Resurrect Capitalism!

March 14, 2009

Central Planning for Growth and Recovery?

Filed under: Obama, politics, socialism — Tags: , , — admin @ 6:52 am

A few days ago President Obama said to a group of businessmen that things in the economy are “not as bad as we think they are”.  No one in the mainstream media called him out on that rather abrupt flip-flop from just last month:

Obama warned that failure to pass an economic recovery package could plunge the nation into an even longer, perhaps irreversible recession

Quite a startling contrast with his more recent statements.

But I digress.  In this same meeting with businessmen President Obama has started to flesh out his vision for how to get the American economy moving and growing again. Being a socialist through and through it should be no surprise that Obama’s plans involve bigger government and bigger sums of money being spent.

“What we need to do is go back to fundamentals,” he said. “And that means driving our healthcare costs down. It means improving our education system so our children are prepared and we’re innovating in science and technology. And it means that we’re making this transition to the clean energy economy.”

On the surface these sounds like sensible remarks.  But boiled down to essentials they will involve ever more bureaucracies consuming ever more massive sums of money.

How will Obama “drive our healthcare costs down”?  Why, by increasing the governments role in healthcare.  I can’t remember the last time the government subsidized anything and made it cheaper, but that’s just me.  Obviously Obama doesn’t care about costs as much as having socialized healthcare.  Most people would be surprised to learn that government spending comprises nearly 50% of all healthcare expenditures in this nation.  How much more expensive will it get when the government’s share of healthcare funding increases, as it will surely do under the Obama administration?

Education, like healthcare, is another area where government interference has been massive and costs have increased much more rapidly than inflation.  Of course Obama will never see this connection.

There are certainly things Obama could and should do to stimulate the economy but they don’t fit in with his socialistic vision.  Make America a more appealing place to do business.  Trim regulations.  Allow people and businesses to keep more of their own time and money.  Let people be free!

The economy will recover and the recovery will not by led by a man who has never been tested by market forces.

February 13, 2009

Mystery Meat

Filed under: politics, pork — Tags: , — admin @ 9:14 pm

A very disturbing aspect of the bailouts: it seems as though not a single senator will have the chance to read the actual $790B stimulus plan before voting on it.  The reason is because it takes a while to read 1071 pages of anything but the vote is going to be held in a rush.

The bill is expected to land on President Obama’s desk no later than Monday, and the president is expected to sign it into law–whether the nation’s lawmakers have read it or not.

Call me cuckoo, but I’d like to at least have the fantasy that our elected officials know what they are voting for.

Sen. Roland Burris (D-Ill.), President Barack Obama’s successor in the Senate, seemed baffled by the thought of actually reading the entire bill–as did his press secretary.

“I think it’s about 800 pages,” Burris’s press secretary said before laughing lightly. “We’ll do the best we can.”

Fuck you, Roland Burris!

Fuck you, Sen. Burris’ press secretary!

I don’t think saddling our children with extreme amounts of debt is something to flippantly blow off.  My teachers made me read 1000 page books in some classes.  But I guess the standards are looser when you’re voting on increasing debt levels by many hundreds of billions of dollars.

It’s obvious that the bill is being rushed through in an effort to strong-arm opposition.  It’s also obvious that the amount of pork and wasteful spending in the bill will be of biblical proportions.

February 7, 2009

Stimulus Packages == Magical Thinking

Filed under: Obama, capitalism, economic growth, politics, psychology, socialism — Tags: , , , , , — admin @ 10:01 am

I’m very skeptical of government sponsored “stimulus packages”.  There are a number of inconsistencies underlying them, and they have a miserable track record at achieving their desired results.  But right now we’re in a financial panic.  In our politicians’ minds critical thinking and examination of the results of previous stimulus efforts are subordinate to the need to DO SOMETHING, NOW.

We’ll set aside the fact that for Obama’s stimulus package (which he tells us needs to be passed NOW) the vast majority of spending will not even happen this year. We shall also set aside the fact that hundreds of billions of dollars of the proposed package are going to welfare of some sort and cannot by any stretch of the imagination cause lasting economic growth.

I’m really puzzled by the assumptions lurking beneath a stimulus package proposal.  The idea is that our government can print money and  through deficit spending  allocate it to a variety of programs, with lasting economic growth somehow resulting.  This is classic Keynesian economics and it has been tried in a variety of nations and circumstances, never with the desired result ensuing.  Keynesian economics does however have the appeal of “something for nothing” and politicians who want to be seen as proactive cannot resist the promises of stimulus packages.

Economic growth is caused by solving / improving problems.  The industrial revolution caused economic growth by freeing up labor.  The horse and carriage, railroads, automobiles, and airplanes all caused economic growth by improving transportation options.  The computer automated countless tasks and freed up considerable mental effort.  The internet caused economic growth by improving the transfer of information.  The theme is that to get economic growth, to improve the standard of living, things need to improve. The catch of course is that it is difficult to improve things.

Government stimulus packages do not improve things.  People who advocate stimulus plans suffer from “magical thinking“:

According to psychologist James Alcock, “‘Magical thinking’ is the interpreting of two closely occurring events as though one caused the other, without any concern for the causal link.

Having more wealth is a consequence of economic growth.  Stimulus advocates take the consequence of growth to be the cause of growth. In essence they confuse cause and effect.  In their minds more money spent implies more wealth.  As a result any amount of money spent on anything should cause economic growth.   Money for artists that no one likes, money for STD prevention, money for bridges to nowhere-  it doesn’t matter to them as funding is equivalent to growth.  Quoting our President:

Ratcheting up the sarcasm, the president said: “So then you get the argument, ‘well, this is not a stimulus bill, this is a spending bill.’ What do you think a stimulus is?”

“That’s the whole point,” he said, as the audience hooted and applauded.

Our President suffers from an acute case of magical thinking.  In his book any government spending will cause net economic growth.  I’ll accept that in a package ~ $1T in magnitude SOME lasting economic growth will be stimulated.  But the question is not will SOME economic growth be stimulated but will the NET effect be economic growth? All of this spending has to be financed somehow, and the funds will be taken from people who given the choice would allocate their capital differently.

turning lead into gold

stimulus packages: just another attempt at turning lead into gold

The basic premise underlying all government stimulus packages is that government is somehow more efficient at allocating resources (i.e. capital) than individuals.  Stimulus packages are the distilled quintessence of SOCIALISM.  Socialism everywhere it has been tried has had miserable results at stimulating growth (academics don’t even debate this, but some say the economic stagnation was a worthwhile trade-off for other more ephemeral benefits).  But somehow this time socialism is going to work and it is allegedly going to save us all.

I’m not the only one skeptical of stimulus attempts.  The Congressional Budget Office concludes that Obama’s stimulus plan will hurt the economy more than doing nothing.

The beauty of capitalism is that as a politician you don’t have to do anything.  You just remove constraints and let people solve their own problems.  Grant people the freedom to allocate their resources as they see fit.  The downside to this is that voters who want to have their cake and eat it too will hold you as a politician responsible for solving their economic problems.  Capitalism is not perfect (nothing is) but just like the laws of thermodynamics you will not do any better.

Our Congress is on the verge of making a grave mistake, one that our children and grandchildren will be paying for.

February 5, 2009

Arrogance Is NOT An Argument

Filed under: economics, politics, psychology — Tags: , , — admin @ 7:37 pm

obama_smug

President Obama says that we need to act FAST and implement his stimulus plan or the results could be catastrophic.  We should be seeing the real Obama more and more now that he must take off the mask of the idealistic agent of change and be a real politician.

Well, he should be acting like a guy who has to solve real problems with real constraints.  But he writes as if he is still in campaign mode, with more of the same fluffy rhetoric that was old as soon as he got elected:

So we have a choice to make. We can once again let Washington’s bad habits stand in the way of progress. Or we can pull together and say that in America, our destiny isn’t written for us but by us. We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship. We can act boldly to turn crisis into opportunity and, together, write the next great chapter in our history and meet the test of our time.

His stimulus bill is stalled in the senate due to massive amounts of pork that have nothing whatsoever to do with economic stimulus.  You’d think he would take the opportunity to address these criticisms and explain why this spending is not wasteful.  Instead he just spouts off platitudes as if to brush aside those who stand in the way of his vision.

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.  I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long.

He really doesn’t present ANY argument for his stimulus plan.  He soothingly describes the general symptoms of what ails us but he does not say HOW his plan will stimulate growth.  He just flatly states that his plan will stimulate the economy.

The economy is bad-  OK, agreed.  So explain to me how spending $1T or so on programs that are at best remotely connected to economic growth is going to revive our economy.  Don’t just try to make me panic:

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

The last line really gets my goat.  The notion that we will descend into an irreversible decline unless we implement his stimulus plan smacks of astounding arrogance.  In fact this entire op-ed piece reeks of smug arrogance.  I’m getting the impression that Obama has always pretty much had things go his way and doesn’t feel the need to justify any of his actions or decisions. If you don’t agree with him, why, you are a bitter husk of a person holding up progress and you need to step aside.

I’m skeptical of any stimulus measure that involves politicians allocating taxpayer dollars.  We need real economic growth (that is, we need to SOLVE PROBLEMS and improve things) and that is something that we do, not the government.  I think that our government can and should try to indirectly stimulate the economy by relaxing (perhaps only temporarily) regulations that add considerable costs to business.

Normally I would favor tax cuts but with our deficit at cringe-inducing levels already I’m not so sure that is the best course of action.  But if our government were to spend $1T on stimulus I would rather have $1T in tax cuts.  The deficit would increase by the same amount but at least we would be able to keep more of our cash and stimulate real growth in the process.

Storm Clouds On The Horizon

Filed under: Uncategorized, decline, deflation, politics, turmoil — Tags: , , , — admin @ 12:41 pm

I believe that recessions are not always a bad thing (and that this downturn was absolutely essential).  But they bring a lot of troubles and unrest as well.  Lots of bad news is emanating from all over the world.

GDP has declined 6% in America.  Credit has tightened up, banks are folding…  you know the rest. 

South Korean exports declined 33% year-over-year, the biggest decline ever recorded.  Feeling emboldened, North Korea has increased belligerent talk as of late. 

China is facing a massive unemployment problem.  Exports have fallen off a cliff and their economy is in a record decline.  10M+ migrants workers are unemployed but this number threatens to rise to well over $50M.  The legions of unemployed migrant workers are a powder keg waiting to explode. 

In Ireland “the game is up“.  The Celtic Tiger is rapidly spiraling towards insolvency.  Unions are threatening mass disruptions and unrest.  They’re on the verge of dumping the Euro.

Iceland is insolvent.  They have had massive protests and the government has capitulated. 

France has also had massive demonstrations (well, much more massive than usual).  The majority of the French population support the protests and are demanding magical fixes for the economy. 

Unemployment in Spain is 14% and is projected to rise to 19% by the end of the year.  A lot of blame is directed at low-wage immigrants. 

Violent protests and riots have raged in Greece.  Unemployment is rising and their economy is dissolving. 

All over the world people are pissed off and they want heads to roll.  America bashing has been all the rage these past 5 or so years but America will be a better place to reside than any of the other nations mentioned above.  At least most Americans aren’t rioting for magical pain-free solutions to our economic problems. 

ocean-storm-clouds

 

There WILL BE national defaults

There WILL BE revolutions

There WILL BE violent conflicts

February 3, 2009

Is Graft a Qualification?

Filed under: politics, taxes — Tags: , — admin @ 12:12 pm

Seriously, WTF?  Do any of Obama’s cabinet picks think they have to play by the rules?

change we can believe in?

change we can believe in?

A quick bullet point list:

  • Nancy Killefer, “Chief performance Officer” (nomination withdrawn): failed for a year and a half to pay employment taxes on household help
  • Timothy Geithner, Treasury secretary: belatedly paid $34K in income taxes
  • Tom Daschle, Health and Human Services Secretary nominee: belatedly paid $128K in income taxes
  • Bill Richardson, Commerce Secretary (withdrawn): concerns of corruption while serving as New Mexico governor

Some of these are FELONIES.  You and I would be hard pressed to get a decent job anywhere with these tax clouds over our heads.  Imagine telling an IRS auditor that it was an “honest mistake”.  But I guess it’s OK for some of the most powerful positions in America.

The tax sums are trivial for these people and yet these folks think they should just be allowed to slip by.  Only when they are facing a grilling do they get their financial house in order.

UPDATE: Now Daschle is out!  What a rocky cabinet confirmation process.

January 30, 2009

Politicians Are Disconnected From Reality

Filed under: economics, politics — Tags: , — admin @ 8:04 pm

I’m opposed to bailouts on the general principle that our government can’t directly stimulate economic growth.  It can indirectly stimulate growth via tax cuts and loosening regulations, which have the effect of allowing you to keep more of your own money.

But I believe that if you’re going to go ahead with a bailout in an attempt to directly “stimulate” the economy you should at least direct the funds towards something that might have stimulative effects.

So I am a little curious as to how the provisions of Obama’s new $825B “American Recovery and Reinvestment Act of 2009″ bailout proposal will help stimulate much of anything (other than his political supporters).  The sheer amount of giveaways that have nothing at all to do with stimulus is staggering.  Here are the highlights of the demons lurking in the “stimulus” package:

  • $1B for Amtrak (the perpetual sinkhole!)
  • $2B for child-care subsidies
  • $50M for the National Endowment for the Arts (that is, the kind of art nobody wants to pay for voluntarily)
  • $400M for global-warming research
  • $2.4B for carbon-capture demonstration projects
  • $650M to pay for digital TV conversion coupons
  • $83B in earned income tax credits (these are “tax cuts” for people who don’t pay taxes)
  • $81B in Medicaid
  • $20B in food stamps
  • $7.5B in public housing (Auntie Zeituni gets new digs?)
  • $30B for COBRA health insurance extension
  • $36B for unemployment insurance
  • $4B for additional Social Security payments
  • $2.5B for welfare payments
  • $1B for nutrition programs
  • $66B in various educational expenses
  • $8B for renewable energy funding
  • $6B for mass transit funding

All total this is about $352B that has absolutely nothing to do with economic stimulus.  Obviously this plan is a liberal’s wet dream.  If spending on the above items qualifies as economic stimulus what wouldn’t? Our politicians are using this financial meltdown as an excuse to spend buckets of money on anything and everything they want. This is an absolute orgy, a complete free-for-all binge.

The plan does contain some spending that could be categorized as “stimulative”:

  • $30B for bridge and highway repair projects
  • $40B for broadband and electric grid development, airports and clean water projects
  • $20B for business tax cuts

Obama sold this plan to the public as an infrastructure rebuilding plan.  I only see $70B that can be categorized as infrastructure expenses.

Our politicians are lost in space.  Three months into the current fiscal year we already have a record deficit.  This is coming off the 2008 fiscal year which was also a record deficit. Now Obama wants a minimum of $852B in additional spending.  But our government debt will be far worse than just these massive spending increases.

One must also take into account that tax revenues will be down significantly from last year.  So we have a scenario of collapsing revenue and exploding expenditures.  Not good at all. Some day when I am not completely disgusted by these insatiable gluttons in our government I will do a more quantitative examination of our federal debt.

Democrats complained (rightfully so) that Bush racked up huge deficits.  But they are going to leave his spending in the dust.  Way back in ancient history (early 2004) the Federal deficit was a “meager” $375B.  Democrats said this was shameful and I agreed. What did Rahm Emanuel himself have to say about Bush’s deficit at that point in time?

“The deficit is going to be a symbol of their credibility problem”, said Rep. Rahm Emanuel, D-Ill.

He said a $375B deficit was a credibility problem. So what does a multi-trillion dollar deficit imply?

If a $375B deficit is a "credibility problem" then what is a $1T+ deficit?

But now a much, much larger deficit is OK with Mr. Emanuel, since his boss is at the helm.

Just a really basic question for our economic master planners:

HOW ARE WE GOING TO PAY FOR THIS SHIT?

January 28, 2009

Rediscovering Limited Government Roots?

Filed under: bailouts, economics, politics — Tags: , — admin @ 8:06 pm

I’m of the belief that bailouts are ultimately worse than the disease they are allegedly curing.  The reasons are too numerous and outside the scope of this post.

Fortunately some folks in the government are starting to think that way, too.

Last Thursday the House of Representatives voted to block the release of a second allottment of TARP bailout bucks, $350B worth.  Unfortunately the bailout is still going to go through due to clauses in the initial TARP bill but the “NO” is symbolic and loudly heard.

This is following the usual cyclical pattern: Republicans give lip service to limited government when they are not in power.  When they get back in power they become consumed with keeping power and spend as bad or worse than Democrats, betraying their avowed limited government principles.  I was really disappointed that Republicans in the Bush years expanded government spending and deficits so dramatically.  They had a genuine opportunity to pin down the size and scope of government but they blew it in a big way.

I sure hope Obama is not going to be able to breeze his ~ $1T pork-laden “stimulus” plan through this Congress.  Regardless of its merits $335M for STD prevention IS NOT ECONOMIC STIMULUS.

January 21, 2009

Analyzing Obama’s Inaugural Address

Filed under: politics — Tags: — admin @ 12:14 pm

The media is gushing over Obama’s inaugural address.  I’m reading the highlights to get more insight into what Obama will try to do in office.   My initial impression was that he’s a classic tax and spend liberal, he’ll gut the military, etc.  His defense cabinet picks surprised me a little, however, so there might be more deviations from the mold I had projected.  At any rate I will judge him by actions and not his rhetoric. 

So far I don’t like his rhetoric.  From his address:

“The question we ask today is not whether our government is too big or too small, but whether it works — whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.”

This is a crystal-clear revelation of Obama’s vision for what government should fundamentally do: pay a “living wage”, provide healthcare, and supply a “dignified” retirement (whatever the hell dignified implies).  I don’t like these things because they COST ME MONEY and they promote government dependency for things that people should be doing themselves.  But that’s the difference from Obama and myself.  He thinks the core function of government should be to give people stuff from taxpayers.  I think the core function of government is to provide general law and order, and NOT to attempt to solve basic personal finance problems. 

Those are his words, but I suspect his actions will be severely constrained by budget realities.  There is only so much money to go around.  Any tax increases are going to be a hard sell at a time when people need to keep their own money more than ever before.  It’s going to be difficult to increase deficits when creditor nations stop buying our treasury bonds (already in process).  The general public and Congress is very weary of massive bailouts with indeterminate effects.  So I expect that President Obama will not be able to fulfill his major goals.

January 20, 2009

Hoping For The Best… Expecting The Worst

Filed under: economics, politics — Tags: , — admin @ 10:21 pm

I wish President Obama the best in his presidency.  He is inheriting a pretty crappy scenario but unfortunately I think his plans will only make things worse.

barack-obama-capitol

Obama is a very ambitious man and he has many big goals on his list. He wants to rack up ever more massive deficits in a misguided “stimulus”, an attempt to spend money that we don’t have to escape the recession that we are in.  He wants CO2 taxes that would strangle commerce at a time when businesses and consumers are already gasping for air.  He wants some form of nationalized healthcare as well.  Any one of these things would be a massive undertaking in the best of times, but right now they’re particularly ill-suited.

We will climb out of this recession by innovation, not by “genius” central planning.  FDR spent considerable sums of money on stimulus efforts in the 1930’s, to no avail.  In the 1990’s Japan likewise undertook massive public works projects, to no avail.

Why will this time be any different?

This is a time in our history when we can ill afford grand plans.  This is a time for scaling back and normalizing, for downsizing expectations and attitudes.  Consumers and businesses have cut spending.  Government must tighten the belt as well but that does not look like the path we’re headed down.  Now would be a good time for Republicans to rediscover their limited government values.

Oh well, at least Bush is out of office.

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