Leftists never learn
The economic crisis that began in 2008 has thrown up several questions. How can we live with banks that are too big to fail? How can we support financial institutions during a liquidity panic without creating incentives that make liquidity panics inevitable?
To these must be added another question: After a financial crisis, how do we short circuit the political imperative to introduce polices that inhibit recovery by hitting business over the head?
FDR's depredations somehow never became much of a focus of the copious literature of the Great Depression. The historiography of the Obama Depression will not be so forgiving. American business is luckier today, in a sense: Its success is more rooted in a global economy. U.S. companies are profitable even as the domestic economy lags.
Thus people like Steve Wynn, whose sharp critique of Obama policy on an earnings call turned heads last month, do not fear to speak up. Las Vegas may be in the dumps, but Mr. Wynn boasts that Wynn Resorts today is "a Chinese company in many respects and [in terms of] revenues and the rest of our financial posture" thanks to its bet on booming Macau.
A great whoosh of buy-in has greeted the idea that post-debt crisis recoveries must always be slow. But unless a lot of CEOs are lying, a policy onslaught designed to fulfill the pent-up wishes of various Democratic constituencies has been the key anti-elixir of growth.
Instead of a "stimulus" to create jobs by financing useful investments that would have paid a growth dividend in the future, we got a debt-fueled permanent expansion of entitlements and the size of government.
In health care, instead of reforms to encourage competent consumers not to treat health care as a free lunch, we got a doubling down on health-care free lunchism.
In banking, instead of new incentives to cause creditors to pull in the reins on risk-taking banks, we got a formalization of too big to fail.
All economic crises begin differently—this one began in housing—but eventually they morph into the same old crisis of forgetting what works. Think about the last big crisis of faith in American capitalism in the early 1980s. The panic was eventually crystallized in dueling Harvard Business Review articles by George Gilder and Charles Ferguson. Mr. Ferguson, an MIT-based consultant, argued the U.S was dooming itself to vassalage unless Washington brushed aside small, poorly-funded entrepreneurs and concentrated regulatory favors and subsidies on giant firms like IBM, AT&T, Digital Equipment and Kodak.
Mr. Gilder championed the then-emerging Silicon Valley paradigm. He quoted technologist Carver Mead: "We depend on the innovations of the citizens of a free economy to keep ahead of the bureaucrats and the people who make a living on control and planning. In the long term, it's the element of surprise that gives us the edge over more controlled economies."
Who won hardly needs to be belabored except that it apparently does need to be belabored. Almost everything Mr. Obama understands as pro-growth consists of bets on "bureaucrats and the people who make a living on control and planning."
Disregarded, meanwhile, is the 1980s' real lesson, embodied in a prescient little book edited by the late Joseph Pechman, dean of tax scholars at the Brookings Institution. Entitled "World Tax Reform: A Progress Report," his 1988 volume showed how country after country was following the U.S. in adopting Reagan-style rate-flattening and tax simplification.
We had plenty of unwise polices in the mix too. Yet, over the next 20 years, policies that allowed private investment and innovation to reap their natural reward paid off. Globalization may be a megatrend, but the United States is still a big economy, and who doubts that if the U.S. were following a sounder course at home that it would matter less what China is doing with its currency or how the Europeans are handling their debt mess?
Mr. Ferguson has since refashioned himself as a maker of leftwing films about the Iraq war and financial meltdown, but his spirit lives on. Mr. Obama now craves a federal infrastructure bank, apparently still unable to see how growth might emerge except by bureaucrats bossing around tax dollars.
And yet the lord smiles on the U.S. Mr. Obama's own fiscal commission—his shamefully ignored Simpson-Bowles Commission—proposed a Reagan-style tax reform. Tax reform is the political fulcrum for addressing the growth shortage, the fiscal crisis and our runaway health-care prices problem. It's the one idea that reaches across the partisan divide. It might be the only thing that could save the Obama presidency.
Obama's Only Policy
For the past several months, most observers have been operating under the assumption that Obama will use the US's veto at the UN Security Council to defeat the Palestinians' bid next month to receive UN membership as independent Palestine. But the fact of the matter is that no senior administration official has stated unequivocally, on record that the US will veto a UN Security Council resolution recommending UN membership for Palestine.
Given US congressional and public support for Israel, it is likely that at the end of the day, Obama will veto such a resolution. But the fact that the President has abstained to date from stating openly that he will veto it makes clear that Obama expects Israel to "earn" a US veto by bowing to his demands.
These demands include abandoning Israel's position that it must retain defensible borders in any peace deal with the Palestinians. Since defensible borders require Israel to retain control over the Jordan Valley and the Samarian hills, there is no way to accept the 1949 armistice lines as a basis for negotiations without surrendering defensible borders.
SAY WHAT you will about Obama's policy, at least it's a policy. Obama uses US power and leverage against Israel in order to force Israel to bow to his will.
What makes Obama's Israel policy notable is not simply that it involves betraying the US's most steadfast ally in the Middle East. After all, since taking office Obama has made a habit of betraying US allies.
Obama's Israel policy is notable because it is a policy. Obama has a clear, consistent goal of cutting Israel down to size. Since assuming office, Obama has taken concrete steps to achieve this aim.
And those steps have achieved results. Obama forced Netanyahu to make Palestinian statehood an Israeli policy goal. He coerced Netanyahu into temporarily abrogating Jewish property rights in Jerusalem, Judea and Samaria. And now he is forcing Netanyahu to pretend the 1949 armistice lines are something Israel can accept.
Obama has not adopted a similarly clear, consistent policy towards any other nation in the region. In Egypt, Syria, Iran, Turkey, Libya, and beyond, Obama has opted for attitude over policy. He has postured, preened, protested and pronounced on all the issues of the day.
But he has not made policy. And as a consequence, for better or for worse, he has transformed the US from a regional leader into a regional follower while empowering actors whose aims are not consonant with US interests.
SYRIA IS case and point. President Bashar Assad is the Iranian mullahs' lap dog. He is also a major sponsor of terrorism. In the decade since he succeeded his father, Assad Jr. has trained terrorists who have killed US forces in Iraq. He has provided a safe haven for al Qaeda terrorists. He has strengthened Syrian ties to Hezbollah. He has hosted Hamas, Islamic Jihad and other Palestinian terror factions. He has proliferated nuclear weapons. He reputedly ordered the assassination of former Lebanese prime minister Rafik Hariri.
Since March, Assad has been waging war against his fellow Syrians. By the end of this week, with his invasion of Hama, the civilian death toll will certainly top two thousand.
And how has Obama responded? He upgraded his protestations of displeasure with Assad from "unacceptable" to "appalling."
In the face of Assad's invasion of Hama, rather than construct a policy for overthrowing this murderous US enemy, the Obama administration has constructed excuses for doing nothing. Administration officials, including Obama's ambassador to Damascus Robert Ford, are claiming that the US has little leverage over Assad.
But this is ridiculous. Many in Congress and beyond are demanding that Obama withdraw Ford from Damascus. Some are calling for sanctions against Syria's energy sector. These steps may or may not be effective. Openly supporting, financing and arming Assad's political opponents would certainly be effective.
Many claim that the most powerful group opposing Assad is the Muslim Brotherhood. And there is probably some truth to that. At a minimum, the Brotherhood's strength has been tremendously augmented in recent months by Turkey.
Some have applauded the fact that Turkey has filled the leadership vacuum left by the Obama administration. They argue that Turkish Prime Minister Recip Erdogan can be trusted to ensure that Syria doesn't descend into a civil war.
What these observers fail to recognize is that Erdogan's interests in a post-Assad Syria have little in common with US interests. Erdogan will seek to ensure the continued disenfranchisement of Syria's Kurdish minority. And he will work towards the Islamification of Syria through the Muslim Brotherhood.
Today there is a coalition of Syrian opposition figures that include all ethnic groups in Syria. Their representatives have been banging the doors of the corridors of power in Washington and beyond. Yet the same Western leaders who were so eager to recognize the Libyan opposition despite the presence of al Qaeda terrorists in the opposition tent have refused to publicly embrace Syrian regime opponents that seek a democratic, federal Syria that will live at peace with Israel and embrace liberal policies.
This week Secretary of State Hillary Clinton held a private meeting with these brave democrats. Why didn't she hold a public meeting? Why hasn't Obama welcomed them to the White House?
By refusing to embrace liberal, multi-ethnic regime opponents, the administration is all but ensuring the success of the Turkish bid to install the Muslim Brotherhood in power if Assad is overthrown.
But then, embracing pro-Western Syrians would involve taking a stand and, in so doing, adopting a policy. And that is something the posturing president will not do. Obama is much happier pretending that empty statements from the UN Security Council amount to US "victories."
If he aims any lower his head will hit the floor.
OBAMA'S PREFERENCE for posture over policy is nothing new. It has been his standard operating procedure throughout the region. When the Iranian people rose up against their regime in June 2009 in the Green Revolution, Obama stood on the sidelines. As is his habit, he acted as though the job of the US president is to opine rather than lead. Then he sniffed that it wasn't nice at all that the regime was mowing down pro-democracy protesters in the streets of Teheran and beyond.
And ever since, Obama has remained on the sidelines as the mullahs took over Lebanon, build operational bases in Latin America, sprint to the nuclear finishing line, and consolidate their power in Iraq and Afghanistan.
On Wednesday the show trial began for longtime US ally former Egyptian president Hosni Mubarak and his sons. During last winter's popular uprising in Egypt, Obama's foes attacked him for refusing to abandon Mubarak immediately.
The reasons for maintaining US support for Mubarak were obvious: Mubarak had been the foundation of the US alliance structure with the Sunni Arab world for three decades. He had kept the peace with Israel. And his likely successor was the Muslim Brotherhood.
But Obama didn't respond to his critics with a defense of a coherent policy. Because his early refusal to betray Mubarak was not a policy. It was an attitude of cool detachment.
When Obama saw that it was becoming politically costly to maintain his attitude of detachment, he replaced it with a new one of righteous rage. And so he withdrew US support for Mubarak without ever thinking through the consequences of his actions. And now it isn't just Mubarak and his sons humiliated in a cage. It is their legacy of alliance with America.
Recognizing that Obama refuses to adopt or implement any policies on his own, Congress has tried to fill the gap. The House Foreign Affairs Committee recently passed a budget that would make US aid to Egypt, Lebanon, Yemen and the PA contingent on certification that no terrorist or extremist organization holds governmental power in these areas. Clinton issued a rapid rebuke of the House's budget and insisted it was unacceptable.
And this makes sense. Making US assistance to foreign countries contingent on assurances that the money won't fund US enemies would be a policy. And Obama doesn't make policy - except when it comes attacking to Israel.
In an interview with the New York Times on Thursday, Muammar Qaddafi's son Seif al-Islam Qaddafi said he and his father are negotiating a deal that would combine their forces with Islamist forces and reestablish order in the country. To a degree, the US's inability to overthrow Qaddafi - even by supporting an opposition coalition that includes al Qaeda - is the clearest proof that Obama has substituted attitude for policy everywhere except Israel.
Acting under a UN Security Council resolution and armed with a self-righteous doctrine of "Responsibility to Protect" Obama went to war against Qaddafi five months ago. But once the hard reality of war invaded his happy visions of Lone Rangers riding in on white stallions, Obama lost interest in Libya. He kept US forces in the battle, but gave them no clear goals to achieve. And so no goals have been achieved.
Meanwhile, Qaddafi's son feels free to meet the New York Times and mock America just by continuing to breathe in and out before the cameras as he sports a new Islamic beard and worry beads.
If nothing else, the waves of chaos, war and revolution sweeping through Arab lands make clear that the Arab conflict with Israel is but a sideshow in the Arab experience of tyranny, fanaticism, hope and betrayal. So it says a lot about Obama, that eight months after the first rebellion broke in Tunisia, his sole Middle East policy involves attacking Israel.
The bourgeois virtues and consumer ethics: "In an earlier column I talked about Deirdre McCloskey’s work on the 'bourgeois virtues.' McCloskey argues that capitalism both resulted from and helps to encourage a set of virtues beyond mere 'prudence.' In a market economy we act more ethically toward others, particularly strangers, not just because it’s in our self-interest but because when our default engagement with them is via voluntary exchange, we slowly develop the unconscious habit of treating others well."
Democracy’s spending curse: "As long as those receiving government benefits are much smaller in number than those paying for the benefits, politicians are more dependent on the taxpayers than on the beneficiaries. But the United States has reached the point at which there are more people receiving government checks than paying income taxes. As the political balance shifts away from taxpayers to recipients, the pressures to increase government spending accelerate until finally the golden goose is fully plucked and the economy collapses."
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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)