Category Archives: Economics

The First “Progressive” President

A warning to modern “progressives” to be careful what they wish for:

I’m thinking of an American president who demonized ethnic groups as enemies of the state, censored the press, imprisoned dissidents, bullied political opponents, spewed propaganda, often expressed contempt for the Constitution, approved warrantless searches and eavesdropping, and pursued his policies with a blind, religious certainty.

Oh, and I’m not thinking of George W. Bush, but another “W” – actually “WW”: Woodrow Wilson, the Democrat who served from 1913 to 1921.

President Wilson is mostly remembered today as the first modern liberal president, the first (and only) POTUS with a PhD, and the only political scientist to occupy the Oval Office. He was the champion of “self determination” and the author of the idealistic but doomed “Fourteen Points” – his vision of peace for Europe and his hope for a League of Nations. But the nature of his presidency has largely been forgotten.

That’s a shame, because Wilson’s two terms in office provide the clearest historical window into the soul of progressivism. Wilson’s racism, his ideological rigidity, and his antipathy toward the Constitution were all products of the progressive worldview. And since “progressivism” is suddenly in vogue – today’s leading Democrats proudly wear the label – it’s worth actually reviewing what progressivism was and what actually happened under the last full-throated progressive president.

The record should give sober pause to anyone who’s mesmerized by the progressive promise.

But they don’t even understand their own intellectual history.

Thoughts On The Economy

Half full, or half empty?

I was surprised that no administration officials were on the business news channels this morning. That is highly unusual for Jobs Day. Maybe they are afraid of the following sequence of questions:

1. Is the economy recovering? (They would like to answer this one, “Tentatively yes. We’re seeing positive signs, but there’s a long way to go.”)
2. If so, is the economy recovering because of the stimulus? How can you claim that it is if only $40-ish billion has gone out the door so far?
3. Or are the green shoots growing just because it’s springtime? Is the less worse economic news primarily a result of financial institutions raising capital and the passage of time?

In addition to being inefficient and wasteful, the stimulus was poorly timed. By deferring to congressional desires to shovel taxpayer funds to slow-spending infrastructure projects, the administration got a stimulus law that isn’t helping GDP growth now, and won’t have a quantitatively significant effect until 2010. The administration is in a tough spot — if the economy is not healing, then at some point the president will take the blame. If instead the economy is healing before the stimulus takes effect, then maybe the stimulus was unnecessary or even counterproductive.

Gee, it’s not like nobody predicted this months ago when the fool bill was passed without anyone having a chance to read it.

X-Prize Foundation Overreach?

Clark Lindsey points out a potential issue with the Lunar Landing Challenge:

Section 4 of the document, especially subsection 4.2, seems overly aggressive to me with respect to the X PRIZE Foundation’s clams to media rights. Apparently, a team has to give up the right to any income generated from their own videos, photos, etc. even for preparatory activities away from the place and day they attempt the competition flights. In fact, sounds like even posting a video on YouTube requires permission from XPF.

I don’t understand why XPF should get all of these rights just for managing the contest for NASA. I don’t see such rights going to the Spaceward Foundation in the rules (pdf) for the Power Beaming Challenge.

I agree. Since the prize money is put up by NASA, how does XPF have sufficient “skin in the game” to justify this clause? I’ve already received an email from one potential participant that this is a “deal killer.”

As I asked him, though, what does that mean? It seems to me that if you enter into this agreement, you believe that the expected value of the prize (purse times estimated probability of win) exceeds the potential revenues from media use of the event. If you believe that the latter is the main value, and not the purse itself, then you wouldn’t enter, but would instead simply perform the feat independently, video it, and make a big deal that you had done what was needed except unofficially, thus embarrassing NASA and the XPF, taking away the value of the competition itself, while generating more publicity (and perhaps potential customers) than actually winning the prize (see Prejean, Carrie).

On the other hand, if you consider NASA a potential customer for your vehicles, you might not want to do that. It is something that, to quote the “Fat Man” from The Maltese Falcon, “calls for the most delicate judgment on both sides. ‘Cause as you know, sir, in the heat of action men are likely to forget where their best interests lie and let their emotions carry them away…”

What A Bargain

Your tax dollars at work:

According to today’s Washington Post, the company currently employs 88,000 workers in the United States. (That seems low, but that’s what the paper says.) GM has gotten $19.4 billion in loans from the U.S. government and Obama promised another $30 billion yesterday.

$49.4 billion divided by 88,000 workers comes out to $561,363.63 per worker.

Can that possibly be right? That in an effort to avoid layoffs, Uncle Sam has pursued a course more expensive than handing each worker a check for a half a million dollars?

Well, the math is correct, but it’s not right, in any sense of the word. I see some very interesting campaign ads coming out of this in 2010.

The Book Stores Didn’t Get The Memo

Many on the left predicted (usually without even reading it) that Jonah Goldberg’s book would end up remaindered shortly after publication (I even had such idiotic prophecies in my own comments section here).

Well, the new edition, in paperback (with a new afterword on the Obama phenom), came out today, and it’s #32 at Amazon.

There’s an interview with the author on the new edition over at NRO:

One of the points of Liberal Fascism isn’t to simply say “I know you are but what am I?” to the Left (though that’s definitely in there), it’s to point out that because we’ve made fascism into this cartoon villain we’ve allowed truly fascistic (or if you prefer, statist or progressive) assumptions to suffuse modern life on both the right and the left. I don’t think all of this stuff is evil or even necessarily bad. Rather, I think it advances without us questioning it. I have a chapter in the book called “We’re All Fascists Now.” I wasn’t aiming that purely leftward, but inward. People need to understand that these movements didn’t arise out of a society-wide desire to be villains. It arose out of a desire, a yearning, for progress. I think that’s one of the most basic points I failed to communicate as clearly as I should have.

LOPEZ: Speaking of Liberal Fascism’s endurance, what do you make of events since the book came out, specifically the election of The One?

GOLDBERG: Well, first of all I think I have to thank Barack Obama. Here I wrote a book, working on the assumption that Hillary Clinton would be the nominee (hardly a harebrained assumption at the time), about how contemporary progressivism is a political religion with its roots in German state theory, sharing a close family resemblance to fascism. Among the anatomical and genetic similarities: cult of unity, sacralization of politics, philosophical pragmatism, corporatism, relativism, Romanticism, hero-worship, collectivism, and so on. And out of nowhere comes a guy who campaigns as a secular messiah, spouting deeply spiritualized political rhetoric, claims the Progressives as his inspiration, and proudly sees himself as carrying out FDR’s mission. I haven’t counted them, but I’d guess I’ve received a couple hundred e-mails from readers telling me how they thought the whole book was written with Obama in mind, even though I finished it before he was even ahead in the Democratic primaries.

It does seem prescient now.

[3 PM Eastern update]

The book has moved up to #30…

It’s The Corporate Culture, Stupid

I don’t often agree with David Brooks, but he has a good diagnosis today of why Government Motors is doomed to fail:

First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.

Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.

Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.

As a taxpayer, I want to divest immediately.

[Update a few minutes later]

Related thoughts from Jim Manzi:

The US government is now the majority owner of the nation’s largest car company. The government has chosen GM’s CEO, Fritz Henderson, and will directly select numerous board members. It will be all but impossible for Congress and various regulatory agencies to avoid meddling with detailed operating decisions.

There is already enormous pressure on GM to abandon the vehicles that make it money — gas-guzzling SUVs and pick-ups — in order to focus on fuel-efficient cars that lose money. I doubt we’ll see many production facilities sent offshore, even if this would make economic sense for GM’s shareholders.

This is a terrible harbinger for the US economy, especially when combined with the Obama administration’s apparently heavy-handed negotiating tactics in favor of Chrysler’s unionized employees at the expense of bondholders.

We appear to be headed for European-style industrial policy circa 1975, with a complicated set of favors being traded between elected officials, government bureaucrats and corporate bureaucrats in semi-private companies.

Great.

[Update a couple minutes later]

Fannie Motors?

[Late morning update]

Obama is busy not running GM:

…while Obama is busy “not running GM” he still has time to make calls to the mayor of Detroit to assure him that GM’s headquarters won’t be moving to Warren, Mich., as it was offered to, but that it will be staying in Detroit.

You know, when the president says he doesn’t want to run GM? I don’t believe him.

[Update a couple minutes later]

Obama says that he has to destroy the village in order to save it:

After a while, the endless, “I have no intention to run GM” pledges begin to sound a bit like the guy insisting he means to eat healthier and cut back on the fatty foods… in a little while.

He actually used the line, “I’m not spending this amount because I want to spend taxpayers dollars; I’m doing this to protect taxpayers”, which I suspect will stir a combination of incredulousness and mockery. Most people who loudly pledge that they don’t want to do something don’t do it.

The wilful suspension of disbelief about this guy from the Dems and the media is astounding.

First Gun Buybacks

…and now extending the idiocy to cars:

Turn in old cars. It’s long been a talking point of liberals and environmentalists that cars older than a given age should be removed from the highways. The usual mantra goes “The government should buy all cars older than X and pay the owner $750. Then the owner could go out and buy a newer, cleaner, more efficient car.” The advocates for this position either fail or refuse to understand that the owners will not be able to find a car to buy with their $750. Basic economics.

At least the gun buybacks, stupid as they are, offer a reasonable amount of money for the hardware, particularly given that many of those turned in are non functional. I suspect that if the government implements such a program for cars, they’ll get a lot of undriveable clunkers, but very few useful automobiles.

Unless, of course, they make us an offer we can’t refuse. That would, after all, be the Chicago way.

The Ideology That Dare Not Speak Its Name

Who owns socialism?

As Confucius said, “If names be not correct, language is not in accordance with the truth of things. If language be not in accordance with the truth of things, affairs cannot be carried on to success.”

One of the insidious tactics of the left over the decades has been to debase the currency of the language, calling themselves “liberals” and “progressives,” and accusing those who disagree with them as “racists,” and “haters.” I refuse to bow to their politically corrosive sophistry. What we are seeing in Washington today is socialism, and fascism, and the two are not opposites, but are in fact closely related.

[Update a few minutes later]

Jonah Goldberg has similar thoughts today at USA Today:

The whole spectacle was just too funny for liberal observers. Robert Schlesinger, U.S. News & World Report’s opinion editor, was a typical giggler. He chortled, “What’s really both funny and scary about all of this is how seriously the fringe-nuts in the GOP take it.”

Putting aside the funny and scary notion that it’s “funny and scary” for political professionals to take weighty political issues seriously, there are some fundamental problems with all of this disdain. For starters, why do liberals routinely suggest, even hope, that Obama and the Democrats are leading us into an age of socialism, or social democracy or democratic socialism? (One source of confusion is that these terms are routinely used interchangeably.)

For instance, in (another) fawning interview with President Obama, Newsweek editor Jon Meacham mocks Obama’s critics for considering Obama to be a “crypto-socialist.” This, of course, would be the same Jon Meacham who last February co-authored a cover story with Newsweek’s editor at large (and grandson of the six-time presidential candidate for the American Socialist Part) Evan Thomas titled — wait for it — “We Are All Socialists Now,” in which they argued that the growth of government was making us like a “European,” i.e. socialist, country.

Washington Post columnists Jim Hoagland (a centrist), E.J. Dionne (a liberal) and Harold Meyerson (very, very liberal) have all suggested that Obama intentionally or otherwise is putting us on the path to “social democracy.” Left-wing blogger and Democratic activist Matthew Yglesias last fall hoped that the financial crisis offered a “real opportunity” for “massive socialism.” Polling done by Rasmussen — and touted by Meyerson — shows that while Republicans favor “capitalism” over “socialism” by 11 to 1, Democrats favor capitalism by a mere 39% to 30%. So, again: Is it really crazy to think that there is a constituency for some flavor of socialism in the Democratic Party?

No, it’s not crazy talk. Except when “right wingers” talk about it, of course.

But as he notes, “corporatism” (the economic philosophy of fascism) is the best term for it.

An Interesting Quote

On the economics of fascism, from self-declared fascist Lawrence Dennis:

Thus we shall see what fascism has to do to make a system of private ownership and management workable, so far as arrangements involving capital income or reward are concerned. The ruling principle must be that capital and management reward must be kept in continuous and flexible adjustment with economic possibilities, and that legal and institutional arrangements—like loan contracts, bonds, legal concepts of just compensation, due process of law, and confiscation—must not obstruct executive action of government to maintain this adjustment otherwise than by the present devices of bankruptcy, foreclosures, reorganization, and cycles of booms and depressions. [Lawrence Dennis, The Coming American Fascism (New York: Harper & Bros., 1936 ), Ch. V. “Can We Reorganize the Present System?”]

Emphasis mine. As Jonah notes, it seems very familiar, somehow.