One Step at a Time

Here in Washington State we had our primary yesterday. The result? Sen. Patty Murray is in trouble, since her vote about pegged equal with the Republican vote. And three Dem districts are in play, the 2nd with Koster against incumbent Larson, the 3rd, an open seat, and the 9th, maybe, with Muri against the incumbent Smith.

If a couple of those seats turn Republican then we'd get a 5-4 GOP advantage instead of a 6-3 Dem majority in the House delegation.

I said it back in 2008. The only way you get to win in politics is by letting the voters get a taste of the other guys. Disgust, the psychologists are finally realizing, is not just about avoiding rancid meat, but avoiding rancid ideas.

With President Obama we have the world set upside down. We have a war on the American economy, with a breathtaking program to seize a huge chunk of the economy and parcel it out to Democratic Party supporters. And we have a president who wants to pass on the great clash of civilizations, the question of whether the West shall prevail or Islam. It is all laid out today by Ayaan Hirsi Ali in The Wall Street Journal.

The president's hope was that moderate Muslims would eagerly accept [his] invitation to be friends.

The president is a One Worlder, a devotee of the fashionable idea that the fall of Communism meant the "End of History" according to Francis Fukuyama. No it isn't, wrote Samuel Huntington in The Clash of Civilizations, and Ali agrees.

The West's universalist pretensions are increasingly bringing it into conflict with the other civilizations. most seriously with Islam and China.

The future of the West depends upon a successful defense against these challenges, according to Ali. Ordinarily, as far as Islam is concerned, it shouldn't be a problem, since the Islamic countries are "ruled by despots of various stripes."

China is a bigger problem, but here there is hope--that China is reinventing itself as a Christian country. Huh? Here is a Chinese Christian describing to David Aikman in Jesus in Beijing how China has looked at the West over the last two centuries.

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.

There are thought to be about 100 million Chinese Christians in house churches in China, but nobody knows, because the house churches are more-or-less underground. So China may in fact be in the process of modeling itself on the West, rather than challenging it.

The great thing about the Obama administration is that all the ideas that the center left has been pushing for the last half century are going to be utterly repudiated by the American people in the next few years. Not because the American people will have done an exhaustive analysis on them, but because they are associated with Obama and the failures of the Obama administration.

And it all starts in the House districts in play this November in Washington State and elsewhere.

Because we are looking right down the barrel of an 80 seat pickup for Republicans in the House. That will be the biggest pickup since the 75 seat swing in 1938, and it will change the rules, starting on November 3, 2010.

Liberals Defend Religion!

Sometimes our liberal friends astound us. We conservatives have suffered for half a century as liberals have pointedly pushed religion out of the public square. No prayer in schools. No religion on campus. No religious symbols on government property.

But then out of a clear blue sky, liberals are all hot to prove their devotion to the First Amendment's guarantee of freedom of religion--to Muslims. And when President Obama, in an address to Muslims, affirms their right to build a mosque right next to 9/11's Ground Zero, liberal pundit hearts go aflutter here, here, and here.

Oh yeah? So when did a liberal heart ever go aflutter over celebrating the right of Christians to put up a church right next to a liberal shrine?

Liberals certainly don't seem too happy about Glenn Beck and his Restoring Honor rally at the Lincoln Memorial on August 28, the anniversary of Martin Luther King's "I Have a Dream" speech.

OK, it's clear how liberals get to supporting the 9/11 mosque. Muslims are anti-American; liberals approve of that. Muslims are anti-Christian; liberals like that. Muslims are victims in Palestine; liberals rally to that. Muslims in America are a minority; liberals like that. Hate groups might attack Muslims; liberals must rally against that. And so on.

As for me, I notice that the mosque issue fits into my culture of compulsion/culture of friendship template. Liberals are saying as enlightened elitists that government must compel the American people to allow Muslims the right to build mosques wherever they want. Conservatives agree that Muslims have the right. But in the spirit of friendship, conservatives say, surely Muslims would not want to build a mosque so close to a site where Muslim extremists killed thousands of Americans.

"There is such a thing as society. It's just not the same thing as the state." Scratch a liberal, and you'll find someone that doesn't get it.

Cordoba House vs. St. Patrick's Cathedral

Once upon a time in New York City there was an immigrant group determined to show the powers-that-be that they were a force to be reckoned with.

No, I am not talking about Muslims and the Cordoba House project led by imam Feisal Abdul Rauf. I am talking about the Irish Catholics led by Archbishop John "Dagger" Hughes.

John Hughes was an immigrant gardener at the gardener and stonemason at Mount St. Mary’s College and seminary in Emmitsburg, Maryland. Then, through the intercession of Mother Elizabeth Bayley Seton--canonized later as America’s first native-born saint--he went to the seminary, became a priest and the first Catholic Archbishop of New York. You can read his story here. In the 1850s Archbishop Hughes conceived of a project to build a new cathedral in New York City. Here's how William J. Stern wrote about it in City Journal.

As the 1850s wore on, the archbishop began to conceive a plan that would give magnificent, concrete expression to the rise of New York’s Catholics. He would build a great cathedral, financed by the Catholics themselves, as proof to the Protestant elites that the Irish, too, knew how to make New York the premier city of the world.

And he would build it right on Fifth Avenue, right where the Protestant swells and the Astors and the Vanderbilts lived and right where they could see it every day.

Fast forward to 2010 and the Cordoba House project. Imam Rauf, like Archbishop Hughes before him, wants to show to the world that Muslims are a force to be reckoned with. Unfortunately the project is not right where the the dominant liberal swells couldn't miss it. It is right next to the hallowed ground of 9/11's Ground Zero.

The Cordoba Project might have made sense when the Twin Towers were standing, when they represented the cultural power of the United States. But not now, not after 9/11. The Cordoba project doesn't represent the ability of Muslims to contribute to the glory of New York City. It just shows the tone-deafness of America's elite Muslims.

There are other differences too. Back in the 1850s the rich New York Protestants clearly represented the cultural elite heart of New York City. But now the cultural elite is the educated progressive elite of liberals. Thus the Muslims are not an insurgent group of dirt-poor Irish laborers and "nymphs of the pave" desperately working their way up from famine and indigence. They are, on the contrary, the darlings of the liberals. Liberals are pontificating up and down the land about the "right" of the Muslims to put a mosque any where they want. (Do not spend too much time waiting around for liberals to assert the right of Christians to put a church anywhere they want.)

What we are seeing is liberal street theater with the usual rent-a-mob. Also, it appears, Cordoba House is not getting funding from dirt-poor Muslim cab-drivers in Manhattan but from rich Saudi and Kuwaiti princes. Next thing we'll learn that George Soros is a contributor!

In the 21st century, if you want to prove you have hair on your chest, it's absurd to come into the public square as a liberal darling. You need to be a real grass-roots movement that must overcome every day with the scorn of the liberals. You know, like the Tea Party.

A Culture of Friendship

If liberalism is the culture of compulsion, then what should conservatism's culture be?

Simple. It should be the culture of friendship, and not just because Aristotle wrote that friendship was the basis of politics, indeed all social bonds.

We could also all it the culture of involvement, of engagement, of voluntary cooperation. All this is just trying to say one thing. The culture of reason, of laws and regulations for everything, of experts declaiming from on high, of politicians dividing us, of bureaucratic busy-ness has failed. It is not kind, it is not generous, it is not thoughtful, it is not human.

Also, it does not understand the huge "diversity" in humans that complements our undeniable sociability. This is not just a question of justice, that people should have a right to be different, but a question of survival. A field of genetically identical wheat will be devastated by a single infestation of wheat rust. But a diverse population will respond to pestilence, or indeed anything, in lots of different ways. Some will perish, others will survive, still others will thrive.

This means that instead of everyone following the single ruling-class-approved trajectory of life, the road of government custody in schools followed by government supervised work and government-dependent old age. In the culture of friendship people would choose different trajectories, providing only that they did not harm the lives of others.

Let us examine how this would work in the realm of social services that form the core of government function in this age of the administrative welfare state.

Instead of the rigid governmental social structures, the government school, the government welfare, the government health care, the government pension, people would obtain these vital social goods in a web of friendship and social service. People would provide social services to others and receive social services from others in appropriate measure.

How might this work in the simple case of the government pension? In the current culture of compulsion each worker is forced to pay a jobs tax that goes to pay the pension of an older person. This plan, we now know, is doomed to failure because people have demanded and politicians have legislated benefits that cannot be paid.

But in the culture of friendship, middle-aged people save from their income. They save so that, in due time, they will accumulate enough capital that younger persons can use it to work and create enough wealth to leave the older person a share of this wealth creation as interest on the capital saved and invested in the younger generation. Thus we have a double exchange of friendship. The older person prudently saves, not wishing to be a burden on the young generation, and gives the accumulation of this saving to the youngsters for them to work and found new families. The young generation gives back a dividend from the wealth created by the combination of capital and work in a spirit of friendliness to the old 'uns.

There is not just one trajectory here, but many. Some will work in large organizations and accumulate capital in the financial markets. Others will establish businesses and sell them, as they get older, to the younger generation. Or they may hand them down to their children. Others will build up businesses that can be operated by younger people while providing them with an income.

There is, of course, a natural flexibility in this arrangement. If the older person saves a lot, he can retire from work early. If there is a banking crisis that reduces the value of investments then the older person must plan to work a little longer. If the younger person turns the investment into an extraordinary success then all benefit.

Thus does the culture of friendship triumph over the culture of compulsion.

We will see in future episodes how the culture of friendship triumphs over the culture of compulsion in the other great social functions: health care, education, and the relief of the poor.

This is not rocket science. It is merely a recognition that we humans are social animals, and that our greatest asset is our sociability, our capacity for friendship, for wishing good things not just for ourselves, but for others.

Forget Medved, the Future is Bright!

If you want to understand why President Obama is pushing immigration and punishing Arizona for trying to enforce the immigration laws, look no further than 2012, writes Michael Medved in The Wall Street Journal.

The politics is aimed directly at the Hispanic vote. That and the black vote is what will put President Obama over the finish line in 2012, according to Medved.

Maybe it will, especially as Hispanic voters are going to swell a lot in the next few years. And if you assume that blacks will still turn out big-time for the first African-American president.

But look on the bright side. Young people. After the soul-destroying years of 10 percent unemployment that falls most heavily on the youth, they won't be voting 67 oercent for the president, if they show up at all. Snobby social-liberal/economically-conservative types. They didn't like the religious right in the 2000s, but they will be voting their economic interests this time around. And then there's the ordinary white middle-class voter. Can you spell "T-E-A-P-A-R-T-Y?"

The thing to remember about Obama is that his Keynesian Obamanomics has screwed everyone except unionized auto workers and government employees, and there just aren't all that many of them. So the 2012 election is shaping up as Hispanics, blacks, auto workers and government employees against everyone else.

Let's not forget the really big factor that is working against Democrats. Matt Welch calls it "The Death of Neo-liberalism." You can call it the death of the New Democrats, or the Third Way, or Clintonism, if you like.

The fact is that the Clinton lurch to the center was a necessary tactical move for elected Democrats in the aftermath of the Reagan era. Reagan proved to most Americans that the old menu of big business, big labor, and big government wasn't working, and he introduced them to a hopeful agenda of entrepreneurism and start-up capitalism. Democrats like Clinton realized that they couldn't get elected on the old agenda.

The left hated Clintonism, and by 2006 they were the articulate base of the Democratic Party. So they swept into power in 2008 on the strength of Republican exhaustion (and the banking crisis caused in large part by New Democratic housing policy!). Now, they thought, we can effect real change with health care, green energy, and more money for progressive programs.

Anyone paying attention could see, starting right away in 2009, that these lefties were wrong. First of all, even in the fall of 2008, Americans hated the bank bailouts. Then in early 2009 a new movement of rejection, the Tea Party, popped up on the radar, taking everyone by surprise. Then, by the summer of 2009, Americans hated the auto bailouts, hated the stimulus, and hated ObamaCare.

Now, in the summer of 2010, we see the recovery faltering. So whatever Obama did, things are going wrong on his watch and Obama is to blame. Actually, according to non-Keynesian economics, what he did was economic stupidity, and he really is to blame.

Let's fast forward to the summer of 2012. Yes, the economy will be in better shape then, but there will still be big-time unemployment. Probably inflation will be starting to look nasty. And, probably, ObamaCare will be causing major anger out there in the heartland as ordinary Americans find that their health care arrangements are being ripped up by new ObamaCare regulations.

My prediction is that we'll see an 80 seat Republican pickup in the House, and you ain't seen nothing yet. That's because the liberals have been lucky, and their luck has run out.

The Democratic Party has always been the party of people trying to get on their feet in the capitalist economy. That was true with Andrew Jackson in 1828, true with the Irish in the big cities in the 19th century, true with the Jews and Italians in the early 20th century, and true with the New Deal coalition in mid-century. Now it's true with Hispanics and blacks.

But once people get on their feet and they discover that capitalism is not a monstrous thing they change their minds about politics. They find that a person with moderate skills and a will to work can always find a decent job and a moderate prosperity in America. They find that just about the only thing government does well is screw things up. They start to believe in themselves as rugged individualists and they start to read about the Constitution and individual freedom. They stop being hyphenated Americans and they become true-blue, rock-ribbed Americans. They stop voting for Democrats.

Bill Clinton, with his stunning political skills, was able to square the circle for a while. But I knew Bill Clinton, and let me tell you, President Obama is no Bill Clinton.

In 2012, President Obama will play the immigration card. He will play the race card. He will play every card in the deck of Democratic identity politics.

But the American people won't care. They will say: "Frankly my dear, I don't give a damn." And they will vote for a Mitch Daniels, a Bobby Jindal, or a Sarah Palin for president.

And here's a long-term prospect. President Obama is going to end up breaking the hearts of African Americans, because they will find that electing a black president doesn't solve their problems. Politics, they will discover, is a false god. We won't see much happen in 2012, but by 2016 we will see a significant minority of blacks detaching from the Democratic Party. No more 90 percent voting for the Democrats. Try 75 percent, 65 percent within ten years. We already know what they look like. They look like those Tea Party black conservatives that keep popping up on the radar.

Yep, things may look gloomy right now, but America is going through a necessary transition, learning by experience that the big-government top-down society of the liberals just doesn't work for them and their families.

After it is all over we will all realize that the pain was worth it. No pain, no gain.

The Luck of the Liberals

You've got to hand it to our liberal friends. They've had an amazing run of luck. After mucking up the economy throughout the 1930s they managed to persuade the American people that they saved the economy in those years with their brilliant stimulus spending on the CCC and the WPA and the TVA and Grand Coolee Dam.

Then, for the last half century, it always turned out that a Republican was in the White House during a recession: 1958, 1969, 1974, 1981, 1990, 2001. Those stupid Republicans, we are reminded again and again. How could they keep screwing it up.

You could also think of the Luck of the Liberals. They always manage to be on vacation when there is real work to be done.

Let's think of liberals more as the uncouth Baron Ochs auf Lerchenau in Der Rosenkavalier. He had a remarkably high opinion of himself, even though his name translates as "ox of the lark-meadow." And he had a favorite rollicking waltz, "The Luck of the Lerchenaus." Eventually, the Baron's luck ran out and he was roundly humiliated to the satisfaction of everyone.

But now the liberals are in charge in the worst recession for a while, and it is a recession combined with a banking crisis, a particularly nasty combination. In such a situation, you need to get it right, otherwise things are going to be really nasty--kinda like the unending Great Depression of 1929-39, America's lost decade.

I felt and I wrote, back in early 2009, about my foreboding when the Obama administration did not change course after winning the election and continued with its entitlement and regulation agenda during the aftermath of the Crash of 2008. Not good, I thought. You chaps need to fix the economy first.

But the courtiers were all egging the Obamis on, and on they went. Now, of course, everyone is predicting a double-dip recession and deflation and a lost decade like Japan's in the 1990s, and Democrats are waking up the the prospect of an electoral tsunami in October. (A tsunami? Another proof of global warming, I should think.)

The sensible strategy is to repeal ObamaCare, repeal the Dodd-Frank financial re-regulation bill, enact sharp spending cuts, extend the Bush tax rate cuts, enact corporate income tax rate cuts, and watch the stock market turn on a dime.

But that, I would guess, is politically impossible for the Democrats. If they were to do that it would announce to the voters and the world that everything they stand for is rubbish and always has been.

The problem, I think, was encapsulated in a recent Wall Street Journal article by businessman Michael P. Fleischer about the problem he faces in the Obama economy. He talks about the cost of "Sally," the median employee at his business. She has a high-school education plus some specialized training. He goes on and on for several paragraphs adding up all the taxes and fees he must pay for.

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally's job each year.

Think of it this way. Government puts a 33 percent jobs tax on every job in America.

Now do you wonder why business is slow to hire new employees in the aftermath of the Great Recession?

I'm reading A History of Central Banking in Great Britain and the United States by John H. Wood right now. Don't laugh, it's a real page-turner. Here's an important take-away. Every time there's a financial panic or crash, it seems that the big question is "confidence." Market players look for a magic bullet to restore "confidence." Another word for "confidence" is "credit" or faith.

In other words, the economy runs on more than the numbers. It runs on confidence and credit and faith and trust. It runs on the faith in the counter-party, that he is good for his commitments.

Governments and financial "plungers" tend to take advantage of other peoples' trust to hoodwink and deceive. But the market economy, at bottom, runs on trust, the trust that things will turn out all right and that the other guy will not try to run away from his commitments.

That's why J.P. Morgan told the Congress this in 1913:

[A] man I do not trust could not get money from me on all the bonds in Christendom.

This statement merely states the obvious. The problem with lending money arises not when things are going well but when things are going badly. What will a man do about the money he owes me when things are going south?

America's businessmen right now are in a quandary. They are making money, because they have ruthlessly pared back their operations to make sure they can turn a profit. But they are looking forward and they just don't have the confidence in the future to take a risk on expansion.

Not with President Obama in the White House and Pelosi and Reid leading Congress.

And so it looks like the Luck of the Liberals is running out, just like the Luck of the Lerchenaus. You just don't want to let the oxen loose in the lark meadow. Not if you want larks in it.

Central Bankers Don't Know Nothing

August 9 was a red-letter day in the Chantrill household. You'll never guess why.

Yep, yesterday was the day that A History of Central Banking in Great Britain and the United States arrived from Amazon.

I can tell you, it is a real page-turner. Seriously.

I'm afraid that I've only got through the first four chapters so far, so I can't give a full report on the book. In fact, the story so far only includes the history of the Bank of England up to 1844.

But the story so far is pretty simple. Central bankers are clueless when it comes to stabilizing the economy. Central banks are vehicles for lubricating government finance, and in Britain and the US they have done this job very well. Good work, chaps!

But we expect more of the central bankers. We expect them to lean against the wind. We expect them to lean against bubbles and booms and we expect them to step in to prevent collapse during banking crises.

Central bankers are very good at doing their job of acting as the government's banker. Unfortunately, they are lousy at doing what we want them to do, and that is to stop the big booms before they turn into bubbles and busts.

We think of the Bank of England as an august body with the wisdom of Solomon. Not a bit of it. The story of the Bank of England is one clueless mess after another. 1720 and the South Sea Bubble. 1745 and the panic of Bonnie Prince Charlie. 1797 and suspension of the gold standard in the Napoleonic Wars. 1819 and the deflation on the resumption of gold payments after the Napoleonic Wars. The crash of 1825.

But the Bank did a bang-up job of acting as the government's banker. The Brits ran the National Debt up to 250 percent of GDP by the battle of Waterloo. You can credit the Bank of England for that.

What excitement! What suspense! And there are still 300 pages left to go!