The tumor on America that Washington D.C. has become
Martin Hutchinson below:
I have moved from Vienna, VA., a suburb of Washington DC to Poughkeepsie NY, a semi-suburb (it’s 73 miles away) of New York. Many have clearly regarded this as an eccentric choice, and much of the motivation stems from things like hating the Washington summer more than the Poughkeepsie winter that are personal to each of us. Nevertheless, there is also a philosophical background for the move, in that I believe the rapid growth of the Washington area to be profoundly unhealthy.
Washington’s unhealthiness has been highlighted during the Great Recession, for example by the housing market. Other regions of the country suffered a severe real estate price decline in 2006-09, except for a few places such as Houston that had not previously enjoyed a boom. The Washington area enjoyed an extraordinary 150% price gain in 2000-06 according to the S&P Case-Shiller data, third after the Miami and Los Angeles areas and more than Phoenix, San Francisco or Las Vegas. Unlike those other regions, however, its price decline in 2006-09 was considerably less, 33% compared to 47% in Miami, 56% in Las Vegas and 42% in Los Angeles. Then after 2009, the recovery in Washington was considerably stronger than in other areas, with prices now up 10% from the bottom and still continuing to rise while house prices in most other areas decline.
The explanation, of course, is that Washington is not on the same economic cycle as the rest of the country. There was some pretence in the late 1990s that northern Virginia had developed a substantial tech sector, but the reality was that most of the sector was either evanescent (like AOL) or highly dependent upon government contracting or, like MicroStrategy, both. The reality is that when government expands, Washington does well, and vice versa.
You can see this in its local real estate market also. There is very little housing dating from the 1920s, a major real estate boom era around most East Coast cities, but a period of well-run, economical government. Conversely, there is a vast amount of housing, generally rather small and unattractive with very mean rooms, dating from the New Deal and wartime 1930s and 1940s. The 1960s, genesis of the two houses we lived in around Vienna, produced the Great Society and another housing boom of rather larger houses, most of them shoddily built. Then the 1980s was another period of recession, when Washington house prices were far below those around New York and little building took place. Finally the Bush years, stretching into the Obama years, saw a massive building boom and the apotheosis of the Washington area McMansion – huge, shoddily built and packed tightly together on the suddenly expensive land.
Whereas the modest and unattractive 1940s housing was inhabited mostly by government bureaucrats when first built, as were the larger 1960s offerings and some of the more reasonable sized modern housing stock, the true market for McMansions was not those working in government, let alone private sector entrepreneurs but the parasites, the swarm of lobbyists (whose numbers doubled under the supposedly limited-government Bush) and lawyers who have come to dominate the big money around Washington. Like Detroit in 1900-1915, Washington in recent years has been a boomtown, and the creaking infrastructure and monstrous traffic delays are the result of this.
The other special feature of Washington life is the nature of its inhabitants. They have far higher academic qualifications than the rest of mankind, even those lucky residents of the up-market suburbs around New York and San Francisco. Fairfax County, Virginia has 55% college graduates, compared with 41% in Westchester County, New York and 51% in Marin County, California. Fairfax residents would argue that this factor justifies them in having the nation’s highest average household income -- $107,000, compared with a mere $79,000 in Westchester and $90,000 in Marin.
Washington area residents will argue that their greater qualifications justify their higher earnings, but from inspection the percentage of college graduates is not sufficiently higher in Fairfax than in the very affluent Marin County for any such premium to be justified. Furthermore, there is no living cost differential that would justify the income differential; indeed rather the opposite as the average owner-occupied residence in Marin is valued at $514,600 compared to $233,000 in Fairfax. Fairfax County real estate is overpriced – this was another reason for leaving the place – but is nothing like as lunatic economically as the fancier bits of California – or indeed south-east England.
As I have remarked before in these columns the Washington area is a kind of anti-Hollywood. Whereas Hollywood is full of people with room-temperature IQs but attractive looks and winsome personalities, the Washington area is full of PhD-credentialed trolls. Thus not only are the academic qualifications of Fairfax County not sufficiently superior to those of Marin County to justify their higher earnings, but Washington-area people are often seriously lacking in other qualifications that make for a commercially successful existence, such as looks, charm, salesmanship and workaholism. Plenty of insurance, real estate and used car salesmen lack substantial academic qualifications, but are nevertheless sufficiently well endowed in other respects to make very large amounts of money indeed, whatever their defects would be as GS-15s.
Washington is thus a region whose inhabitants are paid more than their qualifications are worth, do particularly well in recessions, and often lack the qualities that make them attractive to others. It is thus not surprising that they have little empathy with the travails of those outside Washington whose lives are entangled in the maelstrom of this very serious and damaging recession.
Far from maintaining sound monetary and fiscal policies, which would enable ordinary businesses to recover their footing and begin to grow again, they pursue a chimera of negative real interest rates and gigantic budget deficits that produces high bureaucrat employment, a surface health in financial markets, and long-term unemployment for everyone else.
Far from realizing that in a globalized world market, less skilled and older workers are especially vulnerable, they persistently refuse to enforce immigration laws, producing a large illegal immigrant population that can satisfy Fairfax County’s insatiable demand for maids and gardeners, while driving down wages and job opportunities for low-skill labor to Third World levels.
Far from attempting to relieve burdens on small business and allow them to produce the jobs that are needed, they produce a series of health, environmental and labor regulation schemes that impose massive additional costs on the businesses that produce the country’s wealth.
These impositions are not particularly generated by one or other political faction; they are the result of Washington’s cocooning from the rest of its countrymen. Washington insiders like Newt Gingrich, who has lived within the Beltway for thirty years, cross party lines to support these economically damaging schemes. Conversely a few “blue dog” Democrats whose ties remain outside Washington oppose them, like Joe Manchin (D.-W.Va.) who while campaigning for his West Virginia Senate seat took a shotgun to a copy of his own party’s cockamamie environmental legislation.
It is not surprising that outsiders find U.S. politics dysfunctional; it is dominated by a pampered super-class of lobbyists, lawyers, most politicians and senior bureaucrats, all of which are not only protected from the economic forces that afflict the rest of the economy but actually benefit, both relatively and in absolute terms, from hard times in the U.S. economy as a whole and the “stimulus” schemes for which they provide an excuse. The same effect can be seen in Brussels, when I knew it in the 1970s a very pleasant modestly wealthy capital of a small country with good restaurants, a fine banking system and legendarily affluent “Belgian dentists” who were the major investing force behind the early Eurobond market. Needless to say, Brussels is today richer per capita, but its wealthy now are not dentists but bureaucrats, lawyers and lobbyists, sleek, pampered and utterly cut off from the people for whom they invent damaging regulations.
The idea, pioneered by the Founding Fathers, of a capital city inhabited only by statesmen and bureaucrats, without any other significant economic base, is a very dangerous one. While government is small, it produces the quirky charm of nineteenth century Washington or 1949-99 Bonn – lacking as they did most big-city amenities, they were universally detested by their inhabitants, who left them at weekends whenever possible. However as government grows, it becomes itself a sufficiently large employer to finance a major city – with amenities like the Kennedy Center and the Washington Metro that can easily be paid for by beyond-Beltway taxpayers who gain no benefit from them. Eventually they become bureaucrat Xanadus, like Brasilia, Napyidaw (Burma) or Astana (Kazakhstan) in which government, freed from significant outside pressure, can indulge its fantasies at the expense of a people kept safely remote.
My new abode, New York’s Dutchess County, is only half as rich as Fairfax County, with commensurately lower house prices (yippee!) and only half the proportion of university graduates. While it has a couple of large businesses and several colleges, most of its richest inhabitants are successful used car dealers and realtors, whose depredations extend only to their customers. I look forward eagerly to its modest amenities.
Major Israeli firm helping Iran?
You'd have to be a Clinton to think so
U.S. Secretary of State Hillary Clinton on Tuesday slapped sanctions on seven companies that allegedly do business with Iran – two of them companies with strong Israeli ties.
Among those singled out by Clinton for alleged business ties with Iran were the Ofer Brothers Group, controlled by Yuli Ofer, and the largest stockholder in Mizrachi-Tefachot Bank, and the Tanker Pacific group, located in Singapore and owned by Yuli's brother Sami Ofer, who also has a controlling interest in the Israel Corporation, Zim, Israel Chemicals, Dead Sea Industries, and Royal Carribean Cruise Lines.
The sanctions were imposed on shipping and utility companies suspected of violating U.S. sanctions against Iran, which forbid selling ships or energy exploration equipment to Tehran. A State Department official said that the sanctions on the Ofers' companies date back to September 2010, when the companies allegedly transferred to Iran an oil tanker in a deal worth $8.65 million.
It would have been easy enough for the companies to investigate whether the people they sold the ship to were legal entities, but the fact that they did not indicates that they intended for the deal to go through, the State Department said.
In a statement, the Ofer brothers categorically denied the charges. “We have never sold ships to Iran, and well-respected Israeli officials will certify this,” the statement said.
Iceland the inspiration
In April, the people of Iceland went to the polls, decisively rejecting a bailout of British and Dutch investors who lost billions in the Icesave bank in 2008. Iceland is the rare example of a nation that allowed its banks to fail in the wake of the financial crisis.
Now it appears to be an example for the whole world, and has inspired protests in Spain and Italy, a movement called M15. Some of the movement’s slogans include, “When we grow up we want to be Icelanders,” “don’t rescue the banks,” “let the culprits pay the crisis,” “banks rob us,” and “bipartisanship is dictatorship”.
While some in the media have characterized the movement as left-wing, it appears to be appealing to individuals across the political spectrum, young and old. One video promoting the movement spoke out against both of the major parties in Spain, the center-right Popular Party, and the leftist PSOE.
And dispelling the notion entirely, the group’s founding website, “Real Democracy Now,” articulates a broad message for folks of all political stripes: “Some of us consider ourselves progressive, others conservative. Some of us are believers, some not. Some of us have clearly defined ideologies, others are apolitical, but we are all concerned and angry about the political, economic, and social outlook which we see around us: corruption among politicians, businessmen, bankers, leaving us helpless, without a voice.”
This all sounds quite familiar. In this narrow sense, M15 appears to at least in part resemble America’s tea party movement. It’s a revolutionary sentiment that surpasses party factions.
These protesters, like the tea party, oppose efforts to bail out international banks that bet poorly on housing and sovereign debt. They also recognize — and oppose — the tyranny of the few that has emerged in the wake of the sovereign debt crisis where financial institutions refuse to take any losses on their bad investments.
The Left are still bashing GWB
Their "principles" are always changing but their hate is permanent
Last week I was called by Peter Stone of iWatch, the online ezine of the generally far left Center for Public Integrity. Mr. Stone asked for my opinion on the refusal of George W. Bush to attend the Obama festivities at Ground Zero after the killing of bin Laden. Mr. Stone suggested that Bush's excuse, 'other commitments,' was somehow dishonest given that he was in New York City a few days later giving several speeches at more $100,000.00 per. Stone did note as an aside that Clinton had also declined the Obama invitation citing the same excuse, and that he too was in the City shortly after giving equally lucrative speeches.
I responded that I thought it was inappropriate for Obama to be at Ground Zero considering that he had tried to get the Guantanamo prisoners, who have already admitted guilt, removed to civilian trials in Lower Manhattan. Also that Obama's self glorification was hypocritical since harsh interrogation had led to bin Ladin and Obama was still pursuing prosecutions against the very same CIA agents whose methods obtained that information.
I also emphasized to Stone that I would not want my comments to be part of a one sided denunciation of Bush, since, as he himself pointed out, Clinton was exploiting his ex-presidency in exactly the same way as Bush. Mr. Stone assured me that his piece was to be unbiased, critical of both.
Knowing the generally far left bias of Center of Public Integrity I of course had very low expectations, and I was not disappointed on reading Stone's column. His May 20 column was entitled: After Skipping Ground Zero Event With Obama, Bush Made Three Paid Speeches .
Microsoft Word informs me that Stone's article is 1051 words in length. All but three sentences of it are devoted to attacking G.W. Bush. As an additional example of 'lack of bias,' next to the column is a sidebar called "Top 10 Failures of the Bush Administration" with a live link to an article on that subject.
NY: Power company charges “flag fee” to town honoring war hero: "A New York community that displayed American flags on utility poles to honor a fallen hero is outraged after the Long Island Power Authority sent them a bill -- for using their poles. 'I was pretty shocked,' said Peter Reich, a councilman in the Long Island community of Shelter Island. 'It’s the most ludicrous thing.' The flags were hung last year for the funeral of Army 1st Lt. Joseph Theinert. The Shelter Island native was killed while on active duty in Afghanistan"
Will comparative effectiveness research kill more people than it helps?: "Better health care at lower cost. That's what comparative effectiveness research promises, but can it deliver? A new study argues that federal comparative effectiveness research won't generate cheaper, better medical care to the American public. Instead, it will force cuts in pharmaceutical and medical device research and development, resulting in 32 million lost years of life and economic losses totaling $1.7 trillion."
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