Tuesday, February 19, 2013

Government Excels At Creating Long Lines!

One part of President Obama’s State of the Union speech actually provoked some deep thinking in me:

"We should follow the example of a North Miami woman named Desiline Victor. When Desiline arrived at her polling place, she was told the wait to vote might be six hours. And as time ticked by, her concern was not with her tired body or aching feet, but whether folks like her would get to have their say. And hour after hour, a throng of people stayed in line in support of her, because Desiline is 102 years old. And they erupted in cheers when she finally put on a sticker that read “I Voted.”"

I can empathize a bit since when I voted in Virginia, I showed up just as the polls were opening and waited half an hour.  Of course, that’s nothing compared to six hours, so, like I said, I can empathize a bit.

Nevertheless, that passage precipitated the following thoughts:

1. After all the efforts taken to make voting easier such as absentee ballots and early voting, government still manages to create long lines for voting.  Amazingly, when lines start to form in private sector establishments, they implement a nifty little innovation called “open another checkout stand.”  Sources tell me they have had this innovation in the private sector for quite some time.  I wonder why the government hasn’t adopted it at polling stations?

2. But perhaps that’s the wrong way to look at it.  Maybe we should look at it in a positive way such as: Government Excels At Creating Long Lines!  Bureaucracy has a talent for this.  Go down to your Department of Motor Vehicles any day of the week.  Or if you are an immigrant and want to migrate here legally, sign up with the U.S. Citizenship and Immigration Services.  Or if you live in Britain or Canada, let some of your joints degenerate and then try to get a hip or knee replacement.  Indeed, here in the U.S. we may be on the brink of finding out what that is like.

3. Given how well government is at making voting a convenient, time-saving endeavor, I have the utmost confidence that government can create manufacturing hubs, combat climate change, produce a clean energy market, drive new research with an Energy Security Trust, cut in half the energy wasted by our homes in the next 20 years, produce high-speed rail, help families refinance their homes, and fund and regulate pre-school.  In short, all of the things that Obama laid out in his SOTU.

Yes, the government’s ability to make voting efficient has shown us the way.  The future is very bright!  FORWARD!



Baltic Success Reveals The Folly Of Obama’s Doublespeak

This week’s State of the Union address was full of plans for government action and spending to combat U.S. economic malaise. At the same time, the President claimed that there were drastic cuts to the federal budget on the way (referring to sequestration, under which spending actually continues to grow but at a slower rate). This doublespeak mirrors that of European politicians and hides reality: more government isn’t making the economy any better.

Illustrating this point is the dichotomy in economic performance between Western European countries — whose politicians claim to have made cuts but in reality have increased budgets each year since the Eurocrisis began in 2009 — and their Baltic counterparts — which underwent actual cuts in the size of government.

Eurostat just released fourth quarter 2012 data on economic growth this week, and it follows the three-year trend of Baltic over-performance relative to the rest of Europe. The Euro Zone as a whole registered dismal Q4 2012 growth of -0.6 percent while Latvia and Estonia grew by 5.7 and 3.4 percent, respectively.

As I wrote in National Review last month, there is a world of difference between austerity that leaves out the public sector while businesses suffer from recession, and austerity that forces government to tighten its belt along with the private sector. The first strategy, which I like to call “phony-austerity,” doesn’t work. The second one, which I like to call “real austerity,” does.

President Obama should take note.

His calls for federally planned “manufacturing hubs” and more investment into renewable energy won’t jump start growth. Trimming back the federal budget and leaving more money in the pockets of entrepreneurs will.

When crisis hit the Baltics, countries cut public wages and administration, discretionary spending, and social services. Governments felt it best to reduce their burden upon businesses, so that private enterprise could more easily adapt to hard economic times and bounce back quickly. Since the end of austerity in 2010, the Baltic economies have been the fastest growing in Europe.

On the other hand, Western and Southern European countries have decided to prolong the pain of recession by either belaboring cuts to government budgets or avoiding them altogether. In fact, many countries (those not receiving bailout funding) have actually increased spending and taxes since the start of the crisis. And they have had persistently low or negative levels of growth ever since.

A new report by Catholic charity Caritas Europa indicates that the persistent unemployment and increases in taxation in Greece, Spain, Ireland, Italy, and Portugal have been especially harmful to low- and fixed-income individuals. Instead of following the Baltic example of strong but short-lived economic pain, these countries instead decided to prolong agonizing economic hardship by refusing to cut government largesse sharply and swiftly and by inhibiting creative destruction within the private sector by propping up inefficient businesses. Wealthier European countries like France and the U.K. have also been undergoing similar, though less severe, long-lasting economic hardship.

Instead of following where Europe has failed in the West, President Obama should learn from where it has succeeded in the East. Reforming costly entitlements, lowering taxes, and cutting red tape is the way to create jobs — and more importantly, wealth.



The Argentina example

Americans wondering what to expect as their government piles on more debt and refuses to cut spending do not need to look any further than Argentina. A nation once among the most prosperous in the world is now deeply in debt, hemorrhaging cash, and trying to inflate its way out of the mess it has created. This inflation, naturally, has caused prices to rise sharply, and so the government is doing what all governments do in such a situation: instituting price controls.

The government of President Cristina Fernandez claims the annual inflation rate is 10 percent, which, if true, would be bad enough. Private economists believe it’s closer to 30 percent, but they dare not say so publicly for fear of being fired, fined, or even jailed. However, as the Associated Press points out, “The government says it’s trying to hold the next union wage hikes to 20 percent, a figure that suggests how little anyone believes the official index.”

The International Monetary Fund (IMF) certainly doesn’t believe it. The IMF censured Argentina for exploiting the difference between the official and private inflation rates to make it appear as though the country had saved $6.8 billion since 2007.

No one else is fooled, either. Investors were withdrawing billions of dollars from Argentina until Fernandez “tightened controls in the foreign exchange market and forced companies to repatriate revenue,” Bloomberg reports. Argentines trying to protect their savings by buying U.S. dollars — also depreciating, but at a considerably slower rate than the Argentine peso — were thwarted when the government imposed currency controls on them.

Apparently not content with the level of suffering she has already inflicted on her people, Fernandez is now instituting a two-month price freeze on “every product in all of the nation’s largest supermarkets,” according to the AP.

The intention, of course, is to conceal further the rate at which the peso is being devalued, though the policy is, naturally, couched in the language of helping average people who cannot afford the skyrocketing prices. In fact, it will do just the opposite.

When the price of a product is held below the market level, two things occur. First, since they will be making less profit on each unit sold— or perhaps even taking a loss — producers offer less of the product for sale. Second, recognizing that they are getting the product at a bargain price, consumers purchase more of it than they otherwise would. The end result: a shortage of the very product the government was supposedly trying to enable more people to buy. (Argentines have had experience with this: price controls imposed in 2007 led to food shortages then, too.)

The market will continue to function, of course, but it will be a black market. Scarce products will be available, but almost certainly at prices even higher than would be the case in the absence of the price controls. Consumers fortunate enough to obtain products on the black market will have no legal recourse if those products turn out to be faulty. And everyone involved will live in fear of getting caught engaging in peaceful commerce.

Eventually the price controls will be lifted. (These controls are set to expire on April 1, but who knows what kind of tricks the government might pull that day?) At that point prices will return to their market levels, though they will probably be even higher than they would have been if the controls had not been imposed in the first place, as producers — at least those who didn’t go out of business in the interim — scramble to make up for lost revenue. In addition, observed Tyler Durden of ZeroHedge.com, “many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting’s good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken….” (Fernandez nationalized the country’s largest oil company last year.)

Is today’s Argentina tomorrow’s America? It is certainly within the realm of possibility. In the late 19th and early 20th centuries, Argentina was one of the freest and most prosperous nations on the globe. Then came the Great Depression and the rise of demagogues such as Juan Peron, who turned Argentina into a basket case, nationalizing industries, giving vast power to labor unions, and spending as if there were no tomorrow. The country has never fully recovered from the damage, having suffered multiple rounds of inflation, price controls, and even debt default in the ensuing decades, though it is still the second-largest economy in South America.

So, too, with the United States. Prosperous before the Depression, the country elected Franklin Roosevelt to four terms as president during that downturn. He greatly accelerated the process of centralizing power in Washington, cartelizing industries, boosting union leverage, and spending enormous sums of money. Since then the United States has experienced inexorable inflation, price controls (under Richard Nixon), and ballooning debt. The U.S. government now spends more than $1 trillion more than it takes in each year, is roughly $16 trillion in debt, and has many trillions more in unfunded liabilities. The country is still an economic powerhouse compared with most of the rest of the world, but the decades of gargantuan government have taken their toll.

Economist Soledad Perez Duhalde told the AP that instead of price controls, the Argentine government should “reduce government spending, which is financing an expansion of the money supply.” Unfortunately, slashing spending is about as likely to happen in Argentina as it is in Washington. Equally unfortunately, the results of such profligacy — debt, inflation, price controls, and national decline — are also about as likely in America as in Argentina.



Decayed moral and ethical  foundations can bring down the mightiest

Victor Davis Hanson

Why do once-successful societies ossify and decline?

Hundreds of reasons have been adduced for the fall of Rome and the end of the Old Regime in 18th-century France. Reasons run from inflation and excessive spending to resource depletion and enemy invasion, as historians attempt to understand the sudden collapse of the Mycenaeans, the Aztecs and, apparently, the modern Greeks. In literature from Catullus to Edward Gibbon, wealth and leisure -- and who gets the most of both -- more often than poverty and exhaustion implode civilization.

One recurring theme seems consistent in Athenian literature on the eve of the city's takeover by Macedon: social squabbling over slicing up a shrinking pie. Athenian speeches from that era make frequent reference to lawsuits over property and inheritance, evading taxes, and fudging eligibility for the dole. After the end of the Roman Republic, reactionary Latin literature -- from the likes of Juvenal, Petronius, Suetonius, Tacitus -- pointed to "bread and circuses," as well as excessive wealth, corruption and top-heavy government.

For Gibbon and later French scholars, "Byzantine" became a pejorative description of a top-heavy Greek bureaucracy that could not tax enough vanishing producers to sustain a growing number of bureaucrats. In antiquity, inflating the currency by turning out cheap bronze coins was often the favored way to pay off public debts, while the law became fluid to address popular demands rather than to protect time-honored justice.

After the end of World War II, most of today's powerhouses were either in ruins or still preindustrial -- China, France, Germany, Japan, South Korea, Russia and Taiwan. Only the United States and Great Britain had sophisticated economies that survived the destruction of the war. Both were poised to resupply a devastated world with new ships, cars, machinery and communications.

In comparison to Frankfurt, the factories of 1945 Liverpool had survived mostly intact. Yet Britain missed out on the postwar German economic miracles, in part because after the deprivations of the war, the war-weary British turned to class warfare and nationalized their main industries, which soon became uncompetitive.

The gradual decline of a society is often a self-induced process of trying to meet ever-expanding appetites, rather than a physical inability to produce past levels of food and fuel, or to maintain adequate defense. Americans have never had safer workplaces or more sophisticated medical care -- and never have so many been on disability.

King Xerxes' huge Persian force of 250,000 sailors and soldiers could not defeat a rather poor Greece in 480-479 B.C. Yet a century and a half later, a much smaller invading force from the north under Philip II of Macedon overwhelmed the far more prosperous Greek descendants of the victors of Salamis.

For hundreds of years, the outmanned legions of the tiny and poor Roman Republic survived foreign invasions. Yet centuries later, tribal Goths, Visigoths, Vandals and Huns overran the huge Mediterranean-wide Roman Empire.

Given our unsustainable national debt -- nearly $17 trillion and climbing -- America is said to be in decline, although we face no devastating plague, nuclear holocaust, or shortage of oil or food.

Americans have never led such affluent material lives -- at least as measured by access to cell phones, big-screen TVs, cheap jet travel and fast food. Obesity rather than malnutrition is the greater threat to national health. Flash mobs go after electronics stores, not food markets. Americans spend more money on Botox, face lifts and tummy tucks than on the age-old scourges of polio, small pox and malaria.

If Martians looked at the small box houses, one-car families and primitive consumer goods of the 1950s, they would have thought the postwar United States, despite a balanced budget in 1956, was impoverished. In comparison, an indebted contemporary America would seem to aliens flush with cash, as consumers jostle for each new update to their iPhones.

By any historical marker, the future of Americans has never been brighter. The United States has it all: undreamed new finds of natural gas and oil, the world's pre-eminent food production, continual technological wizardly, strong demographic growth, a superb military and constitutional stability.

Yet we don't talk confidently about capitalizing and expanding on our natural and inherited wealth. Instead, Americans bicker over entitlement spoils as the nation continues to pile up trillion-dollar-plus deficits. Enforced equality rather than liberty is the new national creed. The medicine of cutting back on government goodies seems far worse than the disease of borrowing trillions from the unborn to pay for them.

In August 1945, Hiroshima was in shambles, while Detroit was among the most innovative and wealthiest cities in the world. Contemporary Hiroshima now resembles a prosperous Detroit of 1945; parts of Detroit look like they were bombed decades ago.

History has shown that a government's redistribution of shrinking wealth, in preference to a private sector's creation of new sources of it, can prove more destructive than even the most deadly enemy.


There is a  new  lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc



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