Miscellany: 9/05/12

Quote of the Day 
Wisdom comes alone through suffering.
Aeschylus

Brief Aside

I now have two additional webpages on the blog (listed below my brief biography on the right side of the blog), the first being a page of original blog quotes, and the second being what I call a hub where I provide some additional information to people interested about my availability for professional, publication or academic opportunities, my academic/professional publications, etc.

Some Interesting Tidbits from
Woodword's "The Price of Power"

• "House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid were hammering out final details of the stimulus bill [in 2009]. Obama phoned in to deliver a "high-minded message," he writes. Obama went on so long that Pelosi "reached over and pressed the mute button on her phone," so they could continue to work without the president hearing that they weren't paying attention."
• "His administration's early decision to forego bipartisanship for the sake of speed around the stimulus bill was encapsulated by his then-chief of staff, Rahm Emanuel: "We have the votes. F--- 'em," he's quoted in the book as saying."
• How "bipartisan" was Obama? How's this story: " Nobody in the Obama orbit could even find the soon-to-be-speaker's phone number the evening of Election Day 2010, after it became clear that the Republicans would take control of the House, making Boehner Speaker of the House. Woodward reports. A Democratic Party aide finally secured it through a friend so the president could offer congratulations."
• "Woodward issues a harsh judgment on White House and congressional leaders for failing to act boldly at a moment of  [the debt ceiling] crisis. Particular blame falls on the president. "It was increasingly clear that no one was running Washington. That was trouble for everyone, but especially for Obama," Woodward writes."
• "But at a critical juncture, with an agreement tantalizingly close, Obama pressed Boehner for additional taxes as part of a final deal – a miscalculation, in retrospect, given how far the House speaker felt he'd already gone. ..When Boehner finally did call back, he jettisoned the entire deal. Obama lost his famous cool, according to Woodward, with a "flash of pure fury" coming from the president; one staffer in the room said Obama gripped the phone so tightly he thought he would break it. "He was spewing coals," Boehner told Woodward, in what is described as a borderline "presidential tirade." The vice president led a parallel set of bipartisan talks that reached breakthroughs without the president's direct involvement. "

A few comments here. After any reasonably intelligent person reads these things, he cannot, in good faith, vote for Obama. Much of the post involves the failed negotiation between Boehner and Obama, and Boehner doesn't come out of it looking much better than Obama. Obama, who had been piling up a string of $1.3T deficits, had to know demanding conservatives to agree to tax increases, which conservatives never want to do, particularly in the middle of a weak economy, would scuttle the agreement. Conservatives, including myself, felt that spending had exploded throughout the decade--including under Bush, while economic and job growth was anemic at best. Given the nature of the situation, the tax hike was more ideological than substantive in nature: Obama wanted to go to his caucus and say, "I finally got them to cave on taxes." He only caved on the full Bush tax cut extensions in 2010's lame duck session because the Senate minority filibustered the class warfare exclusion.

But going to my point, Obama had never been in a leadership position or involved in the give and take in Congress. He had not built a good faith relationship with Boehner or McConnell. That he lost it when Boehner realized the deal as is to Obama was probably a hard sell in his own caucus? Not surprising.

I have to smile at how clueless progressives are about the Tea Party. At the heart of the Tea Party movement are the libertarian-conservatives, such as myself and the Paul's (Ron and Rand). We wish that we had the influence the mainstream media exaggerates. Go look at our influence in opposing the extension of certain provisions of the so-called Patriot Act. Has the House so much as repealed sugar subsidies?

What Obama and the rest of the progressives don't get is that even ordinary Americans realize that spending has run amok in Washington DC. Take the simple case of a $16T national debt and a historical average interest rate of 5%. That means we would need to spend $800B a year just in interest in serving out debt, over say the current $300B or so. And Obama's idea of budget cutting doesn't cut any major programs--not even an across-the-board spending cut that I've been beating the drum for throughout this life of the blog. What he has been doing is playing accounting games--taking, say, current year spending and spreading it over the coming decade, typically out of baked-in, planned budget INCREASES and often phased in towards the end of the decade, past the end of a second term ending in 2016.

Even moderate Republicans tend to be fiscally conservative. And all the Republicans understand that we are living on borrowed time. We now have the national debt exceeding the size of our economy--this only happened once before in our history: WWII.

On the News That Obama's Coronation Is Moving 
Inside Tomorrow



And dedicated to President BO, mourning the loss of Obama Girl.....

Barack Obama has lost one important fan - “Obama Girl.”

Amber Lee Ettinger, the model-actress who became an Internet celebrity after she released a YouTube video in 2007 professing her love for the then-U.S. senator, hints she won’t endorse the President this time around.

Have I Mentioned How Much I HATE FDR?

Okay, if Glenn Beck gets to loathe Woodrow Wilson (granted, he was some piece of work), I DESPISE FDR with a passion. It is amazing to see the parallels between Hoover/FDR and Bush/Obama.

Just to provide a context here, Russ Robert hosts the Monday EconTalk and along with Don Boudreaux co-hosts Cafe Hayek. (I love getting my daily morning email from Cafe Hayek--it's like waking up to a Whitman's sampler every day; if you haven't visited yet and signing up for your morning email, you're missing out.) In any event, Roberts, who has been a George Mason economics professor and affiliated with the Hoover Institution (a premier conservative think tank affiliated with Stanford with some notable scholars like Victor Davis Hanson); announced today that he is leaving the George Mason faculty to work with the Hoover Institution full-time. He is starting a new series, The Numbers Game (I may embed it in an upcoming post after I review it, but for those whom can't wait, the video is available here).

You may recognize one of my favorite libertarian economists, Thomas DiLorenzo; he has written one of my favorite essays (on economic fascism), and he has written an influential critical biography of Lincoln. Hoover today is thought of by many as a "laissez faire" President--much like the Empty Suit preposterously attempts to blame the "laissez faire" policies of George W. Bush (whom, in fact, indisputably added billions to regulatory costs during his terms) for the economic tsunami. It may well be that Hoover may have eventually come to see the errors of his ways, but recall this Wikipedia quote? "In his addresses, Hoover attacked Roosevelt as a capitalist president who would only make the Depression worse by decreasing taxes, reducing government intervention in the economy, promoting "trade [with] the world", and cutting "Government—Federal and State and local"."  [I wish...] Every single item listed is something every single classical (free market) liberal, including myself, would favor in the strongest possible terms.

DiLorenzo focuses on several cardinal sins against the free market and free trade on the part of Hoover: from jawboning business leaders to keep wages high, to massive public works projects, to the tariff act. (High tariffs discourage imports.) DiLorenzo does a great job here explaining how the lack of free market principles on the parts of both Hoover and FDR made a recession much worse. First, a point I've repeatedly made--banks had been regulated in a fairly perverse fashion, not allowing banks to diversify across states (e.g., the industrial Northeast and the agrarian Midwest). Midwest banks were thus highly dependent on a robust farm economy. There was always political tension between the industrial Northeast wanting high tariffs to protect their businesses and the rest of the country desiring cheaper consumer goods.

Before going further, do you remember my favorite Bastiat quote? "Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race." Among other things, consumers like an abundance of reasonably priced goods and services: they want to stretch their dollars. High tariffs are bad, because all things considered, consumer has to part with more money than he should have to. Domestic producers and government conspire together to raise prices at the expense of the consumer.

But it goes beyond that. Foreign exporters get dollars for their goods. These dollars are used to purchase exports of American products--in particular, farm goods. If foreign companies earn fewer dollars because tariffs make their goods too expensive (the law of supply and demand). This leaves foreign countries with fewer dollars to buy agricultural products.

But that's not the whole story:  foreign countries usually don't like their trading partners unilaterally changing the rules of the game, at the expense of their own companies and workers. So they'll usually retaliate, selecting vulnerable exports from the other country, say, agricultural products by raising tariffs or other mercantilistic policy (say, low trade quotas).

Now the farmers have a smaller market than they expected, which predictably results in lower prices. Prices may be too low for the farmer to make a profit. A number of farmers in trouble typically translates to banks in farm country in trouble.

So now government decides that the "free market" has failed and hence must intervene. Just a few points here: government has been part of a problem because it has taken away markets for farmers to sell their products; it has also weakened banks by arbitrarily restricting their ability to diversify across geographic regions and segments of the economy. Second, low prices aren't a bad thing; they may reflect productivity improvements in agricultural productivity. Higher-cost farmers may exit the market or merge to gain economies of scale. No company is assured of sales short of a crony relationship with government using force. Some farmers may fail, just like any weak competitor in a competitive market (say, electronic sales). It doesn't make any more sense to save an incompetent farmer than it does to save a big banker making bad loans: it merely delays the day of reckoning and constitutes moral hazard. Maybe, for instance, a neighboring farmer with more up-to-date farm equipment buys the farm.

A couple of takeaways here:

• DiLorenzo points out that other countries in the global economic slump started recovering well before the US; this seems to suggest that FDR's policies were responsible for a delayed recovery
• The Keynesians had ominous predictions when the federal budget more than halved after the end of WWII. In fact, wartime spending (including a zero-sum with the consumer economy in terms of rationing) was suppressing growth in the private sector.

A couple of modern notes. First, the economy is still loaded with dysfunctional government intervention (we still have sugar subsidies and high ethanol import tariffs). Second, as Obama no doubt continues his ludicrous attacks on "lobbyists" and "special interests" (unions, green energy companies, etc. are not included, of course), let's just think about it: since 1930--82 years--the GOP has controlled the House just 18 of those years--and 8 of those years have been under Democrat Presidents! The idea that the GOP has created this house of cards of loopholes, credits, exemptions, tax expenditures, etc., is simply not credible. The fact of the matter is that lobbyists are apolitical--they just follow the party in power. If Obama really cared about the influence of lobbyists, he wouldn't be signing 2000-page bills into law (which may, in fact, by influenced, even written in part by lobbyists).



Reason TV Covering the Democratic National Convention

At least somebody is watching this crap; I refuse to waste my time listening to a bunch of demagogues celebrating self-congratulatory political correctness (diversity) and Romney/Ryan bashing. One of the highlights is supposed to be a couple of disloyal Bain Capital partners going after Romney. (Who would have ever guessed that Romney ever hired/partnered with Democrats in blue state Massachusetts? I think one of them, unlike Romney, tried for but didn't get, the Democratic Senate nod

The three points?

• What accomplishments is he going to run on? No doubt the killing of UBL, ObamaCare and Dodd N. Frankenstein. (I will point out here that he didn't favor an individual mandate/penalty/tax for ObamaCare.)  The stimulus? Does he want to revisit the 2010 election again? But what of a long string of broken promises on immigration reform, Gitmo, the Afghanistan quagmire, the deficit, etc.?
• Will the news media be even-handed in their coverage? (Remember the Wisconsin GM plant kerfuffle from Ryan's speech last week? I wrote a commentary pointing out he was correctly quoting Obama, that GM got a bailout approval from Bush BEFORE the Wisconsin plant closed.) The media had claimed that Ryan was blaming Obama for the factory closure before Obama was sworn in as President.
• What are the plans for a second term?  (Let me take a "wild guess": to "finish the job we were elected to".)

Musical Interlude: My favorite Groups

Cheap Trick, "Voices"