How to Enjoy the Debt Ceiling Fight

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I am enjoying the fight in Washington, D.C., over the debt ceiling — from afar.

If you want the inside dope on what’s happening right now, I don’t have it. I am 3,000 miles away from it, and I have work to do. To me the fight in Washington has mainly been background noise.

In the cocoon of left-liberalism in which I live, the echo is that the “right-wing fanatics in Congress” have gone berserk. That’s what Paul Krugman said in the New York Times, and he is such a smart man. And here is E.J. Dionne of the Washington Post, July 21:

“The tea party lives in an intellectual bubble where the answers to every problem lie in books by F.A. Hayek, Glenn Beck or Ayn Rand. Rand's anti-government writings, regarded by her followers as modern-day scripture — Rand, an atheist, would have bridled at that comparison — are particularly instructive.

“When the hero of Rand's breakthrough novel ‘The Fountainhead’ doesn’t get what he wants, he blows up a building. Rand’s followers see that as gallant. So perhaps it shouldn’t surprise us that blowing up our government doesn’t seem to be a big deal to some of the new radical individualists in our House of Representatives.”

I turn to the No. 1 radical-individualist web page, and see a denunciation of the Tea Party from another place. Here is Brian Wilson on LewRockwell.com, July 23, claming that the Republicans are really progressives:

“When you assume the Republicans are shills for progressivism, the actions make sense and are easily predictable. If the Republicans won the Debt Debate, government spending would really be cut. Which of course, they don’t want. So they had to throw the fight. Unfortunately, like TV wrestling, it becomes more and more obvious the game is rigged. It's as if the rulers in Washington don't even care if we believe their staged fight. It's just a kabuki ritual they have to perform before stealing more of our Freedom.”

Some folks are never satisfied. Being unsatisfied is part of who they are. Not I; some things I find very satisfying. I tend to agree with George Will, who said on July 22 that the Tea Party is “the most welcome political development since the Goldwater insurgency in 1964.”

These are our people. They are for smaller government. They are against the spending and debt. They are for the constitution. I should be on their side because they are on my side.

It pains some libertarians to identify with the Tea Party. Libertarians see themselves as intellectuals, and as political movements go, the Tea Party is middlebrow tending toward lowbrow. Its people listen to Sarah Palin, B.A., Communications, University of Idaho, and Glenn Beck, whose most advanced degree is from Sehome High School, Bellingham, Wash. These Tea Party people know nothing of Lysander Spooner, the Austrian theory of the trade cycle, or the legal doctrine of substantive due process. I recall the comment by Jeffrey Friedman, Ph.D., Yale, and the editor of Critical Review (a publication I can follow only about a quarter of the time) that the Tea Party had trashed the image of libertarianism on university campuses.

Probably so. Still, the Tea Party kicks butt. In 2010, it got a cadre of rabble-rousers elected to Congress. In this debt-ceiling fight, the new Republicans provoke the furious denunciations of the Krugmans, Dionnes, and other stalwarts of the welfare state. You wouldn’t be seeing these fulminations, including Dionne’s furious blast at a novel published nine years before he was born, if the Tea Party weren’t threatening the left-liberal project.

I love it.

How it’s going to work out, I don’t know. I doubt the Left’s hysteria about a worldwide economic crisis that will flush Americans’ 401(l) money down the drain — if this were so, I think, the stock market would have fallen 20% by now — but I don’t know. The market is not all-knowing, and sometimes it comes down with a thump. I wonder whether the promises offered by President Obama and the Senate Democrats to cut two or three trillions in spending are any good. I don’t know that, either, but even if they break their promises, it seems far better to extract those promises now and pin them to their shirts.

Get while the getting’s good, my daddy used to say.

Will the people turn against the Republicans as they did in 1995? Maybe. Or will a large, vague, unenforceable deal work to Obama’s advantage, allowing him to run as a moderate, beat the Republican nominee in 2012, and save the welfare state? That’s the thesis of George Will, who urges the Republicans not to fall for it. I don’t know how they should play their cards, and unlike Will, I am not going to instruct them. I assume they know what they’re doing, and if they don’t, there is nothing I can do about it.

I hear a muted noise from 3,000 miles away, and note that the fight is still on.

I cheer my side.




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No, Size Doesn’t Matter

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With teacher unions now in full battle mode, prepared to fight for even more money and even less accountability, coast to coast, a timely article in the always outstanding City Journal is worth noting.

The piece, by Larry Sand, current president of the California Teachers Empowerment Network, addresses the common claim by teachers' unions that if only class sizes were smaller — which, of course, would require that taxes go higher — educational quality would improve. This is a common ploy of these covens of rapacious rentseekers, whenever parents complain about the wretched education served up at the average American public school. But Sand’s piece reminds us anew of what an asinine myth it is.

He notes that from the point of view of teachers, small classes are great — fewer kids to deal with, fewer papers to grade, and fewer parents to placate. And certainly American taxpayers have been accommodating: since the 1950s, while the number of students nationwide has risen by 60%, the number of school employees — teachers, administrators, and staff — has metastasized by 300%. Yes, that’s right: the number of highly-paid, impossible to fire, union-dues-paying educrats has risen at five times the rate of the rise in new children. (Remember: every new hire represents another $600 per year in union dues).

Nationally, there were 26.9 public school students for every teacher in 1955, 22.3 per teacher in 1970, and 15.5 per teacher in 2007 (the last year for which there are stats). But average student achievement scores remained essentially flat during the past 40 years.

Students in countries that have much higher student-teacher ratios than ours (such as Japan and Korea) routinely outscore American students by a large margin. Ironically, as Sand notes, research (conducted by economist Eric Hanushek) shows that firing the worst 5% of teachers, without replacing them, would only slightly increase the average size of classes, but it would increase student outcomes to roughly those of high-scoring countries such as Canada or even Finland.




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The E-Trade Baby Blues

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When I was in college I learned about a theory called “the cultural contradiction of capitalism,” which claims that capitalism calls upon the public to assume two conflicting personas. As producers, people must be rational and responsible; but as consumers, they need to be irrational, carefree, and gluttonous, so they will buy as much as possible.

I recently recalled this theory while watching one of the incredibly annoying “E-Trade baby” commercials on television. The E-Trade baby’s message is that investing is fun and easy and, by implication, even a toddler could handle it. Although I am an aspiring lawyer, I do have some degree of background on investment advising, and I consider this message absolutely irresponsible. Investing is difficult. To beat the averages and outperform the indexes (which is the only sensible goal for day-trader-type, individually managed investing accounts such as E-Trade sells), an investor needs brilliance, discipline, and a ton of luck.

Investing without understanding how to research stocks is like gambling your life savings at a casino. A rational strategy for saving for retirement would include buying index mutual funds and highly rated bonds with gold or gold-related stocks as a hedge against inflation. Picking individual stocks (even supposedly “safe” or large-cap stocks such as IBM or Microsoft) is too risky for someone investing retirement savings. It is mathematically impossible to predict future stock prices accurately enough to eliminate the risk that your portfolio will be wiped out by bad luck or short-term swings on precisely the day when you need to dip into your savings. Stock-picking is not suitable for any investor unless you spend several hours each day researching your stocks. But actively managed investing for mainstream America is what the E-Trade baby sells.

Many Americans learned the dangers of Wall Street investment when the recent recession ate their portfolios. And Wall Street is a symbol of capitalism for the American public; when retirement accounts go down, Main Street always blames Wall Street. This happened in 1929, when the stock market crash started the chain of events that led to the Great Depression and the New Deal. It happened recently when the so-called Great Recession instigated the Dodd-Frank Wall Street Reform Act.

My own opinion is that a fool and his money are soon parted. The American investing public believed that stock prices and real estate values could never go down, and that the principle of “more reward requires more risk” did not apply. The public got what it deserved. But although I blame the investors, it is undeniable that Wall Street, from Goldman Sachs to Jim Cramer to E-Trade, promoted itself as an easy, riskless way for mainstream families to make money and save for retirement. The investing public’s “irrational exuberance,” to quote Alan Greenspan, can only help Wall Street to make money. Vast fortunes are made by investment banks when stock market bubbles inflate. Wall Street is partially to blame.

What I am trying to get at here is that even though libertarians love capitalism, we do not have to love everything that results from the profit motive. My favorite movies are the original Star Wars trilogy. But George Lucas, desiring to milk as much money from his franchise as possible, has produced several re-edited versions, each more atrocious than the last, and also filmed the pathetic “prequels.” Similar stupidity was behind the decision to film “Harry Potter and the Deathly Hallows” as two separate movies instead of one, dooming the two movies to artistic ineptitude. Generally, whenever a novelist or movie studio produces something good that people like, sequel after sequel follow, for no other reason than to make easy money and feed off the brilliance of the original.

Even though libertarians love capitalism, we do not have to love everything that results from the profit motive.

From a different angle, consider the widespread use of “intro rates” to persuade people to buy cellphone or cable TV services or six-month intro rates on credit cards. Are consumers so stupid that they don’t plan more than six months ahead? Ads full of colorful sights and sounds and subliminal associations but empty of facts and information about why their product is superior are the rule on television, not the exception. The stupidity of the public makes advertising easier. It is easier to sell car insurance by building a brand image around a jingle or a cartoon character than to produce a product that can be objectively demonstrated through scientific testing to be better than its competitors. Ads paid for by businessmen are a huge part of what shapes American culture and the American media — which helps explain why American culture is so strongly slanted in favor of shallowness, stupidity, and irrationality (though this is not a complete explanation, but merely one piece of the puzzle). America is full of instances in which businessmen appeal to consumers not on the basis of reason and logic but through gimmicks and psychological manipulations. Judging by the widespread success of ads like the E-Trade baby, many members of the public make some horribly irrational choices, in their consumer goods no less than their political beliefs.

You can’t blame capitalism for the fact that people make bad choices. Consumer irrationality is not a valid excuse to strip people of their freedom to choose. Wall Street gives us a far higher standard of living than any of the Soviet states ever achieved, and capitalism is the only system with a proven track record of prosperity and progress.

Nevertheless, the moral of this story is that the profit motive has a dark side. I know that some would say that the desire to make easy money by appealing to irrationality is not actually in any businessman’s long-term rational self-interest. I completely agree. Yet it is natural for people to seek to make money as easily as possible, and we see what results. Instead of blindly insisting that the profit motive can do no wrong, we should take the more refined approach and recognize that the fault lies with the people themselves, not with freedom as an economic system.

So I support the profit motive — but supporting the profit motive does not mean supporting everything that results from the profit motive.




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EVs: Not So Green After All

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The Australian has reported the results of a fascinating British study. It turns out that electric cars (EVs), those holy icons of the Green religion, may actually produce more atmosphere-destroying emissions over their lifetimes than regular, gasoline fueled cars — when you do the commonsense thing and factor in the energy it takes to produce the necessary batteries.

To be precise, the study (which was funded by the Low Carbon Vehicle Partnership, a group that is, in turn, supported by both the British government and the British car industry) showed that the average EV would have to be driven over 80,000 miles for it to produce a net savings in carbon dioxide over the standard internal combustion engine. Considering that EVs have limited ranges (they average about 90 miles per charge), it is not clear that many EVs will last that long.

This study was the first to look at the whole lifecycle emissions of EVs, including their manufacturing, driving, and — please note — the tricky matter of disposal of their used batteries. These batteries are the culprits. They contain metals that are expensive to produce, and they have to be replaced every few years.

The study found that a mid-size EV produces about 23.1 tons of carbon dioxide during its lifetime, scarcely less than the 24 tons produced by a regular, gasoline powered car. This is in part because the emissions from manufacturing EVs are about 50% higher than those from manufacturing regular cars.

What the British Department for Transport will make of the report it called for is anyone’s guess. The Department is currently lavishing $7,700 grants on people who buy the damn things.




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Education and Underemployment

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It took a German to speak truth to power.

Eric Spiegel, CEO for German engineering giant Siemens’ US operations, was talking with reporters while waiting for Treasury Secretary Tim Geithner to visit a Siemens facility in Ohio late last month. Spiegel caused considerable consternation when he bluntly asserted that Siemens and other high-level manufacturers were having trouble finding adequately skilled workers, despite America’s high unemployment rate.

As Spiegel put it, “There’s a mismatch between the jobs that are available . . . and the people who are out there. There is a shortage [of workers with the right skills].”

Spiegel went on to say that the hidden problem of finding qualified employees among the hordes of the unskilled and unemployed exposes the weaknesses in the American system of education and job training. He noted that Siemens has had to turn to over 30 “headhunters” (professional job recruiters) to find qualified American workers, and is also trying to hire workers from abroad.

Now, with an unemployment rate that just went back up to 9.2%, and an anemic recovery that created only a laughable 18,000 jobs last month (with a pathetic 500,000 net new new jobs in the past two years of “recovery”), it may seem strange to say that there is a shortage of trained people.

But a recent survey by the major employment agency Manpower shows that over half of all the top American firms are having trouble finding key staff. It’s a dramatic increase from as recently as 2010, when only 14% reported recruiting difficulties.

Ironically, the need for skilled workers is greatest in an area of the American economy that has long been considered defunct: manufacturing. The number of manufacturing jobs available for the high-skilled has risen from 98,000 in early 2009 to 230,000 today.

The Obama regime has of course responded — by proposing to expand the “Skills for America’s Future Program.” That is, throw more money at the problem.

So far, this government program has miserably failed to provide correctly skilled workers in the requisite numbers. The idea of dramatically increasing school choice, so that schools could spring up that would work with various industries to give them what they need, and what is profitable for the students, seems like a better place to start. But that’s not likely to happen.  To speak an absurd understatement, this regime shows little stomach for free markets in education — or anything else.




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Age of Gold, Age of Paper

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It lasted for more than a thousand years. Its Great Palace was the seat of imperial and religious government for as long. It claimed to encompass the Roman Empire, and often did. It was the largest and greatest court in Christendom. In its Chrysotriklinos, its Golden Hall, hydraulic engines powered fountains, large organs, golden birds that sang in jewel-drenched trees, and golden lions that roared. Ambassadors bowed to its emperor as his throne magically rose to the ceiling. Gold mosaics dazzled visitors to its court and cathedral.

It was Byzantium.

I’m reading Judith Herrin’s history of that empire. She is a good historian but perhaps not much interested in economics. In her book, Byzantium: The Surprising Life of a Medieval Empire, an essential fact of Byzantine economy gets a fleeting mention as a caption to an illustration: “Byzantium preserved a gold coinage of reliable fineness over 700 years.”

Many empires have been laid low by the degradation of their currency. I think ours is next. No historian will ever say that the US dollar preserved reliable fineness for even a tenth of 700 years.




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Voting With Their Feet

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Two recent stories illustrate anew the advantages of our federal system, which allows states wide variance in governance, and also allows individual Americans who feel that they cannot pursue the happiness they seek in one state to move freely to any state they choose. The beauty of this is that it helps put real limits on just how badly a given state can treat its citizens.

The reports are about two of the highest tax, lousiest business-climate states, New York and California.

Let’s start with New York. As a recent report notes, over the past decade and a half, the Empire State has led the nation in outmigration, with two people leaving for every person who moves in. But a new Marist poll indicates that the worst may just be starting.

The poll revealed that 36% of young New Yorkers — those under 30, to be exact — plan to leave the state within five years. Thirty-six percent! The primary reasons cited (by 62% of those planning to leave) are economic. Thirty percent cite the high cost of living, 19% the high taxes, and 10% the lack of decent job opportunities.

Regarding this lack of opportunity, well, suffice it to say that a recent survey done by Chief Executive Magazine shows that only California has a worse business climate than New York. And regarding the cost of living, a recent study by the Center for an Urban Future says that someone would have to earn more than $123,000 yearly to live as well in New York City as someone lives in Houston on an income of $50,000.

The second story is a posting about the aforementioned California. It reports an accelerating exodus of businesses from that dysfunctional state. It notes that California is rated by the Tax Foundation as no. 49 for business tax climate and no. 48, by the Mercatus Center, for economic freedom among the states. Not surprisingly, while in 2009 California averaged one “disinvestment event” per week (typically, a business relocating an existing facility to, or opening a new facility in, another state), by last year the average had jumped to 3.9 per week. This year, it has jumped again, to an astounding 5.4 per week.

California is already hemorrhaging people — specifically, middle-class working people. It is rapidly becoming a socioeconomically bifurcated state like Mexico, where you have the desperately poor and the ultra-rich, with little in between. The rapid movement of business investment to other states will only accelerate the Californian middle-class diaspora.

This is how federalism punishes statism: the socialist state loses its jobs and its middle-class citizens.

And that is only morally just. All forms of socialism — including the soft neosocialism of which modern liberals are so fond — are based on the twin vices of envy and sloth, both of which have been characterized, very accurately, as cardinal sins.




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Das Rinderpest Getilgt Wurde!

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Whenever people disappoint me (such as when they vote for liberal Democrats) and I think that humanity is just useless, I like to reflect upon the progress of science. It is therapy that builds eudemonia. In this regard, a recent report from medical science is worth noting.

For only the second time in history, mankind has apparently wiped out a major disease. Smallpox was finally eliminated only fairly recently, and now a long-standing pandemic disease — rinderpest — has been eradicated. Rinderpest is a disease not of humans but of animals — specifically, cloven-hoofed animals. It means “cattle plague” in German, and has been around for at least a millennium, killing off animals — cattle, water buffaloes, Himalayan yaks, pigs, and other fauna—that are important to human survival. Given the historically crucial dependence of people on these beasts, the disease has been a plague on us as well.

The rinderpest virus is closely related to the measles virus, and would periodically break out in epidemics (such as the one that the Mongols brought with them to Eurasia in the 1200s). The modern campaign to rid the world of it began at the end of World War II, with the founding of the Food and Agriculture Organization. It took about $5 billion in total worldwide expenditures — a mere pittance, really, considering that the recent Royal Wedding in Britain cost about $8 billion.

The key to wiping out the pest was threefold. First, a vaccine had to be developed that didn’t need constant refrigeration. Second (and related to that), the limited number of medical personnel (big-game veterinarians) devoted to the eradication campaign had to learn to employ locals and to focus their efforts on an area of Central Africa (the lowland areas of the Rift Valley) where the disease was persistently endemic. Finally, a quick diagnostic test for the disease had to be developed.

All this has now taken place, and it is cause for quiet satisfaction. We can, it appears, occasionally do something right.




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Imagine That!

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You have to be of relatively advanced age to appreciate the grotesque irony that has just been reported. It turns out — oh, my God (that’s OMG for those who live their lives through email) — that hippie-peacenik icon John Lennon was a closet Republican!

And not just some RINO-type, country-club, apologetic, liberal-media-ass-kissing, non-threatening Republican, but a Reagan supporter!

Yes, pick yourself up off the floor. This amazing fact is revealed by Lennon musical sidekick Fred Seaman. Seaman makes his startling disclosure in the upcoming documentary Beatles Stories, in an interview with the flick’s director Seth Swirsky. Seaman revealed that in his more mature life (that is, by the late 1970s), Lennon felt embarrassed by his younger radicalism, and relished debating leftists, including Seaman’s uncle, an "old-time communist."

Lennon said of Reagan, whom he had met at a sporting event, that he would have voted for the politician had he been a US citizen.

All of this inspires me to update Lennon’s signature song, “Imagine”:

Imagine there’s no commies.

It’s easy if you try.

No damn liberals

To tax us on the sly.

Imagine all the money

In our hands to stay!

 

Imagine all the countries —

It isn’t hard to do —

Living in total freedom

And of religion too.

Imagine all the people

Trading goods in peace.

 

You may say I’m a right-winger

But I’m not the only one.

I hope the leftists grow up

So the world can be as one.




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Green vs. Green

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For many years, Mad magazine ran a cartoon send-up of Cold War espionage called “Spy vs. Spy.” A recent report made me chuckle to think that with energy policy, we now have (as the article puts it) Green vs. Green.

On one side of the fence, you have those environmentalists who just love solar power. This includes of course the Obama regime, whose Energy Secretary Steven Chu has pushed solar with a vengeance. Recently, with a grand flourish, Chu announced a $2.1 billion federal loan guarantee to a company intending to open a 1,000 megawatt solar farm in the California desert. Earlier this year the regime granted $1.37 billion in federal loan guarantees for another solar farm in the California desert. Governor Jerry Brown (D-CA) now crows that “California is the national leader in clean energy, and our great state is poised to become the world leader in renewable energy generation.” Of course, California is also the national leader in budget deficits, and is poised to become insolvent in the next economic downturn. It is (next to Greece, perhaps) the world leader in fiscal mismanagement.

These California projects are just two out of 11 large solar farms approved by the Bureau of Land Management (BLM) and local agencies in California and Nevada. Almost all are being built on land managed by the BLM. These solar farms are projected to produce roughly 4,200 megawatts of power — which sounds like a lot, but is only equivalent to the energy generated by two medium-large nuclear power plants. Naturally, the nukes produce power all the time, not just when it is a cloudless day, and they require but an infinitesimal fraction of the land (precious, protected, government-managed land)that the solar plants will.

And more than a dozen other large-scale solar farms are awaiting approval, all in the Mojave Desert.

The massive tracts of land taken up by the ugly solar farms are a source of anger to another group of environmentalists. For example, Janine Blaeloch, executive director of the Western Lands Project, commented dolorously that “these [solar] plants will introduce a huge amount of damage to our public land and habitat.” The concerned energy analyst Christine Hersey put it in this way: “The irony is, in the name of saving the planet, we’re casting aside 30 or 40 years of environmental law. It’s really a type of frenzy.”

Yes, Christine, it is. It’s the frenzy of an administration that has shut down as much domestic drilling as it could, and is desperate for other sources of power.

One of the concerns harbored by the last-mentioned enviros is the plight of desert animal and plant life, such as the desert turtle, that live in the Mojave. Another concern is the prospect that the massive solar installations will threaten thousands of Native American sites said to be regarded as sacred. Indeed, the non-profit group La Cuna de Aztlan Sacred Sites Protection Circle is suing federal agencies and four of the solar farm companies on this basis.

With Big Solar, it’s Green vs. Green. But why did anyone suppose that environmentalism wouldn’t have as many schisms as any other religion?




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