Of Warming Planets and Cooling Economies

Did you notice when the Obama Administration paused in its ballyhooing about global warming? President Obama and his officials had been busily hustling the warming of the planet and its attendant disasters—which they insist can only be fixed by increasing government control of our lives, from birthing to breathing. The President was in Florida, blaming the future hurricane season—which has not yet happened—on global warming. “The best climate scientists in the world are telling us that extreme weather events like hurricanes are likely to become more powerful.” What President Obama did not mention—anywhere in his speech at the National Hurricane Center in Miami—was that the scientists predicted a “below-normal” hurricane season for 2015. Was that mercy because of or in spite of global warming?

Perhaps we should not blame the President for leaving that little item of information out, since for each of the last several years the cited “best climate scientists” (whoever they are) had predicted extraordinarily active and destructive hurricane seasons. Since each season turned out to be unusually mild, the official forecasters have now changed their tune, putting themselves solidly in-sync with recent trends. Do not put yourself at risk with a long investment on it either way.

As for global warming, however, the President and those who say they agree with him insist that the debate is over (in either science or a free nation can the debate ever really be over?), meaning that it is unacceptable to disagree with them. If you can’t say something calamitous, then don’t say anything at all.

Then, suddenly and quite unexpectedly, the global warming talk stopped. There was a mercifully, if brief, moratorium on warming warnings. Instead of predicted calamity, a real calamity was at hand that required some ‘splaining. The most recent report on the nation’s economic growth was announced. Not only had growth slowed, as measured by government number crunchers, the economy had actually declined in the first 3 months of 2015. That seemed to come as a surprise to no one who is either without a job or working in a job that is something less than the job held before 2009. But it was unwelcome news to the Administration that has been working on economic revival for going on seven years.

Instead of global warming, the Administration needed cold weather to blame for the decline in economic activity during January, February, and March. The lead official White House explanative was, “harsh winter weather”. I did not make this up, and you are not supposed to notice how convenient White House excuses are. It was better that global warming talk was cooled for a moment lest people recognize the contradictions in the official propaganda and begin to wonder whether White House policies were working.

Winter weather is not a novel excuse for failed government programs. The old Soviet Union blamed repeated crop failures on harsh winters (in Russia? Who knew?). The similarity in excuses used by the Obama White House and the Soviet Politburo is not accidental. Central planners can survive only if they have at the ready a list of excuses of things beyond their control. The list could be a long one, since in the end there is not very much about the economy that central planners can control, if control means making things go they way intended. To quote the character Jayne Cobb, in Serenity, “what you plan and what takes place ain’t ever been exactly similar.”

Of Signs and Deception

It may seem immodest of me to point out how “insightful” was my posting, published at the very doorstep of the 2008 election of Barack Obama as President of the United States. I think I am in no danger, however, as the predictions were all too easy to make, the signs too clear then to justify special credit now. More significant, I believe, are how the lessons taught then apply as we enter another presidential election season. Give the greatest weight to what candidates do and what they have done, particularly when such evidence is distinctly at variance with what they say.

 

A well-known principle of propaganda is that if you are going to tell a lie, the bigger the lie the more believable it will be. Most people are so trusting that they do not want to believe in the enormity of a big lie. They do not want to believe that someone can intentionally say something appallingly false. Rather than disbelieve the liar, they will want to disbelieve the person who exposes the lie.

One of the biggest of lies is asserting something to be exactly the opposite of what it is. Such is the warmonger who claims to be the leading pacifist, the thief who claims to be the victim of theft—and accuses the real victim of being the criminal—or the bigoted radical who accuses opponents of intolerance.

In recent travels on the streets, roads, and highways I notice at this time of the year the beautiful Fall foliage—and the many political campaign signs. While for some there might be a distaste for seeing these, I feel to rejoice in the signs as evidence of a vigorous system of subjecting our political leaders to public vote.

Having said that, I do draw the line at the steady growth of the mega-yard and curb signs, the five-foot by eight-foot broadsides. So, already inclined to dislike such construction-size boards, I have been particularly disturbed to see what appears to be a planned series of Obama-Biden signs advocating policies that these two Washington insiders have long worked hard to oppose.

I have noticed three in this series. There may be others. The ones that I have seen show the names of the two candidates, followed by a motto reading something like, “Better Schools,” “Lower Taxes,” and “Energy Independence.”

If facts matter, and I believe that they still do (even if they are optional in the mass media), such messages on the signs of these two politicians should be jarring to the honest in heart. The political record of Obama and Biden are unequivocal on these three issues. They both have strongly and consistently opposed school reform, supporting doing more of the same old stuff that has been steadily undermining the quality of government-run schools since the 1960s.

Both have been leading advocates for raising taxes and opposing tax cuts. Even in the current campaign they advocate new tax hikes. They try to disguise their intentions with the assertion that their proposals supposedly would reduce taxes on 95% of Americans (including the 40% who pay little or no income taxes), while raising them on the rest. Either they failed with the simple math, or they hope that voters cannot or will not be able to apply simple math, but you cannot get enough taxes out of 5% to pay for genuine tax cuts for 95%. In fact, their proposals are just another camouflage for the old tried and failed policies of tax and spend. Not only does that always put more power into the hands of the politicos who take and then redistribute, but it is a highly dangerous thing to do in the teeth of an economic downturn. Taxes fall on income and investment, and whatever you tax you get less of. Now is not the time for less income and investment.

And as for energy independence, both Obama and Biden support programs that will yield little and have yielded very little new energy—at very high expense in government subsidies—while staunchly opposing expanded use of the energy resources that are abundant in the United States, particularly oil, coal, and nuclear energy. Independence seems to me to increase reliance on your own resources. Obama and Biden are consistent supporters of policies that keep U.S. energy resources under lock and key.

This should not be surprising from two candidates who campaign on change while advocating the oldest political formula in the history of government, that government knows best, that decisions about spending, whether for health, education, or job creation, are best made by power brokers in the halls of Washington power centers, rather than by families in their homes. Calling that change may be the biggest lie of all.

(First published November 2, 2008)

Of the Federal Reserve and Taking from Savers

Ben Bernanke has a blog. You can find it here, courtesy of the Brookings Institution. Of course, what would the former Chairman of the Federal Reserve Board write about, other than decisions he made as Chairman, and why people who take issue with them are wrong? One would expect no less, and reading the light he sheds on previous decisions—offered in Fedspspeak at the time that they were made—is surely the chief lure of Ben Bernanke’s blog. Allowed to communicate in regular English, not worried about how Fed Watchers might construe or misconstrue everything he says and does not say, Ben is more able to speak his mind clearly.

The former Fed Head chose for his first blog post a vigorous defense of price controls on interest rates. In the process Bernanke demonstrates the assumption that we are safe letting government economists control the economy—an assumption continually disproven by real-world experience.

In fact, as a result of entrusting much of our economic freedom in the United States to government economists, we do not have a free market for interest rates, at least not short term rates, and we pay for that every day. The Federal Reserve sets short term rates in this country, and so far the market has had zero success in moving rates from the near zero interest rate range that the Federal Reserve has decreed and maintained for some years. Keep that in mind the next time you wonder why you earned $1.73 in interest on your savings account last year.

If you borrow money—when you can get a loan—then you might consider yourself lucky. The biggest borrower of all, in the whole world, is the United States Government. Uncle Sam must be feeling very lucky, because he is paying comparatively little on the $18 trillion of U.S. Government debt, increased by another half trillion dollars last year.

If you save money, though, especially for your retirement—and if you have to live off of those savings in retirement—you might not feel so fortunate. By keeping interest rates lower than the market would set them, the Federal Reserve is daily transferring many billions of dollars from savers to the Federal Government. And you thought that only the IRS takes your money.

Let me illustrate with an example. For the last three months of 2014, all of the banks in the United States, all of them together, paid no more than $11 billion to people who had their money in banks. Is that a lot of money? It depends. When that is the interest paid on nearly $12 trillion in deposits, the answer is, no, that is not very much money at all.

Do not blame the banks, though. They are in the saving and lending business, too. Try as they might, with the Federal Reserve controlling interest rates, banks could not pay any more interest to depositors. If a bank did, it would have more money than it could lend as people shifted their deposits where they could get a better return. To pay interest on deposits, banks cannot get much more interest from the loans they make than the Federal Reserve price controls allow, and many relatively good loans present more repayment risk (banks do need to be paid back) than those low interest rates would cover. Low interest earned means low interest paid.

All the banks in the nation have a little over $15 trillion in loans and other assets, on which they earned last year about the same amount as they did five years ago, when they had $2 trillion less in loans and other assets. In an environment of low interest rates, banks have to concentrate their lending on the safest borrowers.

That is how the low interest rates controlled by the Federal Reserve are oppressing the economy. When savers and lenders can only get a few cents on a hundred dollars lent, they place their money with the very safest of borrowers, since they cannot afford to take any losses. Someone who has a really good idea—which like all good ideas may or may not succeed the first time—has trouble getting the money to give his idea a go and hire people to help him try.

Ben Bernanke claims that the Federal Reserve’s near zero interest rate policy—called ZIRP—has been stimulating the economy. If so, where is the stimulation? Why has the recovery been so weak? There has been stimulus, but it has gone primarily to support Federal Government spending and to pay down the debt of the largest and healthiest businesses that can trade in their higher cost loans for the Federal Reserve’s lending bargains. The biggest increases in bank loans have been in Treasury debt and deposits at the Federal Reserve.

Ben Bernanke, in his blog, reminds me of the story of the lawyer representing a client charged with stealing a car and returning it damaged. The lawyer says, first, that his client never had the car; second, that he returned it in perfect condition; and, third, that it was already irreparably damaged when his client took it.

Bernanke begins by explaining that the Federal Reserve does not set interest rates, or that at most its ability to do so is only “transitory and limited.” He pleads that the Fed can only affect short term rates “in the short run.” He does not explain how seven years of ZIRP can be considered the short run. Then he progresses in his blog to describe how the Federal Reserve “influences” interest rates and then how the “Fed’s actions determine” interest rates. His argument, after denying that the Fed can set rates, is that the economy has been so weak that the Fed has had to lower interest rates for the nation’s own good. Bernanke next argues that the economy has remained so troubled (he does not say, despite ZIRP) that the Federal Reserve has had no choice but to continue with ZIRP, concluding that it is the economy after all the forces the Fed to do what it does. Do not blame the Fed Governors, they had no choice but to continue doing what they cannot do because it has not done any good so far. I think you need to have a Ph.D. in economics to make such an argument.

We cannot do it, we did what we had to do, and since it has not helped we cannot stop. I wonder how he reacted to those kind of explanations from his teenagers. Any responsible parent would reply, no, you cannot have the car, give me back the keys.

Of Presidents and Training for the Job, 2015

More and more I have been struggling for the words to express my concern over the frightening incompetence of the current President of the United States. Barack Obama’s economic blunders deepened and prolonged the recession and bequeathed to us the most anemic recovery of modern times. Most of us have been seriously harmed by those policies, some more than others. Unfortunately, the extent of his economic errors are obscured by the benighted economic management in Europe, which amazingly is managing even to underperform ours.

President Obama’s politics have yielded the opposite of what he publicly promised: division in place of unity, secrecy and deception in place of open government, exclusion of those who disagree with him in place of inclusive embrace of open debate, privilege for the few in place of opportunity for the many, racial bigotry for political gain in place of a “post racial” society, rule by breaking laws and ignoring the Constitution in place of rule of law. I am sure that you could easily lengthen the list. Again, these perfidies have been to some degree obscured by congressional Democrat leaders far too willing to compromise their duties of office and the rights of the legislative branch of government, all to cover up and support the Obama Administration’s outrages on the nation and the political institutions of the Republic.

Most frightful of all, however, is President Obama’s dangerously bungling foreign policy. No friend of the United States is safe from this Administration’s blunders. Vladimir Putin, the boss of a second rate economic and military power—albeit one with a formidable nuclear arsenal—has been able to engage in 19th Century military adventures of invasion, conquest, and territorial acquisition against little more than vacuous bully talk from Obama, the emptiness of which has produced similarly pitiful responses from the leading Powers of Western Europe, derision from Moscow, and fear among America’s friends only recently escaped from the Soviet Union. China commits aggression against India and the Philippines, threatens Japan, and toys with close relations with Russia to isolate the United States, while openly engaging in cyber attacks on the U.S. government and American industry. Islamist barbarians increasingly brutalize Muslims, Jews, Christians, and humanists alike, undeterred by inchoate responses from Obama, who asserts leadership while failing to lead, other than with his transparent policies of pusillanimity and indecision. American allies in the Middle East feel abandoned or betrayed, while enemies are emboldened; the best counter strategy that Barack Obama is able to envision is a plan that might delay but will not prevent the nuclear arming of the mullahs of Iran—committed to the incineration of Israel, the more Jews killed the better. Each day seems to extend the list of foreign policy failures.

While considering the consequences of an amateur in the Oval Office, I came across a brief note I wrote during the 2008 presidential campaign. It might be immodest for me to point out how correct my warnings proved. I can make no claims to perspicacity, as all of this was rather obvious. No self congratulations are in order. It is too dangerous a world to trust the Presidency of the United States to one whose inexperience is only matched by his hubris. This is what I penned August 25, 2008, just before Barack Obama received the nomination of the Democrats:

There are some jobs you just cannot safely do without proper training and experience. Flying an airplane is one that comes to mind. Driving a bus is another. I would put being President of the United States in the Twenty-First Century on the list, too.

President of the United States was a tough job in the days of George Washington. It was even a challenge in the days of Millard Fillmore. It has not become any easier in recent years, and next year it will be a very big job. Considering the global responsibilities of the United States, with several irresponsible oil-drunk regimes threatening peace and freedom (ours and other’s) around the world, can we afford to enroll our new President in a foreign policy on-the-job-training program?

Economically as well, there is little room for error. So far we have gone through a year and a half of the housing market bust without falling into a recession. But our economic growth is anemic. A small false step or two can put us into a full-blown economic decline, exploding banking and financial markets that will then take years to recover. It is important that economic policy next year be led by someone who understands economic growth and how to promote it. The formula for growth—low taxes and steady prices—is well known to those who have learned the lesson; we do not need a novice who does not have enough experience to know that you cannot tax and spend your way to prosperity. We cannot afford his experiments with our jobs and livelihood.

That is why it is breathtaking that a major political party is on the verge of nominating for President someone so inexperienced as Barack Obama. I am unable to recall a single nominee for President, by any major party, less prepared for the office than Barack Obama. Really, there is the challenge for you. Name a nominee—Republican, Democrat, Whig, Federalist—less prepared than Obama.

Barack Obama likes to liken himself to Abraham Lincoln. I cannot claim to have known Abraham Lincoln or assert that he was a friend of mine, but I do say, Barack Obama is no Abraham Lincoln. Even liberal exaggerations of Obama’s undistinguished career cannot make it compare favorably with the long and grueling life experiences that schooled Lincoln for the White House.

In short, Obama does not have the training for the job. It may be that the Democrats’ talent pool is so thin that he will be nominated. But the job of President is too important—to all of us—to be extended to someone so unready.

Of Plumber Joe and Community Organizer Barry

I first published this before the 2008 presidential election. In the years since, President Obama’s community organizer background has faithfully exerted itself.

It took a real life example to give life to the key difference between the two candidates for president. When Plumber Joe met Barack Obama campaigning in his neighborhood, Joe asked the would-be president, why do you want to tax my small business? Actually, more precisely, Joe wants to buy the plumbing business he has worked at, and Obama wants to raise taxes on it, and Joe asked Obama, why? At first, Obama equivocated and mumbled something about getting some tax breaks to offset the tax hikes. When Joe refused to buy into that sleight of hand trick, Obama fessed up. Obama admitted that he wanted to spread the wealth around. In other words, he said that Joe would be making too much money, so Obama wanted to take from him and give to someone else.

Why would Obama want to do that? Because, unlike Plumber Joe, who has a real job, Obama’s career experience came as a “community organizer” (when he was known in Chicago as Barry). Taking money from people and giving it to others is what community organizers do. Barry the Community Organizer now wants to organize a big community, of over 300 million people, and he wants to keep spreading the wealth around. Community organizers like to do that, because they like to get the credit for being compassionate and generous, compassionate and generous handing out other people’s money.

Joe has worked hard as a plumber. Joe has saved and prospered. Now Joe wants to own his own business and provide work for other employees. The employees, these plumbers, would provide plumbing services and get paid by their customers. Barack Obama wants to take some of that money—O.K., a lot of that money—and spread it around to people who would get their money from Barack, people who have not been as “lucky” as Plumber Joe.

Lucky? My guess is that it was not luck that made Joe work hard over the years and save his money to be in a position to own a business and provide real jobs to other people. Under a President Obama, Joe and others like him would become unlucky.

John McCain has been trying to point out for weeks that the change offered by Barack Obama is a big time return to the tired old tax and spend politics of the big government politicians. John McCain is not the most eloquent campaigner, and the mass media has been doing its best to bury his message anyway. McCain finally found a real life example, and that is the most eloquent statement of all. At the last national debate, on a stage that the mass media could not ignore, McCain introduced us to Joe the Plumber (who by the way did not ask for all the attention and is a bit embarrassed by it), and McCain asked, why raise his taxes? Why raise anybody’s taxes going into an economic downturn?

If you do not raise the taxes, you cannot keep spending other people’s money and winning praise for your compassion and generosity. And that is the point of this election.

(First published October 16, 2008)

Of Elections and Consequences

I wrote the following just a few days before Barack Obama was first elected President, in 2008. I am tempted, reading it 5 years later, to congratulate myself on how insightful I was, but, frankly, Obama’s policies were so old and tried and failed, that he made it easy. See for yourself:

Elections have consequences, real, life-affecting consequences. One of the more unfortunate aspects of the mass media attitude toward elections is their approach to them as if they were some kind of game. The running score that they keep of the latest polls, their up-to-date electoral college count, the fixation on who “won” the latest debate, all demonstrate a sentiment that the election is some kind of sporting event, where we all root for one side or another, and when the game is won and the season is over we all go back to business as usual. That is not only wrong, it is dangerous.

After the election in November is over, it will not be back to business as usual. America’s standard of living, our economic welfare, our health, safety, and national security will all be affected. Electing Jimmy Carter meant economic and social malaise, it meant the loss of allies in several parts of the world, it meant civil war in Central America and the rise to power of the Ayatollahs in Iran. It meant a toxic economic brew of high unemployment, high inflation, and high interest rates. It meant increased crime in our cities. It meant an underpaid and undersupplied military, with Navy ships coming into harbor trading ammunition with those leaving port because there was not enough ammunition to go around.

Barack Obama is not quite as good or experienced as Jimmy Carter. His leading economic proposal is a whopping tax in the face of an economic downturn. Presidents Hoover and Roosevelt tried that in the 1930s, which turned a recession into the Great Depression. And Obama lies about his tax increase. He lies that it would not affect 95% of the population. The severe recession that it would cause will affect everyone, even the non-tax payers who are promised a tax cut by Obama.

Obama’s plan for a camouflaged government take over of health care will mean that health services will be provided with the same efficiency of the U.S. Postal Service. That means that sick people will have reduced access to medical services. It means that incentives to develop new medicines and new treatments will melt away. If government runs health care, as Obama wants, that means that political muscle will determine health care priorities rather than patient demand setting the priorities.

Obama’s foreign policies are right out of the Jimmy Carter briefing book. That means betrayal of our friends, appeasement of our enemies, and adventurous use of the military in places and causes that mean little to the national security of the United States. It means preparation always for some other war but inadequate commitment to fight the war we are in (he’s eager to send more troops into Afghanistan, but unwilling to win the war in Iraq). It means further design of the next weapons system, but never deployment of it, a return to starving our military of what it needs to do the job with least loss of life and maximum success. It means that the most important issues for the Obama military will be social engineering of the armed forces rather than a focus on their increased effectiveness and efficiency.

Voting in a republic like the United States is a serious matter. It is not a game. It means far more than bragging rights over whether our team won the World Series. It means that we are responsible for our electoral choices, with a full understanding that the people we elect will mean a difference in our lives and the lives of our families. It is a truism that people get the government they deserve. I firmly hope and believe that the American people deserve better than Obama. I know that my children do.

(First published October 5, 2008)

Of Con Artists and Presidential Candidates

There is something disturbing about Barack Obama. I have been trying to put words to it. It is not merely that I disagree with him on his political prescriptions. There are many people, across the political spectrum, with whom I disagree on political policies and programs, even those for whom I used to work. With only a relative handful of them, however, have I sensed the same disquiet that I feel with regard to this year’s Democrat nominee for President.

After the recent presidential debate between Obama and Republican candidate John McCain I found the right words. Obama is a con artist. Fundamentally, he is acting in a deceptive way to get something from you. He wants you to believe that he has your best interests at heart so that he can get from you your precious vote. He pretends to be what he is not, because if you understood what he is all about, you would not vote for him.

Take, for example, his tax policies. Barack Obama promises a tax cut for 95% of the population. He is offering you a financial incentive for your vote. He is offering to buy your vote. He does not tell you that many of those people for whom he promises a tax cut do not pay any federal income taxes. A tax cut to people who do not pay taxes is just a government hand out. And he usually tries to hide the fact that this hand out to people who do not pay taxes is coming from you. We should not be so willing to believe that you can tax just 5% of the people in order to give a tax break to the other 95%—especially if many of the 95% do not pay any income taxes. You cannot get there, even if you try to take all of the money of the “rich,” and once that is gone what do you do for the next act?

If you own your own business, chances are very high that your business is taxed like an individual and that the revenues for that business will be classified as the “rich” that Obama says he thinks need to pay more taxes. Or perhaps you have some investments in the stock market—half of all Americans do. When those rich companies pay the new Obama taxes, that money comes out of the hides of the companies’ shareholders. Moreover, raising taxes into the teeth of an economic decline is a certain recipe for accelerating the decline. That is what Hoover did, and what Franklin Roosevelt did in order to make an economic recession last for a whole decade (eventually history should recognize that FDR was the worst president of the 20th Century—even if he could talk a good game).

A second example follows directly from the tax example. After he is finished talking about tax cuts (on people who do not pay taxes), Obama starts his litany of very expensive new government spending programs. The price tag for these comes to some $800 billion, give or take a hundred billion dollars. Each program is carefully designed to buy votes. Not only do his tax cuts not work as real tax cuts—taken by themselves—they cannot possibly work in the face of $800 billion of new federal spending.

The third example is really the most prominent. Barack Obama says that this is all “change.” He says you should vote for change, because he thinks that you want change and that his promise for change will get you to give him your vote. If you believe that major tax increases and massive new government spending programs are change, maybe he will succeed in getting many votes. But maybe people will say that they have heard that formula before, and whenever it is applied the nation always becomes poorer.

Barack Obama looks good, talks smooth, promises everything. If he loses this race for President, maybe he could try his hand selling used cars.

(First published September 28, 2008)