Remaking America?

With Red Ink...


A sustainable, upwardly mobile middle class is what we have come to expect in this country. Now for the first time in my nearly fifty years I wonder if I was just dreaming all this time or if reality has just up and died.

Stories of Obama's grand plans to remake America blanket the media as we pass the 100 day mark of his tenure. I tend to agree that the debt based growth model we have been embarked on is essentially unsustainable. Consumption for consumption's sake seems perverted. Consumption based on the notion that we are building something better is noble and just.

The way it stands now we consumers borrow the money to buy products made in foreign lands by foreign labor so that our government can sell interest bearing bonds to foreign governments to fund social service programs to care for those without meaningful work. It leaves the consumer with a pile of personal debt and the government with mountains of red ink all the while tax and regulatory policies are literally pushing American businesses to move their operations overseas. It's insane.

Nothing I've seen from the Obama White House and the Democratically controlled Congress is giving me any hope they have any idea what to do to "fundamentally" change America for the better.

The laws on the books that have encouraged American companies to set up operations overseas were written for a different time and for a different set of conditions. In the 1960's when America was embroiled in an ideological global war with the Soviets it was right to spread American business to the four corners of the earth. It was the smart thing to do. Times have changed but the outdated laws remain. So America's working class suffers...

One can't really blame business - it is not about loyalty to a nation or the homeland it's about loyalty to shareholders and profits. It would be a bad business decision to ignore the way the laws and regulations are set up on the basis national loyalty alone. Corporate taxes (the 2nd highest tax rates in the world), regulations and outdated labor costs make it difficult for American business to compete with foreign based companies for the American consumer dollar. Greener pastures are sought. In many cases American based multinational corporations have relied on growing consumerism outside the U.S. for growth - and it has worked - for a while. As we have seen with this recession that foreign factories and importer/exporters still need the American consumer.

The President believes Americans need to consume less and produce more. Maybe so. Unless he plans on crafting tax law to favor job creation for the scrambling middle class the produce more part isn't going to happen. By default there will be less consumption if no one has a job. Instead of business and job friendly action I see a move toward higher taxes on wealth creators and their dividends and a wealth transfer towards those who produce nothing. Just wait until all the new regulations designed to combat a phantom foe called global warming degrade our ability to power our factories and our cities. Frankly, none of his plans make any sense.

We see stories of towns where the steel mill is closed down throwing thousands out of work while the steel to make a pipeline running through the same town is shipped in from India. Damn all the details - it just seems wrong. We have a vulnerable electrical grid that relies on massive and old generators - a breakdown or a terrorist attack could put thousands in the dark. No, not for just a few nights, but rather for months. Why? Because they're not made in this country any more. This storyline is repeated over and over in every state in the union. Why? Our tax and regulatory laws work against the interests of our own working class. Change that Mr. Obama - that's change we can believe in.

If the President wants to "remake" America and help the disenfranchised he might start by encouraging businesses to open back up on America's main streets instead of tossing billions (trillions) of dollars of debt atop Red Ink Mountain.


CW

Counter Intuitive

Save the World with Unbridled Economic Growth

I have written more than once that an economically weaker United States is a disaster for the environment. No matter which way you slice it you will come the the same truth - economic growth, striving for prosperity for everyone everywhere is the "greenest possible solution".

The concerned people who wring their hands over America's wealth and consumption have it exactly backwards. The richer, more prosperous we become as a society the less demand we put on the environment. Yes, we can absolutely credit the environmentalist movement for raising awareness, but thank God the creativity and technical genius of the capitalist mindset was allowed to flourish over the past 40 years. America and the West is a far cleaner, environmentally pure and yes, richer place than it was in the 1960's. The worry now is that the "Save the World" kooks who won't see the truth even when it slaps them in the face are running Congress and the White House and they are listening to Al Gore.

Jim Glass of Scrivener.net has an illuminating post on his website that is must reading for those confused by the counter intuitive narrative of a strong and growing economy equals a cleaner, greener world. (read it here) He also has this nice and succinct graph:

You can also read about this in of all places the New York Times in this April 20, 2009 piece called "Use Energy, Get Rich and Save the Planet" by JOHN TIERNEY.

Tierney states: As [their] wealth grows, people consume more energy, but they move to more efficient and cleaner sources — from wood to coal and oil, and then to natural gas and nuclear power, progressively emitting less carbon per unit of energy. This global decarbonization trend has been proceeding at a remarkably steady rate since 1850, according to Jesse Ausubel of Rockefeller University and Paul Waggoner of the Connecticut Agricultural Experiment Station.

“Once you have lots of high-rises filled with computers operating all the time, the energy delivered has to be very clean and compact,” said Mr. Ausubel, the director of the Program for the Human Environment at Rockefeller. “The long-term trend is toward natural gas and nuclear power, or conceivably solar power. If the energy system is left to its own devices, most of the carbon will be out of it by 2060 or 2070.”

I'll say it again and again if I have to - we need to use more energy not less to clean up the environment. We just need to use it more wisely and more efficiently. This will happen naturally if we let the economy continue to develop unabated by stupid and onerous energy use restrictions and clamps on the creativity of the market system.

Left to their own devices the greens and the socialists will kill the Golden Goose of capitalism and in the process create a poorer and dirtier world.


CW

Great, Just Great: Need More to Worry About?

As if we don't have enough to worry about already. Let me count the ways...

The entire global economy is tanking while millions are losing their jobs and their homes. Oh yeah, here's a comforting thought, did you know your individual share of government debt is projected to top $30,000 by the end of the year? Your last 401K statement made you cry only half as hard as you did the last time you bought groceries. I could go on and on - and on.

Today I read that there is a potential pandemic knocking at the back door. Too bad the back door is not only unlocked it's flung wide open and has been for years. There is a new a virulent strain of the swine flu spreading through Mexico. (read about it here) Thousands have been infected and dozens have died.

The unusual thing is that unlike most flu outbreaks this one is killing young adults and adults instead of the elderly and very young children. That's interesting and unusual. Interesting because the last time a true pandemic swept the world in the World War I era it was also healthy adults that succumbed. The death rate for 15 to 34-year-olds by influenza was 20 times higher than any other flu outbreak. Somewhere between 20 and 40 million people died worldwide. It has been cited as the most devastating epidemic in recorded world history. Known as "Spanish Flu" or "La Grippe" the influenza of 1918-1919 was a global disaster. Could we be headed for something similar?

On the other hand is this another Peter and the wolf scenario? According to the article cited earlier, scientists have long been concerned that a new flu virus could launch a worldwide pandemic of a killer disease. A new virus could evolve when different flu viruses infect a pig, a person or a bird, mingling their genetic material. The resulting hybrid could spread quickly because people would have no natural defenses against it. Interestingly enough this is exactly what has happened in Mexico.

Right now flu experts were concerned but not alarmed about the latest outbreak. Also from the article these words of comfort such as it is... The CDC says two flu drugs, Tamiflu and Relenza, seem effective against the new strain. Roche, the maker of Tamiflu, said the company is prepared to immediately deploy a stockpile of the drug if requested. However both drugs have to be administered early to have any efficacy.

Bottom line: if you feel like you might be getting the flu visit the doctor and ask about these drugs - especially if you are between 15 to 34 years old.


CW

Trickle Down?

During the 1980's the economic conservatives were routinely disparaged for advocating trickle down economics - a term incorrectly commingled with supply-side economics.

Supply-side is a term used to describe how changes in marginal tax rates influence economic activity. Supply-side economists believe that high marginal tax rates strongly discourage income, output, and the efficiency of resource use. (James D. Gwartney)

The principle of supply-side economics in the 80's was simple enough. It involved cutting taxes across the board with deepest cuts for those in the top tax brackets. The belief was that those who paid the most taxes would reinvest their tax savings creating new economic activity in which everyone would benefit. Trickle down became a derogatory term applied to all of "Reaganomics". In truth there has never been any discipline within economic studies that advocated trickle down theory. No such theory can be found in any book on the history of economics.

The 1980's were not the first time hefty tax cuts had been tried. Treasury Secretary Andrew Mellon in 1921 successfully pushed for tax cuts that then ushered in the roaring 20's. John Kennedy also dramatically lowered the upper tax rates which saw strong economic growth in the 60's. Modern supply-siders to this day counter the derogatory term trickle down economics with the famous Kennedy quote "a rising tide lifts all boats." Honest contemporary historians can't argue that Reagan's initial economic policies brought the country out of a deep recession and ushered in nearly 30 years of steady economic growth.

In reading history one could come to the conclusion that such tax cuts do initially spur economic activity aiding job creation, raising the GDP and general prosperity. Yet economic collapse always seems to follow. In the 1930's we had undoubtedly the worst economic crisis in history. The Great Depression was a disaster for America and the world. In the 1970's we endured two deep recessions. Since Reagan's time we have had two shallow and short recessions - until now.

If it were so simple...

Many factors contributed to the Great Depression and if we are to believe that tax cuts were main culprit we would be deceiving ourselves. Like wise for the 1970's. The original oil shocks, Federal Reserve policies and the beginning of what came to be known as globalization - not to mention a protracted, poorly managed war all contributed to the economic mess. The recessions of 1991 and 2001 were blips on the radar and could be tied to in part to the S&L debacle and the Dot Com bubble respectively.

So here we are today facing a very steep and very deep economic down turn. Again honest economic reflection is not citing the modest Bush tax cuts of 2001 and 2003 as the culprit. (keyword: honest) We should recognize the Federal Reserve's cheap money policies and Congressional meddling in the credit markets to advance a social agenda of home loans for their low income constituents. The result was runaway valuation for the housing markets and massive defaults that tore apart greedy investment houses and the corrupt GSE's known as Fannie and Freddie.

Clearly it wasn't the tax cuts... Still Democrats will argue with reality.

There's a difference between tax rates and tax revenues. Tax revenues went up while tax rates went down in the 1980s under Reagan. The same thing happened in the 1960s as well as the 1920s - and yes, even the 2000's under Bush. But still the cries can be heard that we have to pay for these tax cuts by raising deficits. Friends, it's government spending that creates deficits.

Where is all of this history going you might ask?

Today we have the major critics of Reagan's economic policies in power. Their answer to the economic woes is massive government spending through so-called stimulus that will hopefully result in what??? You guessed it: a perverted kind of trickle down economics. The big difference is that instead of the risk being taken by private corporations and entrpenuers - entities that carefully weigh every dime they spend - this massive stimulus is loading us, our children and our children's children with unfathomable debt. No economic recovery will ever expand tax revenues to cover this kind of spending.

If this administration wants an economic turn around they would best either do nothing (ha ha) or cut taxes on businesses that create jobs. They won't do that because it wouldn't achieve their true goals. Face the facts - their goal is government power above all else.



CW

Twin Cities TEA Party

I must say how impressed I was by the Twin Cities version of the Tax Day TEA Party. I got there right at 5 PM when it was slated to start (on my way home from work) and there were already thousands of happy protesters. Did I say happy? Why, yes I did. Everyone was exceedingly polite and well mannered. There was no anger. There was no ranting. There was no crazy people. The few police in attendance (minus riot gear) where yucking it up with the "protesters". On site spotters estimated the final tally was somewhere near 8,000 people - although the local left leaning newspaper said "about 2,000".

There were the young and the old. There were families pushing strollers and retired military vets. There were pretty young girls with smiles on their faces and old crusties like me with a smile on mine. There were some really good signs. I think my favorite was the one that spelled out OBAMA vertically as an acronym - One Big Ass Mistake America! It was a lot of fun!!!

The snooty people who dismissed this event as a crazy Republican sponsored stunt absolutely missed the point. This wasn't about Republicans poking a finger in the Democrats eye - if anything these people are just as upset about what the Republicans have done to this country - no, it was about a runaway Federal government power grab. These were working class people entirely fed up with ever expanding government intrusion into every aspect of our lives but most particularly our pocketbooks.


These people instinctively know it is government meddling that causes most of the problems that face this country. Politicians cause trouble and then rush in with half baked solutions to fix it. Then when faced with things that really require government intevention- like say the aftermath of hurricane - they fail abysmally.


Let's hope this is only the beginning of a real push back on this massive Federal power grab.


Please consider joining in.


PS. I heard that when this thing broke up there was next to no trash left behind. Contrast and compare to the aftermath of your typical Earth Day rally... Like I said these TEA Party goers were just plain good upstanding citizens of the Earth!!!



CW

I See Intellectual People

Thomas Sowell is a national treasure. It's really too bad he gets next to no attention outside conservative think tank circles. Instead we are fed a steady diet of folks like Paul Krugman, Thomas Friedman and David Gergen as America's intellectual heavyweights. How many people do you know that have even heard of Dr. Sowell? Being a right-minded intellectual black man it is no surprise to me that the major media pay no attention to him at all (to them he's another Clarence Thomas, antithetical to their view of an African American). He is never invited on for comment. It's a shame and it's very unfortunate for our country.

Recently I watched a video interview with Dr. Sowell that took place right before the 2008 presidential election. The topic essentially came down to a comparison of the "constrained" and the "unconstrained" vision of human interaction and institutions.

A brief synopsis: the constrained vision is that human nature is fundamentally flawed. For society to work we must somehow erect institutions to contain human nature - in a sense erect boundaries around our flaws and allow us to get on with it considering the fallen character of human nature. The unconstrained vision is that human nature itself is malleable but is being held down causing pain and suffering. In this view we must remake the man-made institutions that are causing this pain and suffering.

You can probably guess which side President Obama comes down on...

The unconstrained view believes you need to simply put smart people in charge and through intellectual capacity alone make all the problems just go away. The constrained view assumes that there are very limited things that institutions can actually do and the idea is to minimize the damage done by the flaws in our human nature. One relies on experience and history to guide it down the proper path while the other relies on superior people with superior ideas.

Peter Robinson, of the Hoover Institution who was conducting the Sowell interview recited a couple of revealing quotations from the two presidential candidates:

QUOTE

John McCain in the Presidential debate of October 16th, on the kinds of judges he would nominate to the Supreme Court “I will find the best people in the United States of America who have a history of strict adherence to the constitution and not legislating from the bench.” Barack Obama, during the same debate, “If a woman is out there trying to raise a family, trying to support her family and is being treated unfairly, then the court has to stand up if nobody else will and that is the kind of judge I want.”

(One of these answers falls toward reflection and experience and one toward undefinable feelings. )

Quoting Sowell: "There is an unwillingness to look at the facts of history and it is anti-intellectual, in a sense of intellectual process is unfortunately all too characteristic [of intellectuals] as an occupational category."

And Robinson asks: "Why would the unconstrained vision prove so particularly appealing to intellectuals?"

Thomas Sowell: "That is a tough one, but I think that I guess the short answer is they imagine that good people like themselves to make this thing go and if it has not worked in the past, it is only because they have not had the right people doing it. In other words, Communism would have worked if it had not been for Stalin. But of course, once you have a system like Communism, people like Stalin are the ones who will come to the floor."

END QUOTE

In my humble opinion many, many highly intelligent individuals don't like people in general. They find it tedious to have to deal with others who can't match wits with them regardless of how decent the other person is. Since they have personally learned to control some of the worst aspects of human nature they find it very difficult to "suffer the fools" who haven't. Therefore allowing natural forces like market fluctuations, survival of the fittest and the stupidity of bad decisions just work itself out - no - they feel they and only they know how things should be and feel perfectly comfortable imposing their own will on others.

Intellectuals have got the answers if the stupid people would only stand aside. Forget that for the most part market economies respond to the natural forces of the interaction of millions of individual choices over time within a constrained set of lawful conditions. The unconstrained vision says that economies bend to the will of particular interests regardless of risk/reward, effort and/or hard work and need to be remade to obey only the public interest.

Of course not all intellectuals have such a superior view of themselves just as not all bad decisions are the result of stupidity. The point being that what the "unconstrained" believe seems so obvious to them that if you don't get it you must be incredibly obtuse or just plain dishonest.

When I think of the constrained versus the unconstrained I naturally think of adults and children. Children have the need to ask why things are the way they are. They haven't had many experiences themselves and often see things through the filter of fair and unfair. Often they have simple and frankly ignorant solutions to problems caused by the failings in the human nature of those they see around them. Young adults also seemingly have all the answers, ask any parent of a teenager, their freshly minted minds just haven't been beaten down by the reality of the daily grind. This is why we don't let teenagers call the shots. We don't really want the children running the world, do we?


CW

Arenal

Here now the latest painting from my Vacation Photo project. This excellent subject comes our way from my friend Jeff Lynn. This was the view from the honeymoon suite in a Costa Rican resort at the foot of Mt. Arenal. I hope you enjoy!

"Arenal"
18X24 (acrylic)
2009
(click on the image for a larger view)

Click on these links to see all the paintings from my Vacation Photo project.

"Lyman Lake at Dirty Face Peak"
"A View From Doyle's"
"Best Friend In God's Country"

See more paintings at http://www.static-art.blogspot.com/




CW