A Tale of Two Tariffs

Back in the 19th century the Republican Party rode to victory, election after election, on the Tariff.  It was common sense, really.  By charging a fee on imports we Americans could make imports from decadent Europe a little more expensive and help boost American jobs and wages.



It all worked like a charm until the economic Armageddon of 1929-33.  Then the Smoot-Hawley tariff helped bury the Republican Party for a generation.



That was then; this is now.  Now the Democratic Party is reaching the end of the line on their Tariff.  The Democratic tariff is not a tariff on imports.  The Democratic tariff it is a tax on jobs.



Think about it.  If you are a "job creator," as we Republicans like to say, you find that when you pay a new employee you must also pay the government for the privilege.  There's the 7 percent payroll tax, the 1 to 6 percent unemployment tax, the premiums on the state's workers' comp. program.  It could add up to a 20 percent tariff that you pay the government on each dollar of each worker's pay.  Then the worker pays their share of the payroll tax, plus income tax if they earn decent money.  That's another tariff, another tax on jobs.



But hey, it's just common sense, right?  We have to fund the government's social insurance programs for retirement, health care, and unemployment compensation somehow.  Right?



Back in 1937 when Social Security taxes first started the tariff on jobs was one percent on the employer and one percent on the employee.  And only the rich paid income tax.  The big 1937 recession was probably not caused by the new FICA tax, but by the 1935 Wagner Act that resulted in huge boosts to union wages.



But now that the tariff on jobs--on ordinary low wage jobs--is hitting 20, 30 percent...  Well, just think back to the days of the Smoot Hawley tariff, when tariffs on imported products reached almost 20 percent.



Economist Deirdre McCloskey writes:

“‘Jobs’ are deals between workers and employers, and so ‘creating’ them out of unwilling parties is impossible. The state, though, can outlaw deals, and has.”

Let us expand this notion.  If "Jobs" are deals between workers and employers, then "Products" are deals between producers and consumers.  Everything the government does to get between workers and employers or between producers and consumers is going to sour the "deal."  Whether it's a tariff on an import, or a tax on a job, it makes the deal less attractive to the parties to the deal.  At some point, they are going to say: "screw it, the deal is just not worth it."



So now tell me that the Obama administration, intent upon raising the tariff on labor, is as smart as they say it is.

Let's Make the Payroll Tax Cut Permanent

Conservative talk-show host Michael Medved is worried that President Obama has a plan to make the current payroll tax cuts permanent and make up the difference on higher income tax rates.  The president has already tipped his hand that 2012 would not be the right time to "raise middle-class taxes".

[T]he new low rates in payroll taxes for every American household, from 6.2 percent in 2010 to 3.1 percent in 2012, won’t suddenly evaporate at the end of 2012; they will become permanent almost inevitably, shrinking revenues not by $240 billion in a single year but by at least $2.4 trillion over 10 years.

But I say: Bring It On.



The current payroll tax, falling heaviest on wage earners, is part of the system of political defense in depth for Social Security and Medicare.  It preserves the illusion, promulgated first by FDR and believed by many Americans, that Social Security and Medicare are insurance programs.  I paid into the trust fund, Americans say, so I got my benefits coming.



But if politicians cut the tax so that it clearly is no longer funding Social Security properly, then the inconvenient truth starts to emerge, that Social Security is really a welfare program.  Then, of course, the sacred aura surrounding the program starts to fade away.  People might start to say: how come those Latinos down in Chile got a genuine savings program and we just have this joke of a welfare program?



Yeah. Let's raise income tax rates.  Let's screw the rich.  But the problem is that US tax rates are already pretty high by international standards.  If we make them higher then people are going to start serious tax avoidance, and maybe even move to more friendly tax regimes.  And the higher you make the rates, the more that it pays people to pay politicians to carve out crony capitalist exemptions and deductions.



And there is another reason.  One of the ways that Democrats prospered in the 2000s was that the professional middle class was doing well, tax wise.  Taxes on wages were moderate, and tax rates on capital were reduced.  The result was that upper-income people did not need the Republicans to represent their interest and started to dwell more on the embarrassing religious enthusiasm of the downmarket social conservatives.



President Obama's interest in taxing the wannabe rich is going to concentrate the minds of the "economically conservative, socially liberal" educated professional classes.  And that won't add up to votes for our Democratic friends.

"Care About" or "Care For"

The eternal complaint about the government is that the government doesn't care, and so politicians are always anxious to present themselves as caring.  The pollsters are always asking the question to voters: "Does the government care about people like me?"

So Peggy Noonan listening in on a couple of focus groups hears this:

What do they want in a political leader? Someone who cares about "Jane Doe on Main Street that can't pay her electric bill." Someone "with passion not for himself but for America."

The problem is that it is a short step from a leader "who cares about me" to a government that "cares for me."  But this is actually a big step.  It is the step into slavery.  Robert Lacey and Danny Danziger tell how this worked in England in The Year 1000.  Slavery back then could be a penalty for crimes ranging from "certain types of theft to incest."  And, of course, you could be captured by the Vikings and sold into slavery.  But you could become a slave by your own act.

People also surrendered themselves into bondage at times of famine or distress...  [I]n the year 1000 the starving man had no other resort but to kneel before his lord or lady and place his head in their hands...  It was a basic transaction--heads for food.

When a free man places his head in the hands of his lord he gives up his freedom, his birthright, in return for a mess of pottage.  He no longer wonders if his lord "cares about" him.  He has changed the relationship.  Now his lord must "care for" him and provide his food.

In reality this boundary is not as clear cut as it might seem.  You can see this in the way that ordinary people in Peggy Noonan's focus groups think about the role of the banks in the mortgage meltdown.

Who are the culprits behind our economic calamity? "The banks and the people who took the loans." But more the banks, because they had, as one woman put it, "the authority." When they gave out the loans, people thought "it must have been OK." People were "lured in" by the banks—don't worry, home values will keep going up—which pocketed the fees and kept walking.

I've noticed that a lot of people think this way.  The bank has responsibility because they shouldn't have loaned to me if I couldn't pay.  The whole authoritarian welfare state, of course, is built upon this equivocal attitude to freedom.  Employers don't just have a responsibility to pay you, but to provide benefits.  Corporations are supposed to act not just as purveyors of products and services but "give back" to the community.

This subordinate attitude, so encouraged by our liberal friends and the mainstream media, would have seemed shameful to the sturdy folk in George Eliot's Adam Bede.  In the English Midlands of 1800, Adam Bede is a modest carpenter, and believes that his work is part of his religion, "that good carpentry was God's will"; he is the perfect expression of Max Weber's Protestant ethic.  Adam looked to himself and his interpretation of the Bible to guide his life.  There is not a whisper of subordination in his character, or in the remarkable character of Dinah Morris, a twentysomething lay Methodist preacher and textile worker.  These people of the Great Awakening lived a culture of deep moral inquiry and personal responsibility.  They did not think to blame others for their troubles, and they had plenty of them.

Our time is a time when the "care for" culture of the authoritarian welfare state is collapsing in moral and actual bankruptcy.  There is a simple reason for the collapse.  Government is force.  Government does not care for anything except its power.  Government must "care about" its people, because their prosperity is the foundation and the reason for its existence.  But when it pretends to "care for" its people then it enters a wilderness of mirrors.

Conservative Jonah Goldberg jokes that too many of our liberal friends believe in a government that is a "non-hierarchical, consensus-based, extremely deliberative form of direct democracy." In their confusion they grasp a truth.  Humans as social animals prize as an ideal a society that is non-hierarchical, consensus-based, and deliberative.  But government is necessarily hierarchical, and its consensus is always something of a sham.  Because when the majority votes a bill into law after due deliberation, it votes to compel the losers to obey the new law.  Government is force, and always will be.

Unions, Soros Join "Occupy Wall Street"

Back in the 1960s the New Left used street protest to oppose the Vietnam War.  They brought down a Democratic president and helped elect a Republican, Richard Nixon.



In the 2000s the Angry Left, assisted by capitalists like George Soros, the mainstream media, and the Democratic Party, took to the streets to oppose President George W. Bush and everything he stood for.



Now, with the Occupy Wall Street movement, we see the Democratic Party use street demonstrations to support an incumbent president. And George Soros and the labor unions are along for the ride.



With sympathetic reporting on the protests from the mainstream media, we must assume that President Obama is backing the protests as part of his Soak the Rich reelection strategy.  It shows that he really is a movement leftist, as his conservative critics have charged, and really lives his community organizer values.  Left-wing protest is what he knows; left-wing protest is what he does.  So he has decided to live or die by the street protest.



Just one thing, fellas.  When the Democratic Party last tried this in the late 1960s the American people hated it. The liberals and the mainstream media all fell over themselves about the wonderful "kids" demonstrating for a just and liberated society.  But the American people went the other way.



In fact, the protest era of the 1960s and 1970s ended the Democratic Party's reign as the Everyman's party. That's because for the American people, as opposed to rent-a-mob activists, the economy and the country must work for them to prosper and thrive.  It may be tremendous fun for "students" to create mayhem in the streets, but ordinary working people need to get back to peaceable work.  The people most upset by the Wall Street protests are the retail business people in the area (often immigrant minorities) trying to run a business.



In a way, I feel amazed.  President Obama and his people can't really believe that they can get reelected this way.  By sending left-wing demonstrators into the streets?  By making the American people afraid?  If it works, they will be geniuses.



But my money says that President Obama is creating a gigantic opening for the Republican Party to take and hold the center ground of American politics.  One big reason: Women.   Politicians in recent years have avoided calling people into the streets because they know that women hate that sort of thing.  Women hate street fighting.  They like to see politicians that get together and discuss their dilemmas and all agree to get along.  Candidate Obama of 2008 was a politician who was all about people getting along and getting past the childish partisan games of the 2000s.



What has changed since then?  The answer is Obama himself.  Back then he was the cool challenger, and everything was going his way.  Now he is the embattled incumbent and things seem to be falling apart.



When pilots experience an emergency, they go with their training.  That's why the airlines do tons of emergency training.  When something goes wrong, the pilot doesn't have to think, he just applies his training.



That's what President Obama is doing in the current emergency.  He is going back to his training.  And his training is in left-wing grievance politics.  The problem is that his training doesn't really apply to the welfare state in crisis with failed programs, massive debt, and 9 percent unemployment.



So he will make it worse.  That is going to cost the US.  Big time.  And it is going to cost the Democratic Party.  Really big time.

Newt's New Contract

The Contract with America worked for Newt Gingrich in 1994 when he led the House Republicans to their first House majority in 40 years.  So why shouldn't it work again?



Presidential candidate Newt has published a 21st Century Contract with America on his newt.org website, and it's a work in progress.  But his legislative agenda is ready, and here it is.

1. Repeal ObamaCare.


2. Return to robust job creation. with 12.5 percent corporate income tax, zero capital gains tax and death tax, and optional flat tax.  Reform the Fed.


3. Unleash America's full energy production potential. with "all of the above" energy exploration and production.


4. Save Medicare and Social Security with proper savings and insurance programs.


5. Balance the federal budget "by freeing job-creators to grow the economy, reforming entitlements, and implementing waste cutting and productivity improvement systems".
   
   


6. Control the border and make English the official language.


7. Revitalize our national security system.


8. Maximize the speed and impact of medical breakthroughs "by removing unnecessary obstacles".


9. Restore the proper role of the judicial branch. Includes replacement of judges.


10. Enforce the 10th Amendment by transferring power back the states.

You can see what it is all about.  It is an "all of the above" recitation of the conservative agenda.  Except that it has nothing about the social issues.  And no wonder.  First we have to get the economy moving and heal the damage that Obamanomics has done to the economy before we try to mend the broken society.

Two points:  First, this program represents a kind of consensus in conservative and Republican circles.  And really, apart from the ever touchy subject of the entitlements, Newt's contract shouldn't have much trouble with the American people.  

Second, every bullet point in the contract is poison to liberals.  Everything in it dismantles decades of liberal dreams and liberal legislation.  It reminds us that the upcoming election is going to be a real choice, reprising the old Goldwater chestnut about "a choice, not an echo."

As the 2012 election unfolds, I can't help thinking that the Democrats are in a miserable position.  You can tell from the actions of their leaders.  Here we have President Obama going for a class warfare campaign against millionaires and billionaires, in a country that defines itself as middle class, and we have Majority Lead Reid pushing a vote on a punish China bill.  These efforts by Democratic leaders are worse than criminal.  They are just stupid.

FoxNews in 2012

It all began in 1964, according to Jeffrey Lord, when the news media took out after Barry Goldwater, calling him the "rallying point for white resistance" to desegregation.  Barry Goldwater?

The man who, during his tenure on the Phoenix City Council and in the Arizona National Guard, helped desegregate all Phoenix schools, restaurants, and the state's National Guard itself?

At the 1964 Republican National Convention in San Francisco, former President Eisenhower couldn't take it any more.  He said this to the delegates about the three liberal networks.

The delegates, he said, should "particularly scorn the divisive efforts of those outside our family, including sensation seeking columnists and commentators, because… these are people who couldn't care less about the good of our party."

The Republican delegates reacted instantaneously.

Delegates shot to their feet, shouting furiously, their applause thunderous. Many jumped up on their chairs in decidedly un-choreographed and quite spontaneous rage turning to face their media antagonists, literally shaking their fists at what Goldwater biographer Lee Edwards would describe as "startled anchormen in the glassed-in television booths high above the convention floor."

But it took 32 years before America had its first conservative TV news network.  Rupert Murdoch opened the Fox News Network in 1996 and put Republican operative Roger Ailes in charge.  Today Fox News earns a little less than one billion a year, and it defines TV news.  Now our liberal friends know what it is like to watch political stuff on TV that trashes everything you believe in.  Everyone should have that experience.  It builds character.



Probably 2008 was the last hurrah of the liberal media, as they jumped in the tank for Obama and, by hiding all the questionable stuff about him, were responsible for electing perhaps the worst president in living memory.  Here's a item that illustrates the point.  President Obama is not a man that likes to get on the phone with Democratic Senate leaders.



But in 2012 the American people will be desperate to consume political news that tells them how to get out of the horror of Obamanomics, ObamaCare, Obama's truckling to the labor unions, Obama's horrible left-wing racism and classism.  Now, with a seasoned Fox News, a teenager at 15, they have a place to go to get the news they want.



That, as they say, is progress.

Social Animals in an Age of Instrumental Reason

The trouble with capitalism, Marx and Engels wrote in The Communist Manifesto, is that it is inhuman.

The bourgeoisie... has left remaining no other nexus between man and man than naked self-interest, than callous "cash payment."  It has drowned... [everything] in the icy water of egotistical calculation.  In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

 And on top of that, the bourgeoisie had also conquered the "modern representative State" making it into a "committee for managing the common affairs of the whole bourgeoisie," and dominated presumably by the same commercial, calculating culture.

What Marx and Engels forgot to add is that culture itself had bowed to the cash nexus, for it was in the 18th century also when a professional writing class emerged into the public square, producing cultural product to be marketed to the great middle class by "publishers" with the idea of making money from culture, and truckling to the fantasies of the reading public.  And that leaves out the great calculating religious movements, specifically the Great Awakening of the mid 18th century in Britain and British North America that was run like a modern political campaign, with planning, advance men, advertising, and free media.  How inhuman, how calculating, exploitative, lacking in spontaneity, is that?

A century later, in the middle of World War II, a new generation of Marxists faced a world at war and looked into the abyss.  The whole modern project, they realized, from science to capitalism to the modern state was the project of "instrumental reason."  But instrumental reason, wrote Max Horkheimer and Theodor Adorno, is pure domination.  Bourgeois business ends up as bourgeois domination, and this is already encoded in the idea of Enlightenment and the Age of Reason.  "What men want to learn from nature is how to dominate it and other men."  And so "Enlightenment behaves toward things as a dictator toward men."

The more you think about it the more you realize that everything is tainted by this indictment.  Business and its pursuit of profit, government bureaucracies and their attempt to confine the world in a box of rules and regulations, movies, books and their prurient exploitation of fantasy, academic scholars and their pursuit of knowledge for the sake of tenure and fame, everything is exploitation, using other people for your own ends.

So what do we do about it?  Let us propose three ideas.  First, there is the idea of the separation of powers.  The sine qua non of winning battles is the idea of strategic concentration.  Concentrate your forces and disperse the forces of the enemy.  The way to limit the exploitation by instrumental reason in all sectors of modern life, from business to government to moral/culture is by a greater separation of powers, preventing the sectors from ganging up against society as a whole: no crony capitalism and the unholy combination of politics and business; no established churches (and that includes secular churches like liberalism) and the unholy totalitarian combination of religion and politics.

But if the principle of force is to be reduced, then how does society work?  The second answer lies in the very structure of the human brain, its approximate division into rational, emotional, and instinctive spheres.  If the rational sphere is all about exploitation, bending the world to our will, and the instinctive is about staying alive from moment to moment, the emotional sphere is the world of the social animal, the reduction of conflict from the bloody murder of force and feud at least to social hierarchy, the hierarchy that kept the peace in the agricultural age, and at best to friendly social cooperation, the egalitarianism of the old hunter-gatherer groups.

Marx writes of what had been drowned in the "icy water of egotistical calculation."  It was the emotions: the "heavenly ecstasies of religious fervor," "chivalrous enthusiasm," and "philistine sentimentalism."  No doubt these emotions are as capable of dominatory excess as instrumental reason.  But as a mitigation between the pitiless gaze of reason and the blind workings of instinct, it provides the rose-colored vision of the social virtues.  If the world of the future is to be a world in which domination is minimized then it must be a world in which people cooperate and work together without the promptings of the lash or the enforcement officer.  That would be a world in which the four pagan virtues: prudence, justice, temperance, and courage; are joined to the three Christian virtues: faith, hope, and love.


The third idea is the working out of voluntary cooperation.  It was Adam Smith who noted the peculiar operation of economic cooperation.  Man the social animal takes care of his own needs by satisfying the wants of others, thus delivering public benefits from private selfishness.  Despite the despotism of instrumental reason, people do not often try to exploit each other, especially others with whom they have a long-term relationship.  They like to cooperate.  Even in the most rigorous bureaucratic organizations, even in the modern army, people have found that the best instrumental results are obtained when people are freed from the tyranny of rules, when they are given responsibility and are encouraged to work together and help each other.

Humans are social animals.  Humans do best when their natural sociability is encouraged and developed.  What a concept!