Wednesday, September 01, 2010

The Party of Know-Nothings

"Ideas may be cut loose from experience in two senses: either they have no roots in experience, or they are not submitted to the test of experience. Either way, they are free to be foolish." So wrote Jeane Kirkpatrick in the Introduction to her landmark book, Dictatorships and Double Standards (New York, 1982, p. 10).

Kirkpatrick's statement applies perfectly to the band of naïve idealists now in change of our government. The youthful dreamers guiding the Obama administration have almost no private-sector experience. Like Obama himself, the Cabinet and host of czars who direct policy have spent their lives in politics or academia, be it as Democratic political consultants, professors, nonprofit directors, or community organizers.

Lack of real-world experience may actually be the primary criterion for employment in the Obama White House. Secretary of the Treasury Timothy Geithner, for example, has no work experience outside government. He joined the Department of Treasury in 1988, three years after graduating from college and traveling about Asia, and he has continued in government service ever since. Lawrence Summers, Geithner's invisible twin on the economic team, has no more experience than Geithner. His entire work experience can be summed up in a few words: professor, World Bank advisor, government employee. Even more limited is the experience of Cass Sunstein, regulatory czar and close friend of the president. His résumé can be inscribed on a postage stamp: professor, 1981 to present.

Then there are the hardcore politicos whose relation to the private sector is not just distant, but hostile. Rahm Emanuel, Obama's Chief of Staff, worked on the Illinois U.S. senate campaign of Paul Simon even before completing his university education. From there he moved to the Daley mayoral campaign in 1989 and the Clinton White House in 1993.

For his part, David Axelrod, Obama's closest political advisor, has spent his entire career in the world of Democratic politics. Beginning as a political writer for the Chicago Tribune, he soon established himself as an independent consultant, serving on the campaigns of such leftist luminaries as John Edwards and Eliot Spitzer, as well as on the U.S. Senate and presidential campaigns of Barack Obama. No one in Obama's inner circle has less experience or appreciation of the private sector than Axelrod.

Another key figure is Obama's long-time adviser, Valerie Jarrett. Ms. Jarrett (who, by the way, was born in Iran and from childhood spoke Persian as a first language) spent most of her career in Chicago politics before following Obama to the White House. She has become wealthy by consulting with government clients and maneuvering the politicized world of Chicago real estate development.

From Geithner to Jarrett, all of Obama's advisors have one thing in common: they have devoted their lives to the expansion of government. They believe -- quite "passionately," as Axelrod has put it -- that government is the solution to America's problems. Their political DNA is deeply antagonistic to the free market and to the assumption that monetary incentives spur productivity and growth. Professors and politicos, they know nothing of how to manage a business, and they certainly know nothing of how to balance a budget.

Most ordinary human beings know a great deal more than Obama's circle of advisors. They understand that it is the private sector, not government, that produces goods and services. Instinctively, they know there's something wrong with the idea that government "creates" jobs. They understand that subsidies for biofuel start-ups and failing banks are wasteful and wrong, and they know that more subsidy is only throwing good money after bad.

They also know that government revenue comes out of somebody's pocket. Only those who have spent their entire lives in government service or in academe don't understand this. The trillion dollars in stimulus of which Obama is so proud -- he still claims it created or saved millions of jobs even as the Labor Department reports that four million jobs disappeared since the stimulus was signed -- was confiscated from the paychecks of working Americans. It was spent to expand welfare payments to those who do not work, to preserve the jobs of inefficient unionized workers, and to fund favored projects of Democratic political contributors.

Americans who have to work for a living understand that Obama's stimulus spending is political payola on an epic scale. They also understand that it is capitalism that produces wealth and that the profit motive is the key to wealth creation.

Without the opportunity to earn a profit -- to be paid for their labor and rewarded for their investment -- workers would not work, and investors would not invest. For this reason, a society that disdains capitalism will soon find its standard of living faltering. Fewer goods will be produced, supply will be constrained, and prices will rise. With prices rising, goods will become less affordable, and less will be purchased. The result is a vicious cycle of declining production and rising prices.

What I am describing is the classic state of affairs within all socialist economies. Goods become scarce, and so, as government attempts to equalize supply, they are rationed. Since rationed goods are by definition sold at below-market prices, more and more goods find their way to the black market, where they are sold to the highest bidder. Instead of creating equality, socialism always produces a two-tiered system. On the black market, for those who can afford them, goods are plentiful. For the rest of the population, they are scarce.

It is this two-tiered system toward which we are heading. In only twenty months, Obama has succeeded in shifting one hundred million Americans into greater dependency on government. One hundred million Americans now receive unemployment benefits, expanded welfare payments and child credits, food stamps, housing subsidies, Medicaid, and (soon enough) ObamaCare. In essence, they are the recipients of rationed goods within a state-run economy. Over time, they will become less well-off as wealth continues to be sapped from the private sector and the production of goods is curtailed. They will be serving life sentences in the prison of socialism.

For the political elite, of course, no such prison exists. Once it becomes apparent that the economy is not coming back, those who have engineered the miracle of Obamanomics -- long-term unemployment rates of 17%, stagnant growth, and crushing deficits -- will obtain new political appointments, move on to lucrative consulting jobs, or simply return to their tenured university positions. Comfortable and well-fed, they will continue to prosper even as they have learned nothing from the failure of their policies.

As for the rest of us, we will pay for their lack of experience.



'Clunkers' was a classic government folly

by Jeff Jacoby

IN THE MARKET for a used car? Good luck finding a bargain: The price of "pre-owned" vehicles has climbed considerably over the past year. According to, a website for car-buyers, a 3-year-old automobile today will set you back, on average, close to $20,000 -- a spike of more than 10 percent since last summer. For some popular models, the increase has been much steeper. In July, a used Cadillac Escalade was going for around $35,000, or nearly 36 percent over last July's price.

Why are used-car prices rocketing? Part of the answer is that demand is up: With unemployment high and the economy uncertain, some car-buyers who might otherwise be looking for a new truck or SUV are instead shopping for a used vehicle as a way to save money.

But an even bigger part of the answer is that the supply of used cars is far lower than it would be if your Uncle Sam hadn't decided last year to destroy hundreds of thousands of perfectly good automobiles as part of its hare-brained Car Allowance Rebate System -- or, as most of us called it, Cash for Clunkers. That was the program under which the government paid consumers up to $4,500 when they traded in an old car and bought a new one with better gas mileage. The traded-in cars -- which had to be in drivable condition to qualify for the rebate -- were then demolished: Dealers were required to chemically wreck each car's engine, and send the car to be crushed or shredded.

Congress and the Obama administration trumpeted Cash for Clunkers as a triumph -- the president pronounced it "successful beyond anybody's imagination." Which it was, if you define success as getting people to take "free" money to make a purchase most of them are going to make anyway, while simultaneously wiping out productive assets that could provide value to many other consumers for years to come. By any rational standard, however, this program was sheer folly.

No great insight was needed to realize that Cash for Clunkers would work a hardship on people unable to afford a new car. "All this program did for them," I wrote last August, "was guarantee that used cars will become more expensive. Poorer drivers will be penalized to subsidize new cars for wealthier drivers." Alec Gutierrez, a senior analyst for Kelley Blue Book, predicted that used-car prices would surge by up to 10 percent. "It's going to drive prices up on some of the most affordable vehicles we have on the road," he told USA Today. In short, Washington spent nearly $3 billion to raise the price of mobility for drivers on a budget.

To be sure, Cash for Clunkers gave a powerful jolt to car sales in July and August of 2009. But it did so mostly by delaying sales that would otherwise have occurred in April, May, and June, or by accelerating those that would have taken place in September, October, or later. "Influencing the timing of consumers' durable purchases is easy," Edmunds CEO Jeremy Anwyl commented a few days ago in a blog post looking back at the program. "Creating new purchases is not." Of the 700,000 cars purchased during the clunkers frenzy, the estimated net increase in sales was only 125,000. Each incremental sale thus ended up costing the taxpayers a profligate $24,000.

Even on environmental grounds, Cash for Clunkers was an exorbitant dud. Researchers at the University of California-Davis calculated that the reduction of carbon dioxide attributable to the program (under best-case assumptions) cost at least $237 per ton. That is more than 10 times the going rate on the international market, where carbon emissions credits currently cost about $20 per ton.

Using Department of Transportation figures, meanwhile, the Associated Press calculated that replacing low-mpg "clunkers" with new cars getting higher mileage would reduce CO2 emissions by around 700,000 tons a year -- less than Americans emit in a single hour. Likewise, the projected reduction in gasoline use amounted to about as much as Americans go through in 4½ hours. (And that's only if you assume -- contrary to historical experience -- that fuel consumption decreases when fuel efficiency rises.)

When all is said and done, Cash for Clunkers was a deplorable exercise in budgetary wastefulness, asset destruction, environmental irrelevance, and economic idiocy. Other than that, it was a screaming success.



Obama's Stimulus Fails across the board

June, July and August were supposed to be the months. Democrats clinging to re-election hopes just knew that between the artificial job gains from Census Department hiring, the impact of their almost $900 billion in “stimulus” spending, and the tens of billions spent in other programs, that the economy would be roaring, people would be working, and the path to November would be made easier. Their so-called “Recovery Summer” was going to save the day.

Now, as we approach Labor Day, the results are in. Big Government has failed. Gross Domestic Product, which is the standard measure of economic growth in the country, was revised downward in the second quarter of the year from 2.4% to an estimated 1.6% as private sector employers are opting against expansion in favor of a cautious course.

It’s no wonder. Companies are staring in the face of a basic cost of business increases anticipated in 2011 due to the passage of the health care law.

Unemployment remains at 9.5 percent, with 45 percent of the unemployed having been out of work for 27 weeks or more. To put these numbers in real terms, the Bureau of Labor Statistics reports that 6.6 million Americans or the entire population of Indiana have been unemployed for 27 weeks or more.

Americans for Limited Government’s Adam Bitely has been tracking state by state “Recovery Summer” data releasing a daily report on a different state with California, Nevada, Colorado, Florida and Delaware being already covered. South Carolina and Ohio are slated to covered this week before Labor Day.

The startling results show the economy in virtual free fall over the past 18 months, as Obama, Pelosi and Reid have opted for propping up state and local government spending instead of engaging in private sector job creation measures.




US stocks have worst August since 2001: "The US stock market ended its worst August since 2001 with meagre gains overnight after minutes from the latest Federal Reserve meeting showed officials' increasing concern about the economy. The Dow Jones Industrial Average was up 4.99 points (0.05 per cent) at 10,014.72 when markets settled, after teetering below the 10,000 point threshold in the final hours of trading. The broader S&P 500 index gained 0.41 point (0.04 per cent) at 1049.33, while the tech-rich Nasdaq composite index shed 5.94 points (0.28 per cent) to 2114.03, plunging below the flatline after making modest gains.".... But the week's most tensely-awaited economic data will be Friday's employment report, with most analysts forecasting non-farm payrolls to fall by 118,000 in August and unemployment to edge up to 9.6 per cent.

Official sexual assaults courtesy of Obama's TSA: "US officials are using "invasive and aggressive" searches for those who refuse to go through their controversial full body "naked" X-ray scanners. The “front-of-the-hand, slide-down technique” amounts to an indecent assault in any other context and shows an alarming disregard for privacy by the US Transportation Security Administration (TSA), civil libertarians say... While the TSA says it has received “very few” formal complaints about the new search techniques, Mr Vines called for a halt to the procedure until they could reveal why it was needed. “The actions of the US TSA would amount to indecent assault if performed by anyone else in the community," he said."

Modern-day “capital strike” : "Pundits have been speculating for months that the United States is undergoing a ‘capital strike’ of the sort that occurred during the Great Depression — that is, frightened and confused by government policies and the (often contradictory) directions in which they tug the economy, investors are sitting on their money rather than putting it into new and existing ventures that might generate jobs and prosperity. That speculation appears to be firming up into reality, as new reports indicate both disenchantment with the Big O among his well-heeled backers and (likely related) widespread unwillingness to invest in the U.S. economy.”


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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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