Wednesday, June 01, 2011

Seductive Beliefs

Thomas Sowell

One of the painfully revealing episodes in Barack Obama's book "Dreams From My Father" describes his early experience listening to a sermon by the Reverend Jeremiah Wright. Among the things said in that sermon was that "white folks' greed runs a world in need." Obama was literally moved to tears by that sermon.

This sermon may have been like a revelation to Barack Obama but its explanation of economic and other differences was among the oldest-- and most factually discredited-- explanations of such difference among all sorts of peoples in all sorts of places. Yet it is an explanation that has long been politically seductive, in countries around the world.

What could be more emotionally satisfying than seeing others who have done better in the world as the villains responsible for your not having done as well? It is the ideal political explanation, from the standpoint of mass appeal, whether or not it makes any sense otherwise.

That has been the politically preferred explanation for economic differences between the Malay majority and the more prosperous Chinese minority in Malaysia, or between the Gentile majority and the Jewish minority in various countries in Europe between the two World Wars.

At various other times and places, it has been the preferred explanation for the economic differences between the Sinhalese and the Tamil minority in Sri Lanka, the Africans and the Lebanese in Sierra Leone, the Czechs and the Germans in Bohemia and numerous other groups in countries around the world.

The idea that the rich have gotten rich by making the poor poor has been an ideological theme that has played well in Third World countries, to explain why they lag so far behind the West.

None of this was original with Jeremiah Wright. All he added was his own colorful gutter style of expressing it, which so captivated the man who is now President of the United States.

There is obviously something there with very deep emotional appeal. Moreover, because nothing is easier to find than sins among human beings, there will never be a lack of evil deeds to make that explanation seem plausible.

Because the Western culture has been ascendant in the world in recent centuries, the image of rich white people and poor non-white people has made a deep impression, whether in theories of racial superiority-- which were big among "progressives" in the early 20th century-- or in theories of exploitation among "progressives" later on.

In a wider view of history, however, it becomes clear that, for centuries before the European ascendancy, Europe lagged far behind China in many achievements. Since neither of them changed much genetically between those times and the later rise of Europe, it is hard to reconcile this role reversal with racial theories.

More important, the Chinese were not to blame for Europe's problems-- which would not be solved until the Europeans themselves finally got their own act together, instead of blaming others. If they had listened to people like Jeremiah Wright, Europe might still be in the Dark Ages.

It is hard to reconcile "exploitation" theories with the facts. While there have been conquered peoples made poorer by their conquerors, especially by Spanish conquerors in the Western Hemisphere, in general most poor countries were poor for reasons that existed before the conquerors arrived. Some Third World countries are poorer today than they were when they were ruled by Western countries, generations ago.

False theories are not just an intellectual problem to be discussed around a seminar table in some ivy-covered building. When millions of people believe those theories, including people in high places, with the fate of nations in their hands, that is a serious and potentially disastrous fact of life.

Despite a carefully choreographed image of affability and cool, Barack Obama's decisions and appointments as President betray an alienation from the values and the people of this country that are too disturbing to be answered by showing his birth certificate.

Too many of his appointees exhibit a similar alienation, including Attorney General Eric Holder, under whom the Dept. of Justice could more accurately be described as the Dept. of Payback.



Mediscare: The Surprising Truth

Republicans are being portrayed as Medicare Grinches, but ObamaCare already has seniors' health care slated for draconian cuts

The Obama administration has repeatedly claimed that the health-reform bill it passed last year improved Medicare's finances. Although you'd never know it from the current state of the Medicare debate—with the Republicans being portrayed as the Medicare Grinches—the claim is true only because ObamaCare explicitly commits to cutting health-care spending for the elderly and the disabled in future years.

Yet almost no one familiar with the numbers thinks that the planned brute-force cuts in Medicare spending are politically feasible. Last August, the Office of the Medicare Actuary predicted that Medicare will be paying doctors less than what Medicaid pays by the end of this decade and, by then, one in seven hospitals will have to leave the Medicare system.

But suppose the law is implemented just as it's written. In that case, according to the Medicare Trustees, Medicare's long-term unfunded liability fell by $53 trillion on the day ObamaCare was signed.

But at what cost to the elderly? Consider people reaching the age of 65 this year. Under the new law, the average amount spent on these enrollees over the remainder of their lives will fall by about $36,000 at today's prices. That sum of money is equivalent to about three years of benefits. For 55-year-olds, the spending decrease is about $62,000—or the equivalent of six years of benefits. For 45-year-olds, the loss is more than $105,000, or nine years of benefits.

In terms of the sheer dollars involved, the law's reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today's 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.

What does this mean in terms of access to health care? No one knows for sure, but it almost certainly means that seniors will have difficulty finding doctors who will see them and hospitals who will admit them. Once admitted, they will enjoy fewer amenities such as private rooms and probably a lower quality of care as well.

Seniors attend a "Medicare Monday" seminar in Centennial, Co., to learn how federal health care reform will affect Medicare and their personal health insurance plans.

Are there better ways of solving the problem? The graph nearby shows three proposals, including the new law, and compares them to the current system. For the past 40 years, real Medicare spending per capita has been growing about two percentage points faster than real gross domestic product (GDP) per capita. Since real GDP per capita grows at just about 2%, that means Medicare is growing at twice the rate of our economy—and is clearly unsustainable. If nothing is done, we'll see a doubling of the Medicare tax burden in less than 20 years.

There are currently an array of proposals to slow Medicare spending to a rate of GDP growth plus 1%. These include a proposal by President Obama's debt commission, chaired by Bill Clinton's former chief of staff, Erskine Bowles, and former Sen. Alan Simpson; one by former Clinton budget director Alice Rivlin and Rep. Paul Ryan (R., Wis.); and another by former Sen. Pete Domenici and Ms. Rivlin. Unlike the Medicare Trustees, the Congressional Budget Office (CBO) also scores ObamaCare at GDP plus 1%.

Of greater political interest is the House Republican budget proposal, sponsored by Mr. Ryan. This proposal largely matches the new law's Medicare cuts for the next 10 years and then provides new enrollees with a sum of money to apply to private insurance (premium support). Even though the CBO assumed premium support would increase with consumer prices (price indexing), the resolution that House Republicans actually voted for contains no specific escalation formula. A natural alternative is letting premium support payments grow at the annual rate of increase in per-capita GDP (GDP indexing).

In light of the heated rhetoric of recent days, it is worth noting that for everyone over the age of 55, there is no difference between the amount of money the House Republicans voted to spend on Medicare and the amount that the Democrats who support the health-reform law voted to spend. Even for younger people, the amounts are virtually identical with GDP indexing.

The law's spending path depends on making providers pay for all the future Medicare shortfalls. But since no one can force health-care providers to show up for work, short of a health-care provider draft this reform ultimately cannot succeed. The House Republican path, on the other hand, would make a sum of money available to each senior to choose among competing private plans—much the way Medicare Advantage provides insurance today for about one out of every four Medicare beneficiaries.

That's a good starting point. But we believe that a truly successful overhaul of Medicare will require at least three additional elements.

First, there must be general system reform. You cannot credibly hold senior health-care spending way below everyone else's spending, nor can we make taxpayers pay for all the future elderly's health care. We must create a reform that reduces the rate of growth of health-care costs for everyone—young and old.

The best reform proposal for the non-elderly, interestingly, is a health plan Mr. Ryan has cosponsored with Sen. Tom Coburn (R., Okla.). It would give all Americans the same tax relief for health insurance and encourage market forces to constrain costs.

Second, if federal spending is to be contained, young people need to be able to save in tax-free accounts during their working years in order to replace the dollars they will not be getting from Medicare.

Finally, providers need to be able to repackage and reprice their services under Medicare in ways that lower costs and improve quality. Anyone who saves Medicare a dollar should be able to keep 25 cents (or some other significant amount). Once that happens, private-sector innovations will spring up overnight.



A Time for Truth

My hope for a GOP Presidential candidate next year is of course Sarah Palin but the media appear to have put her offside with centrist voters by misrepresenting her enthusiasm as naivety so we may have to look at other candidates -- JR

"This is a brilliant and passionate book by a brilliant and passionate man. It is a profound analysis of the suicidal course on which our beloved country is proceeding – so clearly and so simply written, with such eloquence, such obvious sincerity, such a broad base in recorded fact and personal experience, that it is hard to see how any reasonable man who wishes his fellow citizens well can fail to be persuaded by it."

The book, about which Nobel Laureate Milton Friedman felt so passionately, was written in 1977. At the time, we were told gas prices would never come down, the American dream was on the decline, unemployment in America would perpetually be at high levels, and big government was the only answer.

The parallels to our current time are striking. The book was William E. Simon's A Time for Truth. In the course of a presidential campaign, getting the message right is one challenge. It's easier than following through with policies that match the rhetoric. But give former Governor Tim Pawlenty credit for having picked a campaign theme that rises to the level of our nation’s challenges: A Time for Truth.

Simon detailed how “irrational edicts” from the federal government "paralyzed and partially destroyed our energy industries, leading to shortages, [and] danger to the welfare of the citizens."

Three decades later, these words still hold true. The election of President Barack Obama saw a rapid increase in regulations and irrational edicts. His overhauls of the financial, energy and health care industries shifted the balance of power toward government and away from the entrepreneurial spirit that Simon advocated and our nation’s founders envisioned.

If any Republican nominee is to succeed, he or she must adopt Simon’s vision. America needs a staunch defender of what our nation’s founders proposed who will continuously speak out against President Obama’s takeover of our country. The need for clarity and conviction cannot be understated either, because there is one profound and frightening difference between Simon’s era and now.

As Simon notes, despite the politics of his era, there was "a substantial awareness in our political leadership that our fiscal and economic policies have gone awry and that the multiple promises of cradle-to-grave security for our citizens can no longer be responsibly expanded."

Now, of course, the Washington Establishment is intent on creating new entitlements (see Obamacare) and centralizing power. The Establishment leads the charge in vilifying any serious attempt to reform the very programs that threaten to bankrupt our country. With government-dependency in America at record levels, the country is at a crossroads.

Simon, reflecting upon his interaction with Soviet officials, explained there was a "deep, unnamable difference between…men who have never known freedom and men who were born free." It was then that Simon "understood down to my very roots how important my liberty was to me." If the government successfully lays the "groundwork for an economic dictatorship," our children and grandchildren will never know the freedoms previous generations took for granted.

Simon concludes “the overriding principle to be revived in American political life is that which sets individual liberty as the highest political value – that value to which all other values are subordinate and that which, at all times, is to be given the highest 'priority' in policy discussions.”

From Simon's book to Pawlenty's campaign, it is indeed a time for truth. And kudos to Tim Pawlenty for taking on some of presidential politics most sacred cows. He deserves credit for his recent speeches in Iowa, Florida, and at the Cato Institute. In Iowa, Pawlenty discussed the need to end ethanol subsidies.

Considering the biofuel industry accounts for nearly one-tenth of Iowa’s economy, this was the opposite of political pandering. Pawlenty spoke in Florida about the need to reform entitlements. In a state with the largest population of senior citizens in the country, and one that plays a significant role in both the Republican primary and general elections, Pawlenty's proclamation defies conventional political wisdom, but rises to the challenges we face.

Last week, at the libertarian Cato Institute, Pawlenty was asked about our nation's defense budget. "I’m not one who is going to stand before you and tell you we should cut the defense budget," Pawlenty said. Good for him. As our military's responsibilities are increasing, it is simultaneously being hollowed out. This is the truth we need to hear.

Pawlenty is coming out of the woodwork as a mild-mannered conservative with clear solutions. He will have to fully develop those solutions and demonstrate his conviction, but at a time where demagoguery and political grandstanding are rampant, a candidate who speaks the blunt-honest truth about the crisis we're in and the tough decisions ahead might be what the country needs. He has plenty of blemishes on his record that will need to be explained, but that is what the next year will be about.

For now, after years of Washington giving easy answers and passing on difficult decisions, it is indeed a time for truth. Tim Pawlenty’s presidential campaign is off to a great start.



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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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