Thatcher's 80th Birthday

They celebrated the 80th birthday last night of
Margaret Thatcher, the other half
of the tag team of Reagan and Thatcher. She was a scholarship girl, daughter of the corner
grocer who went to Cambridge University and then into national politics.

Her great life achievement was to turn Britain away from the disastrous expert-led death
spiral of the 1970s when the economy was utterly devastated by political power and rent-seeking,
all in the name of social progress and compassion.

Now she is 80 and we all live in the afterglow of her hard-won achievements. The success of the
New Labour Blair government is based on the continuing good economic growth that was founded
in the hard years of 1979-1984.

But the hard truth is that, while the British Conservative Party solved the economic problem of
productivity in the private sector the British Labour Party under Tony Blair has failed to solve
the economic problem of productivity in the public sector. And that is too bad for the British people.

It is said that you only get strong leaders when you need them. At least, the Anglosphere seems to
throw up strong leaders in a time of need. The British certainly got their strong leader
when they needed one in Margaret Thatcher, and just in the nick
of time.

Bush's Plan on Track in Iraq

For about a couple of years now Democrats have pushed the line that the Bush administration
had no plan for Iraq. It sent the US armed forces into Baghdad and then and then stood around
wondering, Now what do we do?

The Bush plan was, and is, to replace the terror regime of Saddam Hussein with some sort of
consensual regime. The plan was to replace one-man rule with Iraqi rule. It was to replace the politics
of the gun with the politics of the negotiation.

So with two major Sunni parties signing onto the proposed Iraq constitution things are looking up
for the election Saturday October 15 in which the Iraqi people get to approve the constitution that
was drafted for them. You could say that Bush’s plan is working.

And as James S. Robbins observes, the Al Qaeda chaps are facing a bit of a problem
with their executioner public face. They are wondering whether they need to tone it down a bit.

With the Iraqi army growing in strengh and the constitution approved, what will the pessimists
hang their hats on next?

We Don't Need No Stinkin' Reforms

What does the recent German election mean, in which the two main parties, the SPD and the CDU/CSU basically
ended in a dead heat?
Anatole Kaletsky reckons it means that the three great nations of Europe, Germany, France,
and Italy, are checking out. First in France with the rejection of the EU constitution and now
with the German rejection of reform, the Europeans are saying that they don’t want any stinking
reforms. They just want to go on as they are. According to

Wolfgang Münchau, a German commentator in the Financial Times: “The
German electorate has launched a new era in European economic policy — the post-reform era.
After ten years of
economic reforms, the Germans decided they had had enough.”

I know, I know. What planet are these Germans on? What reforms? From this side of the Atlantic
there is no sense that the German government has been enacting bold reforms. What they have been
doing is avoiding reform, talking about the noble European “Social Model” and making rude
remarks about the Anglo-Saxon economic model. (By the way, where do the Irish with their world-beating
Celtic Model fit in all this?)

Well, it’s a shame. For all their rascally behavior over the centuries, we owe a lot to the French
and the Germans. Montesquieu taught us how to write our constitution, and the Germans invented the
research university. And Hitler thoughtfully ripped the brain out of Germany and sent it over here.

But still, it’s a shame.

Low US Savings: Is It a Problem?

One of the concerns of enlightened elite opinion recently has been a worry over the lagging US savings
rate. Compared against any nation you like, the US savings rate comes in at the bottom. But like
the balance of payments problem, another worry of concerned elitists, the question is: Is “the problem” a problem?

The balance of payments is always in balance, wrote Ludwig von Mises half a century ago. He meant
that if the US runs a balance of payments deficit in, say, merchandise, it merely reflected the
choice of millions of consumers and thousands of producers. It means that Americans want to buy goods, and foreigners want
to hold American paper: dollars, debt, and equity.

In NRO, John Tamny weighs into The Wall Street Journal’s
David Wessel for worrying about
the savings deficit, that we need to wean ourselves from “from growing dependence on the savings of Asians and Europeans,”
and that the US “consumes more than it makes.”

The problem with this received elite opinion is that is flies in the face of some awkward facts. If
we are dangerously dependent on foreign capital, why are interest rates so low? And if low savings
is such a problem, why does US national wealth keep going up?

The answer is that the US does not have to save because our economy generates wealth.

[Data] last month from the Federal Reserve show that U.S. household net worth hit a
record of $49.8 trillion, up roughly $5 trillion in the last year alone. Notably, those gains
were split
almost equally between residential real estate and financial assets.

High savings rate is an indication that the economy is not throwing off the increase in wealth that
people need to provide for the future.

the best way to boost the savings rate would be for both the housing and stock
markets to collapse. Americans experienced just such a thing in the early 1980s when stocks
were still mired in a multi-year slump and home prices were crashing. Amidst those capital
losses, the savings rate unsurprisingly reached double digits.

To put it bluntly, Americans save when the economy is in the tank.

The bigger question is: Why do foreigners want to put their money into American debt with its
low returns? Why aren’t there better risk-reward propositions out there?

Who Lost Delphi?

On October 8, 2005,
Delphi, the auto parts supplier, became
the largest US manufacturer to file Chapter 11 bankruptcy proceedings. Delphi is
the parts division
that General Motors spun off a few years ago.

The bankruptcy of Delphi will have serious consequences even if it survives. It will no doubt eliminate
shareholders’ equity. It will severely cut workers’ wages and benefits. It will likely throw the
company’s pension plan into the hands of the federal pension insurance system, resulting in
major cuts in retiree pensions.

And, of course, there is the potential for a disruption in parts supplies to U.S. automakers.

Delphi is under criticism for awarding bonuses to its top executives before announcing bankruptcy. But
CEO Steve Miller defends his actions saying

it was the only way to keep talented management needed to complete the restructuring.

"We pay hourly workers three times the market rate; salaried staff are paid
a market rate and execs are paid below market," said Mr Miller.

So who lost Delphi? Was it greedy management asleep at the switch? Was it greedy unions that
negotiated unsustainable wages and benefits by using their muscle power to intimidate the auto manufacturers?
Is it the fault of foreign automakers competing with slave or sweated labor? Is it the fault of
Congress that has given the labor unions monopoly powers that would never have been given to a corporation?
Is it the fault of labor activists that have polished the image of labor unions over the years?
Is it the fault of workers who insisted that their union leaders negotiate for wages and benefits
that could never be sustained over the long term?

Or is it just the way of the world? Corporations are born, they grow and prosper, spinning out products
to consumers and income to stakeholders. And then they grow old and die.

So which is it?

The New Tory Prince

As the song goes, “I been down so long that down don’t worry me.” That
is what the British Conservative Party has been singing after three successive
defeats at the polls. But in last week’s party conference a new star was born singing a new
song: David Cameron,
who electrified the Tory Party with the best speech of the week.

In this opinion article in The Daily Telegraph
Cameron
attempts to advance his campaign to be party leader in Parliament, and hopefully Prime Minister at
the next general election.

Happy Columbus Day

How should we celebrate Columbus Day? As a celebration of western European values and expansion?
Or as a shameful conquest of noble savages that lived in harmony with nature?

Edward Hudgins celebrates the ordinary people that came out from Europe to America.
It may have been that the stout Cortez and his ilk enslaved the Meso and South Americans. But
in North America, the conquerors were workers who came to carve a new life out of the wilderness.

They had to clear the land, plant and sow crops. They had to practice
the trades of carpenters, masons, loggers, miners, blacksmiths and tailors to build
their towns and to create the necessities for life and prosperity. In the centuries that
followed, their descendants -- including Americans today -- built the richest, most prosperous
country on Earth.

Instapundit, on the other hand celebrates the change that Columbus’s discoveries
had on the Europeans back in Europe. Quoting Samual Eliot Morison:

"A new envisagement of the world has begun, and men are no longer sighing after
the imaginary golden age that lay in the distant past, but speculating
as to the golden age that might possibly lie in the oncoming future."

In all this celebration though, we should remember those swept away in the triumphant European
expansion as its adventurers spread out across the oceans
and the continents of the world, trading, dominating, killing,
and ruling. The victims. It ain’t fun when your world gets turned upside down by strangers that
suddenly appear over the horizon.

We like to present history as a triumphant narrative of progress from darkness to light, from
simplicity to sophistication, from cruelty to compassion. Others like to present it as a
death spiral of evil and despair.

But the big question is: What does it all mean?