Saturday, 05 December 2015 05:10

Hendrickson's View

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Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Values.

The Question of More or Less Government

Theoretically, the elemental political choice in a democratic system is between more government or less - more government control over our lives and livelihood, or less; more government spending and programs than the year before, or less; more government power, or less.

In practice, for as long as I can remember, the choice for Americans has been between the party that wants more government (the Democrats, or the party of Big Government) and the party that still wants more government, but a little bit less more (the Republicans, or the party of Big Government Lite). There never really seems to be a choice between a presidential candidate who unequivocally wants Uncle Sam to spend more money next year and one who wants the federal government to spend less; that is, "less" as in not a smaller increase, not a phantom D.C.-style budget "cut" from baseline projections, but a real, honest-to-goodness decrease in the actual number of dollars flying out of the U.S. Treasury.

I thought of this not long ago when I attended a conference and heard some of Ron Paul's supporters wonder how Mitt Romney could appeal to them. Here's a suggestion: Offer them a genuine opportunity to vote for less government.

This proposal might strike some as radical, since it is outside the realm of the experience of living voters, but we face an unprecedented set of conditions today that make such a fundamental change of direction conceivable, though admittedly not likely.

Romney already has proposed cutting numerous federal agencies and programs that waste federal tax dollars more egregiously than your typical run-of-the-mill federal bureaucracy. Why not attach a dollar figure to his budget cutting? How about campaigning on a nice round number? E.g., "My first annual budget will cap federal spending at $3 trillion."

I don't know about you, but $3 trillion for the wasteful, economy-crushing federal leviathan sounds to me like way too much money, but at least it's a step - a significant step - in the right direction.

The case for such a cut is simple: Under President Obama, we have fallen into a fiscal rut of adding at least $1.2 trillion to the federal debt every year. Does anybody other than an economic illiterate think we can afford such massive floods of red ink? Even if we achieved the ambitious target of cutting federal spending to $3 trillion a year, we still would have an annual deficit larger than any deficit in history before the panic-induced TARP bailout in 2008-9. If those who are on the conservative side of economic issues think it's "too radical" to propose an annual budget deficit of "only" half a trillion dollars, then perhaps we need to redefine "conservative."

There is another strong point to be made in support of capping the next fiscal year's spending at $3 trillion: What were the benefits of Obama's quantum increase in federal spending? Did it stimulate the economy? Did it bring us prosperity? What did we get for adding $5 trillion more debt during these last three years? Is there a Henry Morgenthau (FDR's Treasury Secretary) in the Democrats' ranks today with the candor to admit, as Morgenthau did in 1939, that all the administration's extra spending hasn't helped, but has saddled us with a massive debt burden? Romney should forcefully make the case that deficit spending is both wrong and dangerous, and that it's time for Uncle Sam to live within taxpayers' means.

Obama talked about various "resets" earlier in his presidency. Well, let's reset federal spending to what it was when Obama took office and engineered the worst fiscal nightmare in nearly 80 years. For the first time in seemingly forever, voters would have a real choice between voting for more government and voting for less government. That would give the Ron Paul supporters a meaningful stake in this year's election. It should also appeal to the long-suffering taxpayers who get stuck with the tab for federal profligacy.

One of the Democrats' greatest political strengths is their unity. They know what they want. They want more, as in, more government. There is no end to how much more government the "progressives" among them want, although most are too cagey to admit that openly. Just ask them where they want government spending to shrink (except on national defense), and you'll find the list either to be empty or to include a couple inconsequential token cuts offered only as a fiscal fig leaf.

Will the Republican Party ever coalesce around the principle of steadily working for less government as strongly as the Democrats have coalesced around the principle of more? Perhaps not, but I'd sure like to see Gov. Romney surprise everyone and move the GOP in that direction in this prodigiously momentous election year. Give us a real choice, Mitt: More or less?

The Euro Is a Frankenstein Currency

What do Dr. Victor Frankenstein and the architects of the euro currency have in common? Answer: They both created monsters.

The euro is not "money" any more than the monster created by Dr. Frankenstein was a man. Whatever resemblances there may be to the genuine article are merely superficial. Nor is government needed to create money, any more than government is needed to create another human being. These things happen naturally.

In the case of money, it develops in the marketplace in response to the need for a medium of exchange for economic goods. Prices are ratios that communicate the degree to which individuals value the marginal (next) unit of the finite supply of economic goods.

Historically, societies around the world frequently found gold and silver to be the most suitable commodities to serve as money. Why? First, people value gold and silver whether they are used as a medium of exchange or not. Second, those metals have the natural advantages of being durable, divisible and portable. Third, it is easy to standardize the quality of each unit.

A government's perpetual tendency to amass more power impels government leaders to establish a monopoly over money. To facilitate increases in government spending, sovereign powers replace genuine money with fiat money - that is, paper money or, in the digital age, unseen binary data bytes. In doing so, governments and their central banks divorce money from its organic origin as the most marketable commodity in a society.

Commodity money is like a giant oak tree, firmly rooted in the soil of everyday voluntary economic choices. It is an organic, natural part of the economic ecosystem. When governments remove the commodity backing from money, people may continue to use it as a medium of exchange out of habit. Usually, though, legal tender laws compel them to keep using the fiat currency as their "money." On the surface, everything initially appears as it did before. Beneath the surface, however, the metaphorical oak tree that symbolized money has been separated from its roots. From the time real money is replaced by its fiat counterfeit, it starts to die from within. Eventually it collapses under the stress of some financial or political storm.

The euro is more abominable and more dangerous than your typical fiat currency. Today's Federal Reserve note (i.e., a "dollar") is like a giant oak tree that has become a hollow shell. Most of its substance has been eaten away by the inflationary creation of far too many units of fiat currency (all needed to finance government's insatiable appetite for spending). It still manages to stand, to serve in its weakened and brittle state as the medium of exchange, because it still has the "full faith and credit" of the U.S. government supporting it.

But as pathetic as Federal Reserve notes are, the euro is even worse, because there is no entity whose "full faith and credit" lies behind the euro currency. Each more hopelessly indebted than the other, 17 countries use the euro. Which of their governments can command sufficient economic resources to bail out zombie banks and bankrupt sovereign treasuries?

Returning to the tree metaphor, the euro was grafted together from pieces of 17 (so far) dying fiat currency trees of different species. The euro has had no roots from day one. It did not evolve naturally from market forces. Its trunk was stitched together from pieces of the deutsche mark, French franc and Italian lira fiat currencies, with its main branches from the peseta, the punt, the Dutch guilder and its minor branches from remnants of the fiat currencies of smaller economies, such as the Greek drachma and Portuguese escudo. The sutures that stitched together those decaying fiat currencies consisted of nothing more substantial than lies and empty promises. These were solemn pledges that debts and deficits would never, ever reach levels that were long ago exceeded. The experts who devised the euro currency were naive to have believed that democratic politicians would have the honor or capacity to maintain fiscal discipline.

The euro is a monstrosity doomed to be rent asunder by economic gale-force winds. Like characters in Jean-Paul Sartre's grim play, "No Exit," the people who use the euro currency are trapped. Either member countries will abandon the euro, in which case banks, governments, businesses and individuals go through a wrenching period of defaults, write-downs, "haircuts," and bankruptcies, or they lurch onward toward an unviable fiscal union in which Germany, Finland, and the few relatively solvent economies are crushed under the unsupportable weight of being expected to bail out the relatively bankrupt countries.

How much longer can the macabre dance of the EU's Frankenstein currency last? Europeans are paying an awful price for having adopted a Frankenstein currency instead of the real thing.

Mitt and Me: Romney at Cranbrook - a Personal Glimpse

What interesting timing. I had recently planned a column on my observations about Mitt Romney at Cranbrook. Why? Not because of anything in the news related to Cranbrook - at least not yet - but because our careers there (mine and Mitt's) overlapped. Then The Washington Post released its story about the young, alleged bully, Mitt Romney. Now my Romney article is twice as long as it would have been a week ago.

First, some background: I was a freshman in Stevens Hall, Mitt's dorm, during his senior year. At Cranbrook, freshmen watched seniors, but didn't hang around with them, so we didn't know each other. I doubt that he would remember me from Cranbrook (although we did meet briefly prior to the Salt Lake City Olympic Games as a result of my daughter having written the torch relay song for that Olympiad.)

Now, to the current issue: did Romney cut John Lauber's hair? I have no personal knowledge of the incident; in fact, I can't even remember John. But when men like Mitt's classmates, Tom Buford and Matt Friedemann, say publicly that it happened, then it happened. "Kraut," as we affectionately called Friedemann in those pre-political correctness days, was the prefect on my hall, and very kind to this freshman. I knew Tom, another prefect. I'd trust those two any day.

Was Mitt homophobic? The real question should be: Is the adult Mitt Romney homophobic? Cranbrook in the 1960s had a culture that probably would be considered "homophobic" today, but was the norm then. I don't know anybody there who actually hated or wanted to hurt homosexuals, but you sure didn't want to be called one. We were a bunch of adolescent boys with macho complexes, trying to live up to what we thought "real men" should be like. In the 1960s, that meant being masculine and heterosexual.

Did the school administration let Mitt get away with stuff because his dad was governor? Possibly, although seniors generally were a privileged class. As long as they didn't set the dorm on fire, the adults pretty much left them alone to do their thing.

Just as we made mistakes in the classroom and then (sometimes) learned from those mistakes, so we learned by trial and error outside of the classroom. For example, several of the guys who helped Mitt administer the unwanted haircut have stated that the incident bothered them. They learned something important about themselves: It didn't feel right to engage in unprovoked aggression against another human being. I'll bet they never did it again. Maybe Mitt learned the same lesson.

Was Mitt a bully? By today's standards, what Mitt did would be classified as bullying. By the standards of the 1960s, though, "bullying" seems like too harsh a term. The bullies I knew as a kid were pathetically antisocial boys who derived perverse pleasure from inflicting pain on kids who were clearly weaker than they were.

Mitt was anything but antisocial. After reading about this incident, I went back to my 1965 yearbook, both to see if I recognized John Lauber (I didn't) and to reminisce about Romney, Friedemann, Buford, and other guys I knew. There was Mitt in the Glee Club picture; as head of the Key Club; Mitt in the Pep Club; Mitt in "the Forum," a student group that studied geopolitical events; Mitt the chairman of the Homecoming Committee. Here's a guy who loved his school and gave much of himself - hardly the profile of the antisocial bully.

A bully's primary goal would have been to hurt John Lauber. I think Mitt was motivated by a too-ardent desire to uphold the school's unwritten cultural code, under the standards of which he thought John's bleached, styled hair to be effeminate, and thus disrespectful to the school and its student body. Does that make what he did right? Of course not.

On the other hand, if, in order to be president, someone has to have had a spotless, mistake-free youth - no lapses in judgment and not having committed a single embarrassing deed-then the office will have to remain vacant. The Washington Post reported one strange incident that may have been taken out of its social, cultural, and temporal context.

In the interest of doing my little bit to flesh out Mitt Romney's character, let me share a couple of first-hand observations of Romney at Cranbrook:

The one quality about Mitt Romney that stood out more than the others was his abundant joy. He was one of the happiest guys I've ever seen, although he had his serious side, too. His love for life was palpable.

I'd surmise that Mitt's joy stemmed from his happy family life. When the demagogues sneer that he was born with a silver spoon in his mouth, they are right, but not in the way they mean. Mitt's good fortune wasn't his father's money, but that his parents imparted to him great emotional wealth. He had to have a lot of emotional security and self-knowledge to be able to enter into such a successful, enduring marriage at such a young age, and I think that was George and Lenore Romney's truly valuable bequest to him.

Romney's joy is no mere trivial factoid. It has relevance for this presidential race. I would prefer POTUS to be a happy, secure individual, and one who has loved and been grateful for his country all his life.

Let me share another vignette with you, one that speaks to Romney's character: At Homecoming of his senior year, a couple of the regular runners on Cranbrook's cross country team couldn't compete that week. That meant that Mitt, who was further down the depth chart of a very strong team, would finally get to run in a varsity race. When the runners burst into view on the far side of the football field during halftime, Mitt astounded everyone by being near the lead. He had pushed himself to run the race of his life. But then, about 100-150 yards from the finish line, he reached his physical limit. Starved for oxygen, his legs started to shut down. His stride gave way to an unsteady stagger. Runners started to race past him. Then, winded and ashen, his face contorted in acute distress, he collapsed on the track some 30 yards from the finish line.

He could have quit and stopped the agony. He had nothing to gain, it seemed, for every other runner had passed him, but still he didn't give up. Instead, he literally crawled and dragged himself yard after yard on the cinder track, until finally he crossed the finish line and received some first aid. It was a heroic effort.

Lesson: When Mitt Romney is committed to something, he gives it his all.

President Obama and his supporters in government and the media have their work cut out for them. The president's record is weak, so he can't run for reelection on that. The logical Plan B is to turn Romney into a monster. That could prove to be a major strategic error.

I haven't had the privilege of knowing Mitt Romney, the adult. Others will have to tell us about his adult conduct. All I can tell you is that I saw a lot of potential for a life of positive accomplishments in that lanky teen in Stevens Hall. *

Read 1745 times Last modified on Saturday, 05 December 2015 11:10
Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

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