Inequality: Good Cop, Bad Cop

When you and I think of inequality we think of Charles Murray and Coming Apart.  How the lower 30 percent is turning away from marriage and work to live on the government dole.  But when the Washington Post's chappie Jim Tankersley looks at inequality, his mind turns to "skills training"--after it has properly digested the importance of more progressive taxes and better health care.

After writing about the fatuity of this, I got to thinking of the good cop, bad cop duality of the inequality game.

If you are a gentry liberal, living the good life in your government sinecure, whether as a government funded NGO, a government bureaucratic manager, or a government university professor, you think of inequality as a call for compassion, for devising better programs to deliver benefits to the traditionally marginalized who have lost out in the greedy grab for loot in the last 30 years since Reaganomics started.

But there is an ugly side to the inequality game, and the world-historical role of President Obama is to remind us of this.  It's all highlighted in my three point broadside: Government is force; politics is division; system is domination.

Government is force, you gentry liberals.  Every one of those wonderful programs they write about in The New York Times and they talk about on NPR is based on force.  Because the only way that government gets its hands on money to spend is by force.

Politics is division, you gentry liberals.  Politicians win elections by dividing the electorate.  No doubt the Republicans use heinous methods to do this, but Democrats are just as bad.  Democrats do it by sowing race, class, and gender hatred in the lower orders and not-so-lower orders.  There is a simple test for this: how could blacks be voting 90 percent for Democrats, in numbers usually only experienced in dictatorships?  We learned how in 2008 when we read about preachers like Obama's Reverend Wright spewing race hatred in their black churches.  And of course Democrats nod and wink at similar efforts in the Hispanic community.  Think about feminism and abortion; gays and gay marriage.  I don't reckon the divisiveness of this politics as deliberate, although it probably is.

No.  When you use inequality as the basis of your politics you are choosing it willy-nilly because it calls for government action, and you want to use the power of government to do good.  Society is unequal; something must be done.  Obviously it must be government action.

But the politics it takes to build support for that government action is divisive.  Then it just gets worse.  The government action you legislate to solve the problem is force.  And the system, the one-size-fits-all rational bureaucratic system that you devise to implement your program of force based on your politics of division, is bound to be a program of domination.  Why?  Because, as Horkheimer and Adorno wrote decades ago: "What men want to learn from nature is how to dominate it and other men."  It's a daunting thought that we mostly don't want to admit.  We develop science and technique so we can dominate nature and the world.  So every rational system is a program of domination.

Liberals recognize this when they put on their environmentalist hats.  We are exploiting the world; we are destroying the forests; we are killing animals; we are eliminating species diversity.  But then they put on their class-warfare hats and resume their project of political division and domination without even a moment of hesitation.

The liberal over-under coalition is a remarkable work of human creativity--and hypocrisy.  It satisfies the yearning of the gentry liberal Übermensch for sweetness and light, and it provokes the hatreds of the underclass Untermensch. Then wonder of wonders, it all delivers political power to the good guys, the Übermenschen.

And all in the service of "equality."

How Obama Guys Worry About Inequality

I know.  You'd hardly credit it, what with the trillion dollar deficits as far as the eye can see.

But the Obamis are worried, according to Jim Tankersley, that the president is concentrating too much on the deficit and not on  poverty and inequality.

[B]y tapping Lew as Timothy Geithner’s successor at Treasury, the president is signaling clearly that budget negotiations with congressional Republicans will dominate economic policymaking in his second term.

Oh really?  In 2011 the president got a hot new chappie on inequality, Alan Krueger.

Krueger says Obama will propose more steps to address inequality. “The president is genuinely motivated by concern about growing inequality and the stress it puts on the middle class and those struggling to get into the middle class,” he said. “That really animates his views on the economy.”

OK.  What steps, exactly?

 But the policy options Obama has talked about — such as tax reform — tend to work around the edges and focus on the budget. Raising tax rates a few points on the rich or limiting their charitable deductions won’t do much to help middle-class wages break out of their decades-long stagnation. Protecting federal spending on education and innovation is an attempt to keep the middle class from slipping even further, but it’s nowhere near the fundamental overhaul in skills training that many economists believe is necessary to help workers thrive amid global competition.

So that is the big liberal idea: "fundamental overhaul in skills training."  Oh please!

It just shows that conservatives are foolish to get panicked about the future.  These liberals don't have a clue.

You want to know why inequality is going up?  It's all there in Charles Murray's Coming Apart.  The administrative welfare state has created a world that works pretty well for the top 20 percent.  But it has visited a murrain on the lower income folks, where marriage is going down for women and work is going down among men.  Now why would that be?  Lack of "skills training?"  Ya think?

Look liberals.  You geniuses have turned society into a system.  You have blitzed the self-powered lower income family and plugged it into the state.  Of course inequality is going up.  Of course lower income people are suffering.  And things will get worse.  And no amount of "skills training," let alone taxing the rich, or any new administrative "system" is going to make a blind bit of difference.

It all comes down to this:  Government is force.  Politics is division.  System is domination.  Until you liberals read, learn and inwardly digest that, you are going to be making things worse and worse for the people you claim to represent: the eternal "minorities and women hardest hit."

Your silly political interventions are pathetic.  But there will come a day when "pathetic" won't quite cut it.  There will soon be people in the public square raging about "injustice."  And it won't be pretty.

Bobby Jindal's Hat in the Ring

Bobby Jundal threw his hat into the ring Thursday with a speech to the Republican National Committee.



He said that Republicans should stop arguing about government and start arguing about  America.

Instead of worrying about managing government, it’s time for us to address how we can lead America… to a place where she can once again become the land of opportunity, where she can once again become a place of growth and opportunity.

Well yes.  Only there's a problem with that, despite the use of the feminine pronoun.  When you talk about "growth and opportunity" you are talking guy talk.  No, check that.  You are talking career-guy talk.  Nope.  Not even that.  You are talking middle-class white-career-guy talk.



What about the guys in the 'hood?  What about women in general?



It reminds me of a grand old WWII Vera Lynn song. It begins:

When the lights go on again all over the world

When the boys are home again all over the world

And rain or snow is all that may fall from the skies above

A kiss won't mean "goodbye" but "hello to love"



When the lights go on again all over the world

And the ships will sail again all over the world

Then we'll have time for things like wedding rings and free hearts will sing

When the lights go on again all over the world

You can see that Bobby Jindal's message completely misses the idea of "hello to love" and wedding ring things and the whole feminine experience.



But that's all right.  President Obama, Julia's pal, missed the boat too in his second inaugural.  Entitlements forever, global warming forever, and equality/liberation forever misses the point too.  That misses the masculine experience, the feminine experience, the freedom lover's experience, and just about every experience in the world except the cramped meanness of the equality/liberation agenda.



All I am saying is this.  Men are fighters and women are lovers.  When you talk about growth and opportunity you are talking about the sublimation of the manly fighting role in the modern world, fighting for market share rather than pillage and plunder.  But what is utterly missing in Jindal's message is love and marriage, sharing and caring.



Of course, the Democrats talk about fairness and sharing and caring.  If only they meant something other than pillage and plunder.  They mean that the government's revenue men will come and strip income and assets off good working people to give to the supporters of what Rush Limbaugh calls the "regime."



Here's what I want to hear.  We conservatives and Republicans are in favor of growth and opportunity, sharing and caring, love and marriage.  That's why we believe we must stop talking about government. Government is force; politics is division.  The more government, the less growth and opportunity.  The more politics the less sharing and caring.  The more government and politics the less love and marriage.



Let me tell you this.  If you are a Final Glide American, who is planning to cut the engine and glide into a landing on that gigantic aircraft carrier the USS Entitlement, I'd advise against it.  Anyone who thinks that they can organize their life around the government check in the next thirty years is going to get a nasty shock.  Some people will find they are reduced to eating the paint off the walls.

Republicans and the Urban Vote

Don't give up the urban vote, Republicans, writes urban expert Edward L. Glaeser.  Think of all the wonderful things that Republicans have done for the cities!

• Richard Nixon moved cities from public housing to housing vouchers.
  


• Cities are safer because of Republican backed community policing policies like CompStat.
  


• Republicans have championed school choice and accountability.
  


• Republicans have led in opening municipal services to private competition.

And so on.  So why does the Republican Party work on merely "winning suburban and rural votes and has stopped reaching out to city dwellers"?

I'll tell you why.  Because people take those housing vouchers for granted and know that Democrats will give them more.  They don't give a damn about better policing: the urban professionals buy into the activist liberal notion that the police are a bunch of lowlifes and the minorities think the police are out to get them.  The urban minorities have shown in e.g., Washington DC, that they regard schools as more of a jobs program than an education program.  And as for municipal privatization, I'll bet that most urbanites think about city jobs as their job-for-life birthright rather than an area for efficiency.

The only way the cities will come over to the Republicans is if and when they decide that the Democrats have screwed them over royally.  Until then, it's a cultural thing.  Urban people belong to urban tribes that define themselves in opposition to the unhip, responsible, racist-sexist-bigoted Republicans.

And anyway, Republicans benefit from the current situation, as Sean Trende points out.  Democrats are concentrated in: uber-liberal districts, like Seattle's 7th Congressional District with its 600,000 liberal hearts beating as one; and majority-minority districts, like Washington State's brand new 9th District with 50.3 or so percent racial minorities.

Until the the day of judgment, Republicans need to sharpen their message to the ordinary non-urban, non-liberal, non-identity-obsessed American.  Because there's a good chance that in 2016 that kind of American voter will be thinking and acting on the idea that it is "time for a change."

That's how politics works.  The politician knows that he cannot win the votes of people that define themselves in opposition to him, however he might have helped them.  But he can work on the waverers.

Keynesian Truth or Dare

What is the real truth about Keynesianism, that government fiscal deficits help get out of recession?

So let's rehearse the definitions, from Tino Sanandaji in “Why Keynesianism Works Better in Theory Than in Practice” at The American:

The first definition of “Keynesianism” is a theoretical explanation for recessions, a diagnosis of the illness. The free market will periodically fail to utilize all the capacity in the economy due to an inability to generate sufficient aggregate demand. In 2008, we witnessed a particularly dramatic example of this as consumer demand and industrial production plummeted as a result of a crisis in the financial sector. Keynes was once again proven right.

The diagnosis may be correct, but the medicine most commonly associated with it has been shown to be surprisingly impotent.

The second definition of “Keynesianism” is a policy recipe for coping with recessions, a cure for the disease of recessions. The promise is that the public sector can bring the economy out of recessions through deficit spending.

Frankly, I think that both of these definitions are wrong.  In the first place, my theoretical explanation for recessions looks to the Austrian theory of the business cycle, that recessions are caused by the collapse of the malinvestments of the previous boom.  Yes, demand drops in a recession, but the cause is the failures of the malinvestments.  (In the Crash of 2008, think of the failures of homebuilders and homeowners).  Income anticipated by the malinvestors, as evidenced by their debts, fails to appear, and so they must either cut back sharply or fail spectacularly.

The argument for Keynesianism is that by artificially maintaining demand with government spending we can jump over the chasm caused by the collapse in demand.  I think that confuses the issue.  The problem in a contraction is that the financial market has questions about the soundness of many investors and institutions, and so people are hesitant to lend to anyone.  The solution is to identify the sound investors and the unsound ones and prevent the unsound investors from polluting the rest of the market.  In the Crash of 1907, for example, J.P. Morgan and his assistants performed triage on the financial markets.  They refused to loan money to enterprises that they judged would survive without their help, and they also refused to help enterprises that they felt were bound to fail.  They did help people in trouble, but loaned money only to enterprises that they felt would survive if helped with an injection of capital.

You can see that the Morgan approach is actually doing what the Keynesians think they are doing.  Both are assisting enterprises to jump over the fiscal chasm.  But the Morgan approach is discriminating in its assistance.  It is saying: look, some of these plungers are past help.  But some folks are in trouble only because they are caught in the undertow caused by the panic.  We should help them.

In the Crash of 2008 the government did do a bunch of Keynesian stimulus.  But most of the money just went out in transfer payments.  Then there was TARP.  Love it or hate it, TARP was designed to inject capital into banks to make sure that semi-sound banks survived the crisis.  But there was another part to the government's bailout that hasn't received much press. Take a look at my TARP bailout page.  TARP's $700 billion was just the tip of the iceberg.  Here is the full story.

Gross US government bailout outlays	$4.6 trillion
US Government bailout guarantees	$16.9 trillion

You can see that the biggest item was the guarantees. What was that all about?  Well, for starters, there was $3 trillion in guarantees to money market mutual funds.

So there you have it: $20 trillion in bailouts, where the US government is using its position as the soundest investor in the market to keep everyone else afloat.  Makes the "stimulus" program look like chump change.

That is the real story about how to stop a contraction.  You flood the zone with bailouts and guarantees to make sure that only the insolvent enterprises run aground.  Your flood of liquidity and guarantees keeps the marginal enterprises afloat.  The sound enterprises out in deep water will ride things out anyway.

Keynesianism?  Well it sorta helps.  But its chief attraction is that it gives politicians an excuse to do what comes naturally: spend money on their supporters.

Notice, in retrospect, that the institutions that needed help, the banks and the auto companies, have been for decades the little darlings of the politicians.  The banks are part of the nationalization of credit under the Federal Reserve System, and the auto companies are part of the crony capitalism of the authoritarian welfare state.  The banks got into trouble because the politicians forced them to make unsound loans; the auto companies went under because they were forced, decades ago, to make promises to their unionized employees that could not be redeemed.

Then we have Fannie Mae and Freddie Mac.  There were not merely the little darlings of the political sector, but conceived, subsidized, staffed, and led by the political sector.  The miracle is they lasted as long as they did.

Obama's Second Term Agenda

President Obama made things pretty clear to America in his second inaugural speech.



First, the president is foursquare behind the entitlements.

The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative, they strengthen us.  (Applause.)  They do not make us a nation of takers; they free us to take the risks that make this country great.  (Applause.)

Nothing there about what we are actually going to do about the spiraling maelstrom of entitlement-fueled debt.



Then the president committed himself to battling climate change.

 We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.  (Applause.)  Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.  

Not a whisper about the fact that the science is broken and the crony capitalists are cleaning up.



Finally, the president celebrated lefty activism.

We, the people, declare today that the most evident of truths –- that all of us are created equal –- is the star that guides us still; just as it guided our forebears through Seneca Falls, and Selma, and Stonewall...

It is now our generation’s task to carry on what those pioneers began.  For our journey is not complete until our wives, our mothers and daughters can earn a living equal to their efforts.  (Applause.)  Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law  –- (applause) -- for if we are truly created equal, then surely the love we commit to one another must be equal as well.  (Applause.)  Our journey is not complete until no citizen is forced to wait for hours to exercise the right to vote.  (Applause.)  Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity -- (applause) -- until bright young students and engineers are enlisted in our workforce rather than expelled from our country.  (Applause.)   Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia, to the quiet lanes of Newtown, know that they are cared for and cherished and always safe from harm.  

Yes.  The non-stop liberal legislation of the past 50 years is merely the start.  We've got to chuck the women, the gays, the immigrants, the gun controllers under the chin.  There is still so much to do!



Back in 2009 I was really afraid.  I was afraid that the Democrats would capitalize on their political opportunity and move towards the center and co-opt the moderates and nail down a 30-year political majority coalition.  They might have oriented economic policy to appeal to the enterprising as well as to their base.  They might have done Obamacare to entice some Republicans into the deal.  They might have pushed through the Keystone pipeline.



But they didn't.  Instead, as Ron Brownstein has written, Obama and his people think they can now win elections just with their "coalition of the ascendant:" minorities, youth, and women, and without the old white centrists.



Maybe that strategy could work if it really delivered in economic prosperity.  But instead, with the huge costs coming up for Obamacare and the entitlements, we are going to see big-time economic stresses.



Obama is telling us that he proposes to do nothing about the government finances, not until disaster is staring us in the face.  In this, of course, he is a realist.  The entitlement beneficiaries--I am talking about you and me--are not going to agree to cuts until the crisis is upon us.  When it comes, we are going to see some kind of sovereign default: dollar inflation, debt "rescheduling", perhaps confiscation.  And we will see "cuts" in Medicare and Social Security, at least for the 401k classes who don't really "need" assistance.



It's all such a shame.  I just hope that what comes out at the other end is a better America and a better world.  Because otherwise the "coalition of the ascendant" is going to be royally screwed.

Three Liberal Injustices

Liberals are the ruling class in America, and that means liberal injustice.  Political power gives you the ability to lean on the scales of justice, and what's the point of power unless you abuse it?

The greatest injustice of the liberal era is probably the demolition of the low-income family.  There is no mystery about how this has happened.  It is an artifact of the administrative welfare state.  When you set out programs of free stuff, which people can get by qualifying as needy, then people will find a way to qualify.  The result, as Charles Murray has demonstrated in Coming Apart, is that in the bottom 30 percent work and marriage has collapsed.  He means that lower-income men don't work and lower-income women don't marry.  Lower-income children typically don't live with their fathers.  Higher income folks like you and me?  The top 20 percent are married, they work and typically don't get divorced.  There is a simple word for this: unjust.

Almost as bad is the sequestration of workers' savings.  It's hard for employees to see this, but easy to see if you are an employer.  About 20 to 30 percent of the cost of labor goes to the government for a range of programs ranging from Social Security, Medicare, unemployment, disability.  Of course all these monies are for the people.  But the people don't get to direct those monies; they are sequestered by the government and only available to people when they qualify, by age or by situation, for a disbursement.  This means that people are enrolled in a forced savings program but during most of their working life don't get the benefit of their savings.  Suppose people put that 20-30 percent of income in a savings account.  If they are prudent they would have enough money in 10 years to start a business, enough money in 20 years to send a kid to college, enough money in 30 years to retire.  Instead the money is given to politicians so they can buy votes.  There is a word for the sequester of the worker's savings: unjust.

The third great injustice is the nationalization of education.  It means that the culture of the ruling class is the only culture allowed in the education of our children.  When the First Amendment proscribes an "establishment of religion" it is demanding a separation between church and state, between the moral/cultural sector and the political sector. But the education of children is clearly a moral/cultural task.  The German ideal of education is "Bildung," an untranslatable word that means "form" or "image," the forming or development of a human being.  It stands to reason that any parent should have the freedom to direct the education of their children independently of the state and the views of the political ruling class.  It stands to reason also that a ruling class will abuse the power to educate our children, to mold them into mindless supporters of the regime, and that is what has happened.  Liberals like the current system because they are the ones that get to set the educational agenda.  But there is a simple word for the education system in America: unjust.

There are six ways of looking at the monstrosity of our modern ruling class: its cruelty, its corruption, its injustice, its waste, its ignorance, and its delusion.  Today we have dealt with injustice.  There will be more to come.