It's Not As Bad As That

With President Obama safely inaugurated, the experts are looking at GOP prospects and they are painting a gloomy picture. Both Michael Barone and John J. Pitney see a gloomy short-term outlook.

Barone notes that Republicans are doing dismally with black and young voters and are even losing the educated voters in the affluent suburbs.

Pitney worries that Democrats have a lock on congressional districts that are black, Hispanic, New England, and New York.

So how do Republicans have a chance?

They have a chance because things will change. Republicans are losing because voters are fed up with them, particularly upscale, educated voters that are influenced by upscale media. The upscale media has been running hard against Republicans ever since 1998 and the disgrace of Bill Clinton. (Plus there is also the fact that many educated voters work for the government.) On top of that, President Bush asked Americans to have patience while he solved the problem of Iraq. Who needs patience?

But Republicans are not running for office in the springtime of Obama’s adminstration. They will be running in 2010 and 2012. In 2010 they will be running against the first two rookie years of Obama. And in 2012 they will be running against four years of Obama. Given that the early signs are that Obama aims to govern as a patronage president, handing out goodies to the Democratic faithful, you couuld build a case that many swing voters are going to swing against the president and the Democrats in the near future.

After years of media drumbeat the voters now believe that the Democrats are the center-left middle-class party and the Republicans are dominated by the right. Well, they would, wouldn’t they? That’s all they’ve heard for ten years.

In fact, it’s probably more accurate to say that the Democrats are a center-left party that would like to be leftier. And the Republicans are a center-right party that would like to be more libertarian. But as we get into the Obama administration it will be easier and easier to make the argument that the Republicans are a center-right party that works for the middle class and that the Democrats are a bunch of corrupt left-wing loonies that sneer at the middle class behind their back.

When Republicans start to make that argument hit home then all of a sudden upscale voters will start listening to Republicans again and New Englanders will stop looking down their noses at them.

And all of this is assuming that the advancing recession doesn’t cause significant hardship and anger and prompt a broad political realignment.

Be of good cheer! When the other guys are in power then there is everything to play for, and the only way is up.

New Deal Put "Great" in Depression

You can’t say this often enough. The New Deal prolonged the Great Depression. If you want a book-length treatment, a good one is Amity Shlaes readable Forgotten Man, now out in paperback.

And today there’s a good article in the Wall Street Journal by Harold L. Cole and Lee E. Ohanian: “How Government Prolonged the Depression.”

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

Then the authors talk numbers.

Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Let’s put that in a table, to make it all even more clear.

Total hours worked per adult 1929 1930-32 1933-39 Private and public sectors 100% 82% 77% Private sector only 100% 82% 73%

It’s not very pretty is it? And the reason is pretty simple. In the NRA, the government operated a wage-and-price control program to keep wages and prices up. You may remember the wage-and-price controls of the 1970s. It was different from the NRA in that it intended to keep wages and prices down, not up. The result? Inflation, big time. Not surprisingly, the NRA had the opposite effect. It kept deflation going. Fabulous job, guys.

Cole and Ohanian mention another disaster: the recession within a depression of 1937-38..

The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court’s 1937 decision that upheld the constitutionality of the National Labor Relations Act.

You see, in 1935 the New Dealers passed the Wagner Act that mandated monopoly rights for organized labor. Not suprisingly, workers organized into labor unions in autos and steel racked their wages up substantially. And that impoverished the rest of the country.

This is not rocket science. When the government sets up privileges and monopolies for favored special interests, fixing prices, setting barriers to entry, mucking around with the relations between worker and employer, the people suffer. These special interests could be evil bankers, or they could be honest working stiffs. They could even be hard-working teachers in inner-city schools. The result is still the same. The people suffer.

Can Obama Stimulate Republicans?

After the thunder of the Wall Street Journal conservative edit-page folks, now we get the opinion of the liberal news side (don’t ask why the Journal has two opinion pages).

Today the Journal’s Gerald F. Seib wonders whether President Obama will be able to sweeten the stimulus pot enough to attract some Republican votes. President Obama’s heart is in the right place, but the stimulus package creates a conflict between the need for fast action on the economy and his promise of an end to partisan wrangling.

The passage of the bill without a single Republican vote showed the tension between those dual Obama goals. By ceding so much authority to House Democratic leaders to write and then steer the initial version of the big stimulus package — as opposed to offering his own version and trying to dictate legislative strategy — Mr. Obama got action quickly. But he also got a bill with fewer concessions to Republican wishes than the president himself seems willing to make, and the vote showed it.

A stimulus plan without Republican support would be a replay of the first year partisanship of the Carter and the Clinton administrations. In neither case did the overt liberal partisanship turn out too well for the president and his party. That contrasted with President Reagan, who did get bipartisan majorities for his proposals.

Preventing a similar outcome now likely requires expansion and modification of the tax portion of the stimulus package to accommodate Republican wishes for a more business-friendly mix, and further reduction of the questionable spending provisions in the House bill. Republicans need a reason to swim against the tide in their party.

But here’s an idea. How about a stimulus package that actually stimulates the economy? Loyal partisan that he is, Seib rather dances away from the fact that the stimulus plan is nearly 90 percent to-the-victor-goes-the-spoils. There really is no reason for Republicans to sign on to any stimulus package that doesn’t genuinely stimulate the economy.

So far all we’ve seen from the Obama adminstration is silly subsidies and tax credits. That sort of thing reduces the real economic issues into special interest goodies.

If the Obama adminstration wanted to do one thing to help Americans rather than Democratic supporters (who really don’t work in the real economy, if they work at all) it would be to lower the corporate income tax rate. If it did that it could at least hold its head up at liberal dinner parties because it had avoided the awful sin of lowering personal income tax rates on the rich. And it would lower the water level in the economy so that more corporations could get their feet on the bottom of the pool.

Meanwhile here’s some unsolicited advice to Congressional Republicans. Don’t cave unless you get something that really helps the economy and really helps ordinary Americans.

That Stimulus Sickness

Everybody now knows what happens when the government decides to give everyone “affordable housing.” It takes a while, but eventually it takes down the whole financial system. That’s because, Virginia, when worthy Democratic voters that don’t pay their bills get mortgages, banks and Fannies and Freddies end up with toxic assets and nobody knows if they are worth anything..

So now our Democratic friends are proposing to stimulate the economy with a spending bill that, wait for this, increases the subsidies for health care. That’s according to the Wall Street Journal edit page.

The more we dig into the pile of spending and tax favors known as the "stimulus bill," the more amazing discoveries we make. Namely, Democrats have apparently decided that the way to gun the economy is to spend even more on health care.

The intriguing thing about all this is that experts now agree, both from the left and the right, that life-style is the key ingredient in health and life expectancy. This means that when the government increases the subsidy for health care they are gunning the engines on the national cigarette boat. So now we are heading towards the sound of the next big economic waterfall, the point at which government will have to cut back on health care, even faster than before.

The provisions are innocent enough. The Feds are going to increase the federal share of Medicaid reimbursement. They are going to offer Medicaid to the unemployed. They are going to subsidize Cobra benefits for people laid off. This is all very compassionate and thoughtful. Except for one thing:

When you subsidize people not to work, you get more nonworkers.

That’s the problem with the whole welfare state. People work because they have to. They work for food, for housing, for health care, for transportation. When the government subsidizes it then more and more people, especially the low-skilled, low-paid, decide against work. You can’t blame them. Who would work unless they have to?

We’ve been saying here for a while that the only way we are going to reform the welfare state is after it “hits the buffers.” We have mixed feelings about this. Good people, ordinary people are going to be hurt. And even people that never gave into the temptation of the welfare state are going to be hurt.

On the other hand, if you believe that “free” health care or “free” education isn’t going to cost you in the end, we’ve got a bridge we want you to look at.

Stimulating Democratic Voters

Here’s a thought for you eternal optimists. Maybe the Democratic stimulus bill is so egregious that it will give stimulus a bad name.

Any Republican that wanted an excuse to oppose it now surely has enough ammunition. You could get all the ammo you needed just from today’s Wall Street Journal.

First, there is the top editorial. The Journal edit page folks point out that there isn’t much economic stimulus in the bill at all.

Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There’s another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.



Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus.

Twelve cents on the dollar of stimulus ain’t exactly going to stir the sleeping beast.

Next, there’s supply-side economist Alan Reynolds. He points out that the stimulus is mostly going to sectors of the economy that aren’t suffering too much from the recession. Like government employees.

The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in the bill would go to state and local governments. Another 17.3% would go to health and education — sectors where relatively secure government jobs are also prevalent.

Well, OK. No serious person imagines that the stimulus is much more than a payoff to Democratic voters. Of course, you needn’t expect the MSM to point that out to alert voters. Move along there; nothing to see here. In fact you might even expect a loyal MSMer to worry that there wasn’t enough money for government in the stimulus.

Lastly, there is the Journal’s house liberal. Wouldn’t you know that Thomas Frank chooses this exact moment to criticize the notion of privatizing roads and bridges. He’s worried about the danger that the stimulus bill might include incentives to privatize infrastructure development. He sneers at privatization lobbyists who urge that governments lock in private investment before private investment money gets committed to other projects.

But there’s good reason to be reluctant to privatize. It doesn’t take an MBA to figure out that we didn’t build our Interstate highways in order to create opportunities for venture capitalists. The purpose was public service.

Oh really. I thought the whole idea of infrastructure development was to give jobs to union workers, fees to investment bankers and kickbacks to state and local politicians. Silly me.

It is the canard of “public service” that fuels the self-dealing monstrosities like the current stimulus bill in Congress. When can we ever hope for a time in which politicians (and particularly Democrats) stop dumping these wasteful proposals on the American people with the assistance of willing accomplices in the media like Thomas Frank? It ain’t public service, Mr. Frank. It is just politics as usual.

The idea behind bridges and highways is not “public service.” It is economic development. We want to build economic infrastructure that will help move goods and services around and save human and natural resources in doing so. It is, if you like, public service to build a road in Yellowstone National Park so people can drive around in an area of natural beauty. But for regular infrastructure, the purpose is economic. Modern political and economic theory and practice tells us that profit-seeking businessmen are much better at doing this than vote-seeking politicians.

Some day even dyed-in-the-wool liberal MSMers like Thomas Frank will admit this. But probably not before liberals bring the entire economic house down around our ears.

The truth is that almost everything the government does is a cruel waste of scarce natural and human resources. And it looks like the current victory-lap stimulus bill of President Barack Obama and Speak Nancy Pelosi and liberal commentator Thomas Frank is no exception.

But there is always Hope for Change. Maybe the more that ordinary Americans get to see of the stimulus bill the less they will continue to Hope that the Obama Administration and the Pelosi-Reid Congress represent anything within a country mile of Change.

When in "Doubt"

When I saw a trailer for the Meryl Streep movie “Doubt” I was turned off. You could just tell what a movie about accusations of sexual misconduct at a Catholic school would be all about.

But then, reading reviews, I started to wonder. Maybe it was doable, after all.

After seeing it last night, I can say that the movie is a miracle. No, the miracle is not the acting of Streep as the Catholic high school principal nun or Philip Seymour Hoffman as the priest that the nuns suspect is abusing a young high-school boy. Make no mistake. Their peformances were excellent. No, the miracle is the screen-play by writer-director John Patrick Shanley. The plot beautifully lived up to its title.

(Plot spoilers ahead) Did Father Flynn actually abuse the boy? We never know for sure. Is the authoritarian go-by-the-rules style of Sister Aloysius a relic of the Stone Age? The movie does not say. Is Father Flynn a practiced liar? Who knows? Was Aloysius right to pursue Flynn out of the parish? And what good did it do if he just gets shifted to another parish and another school? Good question. The movie, miraculously, doesn’t tell us what to think.

We also get charming cultural touches. We see the celibate nuns eating in solemn silence under the baleful eye of Aloysius; but the celibate priests laugh and smoke at their meal.

I’ll tell you. Just when you think that Hollywood cannot be redeemed, Hollywood comes up with a movie called “Doubt”that really deserves to be called a triumph.

Liberal Law Takes Freedom Away

It’s amazing how many people look at the current sue-mad society and wonder what’s the problem. It isn’t that hard.

The problem is fairly simple. It is the tangle introduced into the law by powerful government. Today we have the notion of law as the balancing of interests competing with the liberal law of “rights” all gummed up with the forest of adminstrative law that arises out of the enormous reach of government.

President Obama has called for a new era of responsibility, writes Philip K. Howard. It’s a wonderful idea. Just don’t try it out yourself or you’ll get creamed.

But there’s a threshold problem for our new president. Americans don’t feel free to reach inside themselves and make a difference. The growth of litigation and regulation has injected a paralyzing uncertainty into everyday choices.

The examples are all around us.

Most doctors say they wouldn’t advise their children to go into medicine. Government service is seen as a bureaucratic morass, not a noble calling. Make a difference? You can’t even show basic human kindness for fear of legal action. Teachers across America are instructed never to put an arm around a crying child.

Again. It’s not that hard. These problems are all problems because politicians, acting with the consent of the voters, have injected government power into areas that didn’t used to have government involved.

We have taught people to expect miracles from medicine. So people sue when medicine isn’t perfect. We have created vast bureaucracies to second-guess private actors. And it’s not surprising that teachers need to watch their step. They are acting as custodians of the nationi’s children in government custodial facilities. Of course their every action should be governed by administrative law.

Philip K Howard thinks he has a solution. He just wants to create a zone of freedom.

Freedom has a formal structure. It has two components:



1) Law sets boundaries that proscribe what we must do or can’t do — you must not steal, you must pay taxes.



2) Those same legal boundaries protect an open field of free choice in all other matters.

That’s all very well, but you can’t allow government officials “an open field of free choice.” The whole point of government is that government spending and regulation must be tightly regulated or it will descend into corruption, and spending money for no return.

If you want an open field of free choice then you’ve got to take the government out of it. So if you want teachers to touch children again, you’ve got to scale back government schooling. If you want doctors free of lawsuits you’ve got to take 3rd party payment out of the equation so that doctors have a one-on-one relationship with their patients.

But that goes against the very grain of modern society. The whole idea of modern society is that an educated elite gets to call the big shots on everything, generally through big government adminstrative programs or through big government administrative law.

You can’t have responsibility in that kind of a culture. Instead you get jealously guarded rights and endless second-guessing and punitive lawsuits.

Don’t like the era of rights and second guessing? Then get government out of the way.