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Category Archives: Politics

Why our President won’t fix Jobs.

Premature negativity sounds hyper-partisan,  with some random blogger here criticizing  the President’s job proposal speech before he gives it. It is President Obama, though, who is bound by that hyper-partisanship (among other things) to propose inefficient methods of job creation. Obama will be forced to propose inefficient methods of stimulus, and bound by the debt-ceiling and his view of economics.

Spending will be proposed in this speech, with likely recipients including infrastructure, R&D, education and energy. These are all worthwhile endeavors, and segments of our society that need improvement. What stops the liberal from spending effectively is sandbagging, the attachment of causes to current action. Democrats and Republicans both have a long history of adding spending to bills, even vital bills close to their heart, but liberals have it tied to their consciences.

Any spending on our infrastructure will include new paths plowed for mass transit, where the money could build twice as many roads, any research will be directed by congress to social priorities, reducing its value (regimented research is guaranteed to produce exactly nothing), any additions to education will attempt to end the achievement gap and keep teachers, needed objectives but not problems that money has been able to solve. Any energy bills will direct funds to alternative energies, promoting currently inefficient forms of electricity and fuel. In attempting to steer our nation, Obama’s proposals have thrown our economy in  the ditch. Untying the social needs from the economy will be too difficult for this president.

Money is a powerful tool, but its misuse is what got us here.

Efficient use of Capital

Jobs depend on efficient uses of capital...

Money appears to also be the only tool in a liberal’s economic toolbox, an effect that is tied to Keynesian economics and interest groups. Keynes argued that any government spending would stimulate the economy, because the people would take that money and spend it again, creating a cyclical effect that helps everyone. What legislators fail to accept, though, is that conditions were very different during the Great Depression. People who had money hoarded it, not wanting to fall victim to poverty like their neighbors. The benefit of government spending was that it forced spending, and gave wealth to those who had to spend most of it to stay alive, or at least stay in their homes. These people also had to spend in very rational ways, making the “Black Box” of demand very efficient compared to today, able to be ignored, a luxury I don’t believe we have today.

It is not my goal to debate Keynesianism, but rather to show that even Keynes wouldn’t have got us into today’s situation. In Keynes’ view, government should be pulling back on spending during the good years, but Congress hasn’t ever done that. And that is especially true for Democrats, due to liberal interest groups. These groups have causes, some good, some bad, whatever. But they promise progress and only demand funding, freeing the Democrat legislator to think only in terms of allocations and never having to wade into the mire of social policy. It has been a convenient arrangement for Democrats, but one that makes our current economic woes intractable.

So we are today caught between a rock and a hard place, and do not have the insight or tools to get out of it. Even many Republican lawmakers who have advocated for slashing spending or not raising the debt ceiling don’t fully understand the economics behind their positions. What is needed is insights into the microeconomic level of spending, something that Congress and presidents have avoided like the plague.

So President Obama cannot break through the debt ceiling, cannot go below the spending “floor,” because of ideology and opposition in Congress, and is “walled in” by inefficient spending because of conscience and interest groups. He has nowhere to go, but to propose platitudes, blame others, and appeal to our compassion. Real economics tied to effective allocation of resources will help our economy, but it is a political impossibility for this president at this time. Sadly so, I hope I am mistaken.

Take Heart, Teabagger!

TEA Partier, listen. I’m talking to you.

I know you’ve been down as of late, looking at a debt deal that didn’t go far enough, worried that the mixed results will be blamed on you and not where it should be, squarely on the shoulders of Liberal Democrats and slightly less fiscally liberal Republicans, who argue over which thing to spend too much money on. Possibly you look at the new round of attacks, saying that you threaten the Republican coalition by not playing nice and that Boener almost lost the farm back there because of you. Worse, you still get misconstrued as the favored child in the room, who the adults have been careful to indulge while still ‘doing the work ‘ that must get done to move the nation forward, a complete reversal of reality.

I want you to relax for a minute.

What the TEA Party has done is nothing short of extraordinary, and before you jump up and tell me I’m placating, listen. We on the Right haven’t institutionalized movements the way those on the Left have. “Rules for Radicals” has really nothing for us in terms of policy. But human, grassroots movements share some similarities, whatever their origin. Let’s examine them.

A real movement comes from people who cannot take the status quo any more. These people must have two things to be a real movement: integrity and community. By integrity I mean that no matter how many (or few) other people are out there, the reformer can no longer go along to get along. This doesn’t mean they want to tear the system down, it usually means they love the system so much they won’t let it descend to ugly depths anymore. This is TEA party to a tee. Having communications and relationships is what makes the movement an actual movement, and can be seen in the small groups meeting regularly around the country.

Those on the Left who dismiss TEA parties as “Astroturf” are probably split down the middle between people who have an ideological impairment to believing that a conservative can organize/would believe in something strongly enough to organize, and those who are scared to death because they recognize a movement when they see one.

 Every movement has a few stages it goes through. First, people decide to be themselves, with their vote and their voice, and not live divided internally anymore. This has happened in America as many have said “Enough, taxes and debt will not solve our problems, only pass them to our children.”  These people found themselves outside of the system, but still love it and want to change it.

In the second stage communities are built as these principled people find each other, coalescing into larger groups and passing information and support to each other. A movement begins to takes shape here.

Thirdly, These groups go public. They take flack, gain enemies, and stay as strong as they can, continuing the conversation with people who hopefully go from unawareness of the problem, to hatred of it, to uneasiness with it, to complete comfort and acceptance of the new ideas. THIS IS STANDARD! Evey new idea has entered the public conversation in precisely this way.

And lastly, they get a seat at the table. The system changes a little bit to accommodate them. Before you go around dogging John Boener and the lack of progress, look at the progress! While we are in the thick of arguments about debt, the argument is ABOUT DEBT! Take heart, oh TEAbagger, your ideas are here, and news organizations can look at them and judge them with the same lenses they look at mainstream policy, because you are now mainstream. Congratulations.

Don’t rest on your laurels, of course. I am not part of a TEA Party, but I can opine along with everyone. What you need now is to kill the vampire that’s been draining our national blood: the economic beliefs that debts don’t matter, and that centralized control helps us get out of recessions. Take this last part for what it’s worth, but stay strong, stay hopeful, and keep it up!

It’s the Economics, Stupid! Why the U.S.’s credit downgrade spells out a coming political earthquake

Standard & Poors, one of several credit rating agencies,  has downgraded the United States’ credit rating from the absolute best AAA rating to AA+, despite Congress passing a debt deal. But what really happened here?

There have been two economic debates happening behind the scenes during this entire process, as Republicans and Democrats come face-to-face with the realities of the economic games they’ve been playing. I say “behind the scenes,” because largely, the debates over the debt ceiling have used terms like ‘fiscal responsibility,’ and ‘revenue increases,’ that are talking points that cover the (more complicated) real policies.

First, the Republicans have had to deal with a growing constituency within their ranks who are articulate objectors to Keynesian economics. These people have always existed within the ranks of Republicans, because they have had nowhere else to go (Libertarian Party, anyone?) but the rise of the TEA Party has coalesced, emboldened, and educated this group, and they have made huge gains among fiscal conservatives who were already open to these arguments. For a lighthearted, entertaining,  but accurate 10-minute education on the economics, click here. It’s also worth posting the follow-up video they made, about the current debt situation.

The political winds since President Obama took office have meant that conservatives who usually fall in line with monetarism have had access to new rhetorical ammo they previously wouldn’t touch, and they have been using it. Criticisms of Timothy Geithner and Ben Bernanke’s monetary policy can be traced very quickly to statements by Ron Paul and others who criticize the Federal Reserve’s existence. Republicans have a fight brewing between these re-branded conservatives and the moderates who want spending to go from 25% of GDP to 19% or so. Both have a case to make, but are mutually exclusive, which is why Republican candidates will not be having this argument publically. The schism could have radical consequences within the Party if it does.

Democrats are in an even worse predicament because of the downgrade, because a large and, for a long time, growing wing of the party has been saying that “Debts don’t matter.” Clearly, credit rating agencies disagree. This form of bastardized Keynesianism is something that Keynes himself wouldn’t endorse, a radical simplification of a nuanced theory by daft politicals. Part of the reason that Hayek followers have made such headway is the cartoon version of economic policy that so many of the Left have signed up for.

Real Keynesianism would have government acting as a counter-weight in the boom-and-bust economic cycle, making money more available in hard times, and less available when the economy is getting too optimistic. The re-election demands of politics however, mean that no congressman or congresswoman will ever actually vote for decreasing the economy or saving money/reducing debt in good times. The political attack ads are pre-written for this: “But Mr. So-and-so has voted against sensible legislation to help our kids, leaving our economy worse off. Tell So-and-so to go to Hell this November.”

So Democrats talk about responsible (Keynesian) policy, while voting for more, ever more stimulus and Republicans talk about “fiscal sanity,” but just make sure they vote for military spending during the boom, which is justifiable spending with their constituents. Economists are a tiny voting bloc, after all. But the country must still be governed.

So where do we go?

Progressives in the Democrat Party are serious that they want more stimulus, and angry that Obama has given away the farm, so to speak, while Ron Paul supporters are incensed that the debt ceiling was increased at all, giving away the farm in their eyes. The middle is seen as squishy and spineless by both sides. These two economic theories are irreconcilable in negotiations; they must be dealt with by economists.

Politicians cannot solve this problem.

I recommend economic education for Americans, for two reasons. First, when wide exposure is made within a group, the talented people are found. Most people out of Oklahoma who can play football, know they can play football. Most people in Alaska, not so much.  If everyone gets exposure to this key need, we will find the cream of the crop, and down the road have the ideas needed to articulate solid theory. Secondly, the interaction of ideas improves those ideas, and when a critical mass of people talk about an issue, the “national conversation” is elevated and real solutions can found, and good decisions can be made.

Secondly, we should let the political shake-ups happen. The current alliances in politics has produced a piss-poor dichotomy that has left many Americans in the cold, not really identifying with either party. I’m not advocating third parties, but rather the re-alignment of coalitions within the parties. Both sides will be pushing for the other side to break up, and trying to conserve their own Party, but both know the triggers, or fault lines, and can likely run candidates and release platforms that tear at the fabric of their political opponents. Unions should consider endorsing Republican candidates, Pro-life Christians should look at Democrats, and everyone should avoid Ron Paul.

May God Bless America.

Ship, Baby, Ship!

A Seattle Times editorialist posted  about not shipping coal through Washington state ports from Montana and Wyoming to China. Here’s his argument broken down to its syllogism:

1. Coal is dirty and bad for the environment, especially for global warming.
2. China burns lots of coal, enough to buy some from Montana and Wyoming.
3. We don’t want to be bad for the environment, so we should not participate in the shipping of coal to China.

To quote the author Lance Dickie, “Coal terminals are a false economy for the planet and local communities. If the coal is routed through Canada, as threatened, so be it.”

This paint-by-the-numbers argument is augmented helpfully by terms that cast a dim light on the entire operation. Lines such as, “Massive coal-export operations proposed… emit the gritty aura of trouble to come,” and “The idea seems strained on so many levels,” portray what we should be feeling as we read about this issue. Gritty auras aside, idea of new business involving a throughput of non-renewable energy should not scare away environmentalists. The alternative, denying port access, is tantamount to a trade embargo with a friendly nation on grounds of distaste.

Yet this is precisely what Mr. Dickie proposes. “Economists point out that a reliable source of cheap, low-sulfur coal offers no incentive for China to change its ways and look for environmentally friendly ways to make electricity.” These economists apparently argue against opening our ports to do exactly what they are lined up to do, the shipping of goods for a (taxable, job-producing, economically stimulating) fee.

An economist is quoted, “Dr. Thomas M. Power, of the University of Montana, wrote a compelling essay published by Sightline Institute, ‘The Greenhouse Gas Impact of Exporting Coal from the West Coast.’ As he reinforced in a telephone interview, ‘price matters,’ and to argue that economic and environmental costs are not important to the Chinese is laughable.”

This is true, of course.  It is also true that the argument ignores the real issue being decided by Washington: Montana coal is going to China, and Washington can participate in that transaction, or not. Oregon would be happy to help, as would Canada and Alaska. The resistance starts to thin out when we talk about the marginal benefits of not participating in an economic transaction because we don’t like coal, and want to behave as if cap-and-trade legislation affects states as well as businesses.

Furthermore, while price matters to the Chinese as it does to everyone, denying energy would only make China more reliant on less friendly nations with dirtier-style excavation and shipping techniques. The United States has vigorous, and more importantly, enforced environmental regulations on its domestic energy production. To argue that other nations’ supply is better for the atmosphere than ours is ludicrous, and smacks of a NIMBY-style approach to environmental politics, while using global warming as a useful symbol. 

Washington stands ready to help improve our nation’s trade balance with China, increase its own revenues, and provide jobs to its citizens. Some in Washington however, seem ready to nix the whole deal and stage an exercise in political protest at the current world energy situation. This is pie-in-the-sky moral posturing by a few noble but misguided souls, and should not impede the deal.

Let China pay us for once. Let the United States export energy for once. And while we’re at it, let’s stop trying to stymie energy supplies in order to make new energies appear. They will come, exactly when the technology advances to make them practical, and not before. In the meantime let’s participate in today’s economy.

Montana countryside as viewed on my road trip

Repost: Increase the value of labor and decrease unemployment

Here is an interesting opinion article about labor, and a good straightforward view of conservative thought on labor policy. I don’t agree with everything there, e.g. I think the federal government should have a basic minimum wage in place, but this makes more than talking points, it’s a coherant worldview of the topic.

Reactions to President Obama and Speaker Boehner

I watched the President and Mr. Boehner give a speech and a reaction, respectively, and here are my immediate observations.

1. Why did the president give this speech? Not that every plow has to break virgin soil to be productive, but come on… name one new point in the debate. In this political boxing match only thing this speech seems to  do is flail for a stray hit and a win on points. Understand, no one thinks a government shutdown is a game, or funny, but one of the reasons this is happening now and not in January is that both sides want to position for the next election cycle.

2. John Boehner gives a damn good performance as John Wayne. No, seriously, if they do a movie about the film star, I can’t think of anyone in Hollywood more suited to the role, than the gentleman from Ohio. He’s too tan for California, though.

3. I’d say 80% odds the Republicans come out on top in this one. Mr. Obama has held his cards too long, and Mr. Boehner called his bluff, that’s the overall impression I got. If the Senate and House pass a bill, and it goes to the president without significant input from him, it will be a tough re-election cycle for the Leader of the Free World.

Book Review: Presidential Courage

Michael Beschloss is a famed presidential historian, but this is the first book of his that I’ve read. Halfway through reading it, I was so impressed I bought a second copy to loan out to friends. This turned out to be good for the author, because the second half of the presidents weren’t nearly as good. I suppose that’s the presidents’ fault, and not the historian’s, but I’ll get into that shortly.

The book’s goal is to demonstrate times that Presidents have set aside partisanship and risked their careers to do what was right for the country. It was both inspiring and heartening to read, in a time when a political campaign consists of smears and defamation, when sentiment towards politicians is so negative, and when trust in the government is so low.

A few things about history and this book jumped out at me. First, many early presidents took incredible risks, both politically and sometimes personally. For example, Lincoln risked everything on his re-election while sticking to his principles:

  “Had the War Democrats and Copperheads elected McClellan as President, they would have demanded that he shut down the war, which would probably have meant the end of the eighty-eight-year-old United States of America.
  Lincoln would have gone back to Illinois one of the greatest losers in history, a President who had spent untold American lives to restore the Union, then destroyed it by transforming the Union cause into a hopeless crusade against slavery.
  As Ralph Waldo Emerson wrote a friend in Europe, ‘Seldom in history was so much staked on a popular vote–I suppose never in history.'”

Secondly, the risks taken and courage displayed seemed to diminish the closer we get to present-day presidents, although that may be due to more thorough documentation. After reading about how Lincoln risked almost everything on an election that the had no way of knowing whether he would win was intimidating and impressive. Reading about how Kennedy hemmed and hawed before finally grabbing hold of history was… less impressive.

Compare this from the chapters about Andrew Jackson:

“He saw Biddle’s Bank, largely owned by foreign ‘Lords, Dukes and Ladies,’ as an ugly emblem of the corruption he had been elected to stop. He was repelled by the Congressmen and Senators who shamelessly took cash from corporations and people like Biddle: ‘I weep for the liberty of my country.'”

Kennedy wrote a book along similar themes to Beschloss’, called Profiles in Courage, but history tells a slightly different story of a president dragged into doing the right thing:

“Robert Kennedy was disappointed by his brother’s terse statement. He had asked Jack to declare equality was ‘one of the great moral issues of our time’– and that ‘all of us have a moral obligation’ to correct it. But the President told him not yet.”

Thirdly, it is worthy to note that many of our minor heroes were on the wrong side of history after they had made their mark. Charles Lindbergh was sympathetic to Hitler’s regime, and General and Secretary of State George Marshall was vehemently opposed to a jewish state in Palestine. Joe Kennedy was a racist, William Clark  (from the Lewis & Clark expedition) was good friends with Biddle, who wanted to start a powerful central bank during Jackson’s administration. Reading history as inter-personal conflict makes it memorable, and Beschloss has given me more memories in this book, than I have from my high school classes.

Beschloss’ handling of the material was great, I will remember key themes of history and not just the dates because his stories breathed life onto the data. His central theme was somewhat less convincing, because of the diminished courage displayed by recent past presidents. The case that presidents risking political loss is good for America stands untainted though, as the direction of our country has seemingly followed the actions of our leaders. It is one of many good history lessons, not to be taken alone, but definitely a great read.

I recommend this book, it is refreshing, informational, non-partisan and life-affirming. I hope and pray for more presidential courage displayed in the future.