Big Government Doesn't Work

The great delusion of our modern age is that politicians and bureaucrats can run an economy just like the village Big Man in a remote village in New Guinea.

Earth to liberals: they can't. That's why President Obama, True Believer in politics and bureaucratic administration, is making such a poor fist of the presidency.

Today we have a couple of readings in big government folly. First of all, David Warren:

We learned a simple thing this week: that the BP clean-up effort in the Gulf of Mexico is hampered by the Jones Act. This is a piece of 1920s protectionist legislation, that requires all vessels working in U.S. waters to be American-built, and American-crewed. So while, for instance, the U.S. Coast Guard can accept such help as three kilometres of containment boom from Canada, they can't accept, and therefore don't ask for, the assistance of high-tech European vessels specifically designed for the task in hand.

Oh really. Who would have thought that the dear old Jones Act would still be doing its damage. (By the way, Obamis, here's a chance to blame Republicans. The Jones Act was passed in 1920 by a Republican Congress--and a Democratic president.)

Then there's Gerald P. O'Driscoll in the Wall Street Journal on the failure of regulation in the Gulf:

By all accounts, MMS operated as a rubber stamp for BP. It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public.

Of course it did. If BP followed all the rules to the letter it would never be able to drill a well.

Let's turn to the financial meltdown:

Boston University Professor Laurence Kotlikoff counts over 115 regulatory agencies for financial services. If more hands in the pot helped, financial services would be in fine shape.

Who knew? 115 financial regulatory agencies, and still we got a meltdown.

Then O'Driscoll hauls out Hayek. Friedrich Hayek, you'll remember, was the chap who identified the Knowledge Problem. To run a central-planning economy, he argued, the planner must know everything out there in the economy, so he can make decisions that usually would be made on the spot by local actors with local knowledge.

Of course, that is impossible. No planning manager, no central planning agency can possibly know enough to run an economy. The result, on a nationwide level, is the Soviet Union. On a tin-pot dictator level, the result is Venezuela, where thousands of containers of food have been discovered rotting in Venezuela's ports. Venezuela has a government food distribution and retail system.

On an industry-wide level, writes O'Driscoll:

Regulatory practice represents islands of central planning in otherwise decentralized market economies.

And the result is failure, just like at the national level. And that is why we are reading over the weekend that we won't be able to keep our health insurance as President Obama promised. Over 50 percent of health insurance plans won't meet regulatory requirements.

"Regulatory capture" is just a theory. The "knowledge problem" is just a theory. If you don't believe the theories then you have to wait for experience to confirm or deny the theory.

Conservatives maintain that these theories have already been amply proved by experience, again and again. But our liberal friends don't seem to agree.

It looks like only one thing will persuade our liberal friends of the validity of these theories: to be out of political power for a generation.

What "Mama Grizzlies?"

Gov. Sarah Palin is being too modest when she talks about "her mama grizzlies."

The only mama grizzly I see on the political radar is Palin herself.

Yeah. When that mama grizzly charges...

Conservative war-horse Pat Buchanan seems to have an eye on Palin. As a papa grizzly and political fighter who goes back to the Nixon years, you could say it takes one to know one.

It was Pat who noted, back last fall after Palin had introduced the gentle idea of "death panels" on her Facebook site, that "the lady knows how to frame an issue."

Pat, the political operative, is telling it like it is.

Now Pat's reacting to the Super Tuesday results. He muses on the MSM writing off Palin as a quitter. It reminds him of Nixon's famous farewell in 1962 when he quit politics after losing against Pat Brown, father of Jerry, in the race for governor of California. And how President Nixon ended up taking the oath of office a mere six years later.

So Palin quit as governor last year. Now look at her.

And though the media have painted Palin as a ditz, no politician in memory has conducted a more brilliant pre-presidential campaign, if that is what she is about, than the lady who calls herself "the Mama Grizzly."

Yes. She just happens to have picked a winner out of the pack in South Carolina. Nikki Haley may well be governor of a state with a key primary in 2012.

Palin endorsed Terry Branstad, a moderate, who will run for governor of Iowa in November. Iowa, let's see...

But then Palin backed John McCain against J.D. Hayworth in Arizona.

There's only one way to make sense of this mama bear's cuffing. She's backing people who will owe her in 2012. Big time.

She's aiming for the White House. That's not me. That's veteran Pat Buchanan's judgement.

Dems Whistling Past the Graveyard

Democrats are still hanging onto the narrative of January 2009, that Obama represents a "subversive force inside the governing establishment", according to Matt Bai in a New York Times Magazine thumbsucker piece. He came to power by bringing 15 to 20 million new "surge" voters to the polls in 2008, who believed that he represented something new.

But now top Democrats are upset that Obama is not being partisan enough. Pelosi & Co. want him to unload on the Republicans and fire up the base.

But that's not what brought out the 20 million "surge" voters, explains Obama's strategist David Plouffe. He is trying to organize these voters in new ways, getting past the tried and true labor-union GOTV and TV ad strategy.

Oh well, Matt Bai sums up: "[T]he one thing [Obama] will never really embody is the status quo."

Oh really? I'd say that the big takeaway this year for everyone except the Democratic Party faithful is that Obama is same-old-same-old Big Government liberal.

Why would anyone think that? Oh, I don't know. He's supported down-the-line mainstream liberal agenda items like Big Government health care and Big Government stimulus and Big Government energy policy. And he's bumbled the response to his Katrina moment. That's transformational?

Look, it was tempting for Democrats to believe that they had done something exceptional in 2008. America's first black president was a milestone. But they forgot that they got into power by being not-Republican at a moment when that is just what the American people wanted.

Having got into power, the Democrats governed exactly like the Democrats that everyone had been voting against for a generation. Sure voters wanted change in 2008. That's what you do after you've got fed up with the chaps in power.

Here's the bigger challenge for the Democrats, as divined by American Thinker contributor and recovering liberal Robin of Berkeley. She reports that her lefty Jewish friends are getting exactly what they wanted in Obama.

But her liberal Jewish friend Laura is "shell shocked."

It's no wonder that polls show Obama's support plummeting among liberal Jews. They thought they were getting a patriotic American who'd unite this country, not someone who would tear it to shreds.

Now, when I talk to Laura on the phone, she sounds shell-shocked. While she hasn't put two and two together yet (I'm working on it), she describes a spooky feeling of nameless dread.

"Nameless dread?" Anyone seen the panic button? If I were a Democratic operative I would be scared to death about shell-shocked liberal Jewish voters suffering from "nameless dread." The very best I could hope for would be that the shell-shocked wouldn't turn out to vote.

But the real danger is that I could be losing a voter like that forever. Especially if she happened to be friends with a recovering liberal like Robin of Berkeley.

Alien vs. Mama Grizzly

The problem with President Obama, writes Dorothy Rabinowitz, is that he's not really our president. He's a kind of "representative at large" to the world community.

[Obama is] wanting in certain qualities citizens have until now taken for granted in their presidents. Namely, a tone and presence that said: This is the Americans' leader, a man of them, for them, the nation's voice and champion.

Well, nobody can say that about Sarah Palin. In fact, the hit on her is that she is too demotic and folksy. In fact a lot of people complain that she has only a vague hold on the all-important "issues."

We'll see about that. Anything that plays into the eternal liberal narrative that conservatives are stupid sets off my bullshit alarm.

The fact is that Palin is living up to the title of her book. She really is a rogue player, and she's not afraid to get out there and take risks when she endorses candidates and keeps herself in the public eye.

And that points to another difference between her and President Obama. It's pretty obvious by now that President Obama is slow on his feet. We saw that in the campaign, but it was explained away as a magnificent coolness under fire.

The question that the average pundit is now beginning to ask, as the BP oil spill continues, is whether that celebrated coolness is not in fact just a fear of making decisions, an inability to think on his feet and act fast in an emergency.

We know, from the commentary on the passenger jet that made an emergency landing in the Hudson River, that in an emergency people revert to their training. That's why they train pilots and airline cabin staff for emergencies.

Palin seems to thrive on emergencies and risk. Many national politicians have built support by endorsing and supporting candidates. They usually do in quietly, behind the scenes. But Palin's very public candidate endorsements and support have created controversy--e.g. her support of GOP Senate candidate Carly Fiorina. Robert Costa:

For Palin, policy ideas and values are important. So, smartly, is winning — especially when it comes to electing her hand-picked crop of Palinistas. “No matter your gender or politics, you have to hand it to her: Palin is fearless,” says Mark McKinnon, a former adviser to Pres. George W. Bush.

Who is President Obama, really? And who is Sarah Palin, really? There's lots of partisan narrative out there, crude attempts to define the other party's candidate as a lightweight, or as out of touch. And really, with a public figure, you can never separate the reality from the image.

What's the reality? The only thing a voter can do is pay attention. And watch the way the politician makes her moves.

Suppose the Liberal Luck Ran Out

Our liberal friends don't know how lucky they are. They've been wrong on pretty well everything (except civil rights between 1962 and 1965) but somehow the American people keep voting for them.

They were wrong on the Great Depression. FDR's economic policy kept the nation buried in misery for a full decade. They were wrong on Communism. It was an evil, just as evil as fascism. They were wrong on government welfare. Their cradle-to-grave welfare state has demolished the working class. In the 1970s their Keynesianism gave us the worst inflation since the Civil War. In the 1990s and 2000s their housing subsidies gave us bubbles and a banking crisis.

One big reason why liberals never seem to get the blame for their screw-ups is that they get to make their own weather. With bribed apologists in the academy, willing accomplices in the media, and immoralists in the commanding heights of the culture, they can spin everything to make themselves look good.

But now we have President Obama. Our liberal friends liked to make fun of President Bush as a fortunate son, a dim-witted scion who wasn't up to the job. Actually, George W. Bush had a baptism of fire with his failing oil firm, Arbusto, which must have taught him a lot about dealing with disaster, and helped him soldier through the dark days of the Iraq mess.

President Obama, on the other hand, really is a fortunate son. He's been eased along by helping hands his entire adult life. Now he is president at a tricky time when the president is really going to have to make some tough choices. He is going to have to make decisions that are going to anger his supporters.

The big thing he is going to have to face is big spending cuts for government. And that is really going to piss off his liberal supporters, who, working in government, have never had to deal with financial reverse.

Arthur Laffer, writing in Wall Street Journal, is predicting a "collapse" in 2011. More precisely, he predicts that the big tax-rate increases that take effect next January are already warping the recovery from the Great Recession. Businesses and individuals are pushing income into 2010 before the big tax increase. That means that 2011 will be pretty dismal, economically.

Maybe we are already seeing the dismal outlook, as the stock market has been swooning for the last month. We are, in early June, just a little over six months out from January 2011, and the market generally leads the economy by about six months.

If the economy is still sluggish in mid 2011, then look for the Obama administration to start proposing some really stupid stuff to goose the economy in time for reelection.

The problem is that there isn't much the Feds can do to goose the economy with Keynesian "stimulus." What do you think they have been doing for the last two years?

The Feds are already maxed out on borrowing. More borrowing would probably create angst in the credit markets and raise interest rates, and a continued easy money policy from the Fed is sure to be developing major inflation by 2012.

See what I mean? Some time in the next two years, the federal government is going to have to bite the bullet and implement real spending cuts to get its fiscal house in order. President Obama is going to be president, pushing spending cuts for liberal voters that have never faced spending cuts in their lives. Federal government employees will be losing their jobs. Teachers by the tens of thousands will be losing theirs. State and local governments will be going broke, and maybe cutting pension payments and health care benefits.

When the liberals run out of luck, it ain't gonna be pretty. The question is: what will the American people think? Will they feel sorry for well-paid teachers suddenly having to pay for health insurance? Or will they decide that big government and its supporters had it coming?

It all depends on who makes the weather.

Let's Not Think Big on Energy

Oh good. Big thinker Jeffrey Sachs, part-owner of the mess in post-Soviet Russia, and now director of the Earth Institute at Columbia University, wants President Obama to think big on energy.

What the disaster truly makes clear, however, is the inadequacy of the administration's own approach to overhauling America's energy system.

Yeah. Like government and its bribed-apologist experts have a clue "overhauling" anything, let alone America's energy system.

Sachs understands, at least, that the current Obama policy approach is flawed. The American people can see that it is a rat's nest of favors and subsidies to special interests. So that's why a bold plan is needed.

That is where the government - and the President - must come in: to promote, in a systematic and aggressive way, the best alternatives for clean energy and then to speed their adoption as they prove their economic and environmental merit.

Franky, Mr. Sachs, I doubt it. For all the talk about consensus and imminent disaster required massive government intervention, the fact is that we haven't a clue about the "best alternatives" or even the meaning of "clean energy." We don't know if CO2 concentration is a problem. We don't know what the climate is doing. And we don't know which technologies will be the winners.

The best thing to do, right now, as Iain Murray writes in National Review Online, is to stop the crony capitalism that induces companies like BP--"Beyond Petroleum"--to get cozy with the government. Look what happened after the Exxon Valdez spill.

After the Exxon Valdez spill, legislators and industry got together and agreed to a cap on damages in exchange for an increase in tax payments. Generally, damage caps create what is known as “moral hazard,” lessening the consequences — and thus increasing the likelihood — of a potentially damaging act.

Isn't that special! Special privileges and exemptions in return for tribute.

What we need to get us to the energy future is a lot of people trying different stuff. That's because nobody knows what the future will demand. Nobody knows what the best alternatives are. Sure, there are a ton of promising ideas out there. But who knows which are the good ideas and which are the good ideas that work.

Fortunately, we have a wonderful system for exploring the future and rewarding the people that get it right. It is called capitalism. Free enterprise capitalism, not government-corrupted crony capitalism.

Government's role is an important one. It is to play the role of impartial judge. When you get "people trying different stuff" you can be sure that they will make a ton of mistakes. Some of those mistakes will be messy, like BP's mistake in the Gulf of Mexico. When people make a mess, they must clean it up. No need to send down the US Attorney General with criminal complaints and perp walks. Just make sure that the law operates properly so that people damaged by a spill or a gas release get compensated fairly and justly.

Conservatives have a great role to play here. It is to play interference against politicians, against experts like Jeffrey Sachs, and against politicized corporations like BP.

The future will almost certainly be significantly different from the future planned by government and its experts. It will almost certainly be different from the future imagined by today's big corporations. That's because, in the nature of things, today's power elite won't want futures that diminish their power. Politicians want to spend money on programs that will get them reelected. Experts want national crises that require more research. Big corporations want solutions that will allow them to leverage their current market advantages against small upstarts.

The beauty of capitalism is that it doesn't give a damn about politicians, experts and big corporations. It just rewards the chap who had the right idea at the right time. And the other people? The chaps with the right idea at the wrong time? The chaps with the promising idea that wouldn't scale or couldn't be reliable or inexpensive enough? Well, they probably had a grand time trying.

The encouraging thing is that whatever stupid crony-capitalist or public-private partnership policy or grand strategy that Obama comes up with, he'll probably botch it.

And then the decks will be cleared for ordinary technologists and businessmen to do something sensible.

Canada and Welfare State Cuts

I checked out a TV in the guest room yesterday and in two minutes saw an ad for AARP's Medicare Supplement insurance and an ad by a lawyer advertising his services in applying for Social Security Disability benefits--the benefits "you deserve!"

It shows how central the welfare state must be in the lives of the TV-watching classes.

AARP's Medicare Supplement business is one of the untouchables in national politics.

And Social Security's Disability program already covers about four percent of the working population. I read an article a while back that predicted that the disability rolls would reach seven percent. Expect that number to be reached when we fully emerge from the current Man-cession in the next couple of years.

What will happen to the welfare state in the years ahead? Obviously we will hit a crisis. And liberals will suddenly realize that they need to trim the welfare state or go out of business.

In Canada, liberals reached that point in the 1990s, as Fred Barnes reminds us.

Canada was called an “honorary member of the Third World” by the Wall Street Journal in 1995, and for good reason. Out-of-control spending, soaring debt, and the government’s bite of the country’s gross domestic product (GDP) growing at a furious pace—those trends prompted the Journal’s harsh putdown.

The liberals in Canada's Liberal Party realized that something had to give. So they implemented draconian cuts in central government spending.

The results have been remarkable. In two years, spending declined 8.8 per-cent. The size of the national government dropped from 16 percent of GDP in 1994 to 13 percent. As debt shrunk, once-gigantic interest payments fell dramatically.

That’s not all. Canada’s version of Social Security was put on a sound financial footing. Only one large government entity with soaring costs has been left unreformed: the single-payer health care system.

Now Canada is trying to do something about its health care system, satirized a while back in the movie The Barbarian Invasions. According to Reuters:

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee.

Well, you can see that the Canadians are not that serious about cutting health care costs. Not yet.

But you can see the problem. Millions of people, like the folks watching those TV ads about government benefits, have organized their lives around the government's IV. If anyone tries to change the bottle of joy-juice, or even reduce it, it will produce enormous rage and resistance.

So, just like in Canada, we really need the liberals to get out in front. It is liberals that must carry the news to their supporters that the glory days are over. Will they? Would President Obama lead such an effort in 2012 after a chilling defeat in the November 2010 mid-terms?

Because if President Obama doesn't lead off, then it will be eight or ten years before another Democrat can lead his party towards a welfare state that recognizes limits on government largesse.

By that time we'll really be in trouble.