Creation vs. Diversion

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When an investment opportunity seems too good to be true, prudence recommends asking: “Will I be sharing in wealth that I help to create, or will I taking some wealth from its real producers?”

A chain letter is an example of just diverting wealth. So is a Ponzi scheme; so is the familiar Nigerian email scam, which gains superficial plausibility from a whiff of dishonesty or illegality.

Similarly, someone engaged in a possibly though not obviously productive business — perhaps some complicated Wall Street transaction — may well ask about creation or diversion of wealth. If not conscience, then concerns about legality and the dependability of success prompt the question.

Someone offering a suspiciously attractive opportunity might dodge the question about wealth creation by saying that the success of his method, though honorable — a method of choosing stocks and timing transactions, perhaps — depends on secrecy. Even so, an answer in general terms is in order; and the vaguer the answer, the more skepticism prudence recommends.

Beyond physical objects, wealth of course includes intangibles such as education, repair and other services, transportation, entertainment, travel and tourism, and comforts of various kinds. Similarly, the production of wealth includes not just growing or physically shaping things but also specialization, the division of labor, and exchange. (Each party to a voluntary and informed transaction gains what he considers more wealth than what he gives.)

Financial operations come into the story. Arbitrage of the most obvious kind moves resources or products from where they are less scarce and valuable to where they are scarcer and more valuable; and by ironing out price discrepancies, it makes the price system more accurate in equilibrating supply and demand. A well functioning market generates knowledge and uses it productively.

 Speculation — most obviously but not only in standard commodities — is a kind of arbitrage in time, moving things from a time when they are less valuable to a time when they are more valuable. If something, say wheat, is expected to become scarcer in the future, a speculatively bid-up price tends to hasten economies in consuming the thing and possibly hasten its production, thereby lessening its future scarcity.The speculators themselves bear the costs of being wrong. Speculation contributes to the depth and resiliency of futures and forward markets, where businesses can hedge against the risk of adverse price changes (and where, as a result, opposite risks can more or less neutralize one another).  Insurance is an obvious example of hedging against risk. 

Saving and investment make possible the increased productivity of well-chosen roundabout, time-consuming, capital-using kinds and methods of production. (Here “capital” means resources freed by savers from serving current consumption so they can serve longer-term-oriented production instead.) The stock markets and related activities help allocate capital to places where it promises to be most productive. Financial intermediation tailors the terms on which capital is available to the varied wants and needs of savers, borrowers, and companies issuing stock; securitization of loans is just one example.

Like capital, risk-bearing is an essential element in production, especially innovative production. Various kinds of stocks and bonds and derivatives, including even the notorious credit-default swaps, help place risk with the persons and institutions most willing and able to bear it. Specialization in risk-bearing enhances confident and productive business planning.

The great variety of financial operations and innovations allows scope, notorious scope, for ignorance, error, and downright fraud. (Some participants, such as Enron energy traders, reputedly, may see their business as a struggle in which the other side is supposed to lose.) More broadly, wealth comes in so many forms, and cooperation in producing it occurs in so many ways, even very indirect ways, that an answer to the question with which I started can seldom be precise.

Nevertheless, insisting on whether wealth is being created or merely diverted can provide healthy discipline.




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Dr. Jekyll and President Hide

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In one of the scenes in Citizen Kane, the protagonist's former friend Jed Leland describes the character of the flamboyant politician and tycoon. "He had a generous mind," Leland says. "But he never gave himself away. He never gave anything away. He just . . . left you a tip."

He might have been describing President Obama.

Like Kane, Obama is a colossal self-advertiser. He first made his reputation, indeed, by writing a book of quasi-autobiography. Like Kane, he can hardly get through a sentence without using the word "I." He constantly refers to government entities as "my secretary of state," "my secretary of the treasury," "my department of defense," and so on. Yet when it comes to revealing himself . . . no. He'd rather be tortured than give up any pieces of the sacred substance, or anything even associated with it.

One assumes that Obama bogarted all specifics about his supposedly close and inspiring relationship with Reverend Wright because Wright had become a political embarrassment. And one assumes that Obama wants to keep his college records secret because he wasn't a very good student. These are assumptions, however, because Obama keeps his stuff to himself even when it would do him good to give it away.

The classic example of this compulsion is his logically pointless war against the people who wanted to see his birth certificate. He conceded the struggle only when he started to fear that it was costing him support for reelection, thus torturing him beyond the limits of even his endurance. For years he had made a public fool of himself by not releasing an innocuous scrap of paper.

Why, after that performance, I expected him to surrender the Osama death photos, I don't know. Maybe I thought he had reformed, and some nice, generous, "transparent" Dr. Jekyll had replaced the clutching, anal, emotionally threatened President Hide. But whatever I thought, I was wrong. The preposterous decision not to release the pictures, ostensibly to chasten radical Islamicists with the evidence of our moral superiority, will merely convince the world that Barry Obama, like Charlie Kane, has more than a small screw loose.

But what about the "tip" — "he just left you a tip"? In Citizen Kane, the protagonist paid other people for "services rendered." He demanded their love, but "he had no love to give." So he offered them money or power or other crass "tips." And that, in his way, is what Obama does. Of all the politicians I can think of, he is the greediest for love but the least interested in other people. His speech is without stories or anecdotes. He seldom alludes to any actual historical event, anything that people actually did in the past. He appears to retain no vivid memories of the people in his own past, or any real interest in the people he meets today. He speaks always as if he were reminding his audience of things they should already have been taught, never as if he wanted to learn from their responses what they themselves would like to know. In lieu of real human concern, he professes a vast interest in abstractions — progress, equality, fairness, proving to our enemies that we are better than they are in some vague, general way.

These are not the kind of tips you can take home and spend. The real stuff — he keeps that to himself. You're not getting any of that.

that




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Another Worm Turns

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I have reflected before on the pivotal battle fought by Republican governor Scott Walker in Wisconsin to modify the collective bargaining rights of most public employees. Despite an unprecedentedly brutal fight, with union-backed Democrat legislators fleeing to a different state to deny the Republicans a quorum, an extraordinary anti-Walker and anti-Republican propaganda blitz bankrolled by the unions, massive demonstrations organized and also bankrolled by them, Walker and the Republican legislators succeeded in pushing through their reform bill.

The unions then doubled down, running a multi-million dollar campaign to replace an independent state supreme court judge with a union stooge committed to nullifying the law. That failed, and the unions were stunned. They have seldom met with such abject failure before; the experience is beyond ken, and their ability to comprehend.

Now another blow to union domination has been struck in of all places — Massachusetts!

Yes, lawmakers in the Massachusetts House of Representatives have voted to cut back municipal employees’ ability to bargain collectively for healthcare benefits. (The Massachusetts bill, by the way, includes the police. It thus goes farther than the Wisconsin law, which exempted police and firefighters from the new rules). And they did so by an almost 3-to-1 margin.

In particular, the law would give local authorities (such as mayors) of the more than 350 cities in the state the power to modify municipal employee healthcare benefits, such as by setting deductibles and copayments. The unions are pushing an alternative: if municipal officials and municipal union negotiators cannot reach an agreement, the dispute will go to binding arbitration. This is a common union ploy. Unions know that arbitrators don’t have to face the electorate, and don’t have to balance budgets, either.

Even more remarkable is the fact that the move to rein in Massachusetts’ public employee unions was and is led in great part by Democrats. This is the most dramatic illustration of a growing split in the Democratic Party coalition: more and more Democrats are seeing that their cherished progressive programs are being defunded by the boundless greed of the public employee unions, bogarting all the tax revenues collected by the progressive states. In the case of Massachusetts, healthcare benefits for municipal workers have more than doubled in a decade. And the compensation packages (pay, pension, and healthcare benefits) for municipal workers are consuming about three-quarters of the average municipal budget.

As in Wisconsin, the unions fought viciously to stop the bill they did not want, but to no avail. And shocked they were at the turn of the worm. Robert Haynes, head of the Massachusetts’ AFL-CIO (which represents over 175,000 municipal employees), squawked, “It’s pretty stunning. These are the same Democrats that all these labor unions elected. The same Democrats who we contributed to in their campaigns. The same Democrats who tell us over and over again they’re with us, that they believe in collective bargaining, that they believe in unions. . . .” You can just hear his outrage: dammit, in the good old days, when you bought off politicians, they stayed bought!

Haynes vowed that the unions would keep fighting the reforms to “the bitter end,” and that the union myrmidons would target those renegade Democrats as surely as they target Republicans. His union is planning to expand its demonstrations, bringing in police and firefighters to participate, increase the ads run, and increase the lobbying.

Speaker of the House Robert DeLeo, a Democrat, offered a couple of large concessions to the unions and to members of his own party who are frightened by the unions. The first would give public employees 30 days to argue against proposed changes in their healthcare plans (though without the power to stop the changes), and would give union members 20% of any savings for the first year from contested healthcare changes that local officials impose. (Considering that the bill will likely save taxpayers $100 million a year, this is a pretty good deal.) The proposal brings the bill closer to what Governor Deval Patrick has himself offered. But the unions are still opposed.

It is unclear whether the bill will make it through the Massachusetts Senate, and if it does, whether Patrick will sign it. He is a very progressive liberal Democrat, but his state faces a nearly $2 billion deficit.

However, the win in the Massachusetts House is already telling. It says that we are coming to the place where voters are no longer ignorant of how much the public employee unions have been ripping them off. This awareness is only beginning to grow. It will accelerate quickly as the retirement of the Boomers brings to light just what massive fiscal frauds the employee unions have committed, and as people see their social services begin to crumble.

It also says that there is a limit to how long Democrats will do the unions’ bidding. Under public choice theory, we assume that all actors in the political process (voters, special interest groups, and politicians) are motivated primarily by self-interest. The politician wants to be reelected, and he knows that in most situations, the public isn’t paying attention to what laws are being enacted, while the special interests, such as unions, are. So it makes sense to screw the voters in exchange for special interest financial support. But when the public is aware and concerned, the politician knows that special interest money won’t compensate for the lost votes. In such cases, where voters are no longer rationally ignorant, the politician will be forced to defy the special interests.

We may be reaching that point.




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What's in a Birth Certificate?

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So, Barack Obama released his “long form” birth certificate and bought himself some temporary tactical advantage against Donald Trump and millions of angry conspiracy mongers out there. The document confirms, as much as any such item can, that Barack Hussein Obama II was born at 7:24 p.m. on August 4, 1961 at Kapiolani Maternity and Gynecological Hospital in Honolulu.

The lingering question of whether the man meets the constitutional requirements to be President of the United States — specifically, that he is a native-born citizen — is answered. He does. And, specifically, he is.

But, if you look a little more deeply into the hard typeface of the Certificate of Live Birth, you can see some evidence of the background that drives a person like Obama. Indulge me in a little armchair Freud.

According to the document, the president’s mother — Stanley Ann Dunham — was 18 years old when she delivered him. That’s very young by any reasonable standard, young enough to make the baby’s arrival seem reckless and ill-advised. A heavy burden to bear, especially when you were the baby in question.

And there’s the bureaucratic judgment in the Certificate’s explication that the mother’s name did not match the name of the child’s father. The 18-year-old girl signed the Certificate “Ann Dunham Obama,” a small act of revolt against the officious document’s implication of illegitimacy.

Good for her.

Many ask, now that Obama has released this Certificate, why he didn’t do it sooner. I have an idea. He’s been protecting his mother from the harsh judgment of petty tyrants.

How many bureaucratic sneers did she suffer, bearing and raising a mixed-race child in the early 1960s? How many dirty looks, when she carried him on buses or airplanes? Brought him to campus at the several universities she attended? Applied for passports? Applied for food stamps?

And how soon did little Barack II realize that authority figures judged his mother harshly? That official forms made unfriendly assumptions about her marital status? How quickly did other kids say unkind things about his . . . unconventional . . . mom? Kids in Hawaii. Kids in Kansas. Kids in Indonesia.

The facts around Stanley Ann Dunham’s life are hazy and are likely to remain so. This is the haze created by family members protecting a loved one they know needs the help. A foolish daughter. An eccentric mother.

There are different versions of when or even whether Stanley Ann and the elder Obama married. Apparently, they never lived together as husband and wife; and the President’s own wife has said that his mother was “very single when she had him.”

There’s a hard edge in that last bit, even from his wife. Young Michelle Robinson — from an intact, upright, churchgoing family headed by a father who was a civil servant — had plenty of occasions to judge foolish teenage mothers on food stamps. You can practically hear it in the very that she uses to modify single. Michelle wasn’t going to bounce around a bunch of motley state schools with a baby on her hip; she was going to Princeton.

For most of his 50 years, Barack Obama has been protecting his mother from judgments and slights. Since she passed away in the ‘90s, he’s been protecting her ghost. He’s the archetypal high-achiever from a dysfunctional family. That’ll never change.

And that archetypal sort is precisely who seeks the presidency in this dysfunctional age.

Trump and Obama’s other antagonists have already moved on to press the President to make public his transcripts from college and law school, as previous presidents have. Their assumption, which Obama himself has tacitly acknowledged in his memoirs, is that he was a mediocre student who advanced through elite academia on affirmative action preferences.

Here’s a prediction: Obama will never release those transcripts. His birth certificate — his entrance into this world — is a testament to what the Babbitts deemed his foolish mother’s recklessness and immaturity. But his Ivy League degrees are the armor he built to protect her and himself from those judgments. And slights. And dirty looks.

He’s not going to lower that.

And, in this narrow Freudian context, good for him. It isn’t a good idea, tactically — and it’s poor form, personally — to mess with a man’s coping mechanisms.




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The Healthy Society

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British Prime Minister David Cameron, speaking on February 5, deplored “state multiculturalism,” a failed doctrine of “encourag[ing] different cultures to live separate lives, apart from each other and the mainstream.” Immigrants should feel, rather, that they were living in an inclusive society, sharing a national identity, culture, curriculum, and language. Lacking such a sense of belonging and experiencing, instead, segregation and separatism, some young Muslims in Britain had turned to extreme Islamism. Cameron cited the “horror” of forced marriage in some immigrant communities. He proposed “a two-month programme to show sixteen-year-olds from different backgrounds how to live and work together.”

Earlier, on October 16, Chancellor Angela Merkel had expressed similar worries for Germany, home to some four million Muslims. The idea of people from different cultural backgrounds living happily "side by side" without a common culture did not work, she indicated: "This [multicultural] approach has failed, utterly failed." French President Sarkozy has said similar things.

Such remarks might be code words for anti-Islamism, but I am not cynical enough to think so. The worry of Cameron and others seems plausible, but it requires nuancing. It is perhaps soundest for a situation with two aspects. First, only one substantial immigrant culture, rather than several, confronts the local culture. Second, the authorities work to preserve the distinction — as, for instance, through year-by-year, not just transitional, public-school instruction in the immigrant language.

But this scenario does not necessarily recommend the opposite: different cultures melted into a homogeneous dominant one. A good society, true enough, does require consensus on ethical norms such as treating other people honestly and honorably, respecting their rights and property — not cheating, stealing, or committing aggression. Such consensus can accommodate differences in details of etiquette and lifestyles (arguably extending to same-sex and even polygamous marriages). Furthermore, a good society requires acceptance of a common legal system, without special privileges or burdens for particular groups. Consensus on the political system also rules out seeking change by violence, but it admits advocating even radical change by constitutional means.

While rejecting militaristic and imperialistic nationalism, Ludwig von Mises welcomed liberal nationalism, including movements for liberation and unity of populations speaking a common language (Nation, State, and Economy, 1919/1983). Liberal nationalism can be a bulwark of peace. Different nations should be able to respect and — to interpret a bit — even share in each one’s pride in its own culture and history. By extension, such mutual respect and celebration can extend to members of different national heritages within a single country. A healthy multiculturalism welcomes a diversity of interests and heritages without official favor or disfavor for any.

A diversity of national heritages can enrich a country’s overall culture. Quasi-native speakers of heritage languages, especially with their own publications and broadcasts, can promote language-learning and can be useful in diplomacy and in war. Diversity even of national restaurants and foods — Chinese, Mexican, Greek, German, French, and so on — multiplies options for work and for leisure. Cultural diversity can bolster a general awareness of history.

Diverse national heritages can scarcely offer benefits as great as those of the occupational division of labor and of domestic and international trade. They can, however, multiply the variety of niches in life in which a person or a family can feel comfortable and important. They can help avoid the dismal opposite, a society in which individuals must feel superior or inferior in competition on a single scale of overriding significance (money being the most obvious metric). A diverse society includes all sorts of (decent) persons, including, yes, entrepreneurs and investors obsessed with creating wealth and making money. Few people, however, can realistically expect outstanding success on the monetary scale. Pursuing an unattainable material equality would foster attitudes and politics incompatible with a quasi-equality of a more humane and more nearly attainable type.

A healthy society — to continue my amateur psychologizing — comprises many “noncomparing groups” (so called by analogy with the noncompeting groups recognized by the 19th-century economist John Elliott Cairnes). People should not be ranked according to the fields in which their accomplishments lie. Each person should have a chance to excel in something, whether craftsmanship, business, scholarship, athletics, a hobby such as collecting classic cars or rare coins, a religious group, travel and adventure, conviviality, or self-effacing service to mankind.

And, yes, cultivating a national heritage. Many kinds of excellence should be as respectable as the amassing of fortunes. A teacher could continue associating without embarrassment with former colleagues or students who had become business tycoons, not because progressive taxation had lopped off their huge incomes but because scholarly values and monetary values were regarded as incommensurate yet of equal dignity. While the approach to equality sought by left-liberal egalitarians implies measurement, true liberals need to follow Herbert W. Schneider (Three Dimensions of Public Morality, 1956, p. 97; cf. pp. 100, 118) in emphasizing "the incommensurability of human beings.”




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True for Me

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I’ve reflected before on the unintended comedy that flows from people in positions of authority or influence in our society denying the existence of objective reality. In the far future, enlightened people will look back on this era of American history and marvel at the fact that the children of a system built on reason could behave so irrationally.

A recent example: the slightly past-her-prime movie actress Ashley Judd (née Ciminella) recently made the rounds of television talk shows to promote a memoir. As expected of such a project, Judd included salacious tales of incestuous sexual abuse suffered when she was a young girl and edgy sex when she was a young woman. Also, occasional bouts of manic depression.

In the book, Judd recalls when she was in middle school and her mother — the country music singer Naomi Judd — started dating her second (and current) husband:

"Mom and pop were wildly sexually inappropriate in front of my sister and me ... a horrific reality for me was that when pop was around I would have to listen to a lot of loud sex in a house with thin walls. . . . I now know this situation is called covert sexual abuse."

It’s too bad that Judd has been reduced to this. She made some pretty good films in the 1990s and early 2000s — including my personal favorite, the surreal 1999 whodunit Eye of the Beholder.

But her deepest self-abasement doesn’t appear in her book. Asked on the Today show what her family thought of the book, Judd said:

"You know, the book is very honest [but] it’s not necessarily accurate, because everyone in my family has their own perspective and their own experiences. But it’s very true for me."

Ugh. Beware “true for me” memoirists.

Of course, some people go for this situational twaddle. One of the half-wit columnists at the website Salon.com wrote:

"Judd’s admission that her memoir is “true for me” allows for an acknowledgment of the real trauma she’s experienced while also making room in the narrative for other versions of events. Memory might not hold up in a court of law, but that doesn’t matter much to a scarred heart. One that’s suffering depression and a host of other hurts. And, by admitting that, Judd’s telling others that if it feels like abuse to you, it was abuse. And that’s good enough."

No, it’s not. As James Frey, Greg Mortenson, and a growing list of other fabulists and swindlers will attest, “true for me” memoirists are a sleazy lot. Often full of sanctimonious, politically-correct hypocrisy. Usually tripped up by undeserved self-regard.

Sadly, these same faults apply to the younger Ms. Judd. Less than three years ago, she appeared in a series of videos produced by a statist political advocacy group called Defenders Action Fund; in those videos, she castigated Sarah Palin for supporting the sport killing of wolves from helicopters. To wit: “Now back in Alaska, Palin is again casting aside science and championing the slaughter of wildlife.”

So, a woman who doesn’t hold herself to a standard of factual accuracy in her salacious memoir damns another woman for “casting aside science” when dealing with wildlife management. This selective embrace of objective reality is part of the reason that American culture is on the decline.

Statists thrive when people doubt objective reality and use terms like “true for me.”

Ashley Judd’s loud and libidinous mother probably summed up the real ethics of such people when — asked by the Today show for a response to her daughter’s stories — she said: “I love my daughter. I hope her book does well.” Cha-ching.




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A Surprise Hit

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Last week I attended a screening of Atlas Shrugged, Part I, and was amazed to see that the theater was literally sold out and packed full. I cannot ever recall seeing that before. After all, this is not your usual fluffy romantic farce, comic book superhero movie, or action flick. It is an honest effort to put Ayn Rand’s extremely long novel into movie format.

Producers Harmon Kaslow and John Aglialoro are expanding the release from the initial 299 theaters to 425 by this weekend, and as many as 1,000 by the end of April. This is stunning, considering that the marketing plan was considered lame by Hollywood insiders, because it used the internet rather than more traditional venues, such as TV and radio, for running ads.

Not only are ticket sales doing well, but film-related merchandise — including replicas of the bracelet Dagny Taggart (Taylor Schilling) wears in the movie (made out of “Rearden metal”) — are flying off the shelves.

Aglialoro, a businessman who put $10 million of his personal capital into the flick, as well as co-writing and co-producing it, attributes its success in great measure to fortunate timing. I think that in this he is absolutely right. Obama’s leftist regime, with its bash-the-rich and blame-the-businesses rhetoric, massive new regulations, crony capitalism, and redistributionist mindset, has created a ready market for the movie.

Ironically, Obama may prove to be the cause of a whole new wave of Rand mania. That is well worth a chuckle or two, no?




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A Whiff of Smoke

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I have oft reflected, in this place, on the fiscal fires advancing toward us.

The United States is running massive deficits, even as it creates massive new entitlement programs (e.g., Obamacare). Our national debt is about to hit $14.3 trillion. Our three main existing entitlement programs (Social Security, Medicare, and Medicaid) are underfunded by more than $100 trillion. And consider such under-the-radar unfunded liabilities as the Pension Benefit Guaranty Corporation, which "guarantees" the pensions of millions of private industry workers and is underfunded in the tens of billions. That's now. Later, as more workers retire . . . you can guess what will happen. Meanwhile, the deficits of those Twin Towers of moral hazard, Freddie Mac and Fannie Mae, continue rising.

All these are at the federal level. The states are another matter.

The states are currently running a deficit of around $125 billion, which may not sound like much in this context. But at their level there is also more than $3 trillion in outstanding bond debt (counting municipal as well as state bonds), and what we can only estimate at about $3 trillion in unfunded liabilities.

The alarming rise in this ocean of red ink has caused Standard & Poor’s to cut its outlook on the US credit rating from “stable” to “negative,” meaning that in the credit agency’s view, we have about a one-third chance of having our AAA credit rating lowered during the next two years. Should that happen, the cost of our staggering amount of borrowing will explode.

The agency’s decision reflects more than its worries about our current deficit of $1.6 trillion (about 10.8% of current GDP) and our total debt of $14.3 trillion (over 91% of our GDP). It also registers the agency's skepticism about whether the wise solons in Washington will be able to staunch the flow of red ink anytime soon.

A number of predictable events have quickly followed. First, the Obama regime immediately pooh-poohed the embarrassing announcement. Spokesman Jay Carney said, “The political process will outperform S&P’s expectations. . . . The fact is where the issues are important, history shows that both sides can come together and get things done.” Obama’s unserious budget proposals belie these words.

Also predictable was the immediate drop in the stock markets. The Dow fell by 1.1% (140 points) that day, and London’s FTSE 100 fell by 2% (126). Equally predictable was the immediate weakening of the dollar, and gold's breaking the important psychological barrier of $1,500 an ounce. (It wasn't very long ago that it broke the psychological barriers of $500, then $1,000.)

The continuing housing bust masks our increasing inflation. While the official American inflation rate remains about 3%, prices have been rising rapidly in food and energy. Commodity prices are at or near their historic highs.

The public is now receiving a small whiff of smoke from the myriad fires that endanger us. People haven’t yet seen the flames, but when they do, the reaction will be severe. This is only the first year in which baby boomers are starting to retire. When all 78 million of them are on Social Security, Medicare, SSDI, Obamacare, and so on, you can expect a fiscal firestorm — probably hyperinflation or bond defaults.

The good news is that in those fiscal flames the hubristic and vicious (in the sense of vice producing) progressive-liberal state will likely be consumed. One hopes that will mitigate the pain.




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The News About the News

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When I was a child, we subscribed to two newspapers a day. The Los Angeles Times arrived early in the morning, and the Herald-Examiner plopped onto our doorstep in the late afternoon, usually thrown by my friend Dennis Miller, who had a paper route. (Back then, moms felt safe letting their young boys ride their bikes by themselves every day and knock on doors asking for money once a month.) I always liked the Examiner better, because the photos were a little larger, the stories a little racier, the features a little more entertaining. I didn't realize back then that it was intentional: morning papers contained cold gray news for people in a hurry; evening papers provided lighter fare and racier storytelling for readers who wanted to relax and unwind after a hard day.

With the advent of television news, then cable news, then electronic news, print news has become less and less profitable. Newspapers around the country are cutting back on stories, letting staffers go, and just plan folding up. When documentarian Andrew Rossi received permission to hang out with a video camera at the New York Times offices for a whole year, he didn't know that the demise of print journalism would become the focus of the story; no good documentarian ever knows exactly where the film will end up. But that's where Page One: Inside the New York Times went, and the result is a sometimes lively, sometimes somber, mostly interesting story about the past, present, and future of journalism.

Page One is a bit character heavy in the beginning as it introduces several side stories at once. The character who shines with the most luster is David Carr, the eccentric Monday columnist for the Business section of the Times who focuses primarily on media issues. One of the ironies pointed out in the film is the fact that the Times found it necessary to open a desk in 2008 to cover the demise of the media, and Carr does it in this film with a protective vengeance.

What's cool about Carr is that he lived first, and became a respected journalist second. A self-described cokehead in his youth, he spent some time in jail before becoming a respected writer. He wrote for a number of alternative publications before joining the Times when he was approaching 50. As a result, his voice, both written and spoken, is often unfiltered and unabashed, providing most of the humor in what is often a gray documentary.

But what is killing print journalism? First is the need for profits. Subscription rates will never be able to cover the costs of writing, printing, and delivering the news. Advertising revenue is the true source of support for newspapers, and ad revenue in print media is down everywhere. As a result, coverage is down, and serious coverage is down even more. Who's going to cover city hall when readers only want to know what Lindsay Lohan is up to? And since readership determines advertising rates, more fluff is passing for news these days.

Second is the need for speed. People used to be willing to wait for the scheduled newspapers, with an occasional "Extra" in which to "read all about it" when breaking news called for the editor to "Stop the presses!" Today's tech-savvy consumers, by contrast, are constantly in touch with breaking news, through texting, Twitter, Facebook, and other instant news feeds. They expect to know what's going on, moments after it happens.

On the other hand, the blogosphere's post-now, check-facts-later mentality gives print media the edge in accuracy and credibility. Carr wryly disparages the "caco-phony" of Twitter, even though he grudgingly admits that Twitter is a "wired collective voice" that gives him a sense of what people are talking about. One important scene in the documentary demonstrates a typical 10 a.m. meeting at the Times, where several editors and reporters sit around a table discussing stories currently in progress. There is an air of calm as they take the time to check facts, discuss context, consider reader interest, and check facts again.

Nevertheless, the documentary pulls no punches in reporting on the Times' gross mistakes, including the Jayson Blair scandal and Judith Miller's 2002 articles reporting weapons of mass destruction in Iraq that turned out not to exist. Miller defends herself by saying, "If your sources are wrong, you're going to be wrong." Blair was simply lying. I'm not sure which is worse — being naively hoodwinked or being deliberately devious.

One of the most shocking revelations in the film is the "end of the war" in Iraq that was neatly choreographed by NBC execs to coincide with the 6:30 news. The documentary claims that NBC simply wanted to give viewers a "mission accomplished" closure to the story. So they filmed their reporter accompanying "the final combat troops leaving Iraq" and broadcast it live on the evening news, even though the Pentagon had made no such announcement. It reminded me of the ending of Ray Bradbury's Fahrenheit 451, when protagonist Guy Montag watches an innocent pedestrian being chased down, caught, and killed in his stead, just to give viewers the satisfaction of "closure" on the evening news.

The film touches on dozens of areas affecting journalism today. All of them are interesting and important, but the film's own cacophony of information prevents it from having a strong central storyline. In a way, this presentation is more real and honest than a neatly tied story with a beginning, middle, and end. Life doesn't always have a climax on page 72. Nevertheless, it's a fascinating film, well worth viewing.


Editor's Note: Review of "Page One: Inside the New York Times," directed by Andrew Rossi. Magnolia Pictures, 88 minutes.



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Why Are We Suddenly Winning?

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There was a recent miracle in Wisconsin, and it is the kind of miracle that merits some reflection.

After facing the fury of the public employees for weeks, Scott Walker, Republican governor of Wisconsin, was able to sign into law restrictions on the collective bargaining rights of state employees. This was the bill that the Republicans in the state legislature had managed to pass even while the Democrats in the state senate were hiding out of state, attempting to deny them a quorum).

It was miraculous enough that the Governor and the Republican legislators hung tough in the face of the union-orchestrated onslaught of confrontational — nay, hysterical — demonstrations by spoiled teachers, duped school kids, poseur leftist college students, and union rent-a-goons (all apparently unchecked by sympathetic cops), not to mention a massive ad blitz portraying the Republicans as subhuman brutes bereft of all compassion.

But after the bill was signed, the unions went to the Left’s time-tested Plan B: use the court system to get what you want. And fortuitously for the unions, there was an election for a seat on the state Supreme Court, in which fairly conservative Justice David Prossner was up for reelection. Unions plowed an astounding $3.5 million into defeating Prossner and electing their chosen tool, JoAnne Kloppenberg, who made it clear that if elected she would rule the troublesome law unconstitutional. It was an egregious display of a complete lack of judicial temperament, not to mention intellectual integrity.

The race promised to be close — remember, another of the time-tested tools of leftist unions is to use their organizational power and endless dues money to win off-year elections, relying on the fact that the rationally ignorant taxpayer is usually too preoccupied with other things—such as actually having to work for a living — to vote in minor elections.

Initial reports showed that the union stooge had squeaked out a victory — she even went on TV to crow about it. But then another miracle occurred: during the certification process, County Clerk Kathy Nickolaus discovered that the City of Brookfield’s votes had not been counted into the statewide total. When they were, it turned out that Prossner won going away, with a margin large enough that the usual Democratic election-stealing tactics (finding a few mysterious votes that appeared to be cancelled ballots, for example) won’t work to reverse it.

This is a huge setback for organized labor in particular, and the Left in general. Be crystal clear on this: if organized labor can’t count on winning an off-year election in a blue state after spending millions of dollars and rallying its myrmidons to march, scream, and vote in lockstep, it is in very profound trouble.

Why? What accounts for all these developments?

Several recent stories help us understand why rightist Republicans, usually pathetically lacking in anything remotely resembling electoral savvy and political street-smarts, are beginning to achieve some measure of success in enacting their agenda. The stories have to do with the looming approach of the public choice tipping point  — the point at which rational ignorance ceases to be rational.

The first is a nice article by libertarian economist and all-around BFB (brilliant French babe) Veronique de Rugy. She brings to our notice the growth of that glorious illustration of the law of unintended consequences, the AMT (Alternative Minimum Tax).

The AMT was passed by a hysterical Congress back in 1969, when it was discovered that about 150 wealthy Americans were — gasp! — using legal deductions to avoid paying taxes. (Ironically, most were elderly people who had put their money in tax-free municipal bonds, bonds that, of course, fund government.)  Under the AMT, certain higher-income taxpayers must file two tax forms, the regular form, and the AMT form. If the latter shows that they owe more than they would if they used the regular form, they have to cough up the difference.

The Governor and the Republican legislators hung tough in the face of hysterical demonstrations by spoiled teachers, duped school kids, poseur leftist college students, and union rent-a-goons.

The cruel joke on the taxpayer is that the AMT was never indexed for inflation, so as each year passes it molests more and more taxpayers. In fact, the number of hapless filers hit by the AMT rose from a couple of hundred in 1970 to about a half-million in 1979 to 4.5 million in 2009.  In that year, Congress had to pass a short-term patch, so that in 2010 the number of taxpayers eligible to be AMT’d wouldn’t rise to 27 million! No doubt the taxpayers who would be targeted were made aware of this by their accountants, and pressured Congress to stop it.

The second article is a superb piece by the SAG (smart American guy) Stephen Moore. Moore contends (rightly, in my view) that “we’ve become a nation of takers, not makers.” He mentions a number of statistics that illustrate this.

There are now nearly two government workers for every worker in manufacturing (22.5 million versus 11.5 million). He notes that back in 1960, there were 15 million workers in manufacturing versus only 8.7 million in government. To put this in another way, we have more people working for government “than work in construction, farming, fishing, forestry, manufacturing, mining, and utilities combined.” Almost half of the combined $2.2 trillion that state and municipal governments cost taxpayers every year is spent on public employee pay and benefits, including pensions. (Moore doesn’t note the fact that this outlay will soon explode, as the Baby Boomers retire.)

California now has twice as many government workers as workers in manufacturing. New Jersey has two and a half times as many. Florida and New York stand at about three to one, government to manufacturing. Even more amazing, Iowa and Nebraska — classic farm states — now have five times as many government workers as farmers.

Pointing to recent surveys of college grads, which show that these people would rather work in government than in private industry, Moore makes the devastating point: “When 23-year-olds aren’t willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.”

A third article illustrates the reason for the attractions of government work. This New York Times piece reports on a growing practice of government workers — retiring on full pension and immediately going back to work; in effect, double dipping. In true Times fashion, it builds the story around a human sample case, one Carlos Bejarano, who is the superintendent of an Arizona school district of about 7,000 students in grades K through 8.

In the middle of a fiscal crisis, in which the district is planning to lay off staff and close two schools because of economic hard times, Bejarano will retire, this year, on a pension of $100,000 per annum — but will continue at his existing job. Oh, by the way, his job pays a modest $130,000 a year, plus health and other benefits, that come to a total of about $150,000 yearly. At one hearing about the school closings, an outraged citizen sputtered out, “How dare you?”

Cases like this are legion, and the populace is beginning to know it. Try explaining to the average worker why he is paid a fraction of Mr. Bejarano’s wage, and has a 401k instead of a defined-benefit pension, or is even unemployed, while his taxes go to pay some public school administrator what Bejarano makes. Good luck.

So there you have it. These stories illustrate what I think is driving the increasing boldness of the Republicans. People are becoming ever more aware of the possible increase in their taxes, and there is increasing awareness of how vast government has become, and how often these multitudes of government workers are ridiculously overcompensated. It is this growing awareness that is changing the rules of the game — changing it from a game that favors “progressive” liberals to one that just might favor classical liberals.




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