The Wisconsin Fallout

Most of the time in politics the two sides stalk around each other, avoiding risky actions that could backfire.

But occasionally they go for a win. In the two years of Democratic power in Washington 2009-2010 President Obama and the Democratic Congress marched boldly forward increasing the size of government and pushing towards their holy grail of complete government health care. We know what happened: the American people reacted with alarm and elected a Republican House of Representatives in the biggest switch in half a century.

Now we've seen Republicans, newly elected to a majority in Wisconsin, push union collective bargaining reforms to curb the power of public-sector unions in that state. Will that bold push provoke a similar backlash? Who knows?

What is shocking to me, as a conservative, is the astonishing double standard when liberals take to the streets. It's considered an outrage when conservative demonstrators put one foot wrong. But hey, when liberal demonstrators invade the Wisconsin state house that's just the people taking action against injustice, the rage of the workers against the mean-spirited actions of the bosses.

Of course, both sides in the political wars tend to outrage about the shenanigans of the other side, and overlook their own indiscretions. But my experience as a conservative is that you always have to be thinking about how you look to the uncommitted moderates in the middle. You get the feeling that the liberals in Madison, Wisconsin, just don't care about how they look to the moderates in the middle.

Perhaps liberals are just used to the old media rules in which the liberal MSM always condoned bad behavior on the left and always played up bad behavior on the right. It's the conceit of conservatives that the rules have changed and that liberals can't get away with stuff any more, because FoxNews and citizens with pocket video cameras can bring lefty outrages onto the national radar. The recent sting on NPR executives, timed just as Congress is considering its funding, suggests that the game has changed.

But nobody can tell how the political battles since 2008 will work out. Have Democrats pushed too far with ObamaCare? We won't know until after the 2012 elections. Will Republicans in Wisconsin get punished for curbing the power of government worker unions? We'll get an early look from the results of the recall campaigns that the Democrats are planning against Republican state senators.

My concern, expressed in "Radical Suits and Their Suckers," is that Democrats are playing their public-sector union supporters for suckers. In the end, government workers are going to be paying a lot more for their pensions and health care. After all the parades and demonstrations, the radical suits will head off to the next gig, and the government workers in Wisconsin will be stuck with fewer benefits.

The Futility of Energy Policy

For some reason, people think that the government ought to have an energy policy.

You'd think we would have learned by now that politicians and political activists are clueless when it comes to anything in the economic sphere, but hope springs eternal.

But it's not just crazed lefties that fall for this folly.

Here is energy expert Nansen G. Saleri worrying about energy efficiency. He's right to suggest that there is little worry about $200 per barrel oil, for there is plenty of oil and plenty of natural gas (particularly given the new horizontal drilling technologies).

The problem is inefficiency.

According to a 2007 study by National Petroleum Council, at the request of the U.S. Department of Energy, approximately 61% of energy produced is lost due to factors such as poor insulation, gas-guzzling vehicles or suboptimal power plants. On average, only one out of three reservoir barrels is recovered, which translates to an overall efficiency of only 13% for oil that is converted to a usable form. Improving energy efficiency should be a top priority, not just in our surface usage but also at the point of extraction.

Then he calls for a national energy policy. The Obama administration is ambivalent about energy, he worries, and needs a clear strategy going forward.

This will require real leadership and the clear articulation of energy goals, costs and priorities. Ambiguity will not serve the best interests of future generations. The U.S. does not have an energy problem. It has an energy strategy problem.

Oh dear. Look, efficiency is not a problem. It just means that, all things being equal, we can afford to put off making vehicles and power plants more efficient. People are not fools; they weigh, instinctively, the advantages of continuing as usual and making investments in efficiency. And the problem right now is that the Obama administration, bowing to its liberal environmental base, is going flat out trying to force the nation into a post-fossil-fuel era with chimerical ideas like wind and solar power. God knows what the penalty in inefficiency will be from this hare-brained effort.

What's needed is a separation of economy and state. Let the state set forth environmental standards, even including the dreaded CO2 if they can get away with it. But when it comes to efficiencies and technologies, then the government should get out of the way.

Who knew five years ago, apart from industry insiders, that horizontal drilling and "fracking" would revolutionize oil and gas drilling? No national energy policy worth the name could have forecast this game changer.

The fact is that the market economy is the only way to combine the whole bundle of economic questions: future resource availability, efficiency, technology. It's not very good at it, but it recovers from its mistakes quickly.

But government is different. It doesn't learn from its mistakes. In fact it only changes policy after it's driven the country into the ditch. An example is the folly of ethanol subsidies. This energy policy has converted 40 percent of the corn crop to fuel production from food production, has raised the cost of food, and is a net loss, energy-wise, because of the energy cost of converting corn to ethanol.

It is admittedly not the case that every aspect of any national energy policy will suffer from the same problems as the ethanol program. The chances are that the ethanol scandal will look like a molehill compared to the mountain of problems and disasters that a real national energy policy will create.

Arguing About the 2007 Deficit

A lot of people are comparing the federal deficit for the last month--a record $223 billion--with the deficit in FY 2007 in the Bush administration. But somehow nobody can agree on the Bush number.

That's where usgovernmentspending.com comes in. It has a special Budget Analyst so you can look things up. In particular it has an "estimate vs. actual" feature that lets you look at a specific fiscal year, say 2007, and look at the forecasts for spending and deficits compared with the actual outcome.

When the president publishes his budget it includes estimates on future spending and revenue as well as reports on past spending and revenue. In the FY12 budget just sent up to Capitol Hill, the president sent Congress his estimates for FY12 starting in November 2011, as well as his report on actual spending for FY10.

So here is how the federal deficit for FY 2007, in billions of US dollars, worked out, in forecast and in hindsight.

	FY2003 Budget	FY2004 Budget	FY2005 Budget	FY2006 Budget	FY2007 Budget	FY2008 Budget	Actual FY 2007
Federal Deficit	-104.0	178.2	241.3	312.1	354.3	244.2	161.0

So there it is, straight from usgovernmentspending.com.

It is shocking to see how the deficit estimate changes from year to year. Imagine! In the FY 2003 budget the president estimated a surplus for FY 2007. But that was before the War in Iraq got started. Then the estimate changed, so that by the time that President Bush sent the FY 2007 budget to Congress in February 2006, he was estimating a budget deficit of $354 billion. Then, after all that fuss, the deficit came in at $161 billion.

You gotta wonder. Who's in charge here?

Bill Whittle's Three Ages Theory and Mine

If you want to explain the world simply and dramatically, the best way is usually through a Three Ages theory: first there was a golden age, then things got screwed up, and now the new age will restore the goodness of the old age in new ways.

Bill Whittle has just done this with a YouTube video, "The End of the Beginning."

His three ages start with the Agricultural age, when the invention of agriculture and settled life allowed the development of the city state, government, and money. In the United States and its constitution this created a society that was open, horizontal, decentralized. But then came the Industrial age and the robber barons. They bribed politicians to favor themselves and their monopolies (see picture of Rockefeller, Vanderbilt, Carnegie, and Morgan here). To challenge this corruption of the system came the Progressives to build up a central government power to challenge the power of the robber barons. But now comes the Information age, that is "horizontal, independent, light, fast, agile, decentralized, local, smaller, cheaper." For this age the Progressive menu and its powerful government and labor unions is a corrupt remnant of the Industrial age.

My Three Ages theory is different, because I think that the idea that the robber barons were corrupt and politically powerful is mistaken.

In my view it was understandable in the 19th century to imagine that the industrial barons could be dangerous, but the events showed that they were not. Let's take the four robber barons pictured in Bill Whittle's video. John D. Rockefeller was only interested in bribing politicians when he needed political permission to, e.g., build pipelines from Pennsylvania oilfields to the Atlantic ports. Rockefeller retired from active business in his 50s and turned to philanthropy. Cornelius Vanderbilt was a railroad man that built the powerful New York Central from New York to Chicago out of a bunch of smaller railroads. Again, Vanderbilt had to get land for his ventures and land means politics. Vanderbilt was not a philanthropist. Carnegie was an unpleasant fellow, but he built the steel industry and gave us cheap steel before selling out to J.P. Morgan for a fortune in bonds. He ended his life as a philanthropist. J.P. Morgan was at the apex of banking and specialized in railroad bankruptcy. Railroads were commonly built upon and wing and a prayer, and often collapsed from too much debt. Morgan cleaned up the financial messes: "morganizing," it was called. As Morgan got older he built a large art collection and gave most of it to the Metropolitan Museum in Manhattan.

The point is that none of these robber barons were particularly interested in political power. They were interested in their businesses, and when they got older they turned to philanthropy. Moreover their monopolies were short lived. Rockefeller had a huge monopoly in oil, but as soon as the Progressive trustbusters started after him wildcatters found oil in Texas. So that was the end of the oil monopoly. Carnegie and US Steel? Yes, but it was challenged by Bethlehem Steel. Vanderbilt and the New York Central? Challenged by the Pennsylvania Railroad. But what about big central government? Who was there to challenge its monopoly power?

So my three ages theory is different. In the hunter-gatherer age society was horizontal and egalitarian. But the invention of agricultural society and its wealth created a vertical society of lords, empires and temple religions that ended with absolute monarchs, bureaucracies, and state churches.

On my view the third age is the industrial age, the age of revived horizontal and egalitarian society. It releases enormous economic powers but those powers are not threatening in the way that emperors, temple priests, and central bureaucrats were and are. That's because in the last half millennium we have developed a political philosophy of separated powers, to keep the power of the economic sector separate from the political power and the religious, or moral/cultural power.

The Progressives built their politics upon an illusion, that the industrialists were more than an economic power. The industrialists were a political power to be feared, and could only be defeated by a countervailing political power. Thus they built a centralized political power that was way more powerful than it needed to be in order to deal with the new economic power. The result is all around us, in a dollar worth about one percent of its value a century ago, a vast political patronage structure that has revived the peonage of the feudal era with big government pensions, health care, education, and welfare. On top of the political structure is a corrupt and venal educated class that just hasn't a clue about its cruelties, its corruption, its wastefulness, its injustices, and its delusions.

We don't need a unified political system with extraordinary powers. We need a separation of powers between the political sector, the economic sector, and the moral/cultural sector.

Modern liberalism is a political movement committed to a unitary political power that has, in its extreme versions, brought unimaginable miseries on billions of people. Modern conservatism is a political movement that hates the unitary state and is committed to the new vision of a society of separated powers, a society not just a state.

Health Insurance Doesn't Matter?

Surely you are joking, Mr. Feynman.

I've written about this before: the fact is that there's only been one longish-term study on health insurance, the RAND Health Insurance Experiment. The result was the same as the Folgers coffee test. No difference. Well, not exactly. As Jim Manzi says,

According to the study, “The poorest and sickest 6 percent of the sample at the start of the experiment had better outcomes under the free plan for 4 of the 30 conditions measured.”

Otherwise the study showed that the more "free" health care people get, the more they use it. That's all.

I suppose that the reality in back of health care is that, when people are sick, they use their human ingenuity to get access to health care. Humans are good that that, presumably for evolutionary reasons.

But the problem with health care is that there are two kinds: health care that makes you better and health care that makes you worse. Manzi then goes on to kick a hole in the whole approach to health care proposed by liberals like Ezra Klein.

Klein clearly has a very sophisticated take on the issue, and wrote in 2009 that health-care reform is not primarily about improving health, but in reducing how much we spend on it. As he put it, “The purpose of health reform, in other words, is to pay for health care — not to improve the health of the population.” Fair enough. But the real debate, then, would be about whether market forces or bureaucratic control would be better at reducing costs, not about which would be better at promoting health for the “poorest and sickest” or anybody else.

Oh come on? ObamaCare is all about reducing health care costs? Really? Is Ezra Klein seriously suggesting that the political hardball of 2009 and 2010 was just a decent effort to search for ways of reducing health care costs?

If there is anyone left in the world who thinks that the bureaucratic method is the way to reduce costs on anything, I've got a bridge to sell them.

The fact is that people in politics are people interested in power. They get power by winning elections. Politicians, left and right, design programs to distribute money to their supporters. Democratic politicians distribute money to their supporters with spending programs; Republican politicians distribute money with tax cuts. There are plenty of people that love the idea of free health care for them and their family. That kind of person votes for politicians that offer free health care and the politicians know it.

It's Not the Rule of Law

We westerners like to witter on about the importance of the rule of law--compared to those lawless Islamic radicals, for example. The importance of law in the western canon goes right back to Homer and the Iliad. "A clanless, lawless, hearthless man is he that loveth dread strife among his own folk." So spake Nestor to his fellow Greeks at the gates of Troy. In modern terms, meat-and-potatoes conservative Sean Hannity speaks about people who go to work, follow the rules, pay their taxes, and obey the law. Yet this rules and laws principle reaches its apotheosis in the administrative welfare state where every social need is provided somewhere in a vast bureaucratic rulebook. This is what the culture of rules and laws leads to?

In fact, the world doesn't work on rigid rules at all. It may be that the lifeless world of cold steel and plastic works in a mechanical way, according to universal laws that provide one rule for all motion. But the social world does not, and we can get a clue from an unremarked fact about the mechanical world. The world of Newton's mechanics only works because of lubrication. The great clanking steam railway locomotives that I remember from my youth only worked because of the oil and grease in their bearings. Without the lubricating oil keeping the metal parts apart, every machine in existence would grind to a halt in seconds. Sure, the laws of mechanics and heat engines apply, but they are all framed by abstracting away the fact of friction. Friction is an annoying problem that gets introduced into mechanics by the back door. The same applies to social life.

Clausewitz famously introduced friction into his theory of war. Friction and the "fog of war" are what makes nonsense of every plan of attack. Shakespeare's Portia famously exposed the difficulty of enforcing a contract gone wrong. How do you measure out the pound of flesh that is specified as the forfeit? You can't live just with contracts and rules, you need also mercy, that falleth like the gentle rain from heaven. And people in their day-to-day activities replace strict rules with the flexibility of give-and-take. In British law this used to by symbolized by the two-track legal system, with courts of common law and courts of equity.

Even the lordly President Obama has already started to shade the majestic rules of his universal comprehensive health plan with waivers--for the politically connected big corporations and labor unions.

In the hunter-gatherer culture, humans worked up many answers to the friction problem. They designed their religion to deal with the freeloader problem; they organized all-night ritual drumming and dancing to soften and melt their feuds and animosities. Their political structure was remarkably egalitarian.

In our times we have capitalism which is a social system to reward flexible adaptation to the needs of others. It lies upon a hard bed of rigid commercial and contract law, but its everyday operations use give and take. Whatever the rules may say, it is the aim of every business owner to charm and please his customers, to create a long-term relationship that shades the starkness of buy-and-sell into a practical friendship.

Our great clanking welfare state is built upon a classic mistake. It built a vast machine of great complexity but forgot about the lubrication.

The great task of the next age of reform to to replace the clanking mechanical monstrosities with new institutions based upon the eternal principles of social life shared by all the social animals. For social animals, rules are not chiseled on tablets, or promulgated from a throne; they hover in the air suspended in a mist of social cooperation and give and take. This is a lesson that many forgot in the mechanical age. The sooner we relearn it, the better.

Obama and Reelection

Pundits are now seriously turning to the question of President Obama's reelection chances. Jay Cost's "Morning Jay" at The Weekly Standard gives his usual sensible advice. Forget the hysteria and the ups and downs in the pundit market.

[F]irst, Obama looks no more or less beatable now than he did four months ago; second, he looks fairly vulnerable.

Given the four standard reelection scenarios--economy good/president responsible, economy good/president not responsible, economy bad/president to blame, economy bad/president not to blame--he picks door #4 as the likely scenario.

Personally, I think that we are getting closer to the possibility of #3, the Hoover option. President Obama's beliefs and instincts lead him towards stupid economic policy, from bailouts to stimulus to regulation to inflation to the latest administration wheeze "to force the nation's biggest mortgage servicers to cough up $20 billion for principal write downs on 'underwater' mortgages," according to the Wall Street Journal edit page.

When will liberals learn not to monkey with the balance sheets of the banks?

If the president wants to avoid the Hoover reelection scenario he needs to get with a pro-growth economic policy really fast, and one that gets the housing market above water by methods other than stupid liberal pet tricks.

That's why I think that Stanley Kurtz's worry about Obama doing the Alinsky is beside the point. Kurtz reckons that Obama is crazy as a fox in keeping his ideology under wraps for Alinsky taught him to keep his "views to himself, and to act by soliciting (and quietly manipulating) the desires of others instead."

This sounds creepy and conspiratorial, but most politicians act that way, agreeing with the voters on everything and speaking in general platitudes, pushing their agenda with flank movements rather than direct ideological attacks.

Whatever his ideology, Obama has to act fast to get the economy visibly on track by the spring of 2012, and time is getting awfully short. Chances are that liberal stunts aren't going to work--they've pushed the entire boat out anyway. No, Obama is going to have to get pro-growth, and fast, if he wants reelection. Otherwise the economy is still going to be in the tank by the spring next year and it will be all over for the president and the Democrats.

Win or lose, a pro-growth agenda from the Democrats will be a good thing for America. Liberals have spent the last century running away from the basic fact of the modern economy; you can't bang it around with a billy club. Government's role is to set the rules, stand back, and fight the temptation to dig young plants up by the roots to figure out why they aren't growing fast enough.