Hillary Clinton's Messed-up Economics

Ever since the days of the Pharoahs, government has been expected to deliver prosperity, and woe betide the government that delivers Seven Lean Years from 2009-2015 instead of the required Seven Fat Years that obtained in the good old days of 1993-2001.

The truth is, of course, that there is very little that governments can do to make the economy better. There is a lot that they can do, and do do, to make things worse. That's because all governments take monies from productive economic actors and give it to their supporters.

Governments can't make it all better. They can't even command the tide to turn.

So Hillary Clinton's recent economic speech, labeled as "growth and fairness," delivered on Monday July 13, 2015 at the New School in New York City, points up the eternal problem of governments and the economy. Clinton is quick to complain about "an economy that still isn’t delivering" and about Wall Street and "short-termism." And she has the usual half-baked ideas to paper over the cracks. But she is pretty light on what government might be doing to make things worse. That is what ruling classes and their governments always do. They respond to every economic problem with more laws, more regulations, and more subsidies. They seldom worry about what government already does to screw things up.

Of course, the first thing to do is to blame Republicans.

For 35 years, Republicans have argued that if we give more wealth to those at top by cutting their taxes and letting big corporations write their own rules, it will trickle down, it will trickle down to everyone else. Yet every time they have a chance to try that approach, it explodes the national debt, concentrates wealth even more and does practically nothing to help hard-working Americans.

Twice now in the past 20 years, a Democratic president has had to come in and clean up the mess left behind.

Notice what she gets flat wrong here. Republicans don't argue that "we give more wealth to those at the top." Republicans argue that we reduce the top rate of taxes on income so that successful business owners will have more money to plow back into their businesses.

I'm sure that Hillary Clinton understands the difference between wealth and income. But the trouble is that she and her minions will end up believing the lie.  So after extolling the glories of the Clinton 1990s, she says:

Now today — today, as the shadow of crisis recedes and longer- term challenges come into focus, I believe we have to build a growth and fairness economy. You can’t have one without the other. We can’t create enough jobs and new businesses without more growth, and we can’t build strong families and support our consumer economy without more fairness. We need both.

Probably, as far as we can know anything about the mysteries of the economy and the market system, Clinton is dead wrong.

Probably the only thing that matters is growth. Once you have growth then everything else takes care of itself. When you don't have growth then everyone starts fighting over the crumbs. See Greece.

What happens when you get growth? First, the new successful businesses start hiring. So wages go up. Then the the successful business owners convert their capital gains into new enterprises. Which means more hiring, more jobs, a strong middle class with "strong families" and more "fairness."

Right now the hot growth sector is the "sharing" or "gig" sector from Uber to AirBnB and TaskRabbit. But Clinton doesn't like that because it threatens the old full-time job with benefits economy that center-left politicians have spent the last century manipulating and decorating for the benefit of their political supporters.

So Hillary Clinton gets out her two-handed economist.

This on-demand, or so-called gig economy is creating exciting economies and unleashing innovation.

But it is also raising hard questions about work-place protections and what a good job will look like in the future.

So, all of these trends are real and none, none is going away. But they do not determine our destiny.

Exactly. The new gig economy is going to smash all the pretty little entitlements and benefits that politicians have worked into the old industrial economy to buy votes.

And, contra Clinton, the "trends" do indeed determine our destiny. There is nothing a Hillary Clinton is likely to do about it except get in the way and support rich established interests against the nimble new technologies and techniques. Just like politicians did in response to all the other economic revolutions of the last two hundred years, from textiles, to steam, to electricity to information.

Just like President Obama is doing by turning the internet into a regulated-utility Obamanet.

The real problem with innovation is that it devalues the contribution of the once-dominant industries and their workers. They must adapt to the new situation. Only they don't want to; humans never do.

What politicians could do would be to make it easier for workers to respond to the changes and get with the new changes. Supposedly government already does that with its training programs and assistance to displaced workers. But then government makes it hard and expensive for workers to change career because of its stultifying regulations on occupational licensing and credentialism and its subsidies for education that make it more expensive.

We also have to invest in our students and our teachers at every level, and in the coming weeks and months, I will lay out specific steps to improve our schools, make college truly affordable and help Americans refinance their student debt.

And let’s embrace –

(APPLAUSE)

– let’s embrace the idea of lifelong learning. In an age of technological change, we need to provide pathways to get skills and credentials for new occupations and create online platforms to connect workers to jobs.

There are exciting efforts underway and I want to support and scale the ones that show results.

Earth to Clinton. We have been "invest[ing] in our students and our teachers at every level" for decades, and I'm here to tell you that "we" have mostly been making things worse.

But you wonder. What in the world could government "invest in" that isn't going to involve big expensive bureaucratic organizations like our current educational blob.

Because maybe the really "exciting efforts underway" involve the gig economy where students can go to school and work at the same time. Or take time off from school to earn some money and then finish their schooling after they've built up some cash.

Maybe what the government could really do to help is to get out of education and cut all its regulations so that education could be lean and responsive and cheap.

It must be obvious even to second-rate minds that whenever government gets in to help with something then lean and responsive turns into bloated and slow, and ruinously expensive.

Look, I get Hillary Clinton's problem. She's got to sound upbeat and forward-looking, because voters are in a Time for a Change mood. But she's also got to take care of the Democratic Party's supporters. And almost every one of them is part of the problem.

Clinton's problem pulls her in two different directions. And the result is a mess.

The Liberal Army Group A in the Caucasus

Kurt Schlichter has a piece out today saying: Hey, liberals changed the rules on politics, so here goes. We are no longer talking about the rule of law and allowing space for our political enemies. It's all about power, all the way.

Until now, we conservatives have been guided by “principles” and “values” that only serve to distract us from what’s really important. Under the new rules, we will no longer let arbitrary ideas about how America should work get in the way of maximizing our ability to exercise our authority over others. After all, our supremacy is a moral imperative.

And so on. The effect of the piece is to realize just how far liberals have gone in the Obama years, and how it is almost unthinkable for conservatives to abuse power like that. Because the whole point of conservatism, from Burke onwards, is to limit political power,

But I think that the lawlessness of the Obama liberals illuminates a huge fact. Liberalism is failing. Liberalism is failing and so liberals have to break the rules just to get through the day, in the way that an alcoholic has to start the day with the hair of the dog. Obamacare was never popular, so liberals had to break the rules to get it over the finish line. Then they had to put in on IVs and change the black letter law with illegal administrative actions to keep it on life-support. They had to mew up their Consumer Financial Protection Bureau in the Federal Reserve to protect it from assault.

That's why I think that we should think of liberalism like Nazis on the Eastern Front. The liberals failed to take their Moscow. That was the repulse they suffered in the Reagan era and the fall of communism. So now they are sending Army Group A into the Caucasus.

But what's the point? What did the Caucasus do for the Nazis except expose their left flank?

It's pretty obvious that right here in 2015 the natives are restless. Pretty soon there is going to be some non-name issue that will become as famous as the no-name Stalingrad on the Volga. Maybe Donald Trump is doing that with immigration. Maybe it will be something else.

I keep coming back to this. The reason for the rule of law and limited government and all the other shibboleths of modern politics is not that they are good and wonderful in themselves. It is that playing fair and limiting the power of government functionaries limits the amount of injustice that the government is able to inflict on ordinary people. It is the experience of injustice that gets people riled up and determined to form a head of rebellion.

So the reason that prudent politicians follow the Moynihan Rule and determine to pass big legislation with a 70-30 vote in the Senate is that they make sure that they can at least pretend to have a consensus for the change. Notice that the 70-30 vote is way above the 60 vote barrier required by the filibuster rule. With 70-30 you have persuaded a good part of the opposition that they had better climb on board because the train is leaving the station.

When Republicans repeal Obamacare in 2017 they need to observe the Moynihan Rule. They need about ten Democrats to vote for repeal and reform, Democrats afraid for their political lives. And if all goes well, there will be plenty of Democrats in the right frame of mind for that.

In my view Democrats have the same problem with green energy and gay marriage and the war against the suburbs to corral Americans into high density urban environments. They didn't ask permission for all that; they didn't build a consensus. They used the tactics of the bully and the mob. There will be hell to pay on all that, and the bill isn't even in the mail yet.

The words of Dr. No to 007, James Bond still apply. Obama liberals are fools, and fools must pay for their folly. 

The Worker and the Hedgie Should Be Friends

Ace has a long piece at the Ace of Spades HQ (H/T Instapundit) on class warfare within the Republican Party. The Middle/Working Class whites don't like the Professional Class (or Comfortable Class) and the Professionals don't like the crudities of the rubes down in the cubicles and on the factory floor. Ace calls down a plague on both their houses.

Both classes, frankly, disgust me, depending on the day of the week.

In fact, all politics is disgusting. I am re-discovering that as I read Eric Foner's Reconstruction. Back in the 1860s everyone -- radicals, abolitionists, workers, planters, hill-billies, freedmen, free blacks -- was out for themselves, didn't give a damn about anyone else, and wanted the government to do the dirty for them.

So yeah. Of course the ordinary middle class is embarrassing to educated folk, and of course the professional class are sickening hypocrites that suck up to the establishment left by sneering at the bigoted rubes.

Earth to conservatives: The whole point of a political coalition is that it's a group of people that hate each other, but hate the guys in the other party more.

I don't know what white ruling-class liberals think about their black and brown supporters. But I'll bet you'd learn a thing or two if you got to be a fly on the wall at some meeting of the great and good. The point is that, way back, your Marxes and your Frankfurt Schools cooked up an ideology that allowed elite snobs to patronize and gush over workers and blacks and browns and bribe them with other peoples' money and think that their kind were the most enlightened and evolved people in the world.

Talk about genius.

Never mind that liberals have in fact plunged African Americans into a cesspool of cultural disintegration, and are doing their best to do the same to Hispanics. Their ideology blinds them to all that, and lets them know that they are the bestest and brightest ever.

The other technique of the political ideology is to sow division in the other guy's ranks. That's what the Joe Soptic commercials were all about: Hey, white working class, the hedgies up at Bain Capital don't give a damn about you!

I'm here to say that, pace Rodgers and Hammerstein, "The worker and the hedgie should be friends."

In other words, we need an ideology, the right's equivalent of Marxism, that imagines a common interest between the capitalists and business owners and professionals on the one side, and the cubicle workers on the other.

The point of Marxism -- and its child, cultural Marxism -- is that the workers (and now the traditionally marginalized from women to blacks to gays and transgendered) -- are the salt of the earth and are being monstrously oppressed and/or exploited by the evil rich and/or racists, sexists, and homophobes. The educated and the evolved are called to minister to the oppressed and exploited, nd be a scourge to the evil oppressors and exploiters. More than that, they are called to be heroes, doing good in the world instead of merely making a buck like the booboisie.

The point of the new conservative ideology should be that the People of the Responsible Self, whether diligent workers toiling away in offices and service businesses or business owners and entrepreneurs and skilled professionals, are the good guys in this world. We are the people that make the products and deliver the services; we are the people that surprise the world with new technologies and business ideas. We are the ones that have been driving the economy for the last two hundred years as it grew from $1-3 per capita per day to $100 per capita per day.

Some of us are newly-born people of the responsible self, through the agency of enthusiastic Christianity. Some of us are responsible creatives, inventing technologies, risking everything in startups, leading great businesses and corporations that deliver products and services to the world. Some of us are advocates for freedom and limited government. Some of us are just fathers and mothers and good neighbors, raising a family and always ready to help a family member or a person down on their luck.

The point is that Ace is wrong. We shouldn't be disgusted with people who aren't like we are. We should be working together, building a new libertarian-conservative movement on the common faith in voluntary cooperation and limited government, combining a prudent, but realistic faith in tradition with a yearning to make the world better while observing the Hippocratic oath to do no harm.

We can do it, folks. We did it with the post-WWII conservative movement and we can do it again with a 21st century Fight for Freedom.

It's an irony that socialism, the idea that we are all brothers and sisters and should work together through brotherly love, in fact operates on the idea that rich and poor, white and black, are utterly irreconcilable and must fight to the death.

But classical liberalism and limited government promote the idea that, given appropriate defenses against enemies foreign and domestic everyone can get along if, paraphrasing JFK,they ask not what others can do for them, but what they can do for others.

The Question of Neo-feudalism

If you go to Wikipedia's entry on neo-feudalism, you get the center-left ruling class's take on the concept. For them neo-feudalism means the privatization of governance, in big corporations. From the right it seems to be a way of critiquing the welfare state and social democracy.

But I want to think of neo-feudalism not as something imposed by a political or economic elite, but as something freely chosen by modern people.

I take as my text Eric Foner's Reconstruction: America's Unfinished Revolution 1863-1877. In it he discusses the experience of the recently freed slaves in the mid 1860s.

For [the adjustment to a new social order] required the abandonment of some traditions inherited from slavery and the adaptation of others to the logic of the economic market, where the impersonal laws of supply and demand and the balance of power between employer and employee, rather than custom, justice, or personal dependency, determines a laborer's material circumstances. (p.106)

Many slaves refused to work for big plantations after getting freedom; others were outraged that they would have to find their own food.

We all, from left and right, use the word "feudalism" as a pejorative. From the left it is thrown at corporations and globalization; from the right it is thrown at big government and entitlements.

But I want to use the word in a different sense. I think that most of us choose to live in dependency. For instance, the Bureau of Labor Statistics table of employed persons for 2014 shows 135 million wage and salary workers and only 8.6 million self-employed unincorporated workers. OK, so there are 23 million people in "management, business, and financial operations occupations," presumably including everyone from CEOs of mega-corporations down to the president of B&B Drywall and mid-level corporate bureaucrats.

I am trying to say that most of us reject a life directly exposed to "the impersonal laws of supply and demand." We choose to work for a boss as an employee, meaning that we let the boss deal with the day-to-day risks of supply and demand in return for a regular paycheck. And then we complain if he makes a killing, or if we get laid off because our "non-negotiable demands" have bankrupted his firm.

For many of us, even the risks of working for a small company and its exposure to the impersonal market are too much. We look for employment in a big corporation or a government where the impersonal laws of the market are far away, and insured against by seniority rules, grievance procedures and a pot-pourri of benefits and pensions.

Obviously there are many kinds of people in the world. Some are adventurers and seek out risk and difficulty. Others seek out a comfortable billet from which they can never be fired.

The problem is that neither the risk-taker nor the risk-avoider truly face reality. The risk-taker will fall back on relatives or the bankruptcy laws if his plans go awry. And the risk-avoider is never willing to pay the real cost of allocating all risks to his employer or his local politician. So we have highly-leveraged bankers and hedge-fund operators looking for a bailout during a financial meltdown. And we have government pensioners outraged by "austerity" and oblivious to the fact that their demands end up bankrupting the nation when the government runs out of other peoples' money.

So what's the solution? It's perfectly simple. We reduce the incidence of force. If the risk-taker gets in trouble we help him because he's a human just like the rest of us. If the risk-avoider gets laid off because his employer has been asleep for the last 50 years we help him too. Because he's human and we are too.

But I don't believe we want to encourage people to believe they have a right to assistance, enforceable by government enforcement officers. That way is the law of the jungle, not the kindly assistance of neighbors and friends.

Whose Side is Trump On?

Did you know that Donald Trump is a friend of the Clintons, and has contributed to their campaigns? I didn't either.

I say that because when Jonah Goldberg complains that Donald Trump is turning Hispanics away from the GOP with his crude complaint that Mexico is sending criminals and rapists to the US, maybe that's the point.

Maybe the supposedly Republican Trump, the pal of the Clintons, is doing a bit of double-agent work.

I say this because it is still remarkable to me how the independent campaign of Ross Perot in 1992 and 1996 helped elect Bill Clinton. We know that Ross Perot hated the Bushes; maybe that's all there was to his campaign. Maybe.

The thing about Hillary Clinton is that she's not very imaginative. (Oh, you've noticed!) So you wouldn't be surprised to see her trying to reprise the techniques of 1992 when she and Bill were young.

You never know. With Hillary Clinton's luck, Donald Trump might turn out to be a net plus for the Republicans.

Look at it this way. No sooner had Trump damned all immigrants than an illegal immigrant felon, released from custody in the sanctuary city of San Francisco, killed a nice middle-class white woman on the tourist waterfront. (A "sanctuary city" is a liberal enclave that arrogates to itself the right not to obey federal immigration law. Do not try this if you are a Christian bakery.)

So that allows Republican presidential candidates to say that they utterly reject the racist sexist nativist rhetoric of Donald Trump. But they also declare that it is time for liberals in their precious gentry liberal enclaves to start obeying immigration law before more innocent middle-class white women tourists are shot down in cold blood.

After all, the whole point of politics is to turn lemons into lemonade.

So, to you folks panicking that Trump is throwing away the Latino vote, and to you Democrats that think that Trump will hand the 2016 election to Hillary, I say: hold your horses.

Let's just say that Donald Trump is a bull in a china shop. And there is no telling whose precious china he will smash.

The Grecian Formula for Game Theory

It is said by Jeremy Bulow and Kenneth Rogoff in the Wall Street Journal that the Greek "Yanis Varoufakis, who was pushed out as finance minister on Monday, prided himself on using game theory in his negotiations." Could be.

But game theory also includes the Prisoner's Dilemma. In a repeated game the Prisoner's Dilemma shows that in a long-term relationship it always pays to be trustworthy. But in a final transaction with another party it always pays to cheat.

So I get what the national socialist leaders of Greece's Syriza Party are doing. They are doubling down, playing double or quits. They are playing the final game where it pays to cheat. Because it is not their money that they are playing with.

They are playing the 150 year old game of the left: pay up or we will teach you a lesson.

And France's socialist President Hollande and the lefty Spanish party Podemos, and Italian Beppe Grillo's Five Star Movement are all agreed that the EU (i.e., the Germans) should pay up and keep the Greek pension checks coming.

But I am interested in my own game theory, that every government is an armed minority in some territory that supports itself by rewarding its supporters with taxes on the work and wealth of the people in its sovereign territory.

The corollary of my theory is that you must think of the government and its supporters as an army on the march. Never mind about the battles: the first priority of the generals of the army must be to keep its soldiers fed and clothed. Because once the food gives out and the boots fall apart then the army will collapse and the generals won't have an army any more.

Now you understand what the July 5 Greek referendum was about. It was held to rally the troops one more time, to get them to forget for a week that they are running out of food and medicines, to keep the Syriza army in being for one more week so that the Greek government could keep up its rhetoric and keep threatening the EU and its bureaucrats.

The other lefty European parties have chimed in because that's their game too. To keep marchn' and protestin' in the faith that disruption will shake out new benefits from the political system. For now.

I use these metaphors for a reason: to demonstrate the cruelty and injustice of the left's politics. They use their supporters like soldiers in the armies of old, when poor villagers went for a soldier because they were starving. They use them for their power games, but in the end they leave them to die by the side of the road, sick and starving, as the generals of armies have ever done.

Once you accept the government's free stuff you are starting on the road that leads to Greece. You are placing a life bet that the government's checks will keep coming. But the trouble is that you are placing a bet like the starving yokel of the 18th century. You are forsaking the chance to become self-supporting with work and service, and marching down the road to nowhere, hoping that the government's commissary keeps the food coming.

In the aftermath of the July 5 referendum the Greeks were laughing and chanting in the streets. For what? That they were brilliantly manipulated by their leaders for one more week?

In the end, such leaders end up like Robespierre, sent to the guillotine and reviled as the "dirty Maximum."

Next Up: Greek Limbo

All of us peasants just want the Greeks to be kicked out of the Euro so we can get on with our lives. But James Delingpole doesn't think so. Because, as was true of the Soviet Union, you are not allowed to leave the Euro or the EU.

That's because "we" are the Ruling Class of educated experts and "we" will decide when it's time to go.

The annoying thing about Syriza and the Greek Prime Minister Alexis Tsipras is that they know exactly how to play against the educated ruling class. They would, since they are part of it. Educated lefty experts.

Incidentally, why aren't people calling them "fascists?" They are blaming foreigners and Jews. They have a "stab in the back" myth. And they seem to think that they can do anything they like to the economy. Let's see. A socialist is a lefty pushing class warfare. A fascist is a lefty pushing race warfare. A progressive is a lefty pushing identity politics warfare.

Let's look at all this through my microscopical lens. In which any government is an armed minority occupying some territory and using the usufruct (the right to enjoy the use and advantages of another's property short of the destruction or waste of its substance) of the people that live there to reward its supporters.

Oh, maybe "usufruct" is too tame a word, since what governments typically do is use the peoples' property and destroy it as well.

The way this racket works in the modern age is that politicians bidding for power offer potential supporters benefits and pensions. They they win. Then they enact pensions for their supporters. Then they run out of other peoples' money. Then the fun begins.

The fun in the Greek case is that the Greek governments have been playing the game perfectly for 20 years. They entered the EU on a lie, but a lie that perfectly aligned with the needs of the politicians, to offer their voters more benefits. Then in 2009 the whole thing went belly up. But not completely, because Greece was able to take advantage of the EU ruling class's need to keep Greece in the EU. They could continue their unsustainable pensions by borrowing more money from the EU ruling class.

How unsustainable? Rich Galen has the numbers:

According to Eurostat, the EU statistical arm, Greece leads the EU in percentage of GDP that goes to pay pensions: 17.5 percent. Although we think that every dollar we earn is going toward someone's pension in the U.S. that number is about 6.8 percent of GDP.

The thing to remember is that the Greek leaders are not in the same boat as the Greek voters. They don't care if the pensions can't be paid. They'll find some other gig somewhere. And meanwhile they are having the time of their lives winning elections, running plebiscites, tweaking the noses of the rich uncles in Frankfurt, Berlin, and Brussels. Emile Zola already had that figured out over a century ago in Germinal. Community organizer, name of Etienne, comes into town, organizes the striking miners, leads them to sabotage the mines, then skips town as the miners face starvation.

And the same goes for the politicians and bureaucrats running the EU (and the US). They don't care about you and me. It's not their money. Their pals will give them a gig, somewhere, somehow. And if they don't it was all great while it lasted. Power is the great aphrodisiac, said Henry Kissinger.

And the band plays on.