Two Americas Updated

Sometimes you learn more from losing than from winning. Lessons learned, and all that.

And victory is oftern sown in the furrows of defeat. Ronald Reagan first emerged onto the national stage in the disastrous year of 1964.

So in a year that will probably go down as one of the worst Republican years ever, with a perfect storm of a financial crisis, war weariness, and 8 year fatigue, You can see the Republican future starting to take shape.

And yes, Virginia, there are Two Americas. There is Credentialed America and then there is Aspirational America.

Credentialed America is the world of our liberal friends. You get your credentials and that sets you up for life in tenuered work that can never be taken away. It may be that you get, on the top end, a Harvard law degree. Clearly you are marked out for the top jobs in everything, not excluding the presidency of the United States. Or you might be a dental technician. You go to school, get your credential, and work away in a safe job forever.

There’s an inverted credential culture too; it centers on the accredited victim. Yes, if you can be certified as a victim, from discrimination or disability, then you too can have an income for life.

Then there is Aspirational America.

The Republican Party has always been the party for aspiration, but recently it has forgotten this. Not any more. The explosion onto the national stage of Gov. Sarah Palin, (R-AK) has put paid to that. And if you didn’t get the message, Joe the Plumber makes it perfectly clear. There are millions of Americans out there who aspire to something. They want to live better, achieve more, and contribute more. They don’t just want to “get theirs.” They want to excel.

This type of American was profiled years ago in The Millionaire Next Door by Thomas J. Stanley and William D. Danko, two academicians who decided to write a best-seller. The millionaire of the book was a risk-taking businessman who maybe owned a couple of dry-cleaning establishments. He didn’t live high on the hog. Instead he saved his money, living in a modest part of town and driving a nothing automobile. He probably started out like Joe the Plumber.

What about the millionaire’s children? Good point. He sends his kids to college so that they’ll get credentials. The thing about a college degree is that it is is low-risk option. You pay your money, you go through the motions, get your credential, and you can get a well-paying job, a job without the downside risk of starting a business.

I’ve never been much of a risk-taker, but I’ve always honored those who are. And I’d hate it if the Republican Party ever turned its face away from aspirational risk-takers like Sarah Palin and Joe the Plumber.

Good News on the Economy!

Yes, I know that it’s the end of civilization as we know it. But there are some portents out there telling us something different.

First of all there’s Libor. That’s the London Interbank Rate, the interest rate that banks charge each other on interbank loans. Remember, the big problem in the current crisis is that banks are afraid to loan money to each other. Well, here’s the trend in in Libor and longer term interbank rates in recent days from Bloomberg.

10/17/08 10/20/08 10/21/08 1-month 4.18% 3.75% 3.53% 3-month 4.42% 4.06% 3.83% 5-yr Bank 6.36% 6.35% 5.84%

So that’s all right. The Libor rates are dropping like a stone.

Then there’s the news from the housing market in Southern California. Home sales were up in September by a record 65 percent. Daniel Taub from Bloomberg reports.

Southern California home sales rose 65 percent in September, the biggest year-over-year increase in at least two decades, as buyers took advantage of foreclosures to purchase properties at discounted prices, MDA DataQuick said.

Why is this important? Let’s hear from Ludwig von Mises, conservative economist and RMC Chappie. He wrote that a recession is the period of liquidation of the malinvestments of the previous boom.

But when the liquidation ends, then it’s time to start a new economic expansion. So the quicker the liquidation proceeds the sooner we’ll get to the other side.

Things are really looking up. Why, the economy may turn around and start expanding by January 20, 2009 when President Obama takes office. And then he can take the credit for the improved economy. It will happen on his watch, right?

The Welfare State's Freeloader Problem

Here in Washington State we are voting this fall on Initiative 1029. It would require home-help workers looking after seniors to attend training and get certified.

You can see why. If the state kicks in money to pay for home-help workers then it wants the money to be a little more than pocket money for a patient’s relatives. So they have decided that it’s time to put up a few hoops and make home help workers jump through them before they get their hands on the government’s cash.

It’s the Freeloader problem, the bugaboo of every human community. How do you get people to contribute to society rather than game the system?

In Hawaii they are having to cancel their noble universal child health-care program because of the freeloaders.

"People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don’t believe that was the intent of the program."

Well, of course they did. And that’s the problem with every government program that’s cranking out a nice little subsidy to some vote-heavy special interest. Why put out for health care, for housing, for savings, for anything if you can get it from the government for free?

No doubt it’s a wonderful thing to spend our tax dollars helping families look after their aged parents. But the problem is that when the government kicks in some cash a lot of people respond by taking the money and spending their own money on something else. Fast reverse to the SCHIP poster boy last year whose parents sent him to private school but couldn’t afford health insurance.

And, of course, because this is a government program we are not talking about a nice friendly community effort to help some needy seniors or needy families. We are talking about a compulsory government program that takes your money and spends it on stuff whether you like it or not.

Yes There is Room at the Inn

The post-WWII American conservative movement started out as an elite movement, with crusty old thinkers, neo-Tories, and the rich-bitch Bill Buckley fusing with European intellectuals pitched out of Europe by Nazism.

But then a funny thing happened. Ordinary people started asking to join. In the Seventies it was the pro-lifers. In the eighties it was the Reagan Democrats. Now it’s the aspirational working class. It’s the Alaska fisherman and the Ohio plumber at the door today.

Every time a new group has asked to join there has been something of a tussle in the conservative movement because conservatives, like any group, have people worried about lowering the tone of the neighborhood. In the Seventies and Eighties it was the conflict between the blue-blood Rockefeller Republicans and the blue-collar Reagan Republicans. In the early Nineties it was between Christian conservatives and more secular conservatives. Now that the Palins and Plumbers are joining, we are seeing once again the more sensitive sort, the Christopher Buckleys and the Peggy Noonans, getting nervous about conservative real-estate values.

We should all hope that the latest generation of Nervous Nellies stays within the big Republican tent to extend a friendly welcome to the newcomers. The record is that each new group that has knocked on the door of the conservative inn has been welcomed in. And each addition has revived and broadened the conservative family.

Let’s not be afraid of the new rough diamonds on the conservative table. We old-timers could do with a bit of the sparkle they bring, and they are doubtless eager to acquire a bit of polish.

There’s an article in the Wall Street Journal today that says that the rich are for McCain and the super-rich are for Obama. You’d expect that. The newly rich are still aspirational; the super-rich are worried about the challenge from below. And there’s nothing like a nice little tax increase to slow down the ascent of the nouveaux riches.

I’ll pitch my tent with aspirational Americans. They are the people that make the country work.

Liberals and Joe the Plumber

My liberal friends like to put it this way: “Why is America anti-intellectual?” It’s true, America has always been a can-do nation, inclined to act first and think second.

But the question can be put the reverse way. Why do liberals sneer at ambitious ordinary people like Joe the Plumber? Why do they brush them off, as Sen. Barack Obama brushed off Joe the Plumber, and tell them to get with the program of sharing the wealth?

It’s not just Joe the Plumber who liberals sneer at. There’s Todd the fisherman, Sarah the small-town mayor, Ronnie the son of the town drunk, Margaret the grocer’s daughter.

What is wrong with people who have worked their way up from modest beginnings? Patronizing Joe the Plumber doesn’t make sense to a conservative or a Republican. But it makes a lot of sense to a liberal Democrat.

Liberals occupy the commanding heights of politics and education and culture. They have also co-opted many of the leading lights of busines. Think Bill Gates and Warren Buffett. When you are up, as liberals are up, there is only one way left, and that is down. When you and yours occupy comfortable sinecures in the academy, in journalism, in the non-profit sector—a sinecure earned usually by academic brilliance—you look upon the simple ambition of Joe the Plumber as a threat. If Joe builds himself a business and acquires a small fortune then he may come, one day, to challenge the comfortable liberals sitting in the warm afternoon sunshine on the commanding heights. The raw energy of the Joes is unsettling.

Much better to keep the Joes down and prevent them from rising and challenging the powers-that-be.

And that goes for the Todds and the Sarahs too.

Could Republicans Reverse the Ratchet?

Go ahead America, some Republicans argue. Vote for Obama. Then when you suffer buyer’s remorse we can reverse the lefty follies of an Obama administration.

But can we reverse the follies? Writes Mona Charen:

[T]here is a one-way ratchet in public policy. Liberal reforms are never undone. How hard have conservatives tried to eliminate the Department of Education or subsidies to public television? Would they have more success uncreating a new nationalized health care system?

Why is that? Why can’t we make Social Security into a genuine savings program? And why does Medicare keep growing and growing?

The short answer is: women. To women, you can’t have enough security. You can’t have enough health care. You can’t have enough education. That’s where the ratchet comes from.

This doesn’t just come from liberal politics. It comes from our nearest relative, the chimpanzee. In chimpanzee society, according to Nicholas Wade in Before the Dawn, the males engage in border wars and defense of territory. The females utilize the resources in the territory—principally food—to bear and raise the young. The more territory, the more food. The more food the more and healthier the young.

It doesn’t take a rocket scientist to see that the females would be instinctively programmed to use all the resources available in the care and feeding of their young.

So it must be in human society. And analysts have noted that big government really starts to take off once women get the vote.

We conservatives musts ask ourselves: When we advocate to reduce the size of government, are we helping or hurting women? So far, women have tended to vote for more government because they always vote for more resources for their families. Presumably they believe that government is a better guarantor of resources than husbands, and maybe they are right.

But that’s not the whole story.

We know, from observation of the effects of the welfare state, that it has problems. It is pretty clear that the more you sync your life up with the government the more that your family (probably reduced to the mammalian minimum of women and minor children) is likely to suffer from social pathologies.

The question that conservatives must start to ask is fairly straight forward. Is this what women want? Do women accept the rise in social pathology as a necessary cost of getting all the education, health care and welfare resources they need? Or do women want something better?

Until conservatives come up with an answer to this, there will be no chance of reversing the liberal ratchet.

You say that conservatives already have an answer? That the whole point of conservatism since Burke has been a celebration of the little platoons, the integration of resource provision into free and voluntary community? OK. Then let’s get the message out.

After the Rescue

It looks as though the US Cavalry made it on time, and that Americans and indeed the people of the world will be spared a total financial meltdown. The stock market (which is the present value of the future earning potential of the economy) rocketed up yesterday and looks like it is taking a breather today.

But that doesn’t mean that we’ll be spared the actual experience of Ludwig von Mises’ definition of a recession: the period of liquidation of the malinvestments of the previous boom. There was plenty of boom until last year and plenty of malinvestment. Now we have to sort through the wreckage.

The good thing is that we are well along in the liquidation of the mal-invested houses of the housing boom of the 2000s. But there is probably a lot more out there that we haven’t seen yet.

After months of stumbling and bumbling, it looks like the world geniuses have come up with a plan to refloat the hard-aground banks. But obviously people are going to need to be rebuilding their balance sheets. That’s a euphemism for cutting spending.

Going forward, it would be nice if we learned something from the current credit crisis. And that simple something is that too much leverage is poisonous.

The chap who’s borrowed too much is an anti-social person who aims to make a killing if things go right, and walk away from a gigantic mess if things go wrong. That is wrong, any way you look at it.

Debt is debt. It ought to be secured and it ought to be limited. If you want to take a risk with Other Peoples’ Money then there is another way to go. It is called equity. When you borrow money you promise to pay it back, principal and interest according to a contracted schedule. When you buy shares in a partnership or a corporation you agree to share the profits and share the losses.

If you liquor—er, leverage—yourself up then you are likely to become financial impaired and unable to meet your obligations. If you confine your risky behavior to equity plays then you can always meet your obligations because you have just said that you agree to sharing in the risk of the enterprise.

This isn’t rocket science, is it?