The only safe ship in a storm is leadership.
Faye Wattleton
Around the World: My Take
- Greek Election: New Democracy/POSAK Socialists (Pro-Bailout) Narrowly Defeat Radical SYRIZA (Thumbs UP!). Germany had signaled some flexibility on austerity terms for bailout support. I suspect that SYRIZA thinks that the day of reckoning is ever closer, that it's just inevitable that its demagogic anti-austerity message will resonate. The demagogue notes that this is not heaven and his opponents are not angels; but the long, hard trail to the summit is never crowded. As a free marketer, I think it would have been better for the Greek economy to find a quick bottom like Estonia did rather than drag it out over years. One thing is for certain: the actuarial reality of Greece's lavish pension system and high levels of government employment are unsustainable; these don't become any more sustainable outside the European Union. Greece has a long way to deregulate its economy and make it more competitive in a globally competitive market
- French Election: Socialists win majority control of the French assembly (Thumbs DOWN!). They won at least 308 seats in the 577-seat Assembly to give new French President Hollande a clear mandate. The recent French elections put Germany in a difficult position as Hollande plays good cop to Merkel's bad cop. Merkel is clearly on the defensive, trying to insist on a stronger European parliament able to demand fiscal discipline among member states, which effectively compromises national budget sovereignty, an issue everywhere, particularly in Germany. I strongly oppose the new "growth" initiative, the latest social liberal buzzword; this refers not to "economic growth" (meaning laissez-faire economic policies) but really doublespeak for "government spending". Given a job half-done on fiscal responsibility across Europe, what Europe needs is more a transition to economic liberty, not another round of whiskey for the inebriated. Like Greece, France will find that electing socialists to control their national government will inevitably result in their sinking ever deeper into quicksand; Hollande will lead France into mediocrity and irrelevance in Europe. I would strongly advise Chancellor Merkel against greater centralization in Europe, to oppose further morally hazardous bailouts of other European countries, and to retain the only worthwhile benefit to the European Union, i.e., the free market.
- Egyptian Presidential Election: Muslim Brotherhood Presidential candidate Mohamed Morsi has narrowly defeated Ahmed Shafik to become Egypt's president (Thumbs DOWN!). Let me be clear: I think that the Egyptian government under Mubarak did a very poor job of enforcing individual rights. As a Christian, I'm well aware of challenges to Christian and other religious minorities in the Middle East and the Gulf Region, including Iraq and Egypt since the overthrow of long-time rulers. Majoritarianism is just another form of tyranny. I suspect that any perceived link of Shafik to the former regime was the kiss of death.
- Romney says no American bailout of European fiscal crisis (Thumbs UP!). Dare I hope that Romney is also referencing reining the Federal Reserve in from further foreign monetary entanglements?
Another Commentary
There have been a couple of posts I ran across recently that I wanted to comment on on this issue. Late last month George Will wrote another brilliant opinion regarding how the Montana Supreme Court is thumbing its nose at SCOTUS, arguing that Citizens United doesn't apply to them because corporations in their state have been particularly egregious.
The progressives (including Barack Obama) have been particularly hyperbolic and hypocritical on this issue: all sorts of people and organizations have been entitled to express political speech: however, certain types of businesses (corporations) and/or other organizations have been arbitrarily rejected. This double standard is indefensible on principle. Progressives believe that they are the self-appointed censors of American democracy. I don't care how many activist SCOTUS decisions skirted the double standard issue: SCOTUS finally addressed the fact that the emperor was wearing no clothes.
There seems to be this muddled logic that somehow more spending will elect a candidate: first of all, the general principle is NOT true; second, the assumption is that voting behavior is determined by the nature and extent of advertising, and I disagree. Let me point out some obvious cases: Blair Hull was the leading Democratic candidate for the 2004 Illinois US Senate nomination when a scandal broke just weeks before the election; Hull vastly outspent Barack Obama throughout the campaign. We have the case of billionaire Ross Perot whom first ran for President in 1992 and didn't win a single state. Then we also have the 2008 GOP Presidential chase when Romney spent tens of millions of dollars while McCain's campaign was largely broke through the second half of 2007.
The fact of the matter is that people are entitled to their vote, period; personally, I think it's wrong this fall that most people of color will vote for Obama simply because he had an African father. Others may vote for Romney for reasons progressives find unacceptable.
Now as for the impact of corporations, let me point out that I think that it's unlikely that corporations would engage in the kinds of saturation political campaigns that progressives have been obsessing about: as a CEO, I might worry about alienating employees, investors, or customers whom support the other candidate; I probably would want to be on good terms with whomever wins the White House. (The progressives conveniently ignore the truth that that the smart crony capitalist will hedge his bets; the crony capitalist is apolitical: his agenda is simply access to power.)
Will and Senate Minority Leader McConnell point out that of the 8 PAC's in the GOP Presidential nomination race through March, only 1 in 8 dollars came from corporations and less than 1 in 100 dollars from publicly-held corporations (and none of the Fortune 100).
Libertarian economist Don Boudreaux also published one of his classic pithy letters to the editor on the subject (this one the New York Times): the idea that otherwise intelligent voters could be easily manipulated through the political ads, say of corporations, is rather dubious. In a follow-up post, Boudreaux responds to a critic whom assumes that business is all behind one party or candidate (Boudreaux correctly perceives that business is more diffuse: my example is sugar subsidies. Say, for example, domestic sugar producers back Barack Obama; I could easily foresee how domestic sugar consumers (e.g., food companies, bakeries, etc.) could back Romney.) To a broader issue, Boudreaux makes an excellent point, which I'll paraphrase as follows: what businesses should be interested in is government without interference in the private sector, a free market, not crony capitalism. We don't want this unsustainable, convoluted tax system with various credits, exemptions, loopholes, deductions to persist. The Republicans tend to support the free market more consistently: fewer loopholes, regulatory burdens and mandates, etc. For example, some companies may resent paying more of the tax burden because other companies are shifting the tax burden through the use of loopholes, etc. It's not that they are looking for a crony relationship with GOP office seekers but they want less government-related costs and a lower tax burden, a fairer playing field.
Stopping the Spinning Wheel:
We Owe It To Ourselves
"Say they, tho’ we owe at present above 100 millions, we owe it to ourselves, or at least very little of it to foreigners. It is just the right hand owing the left, and on the whole can be little or no disadvantage. But it is to be considered that the interest of this 100 millions is paid by industrious people, and given to support idle people who are employed in gathering it. Thus industry is taxed to support idleness. If the debt had not been contracted, by prudence and economy the nation would have been much richer than at present. Their industry would not be hurt by the oppression of these idle people who live upon it. Instead of the brewer paying taxes which are often improper, the stock might have been lent out to such industrious people as would have made 6 or 7 per cent. by it, and have given better interest than the government does. This stock would then have been employed for the country’s wellfare. When there are such heavy taxes to pay, every merchant must carry on less trade than he would otherwise do; he has his taxes to pay before he sell any of his commodities. This narrows as it were his stock, and hinders his trade from being so extensive as it otherwise would be." - Adam Smith, HT: Don Boudreaux of Cafe HayekNobel Laureate economist neo-Keynesian Paul Krugman (references from Enron available on request) quotes one of the social liberals' favorite stock responses to trillion-dollar deficits as far as the eye can see: in fact, this is the actual title of one of his columns 6 months back: "Debt Is (Mostly) Money We Owe to Ourselves". Adam Smith lived during the times of our Revolutionary War, and now centuries later, Paul Krugman is repeating literally the same old same old argument against fiscal responsibility.
First, let me put you on hold; in the interim we have some pleasant music for your entertainment:
In fact, the "change" that Obama has brought us to on the national level has been a country of revolvers, not transactors. That is, we're transitioning towards a government which in time may eventually barely make enough to cover the minimum payment on the national credit card, never mind actual government operating expenses. (I worked for a privately-held marketing research company in the mid-1990's, which eventually got bought out by Equifax; we did a lot of work with credit card companies. "Transactors" are people whom never carry a balance on their credit cards; credit card issuers still make money off the transaction discount, but obviously they make additional money off higher interest charges on outstanding balances to "revolvers".)
Granted, experts tell us the real danger occurs when the government interest payment percentage of GDP approaches 12%. But what should trouble us is the fact we are reaching 3% (see the second chart below), not counting interest payments made by the bankrupt GSE's, at historically low federal interest rates, not nearly the 20% interest rate in the federal funds rate by 1981 (from 11% in 1979). (The 3% of GDP also includes local government interest payments (red) and state government (blue) amounts.)
Since FY2006 (which had a far higher interest rate: see below), we have exceeded $400B in every fiscal year except 2009: last fiscal year we had an all-time high interest payment expense of $454.3B. To provide some context, the entire Department of Defense budget estimate for FY2011 was just over $700B. Total direct federal revenue was just over $2.3T. That is, a fifth of our federal revenues went just to cover interest payments, and it amounted to 41.6% of individual income tax collection.
A key point from Adam Smith is that taxes are a cost of doing business and money is fungible. Taxes on individuals business to cover government paid interest are effectively an unproductive surtax; when you raise the costs of income, you get less of it. Government competes with the private sector for investment dollars; business has to pay higher rates to attract investors. Individuals and companies have higher-yielding investment alternatives in the more effective, efficient private sector, resulting in real economic growth.
As Bastiat would no doubt point out, there are opportunity costs to ineffective, inefficient government spending (i.e., higher economic growth, including related supportive labor resources); government finances by coercion: it is a monopoly, it has captive taxpayers. Government has no natural competitor compelling it to inexorably reduce costs or provide more effective services. Taxpayers must rely on elected representatives to serve as their surrogate; restoring fiscal responsibility requires strong leadership working against the vested special interests guarding the status quo.
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| Federal Interest Rate from 2006 Courtesy tradingeconomics.com |
Barnes v. Zaccari:
Appeals Court Confirms Barnes Judgment:
Thumbs UP!
Hayden Barnes, a student, protested Valdosta State President Zaccari's decision to spend student fees to build two parking garages on campus. Barnes engaged in a number of peaceful protests; this didn't cause a problem, but when Barnes created a collage on a social network referencing the name of the parking garage as "SAVE Zaccari Memorial Parking Garage", the University President expelled him with no formal due process hearings, despite advice from other university administrators. Zaccari's expulsion was reversed by the state soon after Zaccari, enlisting the Foundation for Individual Rights in Education (FIRE), initiated a lawsuit against the Board of Regents of the University of Georgia System. In essence, in the latest update, the court system has denied the claim against the University of Georgia System but allowed Barnes to pursue a claim against the former President Zaccari because Zaccari knowingly disregarded Barnes' due process rights as described in university procedures.
I do think that Barnes showed poor judgment in the wording of the collage. But at minimum, Zaccari should have recused himself from the disciplinary process and ensured the student's rights were respected to the letter in published university procedures, precisely because if I was Zaccari, I would have wanted to ensure all my bases were covered: I wouldn't have wanted my own behavior to come under question (versus the student's) or any decision I made reversed on appeal. If I felt Barnes was threatening me, I would have brought the matter up with university or local community police.
My read of the situation would depend on the nature and extent of any perceived threat to Zaccari. If the collage was an isolated incident in the context of an overall peaceful protest, I probably would have read the collage as sarcasm, not a threat, e.g., "some people have buildings or schools named after them in their memory; what Zaccari will be known for is the guy the parking garage was named after."
Musical Interlude: My Favorite Groups
Tom Petty & the Heartbreakers, "You Got Lucky"
