Tuesday, December 1, 2009
Health reform threatens voluntary charitable action
As the health care debate moves to the U.S. Senate, much of the news coverage and commentary in recent days has focused on the advocacy of Catholic bishops and how their support of Rep. Bart Stupak’s amendment to prohibit the use of tax dollars to fund abortion was a major victory for the pro-life side. The bishops urged the House of Representatives, through local parishes and in a Nov. 6 letter, to ensure that “needed health care reform legislation truly protects the life, dignity, health and consciences of all." All people of good will, all those who value human life and dignity, should cheer this development.
But there’s more to this health care juggernaut that should give us reason to oppose it in its present form. We should all firstly be concerned with the vast expansion of government reach into the private lives of millions of Americans under the proposal put forward by this administration and its supporters in Congress.
This “reform” will create a system that will put bureaucrats in charge of personal health care decisions -- not doctors. It will give the federal government an avenue to nationalize more than 15 percent of the U.S. economy, thus putting bureaucrats and elected officials in the role of manager and regulator -- much as we’ve seen in banking and automobiles. Amazingly, with the push for a $1 trillion plus health care package and the attendant debt, we may soon see Canada with lower government spending (as a percent of GDP) on heath care than the United States! All this, too is a threat to human dignity.
What will this heavy burden of government spending and regulation have on U.S. health care innovation and competitiveness, which has to date pioneered so many advances? How many medical research and development firms would leave our shores under threat of higher taxes and increased regulation?
All the assurances we’ve been getting from President Obama that health care reform will not add “even one dime to our deficit over the next decade” seem more fantastic with every passing day. A new report shows that projected Medicaid cuts, on which rests much of the financial funding for health care reform, would prove to be so onerous to hospitals and nursing homes that they would simply stop taking such patients altogether. The report, by the chief actuary for Medicare and Medicaid, also questions how doctors and hospitals would cope with an additional 30 million people added to the ranks of the insured, many of them into public health programs.
As it’s been said many times, if you think health care is expensive, wait until it’s free.
I also worry about the “crowding out” effect that this vast expansion of the government into health care will have on voluntary charitable action. Somewhere along the line we have lost sight of the fact that charity and health care was not an invention of Washington bureaucrats. How did the more than 600 Catholic hospitals and clinics, and many more hospitals bearing the names Jewish, Presbyterian, Methodist, Adventist and Baptist, get built in this country? It wasn’t through the sufferance of government. Faith is the source of these works, not policy initiatives. Faith, because it involves the entire scope of the human person, body and soul, has not only a larger claim on our allegiance but a deeper commitment to our well being. Our faith communities know us as persons, not as welfare case numbers or voting blocs.
And what effect on future generations will this massive expansion of government into the private sector, and a vast increase in federal debt, have on future generations? The effect is unknown, but if the experience of other countries is any guide, it will lay a crushing burden on the lives of future generations.
Recall the words of Edmund Burke who understood community as a social “partnership,” a bond that spans many generations, past and future. “It becomes a partnership not only between those who are living,” he wrote, “but between those who are dead and those who are to be born.”
The health care reform package that is now before the Senate should be scrapped. It is an ill-conceived plan that will break the budget, provide fewer opportunities for market-driven solutions in health care, and will constrain those who want to practice real charity. Back to the drawing board.
Chavez: Desperate, Delusional, and Dangerous
It’s ironic – and tragic – that as the world celebrates the twentieth anniversary of Communism’s defeat in Europe, the comic-opera that is Hugo Chavez’s “21st century socialist” Venezuela is descending to new lows of absurdity. Beneath the buffoonery, however, there’s evidence that life in Venezuela is about to take a turn for the worse.
By buffoonery, I mean President Chavez’s decidedly weird statements of late. These include threatening war against Columbia, advising Venezuelans that it is “more socialist” to shower for only three minutes a day, telling his fellow citizens to eat less because “there are lots of fat people” in Venezuela, eulogizing convicted murderer Carlos the Jackal as “a revolutionary fighter”, defending Zimbabwean dictator Robert Mugabe as a “brother”, and wondering whether Idi Amin was so bad after all.
It’s not unusual for Latin American caudillos to say things that suggest a growing detachment from reality. The truth, however, is that for all Chavez’s eccentricities, it would be a mistake to dismiss these comments as nothing more than egomaniacal ravings.
It’s no coincidence that the noticeable uptick in Chavez’s verboseness corresponds to a radical downturn in Venezuela’s economy. On November 17th, Venezuela’s central bank announced that the country had experienced its second quarter of negative growth. In other words, Venezuela is officially in recession. But while most politicians would consider this a cue for policy-change, Chavez decided to question the entire GDP methodology. “We simply can’t permit”, he said, “that they continue calculating GDP with the old capitalist method.”
One reason for Venezuela’s declining economic fortunes is the fall in global oil prices since July 2008. Given Venezuela’s heavy dependence on its vast petroleum resources, this was bound to affect its economy.
This, however, is exacerbated by deteriorating economic and social conditions throughout Venezuela that flow directly from Chavez’s “21st century socialist” policies. Amidst other data released on November 17, Venezuela’s central bank reported that private sector activity declined 5.8% and inflation was averaging 26.7%. Further complicating matters has been the drying-up of foreign capital. Outsiders are increasingly reluctant to invest in a country where nationalization of private property is a routine occurrence.
Then there’s the rationing. Chavez’s price-controls on goods such as agricultural products have undermined an indispensible element of a prosperous economy: i.e., free prices. Hence food, water, and electricity are increasingly rationed in Venezuela. Naturally there are ways to circumvent this, most notably the black market and corruption. But these merely contribute to Venezuela’s growing crime epidemic, as Venezuelans turn against one another in their daily struggle to survive.
In this light, some of Chavez’s recent remarks seem less odd and far more calculated. His exhortations to eat less and take shorter showers, for instance, sound like a man trying to rationalize growing shortages of essentials.
The same economic problems may explain Chavez’s efforts to generate foreign policy crises. It’s an old tactic routinely employed by most authoritarian regimes, and plenty of Venezuelans know it. The vice-president of Venezuela’s Catholic bishops’ conference, Archbishop Baltazar Porras Cardoso, for example, recently described Chavez’s recent war threats against Colombia as an attempt to cover up the grave crisis now engulfing Venezuela.
But Chavez is not simply relying upon conjuring up a parallel universe to legitimize Venezuela’s deteriorating economic situation. He’s also bolstering his position through increased repression.
This takes many forms. One is his regime’s habit of billeting soldiers on university campuses whose students demonstrate against Chavez’s policies. More recently, the government asserted total control over all schools’ educational curriculum. Protestors against this new educational law were taken into “detention for investigation”. As Venezuela’s Catholic bishops noted, this represents a reversal of the principle that people are normally investigated first before being arrested.
Given the Catholic Church’s prominence in highlighting the illusions and oppression increasingly used by Chavez to shore up his regime, it’s hardly surprising that his intimidation tactics are increasingly being directed against the Church.
Apart from the daily threats made against priests and now-routine public abuse of bishops by government officials, Chavez’s latest gambit is to threaten to confiscate Catholic churches, buildings, and other property in the name of “protecting the national patrimony”. Indeed, plans to this effect have already been announced for parts of the capital Caracas. The historically-aware will know that the very same tactic was employed against the Church by European Communist regimes after World War II.
But however much one might detest Chavez, he is not a stupid man. A fool would not have been able to gain and hold power for so long. Yet reality is starting to catch up with Venezuela’s leftist strongman. Unfortunately that’s no consolation for Venezuela’s long-suffering people for whom religious, political, and economic freedom are increasingly mere memories in a daily world characterized more by fantasy than truth.
Lou Dobbs mulls White House bid
- Former CNN host Lou Dobbs fueled already rampant speculation about his political future Monday, sending the clearest signals yet that he's mulling a bid for president — and leaving third-party political operatives salivating over the possibility of a celebrity recruit for the 2012 campaign. Photo: AP
ALEXANDER BURNS
Former CNN host Lou Dobbs fueled already rampant speculation about his political future Monday, sending the clearest signals yet that he's mulling a bid for president — and leaving third-party political operatives salivating over the possibility of a celebrity recruit for the 2012 campaign.
Less than two weeks after announcing his departure from the cable network — and after a series of interviews in which Dobbs encouraged speculation about his political plans — the anchorman known to fans as "Mr. Independent" finally made his presidential ambitions explicit on former Sen. Fred Thompson's radio show Monday.
Asked if he might make a run at the White House in 2012, Dobbs answered flatly: "Yes is the answer."
"I'm going to be talking some more with some folks who want me to listen in the next few weeks," Dobbs told Thompson. "Right now I'm fortunate to have a number of wonderful options."
Dobbs's political future, however, remains shrouded in question marks. He has left open a variety of paths to public office — in addition to toying with a presidential campaign, Dobbs hasn't ruled out a bid for the Senate in 2012 in New Jersey — and also left his party affiliation a mystery.
A representative for Dobbs said his schedule did not permit him to comment for this story by deadline.
Though Dobbs's criticism of the Obama administration and his famously conservative views on illegal immigration have raised the prospect he could run for office as a Republican, he has staked out a rhetorical position that places him outside both parties. In 2007, he penned a book titled, "Independents Day: Awakening the American Spirit," and in his final CNN broadcast, Dobbs took broad aim at a political culture "defined in the public arena by partisanship and ideology rather than by rigorous, empirical thought and forthright analysis and discussion."
And in an appearance on CNBC last week, Dobbs told Larry Kudlow that he "absolutely" planned to remain independent of a political party.
After two consecutive presidential cycles in which independent contenders had virtually no impact at the polls, independent political strategists are delighted at the prospect of a third-party campaign for the White House headlined by a high-profile, TV-friendly candidate with the potential to scramble the national political map.
"I would assume he's going independent, since he's made a very strong case that that's where he is," said Bay Buchanan, who ran Pat Buchanan's 2000 campaign for president as the Reform Party's candidate. "There's enormous movement out there, I think more so than when Pat ran. I think they've really given up on Republicans, they've given up on Democrats; so he would be stepping into something where a path had been laid."
Buchanan added: "I think he can win."
Even independent political operatives less ideologically aligned with Dobbs — Buchanan, like Dobbs, is an immigration hawk — say he represents an enormous opportunity for foes of the two-party system.
"Lou Dobbs, I think, would be a perfect candidate for us," said former Sen. Dean Barkley, the founder of the Minnesota Reform Party (later known as the Minnesota Independence Party) who managed former Gov. Jesse Ventura's successful third-party campaign in 1998. "We were hoping he would have run last time."
The notion of a cable news personality running for high office seems less far-fetched one year after former comedian and liberal talk-radio host Al Franken upset expectations by defeating an incumbent Republican senator in Minnesota, and after television stars such as MSNBC's Chris Matthews explored running for office and Fox's Glenn Beck leaped directly into political activism. Indeed, operatives say, Dobbs's talent for communicating with a national audience could serve him well as an outsider candidate.
"You know he's got a pretty good sensibility with an audience," said media consultant Bill Hillsman, who worked on third-party campaigns for Ventura and gubernatorial candidates Kinky Friedman in Texas and Chris Daggett in New Jersey.
"There aren't too many people who you can say have that particular skill on a national basis, if you're looking at independents," said Hillsman, who said he urged Dobbs in a letter to run as an independent candidate in New Jersey's 2009 gubernatorial election.
Still, even with his star power, there could be serious limits to the appeal of a candidate best known for his opposition to immigration reform and his indulgence of conspiracy theories about President Barack Obama's birth certificate.
While Dobbs's views on immigration might get him a toehold with some constituencies, there's little modern evidence that opposition to immigration can power a national campaign. In order to have a shot at gaining traction nationally, Dobbs would have to tap into populist anger on a broader range of issues, according to Clay Mulford, who managed Ross Perot's presidential campaign in 1992.
"There's a populist streak in the voting public that spans both left and right, and so you've got the combination of this protectionist element and immigration on one hand, on the right. And on the left you've got this anti-bailout, Wall Street, focus-on-Main Street kind of sentiment," Mulford said. "That streak in American politics is something that's often ignored."
But Mulford, whom New York City Mayor Michael Bloomberg consulted in 2008 about a possible independent presidential bid of his own, also poured some cold water on the Dobbs-for-President talk, noting that even a charismatic television personality would face a tough adjustment to the campaign trail.
Dobbs would encounter daunting structural obstacles to fundraising and a patchwork of ballot-access laws that tilt the playing field against any third-party contender. On top of that, Mulford said, Dobbs's hard-line views on immigration might restrict his national appeal in "a country of immigrants."
"The Electoral College makes it, unless you're going to really be at the 30 percent level and go from there, it's a hard slog, nationwide," Mulford warned. "Without some really substantive positions, given his lack of experience, a national effort would be difficult."
And for all the talk of a presidential campaign, Dobbs has yet to contact leading third-party operatives such as Buchanan, Hillsman, Mulford or Ed Rollins, the Perot campaign veteran who shared Dobbs's affiliation with CNN until the anchor quit this month, the operatives said.
Given the hurdles Dobbs would have to clear in order to run nationally, Democrats in his home state of New Jersey are responding seriously to Dobbs's hints about a Senate campaign.
"I assume he'd be a formidable candidate in terms of his skills and his ability to raise funds or self-fund," said a Democratic consultant based in New Jersey. "None of us are sitting around going, 'Oh, that's a joke.'"
At the same time, the Democrat said, Dobbs would be hampered from the first day of a Senate campaign by the optics of running as a border security hard-liner against the Senate's lone Hispanic.
"He's probably out of the mainstream on a bulk of issues. He's going to have a particularly delicate time running against the Senate's only Latino member. He certainly has no infrastructure on which to build in New Jersey," the consultant said. "I don't sense that anyone is sitting around going, 'Lou Dobbs is the next big thing.'"
Even as independents look eagerly forward to a possible Dobbs campaign — for president or another office — Republicans have responded much more warily to suggestions that Dobbs, a resident of Sussex County, could run for Senate on the GOP ticket in 2012.
"I don't think people know whether he'd run as a Republican and also don't know where he stands on anything but immigration," said a Republican strategist from New Jersey.
Brian Walsh, a spokesman for the National Republican Senatorial Committee, told POLITICO: "It's not even on our radar screen. Neither New Jersey senator is up in 2010, and 2010 is where our sole focus is right now."
Banging The Final Gavel At Courtwatch
Banging The Final Gavel At Courtwatch
(CBS)
This column will be my last for CBSNews.com and that means the end of CourtWatch, one of the longest-running, continuously-updated legal blogs ever (indeed, it was a "blog" before that word was even invented). During its run (some 650 full-length columns, some 600,000 words, roughly the length of the Old Testament), CourtWatch relayed in detail large and small the hundreds of chapters which made up the story of American law during the first decade of the 21st Century. If you can remember a legal story from the past ten years, chances are CourtWatch covered it, in whole or in part, as the lawyers say.
Through the years, the column was me and I was the column. Its failings and limitations were (and are) mine and mine alone. Its successes, however, were (and are and will continue to be) shared by my friends and colleagues and bosses at the network, who gave me an opportunity to witness and chronicle some of the biggest legal stories in American history; a presidential impeachment, an election recount, and a terror attack so deadly and unprecedented that its constitutional impact is still uncertain. To be sure, CourtWatch lived through interesting times. That I was able to stick around as long as I did was not just a miracle but a blessing.
There were hundreds of columns about the legal war on terrorism and the death penalty and the politicization of the law. There were columns about the need for judicial independence and about the often murky interaction between the branches of government. There were about a dozen columns over the years calling out politicians for cynically buying into the myth of "judicial activism." There were columns about signing statements and the Posse Comitatus Act. There was even a column or two about good ol' Ruth Jordan. But there was not a single column about Britney Spears' custody problems, unless you count this one and, really, you shouldn't.
(AP)
I feel terrible for the families of Laci Peterson and Chandra Levy and Natalie Holloway. I can understand why they ran to Larry King or to Nancy Grace to try to publicize the search for their loved ones or their quest for justice. But every sensationalized, manipulated minute of their stories meant an ignored, unreported minute about the stories of the thousands of other loved ones who went missing or who were found dead during the decade.
One of the greatest hypocrisies in the current coverage of legal events is the elevation of stories involving telegenic (and typically white) victims or perpetrators of crime over stories involving minorities and the voiceless. I simply refused to join this cynical and arbitrary chorus. You can look it up.
But the absence of junk doesn't guarantee the presence of treasure. And despite my best efforts CourtWatch never fully tackled some of the great legal undercurrents of our time; the great disparity between the levels of justice rich and poor people receive; the explosion of America's prison systems; the disgrace of judicial elections; the molasses-slow federal judicial nomination process; the "unitary executive" theory and its impact upon the war on terror; the drive to decriminalize marijuana; the coming demise of the billable hour for lawyers. As Marlon Brando said to Al Pacino on the back patio near the end of "The Godfather," "there just wasn't enough time."
(AP Photo/Steve Helber)
Some of these names may remain significant to you. Some no doubt have faded from your memory or concern. All played center stage, even if only for one day, during the legal narrative of the past decade.
For years now, CBS News insiders have called CourtWatch "the note" because I send it around internally before it gets posted at CBSNews.com. But make no mistake. CourtWatch wasn't written primarily for the assignment desks in New York or Washington or Los Angeles or for our historic "Fish Bowl" at the Evening News. It was written for you, logging on at home, or in your office, or at school, and it was written always to try to translate for you the pell-mell of legal events and issues. It was written to bridge the gulf between the language of the law and the language of life.
Over the years, CourtWatch changed in fundamental ways. In the early days, the columns were mostly straight analysis. I broke down dense, technical judicial into plain English. I explained complex and confusing rules of procedures. I described for laymen the ministrations of justice and occasionally made rather tame predictions about an upcoming trial or case.
Looking back, I find some of those old columns naïve and formalistic; full of comment without perspective; interpretation without context. This was true whether the legal stories I was covering were overtly political or not (and, despite what the critics say, the vast majority weren't political at all).
As the years went on, however, and as I learned my beat, CourtWatch found its voice. It became radicalized -- not in a political sense but in a literary one. When you are lied to by public officials, over and over again, when your fighting faiths are worn down by the half-truths and misinformation and overzealousness by government shills, it is natural to become offended and then cynical about the cynical people whose judgments you are being paid to dissect. And so CourtWatch inevitably became a little edgier, a little angrier; a little more willing to call out public officials or private citizens whose conduct in the world of law and politics was unbecoming.
It was no longer enough, for example, to simply explain Bush-era policies toward terror suspects, for example. It became important to explain why those policies were contradictory, or unlawful, and why hypocrisy and fear precluded more reasonable approaches. CourtWatch's clear progression -- from supporter to skeptic of terror law policies -- generally matched that of the nation's federal judiciary. Like those judges, I learned from bitter experience not to necessarily buy what the Administration or the Congress, Republicans or Democrats, were selling. The predilection for fudging the rule of law, I have learned, is bipartisan, even universal.
(AP )
I wrote what my conscience pushed me to write; sometimes a little more, sometimes, to my eternal discredit, a little less. Although some of my bosses were occasionally uncomfortable with some of these more pointed pieces I do not apologize for any of them. I was there. I covered it. I read the briefs. I followed developments.
CourtWatch is my story and I'm sticking to it. You may not agree with these conclusions -- our research suggests that half of you don't -- but I hope in the end you came away from reading CourtWatch knowing precisely where I stood and why. Any column worth reading, even now, at least ought to come with that guarantee.
I started writing the column as a relative novice. I end it as a true expert -- not in the law (I would never presume so much) but in the coverage of it, the ebb and flow of its principles and priorities, and in the way it's absorbed by consumers of news. If CourtWatch is to have a legacy it is here, in the "formation" of its voice through ten long years of dramatic legal stories, in its evolution from a passive to an active commentary, and in its ability to highlight the frequent hypocrisy of the law's main actors. If CourtWatch were to have a tombstone and an epitaph I would want it to read: Tried To Warn You.
To those of you who read it through the years, thank you. Your support and comments meant more to me than you will ever know. To those of you who helped edit and post it, thank you. To those of you who helped me find stories and themes and angles, thank you.
CourtWatch may be departing the scene but I promise you I will endeavor to stick around for at least one more decade putting to public use my hard-earned but new-found expertise. The great Anthony Lewis once suggested that I might become "a tribune of the law." It is all I have ever wanted to be as a journalist, all I ever tried to be at CBS News as its chief legal analyst, and all I hope to be down the road no matter what the future holds.
Here are some highlighted columns over the last decade:
2009
"Thomas Strips Sense From Search" (June 2009)
"Sotomayor Confirmation a Done Deal" (July 2009)
2008
"Four Strikes, You're Out" (after June 2008 Supreme Court terror law ruling)
"Second Amendment, Unlocked and Loaded" (June 2008)
2007
"They Always Get Their Man" (after Padilla verdict in Aug. 2007)
"Nowhere to Hide for Gonzales" (March 2007)
2006
"Enron's Snakes Finally Snared" (May 2006)
"Constitution, Schmonsitution" (Oct. 2006)
2005
"Supreme Sorrow" (on the death of Chief Justice Rehnquist in Sept. 2005)
Post-trial advice for Michael Jackson (June 2005)
2004
"Good Riddance, Peterson Trial" (Dec. 2004)
Martha: An Admirable Loon (Sept. 2004)
2003
"Death Penalty Is Different" (Jan. 2003)
"Merry Christmas, Lee Boyd Malvo" (Dec 2003) http://bit.ly/6VQRik
2002
"A Dark Day In Court" (at the Yates trial Feb. 2002)
"Fire And Ice At Yates Trial" (Feb 2002)
2001
"Over Before It Starts" (for Moussaoui Dec. 2001)
"Gone But Not Forgotten" (on day of McVeigh execution June 2001)
2000
"Hornets' Nest" (following Bush v. Gore ruling Dec. 2000)
"Law Trumps Politics -- For Now" (Elian Gonzales case June 2000)
They Were For Stimulus Before They Were Against It
Brian S. Wesbury and Robert Stein
Conservative inconsistency on TARP.
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Or, do you believe that capitalism is inherently stable and that economic problems typically have their roots in government mistakes?
These are the most basic of all economic questions. The answers cut one way or the other--either you believe and act as if the government is necessary for economic stability, or you do not. Every bit of economic analysis and most political decisions about fiscal policy take one side or the other of this debate. Either you believe in classical economic principles, or you believe in Keynesian economic principles.
The Obama administration is arguing that insurance companies don't face any competition--i.e., that free markets failed--and that that's why we need a public health insurance option. And there are many who will claim that we need "another" government stimulus plan to help create jobs. Still others think that without government intervention, man-made global warming will cause Manhattan to be covered by water.
Typically, it is liberals who believe these things, while conservatives will often argue the opposite--for example, that insurance companies should be allowed to compete across state lines, stimulus spending doesn't work and that global warming is scare-mongering on a massive scale.
The relatively stark dividing line between these two camps has been understood by most people. But sometimes the line drifts or becomes less obvious and confusion reigns. Last year, for example, with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in charge, many conservatives got so spooked about the state of the world's financial system that they supported a government-centered and liberal response to the crisis--taking over financial institutions, threatening "overpaid" CEOs, cutting interest rates to near zero and pushing hard for the Troubled Asset Relief Program (TARP), which made up most of a $700 billion bailout fund.
While some argue that "everyone is a general after the battle"--meaning that only in hindsight can you see that TARP was a mistake--we argued loudly last year that rather than bailing out banks, mark-to-market accounting rules should be changed and government involvement should be minimized. But Treasury and Fed officials, along with many analysts and influential pundits, said that the threats to the economy were so grievous and scary that government bailouts were the "only" answer. This argument won the day, mark-to-market changes were pushed to the sidelines as a non-issue and many leading Republicans voted to pass TARP. Many of those votes came from "conservative" politicians who also supported the $150 billion Bush stimulus bill in February 2008.
Now, with the unemployment rate at 10.2%, many of those same conservatives want to make the case that Obama administration policies have caused this to happen. This is awfully confusing to the average American. Why is one set of bailouts good and necessary, but another set bad and political?
Conservatives have another problem as well. The economy is recovering. And the more conservatives argue that it can't recover because of the "uncertainty" caused by Obama policies, the more they leave open the door for the current administration to claim that the stimulus worked. And conservatives who voted for TARP either must agree on some level that this is true, or go back and admit they made a mistake.
This should not be that hard. Stimulus did not work. TARP, TALF, PPIP, two stimulus bills, huge new government spending, Fed rate cuts--the government tried everything. But the market did not bottom, and banks raised no private capital, until mark-to-market accounting rules were corrected in March and April of 2009.
Don't take this in the wrong way. We are classical economists; we believe Keynes was wrong. We think government caused the bubble to begin with, and then made it worse by overreacting and panicking. But it's awfully hard to support conservatives who argue against government action this year when last year many of these same people supported government bailouts. It's inconsistent and it's confusing.
Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill.They write a weekly column for Forbes. Brian S. Wesbury's new book It's Not As Bad As You Think: Why Capitalism Trumps Fear and the Economy Will Thrive(Wiley) was published in November.
Obama's Vision Through History
Obama's Vision Through History
Let's set the stage. After 25 years of economic growth, the U.S. stumbles into a recession and double-digit unemployment. An unpopular war aggravates the crisis; the national debt skyrockets. In response, the nation elects a fresh face: a first-term U.S. senator from a Midwestern state, with a vice president from an Eastern state. They promise hope and change; their party builds a formidable coalition of blacks, whites, and immigrants, and sweeps both houses of Congress. After his election, we had a President's Conference on Unemployment to deal with the job crisis. What emerged was a sensational plan: a stimulus package to create jobs -- especially infrastructure jobs -- and thereby attack unemployment directly.
Sound familiar? It should. The year was 1921, and the newly elected President Warren G. Harding and Vice President Calvin Coolidge faced many of the same issues as Barack Obama and Joe Biden 88 years later. What's different is how these men responded. Coolidge and Obama embody two starkly contrasting visions of economic order.
Over the last century, all presidents have bought in to one of these two visions. Harding, Coolidge, and Ronald Reagan were constitutionalists. Limit the government, they argue, and let entrepreneurs and free markets create growth. By contrast, Barack Obama and most of his predecessors -- especially Franklin Roosevelt -- have been interventionists. Government planning, federal spending, and a Keynesian fine-tuning of the economy are the methods they choose to spark the economy and sustain prosperity.
In the case of the 1921 recession, unemployment had indeed soared to 11.7 percent, and industrial income had fallen almost 25 percent in one year alone. But Harding and Coolidge (who became president in 1923 when Harding died) were constitutionalists. They opposed the popular stimulus scheme to use tax dollars to build public works. "The excess stimulation from that source," Harding insisted, "is to be reckoned a cause of trouble rather than a source of cure." They epitomized what President Obama would later call "The politics of No."
But what they said yes to was cutting income tax rates and slashing federal spending. That kind of discipline, they argued, would unleash entrepreneurs, reduce the federal debt, and release human energy for recovery.
Andrew Mellon, their secretary of the treasury, was a banking genius. He had helped launch Alcoa, Gulf Oil, and many other corporations. He designed the plan to cut tax rates and federal spending. In making his case, he made the astonishing claim that cutting tax rates might actually increase revenue. "It seems difficult to understand," he said, "that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower rates."
When Mellon's prediction was attacked, Coolidge came to the rescue. "I agree perfectly with those who wish to relieve the small taxpayer by getting the largest possible contribution from people with large incomes. But if the rates on large incomes are so high that they disappear, the small taxpayers will be left to bear the entire burden."
With Congress in Republican hands, Harding, Coolidge, and Mellon began to implement their free market plans piece by piece. Therefore, the 1920s budgets showed surpluses every year, and income tax rates were chopped across the board, leaving the wealthiest Americans paying at a 25 percent marginal rate. The results were spectacular. By 1923, unemployment had plummeted to 2.4 percent. From 1921 to 1929, GNP soared a remarkable 48 percent, the "average annual earnings of employees" rose 34 percent, and almost one-third of the national debt simply disappeared.
Entrepreneurs enjoyed one of their most creative periods in U.S. history: from radios to sliced bread to Scotch tape, inventors marketed new products. Older inventions finally secured the capital to emerge: air conditioners, refrigerators, vacuum cleaners, and zippers thus found their way into millions of households across America. U.S. patent numbers were higher in 1929 than in every year thereafter until 1965.
Calvin Coolidge became an American icon. His reelection in 1924 was so overwhelming that the Democratic Party, with a mere 28.8 percent of the vote, appeared near death. In Coolidge's six years as president, he averaged 3.3 percent unemployment and less than 1 percent inflation -- the lowest misery index of any president in the 20th century.
ONE MIGHT THINK that Coolidge's spectacular success would have ended the economic debate. The constitutionalists had triumphed. Instead, after 1929, the interventionists, starting with Herbert Hoover, dominated American politics for the next 50 years. Hoover, who had been secretary of commerce in Coolidge's cabinet, often dissented from the president. In turn, Coolidge labeled him "Wonder Boy" and said privately, "That man has offered me unsolicited advice for six years, all of it bad." Hoover believed that targeted intervention could improve the economy without losing any of the gains from Coolidge's free markets.
Once in office, Hoover signed the highest tariff in U.S. history and then started a flow of federal subsidies (and loans) to farmers, bankers, industrialists, and those unemployed. The Federal Reserve, which is somewhat independent of the president, also intervened and contributed to the Great Depression that followed, by raising interest rates and shrinking the money supply. As the country wallowed in federal deficits, Hoover signed a bill raising income taxes to a top marginal rate of 63 percent. Entrepreneurs retrenched, and jobs rapidly disappeared.
With unemployment at 25 percent in 1932, Gov. Franklin Roosevelt of New York, the Democratic nominee for president, was poised to oust Hoover from office. In doing so, FDR decided to campaign as a constitutionalist, someone much less interventionist than Hoover.
Calvin Coolidge could have written FDR's campaign speech in Pittsburgh two weeks before the election. Hoover's deficits, FDR announced, were "so great that it makes us catch our breath." Such spending was "the most reckless and extravagant past that I have been able to discover in the statistical record of any peacetime Government, anywhere, any time." Of Hoover's tax hikes, FDR concluded that such a burden "is a brake on any return to normal business activity. Taxes are paid in the sweat of every man who labors because they are a burden on production and are paid through production. If those taxes are excessive, they are reflected in idle factories...."
Mellon was from Pittsburgh, and if he had been in the audience that day he would have cheered. You can't create jobs by taxing one group and giving to another -- you can only redistribute existing wealth. To create wealth, you had to cut tax rates, not raise them. That was the chief premise of the constitutionalists.
O's Window Dressing
O's Window Dressing
A'stan speech to be all show
Ralph PetersIn the art-auction world, the trick to selling a bad painting is to put it in a terrific frame. That's the logic behind President Obama's West Point speech tonight.
Condemned by his own vacillation to sketching a picture repulsive to multiple constituencies, Obama will use the impressive frame of West Point to lend his remarks an illusion of glorious leadership.
The event will be impressive: The US Military Academy does pomp and circumstance well. The cadets will be immaculate and perfectly behaved, applauding on cue (no Joe Wilson "You lie!" shout-outs from this hyper-disciplined bunch).
Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/window_dressing_akd86XVPYcydBxXKijDRGJ#ixzz0YT8M0S61
Flags, formality and hallowed tradition will be at the service of a policy announcement that, by tomorrow morning, the establishment media will hail as rivaling the Gettysburg Address (to the journalistic herd, every Obama utterance is greater than the last -- from Cairo to Fort Hood to West Point).
So it's clear why Obama's packagers chose West Point: military glamour, a star-struck audience of undergraduates and the subliminal message that anyone who questions the president's wisdom opposes "duty, honor, country."
But the choice also reveals how politically gun shy Obama has become. Above all else, West Point's safe.
A president serious about strategic policy would have given this speech at the National War College, or to the Joint Staff in the Pentagon auditorium, or to a joint session of Congress, or from the Oval Office. He would have addressed his strategy to those charged with overseeing and implementing it.
Instead, he's created an enormous disruption at West Point to speak to apprentice officers whose responsibilities after commissioning will be to lead platoons of 20 to 40 soldiers. These are splendid young Americans, but they're not an appropriate audience for game-changing policy announcements.
To resurrect Marshall McLuhan's phrase from the 1960s, "The medium is the message" for the Obama administration -- the packaging trumps the content. Aware that his strategy's a muddled compromise that won't come to grips with our top security challenges, Obama's staging a media event. But he still won't deliver leadership.
His primary strength remains a hollow charisma to which the media remain embarrassingly susceptible. The president's delivery is superb (when the teleprompter works), but the content of his globe-trotting sermons avoids nasty realities.
Tonight, he'll announce a measured troop surge, justifying it with boilerplate remarks. He won't tell us why holding Afghan dirt matters more than killing America's enemies.
But he'll also seek to soothe his base on the left, hinting at sharp limits on our commitment.
It's the worst of both worlds: As if, during World War II, we'd told the Japanese and Germans that we really meant business, but intended to quit by 1944.
I believe that increasing our commitment to the loathsome Afghan government and occupying worthless Afghan real estate is folly. Yet, given a decision by the president to surge more troops, I want the effort to succeed. It won't have a chance, though, if the Taliban are told that they just have to hang on. Afghans are very good at hanging on.
The key word to listen for in tonight's speech is "Pakistan." Afghanistan's an elusive booby prize -- while, next door, we're supporting (and strategically hostage to) a country that revels in anti-Americanism, harbors terrorists and sponsors terrorism. We have met the enemy -- and written him a big, fat check.
Any strategy that doesn't come to grips with Pakistan -- beyond generalities about enhanced cooperation -- is doomed.
But strategic success isn't Obama's ultimate concern. He wants political cover and is doing all he can to ensure that he's not on the blame-line, no matter what happens.
He wants to appear strong -- but without unleashing our strength. He'll send more troops -- but won't let them do more. Their primary mission will be to protect our enemies.
As you watch and listen to the president tonight, separate what's said from the setting's grandeur. Dig beneath the fancy bow, ribbons and gift wrap to find out if anything's in Obama's box.
You'll find this strategic gift is half bicycle, half pony -- and charged to your account.
Ralph Peters' latest book is "The War After Armageddon."
The quintessential Andrew Sullivan
Blogger Andrew Sullivan charged Sunday that, whereas in December of last year I advocated a gasoline tax, in my “latest column” on climate change, “the gas tax idea is missing.”
“Why?” asks Sullivan. Because: “In the end, the conservative intelligentsia is much more invested in obstructing and thereby neutering Obama and the Democrats than in solving any actual problems in front of us. It’s a game for them, and they play it with impunity.”
He calls this “The Positioning Of Charles Krauthammer,” a demonstration of rank partisanship and bad faith.
It is quite a charge: This “latest column” proves that I've positioned my views on a gasoline tax for reasons cynically partisan, mindlessly anti-Obama, interested only in the game of power and not in the welfare of the country. In other words, so blinded by selfishness as to be unpatriotic.
However, there’s a slight problem with Sullivan’s analysis. If you click on the column of mine that he cites, which he calls my "latest" and which betrays my anti-Obama fanaticism, you will find that it begins with the following headline:
Carbon Chastity
The First Commandment of the Church of the Environment
By Charles Krauthammer
Friday, May 30, 2008
Note the date: May 30, 2008. A year and a half ago. At the time, George Bush was president. Barack Obama hadn’t even won the Democratic nomination, let alone become president of the United States. The column has absolutely nothing to do with Barack Obama.
Sullivan's entire ad hominem conclusion -- that my views are animated by nothing but the basest, most corrupt partisan motives -- turned out to be a complete invention based on his inability to read dates.
And, characteristically, on total ignorance of the subject he is writing about -- in this case, my views on a gasoline tax. I've been an advocate of a tax on oil not since December 2008 but since 1983 (“The Oil Bust Panic," The New Republic, February 21, 1983). I have not changed my position in the intervening 26 years. I've criticized every administration, Republican and Democratic, for not taxing petroleum, beginning with the Reagan administration, which I repeatedly criticized for the idiocy of trying to persuade the Saudis to curtail production and raise the world price rather than impose some kind of oil tax on our own.
I've advocated a petroleum tax at least 20 times over the years. (The only thing I have changed is the form the levy should take: from an oil import fee to the more simply administered and refunded gasoline tax.) I have never changed my views.
Sullivan’s conclusion that I advocated a gas tax in December ’08 and then dropped it this year because I’m only interested in neutering Obama shows that he knows absolutely nothing about my views. The column in question -- the one Sullivan thinks I wrote just now, but in fact was published in May 2008 -- is not "positioning." Bush was president, Obama not even an issue. The gas tax wasn't mentioned because it's not particularly relevant to the subject I was addressing -- the ideological rigidity of climate-change activism. And because my views on the gas tax had been repeated so many times, writing about it again would have been superfluous.
Nine months later (March 5, 2009), I gave a public presentation at the Foundation for Defense of Democracies to a group of around 30 economists and energy analysts on my proposed “Net-Zero” gas tax. I’m no historian, but that appears to have occurred during the Obama presidency.
Sullivan’s post merits reading as the quintessential Sullivan, leaping from nonexistent fact to blanket ad hominem without even a pause for a reality check. Enjoy it here.
Random Thoughts on the Passing Scene
By Thomas SowellRandom thoughts on the passing scene:
Sometimes we seem like people on a pleasure boat drifting down the Niagara river, unaware that there are waterfalls up ahead. I don't know what people think is going to happen when a nation that already sponsors international terrorism has nuclear bombs to give to terrorists around the world.
Since this is an era when many people are concerned about "fairness" and "social justice," what is your "fair share" of what someone else has worked for?
Here is a math problem for you: Assume that the legislation establishing government control of medical care is passed and that it "brings down the cost of medical care." You pay $500 a year less for your medical care, but the new costs put on employers is passed on to consumers, so that you pay $300 a year more for groceries and $200 a year more for gasoline, while the new mandates put on insurance companies raise your premiums by $300 a year, how much money have you saved?
I seldom read fiction-- and I tend to regard autobiographies as fiction.
In response to news of President Obama receiving the Nobel Prize for peace, an e-mail from a reader recalled a black classmate's comments upon graduating from high school many years ago. When asked to list the advantages and disadvantages of being black, the black student facetiously listed as an advantage "being praised for infinitesimal accomplishments."
Many colleges claim that they develop "leaders." All too often, that means turning out graduates who cannot feel fulfilled unless they are telling other people what to do. There are already too many people like that, and they are a menace to everyone else's freedom.
Some people are so busy being clever that they don't have time enough to be wise.
No one likes to admit having been played for a fool. So it will probably take a mushroom cloud over some American city before some Obama supporters wake up. Even so, the true believers among the survivors will probably say that this was all George Bush's fault.
Stepping beyond your competence can be like stepping off a cliff. Too many people with brilliance and talent within some field do not realize how ignorant-- or, worse yet, misinformed-- they are when talking like philosopher-kings about other things.
There has probably never before been as drastic a decline in the quality of vice presidents as there has been when Dick Cheney was replaced by Joe Biden. Yet the New York Times is lionizing Biden as a wise counselor to President Obama. When you support the liberal agenda, that makes you brilliant ex-officio in the media, whether or not you are vice president-- and whether or not you have even common sense.
Government pressures on mortgage lenders to accept less than the full amount they are owed may win votes for politicians, since there are far more borrowers than lenders. But how much future lending can be expected when the lenders know that politicians are ready to intervene at any time to prevent them from getting their money back?
Some people think that the Obama administration is going to get rid of Secretary of the Treasury Timothy Geithner, making him the scapegoat for its economics failures. This would be consistent with the President's acting as if the people under him are not carrying out his policies. But if they get rid of Geithner too early, that will not help if things still do not get better after he is gone and before the 2010 elections.
People who are urging us to do things to win the approval of other countries seem to put an excessive value on other country's approval, as distinguished from their respect that we can lose by such bowing to "world opinion." Do the world champion New York Yankees try to curry favor with teams that are also-rans?
Can you name the only .400 hitter who never won a batting title during his whole career? Or a pitcher who stole home? If you are one of the first ten to answer either of these questions, you will receive a free copy of my most recent book, "The Housing Boom and Bust."
Weak-Kneed in China
By RALPH NADER
There was something both sad and strange about President Obama’s weak presence in China last week.
Sad because he arrived with no seeming goals and left empty handed just after visiting the ancient Great Wall, which he said gave him a perspective on time.
Strange because he allowed the Chinese rulers to quarantine his stops from the Chinese people?whether in person or on television. His main public meeting was with young Communist League students who came with scripted questions.
All the outward signs were that Mr. Obama had no cards to play. The U.S. is by far the world’s biggest debtor. It was hard to challenge his Chinese hosts who made crisp mention of our government’s deep deficits and deficit spending. They did not have to describe our weakened economy, its declining dollar and the huge indebtedness that the U.S. has with its Chinese creditors. Everybody knows how rickety America?s global financial situation is.
Of course we do not know what went on in the private discussions between
Mr. Obama and his Chinese counterparts. Suffice it to say that the President could not have gotten very far on the undervaluation of the Yuan, the gross inequities in the trading rules and practices between China and its biggest customer on the other side of the Pacific.
Had Mr. Obama raised the major trade, investment, military and security issues of conflict with China depicted in the just-released 2009 Report to Congress of the U.S.-China Economic and Security Review Commission, the chilly reception that China’s leaders accorded him in public would have turned decidedly frosty. (For the full report, visit www.uscc.gov.)
David Shambaugh, director of the China Policy Program at George Washington University, praised the U.S.-China joint statement as being “filled with multiple tangible areas of cooperation.” The statement, however, is mere words without any binding details.
On the minus side, Mr. Shambaugh was unsparing. He said:
The failures lay in how the president spent his time in China. Not interacting with Chinese people, not giving an uncensored nationally televised speech, not visiting any civic organizations or businesses, not visiting a wind farm or clean-energy firm, not meeting human rights lawyers or activists, and not meeting with the American business or scholarly community must all be counted as failures. He did not send positive signals in these areas?but the Chinese government did not permit it and the American side did not insist on it.
This first trip to China by Mr. Obama was a lost opportunity in three ways that cannot be excused, no matter the absence of proactive status and power.
First, the U.S. is China’s biggest consumer and it has not been treated well. Contaminated fish, dangerous ingredients in medicines, defective tires and lead-contaminated products are some of the continuing problems that have cost American lives and health.
Mr. Obama should have concluded a consumer protection treaty with China requiring access to their laboratories, factories and exporters for product inspection and certification. Such a treaty should include safeguards against importation of counterfeit goods and subject Chinese companies who want to do business in our country to our laws of tort and contract in our courts.
Second, there should be a bilateral agreement focused on the enormous rush of air pollution coming from China over the Pacific carried by the prevailing winds. China is opening two large electricity-generating coal plants every week and Korea, Japan, and North America are suffering the effects, along with the effects of emissions from huge belching factories. This agreement would be helpful, now that the Copenhagen Conference has been consigned to rhetoric and exhortation, in paving the way for greater cooperation on acid rain, acidification of the ocean and, of course, climate change.
China is worried about our deficits. We should be worrying about their emissions.
Third, a long-overdue pact regarding infectious diseases is needed. Many Americans over the decades have lost their lives from influenza sourced out of China. The virus is passed from pigs to farmers, who live in very close proximity, to the rest of the world.
China learned from the SARS epidemic of 2003 how economically damaging secrecy can be. But it still needs to be more cooperative with international early alert systems. The government needs to allow more American infectious disease specialists to work with their Chinese counterparts full time in China.
A major expansion of cooperative facilities, detection and data analysis, tests and other anti-epidemic initiatives, that together can save millions of lives in the future, both in China and the U.S., is an urgent priority.
Maybe Mr. Obama spoke privately about these matters. But that is a sign of weakness. He owed the American people some public energy and leadership in Beijing to protect them ? as consumers ?from these fallouts of corporate globalization, since he clearly did not move to protect them as workers.
Ralph Nader is the author of Only the Super-Rich Can Save Us!, a novel.
Republican governors
Republican governors
A gang of reds
Life is looking rather sunny for the opposition party
THE governors milled around and chatted onstage. Rick Perry, of Texas, muttered to one of his peers, doubtless about the many successes his state has notched up. There were more than a dozen of them (out of a total of 22) in attendance at the annual meeting of the Republican Governors Association, held on November 18th-20th in a rustic-themed resort just outside Austin. Only two were women (Jan Brewer of Arizona and Linda Lingle of Hawaii), but Haley Barbour of Mississippi, the current chairman of the RGA, made sure to propel them close to the podium.
The night before, in Washington, DC, Senate Democrats had presented their version of the health-care reform bill. The Republican governors happily seized on the subject. Tim Pawlenty, of Minnesota, called for a focus on cost containment. Bobby Jindal, of Louisiana, rattled off ten policy proposals for a better approach to reform. Mike Rounds, of South Dakota, made the bluntest speech. He said that his small state currently spends $265m a year for its share of Medicaid, which provides health care for the poor, and that if the House version of the bill passed tomorrow it would go up by $33m. “I can’t afford that,” he concluded.
This was a different and more serious side of the Republicans than one finds at tax-protesting “tea parties”, on talk radio, or going rogue on a book tour. Some of the Republicans distanced themselves from the most vicious flank of the party. “We need to treat the president respectfully,” said Mr Barbour. People still like Barack Obama, he said; it would be better to focus on his policies.
he governors held an upbeat panel on the outlook for next year’s mid-term elections. There were only two gubernatorial contests in the off-year of 2009, in New Jersey and Virginia, and they were won by Republicans Chris Christie and Bob McDonnell, respectively. The party is especially enamoured of Mr McDonnell, who campaigned on economic issues—“Bob’s for jobs”—and carried independent voters by a big margin. Next year there will be gubernatorial elections in 37 states.
Nineteen of those states are currently held by Democrats, and 18 by Republicans. It is early days, but the Republicans are confident of solid gains. Jennifer Duffy of the Cook Political Report, a non-partisan newsletter, said that at this point none of the states with Republican governors are tilting toward the Democrats, though there are ten that the newsletter classes as toss-ups. But several states that now have a Democratic governor, including Oklahoma, Tennessee and Kansas, are designated “leaning” or “likely” Republican.
The Republicans have more ambitious ideas for a couple of rustbelt swing states. In Pennsylvania, the once-popular Democratic incumbent, Ed Rendell, is leaving because of term-limits. In Ohio, Ted Strickland, a fairly conservative Democrat, has found that his feisty Republican challenger, John Kasich, has caught up with him in recent polls, which is probably thanks to worries about the economy.
The Republicans have some big states to defend, including California, where Arnold Schwarzenegger is stepping down because of term-limits and has a 28% approval rating: Cook has that race down as a toss-up. And they have some potentially nasty primaries ahead. One of those will be in Texas, although Senator Kay Bailey Hutchison, Mr Perry’s opponent, recently announced plans to stay in Washington until the primary in March, which suggests a slackening of the effort. But the omens look good. And after 2010’s races are over, one of these lucky governors, or perhaps an ex-governor, will probably be picked to take on Mr Obama in 2012.
Kosovo and Serbia
Kosovo and Serbia
A legal separation?
Kosovo’s independence from Serbia is scrutinised in the international court
SAY “Battle of Kosovo” and those who live in the Balkans will instantly recall Serbia’s defeat at the hands of the Ottoman Turks in 1389. So it is clearly no accident that Serbia’s leaders have taken to talking about a new “diplomatic” battle of Kosovo. That fight moved to the UN’s International Court of Justice in The Hague on Tuesday December 1st, which has begun hearing submissions on whether Kosovo’s declaration of independence from Serbia in February 2008 was legal or not.
What the 15 judges have to say will be of keen interest from Catalonia to Tibet and indeed wherever the argument about a people’s right to self-determination appears to clash with a state’s right to preserve its territorial integrity.
Kosovo has a population of over 2m people. The overwhelming majority are ethnic Albanians. Unlike the six republics of the old Yugoslavia which became states, Kosovo was a province of Serbia but it had many of the attributes of a republic, including an assembly, a government and a seat on Yugoslavia’s rotating presidency.
After the Kosovo war, which culminated in NATO’s 11-week bombing of Serbia in 1999, the Serbian administration in Kosovo was replaced by a UN body, which in turn gradually gave way to Kosovo’s own elected institutions. Serbia argues that Kosovo’s assembly did not have the right to declare independence and that the UN’s representative in Kosovo was legally bound to nullify the declaration. The Kosovars answer that this was a constitutional issue and not an international legal matter and besides they had as much right to declare independence as the other parts of Yugoslavia.
To date 63 countries have recognised Kosovo, including America and 22 of the 27 EU states. But China, Russia and many other important countries have not—including Spain, which will hold the EU’s presidency from January. As well as Serbia and Kosovo, 29 countries will give their views in court. After that the judges will deliver a non-binding advisory opinion at some point in the next 12 months.
International law on self-determination and secession is unclear. Most Western countries recognise Kosovo but not Abkhazia or South Ossetia which have broken away from Georgia. However Russia and Venezuela, who will both argue for Serbia at the ICJ, have recognised the two breakaway regions. If the judges could steel themselves to offer clarity on the issue that would be widely welcomed.
In fact their opinion on Kosovo’s status is likely to be ambiguous. But, if it is a draw, argues Remzi Lani, a commentator from Albania, then that will constitute “a defeat for Serbia”, because slowly but surely, countries will continue to recognise Kosovo. However, opposition from Russia and China means Kosovo will never be allowed to join the UN or any other body where they have the power to prevent it.
Even if the court finds in favour of Serbia it is unlikely to make much difference as it is inconceivable that Serbia could ever rule Kosovo again. But that may not be the point at issue here. What Serbia may offer Kosovo in the future is an exchange of the Serb-inhabited north of Kosovo for an Albanian-inhabited bulge into Serbia called the Presevo Valley.
It is noteworthy that the opening of the ICJ case is not the main news in either Kosovo or Serbia. Serbia is celebrating a decision confirmed on Monday to abolish visas for the EU’s Schengen countries for Serbs, Macedonians and Montenegrins. A cartoon in one paper shows Serbia’s president, Boris Tadic, cheerfully carting off a man-sized carrot, a gift from the EU, on his shoulders.
Kosovars have nothing to celebrate. Their news is full of the story of the arrest by the EU’s police mission in the country of a man who claims to have taken part in some 17 murders, attempted murders or beatings on behalf of a murky intelligence service which was previously linked with the PDK, the party of Hashim Thaci, the prime minister. The victims were apparently members of another party, now in coalition with Mr Thaci. The PDK Tdeny the accusations, saying they are politically motivated smears. Mr Thaci says that whoever is responsible must be brought to justice. Although nothing to do with the case before the ICJ such allegations, true or not, do not help Kosovo’s cause.
Battling deflation in Japan
Battling deflation in Japan
Feeling deflated
Japan’s central bank takes an overdue swipe at an old foe
THE Bank of Japan (BoJ) must feel as if it has a bad case of déjà vu. Three years after the central bank thought it had ended deflation, it has returned. And to fight it, the bank has had to resurrect a policy tool it tried to bury long ago—quantitative easing. If that is not bad enough, the BoJ once again has to deal with a government breathing hotly down its neck.
The BoJ’s discomfort explains why, on Tuesday December 1st, it made what analysts considered to be a half-hearted attempt to reflate the Japanese economy and weaken the yen. What the bank did was better than nothing, but it did not go as far as some had hoped—nor as far as Japan needs.
On the face of it, the BoJ’s announcement that it would make available ¥10 trillion ($115 billion) in three-month loans fixed at a 0.1% interest rate, appears generous. The loans can be exchanged for a broad array of collateral such as Japanese government bonds, corporate bonds, commercial paper and other assets. They are aimed at boosting the economic recovery by providing liquidity to banks.
The size of the facility amounts to only 2% of GDP, however, which analysts believe is neither enough to ease the deflationary threat in Japan significantly, nor to weaken the yen seriously. Masaaki Shirakawa, the governor of the BoJ, deliberately avoided discussing the currency at a news conference after the meeting, which frustrated those who think the financial authorities need to speaking plainly about the dangers of deflation to jolt Japan out of years of economic stagnation. “It was the size and the commentary that were disappointing,” said Richard Jerram, chief economist of Macquarie Securities in Japan. “It was all pretty tame.”
Added to which, Mr Shirakawa described the measures as “quantitative easing in broad terms”. But this appeared to be more of a sop to government ministers who have called for such a policy, than the result of a firm conviction on his part. Mr Shirakawa is among those in the BoJ who have been sceptical of the merits of quantitative easing, which it used during the deflationary years between 2001 and 2006. The BoJ has been cautious about using it ever since. According to GaveKal, a financial consultancy, during the global financial crisis Japan’s monetary base increased by a paltry 4.7% a year; in America, it has grown by 71%.
Analysts said the BoJ’s move would have had more impact if it were accompanied by dramatic policy initiatives from the government that looked like a serious attempt to weaken the yen. But that did not happen.
Instead, after a cabinet meeting on Tuesday, the fledgling administration of Yukio Hatoyama, the prime minister, lamented the strength of the yen and drew up some ill-defined counter-measures. These included the unveiling of a supplementary budget by the end of the week to tide Japan over for the rest of the fiscal year ending in March. But the size was not expected to be much bigger than the ¥2.7 trillion shaved off a previous budget by the new government. Its intention to find ways to increase domestic demand was similarly vague.
Mr Hatoyama, who indirectly put pressure on the BoJ by announcing on Monday that he planned to meet with Mr Shirakawa, praised the bank after Tuesday’s announcement. “It has demonstrated through its actions its determination to stem deflation and revive the economy,” he said. His meeting with Mr Shirakawa was still expected to go ahead.
Whether or not his government eases up on the central bank may well depend on what happens to Japan’s financial markets. The yen was lower against the dollar and other currencies during and after the central-bank meeting. The stockmarket also benefited from hopes that the yen would fall, because of the damaging effect the currency is having on exporters.
The yen may well climb higher again if the markets feel Tuesday’s efforts were not meaningful enough. However, now that the BoJ and the government have put the markets on notice that they are vigilant to the deflationary risk posed by a rising yen, they may be more inclined to use concerted action next time.
Nock's Theory of Education
[The Freeman, 1971]
One is glad that he left these luminous pages in their pristine form of lectures (he begs indulgence for doing it), because that form shows him off at his best: full of charm, candid in his prejudices, elegant in diction, a natural ironist, and a man in whom thinking is clearly a familiar exercise.
I remember picking up the book soon after its appearance in 1932, at a little book shop on Broadway near 115th Street. I am afraid it was a remaindered copy, very cheap, like the novels of E. M. Forster and the two volume set of Henry James's letters. It was my first acquaintance with Nock and I was delighted with my discovery.
I felt elated even after my incredulous irritation at what I found him saying on pages 76–77. That is the passage where Nock, who throughout his lectures claims a connection with Columbia University, repeats some libelous nonsense about Columbia College, based on Abraham Flexner's then recent study of American and other universities.
According to both these unverifying men, it was possible to obtain a bachelor of arts degree in Columbia College by offering such subjects as advertising layout, practical poultry raising, elementary stenography, wrestling and self defense, and half a dozen other subvocational exertions.
Nock recurs with relish to this list of depravities (including book reviewing) two or three times again the later lectures. It is enough to make one doubt his common sense — or his familiarity with the educational scene of his own day.
As a graduate of Columbia College in 1927, who began teaching there that same year and for many more thereafter, I knew from inside knowledge that Nock's statement was a fantasy. The requirements for the degree permitted no such hijinks as Nock alleged. What is worse, he goes on to say that by "some sort of traffic arrangement with a sister institution" the Columbia College undergraduate "may also count as leading to a degree, courses in … cookery, clothing decoration, dancing for men," and so on through a second half dozen domestic or social accomplishments.
The fact is that permission to take any courses outside the Columbia College catalogue was extremely difficult to obtain. These enumerated frills (presumably from the Teachers College home economics department) would have been disallowed by the Columbia College dean, sitting with his committee on instruction.
The paradox is that if Nock had but known it, Columbia College in his day was the nearest approximation to the ideal set forth in his lectures. The curriculum did not require Latin and Greek, to be sure, but it turned its back on the free elective system and imposed strict requirements in history, mathematics, science, English, and modern foreign languages. The majors had to be approved so as to prevent a frivolous scattering of effort among elementary courses, and (as I said) there was no straying off the reservation into easy extension or Teachers College courses. Arguing with friends from Yale, Princeton, and Harvard showed that they lived far more under the loose dispensation that Nock reprobated.
What was in fact his connection with Columbia? Research shows that from 1930 to 1932, he taught American history and politics at St. Stephen's College, then a distant affiliate, later independent as Bard College. Reading his book suggests that Nock was there chiefly to bait President Butler, whose pronouncements he studied with the feral eye of a ruthless attorney. Nock, for example, is not above twisting one of Butler's phrases about the "new type of university organization." He makes it stand in a sinister way for the nonintellectual, non formative subjects he castigated before.
That is not what Butler was referring to, much less advocating. For Butler was a humanist, too, and in his way as good a one as Nock. And Nock, one must also add, was a little blinded by his just cause into forgetting some truths about the great tradition he praised and preached.
"Nock was entirely right, of course, in his main thesis and his prophecy as well."
His medieval universities were not as he represented them. Had he stopped to use his wonderful imagination, he could have inferred that the old faculties of law and medicine were nothing but vocational schools — medicine especially. And even letters and theology were largely dedicated to the "preparation for life" which he deprecates — making clerics and scribes and pedagogues. The Abelards and Occams are always rare and never the average. Universities are good enough when they permit them to thrive and collect disciples.
Nock was entirely right, of course, in his main thesis and his prophecy as well. We have been seeing the final degradation of the institution whose misdirected aim he denounced with such deadly urbanity. It would be good to have from him a section fifteen to add to the fourteen in his neat little book. It would be on relevance and social consciousness in the free politicalized university.
If I had a Ouija board, I'd spend a few evenings trying to take down the text of it from the authentic source.
Economics vs. Politics
Economics vs. Politics
[This article is excerpted from chapter one of The Rise and Fall of Society.]
It may be that wary beasts of the forest come around to accepting the hunter's trap as a necessary concomitant of foraging for food. At any rate, the presumably rational human animal has become so inured to political interventions that he cannot think of the making of a living without them; in all his economic calculations his first consideration is, what is the law in the matter? Or, more likely, how can I make use of the law to improve my lot in life? This may be described as a conditioned reflex. It hardly occurs to us that we might do better operating under our own steam, within the limits put upon us by nature, and without political restraints, controls, or subventions. It never enters our minds that these interventionary measures are placed in our path, like the trap, for purposes diametrically opposed to our search for a better living. We automatically accept them as necessary to that purpose.
And so it has come to pass that those who write about economics begin with the assumption that it is a branch of political science. Our current textbooks, almost without exception, approach the subject from a legal standpoint: how do men make a living under the prevailing laws? It follows, and some of the books admit it, that if the laws change, economics must follow suit. It is for that reason that our college curricula are loaded down with a number of courses in economics, each paying homage to the laws governing different human activities; thus we have the economics of merchandising, the economics of real-estate operations, the economics of banking, agricultural economics, and so on. That there is a science of economics which covers basic principles that operate in all our occupations, and have nothing to do with legislation, is hardly considered. From this point of view it would be appropriate, if the law sanctioned the practice, for the curricula to include a course on the economics of slavery.
Economics is not politics. One is a science, concerned with the immutable and constant laws of nature that determine the production and distribution of wealth; the other is the art of ruling. One is amoral, the other is moral. Economic laws are self-operating and carry their own sanctions, as do all natural laws, while politics deals with man-made and man-manipulated conventions. As a science, economics seeks understanding of invariable principles; politics is ephemeral, its subject matter being the day-to-day relations of associated men. Economics, like chemistry, has nothing to do with politics.
The intrusion of politics into the field of economics is simply an evidence of human ignorance or arrogance, and is as fatuous as an attempt to control the rise and fall of tides. Since the beginning of political institutions, there have been attempts to fix wages, control prices, and create capital, all resulting in failure. Such undertakings must fail because the only competence of politics is in compelling men to do what they do not want to do or to refrain from doing what they are inclined to do, and the laws of economics do not come within that scope. They are impervious to coercion. Wages and prices and capital accumulations have laws of their own, laws which are beyond the purview of the policeman.
"The ink was hardly dry on the Constitution before its authors, now in position of authority, began to rewrite it by interpretation."
The assumption that economics is subservient to politics stems from a logical fallacy. Since the State (the machinery of politics) can and does control human behavior, and since men are always engaged in the making of a living, in which the laws of economics operate, it seems to follow that in controlling men the State can also bend these laws to its will. The reasoning is erroneous because it overlooks consequences. It is an invariable principle that men labor in order to satisfy their desires, or that the motive power of production is the prospect of consumption; in fact, a thing is not produced until it reaches the consumer. Hence, when the State intervenes in the economy, which it always does by way of confiscation, it hinders consumption and therefore production. The output of the producer is in proportion to his intake. It is not wilfulness that brings about this result; it is the working of an immutable natural law. The slave does not consciously "lay down on the job"; he is a poor producer because he is a poor consumer.
The evidence is that economics influences the character of politics, rather than the other way around. A communist State (which undertakes to disregard the laws of economics, as if they did not exist) is characterized by its preoccupation with force; it is a fear State. The aristocratic Greek city-State took its shape from the institution of slavery. In the nineteenth century, when the State, for purposes of its own, entered into partnership with the rising industrial class, we had the mercantilist or merchant State. The Welfare State is in fact an oligarchy of bureaucrats who, in return for the perquisites and prestige of office, undertake to confiscate and redistribute production according to formulae of their own imagination, with utter disregard of the principle that production must fall in the amount of the confiscation. It is interesting to note that all welfarism starts with a program of distribution—control of the market place with its price technique—and ends up with attempts to manage production; that is because, contrary to their expectations, the laws of economics are not suspended by their political interference, prices do not respond to their dicta, and in an effort to make their preconceived notions work they apply themselves to production, and there too they fail.
The imperviousness of economic law to political law is shown in this historic fact: in the long run every State collapses, frequently disappears altogether and becomes an archeological curio. Every collapse of which we have sufficient evidence was preceded by the same course of events. The State, in its insatiable lust for power, increasingly intensified its encroachments on the economy of the nation, causing a consequent decline of interest in production, until at long last the subsistence level was reached and not enough above that was produced to maintain the State in the condition to which it had been accustomed. It was not economically able to meet the strain of some immediate circumstance, like war, and succumbed. Preceding that event, the economy of Society, on which State power rests, had deteriorated, and with that deterioration came a letdown in moral and cultural values; men "did not care." That is, Society collapsed and drew the State down with it. There is no way for the State to avoid this consequence—except, of course, to abandon its interventions in the economic life of the people it controls, which its inherent avarice for power will not let it do. There is no way for politics to protect itself from politics.
"The intrusion of politics into the field of economics is simply an evidence of human ignorance or arrogance."
The story of the American State is instructive. Its birth was most auspicious, being midwifed by a coterie of men unusually wise in the history of political institutions and committed to the safeguarding of the infant from the mistakes of its predecessors. Apparently, none of the blemishes of tradition marked the new State. It was not burdened with the inheritance of a feudal or a caste system. It did not have to live down the doctrine of "divine right," nor was it marked with the scars of conquest that had made the childhood of other States difficult. It was fed on strong stuff: Rousseau's doctrine that government derived its powers from the consent of the governed, Voltaire's freedom of speech and thought, Locke's justification of revolution, and, above all, the doctrine of inherent rights. There was no regime of status to stunt its growth. In fact, everything was de novo.
Every precautionary measure known to political science was taken to prevent the new American State from acquiring the self-destructive habit of every State known to history, that of interfering with man's pursuit of happiness. The people were to be left alone, to work out their individual destinies with whatever capacities nature had endowed them. Toward that end, the State was surrounded with a number of ingenious prohibitions and limitations. Not only were its functions clearly defined, but any inclination to go beyond bounds was presumably restrained by a tripartite division of authority, while most of the interventionary powers which the State employs were reserved for the authorities closer to the governed and therefore more amenable to their will; by the divisive principle of imperium in imperio it was forever, presumably, deprived of the monopoly position necessary to a State on the rampage. Better yet, it was condemned to get along on a meager purse; its powers of taxation were neatly circumscribed. It did not seem possible, in 1789, for the American State to do much in the way of interfering with the economy of the nation; it was constitutionally weak and off balance.
The ink was hardly dry on the Constitution before its authors, now in position of authority, began to rewrite it by interpretation, to the end that its bonds would loosen. The yeast of power that is imbedded in the State was in fermentation. The process of judicial interpretation, continued to the present day, was later supplemented by amendment; the effect of nearly all the amendments, since the first ten (which were written into the Constitution by social pressure), was to weaken the position of the several state governments and to extend the power of the central government. Since State power can grow only at the expense of social power, the centralization which has been going on since 1789 has pushed American Society into that condition of subservience which the Constitution was intended to prevent.
"The Romans hardly knew or cared about the 'decline' in which they were living."
In 1913 came the amendment that completely unshackled the American State, for with the revenues derived from unlimited income taxation it could henceforth make unlimited forays into the economy of the people. The Sixteenth Amendment not only violated the right of the individual to the product of his efforts, the essential ingredient of freedom, but it also gave the American State the means to become the nation's biggest consumer, employer, banker, manufacturer, and owner of capital. There is now no phase of economic life in which the State is not a factor, there is no enterprise or occupation free of its intervention.
The metamorphosis of the American State from an apparently harmless establishment to an interventionary machine as powerful as that of Rome at its height took place within a century and a half; the historians estimate that the gestation of the greatest State of antiquity covered four centuries; we travel faster these days. When the grandeur of Rome was at its grandest, the principal preoccupation of the State was the confiscation of the wealth produced by its citizens and subjects; the confiscation was legally formalized, as it is today, and even though it was not sugar-coated with moralisms or ideologically rationalized, some features of modern welfarism were put into practice. Rome had its make-work programs, its gratuities to the unemployed, and its subsidies to industry. These things are necessary to make confiscation palatable and possible.
To the Romans of the times, this order of things probably seemed as normal and proper as it does today. The living are condemned to live in the present, under the prevailing conditions, and their preoccupation with those conditions makes any assessment of the historic trend both difficult and academic. The Romans hardly knew or cared about the "decline" in which they were living and certainly did not worry about the "fall" to which their world was riding. It is only from the vantage point of history, when it is possible to sift the evidence and find a cause-and-effect relationship, that a meaningful estimate of what was happening can be made.
"Society, Government, and the State are basically economic phenomena."
We know now that despite the arrogance of the State the economic forces that bear upon social trends were on the job. The production of wealth, the things men live by, declined in proportion to the State's exactions and interferences; the general concern with mere existence submerged any latent interest in cultural and moral values, and the character of Society gradually changed to that of a herd. The mills of the gods grind slow but sure; within a couple of centuries the deterioration of Roman Society was followed by the disintegration of the State, so that it had neither the means nor the will to withstand the winds of historic chance. It should be noted that Society, which flourishes only under a condition of freedom, collapsed first; there was no disposition to resist the invading hordes.
The analogy suggests a prophecy and a jeremiad. But that is not within the scope of this essay, the hypothesis of which is that Society, Government, and the State are basically economic phenomena, that a profitable understanding of these institutions will be found in economics, not in politics. This is not to say that economics can explain all the facets of these institutions, any more than the study of his anatomy will reveal all the secrets of the human being; but, as there cannot be a human being without a skeleton, so any inquiry into the mechanism of social integrations cannot bypass economic law.
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