Thursday, October 01, 2009

Beware socialist snake-oil vendors

A comment from Australia

THOSE on the Left have a new spring in their step. Right across the spectrum of left-wing politics, from Michael Moore to [Australian Prime Minister] Kevin Rudd, they are determined to build momentum for a new social democratic project. On these pages others have spent the past week bouncing around their ideas about progressive economics and the need to resuscitate the moral impulse behind social democracy. Determined not to waste a crisis, the language of the Left is, as always, clever, tapping our emotions with talk of rebuilding a better society. Yet, under new disguises, the same old frauds are being peddled. What is being sold as progressive is regressive if genuine progress is our aim. As the global Left rises up to claim its ideology will prevail, there has never been a more critical time to be reminded that economic freedom sits at the heart of liberty and human advancement.

Most sensible people won’t fall for the far Left’s new anti-capitalist racket. Moore, who is filling his pockets by denouncing capitalism in his latest shock-doc, Capitalism: A Love Story, is preaching to the converted. Ditto economics professor Richard Wolff, star of another documentary, Capitalism Hits the Fan. Delighted that the global recession “creates space for people like me”, Wolff is riding high on the international speaking circuit as a critic of capitalism. Good luck to them.

Most people, however, realise that free markets have lifted people from poverty in numbers never before seen: those subsisting on less than $US3 a day dropped from half the world’s population in 1970 to 17 per cent by 2000. Yet, in the wake of the economic crisis, recent polls suggest a growing fondness for socialism over capitalism, a dramatic change from polls just a few months earlier.

This shift betrays the danger that emanates from those who understand how to reframe the debate with clever, softer words. Political leaders such as Kevin Rudd, not to mention the commentators who have filled these pages during the past week, talk about social democracy, democratic socialism and social justice. Certainly, many of the wiser minds on the Left have evolved from old-fashioned socialists advocating central control of the means of production, but they remain wedded to the belief that a small group of elites can, and must, fashion a better world.

Their form of “progressive economics”, which places government at the centre of the economy, resurfaced most recently at last week’s Group of 20 meeting in Pittsburgh. To be sure, the Prime Minister has done well to ensure that Australia will be included in global economic debates. Greater co-ordination among countries is also admirable. But what if co-ordination involves a larger group of countries making co-ordinated but wrong decisions based on a flawed set of beliefs?

The latest G20 statement was full of talk about a profound crisis justifying drastic action. Governments yet again pledged to “do something”: discourage excessive risk-taking, keep up the stimulus spending, limit executive bonuses and impose tighter regulation of financial markets. Government must now be at the “centre of the economy” to avoid the boom and bust cycles of the past, said the leaders.

The glaring omission from these grand-sounding statements is an acknowledgment that government action played a large part in fuelling the boom in the US housing market that became a bubble in the wider mortgage market and finally burst across the globe. Successive US administrations mandated taxpayer-funded home loans to those who, in more prudent times, would be regarded as clear credit risks. There is a great deal of irony, and even more dishonesty, when social democrats such as Barack Obama and Rudd exploit the crisis to demonise free markets.

As [Australian] Opposition Leader Malcolm Turnbull noted in his speech to the Policy Exchange in London last week, US governments effectively underwrote two-thirds of the US mortgage market using government creations, Fannie Mae and Freddie Mac. The GFC was triggered, in large part, by governments in the US assuming a place at the centre of the economy to pursue well-meaning social goals that delivered disastrous unintended consequences. Without an honest appraisal of the causes of the global meltdown, the case for social democracy is a fraud.

While the Left’s catchcry of social justice is intuitively appealing, there is a reason no philosopher has been able to articulate the principles of social democracy. The closer one looks, the clearer it is that the Left’s language of a new social democratic project is deliberately couched in emotional, ambiguous terms as camouflage for an old project of centralising power in the hands of a few elites who presume to know what the rest of society wants.

Refugees from the Left - men such as Irving Kristol - have a knack for nailing the illiberal tendencies of left-liberal “reforms”. Kristol, who died last week, likened them to amateur poetry, “more concerned with the kind of symbolic action that gratifies the passions of the reformer rather than with the efficacy of the reforms themselves”. Their elephantiasis of moral sentiment means that they are overwhelmingly concerned with “revealing, in the public realm, one’s intense feelings: we must ‘care’, we must ‘be concerned’, we must be ‘committed’. Unsurprisingly, this goes along with an immense indifference to consequences, to positive results or the lack thereof.”

These are not arcane arguments for political philosophers. They go to the heart of human progress and how we live. For example, as Australian Industry Group chief executive Heather Ridout pointed out last week, the union movement’s hardline push against flexibility clauses in new workplace agreements harks back to an era when “if a mother wanted to collect her kids from school early, they would have to ask everyone on the shop floor whether it was possible and get a collective vote on it”. Those who advocate social justice by centralising power necessarily diminish our individual freedom.

With remarkable relevance to today’s debates, William Simon, US treasury secretary under Richard Nixon, wrote in 1978 of the searing experience of the last great recession caused by the “promise-borrow-spend” programs of social engineers on both sides of politics. In A Time for Truth, Simon tracks a recession that deepened on the back of growing government intervention and stimulus spending. The conclusion was clear: “the country ... taught the social engineers a lesson.”

More than 30 years later, history may repeat itself if we allow ourselves to be duped by those preaching a new order of social democracy little different from its forebears. The danger of replicating neo-Keynesian spending policies of the early 70s is we may end up with the disastrous stagflation - economic stagnation, high unemployment and inflation - that defined the middle to late 70s. With that in mind, it is worth repeating what Milton Friedman wrote in the preface to Simon’s book. Critical analysis of social democracy is needed so that “socialist snake oil no longer sells so readily”.



Opportunity or Dependency?

Despite what its detractors might say, the fact remains that the Republican Party is the party of opportunity. Contrast the historical success of this approach with the historical failure of the opposite approach, dependency, taken by the Liberals and currently embraced by the Democratic Party.

America has long been known as the land of opportunity, however there is now a belief among some that it should become the land of dependency. For hundreds of years immigrants risked everything to come to America not because of the programs it offered, but because of the opportunities it provided.

History has shown that when workers and entrepreneurs get to keep most of what they earn, they work harder and put money back into the community in the form of purchases and charitable contributions.

When governments impose income redistribution schemes to “spread the wealth,” workers and entrepreneurs loose their incentive to work as hard and have less to reinvest back into their communities. This is especially true in the case of charitable giving. Why should individuals make voluntary charitable contributions when the government has already invoked involuntary charity?

The concept of dependency is most extreme in communist nations such as the former USSR and Cuba, where the government controls all aspects of one’s employment and income. The individual is completely dependent upon the government for every aspect of his or her livelihood, and even their life, in these repressive regimes. The same dependency occurs to varying degrees in socialist countries all over the world, however the results are always the same, dependency destroys opportunity and economic growth.

In a recent article by Fareed Zakaria in Newsweek magazine, he correctly states that it has been the spread of capitalism in countries like India and China that has lifted millions of people out of poverty. When one studies the economic winners and losers around the world, the winners are those countries that provide opportunities for its citizens and the losers are those countries that make their citizens dependent upon the government and consequently their government dependant upon IMF loans and international subsidies. Cuba has not survived since 1959 because of its vibrant economy. It was subsidized by the USSR for much of its communist history and is now being subsidized by the leftist government of Venezuela.

Clearly, despite its perceived inequities, opportunity provides a far better life for the citizens of a country than dependency, the alternative being proposed by the Obama Administration and the Democratic Party.



BrookesNews Update

The US recession: more unemployment and a sinking dollar : Unemployment is still rising even though Bernanke has been cranking up the Fed's money machine. His policy using inflation to lower unemployment by cutting real wage rates and driving down the dollar has yet to bear fruit. Even if he succeeds any recovery based on these monetary foundations is doomed to be a short-lived one. Maybe too short to save Obama
Is the Keynesian liquidity trap a threat to the US economy? : Negative interest rates are unlikely to move major economies away from a liquidity trap if the pool of real savings is in trouble. Contrary to popular thinking, the threat posed to the major economies is not the liquidity trap, but the government and central bank stimulus policies aimed at countering it
Interest rates and the recession - what you weren't told : One of the reasons that so many analysts got the recession wrong is because failed the connection between interest rates and production. This failure not only caused some of them make absurd claims about a 'dual economy' it also led some of them to even announce the death of the inverted yield curve is still alive. No wonder so many investors lost their shirts
The Democrats anti-tax hypocrisy : The Democrats' opposition to tax cuts borders on the hysterical at time. Apart from their insincerity (the only kinds of tax increases they support are those their fabulously rich supporters can easily avoid) there is the utter bankruptcy of their so-called economic arguments
Who is the president -Barack Obama or David Axelrod? :There is speculation about who is really behind Obama's teleprompter. At the very least it is clear that Obama's Senior Advisor, David Axelrod, shares mouthpiece honors. We frequently hear Robert Gibbs in his role as Obama press agent explain to the news media what the president means during his speech marathon but comments by Axelrod actually sound like the president speaking
Schoolhouse Shariah in the US :Leftwing judges who banned Christianity from schools forcing children to sit through classes on the Islamic religion and the glories of the barbarism that is called sharia law. Needless to say, these Christian-hating judges are Democrat appointees
President Obama and Brazil's Lula's make the "axis of moderation" a servant of the "axis of evil" : In South America a communist axis has been formed with Chavez and Castro as its linchpin and with President Lula of Brazil hovering in the background. This axis has targeted Honduras democracy for destruction. The strange thing is that Obama is supporting this anti-democratic monstrosity. The same man who insults the UK even as British troops are dying along with US troops in Afghanistan is throwing his weight behind a bunch of Latin American Marxist thugs. Now why would he do that?
The religious left finally discovers with radical Islam: "Many members of NCC churches might be surprised to learn of Islamist violence against Christians, since the NCC and most of its member communions have hardly ever discussed it before
A dog of a health care message : It seems that Obama changes his health care message more often than people change their underwear. It was heath care reform, it was insurance reform, then it was health care reform again and then it was insurance reform. Obama has even changed the villains; first it was the Republicans, then it was talk radio, then Fox News and the CBO



Obama backs down from stupid Israel policy: "Almost unnoticed, Binyamin Netanyahu won a major victory last week when Barack Obama backed down on a signature policy initiative. This about-face suggests that U.S.-Israel relations are no longer headed for the disaster I have been fearing. Four months ago, the new U.S. administration unveiled a policy that suddenly placed great emphasis on stopping the growth in Israeli “settlements.” (A term I dislike but use here for brevity’s sake.) Surprisingly, American officials wanted to stop not just residential building for Israelis in the West Bank but also in eastern Jerusalem, a territory legally part of Israel for nearly thirty years. The geniuses of the Obama administration eventually discerned that this double hardening of positions was dooming their na├»ve, hubristic plan to settle the Arab-Israeli conflict within two years. The One’s reconciliation with reality became public on Sept. 22 at a “summit” he sponsored with Abbas and Netanyahu (really, a glorified photo opportunity). Obama threw in the towel there, boasting that “we have made progress” toward settlement of the Israeli-Palestinian conflict and offering as one indication that Israelis “have discussed important steps to restrain settlement activity.” Ironically, Obama supporters have generally recognized his failure while critics have tended to miss it."

China: Public barred from “celebrations” of regime’s anniversary: "Ordinary Chinese citizens hoping to come onto the streets of Beijing to watch a triumphant military parade to celebrate 60 years of Communist rule have been ordered to ’stay at home’ and watch the event on television. Any thoughts that a spontaneous, flag-waving crowd might gather to cheer on the 180,000 marchers as they process through Beijing’s Tiananmen Square have been scotched by security fears ahead of Thursday’s anniversary. ‘People who can go to watch the parade are invited guests with tickets,’ said Ji Lin, the vice-mayor of Beijing, ‘For other citizens the parade will be screened live and the citizens can watch it via TV.’”

FDIC chief wants overdraft fees restricted: "Even as some banks pull back their policies, the head of the Federal Deposit Insurance Corp. is calling for tight restrictions on fees charged for overdrawn checking accounts. In the past week, some of the nation’s largest banks have announced plans to change the way they assess overdraft fees.”

American commander to send 4,000 more troops home as Iraq war winds down: "The top general in Iraq is sending home 4,000 more U.S. troops by the end of October as the American military winds down the six-year war. Army Gen. Ray Odierno said in remarks prepared for a congressional hearing Wednesday that the number of U.S. soldiers in Iraq will total about 120,000 over the next month. He said that will mean about 4,000 fewer troops than are in Iraq now — about the size of an Army brigade.”

NY: Health care workers protest mandatory H1N1 flu shots: "Several hundred health-care workers, civil libertarians and members of anti-vaccine groups on Tuesday railed against a mandate that medical professionals get seasonal and swine-flu vaccines. But the state health commissioner said their arguments are baseless. Nurses and other health-care workers said they shouldn’t be forced to get a vaccine that they don’t believe has been tested appropriately as a condition of keeping their jobs.”

Dodgy Dan loses one: "A New York court on Tuesday dismissed Dan Rather's $70 million breach of contract lawsuit against CBS Corp., noting that the network continued to pay the anchor $6 million a year even after he left the evening news broadcast. Rather sued CBS and its top executives in 2007, claiming he had been removed from his "CBS Evening News" anchor post over a report that examined President George W. Bush's military service. The Appellate Division of the state Supreme Court -- New York's trial-level court -- said the complaint "must be dismissed in its entirety." The five-judge panel ruled unanimously that a lower court "erred in declining to dismiss Rather's breach of contract claim against CBS." The court said there was no breach of contract, because CBS still paid Rather his $6 million annual salary after the disputed 2004 broadcast under the "pay or play" provision of his contract."

CT: The State of corruption: "They used to call Connecticut ‘The Land of Steady Habits,’ but lately it has been more like the land of steady handouts. One mayor received expensive wines and Oriental rugs. A governor scored a free hot tub and cathedral ceilings; his aide landed a stack of gold coins. And a state treasurer finagled … well, money. They are just a few of the prominent city and state officials collared in corruption probes in recent years. But their downfalls, and resulting efforts to reform ethics rules, apparently have not stemmed the tide of charges against public servants. The latest to be arrested — for the second time — is Mayor Eddie A.Perez, for alleged extortion. The spate of scandals is a source of chagrin for the state, and the sting of each new nickname — ‘Corrupticut,’ ‘Louisiana with foliage’ — worsens with each new corruption arrest and indictment.”


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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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