He's Out of Ammo; She's Loaded for Bear

If you want to know how much trouble President Obama is in, look no further than his federal pay freeze. It's a gimmick, and it shows that he's out of ammo. The glorious days of 2009 when liberals seemed to be converting liberal shibboleths into government programs at a rate of a billion dollars an hour are over. All he's left with is a symbolic pay freeze and doing a deal on the Bush tax cut extension.

According to Rich Galen, the deal is tax cuts extension for unemployment benefit extension. That is not so good for Democrats because, compassionate though it may be, extending unemployment benefits will delay the return of the unemployed back into the labor force. That will delay the recovery. That will lower the chances for President Obama to get reelected. (On the other hand, the equity markets are up two percent today).

Then there is Sarah Palin. She's got another book out, America by Heart, and she's loaded for bear. I notice in her new book that she has stopped calling herself a commonsense conservative. "Commonsense Conservatism" was the line in her first book, Going Rogue. In the last chapter of her new book she calls for "Commonsense Constitutional Conservatism." Well now. What would that be all about do you think? I will tell you.

Sarah Palin is not the clueless trailer trash that our liberal friends want her to be. Instead she is a skilled elected politician who has done it the hard way, working up from city council to mayor to governor without friends in powerful places. She understands that it no longer enough to be a commonsense conservative. Not after two years of the Tea Party.

Palin understands that the fulcrum of the Tea Party movement is not specific issues but the general demand that we return to the concept of limited government, a government of laws rather than a government of programs.

How do you get limited government? You start with a constitution and a people that believe in it. For the last century, beginning with Progressives like Teddy Roosevelt and Woodrow Wilson, our liberal friends have advanced the idea of a "living constitution" that could be adapted to the times. The real meaning is, of course, that the constitution could be changed on the fly rather than the laborious process of constitutional amendment.

Notice that the "living constitution" theory means that the government can do anything. It reduces government to a pure contest of power. One year the government may change the constitution as the behest of the popular will, another year the government may change the constitution at the behest of the educated elite.

The result is what we have today. It is a government that can't say no, a government that has promised pensions and benefits to the people that can never be delivered and will result in a train wreck at some point. After the train wreck the liberal clients will find that the promises are worth nothing.

But now the people, through the medium of the Tea Party movement, are telling the progressive elite that they demand a return to constitutional government, a limited government not a living government.

Sarah Palin is one street-smart politician. And that is why she is now a "commonsense constitutional conservative."

Central Bankers are Useless

Wikileaks is all very well. But who needs to know that the Arab rulers in the Middle East are more pro-US than they like to let on, or that they are afraid of Syria and Iran. We knew that. We just didn't know the words they used.

We also know that good old Arthur Burns, Chairman of the Federal Reserve Board from 1969-74, was a pushover who let President Nixon push him around and inflate his way to reelection.

Now we have the old-fashioned equivalent of WikiLeaks to tell us.

It turns out that Uncle Arthur penned a diary in spiral-bound notebooks during his years in Washington, DC. His widow gave the notebooks to the Gerald Ford Presidential Library, and now we have Inside the Nixon Administration: The Secret Diaries of Arthur Burns edited by Robert H. Ferrell.

The diaries don't tell us anything new. We already knew that Arthur Burns was a pushover. It's made pretty obvious in bouncing titles like A History of Central Banking in Great Britain and the United States by John H. Wood.

In fact Central Banking shows pretty conclusively that 20th century central bankers were mostly completely useless bureaucrats. In the US there were only two that were any good. William McChesney Martin had his moment when he won the Fed vs. Treasury battle in the early Fifties by raising interest rates to end the accommodative policies during World War II. And Paul Volcker stopped the Seventies rot with bar-tight monetary policy to break the Nixon-Ford-Carter inflation.

The most useful commentary on monetary policy since the government gave us the Federal Reserve Board is that the dollar, worth about 1/20th of an ounce of gold in 1913, is now worth about 1/1400th of an ounce of gold. Here's another benchmark. When Uncle Arthur bought his spiral bound notebooks back in 1970 they cost $0.49. Today the notebooks cost $4.95. That makes today's dollar worth about ten cents in 1970 dollars. Thanks to our brilliant central bankers.

One of the justifications for our current policy of "mild" inflation is that it helps prevent meltdowns like the Great Depression of the 1930s and the frequent financial panics of the 19th century.

That's nice to know.

Diversity? What Diversity?

Everybody knows that liberals are all in favor of diversity. Except when they aren't.

For instance, in the light of the recent election, which party is the more diverse? Here's the way the Washington Post sees it.

The Republican Party's big gains in the House came largely from districts that were older, less diverse and less educated than the nation as a whole. Democrats kept their big majorities in the cities...

The Obama coalition remained intact. Democrats remained strong in areas with the party's core of minorities and higher-educated whites.

Republicans made big gains with the white working class, of course.

We've all been carefully taught to believe "diversity good," "minority votes good" by our liberal preachers, but what does it mean? It means that the Democrats do really well with people who get benefits from the government, but not so well with just about everyone else. In particular, writes Michael Franc, Republicans do really well with veterans.

How diverse is your party, honestly, if its voters are confined to the educated elite and its benefit clients in the inner city? Wouldn't it be much more broadly based if it had solid support in the great American middle class?

If you think seriously about the Democratic supporters, you have to be concerned. The black vote is up over 90 percent. That can only go one way, and that is down. And the Hispanic vote is notably driven more by economic status than by race. As Hispanics integrate into the great American middle class they start voting Republican. Obviously liberals will vote Democratic until the last government grant evaporates and the last abortion is performed, and good luck to them.

The Washington Post puts up a brave front, celebrating gains in Hispanic votes and hauling out demographer Ruy Teixeira: "Republicans do the best in areas that are typically not growing very fast and don't look like the present, or certainly the future, of the country," he says.

There's another way of saying that. People voting against the regime are people who are losing out in the Obama economy of stimulus and crony capitalism. Of course the losers are voting against the government. That's what they always do.

Politics always involves a lot of blind faith in your side, putting a shine on your party's prospects and painting a dark prospect for the other guys.

But is it really a glorious future for the Democrats if their voters are liberal experts and government beneficiaries? Surely the Democratic Party was built for better things than that.

Wall Street and Washington

Whenever the politicians create a scapegoat, you can guess one thing. The scapegoat isn't to blame. It's the politicians.

So when the politicians blamed greedy bankers for the mortgage meltdown, you had to know that the bankers were at worst the willing accomplices of the real greedy crooks. And they had to be the politicians.

So when you read about Charles Gasparino's Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street you know the real story.

There's only one thing to remember when it comes to figuring out Wall Street. It's the old, old line from Jesse Unruh, once Speaker of the California Assembly. "Money is the mother's milk of politics," he said. Unruh was talking about campaign contributions, but the same applies to government finance, only in spades. If money is the mother's milk of elective politics, then money is the very red blood corpuscles in the blood stream of government. Here's a story that tells it all. I got from The Merchant Bankers by Joseph Weschsberg.

After the Napoleonic Wars, in 1815, the Allies demanded an indemnity of 700,000,000 francs from the defeated French. How on earth would the French come up with that kind of money? Perfectly simple, said French merchant banker Gabriel-Julien Ouvrard. Don't borrow from the rich in France with a compulsory loan. Don't raise taxes. Float a bond issue in London. Everyone thought the guy was crazy. Why would the Goddamns pay for the indemnity? But it worked! Ouvrard got permission from the Duke of Wellington, the general of the Allied occupying army in France. He got merchant bankers Barings and Hope & Co to syndicate the loan and in 1817 the French sold a 350,000,000 franc bond issue in London. So they got Brit investors to cough up the money to pay the indemnity and got to pay back the Brits in installments.

This little story illustrates the reality of government finance. Governments need the bankers more than they need the armed forces, more than they need their supporters. Because it is the bankers, more than anyone, that keep them in business.

If you don't like the idea of Wall Street and Washington in bed together, then make the bed smaller. Cut the size of government. At least you'll know then that neither Wall Street nor government is comfortable.

The Emergent Democratic Minority

Now that the prophecies of an Emerging Democratic Majority by chaps like John Judis and Ruy Teixeira have been laid to rest, let's look at the more realistic idea of an emerging Democratic minority, which seems more likely.

Michael Barone takes a look at the demographics of the late election and notes the desertions of several long-term stalwarts from the Democratic rank and file.

The Jacksonians from Appalachia and the South who have been Democratic since the days of Andrew Jackson in 1828 seem to be definitely gone.

The Germans and Scandinavians from Minnesota, Wisconsin and Iowa are definitely on the move, in particular in Wisconsin.

The Rust Belt was a disaster for Democrats as industrial workers in trouble voted against big government.

The Hispanics are showing definite signs of movin' on up from liberalism, in Florida, in Texas, and in Nevada and New Mexico.

Even the Finns in upper Michigan are deserting the ship.

The only chaps still firmly in the Democratic camp are gentry liberals and blacks. My prediction is that blacks will start deserting the Democrats as soon as Barack Obama leaves the presidency and they no longer feel the need to defend their guy to the death.

That leaves our friends the gentry liberals as the core of the Democratic Party. I want to believe that gentry liberals are Democrats because they benefit disproportionately from Big Government. Just voting their pocket-books, don't you know. But the trouble is that I know too many liberals that don't work for the government. They are liberals because they believe.

Life after Liberalism

Women yearn for love; men yearn for victory. Our liberal friends yearn for the perfect ten-point program. Alas, our dreams are fantasies. Yearning for love, women live with the grief of loss; yearning for victory, men live with the humiliations of defeat. And liberal government programs end in perfect failure.

The beginning of wisdom is to dissolve our fantasies, to surrender to loss while ever keeping the light of love shining, to accept defeat while continuing to fight the good fight. But what of the perfect government program?

For two hundred years our liberal friends have pursued a chimera. They have longed to create a perfect world of peace and justice through a system of centralized administrative government. Their method has been to remove certain socially necessary activities from the economic sector and subject them to the administrative control of the government, the political sector. This, of course, has the effect of stripping these activities of their social character and reducing them to a transaction of force, for government is force, and politics is power.

Each act of force is the victory of the strong over the weak; it is the triumph of power over love. And so, wherever liberal programs hold sway, there is no peace and no justice. At best, liberal government produces a society of envy policed by surly officiousness. At worst it descends into the hell of political terror. At its best it operates with the Keystone Kops incompetence of the US Transportation Security Administration; at worst it slashes through history with the murderous rage of the Soviet KGB.

Every life ends in death; every government ends in default. It is our task to imagine and to build a life after the default of liberal government.

It is possible to set forth on this quest because we now know that the trajectory of liberalism has passed its apogee. It must now end in default, because it cannot deliver on its promises. It must either default on its promises, or default on its debt.

As liberal government defaults on its promises, it will lose its power. It creates a space for a new power, a new foundation and a new order. We already know what this foundation must be. It must be a new dedication to the principles of limited government set forth in the US Constitution. Our society is not a single government monolith nor can it flourish and grow when all social transactions are collapsed into the political sector.

Our modern commercial society is founded upon a differentiation of the public square into three sectors. There is the political sector, the realm of force where people jostle for power. There is the economic sector, the realm of trust where people cooperate to serve each other's needs. Finally, there is the moral-cultural sector, the realm of faith where people search for the meaning of it all. The differentiation of society into these three institutional sectors means that society cannot be yoked to a single purpose or moral vision. It is a plural society, with many competing moral visions, many economic actors competing to serve, and many political actors lusting for power.

Our liberal friends, in their century-long liberal dynasty, have used their power to blur, and sometimes collapse the separations between the three sectors. With their secular religions, socialism, fascism, and communism, they sought to fold the moral-cultural sector into the political. Whenever they succeeded, the result was tyranny. With their war on business they sought to fold the economic sector into the political. Whenever they succeeded, the result was poverty.

Our task is simple. We must renew the promise of the differentiated society. There must be a renewal of the separation of church and state, to keep the political power from co-opting and corrupting the moral-cultural power. And there must be a renewal of the separation between economy and state, to keep the political power from dominating and corrupting the economic power.

Of course, this practical and honorable project will not bring in the millennium. But it will heal the corruption of the centralized liberal administrative state. It will let women dream of a love free of liberal rapine, and it will let men dream of victory in a life free of the liberal kowtow.

And people will rejoice in Life after Liberalism.

The Mystery of the Missing Voter?

Now I've seen it all! Democrats are apparently shocked by the mystery of the missing voter. What happened, they wonder, to the hordes of Democratic voters of 2008 that turned out to elect Barack Obama? Writes Gerald Seib,

A popular theory of this year's midterm election holds that Democrats took a shellacking in part because big chunks of the party's core liberal base, discouraged at the path of the Obama administration, stayed home rather than show up to vote as they did in 2008.

Well, not exactly. According to a Wall Street Journal poll of 2008 Obama voters that didn't turn out this year, they are not angry lefties. No, the explanation is much simpler than that. Sure, they are mostly self-described as Democrats.

But they also were more likely to identify themselves as "not very strong Democrats" rather than "strong Democrats." And the largest share identified their ideology as moderate rather than liberal.

In other words, these are Americans that are not strongly connected to politics and not strongly motivated to vote.

That fact rather steps on the desire of many strong Democrats to rile up the Democratic base by doubling down on the liberal Obama agenda with a strongly partisan attack on the Republicans.

No, the voters that stayed home are momentum voters. They voted for Obama because they got swept up in the euphoria of Hope and Change. To bring them out again, the president is going to have to rile up the uncommitted.

Really, that's going to be almost impossible, absent a big turnaround in the economy. Think about the average uncommitted young woman voter. In 2008 she found herself all excited by Candidate Obama because all her friends were excited. But now she and her friends are looking for work and not finding it. They are discovering, for the first time in their young lives, that politicians will say anything to get elected. They are discovering that politics really doesn't transform their lives with Hope and Change. What is it going to take to get those young voters back to the polls? A strong economy, that's what. But even so, they are not going to be marching to the polls in battalion strength like they did in 2008. You only get to do the euphoria experience once, when your side is out of power and half the electorate is groaning for release from the evil corrupt in-party.

What President Obama needs is a Morning in America feeling, like the feeling that Americans felt in 1984 when the economy had emerged from four years of inflation and recession. The big question is whether Obama's economic policies will deliver that. After all, his policies are the exact opposite from President Reagan's policies in 1981-84. Instead of hard money, he is backing "quantitative easing." Instead of spending cuts, he favors big spending increases. Instead of tax rate cuts, he wants to increase tax rates on the most productive Americans.

It's a great experiment, and we will see what works by 2012. And then the missing voters of 2010 will get to decide whether they want Four More Years, or whether they think it is Time for a Change.