Uncle Miltie at 100

Milton Friedman was the classic smart Jewish kid.  He was smart, he worked hard, and he never backed out of an argument.  We need more of his kind.



For conservatives he represents a nuts-and-bolts defense of capitalism, while Mises (another smart Jewish kid, from the city of Lemberg, now Lwow in the Ukraine) represented a more Kantian, philosophical approach.  Hayek, I would say, because of his detour through Britain, brought more of a British empirical approach to the subject.



Milton Friedman was the public face of free-market economics because of his Free to Choose TV series.  But why, you will wonder, did PBS agree to put such a man up on TV?  The reason is that conservatives were miffed that the BBC and other public broadcasting agencies had put up John Kenneth Galbraith on TV with his hymn to liberalism, the 13 part series called The Age of Uncertainty.  What about our guy, was the cry!  So, grudgingly, PBS put up Milton Friedman for a 10 part series.



Today's eulogizers seem to remember Free to Choose as a stunning success, but I remember feeling that it didn't quite come off.  The main reason, I felt, was that Galbraith in The Age of Uncertainty came across as urbane and cool, whereas Uncle Miltie was hot and combative.  Of course, Galbraith was the liberal's favorite liberal, lionized wherever he went and telling liberals exactly what they wanted to hear.  Friedman was a smart Jewish kid telling the establishment things it didn't want to hear.



Do we need another Milton Friedman today, someone who can teach free-market economics to a new generation?  No we don't, any more that we need a new Ronald Reagan.



A generation ago Milton Friedman taught men that free-market economics was the only way to go.  It was better for men to battle for market share than to battle for bureaucratic power.



But the task now is to teach women that civil society will create a better world for their children than centralized one-size-fits-all programs from the government for health, education, and welfare.  You'd think it ought to be a breeze, because women don't like being treated like a number in a line at the DMV: they think that their child is unique and that their mother's health care requires individual attention.



So we are still waiting for the smart Jewish kidette to amaze us with her brilliance and lead women away from the liberal culture of compulsion and home to freedom and the true social relations promoted by civil society--the society, in a word, of people helping people.

Dems Wasted Oughties Enthusiasm

I don't know whose idea it was, but someone decided that the Democrats would take the toss-up election of 2000 and rile up the base.  So all the liberal Subaru Outbacks carried Re-Select Bush bumber-stickers right through the 2004 election.  Har-de-har-har.



You can see the results at Gallup.  In summer 2004 Democratic voter enthusiasm was at 68 percent, in summer 2008 it was at 61 percent, while Republican enthusiasm was at 51 percent and 35 percent.



Today things are different.  In summer 2012 Democratic enthusiasm is at 39 percent and Republican enthusiasm is at 51 percent.



In my view the Democratic decision to crank up partisan rage back in the early Bush years has proved to be a strategic error.  Of course, I felt back in 2001 that the decision to insist that the 2000 election was stolen was an act of meanness.  After all, when the Democrats obviously stole the 1960 election in Illinois and Texas Richard Nixon took it like a man, because he didn't want to divide the country (and who knows, maybe he thought it wouldn't help him).



The partisan mobilization turned out to be an error because Democrats taught their followers to believe that a win in 2008 would "fundamentally transform" America.  Now that the Obama administration clearly hasn't transformed anything except the national debt, what will the partisans do?  Where will they go?



They will get demoralized.  Meanwhile, the rest of America is getting enthused about getting to the polls.



There is a good reason why the Obama win has turned to ashes.  It didn't come up with anything to deal with our underlying economic and social problems.  Liberal partisans suffer under the delusion that their agenda is something fresh and new.  It isn't.  It is just big government wanting to simplify and organize and control the people.  As governments have tried to do right down the ages.



The magic of social animals, from ants to zebras, is that we do the right thing instinctively, without being told. The magic of all living things is that they are adaptable.  They respond to changing conditions by changing their ways.



The problem about big government is that it is designed to treat humans like machines.  The problem with big government is that when conditions change it does not change.  The same is true, to a lesser extent, with big business.



The problem for Americans is how to reform big government into adapting to the future before it drives us all off the cliff.



That is why the Democrats ads featuring Paul Ryan pushing grannie over a cliff are such a joke.  We want to be nice to grannies--and to grandpas like me--but only up to a point.  First we have to make sure that the average working stiff doesn't go over a cliff, not to mention the average mom, and the average student, and the whole economy.



That, presumably is what President Obama means when he says that "I believe that the way you grow the economy is from the middle out. I believe in fighting for the middle class because if they’re prospering all of us will prosper."



The only problem is that the notion of growing the economy "from the middle out" is utterly fatuous.  It means, of course, that the president will take money from the rich via the Buffett Rule and give it to the middle class.  The only problem is that redistribution doesn't grow the economy.  Never did, never will.



The only problem is that Democrats just don't get it.  And now they are losing the big head of steam they worked up in the Oughties when the evil Bush was president.

The 1.5 Percent Solution

Oh dear.  So today's GDP report shows that "the United States economy slowed in the second quarter" with slow consumer spending, government cuts, and higher imports.  So now what, in a world of 1.5% GDP growth?

So how about we ditch the whole Keynesian paradigm for something new?

Look, here's how the world looks from here.  For over a century, the educated elite, the governing class of our age, has operated on the following cultural assumption.  Liberals could ladle out social gains to the working class--and latterly minorities and women--without worrying much about what all those benefits and regulations and subsidies might do to the overall economy.

And if things did go wrong and the economy tipped into a recession there was always Keynesian stimulus, i.e., additional government spending on favored voting constituencies, and in the last resort, inflation.

That was the assumption the Obama administration brought with it into Washington DC in 2009.  Its agenda called for a quick trillion dollar stimulus, a couple rounds of quantitative easing, and back to the important work of finally implementing universal health insurance and replacing fossil fuels with green energy.  Why not? That was what the culture of the liberal governing elite said to do.

The conservative counterargument goes something like this.  All government interventions in the market are almost always designed to impose some favored political outcome on the interactions of economic actors, whether by taxes used in government spending or in regulations or subsidies.  Each intervention, therefore, adds up to an additional weight on the economy that slows it down, just as additional weight on a jockey slows down the horse.

Now each of these arguments is actually more than an argument.  It is a culture, in Jürgen Habermas's system, a lifeworld.  In Liberal World we are engaged upon a quest to eliminate injustice and inequality using the power of government.  In Conservative World we are engaged upon a quest to unleash the power of individuals and teams to build wealth and prosperity by getting government out of the way.  In the system of Juergen Habermas, this lifeworld is a taken-for-granted culture about how the world works, how we perceive the world, and how people act in it.

Obviously when the conservative taken-for-granted lifeworld is different from the liberal taken-for-granted lifeworld then something eventually has got to give.

That "eventually" might be right now, as the economy rather obviously is failing to bounce back from the Crash of 2008.  Liberals believe that what is needed is additional "stimulus" and, if necessary more quantitative easing "QE3".  Conservatives believe that tax rate cuts and government spending cuts are in order.

So you can see that neither side learns anything from events.  We just keep proposing the same nostrums. Here's an example.  The Obama administration is restoring the minority-friendly policies that conservatives believe got us into the Crash of 2008.  The new Consumer Finance Protection Bureau that was part of Dodd-Frank has dusted off the 1994 regulation that ordered banks to giver preferential treatment to "protected classes" in loan origination.

That's not surprising, of course.  As conservative William Tucker writes in utter fury:

Do you remember that thing about how the banks wouldn't lend to blacks and Hispanics because they were racists? And do you remember how they passed the Community Reinvestment Act so that banks were forced to reduce down payments practically to zero and lend to a lot of people they knew were bad credit risks? And do you remember how Wall Street bundled all these risky subprime mortgage and sold them to investors around the world so that when it became clear that those people weren't going to be able to pay their mortgages banks everywhere were left holding the bag and all five of the Wall Street investment houses either went under or had to be bailed out by the federal government?

And do you remember how, when it was all over, liberals said it was actually the banks' fault for "deceiving" all those people into thinking they could afford to buy homes and that the banks should be punished for it and some of those people be allowed to keep their homes anyway? And do you remember how all this cost the government close to a trillion dollars and put the whole economy in a hole that we really haven't begun to dig ourselves out of yet?

The point is that the New York Times and the Democrats have been busily pushing "the banks did it" meme for the last four years, and liberals believe it.  Because if liberals admitted that it was their credit subsidies and pro-minority discrimination that brought the whole financial house crashing down in 2008, why then they would have to abandon the taken-for-granted assumptions of their culture, their lifeworld.  And people just don't do that.

The American people don't believe either the conservative line or the liberal line.  They believe a mish-mash in between.  Yes the greedy bankers did it.  Yes the stupid borrowers who bought way more house than they could afford did it.  So there!

But the 1.5% economy is putting up storm signals.  It is saying that the liberal line isn't working.  And all the campaign flaps about "You didn't do that" and Romney's outsourcing are all grist to the mill that will grind out a decision in November.

Do we want to continue with the liberal world view, the assumptions of the liberal lifeworld, or do we switch more to the assumptions of the conservative lifeworld?

It's up to the voters.

The Silence of Romney's Guns

Some people are complaining that Mitt Romney hasn't yet come out with a compelling narrative for his election.



There is Conrad Black, who wants more criticism of the mess of the Obama years:

It would be a national tragedy if we got all the way through what promises to be an exceptionally trying and vapid election campaign without a full airing of the president’s fishtailing and flip-flopping on all these and many other matters.

Or Matt Towery in an article on polling.  He is anxious to see how the Romneys will actually fight the election:

In the end, it is message, image and strategy that win the race -- and debates. For Romney, the message is not clear, and the image is still fuzzy. But he may have a strategy that is going to work.

 Meanwhile Karl Rove is raising the spectre of Fannie and Freddie.  He wants to remind us that seven years ago the Bushies tried to push a reform of Fannie and Freddie, but the Democrats in the Senate told the GOP that they would filibuster their reform bill.

Democrats opposed regulation in large part because the GSEs were an important source of funds for community groups allied with the Democratic Party, and they were run by Democratic power brokers like former Clinton Office of Management and Budget Director Franklin Raines and Walter Mondale's 1984 campaign chairman, James Johnson. And so the Bush reform died.

And the Obama administration still hasn't done anything about Fannie and Freddie.  They are moldering away in the back of the FHA, getting broker and broker with about $5 trillion in debt.  Think about what happens when that gets added to the national debt.



My guess is that the Romneys have a schedule and that all will be revealed when Romney gets back from his foreign tour and starts to ramp up for the Republican National Convention.  There will be a "message," there will be image-building, and there will be plenty of negative ads on the many failures and corruptions and tyrannies of the Obama administration.



But you really don't want to show your hand too early.  You don't want to give the Obamis time to prepare for a counterattack.  Also, we don't exactly know whether the economy gets worse between now and October or the European slow-motion death spiral turns into a maelstrom.



And there is this ancient piece of wisdom.  When your opponent is digging himself a hole, hand him a shovel.  Or Napoleon's advice: "Never interrupt your enemy when he is making a mistake."



Given the number of unforced errors the Obama campaign has committed thus far in 2012, you really don't want to get in its way.

What Comes Next?

When you read an article about the failure of the global governing class: "The Governing Elite are the Greatest Threat to the World's Middle Class," it makes you think about what the governing elite and the world's middle class are going to do about it.

I am thinking about this in the context of the difference between the world of 1800-1850 and 1850-1900.  The first half of the century in Europe was about the absorption of the middle class into the councils of political power.  The second half was what to do about the new industrial working class.

The middle class wanted to bring its influence to bear on the general rules of society, particularly as they related to trade and subsidies.  The working class wanted "stuff."  All this is unexceptional.

Before the rise of the middle class, states were organized as the patrimonial estates of their rulers, but that did not work for the middle class which wants to work not in an Authority Ranking world of patrons and clients, but in a market world of exchange and commercial wealth creation.  The working class of 1850, on the other hand, was barely subsisting, so whenever the economy went into the tank due to wars or financial crises, then the workers would start starving.

Two kinds of politics arose from the rise of the working class.  The first was a top-down provision of social benefits, giving the working class what they needed in hard times.  The other was a bottom up revolutionary movement of refusal and opposition so the workers could take what they wanted.

Our welfare state today is the precipitate of those years in the second half of the 19th century.  It assumes that people are as helpless now as the working class was then, and that government should organize and provide against the vicissitudes of life.

Obviously, the working class of today is not the struggling working class of 1850, at least, not in the developed countries.  So just as obviously, we should be detecting a disconnect between what ordinary people want and need and what the political system wants to give them.  The political system offers more and more free stuff, and people take it and say "what have you done for me lately?"

The current debt crisis is the end game of the politics that began in the 19th century, the assumption that the way to avoid social unrest was to give the working class stuff.  But eventually you run out of other peoples' money.

The question is: what do the people of the 21st century want?  President Obama is playing the revolutionary politics of the late 19th century, telling the rich and the middle class that they need to cough up to prevent the lower classes from revolting.  Is he right?  Does the failure of the Occupy movement tell us something?  Candidate Romney is going around proposing that we release the private sector to do its job of producing goods and services and creating jobs.

What does the Tea Party mean?  It seems to want a return to common-sense middle-class prudence in government finance.

As soon as the governing elite figures out what the people want, and I would guess that "the people" here means the middle-middle class of families with some colllege education but not a lot, they will be racing to give the people what they want.

What the people want, I suspect, is a society that actually delivers the social services that government presently delivers badly: health care, education, relief of the poor, and they want an economy that doesn't feel like a roller-coaster.

The challenge for conservatives is to persuade the American people that they can have all that without big government.  It probably wouldn't hurt to have all the government provision of social services obviously broken.

And that's why I think that conservatives will come to love the future former-President Obama like a brother.  He seems to have succeeded in breaking everything he touches.

Common-sense people say that if it ain't broke, don't fix it.  But when President Obama and his lefty friends have broken everything in sight, well, then it is time for the great American handyman to get to work with his tool belt and his power tools.

Some time in the next ten years it will all become crystal clear, and everyone will say that the leaders of 2012 were idiots not to see it.

The Trouble with Big Anything

Everyone is tut-tutting and serve-them-righting about the NCAA penalty dealt out to Penn State, home of the nasty Sandusky child-abuse scandal.



What a monster; how could they let it happen, etc.



But let's get real.  Of course nasty things like that will happen at a big bureaucratic organization.  The only reason we all know about the Penn State case is that it included college football and a legend in his own time, Joe Paterno.  That makes it bait for a national scandal.  But suppose the Jerry Sandusky in the case were not an assistant football coach but just some average Marginalized Studies department professor.  Who would care then?



The fact is that we are in two minds about Bigness.  Conservatives hate Big Government and love a scandal about government waste, fraud and abuse.  But we kinda like the armed forces and their hierarchical military spirit.  Liberals hate Big Business and love to report on, say, Big Oil laying waste to the planet with horrible oil spills.  But they love Big Government and all its caring compassionate programs that help the poor and the marginalized.  At least everyone hates the DMV.



But what about Big University?  Liberals hate the football program; conservatives hate the left-wing indoctrination.  Big Philanthropy?  Conservatives love to hate the liberal foundations like the Ford Foundation and the Rockefeller Foundation.  Big Religion?  Liberals love it when Catholic priests are caught covering up child abuse.



But I wonder if it's time to look at the problem of bigness in general.  The Penn State case shows the problem.

In 1998, a boy’s mother reported to police that Sandusky had showered with her son in a Penn State facility. An investigation began that Penn State officials were eager to see go away...



A janitor saw him in November 2000, but didn’t report it for fear “they’ll get rid of all of us.”...



Paterno and the others “repeatedly concealed critical facts relating to Sandusky’s child abuse from the authorities, the University’s Board of Trustees, the Penn State community, and the public at large.”

Everyone is creeping around, like a moral mouse, looking after Number One, anxious not to rock the boat.



It seems to me that the answer is that we need a lot fewer big hierarchical institutions around.  It's not just that they tend to cover up criminality, but that they are notably fragile and resistant to change.  Over the years they run down delivering less and less for more and more money.  They are a conspiracy against cooperation and adaptation.



I was reading a book about Prussia the other day, H.W. Koch's History of Prussia, and learned that the Prussian state bureaucracy had won for itself tenure and pensions by 1820.  That is eighteen-twenty!



Shades of government bankruptcies in 2012!  All bureaucrats want, in any big organization, in any era, is to get tenure and a pension.  Then that they can do nothing for the next ten, twenty years while they collect their salaries.  And then the glorious moment arrives when they retire and start to collect their pensions!



It is surely our job to make sure that the bureaucrats don't get it.  Because when we have guaranteed tenure and pensions to some special class of people it means that the rest of us are more at risk.  Like right now.

Liberals and Fracking

I was out to dinner with liberal friends last night and got roundly spanked for blogging about blacks that think "we're owed."  I don't know anyone that thinks that, said my black acquaintance.

That's comical, really.  Because the whole point of liberal politics is the idea of "We're Owed" writ large.  That's why we talk about "entitlement" programs.  I'm entitled; we're owed!

But the big takeaway was fracking.  The word has gone out, presumably through the documentary "Gastown," and liberals are all convinced that fracking, the technique of fracturing oil and gas-bearing rock in the neighborhood of a drill hole using water, sand, and a bit of detergent, will contaminate the drinking water supply and end the world as we know it.

Our liberal friends are passionate about this, almost as passionate as they are about "marriage equality," or really, gay marriage.

What is interesting to me, as an engineer that spent 30 years in energy and environmental consulting, is how cocksure professional musicians and professional photographers can be about these technical issues.  It didn't occur to me at the time to make the argument from authority, but I shoulda. You know what?  When it comes to music I absolutely defer to your knowledge and experience.  So how about the environment and the energy biz?  I spent 30 years, man and boy, working on sewers and energy resource questions.  I know a thing or two about cleaning up the environment and about the financial feasibility of intermittent resources like wind turbines.

But really, it's not about the science.  It's about the religion.  It's about the end of the world and original sin and finding redemption from the sins of the world.  It's about "immanentizing the eschaton."  When you don't believe in God any more then you tend to want to create Heaven on earth and not wait for salvation in the next world.

Yes, and those liberals all believe that the oil companies get gigantic subsidies, and make profits in the hundreds of billions of dollars.  Let's check Exxon Mobil.  Market cap. is about $400 billion and the P/E ratio is about 10.  So that means net profits are $40 billion a year.  Gross revenue is about $440 billion per year.  Big, you'll say.  But not obscene.  Apple makes about the same profit on one third of the revenue.

Our liberal friends.  What are we to do with them?  I guess the most sensible thing would be to beat Obama like a drum 55% to 45% in November, take over the Senate, repeal Obamacare, cut spending, reform entitlements, cut tax rates while cutting deductions and loopholes and drill, drill drill.

Liberals got the wrong idea when Obama won in 2008.  They thought it was game, set, and match.

But there is a reason why liberals had to rebrand themselves as "progressives."  Americans really don't like liberals.  They are America's ruling class and they are annoyingly bossy.  A nice win for the Gipper would really quiet our liberal friends up for a decade, and let the rest of us get on with building families, expanding the economy, and repairing the national balance sheet.

Then, a decade or two from now, it will be time for a new generation of liberals, a generation that "knew not Obama" and the really dumb strategic mistakes he made.