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.
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 The Epoch Times, and Visionandvalues.org, a publication of Grove City College in Grove City, Pennsylvania.
Ready for Some Good News?
We are constantly bombarded with bad news. There are disasters, dangers, challenges, and woes. On the political scene, we find perpetual discord peppered with lurid denunciations and shrill condemnations. Media reports are alternately dismaying, disappointing, distressing, disgusting, or depressing. But despair not, friends: All is not lost!
Here let me serve you a heaping helping of good news: The world is more prosperous and more peaceful than it has ever been before.
To those of us who came of age in the ’60s, the two most pressing problems in the world were poverty and war. Fifty years later — Voila! — there is a lot less of those two blights on human life.
Let’s start with poverty: In the mid-1970s, there were approximately 3.5 billion people on Earth and two billion of them were poor and hungry. Forty years later, there were 7.3 billion people and 767 million in severe poverty. In less than two full generations, the proportion of severely poor humans has plummeted from five in nine to one in nine. Nothing remotely similar to this massive economic progress has ever happened before.
Look at poverty in a longer-term context: In 1820, near the dawn of the Age of Capitalism, 94 percent of people were poor. Indeed, throughout all of human history before then, only a tiny elite prospered while over 90 percent of humanity barely subsisted. At the end of World War II, there had been significant progress, but over 70 percent of the people alive were severely poor. Then look: in 1981, 44 percent of humans were severely poor; in 1990, 37 percent; 2010, 16 percent; 2013, 10.7 percent. This is an astonishing achievement.
Here let me interject a cautionary note: While we are on a trend to potentially eliminate severe poverty entirely by 2030, don’t count on that happening. Flawed humans have an amazing capacity to mess things up. Just look at Venezuela today. In 1950, Venezuela had the fourth-highest per capita GDP in the world. Today, crippled by socialist policies, Venezuela has been reduced to an economic basket case with people starving to death. (Americans enthralled by Bernie Sanders, take note.)
Now, back to the good news: More people are enjoying peace and prosperity than ever before. Poverty has receded to the degree that governments around the world abandoned socialistic policies and unleashed market forces. Billions of people gained greater freedom and opportunity to work, invest, produce, profit, and trade with each other, both domestically and internationally.
Indeed, an under-appreciated aspect of market liberalization (i.e., the freeing of economic activity from government controls) has been the increased freedom to trade across national borders. After two world wars with a trade war/depression sandwiched in between, enlightened statesmen in the 1940s (with Americans taking the lead) worked diligently to craft a more peaceful, prosperous world by lowering trade barriers and strengthening commercial ties.
The underlying economics is simple: Every time the social division of labor is expanded through the inclusion of more people in the marketplace, the greater the range of talents and products available to consumers and the more competition, specialization, efficiency, comparative advantages, and economies of scale impel producers to improve quality and lower prices. In short, more trade leads to more prosperity. And as greater international commerce demonstrates that trade increases prosperity, people realize that it is self-defeating to wage war against the very people who are supplying things we want.
The theory that trade conduces to peace has been borne out in practice. As international trade has expanded greatly since WWII, the incidence of war has plummeted. By one calculation, the number of wars was ten times greater in the century before 1950 than in the 50 years after. Harvard scholar Steven Pinker avers, “the world is less violent now than at any time in history.” Let us be grateful.
The post-WWII order — more trade, more prosperity, and more peace — is worth preserving. We should celebrate the amazing progress against the twin scourges of poverty and war, even as we continue to aim for their eventual elimination. Let us urge our leaders to remove the remaining barriers to trade. True, current trade rules are not always fair. They need to be improved, as President Trump is trying, but let’s not allow the perfect to be the enemy of the good and collapse the post-WWII order of trade and peace. Our unprecedentedly peaceful and prosperous world is a whole lot better than a world of national isolation, lower standards of living, and war.
Good News, Bad News about Divorce
First, the good news: “Millennials Are Causing the U.S. Divorce Rate to Plummet.” As reported by Ben Steverman on Bloomberg.com, Census Bureau data show that millennials’ divorce rate is so much lower than baby boomers’ divorce rate that the overall divorce rate has plunged by 18 percent from 2008 to 2016. The evidence indicates that young couples are less likely to rush into marriage and subsequently realize they had made a mistake.
Unfortunately, as encouraging as a falling divorce rate sounds on the surface, there is some bad news associated with it, too. As the Steverman report states:
“Many poor and less educated Americans are opting not to get married at all. They’re living together [and] often raising kids together [but] studies have shown these cohabiting relationships are less stable than they used to be.”
Although marriage is one of the most private institutions in a society, the state of marriage in a society has profound economic consequences. Repeated tabulations of data by social scientists shows a high correlation between being married and being prosperous. Economist Robert Whaples argues that after people get married, on average they are perceptibly more productive and earn more regardless of whether they were born prosperous or poor.
Further, Whaples shared key statistics about poverty among the married and unmarried. In 2005 (the most recent year for which he had data at the time he filmed his lecture series), the poverty rate was 7.8 percent for intact white American families and 8.2 percent for intact black American families. Combined with contemporary U.S. Census Bureau data that the poverty rate for unmarried mothers with children was 40 percent while it was only 8 percent for married couples with children, we can form two conclusions: 1) The much higher incidence of poverty or near-poverty among black Americans is not a racial gap, but a marriage gap, attributable to the much higher rate of white American families remaining intact compared to black American families. 2) In the words of policy analyst Robert Rector of the Heritage Foundation, marriage is “America’s greatest weapon against child poverty.”
Another salient point in Steverman’s report about America’s falling divorce rate was that the difference in marriage rates among the economically well-to-do and the economically marginal members of our society is “a sign of America’s widening chasm of inequality.” Yes, it is, but this trend is nothing new; on the contrary, it has been going on for decades.
The widening chasm of economic inequality to which Steverman referred is one of the central points in Charles Murray’s 2012 book Coming Apart. In it, Murray cited abundant data showing that the economic gap between affluent and economically marginal Americans has paralleled the widening gap between married and unmarried adults. Although it would be an oversimplification to assert that marital status is the single determinant of whether an American leads a prosperous life or not, it is clear that the perennial divide between the economic haves and have-nots is a divide between the married and unmarried.
The seemingly intractable persistence of a two-tier society must be frustrating the heck out of the social justice warriors and the inequality fanatics. The whole social engineering cult is besotted with the belief that it can construct a “great society” — i.e., one in which everyone shares more fully in the fruits of affluence — from the top down. The increasing incidence of unmarried Americans thwarts that egalitarian goal.
What, then, are the social planners to do? Would a federal Department of Marriage produce a larger number of happier marriages? Or should Uncle Sam ban marriage for everyone on the ground that it produces unequal economic outcomes? Even the most fervent of social planners can see what a nonstarter that is. Should married taxpayers pay a penalty to subsidize their poorer, unmarried compatriots? Would the favorite progressive prescription, “Raise taxes on rich corporations,” somehow result in more Americans marrying or help already married couples stay together? Hardly.
The marriage/wealth gap should enable everyone to see the limits of social engineering. There are certain things that the state simply cannot do. No government policy, program, or agency can mold citizens into individuals with loving hearts and the strength of character to accept responsibility and make long-term commitments.
Conservatives don’t have an easy answer for this problem either, although they reject out of hand the notion that it is up to government to “fix” the marriage problem.
That leads me to a humble suggestion for how more Americans can build a foundation for lasting marriages and the economic prosperity that generally follows. A successful marriage flourishes among individuals who are selfless enough to love others and to honor their duties. Marriage works best if the marriage partners have glimpsed the spiritual truths that it is sometimes better to give than to receive and to be of service to others instead of always prioritizing self-indulgence. Marriage is strengthened when husband and wife share the noble aspiration to live for a higher cause than just momentary whims and desires. Where are such values to be taught and inculcated? In church — maybe not in every church, but for 2,000 years, church has done much to prepare people for the demanding and fulfilling joys of marriage. Turning to the divine for guidance has blessed the lives of billions of people, including many generations of Americans. It can do the same today, if people will give it a try.
Spending More on Debt Than Defense
The financial health of the federal government has been deteriorating for decades. Unable to break free from our bipartisan addiction to deficit spending, the national debt has continued to rise relentlessly. This has brought us within sight of a grim milestone: the day when the interest that Americans have to pay on the national debt exceeds what we pay for national defense. According to The Wall Street Journal article, “U.S. on a Course to Spend More on Debt Than Defense,” we will reach that baleful milestone in only five years.
The figures are startling. In 2023, military spending is projected to be more than $700 billion. Yet in that same year the annual interest that taxpayers will pay on the national debt will be even higher.
You can argue that the federal government spends too much on defense. That is an unknowable except in retrospect, but the cost of spending too much on defense is almost certainly less than the cost of not spending enough. Whatever you think about defense spending, at least it is for present consumption. By contrast, interest on the national debt is for past consumption — over $27 trillion worth by 2023. That is how much young taxpayers will have to pay to service the debt run up by their elders.
When the enormity of this predicament dawns on stressed taxpayers, progressives assuredly will blame defense spending for our massive indebtedness. Of course, progressive opposition to defense spending has been a virtual constant for decades.
The fundamental problem with blaming Uncle Sam’s sorry fiscal state on defense is that, unlike those myriad other federal programs that have contributed to the national debt, defense spending is one of the few activities that Uncle Sam engages in that is explicitly authorized by the U.S. Constitution. For well over a century now, animated by the belief that the federal government should provide economic assistance to Americans, progressives have pushed for government to expand into areas of life never envisioned by the Founders nor authorized by amendments to the Constitution. It is no wonder that progressives attacked Justice Kavanaugh from the moment he was nominated. They fear and despise his respect for the text of the Constitution, because they want to spend more money on things not stipulated in the Constitution and less on what is stipulated in the Constitution.
Indeed, the progressive agenda of expanding government beyond its historical, constitutional confines has been hugely successful. Defense spending as a share of the federal budget has fallen from an average of 48.1 percent from 1792 to 1860 to under 25 percent today.
Defense spending no longer takes up the largest share of federal spending. In Fiscal Year 2015, Uncle Sam spent $609 billion on military programs, $1,051 billion on Medicare and health spending, and $1,275 billion on Social Security, Unemployment & Labor.
Today, military spending is only the third largest category in the federal budget. In five years, when interest payments on the national debt surpass it, military spending will be the fourth largest.
The federal government is in uncharted waters, financially speaking. Historically, the federal government incurred significant debt only in wartime and then whittled away at that debt during peacetime. In the modern era, when federal spending expanded into new areas, the national debt has swollen rather than shrunk during peacetime. The fiscal problem, then, is not due to military spending, but to other spending.
Sooner or later, something will have to give. We eventually will have to learn to live within our means. I don’t say that as a matter of opinion, but as a law of nature. It simply isn’t possible to live beyond one’s means indefinitely. The longer it takes for us to learn that lesson, the more painful the convulsions of a future debt crackup will be.
One Judge’s Role in Sabotaging the Keystone XL Pipeline Project
Last week I was chatting with a friend who asked me the current status of the Keystone XL pipeline project. This is the pipeline that would transport over 800,000 barrels per day of oil from Alberta, Canada, to Nebraska. There it would connect with existing pipelines that feed into the oil refineries in the gulf coast region.
President Barack Obama had sided with environmentalists in blocking the construction of the pipeline whereas President Donald Trump has openly supported this project, both before and after taking the oath of office. Indeed, two months into his presidency, the State Department issued the necessary permit for the pipeline to cross the U.S-Canadian border.
I don’t know if my friend and I jinxed the project, but late last week a federal judge declared that he was putting the project on hold. By taking this aggressive action, U.S. District Judge Brian M. Morris has endeared himself to “environmentalists who want to keep fossil fuels in the ground” (to use the words of The Wall Street Journal’s reporter Miguel Bustillo).
This appears to be a case of judicial usurpation of the legislative and executive branches of government. Since when are judges supposed to determine our country’s energy policies? Environmentalist activists have been blocking the Keystone XL project for a decade through a series of legal delay tactics and, for eight years, with the cooperation of the Obama administration.
Judge Morris is demanding an updated environmental review “to weigh several additional factors, including the impact of lower oil prices on the project’s viability, its related greenhouse-gas emissions, and modeling of potential oil spills it could cause.” These are three transparent pretexts that the judge has no business requiring.
The first demand the judge made is for the private business interests that want to undertake this project should consider its economic viability. Really? Does he think that the people who want to build Keystone haven’t considered its potential for profit and loss? It’s their money; if they want to risk it, who is a judge to rule that they can’t?
The very premise of this request is absurd, because it implies that human beings can somehow calculate what future market prices will be. This is the arrogance of a socialistic central planning mentality. Nobody knows the future. On the positive side, increasing the production of energy sources in politically stable North America will enhance national security. It may also help to increase the supply of oil enough to push energy prices lower to the great benefit of Americans, and particularly poorer Americans who spend a higher percentage of their income on energy than do more affluent Americans. And if the project eventually goes bankrupt, well, the taxpayer isn’t on the hook. This is a private investment with the financial risk all borne by the private sector. It isn’t the judge’s role to interfere with the private decision of how much risk people are willing to take with their own property.
As for the second reason given for blocking construction of this pipeline, why should the builders of Keystone XL have to quantify the project’s carbon dioxide emissions? Until such a requirement becomes the law of the land universally applicable to every company, this is a discriminatory action. Besides, as I’ve written elsewhere it turns out that the increased concentration of carbon dioxide in the atmosphere is significantly greening the earth while the heat-trapping capacity of this benign gas is close to maxed out.
Finally, the demand for “modeling” of potential oil spills is a red herring. Moving oil long distances through pipelines is not a new industry. Our country already is crisscrossed by thousands of miles of pipelines. Do accidents occasionally happen? Yes, but rarely. The big story is how countless barrels of fossil fuels have been transported safely day after day, year after year. It sounds like the judge suffers from a typical liberal desire, which is to live in a perfect and risk-free world. Sorry, sir, there is only perfection in heaven. To block a project because there is a small chance that something might go wrong is essentially prejudicial. It feels like the Tom Cruise movie “Minority Report,” in which the police, employing psychics, arrested people before they committed a crime. That isn’t American justice.
We have laws in place to punish malfeasance, if and when it should occur. The companies that want to build the Keystone XL pipeline face powerful economic incentives to get it right. They’ve been jumping through regulatory and legal hoops for ten years. It’s time to quit persecuting them and let them get on with it.
As President Trump stated one time when he declared his support for Keystone: America is about building. The first steps to organize the project for building the Empire State Building happened in 1929. Construction began the following March and was finished one year and 45 days later. These obstructionist delay tactics are a disgrace to our national heritage.
The Politics of E15
On October 9, President Donald Trump announced that he was lifting the EPA’s ban on summertime sales of E15 — a motor fuel blend consisting of 15 percent ethanol instead of the usual 10 percent. Trump’s announcement is telling. It teaches much about politics, trade policy, and the sorry state of the environmentalist movement.
That Trump’s announcement was politically motivated is obvious. The proposed new policy was announced during a campaign visit to Iowa. A crucial biennial election loomed, and Trump unveiled his plan there to give a boost to the electoral prospects of Republicans in the Corn Belt.
Such a move was politically necessary after Trump’s tariffs on Chinese imports triggered retaliatory tariffs that reduced American food exports to China and cut American farmers’ incomes. The president needed to demonstrate to farmers that he is looking out for their interests. The call for greater use of E15 — which would increase the demand for corn — was music to the ears of many voters in the Farm Belt.
This sequence of events — economically disruptive tariffs followed by a policy designed to mitigate or offset those disruptions — illustrates a profound truth about political economy. The great Austrian economist Ludwig von Mises elucidated this truth in his essay, “Middle-of-the-Road Policy Leads to Socialism.” [Stay calm; I am not suggesting that Trump wants socialism!]
Mises’s point was that government intervention into markets, however well intentioned, inevitably impacts prices and patterns of production. Intervention helps some and hurts others. Those who now have a government-induced problem, like American farmers after the imposition of tariffs, expect the government to solve that problem. But whatever government does in the attempt to offset the damage its policies caused will further distort markets. This will stimulate cries for further intervention. Thus, the tendency of intervention is to breed further intervention.
Trump’s trade policy is developing as a “two steps forward, one step back” process. (Let’s hope it doesn’t end up being one step forward for every two steps back!) Clearly, the proposal for increased usage of E15 is a government subsidy to corn growers and the ethanol industry. It moves us even farther away from Trump’s professed goal of dropping all tariffs, trade barriers, and subsidies. Realistically, given our current political alignment, zero subsidies for American agriculture is inconceivable for the foreseeable future.
I have written before about the negative economic effects of using corn-based ethanol as a motor fuel. The negative environmental impacts are significant, too. Although some green groups, such as the Sierra Club, have warned about the environmental consequences of corn-based ethanol in the past, they have remained strangely silent about Trump’s plan to increase its usage. Apparently, they are too busy trying to use the climate change issue to scare Americans into embracing socialism to challenge a policy that truly is environmentally harmful. This underscores my long-held belief that preserving a healthy environment is not the primary goal of environmentalists.
Forty percent of the American corn crop already gets burned up in our vehicles’ engines. That represents millions of acres of land that are converted from wildlife habitat to tillage. It causes the use of who-knows-how-many tons of fertilizers that unnecessarily contaminates water (e.g., red tide in Florida).
Worst of all, any government policy that hastens the pace of water consumption in the Midwest, where aquifers already are dangerously depleted, is environmentally shortsighted. If environmentalists really cared about the environment more than they want to increase government control of the economy, they would oppose corn-based fuel more vigorously than they oppose fracking. Fracking does not jeopardize our precious water supply; corn-based ethanol does.
Remembering Soviet Dissidents and the Weaponization of Psychiatry
The New York Times obituary opened with a simple recitation of facts: “Zhores A. Medvedev, the Soviet biologist, writer and dissident who was declared insane, confined to a mental institution and stripped of his citizenship in the 1970s after attacking a Stalinist pseudoscience, died . . . in London.”
Zhores Medvedev, his twin brother Roy (still alive at 93), the physicist Andrei Sakharov, and the Nobel Prize-winning novelist Aleksandr Solzenitsyn were leading dissidents. They courageously put their lives on the line to smuggle manuscripts out of the Soviet Union. They wanted the outer world to learn the truth about the “the workers’ paradise” that so many Western intellectuals (some deluded, others having gone over to the dark side) praised.
A generation of Americans has been born since the Soviet Union, the USSR that President Ronald Reagan boldly labeled “the evil empire,” ceased to exist. They have little to no concept of how ferociously the USSR’s Communist tyranny suppressed dissent. As the Times obit of Dr. Medvedev illustrates, one Soviet technique of oppression was to declare that political dissidents were insane. They were then incarcerated in psychiatric hospitals where they were tormented and tortured. Some were used as human guinea pigs for dangerous experiments. (Shades of Hitler’s buddy, Dr. Mengele). Some even succumbed to the not-so-tender ministrations of those “hospitals.”
I recall one particular example of the disgusting abuse of human beings in Soviet psychiatric hospitals. Vladimir Bukovsky, who will turn 76 later this month, spent a dozen years being shuffled between Soviet jails, labor camps, and psychiatric hospitals. One of the “therapies” administered in a psychiatric hospital was putting a cord into his mouth, then threading it from his throat up through his nasal passages, and then drawing it out through one of his nostrils. (Maybe the cord went in the opposite direction; I’ve never been interested in memorizing torture techniques.) Alas, this Communist “treatment” did not “cure” Bukovsky of his rational (not irrational) abhorrence of tyranny and brutality.
The warped thought process that led to the perversion and weaponization of psychiatry in the Soviet Union can be traced back to Communist icon and thought leader, Karl Marx. Marx propounded a spurious doctrine known as “polylogism” to justify stifling dissent. According to Marx, different classes of people had different structures in their minds. Thus, Marx declared the bourgeoisie to be mentally defective because they were inherently unable to comprehend Marx’s (allegedly) revelatory and progressive theories. Since they were, in a sense, insane, there was no valid reason for Communists to “waste time” arguing with them. On the contrary, Communists were justified in not only ignoring or suppressing bourgeois ideas, but in liquidating the entire bourgeois class.
The practice of categorizing one’s enemies as “insane” became a ready tool of suppression in the Soviet State founded by Lenin and developed under Stalin. The USSR’s infamous secret police energetically wielded quack psychiatry as a club with which to destroy political dissidents.
The incarceration of Zhores Medvedev in psychiatric hospitals in the 1970s was a monstrous injustice. His “crime” was having exposed the bizarre pseudoscience of Lysenkoism that Stalin had embraced in the 1950s. Lysenko’s quack theories led to deadly crop failures and widespread starvation. Nevertheless, Stalin backed him by executing scientists who dared to disagree with Lysenko. Millions of innocents lost their lives because “truth” in the Soviet Union wasn’t scientific, but political.
Another vivid example of the destructive consequences of politicizing truth is related in Solzhenitsyn’s exposé of Soviet labor camps, The Gulag Archipelago. Certain Soviet officials decided to increase the steel shipped to a certain area. When the planners issued orders for trains to carry double the steel to the designated destination, conscientious engineers informed them that it couldn’t be done. They pointed out that the existing train tracks could not support such great weights. The politicians had the engineers executed as “saboteurs” for opposing “the plan.” What followed was predictable: The loads were doubled, the tracks gave out, and the designated area ended up getting less steel, not more.
This episode shows where the true insanity was in the USSR. The central planners believed that constructing their ideal country was simply a matter of will. Alas, reality doesn’t conform to the whims or will of any human being, but the arrogance of central planners remains stubbornly impervious to that inescapable facts of life. Instead, as the havoc wrought by Soviet central economic planners repeatedly demonstrated, the Communist central planners refused to abandon their insufferable self-delusion and mystical belief in the power of their own will to alter reality. This was the true insanity, compounded by the error of persecuting competent scientists like Zhores Medvedev.
Sadly, the practice of branding political opponents as “insane” is not confined to the now-defunct Soviet state. In 1981, when I was completing my master’s thesis about Solzhenitsyn, I telephoned an American college professor of history to ask whether he recalled if Solzhenitsyn had been granted honorary U.S. citizenship. (He wasn’t. President Ford didn’t want to offend the Soviet leadership.) The reply to my question was this: “Aleksandr Solzhenitsyn belongs in an insane asylum.” The virus of Marx’s polylogism is, unfortunately, alive and well in American academia.
As for Zhores Medvedev, may he now rest in peace and receive his reward for his integrity and courage. *
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 The Epoch Times, and Visionandvalues.org, a publication of Grove City College in Grove City, Pennsylvania.
The Kavanaugh Accusation: A Defining Moment for #MeToo
What is #MeToo’s mission? Is it to work for a reduction of abusive sexual behavior and to promote greater respect for each other, or is it to weaponize sex for partisan, ideological purposes? We may find out soon.
Just last week, I wrote in support of #MeToo’s efforts to curb predatory sexual behavior, saying that they could be more effective and helpful if they would dare to challenge the rich and socially accepted purveyors (Hollywood, Playboy, et al.) of socially corrosive sexual titillation.
Now, one week later, #MeToo is in a position to squander their long-term effectiveness in one huge misstep.
All they have to do to blow it is to hitch their reputation to the attempt to derail Judge Brett Kavanaugh’s nomination to the Supreme Court on the flimsy basis of unproven accusations of impropriety as a minor. If that happens, #MeToo will lose a ton of respect, credibility, good will, and moral authority.
If, going forward, #MeToo focuses its efforts on adults using positions of power to coerce or extort sexual favors from those beneath them in a hierarchical organization, they will enjoy mainstream support.
But, if #MeToo starts going after every man who crossed a line as a callow teenager, the result will be a circus. Heaven knows, we have enough problems to address in the present without reliving thousands of years- and decades-old cases of adolescent impropriety of various degrees of veracity.
Yes, let’s do more to teach today’s youth about proper conduct toward members of the opposite sex, but let’s reserve the heavy artillery of branding someone for life for incorrigible adults who pose a present threat to decency and respect today.
Hopefully, there are enough sober thinkers in the #MeToo movement to see how much support they will lose if they call for the unjust ruination of a man’s career on the basis of unproven allegations.
Sadly, two female U.S. senators are setting horrible examples. Sen. Kirsten Gillibrand (D-N.Y.) has stated that Kavanaugh should be disqualified “given what we know.” Sorry, senator, but we don’t know what did or didn’t happen 36 years ago.
Sen. Mazie Hirono (D-Hawaii) apparently blames all males for sexual misconduct, and has called on men to “step up” and “do the right thing.” Well, I stepped up last week in support of curbing sexual predations. Now I hope the senator will reciprocate and do the right thing by not lynching Judge Kavanaugh on the basis of an uncorroborated allegation dependent on fuzzily recalled events from 36 years ago.
Hypocrisy — What makes progressives’ attempt to torpedo the nomination of a brilliant and fair-minded jurist, who by all accounts has been a model of upright behavior throughout his professional career, is the rank hypocrisy of it all.
Liberals have long blamed the environment in which someone was raised for the occurrence of crime and poverty. While I don’t think environment explains or exculpates everything, it can indeed be a potent factor. So it is with sexual misconduct. That is why, in my article last week, I urged #MeToo to criticize today’s social environment in which recreational sex is glorified and chastity and monogamy are devalued.
Liberals also have customarily come down on the side of lenience for minors who have broken laws. Indeed, while we can disagree about how much leniency to show to adolescents, we need to make some allowances for juvenile misbehavior, for minors are not fully mature individuals either emotionally or psychologically. Many of us made mistakes as teenagers that we would never make as adults.
The eleventh-hour attack on Kavanaugh reminds me of how, six years ago, the left went after GOP presidential candidate Mitt Romney for some high school mischief. I happened to live in the same dormitory as Mitt that year, and wrote about the incident for Forbes.com.
Even though I think Mitt did what he was accused of (something I won’t believe about Kavanaugh without credible corroboration), I feel that he learned and grew from his overzealous behavior. Kids are kids, they make mistakes, and to say that a mistake in youth disqualifies a person from doing honorable work as an adult is wrong and cruel. (It’s also impractical, because if only people who never stepped out of line as kids can be eligible for high office, those offices will have to remain vacant.)
Progressives say that standards of conduct must be stricter for someone to occupy a position as powerful as a seat on the Supreme Court. That is laughable coming from people who gave Bill Clinton a pass for his alleged serial sexual depredations, even though as president he had more power than a Justice Kavanaugh ever would.
Furthermore, Clinton’s known transgressions as an adult were far more outrageous than Kavanaugh’s unknowable, alleged transgressions as a youth. To have given Clinton a pass, but to condemn Kavanaugh is as dishonest a double standard as can be imagined. And to pretend that the Clinton episode is “ancient history” and that progressives’ standards have risen over the two decades since is bunk.
Just two years ago, those now arguing that an alleged sexual assault by an intoxicated teenager disqualifies an individual from high office for life wanted Hillary Clinton — a woman who had allegedly thrown dirt on the female accusers of her husband — to be president of the United States. How utterly cynical.
Yogi Berra famously quipped, “When you come to the fork in the road, take it.” #MeToo now finds itself at a fork in the road.
In this case, it is more than obvious which fork #MeToo should take. They should opt for the higher road of evenhandedly and consistently working to uproot sexual exploitation from the workplace, and shun the downward path toward becoming nothing but another demagogic tool of partisan politics.
The #MeToo Movement’s Blind Spot
The #MeToo movement has scored a significant victory: Les Moonves has “stepped down” as CBS chairman and CEO after multiple accusations of predatory sexual behavior spanning many years came to light.
The #MeToo movement appears to be an amorphous, spontaneous uprising against people in positions of power who have engaged in serial sexual predation. That strikes me as a quintessentially American phenomenon. Whatever the particulars of the movement’s structure, leadership, etc., it is accomplishing several worthy objectives.
First, justice: Moonves’ comeuppance illustrates the old Biblical principle that one reaps what one sows (Galatians: 6:7). What “perfect justice” in this case would be, I cannot venture to say, but there is at least partial justice now that Moonves’ victims see him paying the price of public disgrace and removal from his position of power as a consequence of his misdeeds.
Second, deterrence: Clearly, we have only seen the tip of the iceberg during this, the first year of #MeToo. That means that there are a lot of guilty men (and a few women) out there who are sweating bullets that their shameful mistreatment of others (whether violently criminal or “merely” unethical, obnoxious, and abusive) will be revealed. And for others who haven’t yet crossed the line to engage in predatory sexual misconduct, most will be far more likely now than they were a year ago to refrain from crossing that line.
Third, accountability: The dam has broken. The notion that one could engage in such ugly behavior with impunity and hide safely behind an unwritten code of silence has been shattered. Notice has been served: Do it, and you will pay a heavy price.
This is all to the good. The norms of our society are changing for the better. Treating others with greater respect is much needed and much welcomed. That being said, I have a bone to pick with the #MeToo movement.
By all means, let there be days of reckoning for the guilty. Let the perpetrators be unmasked and receive their just desserts. But if the movement stops there — only bringing to light more misdeeds by more perpetrators — then it is only treating the symptoms of a societal problem and not its causes. The real culprit here is the mindset that fuels the impulses, rationalizations, and self-justifications that trigger such misconduct.
Can anyone deny that American society has become increasingly preoccupied and saturated with increasingly lurid and demeaning concepts of sex over the past 50 to 60 years? This isn’t to say that intense interest in sex arose with the baby-boomer generation; powerful sexual desires are as old as the human race. But the Playboy philosophy that emerged in the 1950s and the sexual revolution that exploded in the ’60s and ’70s magnified and amplified those natural instincts, exalting sex and sexual “liberation” and indulgence as the mark of a “hip” modern man or woman.
A year ago this month, just before the #MeToo movement rose to prominence, Hugh Hefner, the founder of the Playboy empire passed away. I have no personal animus against Hefner, but as long as the peccadilloes of living men are being discussed openly, why not take a look at a deceased individual who played a key role in glamorizing sex-without-commitment promiscuity?
How was Hefner different from a pimp? No, he didn’t ply his wares on street corners, but he still paid women to disrobe for the titillation of males who were willing to pay. And how would you characterize his flagship publication, if not as pornography? (You might say “high-class porn,” but pairing “high-class” with “porn” seems like an oxymoron, so perhaps a more accurate description of Playboy is that it is porn with more polish than some of the cruder versions thereof.)
Let me emphasize that I’m not alleging that Hefner singlehandedly debased human sexuality in American culture. He was a figurehead for a vast number of people in our society who were seduced into believing that sex is a toy that takes one to the pinnacle of happiness when, in fact, sexual hyperactivity has destroyed families and brought pain to millions of devastated American children who have wondered why Mom and Dad didn’t stay together.
Besides ignoring Hefner and fellow pornographers’ role in eroding standards of sexual self-control, the #MeToo movement also has given Hollywood a pass. The movie industry has played a huge part in the exaltation of sex over love. Scenes that were left to the imagination as recently as the early 1960s have became increasingly explicit in the years since. The constant bombardment of the senses with vivid scenes of sexual passion inflamed those passions in others.
Indeed, the #MeToo movement lost a golden opportunity at last spring’s Oscar ceremony. There, a famous actress used her time on national TV to call for more offenders to be brought to account. That was fine, as far as it went. However, she blew a golden opportunity to address Hollywood’s culpability in fanning the flames of sexual desire. Hollywood has contributed heavily to generating a cultural miasma in which morally weak individuals abandon self-restraint and instead commit sexual depredations against others.
As the book of Proverbs warns, “Can a man take fire in his bosom, and his clothes not be burned?” (Prov. 6:27) Hollywood films have ignited a lot of fires of desire over the years with graphic and mesmerizing depictions of sex as no-strings-attached thrills, best enjoyed with someone other than one’s spouse. For Hollywood figures to denounce those who are consumed by those fires, without accepting any responsibility for its role in pouring fuel on those fires is shortsighted, if not hypocritical.
The #MeToo movement is propelling needed change. The next step in its development should be for its spokespersons to courageously challenge the social acceptability of exalting sexual gratification above healthy relationships and time-tested moral norms. It’s time for them to address the roots of this cultural and social scourge.
Serena Williams, Umpire Abuse, and American Culture
If you follow sports at all, you know that Serena Williams erupted into a rage and verbal nastiness during her U.S. Open tennis finals match on Sept. 8. Williams, arguably the greatest female tennis player of all time, called the match umpire a “thief” among other unflattering characterizations that were heard by millions of spectators around the world.
In doing so, she not only embarrassed herself, shattered the dignity of her own sport, and marred the first Grand Slam victory by Japan’s talented and consummately gracious Naomi Osaka, but she shined a spotlight on a couple of deep-seated problems in American society.
Williams’ strong verbal attack against the umpire was symptomatic of the declining respect for authority, as well as the declining respect for others that has become endemic in contemporary America. Please understand, I am not blaming Williams for these problems. She isn’t the cause of these problems, but merely a prominent symbol of them.
Frankly, professional tennis tournament officials and governing boards have only themselves to blame for allowing a “gentlemen’s [and ladies’] sport” to degenerate into verbal hooliganism. Indeed, Williams is a much more restrained version of the volcanic John McEnroe, whose emotional immaturity and verbal pyrotechnics 30 to 40 years ago paved the way for this latest verbal explosion.
Even in baseball — historically a much less genteel sport than tennis — players who verbally abuse an umpire are ejected from the game.
Ejection is more problematical for tennis, since removal of one player ends the match, but here is how professional tennis could do it: Make a rule that verbal abuse of anyone on the court brings automatic disqualification; give the offending player’s share of the prize money to the paid ticketholders in attendance to compensate them for their contracted tennis match being truncated; stipulate that three such instances result in a permanent ban from professional tennis.
Do this, and the problem would greatly diminish. It’s simple economics: Raise the cost of misbehavior to the point where such behavior becomes nearly unthinkable.
One of the consequences of Williams’ verbal assault on the umpire is the message it sends to children: If you disagree with an official strongly enough, then it is permissible to berate and yell at the official. The token fine levied against Williams a day or two after the tournament will in no way erase the vivid mental images of her conduct. You can bet on younger athletes mimicking that behavior by bad-mouthing officials in their respective sports.
Verbally abusing officials isn’t harmless. In addition to whatever stress it imposes on the target, it discourages people from helping out communities and schools by serving as sports officials. Indeed, there already are many communities in the United States that are having a hard time finding anyone willing to officiate sports, or to work as volunteer coaches for children.
Many Americans now shy away from officiating because angry parents are so quick to verbally abuse and harass any official who makes a call against little Johnny’s team. Others decline to volunteer as coaches because some self-righteous parents who believe that their child is entitled to start or play an important position routinely bash coaches who don’t assess the team’s needs in the same way.
In short, the American proclivity to engage in verbal abuse already has hurt our children, by causing many adults with some talent for sports to shy away from youth sports involvements because it has become so unpleasant.
The problem isn’t confined to sports. Think of all the verbal abuse that has been heaped upon police since the “cops are pigs” countercultural meme gained traction in the turbulent 1960s. It persists today (see Colin Kaepernick, about whom I will write next). The impact? According to a recent report in The Christian Science Monitor, small towns in America are having great difficulty in finding anyone willing to go into police work.
I know none of us loves the cop who “picks” on us when we are speeding, but do we really want to create a social atmosphere in which nobody is willing to perform this vital, difficult, and under-appreciated work because their fellow citizens routinely denounce and condemn police officers?
We Americans have become entirely too quick to become verbally abusive of others. Sadly, today’s toxic political polarization aggravates that tendency, although it seems to me that politics didn’t make us mean, but instead, our reduced respect for authority and the verbal meanness that accompanies that disrespect has infected political discourse. (Examples abound, with the one freshest in my mind being the goons who staged the ugly interruptions of the confirmation hearings for Supreme Court nominee Brett Kavanaugh in the hallowed chambers of the U.S. Senate.)
Now that I’ve mentioned the political realm, I think partisans on both sides of the political divide know of good people who have rebuffed attempts to get them to run for public office because they don’t want to endure having their families subjected to the harsh and increasingly vicious verbal abuses to which political candidates are often subjected.
Sadly, I have no hope that verbal attacks against political officeholders and office seekers will lessen any time soon. But can we please make an effort to muzzle ourselves and refrain from verbally trashing sports officials and coaches, and from demonizing the police? We need good people in those positions, but every time we abuse people in those positions, we drive good people away from where their talents could bless our society.
That’s why Williams’ outburst was so harmful. We have to stop behaving like this, for the sake of both our children and our communities.
Heroes, Sacrifice, Collusion, Capitalism, and the Nike-Kaepernick Ad Campaign
Colin Kaepernick, the currently unemployed NFL quarterback most famous for kneeling during the U.S. national anthem, has hit the jackpot. Nike Inc. has unveiled Kaepernick as a featured face in their new ad campaign. While the terms of the contract haven’t yet been released, Nike pays megabucks to the athletes in its ads.
Let’s examine Nike’s decision. First, though, full disclosure: I have never had any monetary relationship with Nike, not even as a consumer. (Why pay several dollars more for a product just because it has a little swoosh on it?) However, I have respected and defended Nike against ignorant attacks against its Third World factories. Nike’s sweatshops have done far more than most, if not all, nonprofits to lift people out of dreadful poverty.
That having been said, Nike’s new ad campaign disappoints me. With so many well-liked great athletes, male and female, in our country, why did Nike choose an athlete as widely disliked as Kaepernick to represent them? The answer: Nike made a cold, calculating, cynical decision. American society is divided and polarized. Nike, of course, didn’t cause the polarization; they simply have made their peace with it, and decided to exploit it to the hilt to maximize profits. This is capitalism without conscience in action.
As one commentator shrewdly observed in Business Insider, old white guys aren’t Nike’s target market. Nike correctly calculated that my demographic would howl in protest about the selection of Kaepernick, generating tons of free publicity. Nike also calculated that younger Americans — Nike’s target demographic — would embrace Kaepernick as a symbol of youthful defiance and liberation from the (supposedly) outdated values of their stodgy elders. Defiant rebelliousness is sexy, and that is what Nike is marketing with Kaepernick.
Another aspect of the generation gap that Nike is exploiting is that the American concept of “hero” has changed. In bygone decades, corporations would choose someone universally recognized as a hero to be their public face. Up until the mid- or late-60s, right and wrong were clear-cut and unambiguous. Heroes were the good guys, whether the Lone Rangers, Ozzie Nelsons, and Ward Cleavers of popular entertainment, or the Sgt. Yorks, Lou Gehrigs, and John Glenns of real life.
By the 1970s, though, the era of the anti-hero had dawned. Butch Cassidy and the Sundance Kid were thieves, but Hollywood portrayed them as charming and likable. For decades now, popular entertainment and culture have pushed the envelope of decency and morality, gradually eroding the old standards. It has been trendy to mock the “straight and narrow way” as uncool; to depict life as steeped in shades of ethical grayness. The bar is lower for what it takes to be a hero. Voilà, the rise of hero/villains such as Kaepernick.
For me, the disappointment in Nike’s choice of poster boy is compounded by the glib superficiality of the ad campaign’s message. The notion that Kaepernick has been “sacrificing everything” is shamefully dishonest. Whoever wrote and adopted that phrase should spend a couple of hours in Arlington National Cemetery to learn what “sacrificing everything” really means.
What exactly has Kaepernick sacrificed? Certainly not fame and fortune. What about his professional football career? Kaepernick has not “sacrificed” it, but squandered it. He has accused NFL owners of colluding to blackball him from the NFL. This is a dubious assertion. Kaepernick’s hasn’t been sidelined because he knelt during the national anthem. Lots of NFL players have done this repeatedly, yet they continue to play.
He derailed and perhaps permanently forfeited his football career by doing outrageous things such as being photographed wearing “police are pigs” socks. (Can progressives who salute Kaepernick honestly say that you would clamor for the reinstatement of a player who had been as derogatory and condemnatory toward a racial minority as Kaepernick has been to police? Why the exception for that brand of despicable bigotry?)
Put yourself in the shoes of an NFL team owner for a moment. Mindful of the values of your fans and that a significant chunk of them already have boycotted NFL football, you wouldn’t dare to sign a player who has figuratively spat upon our country’s police officers. Besides costing you many fans/customers, the addition of this radioactive player to any NFL locker room would cause intolerable distractions. There is no collusion. Every NFL owner can plainly see the perils of hiring Kaepernick.
One last point about Nike’s choice of Kaepernick: Besides lowering the bar for what constitutes a hero and grossly devaluing the meaning of “sacrificing everything,” the perennial Nike motto “Just do it” seems feeble. In the present context, “just do it” seems to exalt the kind of casual carelessness that Kaepernick has manifested: Don’t pause to consider the ramifications of your actions; just follow your impulses. Frankly, that is a terrible message to convey to young people. We should encourage them to be more thoughtful, not less, about their actions.
As for Kaepernick himself, I haven’t written him off yet. We all make mistakes, especially when we are young and immature. It is possible that as he matures, Kaepernick will see that while he had legitimate concerns, his actions were hurtful, unfair, ineffective, and counterproductive. You don’t promote justice with injustice. You don’t disarm prejudice with prejudice. You don’t build bridges by burning bridges.
The big question about Kaepernick going forward is whether he has room in his heart to let love displace anger, and room in his mind for reason to supplant unthinking reactiveness. Will he allow the gall of bitterness to harden him into yet another pathetic hate-America leftist? Or will he awaken to the fact that the United States, despite not yet having completely fulfilled our noble ideals, is still a great country where more has been done for more people than virtually anyplace else on Earth, and where we can accomplish so much more if we work together, in mutual respect?
I hope he can come back from the dark side, although Nike is paying him a ton to be an anti-establishment icon. Good luck, young man.
An Open Letter to the Players of the National Football League
Many of you give generously of your time and money to various community activities. You also deeply desire to help our country live up to our lofty ideals of peace, justice, and opportunity. Thank you for your efforts and for caring.
The decision that some of you have made to kneel during the playing of our national anthem has sown confusion, in addition to controversy. The following remarks are an attempt to bring clarity to several important aspects of this issue.
First: Constitutional Rights — If the National Football League (NFL) or a team owner requires you to stand for the anthem, this isn’t a violation of your constitutional right to free speech. Our precious First Amendment stipulates: “Congress shall make no law . . . abridging the freedom of speech, or of the press . . .” Since it isn’t Congress that is requiring you to stand during the anthem, the First Amendment doesn’t apply here.
Second: Owners’ Rights and Employees’ Obligations — The NFL and the team owners — private employers — are the ones requiring that you, their employees, stand for the anthem. There is no constitutional right to have a job where the employer must provide a public platform for employees to express their personal grievances. On the contrary, employers have a right to establish guidelines for what is permissible behavior during working hours.
The requirement that you stand for the national anthem is no different than the board of trustees of my college insisting that we professors wear silly caps and gowns, march in an orderly procession, and remain seated during official ceremonies such as convocation and commencement.
Third: Uniforms and Uniformity — The purpose of a uniform is to outwardly manifest uniformity — the merging of individuality into one common purpose. When some players kneel and others stand, the appearance of uniformity is gone, it looks sloppy, and you don’t look like a team.
Obviously, the 46 players dressed for your team on game day don’t all share the same beliefs, perceptions, and priorities in their private lives, but why call attention to that right before kickoff? That is a crucial time when all teammates should be of one mind.
Your teammates who stand may respect your desire to protest, but I’m sure it makes some of them inwardly sad when you won’t stand for the national anthem.
Fourth: Some Practical Considerations — Who decides which issue(s) of the many possible choices are to be protested? What if a born-again Christian on your team wants to protest abortion? What if one of them took my economics course and wanted to protest the cruel injustice of burdening our country’s youth with tens of trillions of dollars of debt and obligations? And how can you tell when protests are no longer needed?
There is a basic problem here: If we use the national anthem as an occasion to protest because something isn’t right yet, the protests will never end, because there will always be problems in a society comprised of imperfect human beings.
Fifth: Counterproductive Results — Do anthem protests help or hurt your cause? Look at last year’s attendance figures and TV ratings. Your anthem protests have caused many Americans who would be naturally inclined to support your campaign for justice to permanently tune out you, the NFL, and your social messages.
Those you have alienated include:
1. Those veterans (many, but not all) who, while supporting your right to protest on your own time, deeply resent you kneeling when the flag that some of their friends died for is being honored by the playing of the national anthem;
2. Many police officers and their friends and families who resent being portrayed as animals because some of their colleagues committed wrongs;
3. Some moms, upset that their kids started fighting before a pee-wee football game when some of the boys mimicked you by kneeling during the anthem, who have now banned watching NFL football games in their homes;
4. Those fans whose greatest joy in the week used to be going to a football game to forget about personal and social problems for a few hours, when fans of all political persuasions could stand or sit side-by-side in friendly fellowship, united in support of their favorite team.
A football game was one of our last refuges — a refreshing oasis — from the political polarization that has seeped into so many areas of our lives. The anthem protests have deprived people of that oasis, and some have turned their backs on you as a result. Depriving innocent people of joy does nothing to bring more justice to our society.
Sixth: Your Right of Conscience — The NFL’s anthem policy this year (clearly unenforced) allows players to remain in the locker room if they can’t in good conscience stand for the anthem. They didn’t have to do this.
The 1940 Supreme Court decision Minersville School District v. Gobitis exempted those with certain religious convictions from having to stand and recite the Pledge of Allegiance. It didn’t provide an exemption for people who were upset about something, but the NFL owners, out of respect for your conscience, magnanimously provided an “out” for those who would resent having to stand for the anthem.
Seventh: Your Aim — Although most of you don’t mean it this way, it looks to many like you are protesting the flag — the symbol of our ideals — when your real complaint is with the failure of certain individuals to live up to those ideals. The Stars and Stripes isn’t responsible for individual shortcomings and wrongs, so why make the flag look like a target?
Eighth: The Matter of Timing — As football players, you all understand how crucial timing is to the success of a play. Timing is just as important when it comes to addressing problems. By choosing the playing of the national anthem as a time of protest, you have achieved the counterproductive result of upsetting fans who otherwise would be receptive to your message.
The book of Ecclesiastes tells us: “To every thing there is a season” (Eccl. 3:1). Couldn’t that mean today that there is a time for gratitude, a time for protest, a time for football, and a time to work for a better America?
Ninth: Is the Glass Half-Empty or Half-Full? — You have legitimate concerns about very real problems. Our country has never yet completely lived up to our lofty and noble ideals, and we need to keep working on it. But there is more freedom and prosperity here than most people in the world’s history have even dreamed of.
Most importantly, there is something of paramount importance that unites all of us Americans: While we have not yet come close to solving all our country’s problems, we are blessed to have the freedom to work toward our worthy goals.
That is what our veterans fought and died for. That is what Old Glory symbolizes. So when “The Star-Spangled Banner” is played, can’t we stand together in gratitude for the freedom we all have to make a difference? Can’t we celebrate the positive, can-do spirit that has always made America great?
Wishing all of you an injury-free season and progress in your careers. *
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 Forbes.com and Conservative Review.com, and Visionandvalues.org, a publication of Grove City College in Grove City, Pennsylvania.
Can Congress Fix Healthcare?
I’m experiencing cognitive dissonance as Republicans in Congress thrash about trying to find a politically acceptable way to (allegedly) “fix healthcare”; to find a viable way to reform the federal government’s role in healthcare. Looking back over the past 52 years, the lesson to be learned is that Uncle Sam can’t fix healthcare, but can disrupt it, cripple it, make it ever more expensive, and redistribute who has access to it when they most need it.
To me, the very notion that the federal government should be involved in healthcare or healthcare insurance is preposterous (as well as not authorized by the Constitution). If it were up to me, Congress wouldn’t be debating how to tweak federal involvement, but to abolish it. Before you ask, yes, I would be willing to forego every penny that the government has taxed me for Medicare (yet another broke federal program) over the past forty-some years if only we could get the government out of that most private of spheres, namely, our health.
Obviously, that isn’t going to happen. The question then becomes: Can Republicans in Congress agree on how to undo some of the damage already done by prior federal interventions, most egregiously, the Affordable Care Act? The difficulty was encapsulated in a headline some weeks ago in The Wall Street Journal. It asked whether Republican proposals would be producing (or be perceived as producing) more winners or losers. Once the notion is accepted that the government should help citizens provide for their healthcare needs, any proposal that would reduce (perceived) benefits already granted will be seen, with some justification, as an injustice. What is “fair” about a government helping some but hurting others in their decisions about who gets what? Lots of luck getting that to fly.
There is another problem with trying to scale back government involvement layer by layer. It’s a little bit like trying to ease into a pool of icy water inch by inch. Each small step causes so much discomfort that the project is abandoned. The only way to do it is to dive in headfirst and take all the pain at once. Any attempts by Republicans to roll back, much less dismantle, the gargantuan federal network of bureaucracies and regulations impacting healthcare runs the risk of a backlash that would return control of Congress to the opposition.
Frankly, given the dynamics of democratic (small “d”) politics, it seems most likely to me that, regardless of short-term hard-fought victories in the attempt to scale back the federal government’s involvement in healthcare, the outcome will be the systemic collapse of an overburdened, over-regulated, bankrupt healthcare system. Democrats, of course, are completely united in opposition to any and all attempts to shrink the federal footprint in healthcare. I outlined their strategy nearly a decade ago. Their goal is to centralize control over key parts — the “commanding heights” — of our economy in Washington. That objective is accomplished by precipitating a crisis or collapse that causes scared Americans to plead for the government to rescue them from the government-manufactured chaos. All they have to do is wait until scared Americans call for a paternalistic government to take care of them.
Despite my pessimistic long-term outlook, I hope Congress is able to start removing bricks from the federal healthcare wall that has been erected over the decades. It will be interesting to see if the GOP can agree on which bricks and how many to remove this year. How tragic (yet politically understandable, given the different dynamics of the voters in different congressional districts) it may be if all Republicans want are some incremental improvements (i.e., rollbacks of different harmful policies currently in place) but we end up stuck in the horrible status quo because they won’t agree on which incremental rollbacks to make. To use the exceedingly platitudinous metaphor, “Rome wasn’t built in a day,” nor can it be dismantled in a day. Will Republicans even get started on the formidable task facing them?
Stay tuned; we’ll find out soon.
Low Unemployment Is Not Economically Dangerous
The June 5 issue of The Wall Street Journal included an article entitled “Other Times Unemployment Has Been This Low, It Didn’t End Well.” It raised the question as to whether we should begin to worry that we are on the threshold of a painful economic comeuppance now that the headline May unemployment rate has fallen to only 4.3 percent. The short answer: Not at all. That isn’t to say that there is no possibility of a serious economic downturn, but if such unpleasantness arises, it won’t be because of a low unemployment rate.
The question occurred to the writer, Josh Zumbrun, because the only three times in the past five decades when official unemployment was this low were followed by “serious economic trouble.” Specifically:
“Low unemployment of the late 1960s preceded an inflation spiral in the 1970s. The late 1990s bred the Dot-com bubble and bust. The mid-2000s saw the buildup and collapse of U.S. housing.”
Let’s identify the causes of those jarring economic episodes. A proper diagnosis can help us avoid quack remedies.
The seeds of the inflationary spiral of the 1970s were sown by Lyndon Johnson’s “guns and butter” policy — i.e., increasing federal spending to wage a war on poverty and a military war in Vietnam concurrently — thereby undermining confidence in the dollar. Eventually, LBJ’s successor, Richard Nixon, who continued LBJ’s excessive spending, felt compelled to take the dollar off the gold standard, thereby unleashing the inflationary whirlwind of dollar depreciation that plagued the 1970s.
The dot.com bubble was the culmination of the giddy 1990s. Communism had collapsed, welfare reform was putting people back to work, creating more wealth, new technologies and businesses were emerging, and economic growth was vibrant in many foreign countries. Optimism reined. Most significantly in regard to the bubble, the financial powers that be — the Federal Reserve under Alan Greenspan, the U.S. Treasury, and the International Monetary Fund — intervened in financial markets every time a potentially unsettling event was brewing. There were bailouts of Mexico, South Korea, Russia, and Brazil. Intervention contained the potential fallout from Long Term Capital Management’s catastrophic losses. Investors believed they were insulated from bear markets by the notorious “Greenspan put.” However, the bear always gets his turn and all bubbles eventually burst, but the cause of the spectacular dot.com crash was not low unemployment, but massive financial intervention.
The housing bubble of the 2000s was a direct result of the ill-conceived bipartisan policy of government planners trying to increase the percentage of Americans who owned their own homes. Regulators at the Fed and Housing and Urban Development leaned on financial institutions to weaken, if not ignore, prudent credit standards; furthermore the Fed held interest rates low for so long that people were given adjustable-rate mortgages for high-priced houses that they could afford only as long as interest rates remained suppressed. And amateur home “flippers” took on leverage that eventually caught up with them.
The article depicted those economic shocks superimposed on a timeline showing low unemployment immediately preceding them. To the credit of Mr. Zumbrun, or his editors, the graph bore the heading “Omen or Coincidence?” — thereby allowing for the truth that concurrence alone does not establish causation. The fact is, as we have seen, that the three economic shocks preceded by a low unemployment rate had causes other than low unemployment. What, then, is the source of the speculative notion that low unemployment might have the power to cause economic upheaval?
Here we encounter the ghost of the Phillips Curve. Zumbrun writes, “Economic theory draws clear linkages between low unemployment and inflation.” The sentence is technically correct. Economist A. W. Phillips hypothesized such a linkage in 1958, and the eponymous “curve” became part of Keynesian orthodoxy. However, a more accurate wording by Zumbrum would have been, “Defunct economic theory.” The painful “stagflation” episode of the 1970s exploded the Phillips Curve dogma.
It’s well past time to give the Phillips curve a decent burial and move on from the silly notion that low unemployment is bad for a society’s economic health. Workers of America, relax! You’re innocent — inflation and bubbles aren’t your fault.
1967 and “The Summer of Love”: A Half-Century Later
For the baby-boomer generation (or at least the counterculture segment within it) the summer of 1967 became known as “The Summer of Love.”
Actually, most of us boomers never experienced it. Certainly, 1967 wasn’t a blissful, carefree summer of love for the hundreds of thousands of Americans serving in Vietnam.
It didn’t feel much like love in my hometown of Detroit either. Fifty years ago this week, on July 23, 1967 (a Sunday, as it is this year), deadly riots erupted in the Motor City. They lasted through Friday, July 28, when, with help from the National Guard (including Detroit Tigers’ second baseman Dick McAuliffe), the mayhem expired. During that week, my friend Rick was scheduled to lay down some violin tracks at a music studio downtown. His dad asked me to accompany them to the inner city. When we knocked on the door of the studio, an unsmiling middle-aged African-American man looked at three nervous white guys and drily told us that they weren’t going to set anyone on fire that evening.
The actual Summer of Love took place in the Haight-Ashbury neighborhood of San Francisco. It had become a spontaneous hedonistic Mecca for 100,000 hippies. A “summer of drugs, sex, and rock’n’roll” would have been a more accurate description. Showing the proverbial power of the pen, writers managed to glamorize and mythologize a prolonged session of debauched self-indulgence. They portrayed hormonally charged young people taking the path of least resistance and luxuriating in sensual pleasures as something supposedly idealistic—loftier and nobler than the war in Vietnam and the economic struggle for the supposedly “almighty” dollar. The counterculture embraced the Summer of Love as its nirvana.
Whatever thrills the hippies at Haight-Ashbury might have had then, the legacy of the summer of ’67 is far from glorious. Drugs, sex, and rock’n’roll is hardly a formula for generational excellence. Think of “the greatest generation” that found the inner strength and character to prevail in the existential conflict of World War II: Would they have achieved such heroic heights had their priorities been to tune out the world and pursue ease and pleasure? Not a chance.
The Summer of Love romanticized unromantic sexual liaisons. Casual sex “liberated” men and women from commitment. It turned the life-affirming act of procreation into a life-cheapening pastime of recreation.
I’m sure many baby-boomers smile at the recollection of youthful flings in those days, but there was a dark side to unleashing the human libido. Millions of American families have fractured as a result of a man’s, or woman’s, addiction to the intense but transitory thrills of sexual pursuits. In doing so, they have inflicted incalculable emotional damage on millions of innocent children. Millions more children were never even born, because baby-boomers didn’t want their pleasure-seeking lifestyles to be hampered by such weighty responsibilities.
Drugs? The tragedy of lives blunted and sometimes prematurely ended by drug usage has grown since the Summer of Love. You can supply your own statistics, anecdotes, and headlines. For me, the bottom-line issue is: How did our society get so spiritually anemic that millions of our compatriots still fall for the wicked illusion that happiness can be bought, then ingested, inhaled, or injected?
Rock’n’roll? Here I’m ambivalent. 1967 was a fertile year for exciting, creative music — ranging from the Beatles’ “Sgt. Pepper’s” album to the beguiling West Coast sound of The Doors and Jefferson Airplane. The music was great, but it often wasn’t innocent. The Doors evoked oedipal imagery. My wife loved the Airplane’s “White Rabbit,” not realizing until I explained to her in the ’80s that it was a drug song. The Grass Roots’ captured the essence of the Summer of Love with their paean to immaturity and irresponsibility, Let’s Live For Today:
“By chasing after money
And dreams that can’t come true
I’m glad that we are different
We’ve better things to do
May others plan their future
I’m busy loving you. . . ”
The bottom line on the rock’n’roll aspect of the Summer of Love: Sonically enchanting tunes conveyed distinctly countercultural messages into many pliable minds.
If you are old enough to remember the Summer of Love, I hope you emerged unscathed and have happy memories of it. If you are younger, you didn’t miss anything except some fantastic music, and you didn’t really miss that, because it’s available today. As for real genuine love — not the hollow Summer of Love counterfeit — it dwells within you (see Luke 17:21). *
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 Forbes.com and Conservative Review.com, and Visionandvalues.org, a publication of Grove City College in Grove City, Pennsylvania.
President Trump’s Schizophrenic Tax Proposals
To state a banal truism: Politics is about misdirection, give and take, and compromise. That idea should be held in thought when analyzing President Trump’s recent tax proposals.
Within the span of a few days, Trump requested both a tax hike and tax cuts. The tax hike is the proposed tariff (i.e., tax) on the importation of softwood products from Canada. The tax-cut proposal is for lower tax rates on both personal and corporate income, and a simplification of these tax codes.
This ambivalent approach to taxes — raising some while cutting others — may strike one as schizophrenic (not, I should emphasize, that the president is schizo, but that the policy proposals seem bipolar due to having opposite intents). Personally, I oppose the tax hike and favor the cuts, but in Trump’s seemingly conflicting proposals, I see political cunning and pragmatism.
Part of Trump’s political base consists of the populists and nationalists who view with suspicion, if not animosity, any business that provides Americans with the lower-priced goods that we want if that business happens to be from another country and competes with American businesses. These Americans like tariffs, even though the economic reality is that the tax is actually paid by American consumers, not by the foreign suppliers.
Conservatives and people in general who would rather keep more of their income than send it to the insatiable money pit in Washington will, of course, be favorably inclined toward Trump’s proposal for lower income taxes.
Thus, Trump’s raise-taxes-here-and-cut-taxes-there strategy contains elements appealing to a broad swath of the American electorate — a politically astute tactic. And what would be the overall net change in the tax burden on Americans? The proposed 20 percent tariff on approximately $5 billion per year of Canadian softwood imports (a tax that has some procedural hurdles to clear before it takes effect) amounts to a tax of approximately $1 billion per year on American homebuyers, many of whom are of modest incomes. (A pundit’s flamboyant headline could read, “Trump raises taxes on middle class.”) By contrast, the proposed tax cuts on personal and corporate income (which faces the larger hurdle of having to get through Congress) would reduce the taxes paid by Americans as much as $100 billion per year. Viewed that way, Trump’s proposed tax cuts are a hundred times as large as his proposed tax hikes. I can live with that tradeoff!
There are many specific aspects of Trump’s tax-cut proposal that merit comment, but I’ll single out two.
First, many residents of states with high personal income taxes will plead with their congressional representatives to preserve the deduction of their state income tax from their federal adjusted gross income. That deduction is a subsidy, a privilege. It is a stealthy transfer of wealth from taxpayers in no-tax and low-tax states to taxpayers in high-tax states. It’s time to end that unfairness. Politically, the high-tax states tend to be liberal — California, Oregon, New York, New Jersey — and they generally vote Democratic, so Trump wouldn’t alienate his political base by removing the deduction. And since those high-tax states are progressive, that is, they are politically dominated by people who believe that taxes should be higher than they are, why should they complain if Trump gives them what they want? Let them reap what they sow.
Second, I’ve just re-watched the brilliant PBS documentary “The Commanding Heights” — essentially an economic history of the 20th century — that makes it abundantly clear that major economic reform often fails when undertaken with a gradualist approach. The countries that have most successfully transitioned from stagnant statist controls to vibrant economic growth have been those that adopted the approach of “shock therapy” — that is, jump in headfirst and take the pain in one fell swoop. That is the approach that President Trump should take with the corporate income tax — just abolish it. Already, special interests are arguing about whether to preserve deductions for interest payments (a quirk in our tax code that perversely incentivizes debt) or how fast to allow depreciation. If the tax rate were zero, these contentious points would be moot and simply evaporate. The economic reality is that corporations, being fictitious persons, don’t really pay taxes; only individuals do. Even the OECD, factions of which deplore business tax competition between countries, acknowledges that the corporate tax is absolutely the worst, the most distorting and economically irrational tax out there. Trump’s proposal to greatly reduce the tax rate is an economically brilliant idea, but to temporize with such a stupid tax leaves the door open to future mischief in tweaking the code to placate special interests. Just deep-six the corporate income tax monstrosity and be done with it. Doing so would soon make the U.S. the preferred location for international business and lead to a huge explosion of jobs in our country.
Despite its imperfections, Trump’s tax-cut plan is a huge improvement over the status quo. It will be interesting to see if congressional Republicans can bury their differences and avoid letting the perfect be the enemy of the good and enact these tax cuts into law.
Mark Zuckerberg at Harvard: A Young Idealist Undercut the System That Has Blessed Him and Us
Facebook founder and multi-billionaire Mark Zuckerberg’s Commencement speech at Harvard drew lots of attention — especially his call for some sort of a federally funded guaranteed minimum income (a “universal basic income” or “UBI”) for all adult Americans. Overall, it was an above-average commencement address — warm-hearted, encouraging, humane, and filled with some endearing personal touches. The only negative was an all-too-common fuzzy, callow idealism about economic and political matters.
Zuckerberg has come to epitomize the wealthy, successful entrepreneur who seeks to atone for the “sin” of succeeding. Thus, he pandered and condescended when he declared:
“Let’s face it: There is something wrong with our system when I can leave here and make billions of dollars in 10 years, while millions of students can’t afford to pay off their loans, let alone start a business.”
Leaving aside the mistaken implicit assumption that millions of students have the gumption, ability, and desire to start their own businesses, how about some love for a system that allows a man to become a billionaire in return for having provided a service that tens of millions of people have found useful? Zuckerberg, like most other billionaires, has earned his fortune, and in no way should he be apologetic about it. As for students who have incurred more debt than they should have by overpaying for college courses that didn’t pay off in the job market, well, that’s a problem both of mispriced and overabundant higher education and imprudent decisions by those who voluntarily incurred all that debt.
Zuckerberg furthermore demeaned his fellow entrepreneurs by attributing success not only to “having a good idea or working hard,” but “by being lucky, too.” True, things often work out in seemingly miraculous ways, but isn’t it interesting how the “luck” of success seems to follow those who have good ideas and work hard?
Even worse, Zuckerberg seems to misunderstand the basic American concept of “freedom.” He resorted to cheap polemics when he said:
“. . . today, we have a level of wealth inequality that hurts everyone. When you don’t have the freedom to take your idea and turn it into a historic enterprise, we all lose.”
First, “wealth inequality” doesn’t hurt anyone; poverty, not inequality, does afflict a minority, and defeating poverty remains a worthy goal for Americans. Second, Americans do have the freedom to create new businesses and seek funding from a multiplicity of sources. True, they may not be starting with the advantages of wealth and connections, but that didn’t stop Steve Jobs and Steve Wozniak from starting Apple in a garage.
What Zuckerberg wants is for everyone to be able to afford to putter around without having to worry about earning a paycheck to make ends meet. This is where Zuckerberg’s proposal for a UBI fits in. While I agree that there could be a relatively small number of individuals who might incubate successful businesses while receiving a guaranteed government allowance, I think Zuckerberg is dreaming when he implies that a large number of Americans would create successful businesses if only Uncle Sam would pay their basic living expenses.
The idea of a government-funded universal basic income has been around for a long time. Zuckerberg (whom some suspect of laying the groundwork for a run at high political office) views government giving every American adult X thousands per year as a logical next step beyond the New Deal and Great Society in the progressive tradition of paternalistic government. Indeed, one hears echoes of Bernie Sanders in Zuckerberg’s words; the former became popular by calling for free college education and health care; Zuckerberg upped the ante by advocating a free all-purpose allowance.
Interestingly, the idea of a universal basic income has long enjoyed support from some individuals at the conservative/libertarian end of the economic spectrum, such as the late Milton Friedman and the American Enterprise Institute’s Charles Murray. Those eminences advocate a guaranteed minimum income not because they believe it is morally desirable for government to redistribute wealth, but for reasons of expediency. They are like anti-drug libertarians who recommend the legalization of dangerous “recreational” drugs as the lesser of two evils. Murray, for example, despises the bloated bureaucracies that administer hundreds of ineffectual government so-called “antipoverty” programs and believes that a single government check to every American would be cheaper and less disruptive.
There isn’t space to debate that question here, but let us close by looking at the problems that might attend a guaranteed basic income.
First, while Murray calls for a UBI to replace all federal assistance programs, including Social Security and Medicare, Zuckerberg has remained silent about whether he wants to consolidate all federal assistance into one monthly check or simply add one more entitlement to those already existing. Since the present system of entitlements has put Uncle Sam $20 trillion in the hole, Zuckerberg could be proposing that our society hop on the fast train to bankruptcy.
Since Zuckerberg values equality, it is worth noting that a UBI would pay an equal amount to every American adult. On the revenue side, though, it would be wildly unequal with productive Americans footing the entire bill and unproductive Americans not paying a cent.
Politically, the UBI would be the most un-repealable entitlement ever. With only a minority of voters paying for it, the majority on the receiving end would not only never consent to relinquish the benefit, but they would be putty in the hands of every demagogic progressive politician who would assure voters that they deserve a larger monthly allowance.
Economically, a UBI would achieve the goal of the “living wage” movement. Indeed, as I’ve written elsewhere (google: Hendrickson Forbes minimum wage nonsense) the structure of wages provides essential economic information that incentivizes individuals to acquire additional skills. A UBI would allow young adults to remain in minimum wage jobs instead of moving up the economic ladder and making room for younger Americans to take low-skill jobs.
Socially, because of the split between those who would be net beneficiaries and the net losers, a UBI would be devastating. The glue that holds a society together is the social division of labor. We already have a problem of more than ten million healthy men in their prime years sponging off of parents and girlfriends, picking up some cash here and there, but essentially not working, and therefore consuming part of society’s wealth without making any contribution to the production of that wealth. A UBI would facilitate such lifestyle choices, leaving us with a society in which those who work bear the burden of those who choose not to work. If you have to ask, “What could possibly go wrong?” then you don’t know history, such as the ancient Greek mentality that only slaves work.
Spiritually, or at least psychologically for those of you uncomfortable with references to “spirit,” for grown men not to have to strive or face challenges is to leave their potential untapped, their character undeveloped, and their sense of fulfillment blighted. Two things I have observed in my lifetime: 1) human beings need to work; 2) easy lives are blunted lives.
In conclusion, I admire Mark Zuckerberg in many ways. I know he hopes to help others as he already has in some very tangible ways, but his undeveloped understanding of the beauty of a free market system has the potential to more than offset all the good he has accomplished.
Remembering Three Great Athletes (and the Way Sports Used To Be)
May was a poignant month for those of us who were avid Detroit sports fans in the late ’50s and early ’60s. Three of our heroes passed on within two weeks of each other: five-time All-NFL and Hall of Famer Yale Lary; his teammate, three-time All-NFL player Wayne Walker; and Detroit Tigers Hall-of-Famer Jim Bunning.
For those of you not familiar with their accomplishments, let me share a few with you, and weave into the narrative a few vignettes that show how different the world of professional sports was then.
Yale Lary played safety for the Lions for 11 years during the Alex Karras era when the Lions had the most dominant defense in the NFL. During his first two seasons, he played minor league baseball in the summer. Then his sports career was interrupted when he served two years as a lieutenant in the U.S. Army. During the latter part of his NFL career, when it was still common for players to hold off-season jobs in order to earn more income, he held office in the Texas state legislature. (After retiring, he went into private business instead of politics.)
On the field, Lary had 50 interceptions in his career (a figure that surely would have been higher if not for his military service) — enough to rank fifth all time at the time of his retirement. He also handled the punt and kick return duties. Younger football fans may not know that there weren’t always kicking specialists in the NFL. Lary, however, was good enough to be a punter in the NFL even today. Three times he led the NFL in punting and when he retired, his career average of 44.3 yards was second all-time. His hang time was so great that in one season the average return of his punts was a single yard. Lary played in nine Pro Bowls.
Wayne Walker led the Lions in scoring in three seasons and once was named the Lions’ defensive player of the year (no small feat when he shared the field with multiple Hall-of-Fame defenders). Walker played linebacker. So how did he lead the team in scoring? He also was the placekicker. Like Lary, Walker wore more than one hat for the Lions. Three times voted first-team All-NFL (what they call “All Pro” today), Walker’s teammates were shocked that he never was elected to the Hall of Fame.
U.S. Senator Jim Bunning, who attended Xavier University on a basketball scholarship and later became the only baseball Hall-of-Famer to serve in Congress, was a tall, slender, redheaded, right-handed pitcher. His accomplishments on the diamond were sterling: Over 100 victories and a no-hitter (one of them being one of 23 perfect games in MLB history) in each league; the American League’s starting pitcher in three All-Star games; retiring second only to the immortal Walter Johnson in career strikeouts.
Bunning was one of three starting pitchers who, in the absence of a reliable fourth starter and a decent bullpen, but with the help of sluggers Al Kaline, Rocky Colavito, and Norm Cash, kept the Tigers respectable at a time when the Yankees dominated the American League. The other two were Frank Lary (no relation to Yale Lary) and the cagey southpaw, Don Mossi.
Frank “Taters” Lary was the ace, known as “the Yankee killer,” since he was the only one to consistently tame the powerful Yankee bats of Mantle, Berra, and crew. Frank Lary was used frequently as a pinch runner. Can you imagine the Dodgers sending Clayton Kershaw out to run for somebody today? Not a chance. In the ’60s, even star players were expected to help their team any way they could; today, in the era of mega-contracts and specialization, such double-duty is inconceivable.
As for Don Mossi, I actually met him when I was a boy. My Pop knew George Kell, the Hall of Fame third-baseman who handled TV broadcasts for decades after his playing career, and George took us to the door of the Tigers’ clubhouse and went in to see who he could bring outside to greet us. The next thing I knew, there was Don Mossi, his jersey completely unbuttoned and exposing his undershirt, smoking a cigarette. How’s that for a sign of the times? Mossi was a friendly, gracious man, most famous for his unusual facial hair. I think he held the world’s record for heaviest beard. I’m sure that if he shaved at 7:00 a.m. he would have a 5 o’clock shadow by 8:00. I think he could have grown a short beard over a weekend. Amazing!
Major league sports has a great capacity to touch our lives and give us memories that last a lifetime. Yale Lary, Wayne Walker, and Jim Bunning were all in their 80s at the time of their passing last month. All three were solid citizens who led productive lives after the conclusion of their sports careers. Even though it has been decades since they starred for my hometown teams, I have vivid and happy memories of all three of them. Thank you, gentlemen. RIP. *
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 & Value, and Forbes.com.
The Wall Street Journal’s Peggy Noonan Repeats Leftwing Propaganda about Capitalism
Peggy Noonan’s weekly column in last Saturday’s Wall Street Journal was entitled, “Socialism Gets a Second Life.” It was about the rising popularity of Bernie Sanders, the self-avowed “democratic socialist,” and what explained his popularity among younger voters.
It all made sense until near the end of the article, where Noonan wrote: “Do you know what’s old if you’re 25? The free-market capitalist system that drove us into a ditch.”
Whoa, time out! What “free-market capitalist system” are you referring to, Ms. Noonan? You’ll get no argument from me about the “ditch” part. Indeed, we have suffered through a multi-year economic funk that has left many young Americans on the outside looking in. But to write that it was a “free-market capitalist system” that produced these justly lamented conditions is an egregious error.
Our current economic system is anything but “free-market capitalist.” Under the last two presidents, annual federal spending ballooned from $1.86 trillion in George W. Bush’s first year in office to $3.75 trillion in his last year — enough to raise the national debt from $5.7 trillion to $19 trillion today.
The housing and financial crisis of 2007 and 2008 resulted from political interference with free markets. (A few lowlights: the Federal Reserve held interest rates artificially low; the administrations of Presidents Bill Clinton and G. W. Bush used regulatory pressure to induce financial institutions to issue mortgages without verifying creditworthiness; Fannie Mae and Freddie Mac issued loads of risky mortgage-backed securities that went bad.)
Since then, we have not embraced freer markets, but instead have increased government intervention and made markets less free.
The unjust TARP bailout was followed by President Barack Obama’s non-stimulating “stimulus” federal borrowing and spending of additional hundreds of billions of dollars. The Fed essentially suspended the market prices — interest rates — that coordinate present with future production with its prolonged zero-interest rate policy. Key industries have been brought further under the control of the federal government — health care via Obamacare; energy via EPA throttling of coal, Interior Department resistance to drilling for oil on public lands, subsidies for green boondoggles, etc.; the financial industry by Dodd-Frank’s unaccountable Consumer Financial Protection Bureau; the home mortgage industry via the nationalization of Fannie and Freddie; the semi-nationalization of the college loan market.
Government regulation continues to increase and now costs Americans nearly $2 trillion per year. The highest taxes in the world on corporate profits drive some companies offshore and contribute to a pervasive anti-business climate that has brought us to the worrisome condition of businesses closing at a faster rate than they are opening, thereby reducing job opportunities. “Free markets”? Not even close.
It’s bad enough that progressives resort to Orwellian Newspeak — calling an economy bludgeoned and weakened by massive government intervention “free markets” — as a technique for unfairly discrediting markets and providing false rationalizations for more government control, but when The Wall Street Journal editorial crew lets them get away with it and, even worse, lends credibility to the lie, it’s no wonder that kids don’t know better than to latch on to Bernie Sanders’ utopian socialist nonsense. (Indeed, as TheBlaze recently reported, many Sanders supporters can’t begin to define socialism, but that’s no excuse for our side not defending free-market capitalism from mischaracterizations.)
We have an uphill challenge ahead of us, but we need to explain to young people that the economy has struggled because President Obama has repeatedly attacked markets and waged economic warfare against the middle class that would have made Karl Marx proud, and that electing Bernie Sanders or Hillary Clinton would be to partake of more of that economically poisonous brew. If it’s change that young people crave, then try free-market capitalism. That’s the approach we haven’t tried for too long a time.
Hillary, Guns, and a Divided America: Two Different Worldviews
Leigh Munsil, political editor of TheBlaze, reported over the weekend that Hillary Clinton played the gun control card while campaigning in Ames, Iowa, on Saturday.
Clinton’s pitch was oh-so-cleverly planned: She assured conservative Iowans that any actions on gun control would “certainly be done consistent with the Constitution and the rights of gun owners.” Then she scored points with liberals by slandering opponents of government gun control by shamelessly charging that “one of their highest priorities [is] lowering the age from 14 to let more children be able to legally have guns.”
As an added emotional touch, Clinton was accompanied by the sympathetic figure of former U.S. Rep. Gabby Giffords, who was tragically wounded in a 2011 shooting spree, and Giffords’ husband, Mike Kelly, who characterized opposition to gun control as a plot by a “powerful corporate lobby” (evil corporations being the left’s omnipresent bugaboo).
Let’s back off the emotional manipulation and political theater and try to take a sober look at the gun control issue. At his town hall meeting about guns last month, President Barack Obama stated that, when it comes to guns, “People occupy different realities.”
This doesn’t happen often, but I agree with the president 100 percent.
There does happen to be one gun-related point on which Republicans and Democrats are united: We all yearn for the end of murders and mass murders (whether by guns or other means). When it comes to gun ownership, though, we are divided by two fundamentally different worldviews.
Investor’s Business Daily recently published a survey that attempted to quantify the differences between Republicans and Democrats on the gun issue. Does increased gun ownership lead to more crime? More than two-thirds of Democrats think it does, while 80 percent of Republicans think that increased gun ownership actually reduces crime. Similarly, “72 percent of Democrats believe that stricter gun control laws would significantly cut crime [but] only 14 percent of Republicans” do.
These starkly divergent beliefs result from Americans differing politically about ideology, philosophically about idealism, and psychologically in terms of what we fixate upon.
In terms of political ideology, Democrats by and large are liberals and progressives who believe in the efficacy of government. To them, government is the great power, the benevolent force, the necessary agent for improving society. By contrast, most Republicans and conservatives share our Founding Fathers’ distrust of government power, as summarized in the 9th and 10th Amendments.
Knowing that there has been a perennial battle throughout human history between individual rights and liberty on the one hand and government power on the other, our Founders adopted the Bill of Rights, including specifically the right to bear arms, and then gave us the 9th and 10th Amendments as the capstone to their vision, making it clear that anywhere there was a doubt, the presumption was to be in favor of individual rights over government power.
In terms of idealism, the progressive worldview includes a quixotic quest for a risk-free world. Whether it’s suing somebody because they don’t think it’s fair that their own stupidity, mistakes, or poor judgment should result in any injury to themselves, or their desire for cradle-to-grave security in the form of Big Government taking care of their every need, the left believes that government can engineer a world in which injury and death can be minimized through government provision of a safe, risk-free world.
Conservatives, by contrast, reject such notions as impossibly unrealistic, understand that a government given too much power to “take care of us” is a threat to liberty, and recognize that the hazards of this world require us to remain mentally alert, adopt prudent precautions, and accept responsibility for our own welfare.
In terms of psychology, we have a classic divide between those who see the glass as half empty and half full. Republicans see the benefits of guns. Interestingly, in 2013 President Obama commissioned the Center for Disease Control to study the impact of guns in America, and the CDC’s findings were the opposite of what the anti-gun Obama was hoping for.
“Self-defense can be an important crime deterrent,” said the report.
Guns are an effective and often used crime deterrent. . . . Studies that directly assessed the effect of actual defensive uses of guns (i.e., incidents in which a gun was “used” by the crime victim in the sense of attacking or threatening an offender) have found consistently lower injury rates among gun-using crime victims compared with victims who used other self-protective strategies.
The CDC study confirmed earlier studies estimating that guns deter criminal aggression anywhere from half a million to 3 million times per year — a huge number compared to fewer than 11,000-13,000 murders by firearms per year.
I’ve presented some arguments in defense of gun ownership in the past, but facts, data, and reason rarely change somebody’s mindset about guns. Americans are divided by ideology, idealism, and psychology, and that isn’t going to change.
Antonin Scalia, George Washington, the Constitution on Our Future
As those of us who still revere George Washington remember him on his birthday (the actual date — February 22 — not the wan counterpart known as Presidents’ Day). I am struck by a strong link between the recently departed Justice Antonin Scalia and the Father of our country. Both men did their utmost to preserve the integrity of our precious Constitution.
In his Farewell Address, which has been read in the U.S. Senate every year since 1896, he eloquently states that officials in each branch of the government — legislative, executive, and judicial — should
. . . confine themselves within their respective constitutional spheres, avoiding any exercise of the powers of one department to encroach upon another . . .
because such encroachments lead to “a real despotism.”
It was this type of encroachment that Justice Scalia lamented in his opinion last summer in the Obergefell decision that legalized homosexual marriage when he referred to the Supreme Court’s decision as a judicial putsch.
Contrary to what some progressives assert, Scalia’s attempt to honor and uphold the original intent of the Constitution was not designed to tie us to the past.
Scalia would concur with Washington (again, in the Farewell Address):
The basis of our political systems is the right of the people to make and to alter their constitutions of government.
. . . if, in the opinion of the people, the distribution or modification of the constitutional powers be in any particular wrong, let it be corrected by an amendment in the way which the Constitution designates. But let there be no change by usurpation; for though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial or transient benefit, which the use can at any time yield.
Washington’s warning here is clear and his wisdom is timeless: Beware of cutting constitutional corners for the sake of expediency. Yes, an expanded, Constitution-busting exercise of power may indeed benefit you today, but the expansion of state power leads to a permanent diminution of liberty that will haunt you in the long run.
This vital point about constitutional integrity is either too subtle for the left to grasp, or they are so intoxicated by their zeal to get what they want that they either fail to believe that the expanded power of government will ever be used in a way of which they disapprove, or they are willing to roll the dice about the future in exchange for getting something they want today.
Indeed, here we see one of the fundamental differences between conservatives and libertarians on the right and progressives/liberals on the left: The left focuses on what they want, and the right (which includes Scalia and Washington) focuses on how. The difference is crucial.
Progressives are so convinced of the rightness of their positions, that they believe the end justifies the means. In their view, why should a document written in the 18th century get in the way of what progressive-thinking people in the 21st century want? To progressives like President Barack Obama, the Constitution is a nuisance to be swept aside. To constitutionalists, like Washington and Scalia, the Constitution is sacred and a protection.
The progressive philosophy that regards the constitution as a “living, breathing document” in practice makes our constitution a dead letter. If any branch of government can ignore, bypass, disobey, or nullify any constitutional stipulation today — even if the action is favored by millions of Americans — what is to keep government officials from ignoring, say, the First Amendment tomorrow?
Justice Scalia’s dissent in Obergefell last summer vividly warns us about how close we are to losing our rights and liberties to what Washington called “usurpation” of the constitutional order. From the point of view of Washington and Scalia, Obergefell sets an ominous precedent: It establishes the undemocratic, unconstitutional doctrine that vital points of law are being enacted, not by the people’s elected representatives in Congress, as the Constitution stipulates, but by as few as five unelected judges who have no compunctions about usurping the Constitution.
Whoever succeeds Justice Scalia, then, given the current 4-4 ideological split on the Court, may bear the awful burden of going down in history as the one who either put the nail in the coffin of our country’s original constitutional vision — that we are a nation of laws, not men, and with a limited government that cannot abrogate “unalienable” individual rights — or who will take the side of Scalia and Washington and slow our slide down the slippery slope to tyranny.
Republican senators will be subjected to enormous pressures to approve the person whom President Obama nominates. It is quite possible that some of them will lose bids for reelection if they don’t. The rest of us have to hope that those GOP senators understand that our entire constitutional order is at stake, and that they have the nobility of character and love of country that would lead them to put the Constitution ahead of their own personal career goals.
In addition to the fundamental issue of preserving some remnant of constitutional order, Sen. Rand Paul offers a second compelling reason for Republican senators not to approve an Obama appointee: In light of Obama’s arrogations of executive power that are constitutionally dubious, it would constitute what Sen. Paul called a “conflict of interest” — indeed, it would make a mockery of justice — to allow Obama to appoint the justice who likely would be the deciding vote in cases in which Obama essentially occupies the seat of the defendant (a point about which progressives are oblivious, and so, in their usual supercilious fashion, they are ridiculing Rand Paul. As stated before, the left wants what it wants, and it is not particularly concerned about constitutional integrity in its efforts to get it.)
Let us hope and pray that the wise and caring advice imparted by the George Washington in his Farewell Address goes to the heart of every U.S. senator this February 22. Antonin Scalia did an outstanding job of upholding Washington’s standards and the integrity of our Constitution. Whether his successor does the same or not will make a huge difference in the future direction of our Republic.
Financial Regulation and the Conceit of the Do-Gooders
Last week, Richard Cordray, the director of the Consumer Financial Protection Bureau (the incarnation of the Dodd-Frank law) made the news. He is leading a regulatory push to lower the price of payday loans.
The Wall Street Journal quoted him as saying:
I personally believe banks and credit unions can be low-cost providers of small-dollar loans. I think that . . . there would and should be an ability for them to offer decent products.
This statement is both sad and scary. It’s sad because of the economic ignorance it manifests. It’s scary because this economically ignorant man wields awesome powers, yet lacks the wisdom to use those powers helpfully, and he remains essentially unaccountable to anyone who just might have a better grasp of economic reality than he does.
We all are entitled to our opinions. And when he says, “I personally believe…” and “I think,” Mr. Cordray is making it plain that he is dwelling in the realm of opinion. In his opinion, (which, alas, carries more weight than yours and mine, due to the regulatory power he wields) financial institutions can afford to continue supplying small, short-term loans at lower prices than they currently charge. Apparently, he knows better what banks can do profitably than the banks themselves do. Cordray also injects a normative concern: Lenders “should” be able to offer “decent products” — implying that the products they offer now lack decency.
Let’s address the decency issue first.
What gives Mr. Cordray the right to arbitrarily decide what fees (interest rates, application fees, or whatever) are “decent”? He thinks lending institutions should charge less. What would he think if some government bureaucrat presumed to tell him the price at which he could sell his house or automobile? Cordray rightly would tell the bureaucrat to buzz off because he has a right to sell his own property for whatever he thinks it is worth and whatever someone else is willing to pay for it. In short, he would stand up for his property rights. It is no different for moneylenders. They decide what price to ask for the use of their property. It is a peculiar notion of justice that individuals should be free to charge what they want for their property rights, but businesses shouldn’t.
This brings us to the underlying economics. Nobody compels a person to take out a payday loan from a particular lender. If the would-be borrower thinks that a lender’s fees are too high, he or she is free to seek out more favorable terms from another lender. The fact that borrowers haven’t borrowed from another lender indicates that the borrowers weren’t able to find a better deal elsewhere; thus, they are getting the best deal available to them.
Mr. Cordray, of course, wishes that they could get cheaper loans.
Why doesn’t he start his own business and do what he thinks should be done himself? Ah, that’s right — he’s too busy saving the world from his lofty perch in Washington. But why don’t other lenders come along and offer lower interest rates on loans? After all, there are always enterprising individuals searching for ways to make a buck.
The economic fact of the matter is that if the current lenders were making large profits from the small-loan business, then some other lender or lenders would enter that market to get a piece of that juicy action. The fact that they don’t enter a market they are free to enter indicates that the current lenders are charging a market rate for their services — low enough to entice customers, high enough to make it worthwhile to the lender, but not so high as to attract lower-cost providers into the market. That is the way competitive markets work, Mr. Cordray.
Cordray apparently wants to impose a price ceiling on how much payday lenders can charge. If he crams prices below the market price, a shortage will develop. Demand for such loans will rise at the same time that the supply of such loans will diminish. That may prove beneficial in the short run for those individuals lucky enough to get the loan they need, but it could be devastating to those who can no longer get such loans. In fact, those unfortunate individuals will have no other choice but to turn to black markets to get the funds they desperately need. In those black markets, prices will not only be higher, but the consequences of failing to repay could be much grimmer (think broken kneecaps and other unpleasantness).
I will say one thing for Mr. Cordray: The ignorance and conceit that leads him to presume to lecture lenders on how to operate their businesses and to pass moral judgment on people whose businesses he really doesn’t understand are not his unique faults. The whole progressive movement is riddled with them.
In fact, Cordray’s conceit is at least matched, if not greatly exceeded, by Hillary Clinton. The Democratic presidential wannabe has proposed a plan to give federal regulators the power to “break up any financial institution that is too large and risky to be managed effectively.” That probably sounds reassuring to voters who shudder at the recollection of the financial panic of 2008, but stop and think for a minute: What makes Hillary wiser and more perceptive than the country’s financial experts? Where are the bright lines that will let her detect when a bank has gotten “too large” or “too risky”?
Does anyone seriously believe that Hillary Clinton (or any other politician) knows better than financial professionals with decades of experience how banks can be “managed effectively”? (Maybe that’s why major Wall Street firms pay her millions of dollars for an hour or two of her time — so she can give advice and solve their managerial problems for them. What do you think?)
No, the basic problem here is economic ignorance. Highly educated, intelligent people like Richard Cordray and Hillary Clinton may think they are smart enough to manage markets, but as the disastrous 20th-century experiments in political control of economic activity proved, there is no government in the world that can process essential economic information and coordinate economic activity with anywhere near the efficiency and effectiveness of free markets and the pricing mechanism. Hands off, do-gooders! Your blundering interventions will only make things worse, regardless of your intentions. *
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.
Don't you love it when something heartwarming happens to you unexpectedly? That happened to me on October 1. My friend Ron invited me to go with him to Cleveland to see the game that night between the Indians and the Minnesota Twins. Neither of us had any connection to either of the teams (I'm a lifelong Tigers fan and Ron is a lifelong Pirates fan) but I had never seen Progressive (formerly Jacobs) Field before, so off we went.
From the moment we left the parking garage and walked a block to the ballpark, I felt comfortable. Usually, cities tense me up, but Cleveland had a small-town "vibe" - calm, safe, and peaceful. As we crossed the street to the stadium, we encountered a large statue of Larry Doby. That was a nostalgic moment for me. Doby was a Cleveland outfielder in the first major league baseball game I ever attended, way back in the 1950s at Briggs (later Tiger) Stadium in Detroit. For the benefit of younger readers who may not recognize his name, Doby is historically significant to major league baseball, because he was the first African-American to play in the American League, just as Jackie Robinson had broken the color barrier in the National League. A seven-time All-Star center fielder and Hall-of-Famer, Doby (along with teammate Satchel Paige) became the first African-American to be a World Series champion when the Indians won in 1954 after Doby led the league in home runs and RBIs.
Snapping out of my nostalgic reverie, my thoughts shifted from past to present as we approached the turnstiles. My first impression: Baseball near the shore of Lake Erie on an October night is a chilly proposition! The cool wind off the lake is impossible to ignore. I can't imagine what it would be like to play a World Series game there in November. Second impression: The people working at Progressive Field were as warm as the air was cold. I have never met people as uniformly friendly as the off-the-field team assembled by the Cleveland Baseball Club.
The security inspectors at the turnstiles were relaxed and affable. They treated us like welcomed guests instead of like cattle. The lady at the hamburger stand must have served thousands of other customers during the season, but she made me feel like I was her first-ever customer. She greeted me with a beaming smile, twinkling eyes, and overflowing kindness. The ushers, too, were helpful, courteous, and friendly. They took a personal interest in us rather than thinking of us as numbers in a crowd.
We had arrived early and soon went to escape the cold in the Terrace Club - an enclosed area - to wait there until the game started. We had already eaten and didn't need a table, so after checking out the Bob Feller exhibit in the waiting area, we were invited my the cheerful hostess to sit in a couple of comfortable chairs.
What happened next touched my heart. Out on the field, a young lady was ready to sing the national anthem. Ron and I rose, and then, almost to my surprise, every single person who was sitting in the restaurant area in front of us, also rose and doffed their caps. They could have stayed seated, being physically removed from the stadium seats by privacy glass, but they didn't. God bless the people of Cleveland! They are true patriots.
For me, the good people we encountered that night at Progressive Field helped forge a bond with the city where my late mom grew up - a great American city with some of the friendliest people I have ever met. For you who have read this, I hope this story will be an encouraging reminder that there are a lot of good people in our country. This everyday goodness, not the evil done by a few warped individuals, is what America is really all about. We have a lot to be proud of and a lot to be grateful for.
[Recently], Jeb Bush explained his proposed plan for tax reform on the Commentary page of The Wall Street Journal. Let's review a few of the proposal's pros and cons.
First, the economic. Pro: Bush proposes lower rates for both personal and corporate income. At a time when an increasing number of American citizens and American corporations are moving abroad so that they can keep more of their income, such a proposal is timely and vital.
Con: The proposal doesn't go as far as Rand Paul's more visionary proposal from early this summer. While Bush's top personal income tax rate would be 28 percent (approximately a 25 percent reduction) and the top corporate rate 20 percent (almost a 50 percent reduction), Sen. Paul boldly proposed a uniform top rate of 14.5 percent (why that oddball number instead of simply 15 percent, I have no idea) for both personal and corporate income. In addition to allowing Americans to keep more of their income, Paul's plan helps to restore the venerable principle of equality before the law by deep-sixing the discriminatory graduated tax scheme that discriminates against Americans by taxing some at higher rates than others.
Second, the political. Pro: By emphasizing growth while Democrats obsess about income distribution and redistribution, Bush is appealing to Americans' inherent optimism and belief in progress and achievement. While progressives sputter in the gloominess of their 16th-century zero-sum worldview, Bush's approach exudes togetherness and inclusiveness. He knows that America and Americans are capable of so much more than the government-induced stagnation of recent years. By calling for three personal income tax rates, with the top one being 28 percent, he clearly is maneuvering to lay claim to the Reagan mantle, since Reagan's last tax reform had only three tax rates with the same top marginal rate of 28 percent.
Con: By structuring his tax proposal so as to identify it with Reagan, Bush may find himself being compared to Reagan on far more issues than he would like. GOP conservatives will want to know if he is a "true Reaganite" or an opportunistic impostor. This could backfire on him. While Rand Paul broke new ground with his tax reform proposal, Bush is tilling old ground, which may raise concerns about whether he has any new ideas to deal with a tired old political status quo. Bush is adopting a centrist or perhaps even moderate position in the Republican field, which could replicate Mitt Romney's failed strategy of not winning over enough of the conservative base of the party.
Third, the timing. Pro: Bush deserves credit for publishing his well-thought-out proposal early in the campaign. It makes him seem proactive instead of reactive.
Con: With the current intense concern about the Iran deal and about the apparent law-breaking of the leading Democratic presidential candidate when she was Secretary of State, Bush's proposal may not have "legs" in terms of media coverage. Here I sympathize with him, because hardly a week goes by without the opposition party awash in some crisis or scandal, so it's unlikely he could find a "quiet" time in the news cycle when he could take front stage.
A few final thoughts in the form of questions: Do Americans today care all that much about tax reform? Have they grown tired of Republicans' almost ritualistic, robotic call for tax cuts while remaining relatively silent about the more important and more needed reform of cutting government spending? Are GOP voters more concerned about foreign affairs, immigration, and a political establishment that disrespects America, traditional American values, and American citizenship than about tax rates? Does Bush really "get it" - the big picture, that is?
Jeb Bush's tax proposal would be a marked improvement over our current tax code. It will be interesting to see if voters in the next election feel passionately enough about the tax code for taxes to be one of 2016's decisive issues.
Today's version of "a chicken in every pot" is Hillary Clinton's proposed plan to "make college affordable and available to every American." This is political catnip, pure and simple. And it is a more delusory form of catnip than Herbert Hoover's "chicken," for while everybody needs enough to eat, not everybody needs to go to college.
There is today an oversupply of college degrees. A Federal Reserve study found that half of recent graduates were working in jobs that didn't require a college degree or were not employed at all. For Mrs. Clinton to propose spending $350 billion to subsidize college attendance will exacerbate rather than reduce the glut of college-educated Americans. To propose such wastefulness when federal debt already exceeds $18 trillion is fiscally irresponsible and a slap at American taxpayers. It will also increase the number of graduates experiencing disillusionment when they realize the lack of market demand for their degrees.
The increasingly overt socialistic nature of Mrs. Clinton's campaign theme is glaringly evident in her "New College Compact." She laments, "For too long, families have been left to bear the burden of crushing costs" of a college education. Heaven forbid that Americans be expected to pay for what they consume! (A quick "thank you" here to those whose generosity funds academic scholarships to highly qualified and motivated students from poor backgrounds.) Who does Mrs. Clinton think should pay if not the consumer? Her plan explicitly specifies that the federal and state governments (i.e., the taxpayer) should foot the bill at public universities and colleges.
Along with state financing, Hillary Clinton advocates increased state control. She thinks that government should micro-manage post-secondary institutions by telling colleges where they must spend their money (less on administrative expenses), commanding colleges to accept junior college credits (regardless of the four-year colleges' own academic standards), and deciding when to waive accreditation standards.
Clinton's disfavor of the private sector is obvious: She expresses sympathy for students with "an expensive degree from a for-profit institution" only to find that a degree doesn't lead to a job. Why single out graduates of for-profit colleges and universities when the same disappointment befalls many graduates of not-for-profit institutions, too? And why should students who agree to work for government receive earlier cancellation of their debts than private-sector workers? That's a double-whammy on the taxpayer, whose taxes first would subsidize the student's education and then pay the student's salary after college. And why is it necessary for government to make sure that community colleges offer more "two-year degrees and certificate programs that are valued by employers?" Why can't private educational entrepreneurs survey the marketplace to discern what degrees and certificates are valued and then profit by providing them?
As for the horrendous problem of college debt blunting the lives of millions of younger Americans, Clinton doesn't acknowledge that the federal loan program is responsible. If she were not so ideologically averse to the private sector, she might see privatization of the college loan market as the solution. First, though, bankruptcy laws should be revised to include college debt. It is anomalous and unjust to allow mature adults with decades of business experience to erase their debts via bankruptcy if they make a miscalculation, but to deny such mercy and financial relief to young, inexperienced adults. If private lenders issued college loans, and they knew that bankruptcy was an option for young borrowers, then those lenders would calculate that risk. They wouldn't lend tens of thousands of dollars to students floundering for five or six years or students taking courses that have little value to the job marketplace, and so the glut of over-educated/under-employed young people would shrink.
There is one aspect of Clinton's higher education plan that makes some ethical, if not economic, sense. Ethically speaking, it seems unfair for the Fed to have engineered low borrowing costs for Uncle Sam while at the same time not sharing some of its windfall by refinancing student debt at lower rates. (Many students are still paying off loans at seven, eight, or nine percent). Economically speaking, though, Hillary Clinton has no business promising that the federal government "won't profit off student loans." While "profit" apparently is a dirty word to Clinton, any loan program should generate enough interest income to pay for the salaries, offices, etc., of those administering the loan. If the federal college loan program doesn't cover its own costs, then, once again, the long-suffering taxpayer gets stuck with those costs. The economically rational approach is to let the private sector figure out what an economically viable loan market for college education looks like. Economic losses to our society would decline by billions if privatization of student loans supplanted the socialistic status quo.
The New College Compact proposed by Hillary Clinton is economically wasteful central planning, all wrapped up in the beguiling garb of Santa Claus politics. Caveat emptor - Let the buyer (in this case, the American taxpayer and voter) beware. There ain't no such thing as a free lunch.
Once again, a scholar with impressive credentials is broadcasting the gloomy notion that Americans face a job-poor future. The insufficient-jobs scenario appeared in George Mason University economist Tyler Cowen's book Average Is Over a couple of years ago. It resurfaced again recently in the Pittsburgh Tribune-Review. Vivek Wadhwa, "a fellow . . . director of research . . . and distinguished scholar" at several prestigious universities, wrote that we need "a new version of capitalism" for "dealing with our jobless future."
The crux of Wadhwa's argument is his belief that technological progress will result in a society divided between a technologically savvy elite, who will prosper mightily, and a larger number of Americans whose jobs will be rendered obsolete and won't be able to find new jobs. There's an obvious fallacy here: If technological progress reduces employment opportunities, then why are hundreds of millions of people still working in the technologically and economically advanced countries of the world? What is it with these intellectuals and the recurring nightmare that progress results in a dearth of jobs?
An incident that the late economist Milton Friedman related comes to mind: While visiting a populous but undeveloped Asian country several decades ago, Friedman saw a gang of workers using shovels to excavate a hole where a building's foundation would be laid. Friedman noted that the job would be completed much more quickly if a modern excavating machine were used. His host replied that a deliberate decision had been made not to use such a machine because the government wanted to maximize employment. Friedman's rejoinder was to the effect that if the goal were to maximize employment in the country, they should ban the use of shovels and equip a far larger number of laborers with spoons. It doesn't require great vision to realize that a fully employed nation of spoon-wielding ditch diggers would remain a very poor place.
Can anyone doubt that technological progress has led to economic advancement? The economic principle is elementary: As worker productivity increases (that is, as more wealth is produced from fewer units of labor) prosperity rises, too. When improved agricultural productivity has bankrupted farmers and resulted in our food supply being produced by an ever-smaller percentage of Americans, what has happened to all those ex-farmers? They found employment in new fields, thereby increasing the number and variety of goods and services produced. In other words, more wealth was created, and that is how a society achieves higher standards of living for the masses.
What has just been described is Schumpeter's process of creative destruction. Old jobs that produce things of less value become obsolete and new jobs producing things of higher value take their place. This is the natural evolutionary course of free markets.
Any notion that there is a ceiling to the number of potential jobs ignores an elementary and undeniable economic truth - namely, that there is no limit to the potential number of jobs because there is no limit to mankind's wants. As technology makes it possible to produce what are considered the modern necessities of life (cars and cell phones in addition to the traditional necessities of food, clothing, and shelter) more workers will be available to produce and provide new goods and services that entrepreneurs are dreaming up every day of the year.
Is there anything that can inhibit or halt the natural tendency of entrepreneurs in market economies to generate new job opportunities? Yes, indeed. Government intervention - excessive and costly regulations, wealth-and capital-depleting taxation, misallocation of resources via government spending programs, depreciating currency, etc. - can stifle economic activity, discourage business formation, and cause job opportunities to dry up.
What is scary about Wadhwa's thesis and related plans (such as Hillary Clinton's proposal for government to lay a heavier, more controlling hand on American entrepreneurs and businesses) is that their ill-conceived policies will produce results opposite to what they claim to be seeking. There will be less employment instead of more.
When Wadhwa says we need a new "capitalism" that redistributes more wealth and provides everyone with a taxpayer-supported guaranteed income, he is doing two destructive things: First, he is perpetrating a pernicious lexicographical hoax, proposing a new form of statism that is a repudiation of free markets - that is, anything but "capitalism." A more honest statement would be "It is time to replace capitalism with greater government control of economic activity." The second destructive aspect of his suggestion is his apparent blindness to the fact that maximum economic freedom - true capitalism - is the world's best hope for expanding job opportunities. To jettison capitalism and replace it with a greater degree of statism will impede economic growth, squelch the growth of businesses, and consequently hinder job creation, to the economic detriment of those who are hoping for jobs.
There will be enough jobs for Americans only if the political planners surrender their mad ambition to direct the economy from Washington. *
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.
Two summers ago, while passing through an airport, I caught a TV news story: a double homicide in Ohio. The victims were a young woman and the nine-month-old fetus she was carrying. The murderer was her lover, the unborn baby's father.
I was stunned, bewildered, grieved. Who could do such a thing?
Apparently, this particular crime is not rare. One expert interviewed for the report I saw averred that homicide is the second-most common cause of death for pregnant women in America.
I've thought about this heinous crime repeatedly during the past two years. Here are some thoughts that have occurred to me:
The perpetrators of this crime tend to be men rejecting the responsibilities of parenthood and marriage. Both child and mother are viewed as burdens to be disposed of. How dare the woman carry the baby to term and ruin a convenient, nonbinding sexual relationship!
These double murders don't occur in a void, but in a social context against the cultural backdrop formed by our values. Please don't construe what follows as suggesting collective guilt. What I will suggest is that men murdering their lovers and children is the most extreme manifestation of thoughts, attitudes, and beliefs that tend toward death and away from life. The perpetrators are responsible for their crimes. Let's look around us to see if there are trends in thought in our society that are nourishing a cultural ethos that depreciates the value of individual lives.
The increasing incidence of men killing their pregnant lovers coincides over the last 36 years with abortion having received legal sanction as a legitimate form of birth control. Legalizing the killing of unwanted babies was our first repudiation of the principle of the sanctity of life, a rejection of God's plan. "Shall I bring to the birth, and not cause to bring forth? saith the Lord" (Isaiah 66:9).
A next step after abortion on the slippery slope toward death is the killing of women bearing unwanted babies. (A quick aside here: The pro-abortion assertion that a fetus is just a growth inside a woman's body, not a life, receives a strong rebuke when our laws treat the murder of a pregnant woman as a double homicide.)
Roughly coinciding with the period of legalized abortion has been the insidious error, propagated by pagan environmentalism, that there are too many people, that having children is irresponsible, that a human being is just another mouth to feed, rather than an intelligent, creative, productive being whose life can glorify the Creator of the universe. God's first command to man - "be fruitful and multiply" (Genesis 1:28) - was contradicted by green theologians who proclaimed procreation a sin against Mother Earth.
Also feeding an anti-life culture has been the common "baby boomer" desire to remain young and carefree for as long as possible. Raising kids is hard work and ties one down, right? True, but millions of us who have opted for parenthood have found raising children to be the greatest joy in this world. But the fact remains that many boomers have preferred consumption to investment, immediate gratification to long-term, greater rewards. We'd rather partake of the pleasures of this world (exotic vacations, fancy cars, luxury goods) than sacrifice some of our immediate wants for the long-run benefit of our familial and societal posterity.
Another powerful anti-life undertow was generated by the "sexual revolution." For many, the Judeo-Christian concept of sex for procreation was eclipsed by the philosophy of sex as recreation. Procreation or recreation: Is sex about creating life or having fun? Is it about giving life and love, or is it about taking pleasure - a self-indulgence so devoid of love that in extreme cases it culminates in murder. Is it life-affirming or life-destroying?
To the extent that sex as fun has eclipsed sex for life, we have trivialized sex and devalued life. The result: soaring divorce rates, the emotional trauma of broken families, and even men murdering their lovers and unborn children. Clearly, being "liberated" from traditional sexual mores isn't as progressive - individually or socially - as the proponents of sexual "liberation" promised.
Here is some historical trivia, which I know will sound like raving right-wing paranoia to those who never studied the subject: Communists insidiously worked to encourage sexual license and subvert sexual morality in America. It's all there in black and white, dating back to Beria, the leader of Stalin's vile secret police. Communists understood that a demoralized population is far easier to enslave than a morally upright people. They delighted in the Vietnam-era countercultural mottoes, "Make love, not war" and "If it feels good, do it," because they understood that a society filled with people who value self-indulgence above heroism and sacrifice lacks the backbone to resist the encroachments of tyranny.
Indeed, it is difficult to conceive of a more demoralized society and one riper for the loss of self-government than one in which men choose to kill their pregnant lovers and wives.
As is always the case with life's great issues, the Bible provides the best guidance: "Lo, children are an heritage of the Lord: and the fruit of the womb is his reward" (Psalm 127:3) and "Choose life that both thou and thy seed may live" (Deuteronomy 30:19).
In a case of painfully ironic timing, between the 800th anniversary of Magna Carta on June 15 and our annual Fourth of July celebration three weeks later, the Supreme Court of the United States (SCOTUS) issued three decisions which fundamentally altered the legal landscape in America in ways that undermine the rule of law, economic liberty, and to the free exercise of the Christian religion. Let's take a look at a few aspects of the brave new world that the Court has thrust upon us by examining the implications and ramifications of these three cases: King v. Burwell, which upheld the Patient Protection and Affordable Care Act ("Obamacare"); Texas Department of Housing v. Inclusive Communities Project, which conferred constitutional legitimacy on the dubious doctrine of "disparate impact"; and Obergefell v. Hodges, which ruled that gay marriage is a right that the Constitution guarantees to all Americans.
1) King v. Burwell versus the rule of law. While many of us are rightly lamenting the survival of a poorly conceived, economically disruptive, and potentially tyrannical law that lays the groundwork for unelected political hacks ultimately to wield the power of life and death over Americans by granting or withholding health care from them, let's look at the harm inflicted by SCOTUS' 6-3 decision upholding the law.
As he did in upholding the PPACA in 2012, Chief Justice John Roberts (this time with the concurrence of Associate Justice Anthony Kennedy as well as the Court's four rubber-stamp approvers of all things progressive) employed word games to salvage the law. Three years ago, Roberts unilaterally redefined a fine as a tax. This year, Roberts showed that he has fallen all the way down Alice in Wonderland's rabbit hole and adopted the Humpty Dumpty theory of language. To quote Humpty, "When I use a word, it means just what I choose it to mean." In King, Roberts decided that a "state exchange" meant "not a state exchange." This is not only absurd and irrational (if "A" means "not A," reason has been abandoned) but sinister and Orwellian, for as Orwell memorably illustrated in his classic dystopian novel, 1984, when the government can redefine reality (e.g. "freedom is slavery") liberty indeed is lost.
In his opinion, Roberts abrogated the constitutional order by usurping the congressional prerogative to legislate. We can quibble whether he arrogated that right to himself by reversing the plain language of PPACA or bestowed that unwarranted privilege on the IRS by ratifying that politicized agency's creative interpretation of statutory language. In either case, though, Roberts neutered Congress.
Apart from the violence done to our constitution in this decision, in a very practical sense Roberts has created a moral hazard that is likely to result in Congress being increasingly sloppy and imprecise in writing laws. Congress (as it has been doing in recent decades, much to Justice Scalia's frustration) will be tempted to pass increasingly vague legislation that will allow unelected officials in the executive branch to decide the meanings thereof.
Tragically, 800 years after the principle that free people have a right to be governed by written, fixed laws instead of the arbitrary opinions of those in power, Roberts' atavistic thinking has abandoned that principle thereby jeopardizing liberty. Adios, Magna Carta and rule of law!
2) Texas Department of Housing v. Inclusive Communities Project versus individual liberty. With this decision, SCOTUS ruled that Americans may be found guilty of violating the Fair Housing Act of 1968, which prohibits racial discrimination, even if there was no intent of discrimination, but simply when the result shows a disparate impact on various races.
There are at least three major problems with the opinion written for the 5-4 majority by associate Justice Anthony Kennedy, who aligned himself with the four progressives:
First, Kennedy endorsed the kind of social engineering that one would expect to find in a Communist country like Soviet Russia than in a free society like the United States of America. When Kennedy wrote, "the Court acknowledges the Fair Housing Act's continuing role in moving the Nation toward a more integrated society," he authorized governments in the U.S. to move beyond the realm of negative law (i.e., telling people what they cannot do to others, such as by banning practices designed to segregate races or disadvantage particular races) to positive law, by which governments tell people what to do - for example by guiding and controlling things like where people live in order to meet certain preconceived notions of a "right" amount of racial integration. (As a flippant aside, do you suppose this decision means that the feds will see to it that a couple of Republican white guys are transplanted into those Philadelphia precincts that voted 11,000-to-zero for Obama over Romney?)
Second, by exalting specific politically chosen outcomes as the criterion for whether actions are lawful or unlawful, Kennedy essentially endorsed the practice of socialism - a system wherein the government ordains certain outcomes, choosing winners and losers, and abrogating the right of individuals to pursue happiness and conduct business as they see fit, so long as they don't deliberately undermine the rights of others.
Third, Kennedy's opinion sows the seeds of future confusion. Indeed, Kennedy himself anticipated the problems that his own language will cause. "Remedial orders that impose racial targets or quotas might raise more difficult constitutional questions." "We must be wary of policies that reduce homeowners to nothing more than their race." "Courts should avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations into every housing decision." I agree with all three of those statements. The problem is, if disparate impact is defined as simple numerical discrepancies - and there is nothing in the Supreme Court decision that provides any other guidance or definition of disparate impact - then racial calculations and quotas inevitably will have to be considered by public or private providers of housing and other economic goods. In sum, Kennedy wants to have his cake and eat it too. He says he doesn't want us to boil decisions down to a matter of race even as his opinion mandates that we do so. We will be less free as government ensnares individuals and criminalizes actions even when the perpetrator has no objectionable intentions and nobody is hurt ("no harm, no foul").
One final thought about this case: The Texas Department of Housing was found to be at fault for building too many housing units in predominantly minority neighborhoods. I'm sure they could have been found at fault if they had built too many in white neighborhoods, too. What we have here is a disagreement as to what percentage of publicly funded houses a government agency should build in various locations. The obvious way to keep that disagreement from ever arising again is to return to the free market and get government out of the business of building housing units with taxpayer funds. Instead, the Supreme Court essentially upheld the principle of central economic planning, but ruled that the Texas housing officials weren't going about it the right way. It seems the free markets based on the American principles of individual liberty and private property weren't even on the Court's radar screen; instead, the Court wants government planners to engineer the Court's notions of social justice. SCOTUS has come down firmly on the side of Big Government and against the economic liberty of Americans.
3) Obergefell v. Hodges versus freedom of religion. Once again, this was a 5-4 decision in which Justice Kennedy voted with and wrote the majority opinion endorsed by the four progressives. This decision granted a fundamental right to same-sex couples to enter into unions that are legally identical to marriages. Let us not revisit here the longstanding debates about whether same-sex marriages should be legal throughout the United States, or the proper parental and property rights of homosexuals. There are, however, several aspects of the decision that merit comment.
Let me briefly state that, unlike some conservatives, I have some sympathy with Justice Kennedy's opinion. The current chaotic and confusing situation - in which Americans who are legally married or have protected parental rights in one state, lose them when they move to another - indeed cried out for consistent nationwide standards as a matter of practicality and fairness. I just don't believe it was the Supreme Court's role to establish such standards.
One problem with the Obergefell decision is that the judiciary branch of government usurped the legislative prerogative of Congress, thereby upsetting the balance of power in our constitutional order. Two years ago, in United States v. Windsor, SCOTUS declared unconstitutional the Defense of Marriage Act (DOMA) by which Congress defined (for purposes of federal laws) a marriage as a legal relationship available exclusively to heterosexual couples. Having nullified the people's legislature from legally defining marriage in U.S. v. Windsor, the Supreme Court, in Obergefell, proceeded to arrogate to itself the power to decree and mandate its own definition of marriage.
Thus, five unelected judges trashed the democratic process and perpetrated an unconstitutional coup by imposing a law that was not passed by a majority of 536 elected officials (435 representatives, 100 senators, and one president).
In one worrisome sense, Obergefell is like the King v. Burwell decision that upheld Obamacare. In both cases, the Court unilaterally assumed the power essentially to rewrite laws that Congress had bungled - Obergefell being a case (in the eyes of a SCOTUS majority) in which Congress earlier (via DOMA) had legislated an incorrect definition of marriage, and King being a case in which SCOTUS adopted the opinion that Congress meant the opposite of what was written in the law, with the result in both cases being that it, the Court, not Congress, ended up writing the law of the land.
A second problem with Kennedy's decision involves its careless use of language. What some referred to as Justice Kennedy's "soaring opinion" (and indeed, his opinion was quite rich in compassion, sincerity, and emotional conviction) at times lapsed into rhetorical excess that defied reason and fact.
Rhetorical excess #1: Emotion clouded Kennedy's objectivity when he wrote that homosexuals hope "not to be condemned to live in loneliness." This is a straw man argument. Nobody I know who favors traditional marriage wants homosexuals to be lonely. Long before Obergefell, adult Americans already were free to love and live with any consenting adult they want. And even if Obergefell had been decided the opposite way and not decreed a right of homosexual marriage, how would that have made homosexuals lonely?
Rhetorical excess #2: Kennedy's runaway emotions caused him to blunder into a blind spot that renders his lofty sentiments hypocritical. One of Kennedy's explicit reasons for legalizing homosexual marriages was to grant "dignity" to homosexual couples. I'm all for treating people with dignity. I also agree with Justice Clarence Thomas' dissenting opinion that dignity is innate, not something that the government has the power to confer or withhold. But if Justice Kennedy believes that it is the Court's role to grant dignity to American citizens, why did he heap an enormous indignity upon individuals who have broken free from homosexual attractions and practices by denying that such people exist? Kennedy twice asserted that homosexuality is "immutable." That assertion is blatantly erroneous. It demeans and disrespects the many erstwhile homosexuals who have gone straight; it treats them like Soviet Communists treated dissenters - as nonpersons.
Rhetorical excess #3: While I'm sure I love liberty every bit as much, if not more, than Justice Kennedy, he overreached when he wrote, "The Constitution promises liberty to all within its reach, a liberty that includes certain specific rights that allow persons, within a lawful realm, to define and express their identity." Shades of the '60s - do your thing, man! Maybe Justice Kennedy was a flower child when he was younger.
The '60s rockers had it largely right when The Rascals sang "People got to be free"; The Animals, "It's my life and I'll think what I want"; and the Fifth Dimension, "Go where you wanna go, do what you wanna do, with whomever . . ." But just because a person chooses to define himself in a certain way doesn't mean that the U.S. government should compel all the rest of us to ratify or agree with everyone's self-definition. If a man wants to call himself another man's "wife," that's his business, but should the rest of us not be free to describe him as someone's "civil partner" rather than "wife" or "spouse"? Or does the Constitution's protection of liberty no longer permit us to hold such views? Must we ignore biological differences between genders and pretend that a homosexual pair is "just like" a heterosexual couple?
The third problem with Kennedy's arguments in Obergefell is that it poses (at least) two other threats to liberty. One is broad and generic: By divining a "right" to homosexual "marriage" in the Constitution, Justice Kennedy and the four progressives essentially have adopted the ultimate "loose construction" philosophy - i.e. that since the Constitution doesn't say that homosexuals can't marry, they can. The other is much more specific and immediate: The Obergefell decision poses a real threat to our First Amendment right to practice religion.
As in his Texas Department of Housing decision, Kennedy's opinion included statements indicating that he recognized some of the problems that his opinion inevitably will cause and is aiming to avert. While granting a "right" to "marriage" to homosexual couples, he took pains to insist that Christians and their values also need to be respected. The problem is: it's one thing for religious values to be spoken of as worthy of respect; it's quite another thing for those values to be protected by law.
In defense of Christians, Kennedy wrote:
. . . it must be emphasized that religions, and those who adhere to religious doctrines, may continue to advocate with utmost, sincere conviction that, by divine precepts, same-sex marriage should not be condoned. The First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths, and to their own deep aspirations to continue the family structure they have long revered.
Many who deem same-sex marriage to be wrong reach that conclusion based on decent and honorable religious or philosophical premises, and neither they nor their beliefs are disparaged here.
Further, Kennedy cited the Due Process Clause of the Fourteenth Amendment, affirming, "the fundamental liberties protected by this clause include . . . intimate choices that define personal identity and beliefs." In that context, he referred to homosexuals' "identity and beliefs," without including the necessary corollary that Christians' intimate choices - and practices - pertaining to their identity and beliefs deserve constitutional protection, too. The problem with Kennedy's language is that while it expresses what undoubtedly are his good intentions, it does not define where a homosexual couple's rights end and a Christian's begin when they are in conflict with each other.
The need for reiterating the basic First Amendment right to the free exercise of religion has been made glaringly obvious by the recent case in Oregon in which Oregon's labor commissioner upheld a fine of $135,000 "for emotional, mental, and physical suffering" assessed by an administrative judge against a Christian couple - Aaron and Melissa Klein, proprietors of a bakery - who refused to bake a wedding cake for a lesbian couple's upcoming special day.
Apart from the constitutional issue, which I'll address momentarily, the so-called "justice" in this case is highly dubious. The lesbian couple asserted that they suffered emotional stress from all the media attention they received. Question: Who was responsible for making a media circus out of this little incident? I doubt that the bakers bothered to call a bunch of reporters to tell them that they had turned down a request to bake a wedding cake. I'll bet you dollars to donuts that it was gay-rights sympathizers (perhaps even contacted by one or both of the lesbians) who generated the publicity. If, as seems likely, it was gay-rights groups and not the bakers who were responsible for the alleged stress, then why must the bakers pay the damages?
Now let's return to the main issue here - the constitutional ramifications: The commissioner justified the Kleins' draconian fine, totally out of proportion, by stating that Oregonians have a right "to move about unfettered by bigotry." Let those words sink in for a minute. In the present context, he unmistakably is saying that it is "bigotry" for Christian Americans to abide by the moral principles of their religion. In essence, he is saying that Christianity is a bigoted religion and Christians (at least, practicing Christians) are bigots.
If anything, it seems that the two Christians in this case have suffered far greater damage and indignities than the lesbian couple. The Kleins privately told the lesbians their reasons for refusing their order. On the other hand, the Kleins have been subjected to public humiliation (the public declaration of Oregon officials that their religious beliefs make them bigots). The Kleins also have received death threats and had their car vandalized at least twice by those sympathizing with the other side, and yet they are the ones being punished. If the fine assessed against the Kleins stands, then, in a de facto sense, Christianity is not to be practiced in the U.S., the First Amendment notwithstanding. (I'll bet you, though, that no progressive judge or administrator would dare fine a Muslim butcher if he refused to process a pig for a customer.)
One other thought about how Christian practice can be reconciled with Obergefell: The left used to believe strongly in "conscientious objector" status for young men who viewed military service as being inconsistent with their deeply held religious convictions. Our law accommodated those conscientious objectors, even though by not going off to war, somebody else's son was exposed to lethal dangers and, in some cases, died in their place. Can the left not muster enough tolerance now to accept and respect that Christians have a conscientious objection to violating their sincerely held religious beliefs? Apparently not. The supposed "harm" (way too strong a word; "minor inconvenience" is more accurate) "suffered" by those who are asked to go somewhere else to buy a cake cannot compare with the harm suffered by Americans who took up arms as a result of conscientious objectors refusing to do so. The conscientious objections of Christians deserve legal protection, not legal persecution. By failing to outline and mandate those protections in Obergefell, Justice Kennedy and four of his Supreme Court colleagues have weakened the First Amendment. They have given militant homosexuals a club with which to seek to bludgeon anyone, particularly Christians, who may disagree with their view of homosexuality and wish not to violate their conscience.
All in all, in light of the Supreme Court decisions in King, Texas Department of Housing, and Obergefell, it has been a tough season for traditional, long-venerated American principles. Welcome to SCOTUS' "brave [but less friendly and free] new world." *
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.
Singapore's Lee Kuan Yew quietly passed from this world from pneumonia on March 23 at the age of 91. Lee's vision and leadership (both officially as Prime Minister from 1959 to 1990, then unofficially behind the scenes) guided Singapore's transition from an impoverished Third World backwater to a gleaming modern affluent city-state. Indeed, no other person on earth has come close to matching the economic miracle that Lee wrought in Singapore, where per capita GDP has risen from around $400 in 1960 to over $56,000 today with an unemployment rate under two percent.
Mr. Lee was brilliant. A masterful communicator in three languages - Mandarin, Malay, and English - I loved to read his column in Forbes Magazine, written from 2001 until recently. It was filled with an impressive mixture of wisdom, extensive knowledge, and a keen understanding of the complexity of issues. Lee was an admirable combination of enlightened visionary and hardheaded realist.
A political pragmatist, Lee made common cause with Communist trade unionists to form the People's Action Party in 1954, guiding it to victory in 1959. Lee and his party gained independence from Great Britain in 1963, then, after two years in an uncomfortable federation with Malaysia, Singapore launched out on its own in 1965 and flourished.
We can see Lee's vision, wisdom, and brilliance in the course he charted for Singapore. He started by making English the official language while not suppressing either Chinese or Malay identities, thereby bringing a cohesion to Singapore's polyglot, multi-ethnic society. At a time when other newly independent colonies of various European powers succumbed to the European intellectual virus of socialism and devastated their populations with socialistic policies, Lee charted a course on the road less traveled. He purged the Communists from his party and implemented free-market policies that produced the world's greatest economic miracle of the past half-century. Singapore consistently ranks with Hong Kong as the two freest economies in the world, both in the Heritage Foundation's Index of Economic Freedom and the Cato and Fraser Institute's Economic Freedom of the World Report. Doingbusiness.org ranks Singapore number one in the world for ease of doing business. Michigan State University's Global Edge website states, "Singapore has been ranked as having the most open, least corrupt, and most pro-business economy in the world." In fact, to Lee's lasting credit and our discredit, over the past 50 years Lee did a much better job of protecting Singaporeans' property rights than the U.S. government has done of protecting Americans' property rights - a fact that largely explains Singapore's faster rate of economic progress over that time span.
So effective were Lee's policies, right from the start, that China's leader Deng Xiaoping, after visiting Singapore in 1978, sent 22,000 Chinese officials to Singapore to study Lee's policies. Showing his ability to see the big picture, Lee believed that the U.S. involvement in Vietnam (which Lee supported consistently), though perceived as a defeat here at home, was hugely beneficial for Asia and ultimately for the world. It bought time for Singapore to develop along free market lines, which in turn convinced Deng to implement the many economic reforms that have enabled hundreds of millions of Chinese to climb out of poverty - an example that later induced Vietnam to turn its back on doctrinaire socialism and unleash its people's productive energies.
As a pragmatist, he understood that the only way Singapore could get on the fast track to economic development would be if it could avoid the common Third World problems of official corruption and ambitious individuals using government to enrich themselves at the expense of the people. So, he adopted authoritarian tactics to suppress the centrifugal forces inherent in a multi-ethnic, multi-cultural polyglot society with the usual share of political ideologues. He imposed order heavily enough to contain disruptive, divisive forces, but light enough for the people to prosper. The formula worked spectacularly. Lee's vision and leadership turned Singapore into a beautiful, gleaming, clean, wealthy city-state with one of the lowest crimes rates and highest standards of living in the world.
Naturally, Lee's authoritarianism offended those who were its targets. While pragmatic Communists like Deng admired and sought to learn from Lee, ideologically rigid Communisms detested him. And why not? He put the socialist models of Castro, Kim, Mao, et al., to shame. The Marxists always have trumpeted Jeremy Bentham's utilitarian tenet "the greatest good for the greatest number" as a prime directive, but Lee's Singapore, not the Communists' fraudulent and failed "workers' paradises," actually attained that goal. Lee brought breath-taking prosperity with breath-taking rapidity to his people whereas the Communists brought wretched poverty, and Lee did it without resorting to the draconian brutalities inflicted by Communists - extensive networks of slave labor camps, torture factories, summary executions etc. Lee once said that his greatest achievement was "beating them" - meaning, Communists.
Mr. Lee would be the first one to admit he wasn't perfect and that his pragmatic utilitarian policies were far from ideal and sometimes unjust. "I had to do some nasty things, locking fellows up without trial," Lee told a New York Times interviewer in September 2010. "I'm not saying everything I did was right. But everything I did was for an honorable purpose." It's hard to picture such candor and humility from Castro, Kim, or any dictator on the left.
Mr. Lee did not build a personality cult around himself. He could have continued as Prime Minister indefinitely, but he withdrew in 1990, handing over the reins of government to a younger generation while continuing to offer guidance from the advisory position of Minister Mentor until his retirement in 2011. When he died, he was mourned as a man, a social benefactor, a true friend of the people. What a welcome contrast from the state funerals of deceased Communist tyrants with their obligatory homage to rulers that demanded to be worshiped as fearsome pagan deities - angry gods who had degraded and oppressed the poor, suffering masses programmed to publicly mourn the passing of their own tormentors.
There are no saints in politics, and there is no perfect government on earth, but Lee Kuan Yew did much good. He uplifted his people and showed the world convincingly which policies bring prosperity. He deserves to be remembered as one of the world's greatest 20th-century leaders. R.I.P.
A political science colleague sent me an article documenting President Obama's dismal economic record, and he asked me for added details and perspective. Here goes:
True, economic growth under Obama has been sluggish, fitful, faltering, historically weak, etc. However, U.S. economic growth has been trending downward for several decades. Conclusion: Our economic woes did not begin with Barack Obama. However, he has done nothing to reverse the trend; on the contrary, he has doubled down on the very policies that have hampered economic growth. For that he bears full responsibility.
The headwinds opposing economic growth are generated by what Ronald Reagan referred to as "the government disease." No president has advocated, championed, and imposed more harmful government intervention than Barack Obama.
Here's a short list of those interventions:
1.) Government spending. Economists as far back as Adam Smith have noted that the true burden of government is what it spends, not what it taxes. When political decisions about where to allocate scarce economic resources supplant market decisions, production inevitably is diverted from the most highly valued needs to less-valued things. Thus, less wealth is produced, economic growth is suboptimal, and the people are poorer than they otherwise would be.
While not having increased federal spending by as large a percentage as his predecessor (although not because he didn't want to, but because a Republican Congress has thwarted that goal) Obama undeniably has presided over more market-distorting government spending that any of his predecessors. To be fair, some of this spending was already baked into the cake - particularly the rising spending on Social Security and Medicare. Because federal entitlements operate on a "pay as you go" basis, these increasing expenditures to seniors do not consist of real economic returns on capital invested. Instead they transfer hundreds of billions of dollars from current workers to mostly retirees. Entitlement expenditures artificially inflate GDP and overstate the real wealth of the country, because those dollars represent purchasing power that does not arise from the production of actual goods or services.
2.) Rising debt. The greater the debt load, the more present income is diverted from present consumption to pay for past consumption. After a brief downturn following the 2008-9 financial crisis, total debt has risen by over 15 percent to a shade over $59 trillion, according to the Federal Reserve. Over half of the $7.35 trillion increase (some $4.84 trillion) is government debt stemming from Obama's budgets.
Obama's policy of encouraging and facilitating loans to college students has seen student debt soar to over $1 trillion with devastating economic consequences for the recipients. Young graduates struggling under the burden of debt have delayed marriage, child-bearing, home-buying, etc. In too many cases, college debt has stunted young American lives.
3.) Suffocating regulation. The Obama administration has burdened Americans with a record amount of federal regulation as measured by the number of new rules promulgated and pages in the Federal Register. The annual cost of the federal regulatory burden is now approximately $1.9 trillion (only nine countries' GDPs are larger). As reported in Investor's Business Daily, "the cost of enforcing federal economic regulations is . . . up 31 percent since Obama took office, and the 'Code of Federal Regulations' is 17,294 pages longer."
Furthermore, as noted by Obama's Council on Jobs and Competitiveness, the Sarbanes-Oxley law (which Obama inherited, but has not revised) and Dodd-Frank (which a Democratic Congress passed in 2010 with Obama's approval) have "placed significant burdens on the large number of small companies." Consequently, we are in the unusual and worrisome situation of businesses closing at a faster rate than they are opening, thereby shrinking employment opportunities and slowing economic growth.
4.) Tax policy. Business tax rates have remained unchanged under Obama, and that has had negative consequences in a world that has been shifting toward lower corporate profits taxes. By allowing the United States to have the highest corporate tax rate in the developed world, American businesses are migrating abroad via the corporate inversion maneuver.
5.) The war on work. While constantly professing concern for workers, Obama has consistently supported and implemented policies - raging from a higher minimum wage to federal jobs programs to anti-business policies - that have shrunk the number of jobs (see the Labor Force Participation Rate). Obama's prize legislative achievement, the Affordable Care Act, has shrunk the number of hours worked (and consequently the amount of wealth created) by incentivizing employers to reduce the number of full-time jobs. According to David Stockman, the United States has two million fewer full-time workers now than it did in 2007.
Bottom line: President Obama's policies have crippled the American economy. *
I have to admit that initially I was uninterested, even close-minded, about the negative yield being offered on a growing share of European sovereign debt. "It must be a short-term aberration," I thought at first. "Completely nutso," I sniffed dismissively as the phenomenon spread. "Who in their right mind would invest in a financial instrument that would guarantee a loss of principal?" Upon calmer reflection, I would shrug and think, "Well, to each his own, but none of those topsy-turvy debt instruments for me."
More recently, I have taken a more tolerant attitude toward negative-yield debt. As I teach my Econ 101 students, the key to success in the economic marketplace is to set aside your own preconceptions and preferences and to acknowledge that the consumer is always right. If some of my fellow human beings want investment products that repay them less than their principal, who am I to find fault?
In fact, the more I think about it, I find myself attracted to the idea of offering such a service to satisfy this unfathomable consumer appetite for negative yields. Maybe I should announce that anybody out there who would like to send me money on the condition that I return less than all of it to them in the future is free to do so (as long as they include payment for any incidental transaction costs). From that perspective, negative interest rates are quite ingenious.
Actually, (I'm going to attempt to be serious now) what really got me thinking about the growing phenomenon of negative-yield debt was how to explain the concept to my 101 students. The traditional introduction to interest rates involves three basic components. The first is the "originary" rate of interest - the time preference between the present and the future. In years of teaching economics, I've never yet had a student express a preference for a hundred dollars next year over the same amount today, and I doubt I would get a different response if I lowered the payoff in the future to $99.90. Conclusion: The time preference of humans doesn't account for the increasingly common negative-yield phenomenon.
Perhaps, then, we can solve the mystery by examining the second component of interest rates - the risk factor. Students readily grasp the rationality of lenders adding a risk premium to interest rates to compensate for lending to higher-risk borrowers. Traditionally, the primary function of financial intermediation has been to assess the creditworthiness of borrowers. That isn't always the case at present, with government citing "disparate impact" and penalizing lenders who dare to consider risk before issuing loans. I can get my head around a risk premium of zero for government debt, since central banks can use QE and other techniques to ensure that governments have unlimited ability to return to its creditors however many monetary units it has borrowed. But a negative yield? One could certainly argue that nongovernmental borrowers, not having their own central banks, can't give 100 percent guarantees that they'll be able to repay what they borrow, while governments do; therefore, some creditors feel safer contracting for a negative yield from a government than a positive yield from a private entity. The problem with this line of thinking, though, is that creditors could lock cash in secure storage and know that they would get all of it back, rather than paying government to borrow their money.
The third component of interest rates is the inflation premium that creditors sometimes demand to protect against currency depreciation. The late Franz Pick used to call bonds "guaranteed certificates of confiscation" because, between depreciation of the monetary unit and government taxation of interest income, bondholders' purchasing power was systematically and ruthlessly transferred to government. Even today, in the bizarro world of central banks trying to "achieve" positive inflation (i.e., currency depreciation), one would think that creditors would insist on an inflation premium to offset the targeted depreciation. Instead, we have the spectacle of widespread acceptance of a nominally negative return on paper denominated in a currency that the relevant central bank is actively trying to depreciate.
In sum, elementary interest rate theory doesn't solve the puzzle of why there are negative-yield instruments, so we need to look elsewhere. Perhaps the holders of negative-yield sovereign debt instruments anticipate earning capital gains due to increased demand for negative-yield securities in the future. This seems like a bet on the "greater fool theory" with central banks playing the part of the "fool." I suppose it's possible that in our strange new world of unlimited QE, chronic ZIRP, negative interest rates, etc., yields may become even more negative in the future, thereby rewarding those who solved earliest this counterintuitive riddle. Such a race deeper into the rabbit hole of negative yields may happen, but timid (blind?) little me won't be on the buy side of those deals.
One other possible explanation for the phenomenon of negative interest rates is that central banks are trying to make their currency less attractive in currency exchanges. This is what makes the most sense to me - central bankers hope that negative interest rates will be an effective tool of currency manipulation in a world of competitive devaluations.
Negative interest rates are a weird and alarming symptom of profound economic dysfunction. In a healthy economy, interest rates coordinate production between the present and the future according to people's composite time preferences. Today, those vitally important market signals are mangled, broken, shattered. Maybe negative-yield instruments will pay off in ways I don't yet perceive, but I'm content to keep my distance from them and let others play that bizarre game. I'd rather preserve my sanity.
In an interview posted on Yahoo.com, Nobel Prize-winning economist Joseph Stiglitz spoke about growing economic inequality and America's shrinking middle class. Agreed, these are challenging and discouraging times for many, but as has happened before, Mr. Stiglitz provides a faulty explanation.
Stiglitz spoke fondly of the highly progressive tax code and lesser degree of inequality that followed World War II. Like his intellectual comrade, Thomas Piketty, he looks more favorably upon the Great Depression, with its greater poverty but lower measures of inequality, than the 1980s, with its significant improvements in standards of living for the non-rich accompanied by higher measures of inequality.
Stiglitz veers into historical revisionism by asserting that today's inequalities originated during the Reagan years with its supply-side tax cuts that made the tax code less progressive and allegedly benefited only the rich. I would counter that there is a much more obvious cause for today's sluggish economic growth and concomitant middle class struggles: Growth in government.
Stiglitz and I agree that standards of living improved after the end of World War II. He, though, implies that this prosperity was due to the more egalitarian progressive tax code of the era, with its top marginal rate of 91 percent. I know of no accepted economic theory that high taxes create prosperity. The real explanation for the post-war boom was that after years of suppressed consumer spending enforced by wartime rationing and the diversion of resources to the war effort, peacetime released a flood of pent-up demand as Americans made up for lost time. The huge decline in federal spending after the war (from 48 percent of GDP during the war down to 15 percent in the late '40s) released billions of dollars to the private sector which turbo-boosted a strong economic recovery.
Economic growth was more tepid in the 1950s. There were three mild recessions during the Eisenhower years, helping to tip the 1960 election to the Democrats. President Kennedy's bequest to the American people was a tax cut that boosted economic growth in the mid-'60s.
The foundation for today's malaise was laid in the mid-'60s when Lyndon Johnson significantly expanded the federal government by waging two expensive wars - the War on Poverty and the Vietnam War - while adding new federal entitlements (Medicare and Medicaid). Richard Nixon and Gerald Ford continued the spending binge, with an early casualty being the dollar's gold backing, followed by rampant inflation and rising unemployment that made the 1970s a lost decade economically for many Americans.
The economic stagflation of the 1970s was routed during Reagan's presidency. His supply-side policies revived economic growth. For Stiglitz to claim that only the rich benefited from Reagan's policies is egregiously contra-factual. The poverty rate fell and median incomes and net worth rose. The Reagan recovery (which carried on through the Clinton years with only mild pauses) was a boon to the American people. That being said, the failure of Reagan and the Democratic congress to halt the growth of government and to confine their spending to match government's tax revenue deserve a share of the blame for our sluggish economy today.
Deficit spending took a welcome breather under President Clinton and a Republican House under Newt Gingrich, but the regulatory state continued to expand its growth-restricting reach on the economy. Then, during the economically disastrous presidencies of George W. Bush and Barack Obama, massive spending (much of it in response to the fallout from the government/Fed-engineered housing bubble and subsequent Wall Street bailout) and increasingly active regulatory agendas have diminished economic growth, thus reducing opportunities for the non-rich to make economic progress.
So here we are today, suffering a record-slow post-recession recovery resulting in fewer opportunities for economic advancement for non-rich Americans. Big Government produced an $18-trillion debt that has impelled the Federal Reserve to suppress interest rates, thereby delaying the needed adjustment of ending the fiscal malpractice of government over-spending and distorting capital markets. This, combined with a suffocating regulatory regime that wars against business has put us in the unusual and worrisome situation of businesses closing at a faster rate than new businesses are opening, thereby shrinking employment opportunities.
The cause of the current economic sluggishness that is "hollowing out" the middle class is Big Government. Repeated economic studies, such as the ones I cited in my book cataloging the errors in Thomas Piketty's book on inequality, show the negative correlation between government spending and economic growth. Additional evidence is found in the Heritage Foundation's Index of Economic Freedom, which shows that as Big Government has made our economy less free, growth has slowed.
Joseph Stiglitz's diagnosis is flat-out wrong when he argues that the middle class is declining because the rich are getting richer. That zero-sum view is atavistic mercantilist nonsense. In a free market, transactions are positive sum, so individuals become wealthy in return for economically benefiting others. It is in the political marketplace where transactions are zero-sum - where wealth that benefits some comes at the expense of others. Indeed, we have a lot of that today in the form of bailouts, subsidies, boondoggles, and other forms of cronyism. If Mr. Stiglitz would oppose those growth-sapping cancers, I'd gladly make common cause with him, but for him to blame the rich instead of government for today's problems reflects a partisan and ideological bias rather than objective economic analysis.
Because Stiglitz's diagnosis is wrong, his prescription also is wrong. Raising taxes on the rich won't improve the economic prospects of the non-rich. Shrinking the burden of government will.
As those familiar with my writing know, I was never a fan of erstwhile Federal Reserve Chairman Ben Bernanke. Indeed, while some praised him as "the greatest central banker in U.S. history," I thought otherwise.
In trying to give Bernanke every benefit of the doubt, I have wondered whether some of the pernicious policies he adopted at the Fed were not the result of his own economic convictions, but instead were forced on him by intense political pressures. Surely, I thought, no economist could really believe that creating money produces prosperity or that suppressing the pricing mechanism that coordinates present with future economic activity (i.e., interest rates) is prudent. Alas, it appears I was wrong.
Now that he is a private citizen again, I have wondered whether Bernanke might change his tune. In a word, "no." Recently, an entry from Bernanke's new blog found its way into my inbox. In this blog post, Bernanke dispensed advice to Germany that was unimaginative, unadulterated Keynesian orthodoxy - a flawed theoretical paradigm with a dismal track record. Tragically, the ghost of Keynes still haunts us today.
In writing about Germany's trade situation, Bernanke casts the problem in Keynesian terms, asserting that there is insufficient "aggregate demand" today. According to this view, the problem is that people aren't spending enough on consumption. Shame on them! Therefore, it's up to the government to correct this mistake. Here we see the close similarity between macro-economic policy prescriptions and socialist central plans: In both cases, the elite planners act like puppeteers, trying to pull the strings to make people do what the planners think they should be doing - as if they know better than the people what the people want or should want to consume.
In the macro paradigm that Keynes devised, the micro perspective of acting and choosing individual human beings is lost. For macro strategists to assert that a population is making a collective mistake in how much they demand ignores the fact that all of the individuals comprising the collective are making the right decisions for themselves. Who is Bernanke or any other economist to claim that they aren't spending enough? There are many valid micro-economic explanations for why individuals and businesses limit their spending: Perhaps they simply don't need or want any more of certain products; perhaps they would purchase more if prices were lower; perhaps they are burdened by debt from previous expenditures; perhaps they prefer to save some of their income for future instead of present consumption. Whatever the reason(s), markets will communicate the necessary price information to reshape economic production to align more closely to people's preferences - or at least they will if public officials don't intervene and falsify those signals through fiscal or monetary policy. Those in power do not know how much demand there "should be" in specific markets, and government attempts to "correct" market behavior is counterproductive economic quackery.
In his blog post, Bernanke makes several specific recommendations to Germany:
First, he says that spending more money to improve Germany's transportation infrastructure would "increas[e] domestic income and spending, while also raising employment and wages." Has Bernanke so soon forgotten President Obama's 2009 non-stimulating "stimulus plan," under which a massive increase in infrastructure spending produced no uptick in economic growth and employment? Government spending does not increase wealth, but merely redirects it. Jobs created by government spending are offset by an equal or larger number of jobs that cease to exist or do not get off the launching pad when scarce economic resources are diverted from the private sector to additional public-sector activity (Bastiat's lesson about "the things not seen").
Second, Bernanke writes, "German workers deserve a substantial raise, and the cooperation of government, employers, and unions could give them one." This is a normative statement, a personal opinion, not a specimen of economic analysis. Whether German workers deserve or should get a raise is a matter for markets to determine, not some economist. Surely, Bernanke knows that wages are a price phenomenon and that artificially raising wages above the market-clearing price is a formula for higher unemployment. Do some German workers "deserve" to lose their jobs?
Third, Bernanke recommends that Germany's government facilitate increased spending through targeted "tax incentives for private domestic investment; the removal of barriers to new housing construction; . . . and a review of financial regulations that may bias German banks to invest abroad rather than at home." Here, I see a glimmer of hope that Bernanke is not so completely in thrall to Keynesian mysticism, for he recognizes the importance of incentives to individual economic actors. However, he still has the state's role backward. The first rule of the economics profession should be the same as it is in the medical profession: first do no harm - in other words, before even trying to do something beneficial, make sure you're not doing something harmful. Thus, rather than advocating targeted tax incentives to promote desired actions, the correct recommendation would be to remove existing disincentives (taxes, etc.) that impede investment.
For the rest of this wish list, though, Bernanke is on target when he recommends removing the political shackles that limit and hamstring economic activity. Government intervention - whether in the form of taxes, spending, regulation, or monetary manipulations - warps market signals and thus distorts economic decision-making. What Germany needs, as Bernanke implies in his third recommendation, is less government interference with markets.
The problem, though, is that by viewing the situation through a Keynesian macro-economic lens, Bernanke wants to pick and choose which markets to liberate from stifling government restrictions - there is the puppeteer mentality again. The true path to prosperity is for all markets to be liberated from the quack tinkering of master planners and be allowed to develop freely within the context of the rule of law. Maybe Ben Bernanke will arrive at that conclusion some day. Until then, we can be glad that he isn't in a position of power any longer and that, for the moment at least, we here in the States aren't the target of his flawed Keynesian advice. *
Earlier this month, Federal Communications Commission Chairman Tom Wheeler announced that its five commissioners will conduct a vote on February 26 to decide whether to grant itself the authority to regulate the Internet under Title II of the Communications Act of 1934. It's highly likely the FCC will give itself this new power. Lawsuits are certain to follow. The Wall Street Journal's L. Gordon Crovitz denounced FCC Chairman Wheeler's decision to apply outdated regulations designed to manage the erstwhile Ma Bell telephone monopoly to today's rapidly evolving Internet. He warned that these "reactionary regulations" will mark "the end of the permission-less innovation that built today's Internet."
Mr. Crovitz is correct. Here are some of the far-reaching implications and negative consequences of the FCC's new policy:
Innovation will be squelched. Crovitz' phrase, "permission-less innovation" gets right to the heart of the problem. He notes:
In 2005, the U.S. Supreme Court warned that if the FCC treated the Internet as a telecommunications service, it "would subject to mandatory common carrier regulation all information service providers that use telecommunications as an input to provide information service to the public" - in other words, almost all websites and apps would be subject to regulation.
Chilling. If this were to happen, and it's not unreasonable to suspect that it could if not challenged, the FCC would have a chokehold on entrepreneurial innovation and technical creativity. Even if the FCC consisted of nonpartisan experts (which it doesn't and probably never will) the entrepreneurial process of creative destruction would be diminished. The problem with experts sitting in judgment and deciding which breakthroughs and entrepreneurial visions will be given the green light is that experts are only experts about the past, while entrepreneurs are the ones who invent the future. Today's "experts" are spectacularly unqualified to sit in judgment about how the future should evolve. To believe otherwise is to fall for the oft-discredited myth of government economic planning.
2) Cronyism and special interest politics will be strengthened. By adopting the highly subjective language banning "practices" that the FCC decides are "unjust or unreasonable," the FCC is inviting lawsuits from large corporations with deep pockets designed to cripple less-well-capitalized newcomers. Thus, the FCC continues the current president's pattern of favoring large entrenched corporations (e.g., the ACA and Dodd-Frank Act - see Timothy Carney's 2009 book, Obamanomics). In addition to favoring established big businesses, the new regulations create yet another government make-work program for lawyers.
3) Consumers will pay more. Government regulatory control almost invariably makes things more expensive by raising prices higher than free-market prices. This happened with trucking under the Interstate Commerce Commission, airlines under the Civil Aeronautics Board, and long distance telephony under this very same FCC. In fact, this new FCC rule will encourage and empower existing businesses that are falling behind to petition the FCC to hamstring and even shut down emerging competitors that are outperforming them. This is exactly how antitrust law has been abused throughout our history - penalizing efficient competitors to protect inefficient competitors at considerable cost to the American consumer.
4) The constitution will be weakened. The FCC's action is another step away from the hallowed principle of representative government and toward bureaucratic tyranny. It is simply the latest in a long series of executive branch usurpations of Congress' constitutionally mandated legislative prerogative. For a few unelected political appointees to break decades of precedent and unilaterally decide to regulate the Internet is abhorrent - especially since, once the process gets underway, these same unelected officials will act as judge, jury and executioner in the cases that come before them. Chairman Wheeler is trying to reassure us by promising to "forbear" from actually exercising full regulatory power, but of course, he is vague about what powers he and his colleagues wouldn't exercise. Once the sought-after powers have been conceded to the FCC, they will have vast discretionary and arbitrary powers.
5) Free speech will be compromised. The First Amendment itself would be at risk under this new FCC regime. If you think that the IRS discrimination against conservative tax-exempt organizations was offensive, imagine what the FCC could do to stifle communication by not approving select websites. If you need government permission to disseminate ideas, speech can hardly be said to be free.
Congress needs to wake up and decisively halt this unwarranted expansion of executive branch power. In previous cases of bureaucratic overreach (IRS, NLRB, NSA, etc.) some members of Congress have made lots of noise, but the consequences to the perpetrators have been pathetically weak. It's time to move beyond giving indignant speeches and an occasional slap on the wrist. Why not abolish the FCC, update federal communication law, and then let individual cases be litigated in common law courts?
The junior senator from Massachusetts, Elizabeth Warren, gets a lot of mileage from proclaiming that "the system" is rigged against the middle class. While not completely accurate - upward mobility is still attainable, as millions of Americans have proved and are proving - it is true that other millions of Americans are encountering more obstacles and headwinds on the path to increased prosperity than ever before.
Here is a far-from-complete list of those obstacles:
1) According to Edward P. Lazear in The Wall Street Journal, the Affordable Care Act has lowered incomes in at least two significant ways: first, the individuals whose hours have been cut by employers to avoid incurring ACA-related costs; second, by reducing employment in the health care industry itself.
2) Like the ACA, the Dodd-Frank Act (which happens to have been Sen. Warren's brainchild) has reduced employment in its target industry, finance. Many smaller financial institutions have folded while multibillion-dollar Wall Street firms have received bailout guarantees (talk about rigging the system - shame on you, Ms. Warren!).
3) The pace of new regulations promulgated by Team Obama has reached all-time highs - 468,500 total new pages in the Federal Register so far during this presidency with an annual cost nearing $2 trillion. The costs of complying with Dodd-Frank alone could eventually add over $1,000 to the cost of living of the typical American worker, according to Robert Genetski, writing in Investor's Business Daily, Dec. 12, 2014. Due to the costs imposed by Dodd-Frank along with other taxes and regulations, more businesses are closing than opening, resulting in fewer employment opportunities.
4) The Obama Administration, egged on by the green lobby, has blocked approval for such privately funded projects as the Keystone XL and a dozen other pipeline projects (even though pipelines are more environmentally friendly than transporting oil by railroad or trucks).
5) Government spending has remained at elevated levels even though the crisis cited as justification for increased spending subsided long ago. One of the clearest macroeconomic relationships is the inverse correlation between government spending as a percentage of GDP and the rate of economic growth. Much of this elevated spending under Obama is for corporate welfare and cronyism, whether guaranteeing bailouts to big banks under Dodd-Frank and to health insurance companies under ACA, channeling subsidies to Boeing, GE, and Caterpillar via the Export-Import Bank, or bestowing taxpayer-funded largess upon green boondoggles.
6) Another economically crucial relationship is the positive correlation between economic freedom and economic growth. According to the annual Index of Economic Freedom co-published by The Wall Street Journal and The Heritage Foundation, 2014 was the first time in eight years that economic freedom did not decrease in the United States.
7) Another key factor that contributes to robust economic activity and job growth is private investment. Economist Stephen Moore and former Senator John Kyl reported (WSJ, Oct. 29, 2014, p. A17) that Team Obama has raised taxes on capital gains and dividends while private investment is a lower percentage of GDP compared to the 1980s (9 percent vs. 12 percent) when taxes on investment were cut.
8) Various government efforts to "help" workers - from increases in the minimum wage law to government "stimulus" and jobs programs - have contributed to the dramatically falling labor participation rate in recent years.
9) The Federal Reserve's bizarre policies of penalizing savers through its six-year-old zero interest rate policy while working to decrease the purchasing power of the dollar (for which the recent dollar rally is providing temporary relief) have been insidiously undermining middle class Americans' standard of living.
So, what is the common thread running through all these impediments to economic advancement? They all have been foisted on the backs of the American middle class by government and its partner in mischief, the Federal Reserve. This is where Senator Warren has it all wrong. Government is the problem, yet Warren argues that more government power is the solution to the middle class's economic woes. This is sheer quackery - a classic case of wanting to put the foxes in charge of the henhouse.
President Obama has an ideological antipathy for the middle class. Whether Sen. Warren shares that antipathy or is simply economically ignorant, I can't say, but clearly she hasn't come to the understanding that only a system in which the government doesn't have the power to rig economic outcomes - in other words, free-market capitalism - has the vitality and flexibility to generate the rapid economic growth that produces widespread prosperity. Perhaps she should read the book Problems with Piketty in which the author (yours truly) differentiates between systems like feudalism, mercantilism, and socialism - systems in which political elites rig the rules to enrich themselves at the expense of everyone else - with capitalism, in which the system is "rigged" so that the way to get rich is by creating wealth for others instead of draining wealth from them.
I share Elizabeth Warren's (professed) concern for the middle class, but the kinds of progressive government intervention she favors are poison, not medicine, for the economic prospects of the middle class.
When the Eagles came out with their mega-hit "Hotel California" almost 40 years ago, I'm sure they never dreamt that their words would capture the essence of the economic and political nightmare that the nations of the European Union (EU) would be suffering through in 2015. For decades, Eagles fans have debated what those haunting lyrics really meant. What follows is one interpretation:
"This could be heaven and this could be hell." (Eagles, "Hotel California")
In agreeing to join the EU, the political majorities in various European nation-states entertained optimistic visions of economic gain - not actually "heaven," but definitely a significant improvement. They viewed greater economic integration as a means to increased prosperity through free trade, free migration, and perhaps even some transfer of wealth to help a country out during a time of need.
Alas, human nature being what it is, people proved far more interested in the benefits they could reap from membership in the EU than in doing the hard work of discharging their own treaty-defined responsibilities, such as balancing their budgets, so that the union would work like its architects had intended. Heavenly hopes have turned out to be hellish realities. Instead of flourishing via positive-sum, mutually beneficial cooperation, the EU has degenerated into a negative-sum squabble in which irresponsible governments have egregiously failed to honor their promises of fiscal discipline, thereby jeopardizing the financial stability throughout the EU. Far from keeping government budget deficits within specified limits (as they had promised) spendthrift governments have generated massive debts that have necessitated bailouts to avert defaults that would devastate the entire Union.
"We are all just prisoners here of our own device." ("Hotel California")
Greece and the other EU countries have been learning the hard way that democracy is like a Venus flytrap. Its allurements draw you in, then the trap door slams shut and it devours you. In the case of the EU democracies, though, the damage is self-inflicted. The Europeans themselves devised the very political systems that are now doing them in.
Our Founding Fathers clearly understood the self-destructive dynamics of democracy: Citizens, seduced by the attraction of getting the proverbial free lunch, vote for politicians promising to confer financial favors upon them; politicians, in turn, quickly learn that the way to electoral success is to feed the appetite of voters for increased government benefits. The problem is that this appetite is insatiable, and so, in the symbiotic relationship that exists between voters and elected officials in a democracy, government spending inexorably increases. The expedient of deficit financing inevitably is resorted to and debt accumulates. Eventually, the ability to make good on all the promises hits the inevitable wall of economic reality in which the government lacks access to sufficient funds to pay for all its programs and debt service expenses. Creditors worry that the government will default on its debt and start dumping bonds. Then arises the grim prospect of a catastrophic chain reaction of debt defaults and bankruptcies.
What options does a democratic government have for raising sufficient revenues to honor its financial obligations? The democratic system that seemed so attractive when it was set up has morphed into a prison that has trapped citizens and politicians in an unsolvable dilemma. On the one hand, there is a limit to how much it can cut spending before angry, frightened citizens vote incumbents out of office. In other words, politicians who dare to do what is economically necessary find that it is politically suicidal, and so they balk. On the other hand, there is a limit to how much the government can raise tax rates before so many businesses and individuals are crushed, ruined, or go underground, thereby shrinking rather than boosting tax revenues. Yet interest on the debt must be paid somehow. Where are the needed funds to come from when fiscal policy has become useless due to the democratic fiscal stalemate?
It turns out that the powers that be have an ace up their sleeve - a fairy godmother who can magically postpone disaster. This, of course, is the international and supranational monetary and political establishment - additional creatures of democracies' own device. In the case of the EU's current crisis, we are talking about the so-called "troika" - the European Central Bank, the EU, and the International Monetary Fund. These multilateral institutions are not subject to the normal strictures of democracy; they aren't accountable at the ballot box to the people whose lives they affect. They were conceived and brought into existence by national governments that gave them immense power to make momentous unilateral, autocratic decisions. ECB chief Mario Draghi's recently announced trillion-euro "quantitative easing" program (hardly a surprise, given the ECB's other trillion-euro bailouts over the last five years) is designed to stave off default and prop up Europe's moribund financial system despite Greece's essential bankruptcy and lack of economic viability. In the short run, it may appear that the troika has saved the day, but in the long run, when additional trillion-euro bailouts are launched to try to paper over the fiscal crackup of other European democracies, and the euro currency becomes a cruel joke, Europeans will rue the day that government officials created such powerful, unaccountable entities.
"They stab it with their steely knives, but they just can't kill the beast." ("Hotel California")
In the current Greece/EU drama, there are two beasts that cannot be slain despite impassioned mental knife thrusts. One is, from the perspective of non-Greeks, the apparent unwillingness of the Greeks to mend their ways and get their financial and fiscal affairs in order. The other, from the Greek perspective, is the gang of foreigners who are seen as oppressing the Greek people and attempt to undermine Greek sovereignty - the troika and some of the other European governments, most prominently Germany.
Greece's foreign creditors understandably want to be repaid. They view the Greeks as recalcitrant, irresponsible, and dishonorable. "This crisis would dissipate if the Greeks would just pay their bills." The problem here is expressed in that old clich about not being able to squeeze blood from a turnip. At this point, with the electoral victory of the Syriza coalition under new Prime Minister Alexis Tsipras, Greece's voters have shown that they aren't going to tolerate any more of the austerity that foreign creditors have demanded and that the outgoing government imposed.
Undoubtedly and undeniably, the Greeks are going to have to learn how to live within their means and figure out how to keep government from squashing the private sector. However, one should be able to understand the Greeks' current desperation, if not have a smidgen of compassion for them. The outgoing government did cut spending significantly (although it failed to accomplish a much-needed significant downsizing of the bloated and expensive government bureaucracies). Government spending in Greece fell from about 124 billion euros in 2009 to approximately 90 billion in 2014.
Despite this notable decrease, government spending as a share of Greece's GDP actually increased over the same time period from 46.8 percent in 2007 to 59 percent by 2013. This horrific statistic means that the private sector is contracting at an even faster rate than the public sector. Indeed, household income in Greece has fallen an estimated 40 percent since the crisis began, unemployment among young Greeks has soared to 64 percent, and the health care system is near collapse (with relatives often having to take care of hospital patients due to the shortage of nurses). The Greeks will find some way to survive. They aren't going to kill themselves no matter how hard and insistently their creditors pressure them.
Just as foreign creditors can't "kill" the problem of the Greeks' present inability to pay what they owe, neither are the Greeks going to kill off the ECB, the EU, or the ever-troublesome (whether to Greece or the U.S.) IMF. Still, given the magnitude of the economic catastrophe that the Greeks are suffering, the Greeks' anger with the troika, Germany, et al., is understandable. No wonder they made a statement at the polls: "Enough! It's time for a change. Go to hell, you foreign bullies!"
Whatever changes the Greeks eventually make (and they certainly need to be major fundamental changes) it is unrealistic and inhuman for non-Greek creditors to insist that the Greeks take larger doses of their current misery. The IMF's demand that the Greek government raise taxes on an impoverished prostrate populace is unconscionable. Indeed, while the Greeks themselves must bear responsibility for the myriad policy errors that have prevented its private sector from experiencing healthy growth, the IMF's "jack up the tax rate" policy is the most counterproductive, destructive policy of all.
"You can check out any time you like, but you can never leave." ("Hotel California")
Greece may in fact check out or get kicked out of the EU at any time, but it can never leave Europe nor escape its economic problems by exiting the EU. The Greeks will still need to make profound, far-reaching, fundamental changes to correct their multiple economic dysfunctions. They still need to figure out how to enable a productive private economy to emerge. They will still have to learn how to live within their means and to rid themselves of the government disease that has consumed their economic substance. They will still have to learn how to depend on free markets instead of Big Government to supply their needs. They will still need to learn to respect each other's property rights and refrain from using government to redistribute wealth. They will still have to kick their addiction to debt and learn to live within their means. They will still have to figure out what goods and services to produce and provide for commerce with their fellow Europeans and other non-Greeks. They will still have to learn how to manage their fiscal affairs sufficiently well to earn the trust of lenders if they are to have access to credit markets going forward.
Even if Greece leaves the EU, the remaining EU countries will still be stuck in the same EU version of Hotel California. Many other EU countries have the same problems that have bankrupted Greece, though not to such an advanced degree - yet. Several of them are in danger of replicating the Greek democracy's slide into bankruptcy and insolvency. Not one of the countries whose government debt problems were considered worrisome five years ago (specifically, the PIIGS - Portugal, Ireland, Italy, Greece, and Spain) has managed to reduce its debt-to-GDP ratio since then. While Greece's debt-to-GDP ratio rose from 129.7 percent in 2010 to 174.9 percent in 2014, over the same time frame, Portugal's rose from 83.7 to 129, Ireland's from 64.4 to 123.3, Italy's from 116.4 to 132.6, and Spain's from 54 to 92.1.
In fact, despite French President Hollande's plaintive cry, "Europe cannot continue to be identified by austerity," the reality is that cannibalistic democratic governments throughout Europe have continued to grow at the expense of the private sector. For the EU as a whole, government spending hit 49 percent of GDP in 2013, up from 45.5 percent in 2007. Only four of the 28 countries in the EU saw government spending as a percentage of GDP fall from pre-crisis levels through 2013 - Bulgaria, Romania, Lithuania, and Poland (countries that nobody ever suggests pose a threat to the viability to the EU) - while the other 24 countries have seen government grow faster than the private sector.
In addition to the official debt of the non-Greek PIIGS having risen over the past five years, so have their unfunded future liabilities. Those liabilities range in size from two-and-a-half to five times the amount of their explicit debt in those countries. (The same predicament exists in Germany, France, the U.K., and, yes, the U.S. None of these democracies will ever be able to honor all these obligations. Some of these liabilities, this negative wealth, will have to be vaporized, either by explicit defaults or through the maneuver of currency depreciation. There are going to be a lot of unhappy residents when they find that they can't leave the nightmare of their countries' political Hotel California.
The fact is that even if Greece leaves the EU, most Europeans will still be stuck with a Frankenstein currency; they will still be subject to the monetary quackery of the ECB as it mirrors the Federal Reserve's bizarro world; they will still have the machinations of EU bureaucrats pulling whatever levers they can to strengthen the EU and protect their generously compensated jobs; they will still have to contend with pests that have a more global reach, like the IMF. The people of Europe and their sovereign governments won't be able to leave the EU's dream-turned-nightmare Hotel California until they wake up from the spell that they are under. They will need to repent of, repudiate, and reject Big Government, democratic welfare states, debt addiction, a currency based on nothing, and a host of other economic errors. I doubt that this awakening will come before the ECB creates trillions more euros, destroying it in the vain attempt to avert an eventual catastrophic implosion of the European sovereign debt bubble, crackup of the EU, and tragic economic pain shared by millions of Europeans.
Last weekend, I had a real treat. My first college roommate visited us. We hadn't seen each other in three years.
While sitting in the gazebo on a perfect spring morning, we did what old friends do: We engaged in relaxed, desultory conversation punctuated with blissful intervals in which nothing needed to be said, and we simply enjoyed each other's presence. The conversation ranged from the past to the present, from the profound to the trivial, and from the personal to the universal.
At one point, out of the blue, I asked Steve, "Do you know who Kim Kardashian is?" I asked because I don't know. I mean, I've seen dozens of headlines about her online - Kim gets married, Kim gets unmarried, Kim dates so-and-so, Kim gets pregnant, etc., but what does she do, other than be famous? I haven't cared enough to Google her and find out. Steve didn't know who she is either.
Actually, I was one step ahead of Steve. I've seen her photo enough to know what she looks like. She is young, curvaceous, and has some nice features, so I conclude that she is known for her physical beauty. The phenomenon still puzzles me, though. There are many, many physically beautiful young people in America. Ms. Kardashian must have the country's best publicity agent to have created such visible celebrity out of so little substance. "The Marketing of Kim Kardashian" should make a classic business school case study.
Within minutes of our passing mention of Ms. K, Steve checked his iPhone messages while I read the previous day's USA Today. On page one, I read the story of Ronny "Tony" Porta, an ex-Marine who lost his arm and whose face had been badly burned by an IED explosion in Iraq. Immature kids mock and taunt Tony for his disfigurement.
What a heart-rending story. Here's a man who suffered greatly for his service to his country, and instead of compassion, gratitude, and appreciation, he is the object of scorn and derision. And yet, in reading the story, I see an inner beauty in Tony - an honesty, a sensitivity, a strong and gentle man.
Speaking to the reporter who interviewed him, Tony asked, "Who will love me now?" That gets right to the nub of his great longing. I immediately thought, "I do, Tony, and so does my wife, my friend Steve, and a ton of other Americans you don't know." Of course, that's not Tony's primary need. Like any other young man, Tony desires acceptance, and hopes to receive the love of a partner.
Does Tony have any chance of finding the happiness of that one special companion? Indeed, the odds are long. I know from my own development over the decades and what I have observed from others that one's desire for physical beauty generally exceeds one's appreciation for inner beauty at least during the first four or five decades of life (permanently, in some cases). But it surely isn't impossible.
Tony can take heart from another story I encountered over the weekend. A friend had sent me the viral email with 22 photos depicting the love story of Taylor Morris, the young man who lost all four limbs from a bomb blast in Afghanistan, and his girlfriend, Danielle Kelly. Danielle has continued to love Taylor in spite of the radical change in his physical appearance. She has that admirable ability to look beyond the surface appearance and see the same wonderful man she had known since her junior high school days. Only 24 years old, Danielle is wise beyond her years. She sees not just with her eyes, but also with her heart. She sees beyond the transient physical beauty that lasts but a few years or decades to the abiding beauty of character and qualities that transcend and outlast mere physicality. Isn't it great to know that there are people like that out there?
And while we are talking about beauty, let me salute another beautiful person about whom I learned in the same section of the newspaper in which I learned about Tony Porta: Heather Abbott. Heather's foot was severely injured by the second bomb at the Boston Marathon. She explained to the reporter that she decided to have her leg amputated below her knee so that she could get a prosthetic device and resume normal activities rather than endure years of disability with a mangled foot. What really impressed me was her buoyancy and constructive attitude. She said she isn't thinking about the bomber, but focusing all her attention on making the best of her own life. What a gem! If I were the dad of this positive, wise, and sunny young woman, I'd be bursting with joy. Even with her being a total stranger to me, I can't help but think, "Oh, yeah, this wonderful person gets it, and what a blessing she will be to those who are close to her."
Writing about economics and politics isn't always a happy task. It was a real treat to take this detour to appreciate the inner beauty of young Americans like Tony Porta, Taylor Morris, Danielle Kelly, and Heather Abbott. These beautiful people help to make the United States the amazing country that it is. *