Finally Good News on Jobs

The headline number on unemployment went up last month to 7.6 percent.  But it went up for a good reason.



Let's take a look at the BLS numbers.  The unemployment rate went up because the Civilian Labor Force went up faster than Employment.  That means that more people are entering the labor force.  That is very good news.



The Civilian Labor Force went up by 420,000.  The Employment level went up by 319,000.  That will make the overall unemployment rate go up.



However, all is not copacetic.  If you look at the Labor Force numbers, you see that it has merely recovered from a three month dip.  What we need to see is continued growth in the Labor Force.



The question for us gamblers and speculators is what this does to the Fed.  Does it mean that the Fed will now slow its money printing operations and return to normal interest rates?  Does that mean that the bull run in gold is over?   Gold was down a couple percent this morning.



My guess is that the Fed will start gradually returning to normal operations, but that as in the past it will be too little too late.  By the time that the Fed gets to a genuinely balanced monetary policy it will find that inflation is roaring, real assets are booming, and a credit crunch will be needed.  Then it will have to really put on the brakes.



Why does it always go like this?  It's because the Fed is a creature of the government, and it will almost always do what the government needs to keep paying its bills.  The Fed does not conduct monetary policy for the benefit of the American people.  It conducts it for the benefit of the US government.  Then there is the dual mandate, for the Fed to target prices and employment.  And then there is Keynesianism, which encourages inflationary money printing in a recession, well after the credit crisis has passed.



We aren't going to get a sensible monetary policy until the prestige of the current ruling class is utterly destroyed.



But meanwhile, we see a healthy uptick in the employment indicators, despite the headwinds of big government spending, big government regulation and the looming threat of Obamacare.  This is good.

The Real Foreign Policy Reset

Conservatives seem to be in a tiff today about Benghazi Babe Susan Rice's appointment as National Security Advisor.  Meanwhile Charles Krauthammer opines that Republicans would have had a better chance of getting to the bottom of Benghazi if they'd let Rice's nomination as Secretary of State go forward.



But I don't think we should get too worked up about minor tactical issues.  President Obama wants an "America is the real problem" strategic retreat on foreign policy, and he ought to get it.  If he is wrong, deadly wrong, then Republicans will get to fix it, and the Democrats will get to be mistrusted on defense for another generation.



In truth the world is at a hinge point.  The strategic importance of the Middle East is about to decline as the fracking revolution comes on line, and the whole Arab culture is going to go through a gigantic revolution.  What about China?  Who knows?  Iran?



So the Obama policy of retreating from the world and contracting the defense establishment is really a status-quo policy.  We really don't know what else to do.  And if he retreats too far and contracts defense too much then it merely creates maneuver room for the next Republican administration.



The thing to remember is that government is always a complete mess, a record of failure after failure.  The heroic story of the British Empire was in fact a long series of blunders that usually got patched up and repaired just in time.



Our Democratic friends made a big deal about the mistakes and the blunders of the Bush administration.  But in the context of the time, it made sense.  We wanted to contain Iran and we did.



But what about the jihadi threat?  What about the surging Muslim immigrants to Europe?  Aren't they threatening to take over the world?



Well maybe, or maybe not.  The Islamic surge is a strongly divisive movement.  It is tribal in its structure and therefore probably self-limiting, just like fascism in its day.



If we accept the judgement of people like Max Weber the vital spark that powered the West to world hegemony was not its guns and its science but its transcending of mere tribalism.  Christianity, he wrote, taught city dwellers extend the boundaries of trust beyond blood kin.  It taught them personal responsibility.  It taught them to trust the stranger, or at least give him a fair chance to demonstrate trustworthiness.



Liberalism is going down because it contracts the boundaries of trust.  It urges us to trust foreigners and people barely off the farm.  And it tells us to mistrust businessmen and the ordinary middle class.  Instead it should be teaching women and minorities to emulate and admire the culture of business and the middle class.



Years ago the rulers of China and India decided to build their post-colonial regimes on the model they had learned at western universities, the socialist model.  They thought they were buying the latest, hottest thing.  It took them half a century to discover their mistake and switch their economies away from the dead hand of the administrative state.



Perhaps the Islamists are making a similar mistake.  They are practicing the white-hot politics of identity, just like their western liberal professors taught them.  It may take them half a century of bloody mistakes before they discover they have been had.



The only opportunity for a real reset on foreign policy -- and on domestic policy -- is after the liberal way gets exposed as a hopeless failure and a pathetic conceit of the present ruling class.



Then and only then will conservatives get a mandate to resume the western project of freedom, trust, responsibility, and prosperity.



But in the collapse of liberalism it will be minorities and women hardest hit.  As usual.

McDermott: Tea Parties Asked For It

Dear Congressman McDermott:



I am writing to deplore your conduct at a hearing of the House Ways and Means Committee on Monday, June 3, 2013.



As a US citizen and voter in Washington State's 7th District, I am ashamed of what I saw you do in your official capacity as my representative in the US House of Representives.



Look, I'm a conservative and you are a liberal institution here in liberal North Seattle.  But what you did on Monday shamed every First Amendment believing liberal in the nation.  Or it should have done, for any liberal that had, at last, any sense of decency.



Of course, the funny thing is that the gist of your remarks amounted to the idea that the Tea Party groups that applied for 401(c)4 status behaved like a woman that "asks" to be raped.



And we know what liberals think about that.  Blaming the victim is the least of the judgments that liberals make on people that suggest, even obliquely, that a woman asks for trouble when, e.g., she dresses "provocatively."  It shouldn't matter how a woman is dressed.  Rape is rape.  Right?



How provocative is it to put "Tea Party" in the name of your organization!  Talk about push-up bras!



By the way.  I see that in IRS Publication 557, 401(c)4 groups are titled "Civic Leagues, Social Welfare Organizations, and Local Associations of Employees."  What part of that is relevant to the notion that "if you didn’t come in and ask for this tax break, you never would have had a question asked of you"?



You see, Congressman, it matters a lot how an organization is registered with the government, and the Tea Partiers know it.  It's not just a question of tax-deductible contributions, or exemptions from income tax.  Tea Partiers know that you liberal chaps want to legislate lots of laws around the actions of corporations influencing elections, particularly corporations organized for the purpose of political education and persuasion.  In fact, I thought that you chaps want to overturn the Citizens United decision on corporate donations and electioneering.  Remember, Citizens United wasn't a grocery store that decided to get involved in changing the plastic bag law.  It was a corporation of concerned citizens that wanted to play in the public square on public issues.



So it is rather important for any "civic league" to make sure that it has ticked the right boxes with the government.  Otherwise the IRS or the FEC or the EPA or OSHA or ATF might come calling.  Golly, they did!  Especially since the folks at the Obama administration get really interested in the dotted "i"s and crossed "t"s of conservative organizations and conservative people when they get anywhere near public advocacy.  Hey, Lois!  How yer doin' babe?



Oh, I know what you were doing on Monday.  I understand completely.  You Dems are really worried about the air going out of the balloon of liberal enthusiasm.  With the IRS hearings droning on, day after day, and Jay Leno getting big applause on his IRS one-liners, you need to keep the liberal team pumped up.  You need to keep those liberal trolls going at full throttle down at Jen Rubin's blog.  And then there's the 2014 mid-terms.  So, who else do you ask to throw out the partisan red meat than good old Jim McDermott (D-WA-7), the guy representing the most liberal congressional district in the nation?  It's a dirty job, but somebody has to do it.



So I understand the political imperatives, Congressman, and the imperatives of political tactics.



But let's look at the bigger picture, Jim.  Let's peer beyond the parameters of daily talking points and partisan political tactics.  Let's start the good old post-mortem.  What went wrong?  How come that we find ourselves railing away at the IRS and the Obama scandals, day after day?  Is there something beyond mere Republican opposition and mean-spirited extremism?



Yes, there is.  In fact there's a big lesson to be learned from the current mess that you Dems are in.



It's simple really.  The "rules" and "rights" are not there just to protect the weak from the powerful, as we all endlessly declare.  They are not there just so that a Mom and Pop Tea Party organization can get a fair shake from the IRS.  The "rules" are also there to protect the powerful from themselves.  They are an insurance policy against hubris in the ruling class.



Here's the deal.  Anyone with political power is tempted to use it.  Even abuse it.  Sometimes liberals abuse their power.  Imagine that!  So we Americans limit the power of government to limit the power of the rulers.



It's all very well to decide what's needed to make America better and then legislate a program to change it.  Anyone can do that.  Anyone can then sit in a government bureaucracy and issue regulations to force people to conform to the new law.  But what if you are wrong?  Suppose that you pass a law on health care and predict that it will lower insurance premiums.  And then, four years later it becomes clear that you were wrong, and that health insurance premiums will go up?  What then?  Do you have to have an election and elect new legislators?  A new president?  Suppose that a significant minority is deeply hurt by the legislation but that a majority of the voters refuse to modify the law to accommodate them?  What does that minority do, if it is, say, composed of undocumented workers? Or, alternatively if it is composed of people working for small businesses that will lose their health insurance?  Or gays?



The fatal flaw in liberal politics is that it assumes that liberals will always be the first to see and respond to social injustice.  But suppose liberals were blind on some issue?  Suppose they just didn't get it?  What do we do then?  Given the power that liberals have, how will the people get the government to listen to their grievances?



Well, it's obviously going to be more difficult for the people to get their voices heard when you Dems sicc the Lois Lerners of the IRS on them.  And in the bigger context, that's going to hurt liberals.  Because, in a word, you chaps have put the Lois Lerners in there to suppress dissent from your liberal agenda.  How do we know who is right?



That is what came over so clearly in your remarks on Monday, Congressman.  You told us all that you do not understand the possibility that you liberals might, just once, be wrong on something.



The Greeks had a god that took care of people like you, Congressman McDermott.  The name of the god was Nemesis.

Judging Obama with Burke

I was looking at the latest Edmund Burke biography at the Corner Bookstore in Manhattan yesterday.  Well I was attending an author event for my daughter Beatriz Williams' blockbuster new book, A Hundred Summers.  It's about the big 1938 hurricane that hit New England in the fall of 1938.  It's going to be big, very big.



Listening to a flock of liberals at the party, and in particular to one enthusiast that averred that President Obama would go down as a great president, it got me to thinking.



How does Obama stack up against Edmund Burke?



The first great effort of Edmund Burke was his twelve year effort to impeach Warren Hastings, the Governor of Bengal.  I remember learning about the affair in school, but not really getting it.



But in the Obama era, you can get it, completely.  The point of impeaching Warren Hastings was to open a new era in governance.  No longer was it OK for a ruler to plunder his subjects as the mood took him.  The ruler, in this case Britain's proconsul in its new Indian empire, could not simply farm his subjects, he had to obey the law, its letter and its spirit.  He could no longer act like a Spanish conquistador or a pirate and loot and plunder.  He had to be responsible and obey the law.  The Begums of Oudh.  You could look it up.



Compare with Obama and the IRS and Fast and Furious and Obamacare and the bureaucracy run amok and the recess appointments made when Congress isn't in recess.  It is clear that President Obama recognizes no limits to his authority except those of countervailing power.



The second great effort of Edmund Burke was his support for Catholic emancipation, to stop Britain ragging on the Catholics, particularly the Catholics in Ireland.  Nominally, Burke was Protestant, but there is reason to believe that he was a crypto-Catholic; his wife remained Catholic all her life.  Burke lost his seat in Parliament in Bristol over his support for Catholic emancipation and free trade with Ireland.  Thereafter he represented a pocket borough belonging to Lord Rockingham.



Compare with Obama and his use of the IRS to harass his conservative opponents.



Then we come to Burke and his opposition to the French Revolution.  His opposition is generally framed with his denunciation of "sophisters, economists, and calculators." This was an attack on the worship of Reason, then at the height of its prestige before the attacks of Romanticism began in earnest.  Burke argued that society could not be founded on reason, nor yet on the social contract theories of the 18th century.  Society was not an arbitrary or supposed contract between the living, but a much bigger contract.  It was a contract between the generations, between those who are living, those who are dead, and those who are yet to be born.



Compare with Obama who is spending the country into bankruptcy.  Not to overdo it, we were already heading there, but President Obama certainly seems to be insistent that we should get there in a hurry.



The problem is, of course, that government is force, politics is division.  Liberals don't recognize this, don't understand it.  They are transfixed by the notion that they are transforming society from bad to good.  They do not get that it matters, profoundly, how society gets transformed.  The fatal flaw in the Obama method is that his vision is a vision of power.  The thing is to get to the progressive millennium, any way you can.



The whole point of Burke's philosophy is that reform or revolution by itself means nothing.  What matter is how you implement change.  Humans are social animals, not mechanical slaves.



We will soon learn to appreciate the sublime wisdom of Edmund Burke better.  Thanks to President Obama, the great.

Where Will This Corruption End?

Anyone that isn't a dyed-in-the-wool liberal must see that the Obama administration is the most corrupt administration in our lifetimes.  We are not just talking about the IRS, the Holder Justice Department, the Benghazi scandal.  Or even the latest news from Jeff Jacoby that welfare is rotten to the core.



Not even financial corruption that is the problem, although you can tell there is plenty of that.



It is the ideological blinders, the fact that liberals give themselves a pass to do whatever it takes to rid the world of evil: that is the problem.



Of course, back in the Watergate era, liberals were making similar jabs at the Nixon administration people.  They forget, of course, that Nixon was governing in the aftermath of the Sixties and there really were people planning revolution.  Eh, Bill Ayers?  Nixon almost had an excuse.  And just like the baby boom that came of age in the 1840s, the Sixties radicals were the children of the well-to-do.



The problem is what we generally call political correctness.  It is the corruption of the Frankfurt School's attempt to reform Marxism.  Postmodernism and the Frankfurt School have developed some transcendent ideas.  But in the hands of dull adepts and routine thinkers the tradition has developed into a secular religion that simply says progressives good, conservatives bad.  And progressives have licensed themselves to do anything needful to advance their agenda.  Of course they have.  Good must be made to triumph over evil.



The problem, of course, is that as progressives have defined their task as the fight of good over evil they have made themselves into a secular religion.  And because their politics is identical to their religion they have collapsed the separation between religion and state that is encoded in the First Amendment.



That is because progressives are too stupid, or too dishonest, to realize that what they think of as progressive politics is really a secular religion with a moral agenda, not just an ordinary political program.



In the modern secular religions politics and religion get collapsed into a totalitarian state.  That is what it means when you collapse the barriers and the separations between the three main power sectors in the culture, between religion and government and the economy.  You get all the power structures collapsed and added up into a single total.



And let's face it, our liberal friends really don't understand the meaning of any limits on their power.  Their ideas are necessary, their cause is right, and their opponents are racists, sexists, and homophobes.  Also anti-choice fascists.



Back in the days of Nixon liberals had a point that the presidency was turning into an "imperial presidency."  But now the liberals are turning the whole nation into a liberal mandarinate.



Because the idea is that liberals should be in charge and liberals should set the rules, and liberals should be exempt from the rules if needed to advance the liberal agenda of all that is progressive and diverse.



The problem is that the rules about the First Amendment are not just there to protect liberal journalists against Richard Nixon's myrmidons.  We like to think that the rules and the limits are there to protect the people.  But the rulers are always the rulers and the governed are always the governed.



Really, the whole apparatus that limits government power is there to protect the powerful from themselves.  It is to stop them from imagining that they are anything other than mere temporary custodians of the public trust.  And to stop them from thinking that some Big Push of government will do anything to improve society.



The way I look at it makes the complex understandable.  Humans are social animals, but government is force.  Thus the problem with government is to stop it and its forces from stamping out the living beating heart of society, the social cooperations and interactions, with its overweening force.



Think of it this way.  When you take a drug for chemotherapy you are ingesting a poison that you hope will kill the nasties without killing the rest of you.  It's a very tricky business, and is slowly getting better as scientists develop better drugs that target specific cells in the body while leaving others alone.



But government can never get that smart.  Government is just a blunt force that squelches everything in its path.  For over a century liberals have believed in a chimera that, with the help of large-minded people and intelligent experts, they can make government into a responsive, precision instrument.



We are about two-thirds of the way into the process at the end of which even liberals will come to realize that you can't do that.  Government is government; force is force.



The trick with government is the opposite of what liberals think.  It is to figure out new ways to replace government's blunt force with ingenious new ways of social cooperation.  We are talking about things like individualism, the market, credit, and the extension of trust beyond family and tribe.



Liberals don't get that, and they will pay for it.  Unfortunately, the rest of us are going to pay even more.

Mucking Up the Trust System

The whole point of the modern global economy is Trust.  It instantiates the idea that we can work and produce in relationships with people who are not our blood kin.



Because we mostly take it for granted that we can trust people across the world to produce a good for us, it is difficult to understand how radical this is.



One way to appreciate the radicalism of global commercial trust is to rehearse the culture of China.  It is said that what prevented China from taking over the world was that the power of the top-down imperial state forced ordinary people to retreat into and defend themselves from the rapacious Mandarins in their kin networks.



In other words, a flourishing commercial culture requires the emergence of a trust culture and requires a government that keeps its hands off the people and their business.  China in the early modern period lacked this culture and so it suffered the two century humiliation of European dominance.



But don't worry.  Today's West is busily trying to demolish the trust culture that conquered the world.  That's what President Obama is doing when he, as the president of all of us, continues his Alinsky tactic of division from reelection campaign to everyday governance.



There's nothing remarkable in what the president is doing.  It's what any political leader does.  He rallies his supporters behind him in a war against evil.  The innovation is that never since the 1930s has a president rallied his supporters so nakedly against the productive sector, corporations and successful businessmen.



The trouble is that the president is demolishing the trust culture upon which our prosperity is founded.  Lewis Lehrman, in a quick history of money and credit, shows how the government's appetite for resources leads it to demolish the delicate skeins of money and credit.



Money and credit are based on trust, they entail "moral obligation," Lehrman writes.  Inflation through unrestricted fiat money creation is the breakdown of trustworthy money.

Inflation prevails in America and the world today because of a breakdown of the institutions of trust that convertibility to gold once provided for the dollar. People no longer gladly accept and hold the dollar for long periods. They try to get rid of it in favor of something real: commodities, automobiles, real estate, equities, art, antiques, or coins. Producers and consumers have lost faith in the dollar because the government and the Federal Reserve have created more dollars than participants in the market desire to hold. Government overproduced money and credit in order to finance its colossal deficits and manipulate the economy, prices, demand, and employment levels. As a result, the paper dollar has ceased to be real money.

The problem is that inflation leads from bad to worse.  "Inflation or monetary depreciation entails a price revolution. It often precedes, and indeed it may cause, a more thoroughgoing political revolution."



There's a book about that: The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fischer.  The classic Price Revolution is France in the 18th century.  France found that it could not keep up with the Brits to finance their Second Hundred Years War and so defaulted on its sovereign debt, again and again.  Naturally the French blamed the greedy bankers.



But the problem with screwing up the government's finances is that it lowers the prestige of the ruling class enough so that, in the end, you get the French Revolution.  Not that the French Revolution was much of an improvement on the douceur de la vie under the ancien régime.



The fact is that politics is about division.  A politician must divide the nation into "us" --  the ruling class and its supporters -- and "them" -- those dastardly Tea Party types that deserve what they get from the IRS.  Everybody does it; it's just that some people do it more ruthlessly than others, eh, Mr. President?



But the way you do division is to sow distrust among the people.  As in greedy insurance companies and greedy bankers and corporate greed.  Because if people trust their local supermarket and their local gas station and their local doctor why would they demand that the government solves the problem of greedy corporations and tax the rich to teach them a lesson?



Government is force, but even government needs an excuse, a justification, for waging war on regime opponents.  If you wonder how it's done, just listen to President Obama for a month or two.  Every word out of our president's mouth is about preparing the battlefield for another campaign of division.  It sows the fruited plain with the tares of mistrust.  To justify another program of coercion.



The great achievement of Christianity, according to Max Weber, was to get Europeans to trust people outside the limits of blood kin.



The great achievement of the Left is to get people everywhere to mistrust and hate anyone outside their "identity" group.



Go figure.

What Is To Be Done?

What is wrong with the Republican Party?  And what is to be done about it?

That seems to be the consensus problem-of-the-week for conservatives.  From Bob Dole to Ben Domenech.  And let's not forget the March Commentary piece by Michael Gerson and Peter Wehner.

And a reader of my "Riots and Liberals" piece asked for more than just diagnosis.  How do we deal with liberals and "disincentivize their actions."

Gerson and Wehner call for a five point program for Republican revival.  First the problems:

1. Fewer white people, so Republicans must reach out.
2. Foreign policy failure, and Republicans have been losing the argument in the war on terror.
3. Weak candidates.
4. Stale ideas
5. Reputation for judgementalism.

Their solution?

1. Focus "on the economic concerns of working-and middle-class Americans."  Like "end corporate welfare as we know it."
2. Welcome immigrants instead of dissing them.
3. "[E]xpress and demonstrate a commitment to the common good". Defuse the idea that Republicans are hyper-individualistic with appeals to "civil society."
4. Make GOP approach to social issues "aspirational rather than alienating."  The problem is not gay marriage, it is the collapse of heterosexual marriage.
5. Don't make war on science.

OK.  so what does Ben Domenech have to say?  He points out that the Republicans have done best when they have been populists.  So is there a way for them to be populist and also "restore the party’s standing as the adult in the room"?

Maybe. He thinks the GOP can be populist and also call for bold reform of, e..g., Social Security and Medicare.

The truth is, however, that politics runs on fear, fear of the enemy.  And if that is not enough, it crosses over into the territory of religion and rails on about good and evil.

So it must take up the problems of the moment and drench them in the language of warfare and the opposition of right and wrong.  

That is what liberals do when they talk about corporate greed and intolerance.  Why can't I get a job?  It's because of greedy corporations.  Why is my house in foreclosure?  It's because of greedy bankers.  Why does health care cost so much?  It's because of those greedy insurance companies.  Why is my life a mess?  It's because of those judgemental conservatives.  And after they have got people riled up then liberals proceed to implement their top-down centralizing ideas.

In a way, the ideas don't matter.  It is the Alinskyizing of the guilty parties that creates the opportunity for political change.  You have to have things going wrong and have the effrontery to blame the ruling class.  Then you get into power and you start to legislate.

So you can expect GOP rhetoric in the next couple of years to return to the "liberals, liberals, liberals" line of the good old days.  Why can't I get a job?  It's because of job-killing liberals.  Why can't I get health insurance?  It's because of corrupt and unjust Obamacare liberals.  Why does it cost me $100 to fill up my truck?  It's because of corrupt liberals and greedy green energy.  Why is food so expensive?  It's because of cruel liberals forcing farmers to grow corn for fuel instead of food.

But even then, conservatives are operating under a disadvantage, because liberals, as the ruling class, get to define reality.  The fact is that liberals get to tell little children what to believe in school, and liberals get to tell young adults what to believe in movies and on TV and the social media sites.

Conservatives have plenty of good ideas, but, we will find that we can only go forward with those ideas after the liberal ruling class has been utterly discredited.  Maybe it can't happen until the current school system breaks down and middle-class parents desert it.

But there is a light in the tunnel.  It is that the Obama way is going to get utterly discredited in the next three years, as scandals multiply and people start to suffer until the administrative monstrosity of Obamacare.

But still, so long as liberals can hand out free stuff to their supporters, so long will they maintain political power.

My point is this.  We know what needs to be done.  But Americans will not agree to change until they see disaster in the face.  They would be fools to do otherwise.  When that day arrives conservatives need to be ready not just with the right politics and a program, but also a moral/cultural system to demolish liberals as a ruling class.

Then we can move into a better world.