The Sarah Palin of the Wild-eyed Left

 | 

Right now, our ineffectual President is not the highest-profile among those who would make slaves of free citizens; his incompetence as an executive has reduced him to a cynical, groveling faux populism. The highest-profile slaver is not a significant writer or intellectual of the Left; those who might be significant waste their time performing on cable television minstrel shows. It’s not an internet or New Media big-shot; they’re more interested in feuding than influence.

Right now, the highest-profile collectivist in America is a woman named Elizabeth Warren. A Harvard Law School professor and aspirant to elected office in Massachusetts, she combines the President’s cynicism with the intellectual Left’s focus on cable TV performance and a strong internet presence. Her writing indicates a trivial, though eminently credentialed, mind; her body of work reads more like Suze Orman than Richard Posner or Lawrence Tribe.

If you follow the news or scan left-leaning media outlets, you’ve heard Warren’s name. If you live in Massachusetts, you know that she’s seeking Teddy Kennedy’s old U.S. Senate seat, presently occupied by Scott Brown. But the chances are that you, like most Americans who aren’t wild-eyed Maoists, have a vague impression of the woman.

But it’s important to clarify that vagueness. This woman reflects several current trends in American culture — most of which are not good.

She was born Elizabeth Herring in Oklahoma City in the late 1940s. It was the front end of the Baby Boom, but her childhood wasn’t Happy Days. When Elizabeth was a young teenager, her father had a heart attack and related health issues. These led to severe financial problems for the Herring family. They lost a car to the repo man . . . and fell out of what they considered the middle class. Her mother went to work as a telephone operator. Later, Elizabeth waited tables to help support the family.

She was bright. Did well in school. Got a debate scholarship to George Washington University in the nation’s capitol — and left Oklahoma. Quick as she could.

GW isn’t an intellectual mecca. The biggest part of its student body is made of underachieving kids from affluent families who pay full freight, leavened with some smart kids from hinterlands there on scholarship.

While still an undergraduate, Elizabeth married a classmate named Jim Warren. In 1970, she graduated with a degree in speech pathology. Jim pursued a career and established himself as a middle-class breadwinner; Elizabeth used her degree to get work helping children who were recovering from head traumas and brain injuries.

Various left-wing media outlets were entranced by the soft totalitarianism of Warren’s schoolmarm demeanor.

But that wasn’t satisfying. The collegiate debater felt drawn to something more ambitious. Law school. While having two children with Jim, Elizabeth cobbled together a law degree — starting out at the University of Houston and eventually finishing at the Newark campus of Rutgers. Along the way, she interned at a white-shoe Wall Street firm and was an editor of the Rutgers Law Review.

She got her law degree in 1976 and ran a solo practice in the New Jersey suburbs, focusing on wills and real estate closings. She taught Sunday school, reading and telling kids about Methodist founder John Wesley. She still cites Wesley as an inspiration.

In 1978, she and Jim divorced. That seems to have changed many things.

Elizabeth moved from practicing law to teaching it. She started at Rutgers and moved through short-term gigs at the University of Houston, Texas, and Michigan before getting a tenured position at the University of Pennsylvania. And, as she explains it, she began to change from a free-market advocate to a full-blown statist.

While her academic research wasn’t exceptional (more on that in a bit), she was a dynamic classroom instructor and popular with students. While Reagan and the elder Bush occupied the White House, she refined an approach that worked well in the university setting. The actual content of her writing and speaking is usually unexceptional; but she conveys — by demeanor and implication — sentiments that click with campus radicals. She signals progressive pieties that flatter students and colleagues, making them feel they aren’t just careerist clerks but Deep Thinkers interested in Profound Issues.

She moved from UPenn to Harvard in 1992.Today, she is the Leo Gottlieb Professor of Law, teaching commercial law and bankruptcy. She is or has been a member or officer of: the American Academy of Arts and Sciences; the American Law Institute; the Executive Council of the National Bankruptcy Conference; the Federal Depository Insurance Corp.'s Committee on Economic Inclusion; the National Bankruptcy Review Commission. As I’ve noted, she’s eminently credentialed.

She signals progressive pieties that flatter students and colleagues, making them feel they aren’t just careerist clerks but Deep Thinkers interested in Profound Issues.

Most university professors are expected to produce a steady stream of peer-reviewed academic articles and research papers related to their fields. Generally, law professors have some relief from this severity; because law schools are usually profit centers for their universities, law school teachers can focus on classroom teaching rather than driven academic publication. Still, a law professor is expected to produce — or at least contribute to — the occasional academic paper.

Here, Warren has had some trouble.

In 2005, she and several colleagues published a study in the academic journal Health Affairs on the relationship between medical bills and individual bankruptcy. They concluded that half of all families filing for bankruptcy did so in the aftermath of a serious medical problem and that 75 percent of those families had some form of medical insurance. This gave a lot of rhetorical ammunition to people vilifying “evil insurance companies” and calling for “health care reform.”

Some readers questioned the study’s methods. As a surprisingly good analysis from ABC News noted:

The Harvard report claims to measure the extent to which medical costs are “the cause” of bankruptcies. In reality its survey asked if these costs were “a reason” — potentially one of many — for such bankruptcies.

Beyond those who gave medical costs as “a reason,” the Harvard researchers chose to add in any bankruptcy filers who had at least $1,000 in unreimbursed medical expenses in the previous two years. Given deductibles and copays, that’s a heck of a lot of people.

Moreover, Harvard’s definition of “medical” expenses includes situations that aren’t necessarily medical in common parlance, e.g., a gambling problem, or the death of a family member. If your main wage-earning spouse gets hit by a bus and dies, and you have to file, that’s included as a “medical bankruptcy.”

So, the study was marred by the hacky left-wing politics that pass for “consensus” in many of the social sciences. (The University of East Anglia’s Climate Research Unit caused a similar controversy when it filled its reports on global warming with comparable manipulations.)

While academic research isn’t her forte, Warren has shown greater enthusiasm for more popular fare. She has co-authored (with her daughter, Amelia Tyagi) two consumer books on personal finance, All Your Worth: The Ultimate Lifetime Money Plan and The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke. The books offer useful, if basic, financial advice. They read like personal-finance versions of celebrity cookbooks — people who come to the books because they like Warren probably find them worth the price; others probably don’t. In its review of The Two Income Trap, Time magazine wrote: “For families looking for ways to cope, Warren and Tyagi mainly offer palliatives. . . . Readers who are already committed to a house and parenthood will find little to mitigate the deflating sense that they have nowhere to go but down.” Like most of the establishment media, Time has been generally favorable to Warren in other contexts.

In the mid-2000s, Warren and some of her Harvard law students wrote a column called Warren Reports for the popular left-wing internet news site TalkingPointMemo.com. Warren Reports purported to be a deep-think collaboration like the libertarian-leaning opinion site Volokh Conspiracy; it ended up being less deep analysis and more hacky partisan spin.

But Warren’s hacky politics found an audience. On November 14, 2008 — days after Barack Obama had been elected president — she was appointed by Senate Majority Leader Harry Reid to chair the five-member Congressional Oversight Panel created to oversee the implementation of the Emergency Economic Stabilization Act and its main product, the Troubled Assets Relief Program (TARP).

In other words, Warren oversaw the Wall Street bailout.

Through her term as chair, the Congressional Oversight Panel released monthly reports that evaluated the bailout and related programs. These reports — and videos that accompanied them — served as bully pulpit for Warren. She focused her regulatory enthusiasms on topics including: bank stress tests, commercial real estate, consumer and small business lending, farm loans, financial regulatory reform, foreclosure mitigation, government guarantees, the automobile industry, and the impact of TARP on financial markets. She also testified frequently before House and Senate committees.

From these unlikely venues, a star was born. Various left-wing internet news sites and new media outlets linked to her videos and reported on her congressional testimony. Like the campus radicals at UPenn and Harvard, they were entranced by the soft totalitarianism of her schoolmarm demeanor.

Throughout her various congressional testimonies and internet videos, Warren advocated for the creation of a new Consumer Financial Protection Bureau. In a December 2009 interview with Newsweek magazine, Warren said:

To restore some basic sanity to the financial system, we need two central changes: fix broken consumer-credit markets and end guarantees for the big players that threaten our entire economic system. If we get those two key parts right, we can still dial the rest of the regulation up and down as needed. But if we don't get those two right, I think the game is over. I hate to sound alarmist, but that's how I feel about this.

(Reread that last sentence, keeping in mind the famous negotiating aphorism: “Everything before the ‘but’ is a lie.”)

This quote embodies two essential traits of Warren’s political persona.

First, she identifies important issues but comes to illogical conclusions about them. She’s right that moral hazard had dulled the capital markets; government guarantees for banks that are too big to fail inexorably leads to more failure. But she doesn’t seem to understand her own point. She wants more well-intentioned regulation to cure the problems caused by previous well-intentioned regulation.

Second, she leads with her heart — which is good in love letters but not so great in governance. Most of her public policy statements are full of prefaces, parentheticals and sidebars about how she feels about things.

One challenge for a politician who has lots of stupid people cheering for her everywhere she goes is to avoid losing any connection to reality.

In time, Warren got her new (and additional) consumer protection agency. The Frank-Dodd Wall Street Reform and Consumer Protection Act, signed into law in July 2010, created the United States Consumer Financial Protection Bureau — which some in the Obama administration hoped would grow as large and powerful as the FBI.

Warren’s growing legions of collectivist supporters wanted her to be named head of the new bureau. She wasn’t. Some collectivists saw this as apostasy on Obama’s part — he’d caved to the Wall Street establishment by not appointing the woman who’d supervised the bailout of the Wall Street establishment. Others collectivists blamed “the Republican congress” for blocking her ascent.

Warren settled instead for the consultative position of “Special Advisor” to the Bureau. Which she kept for less than a year, when she quit to launch her U.S. Senate campaign. On her way out, she issued a farewell statement (surely one of the few Special Advisors to a non-cabinet-level agency ever to do so) that read, in part:

Four years ago, I submitted an article to Democracy Journal that argued for a new government agency called the Financial Product Safety Commission. I felt strongly that a new consumer agency would make the credit markets work better for American families and strengthen the economic security of the middle class. I leave this agency, but not this fight . . . the issues we deal with — a middle class that has been squeezed and business models built on tricks and traps — are deeply personal to me, and they always will be.

Again, rich subject matter and a jabberwocky conclusion. A “new government agency” will make credit markets “work better for American families”? Not likely. The lesson of the subprime mortgage collapse and the current recession is that statist abominations like the Community Redevelopment Act, TARP (the Wall Street bailout which, it bears repeating, Warren administered) and Fannie Mae/Freddie Mac create moral hazard and obstruct market efficiency.

And, again, the pabulum about her “deeply personal” feelings. Warren’s feelings are a big part of her public persona — as big as policy details or the effects they have on objective reality. This is an unexpected focus for a law professor. But Tip O’Neill would understand. Feelings work well at the retail political level. Paste-eating collectivists put maximum importance on “personal narratives”; they care less about logic or objective reality.

Warren has peddled her emotions with some success in the popular media. She appeared several times on the Dr. Phil TV show. She’s been a recurring guest on The Daily Show. She talked about Wall Street greed in Michael Moore’s documentary Capitalism: A Love Story. And she’s a staple on less popular TV talk shows hosted by the likes of Charlie Rose, Bill Maher, and Rachel Maddow.

Her focus on “personal narrative” also plays into some au courant gender-studies topics. But in a way that doesn’t play out well for gender equality. In short, some on the American Left believe that women prefer narratives to facts . . . and these types applaud Warren’s constant drumbeat of “feelings” that are “deeply personal” to her. But lost in all this postmodernism and academic jargon is the ugly and ancient assumption that women aren’t up to analysis of objective reality.

When Warren jabbers on about deeply personal feelings, she’s not so much different than the notorious talking Barbie doll who complained, “Math is hard!”

For those who are inclined to like Warren, these things don’t matter. They don’t even register. A quick survey of the reader comment sections of left-leaning internet news sites finds the following:

  • I'm 'blown-away' by Elizabeth: she's like a breath of fresh air. I watch this video every morning: its my Doxology!!
  • I love her!!!!!!!!!!!!!!!!!!!!!!
  • I love Elizabeth Warren! Such a breath of fresh air. I only wish I could vote for her. But, unfortunately, I'm in Ohio. We need more crusaders like her. You go girl.
  • If the Dems are smart they will highlight E Warren for the next 14 months and then give her a high profile role in the Senate because she IS 2016 staring them right in the face and challenging them to step up.
  • Love her. And I wish she were running for President now. But, she'll be no more experienced in 2016 than Obama was in 2008.
  • I love Elizabeth Warren. She saw the whole mess coming and did something about it. Her campaign now is the most valuable thing I can imagine for the Democrats over the next year.
  • Warren's courage has been contagious so far. Her clarion call to justice for the next generation of Americans can provide Democrats and progressives with an opportunity to reclaim the narrative about how to make America work again for everyone.

(from the Huffington Post)

  • I'm so JEALOUS... I live in Missouri and wish we had someone like Elizabeth Warren to run here. She is AMAZING and she's gonna kick Scott Brown's ass.
  • Getting rid of Scott Brown AND having a MA senator in the ranks of Bernie, Al, and Sherrod?!? Be still my beating heart...Elizabeth Warren will be a wonderful successor to Sen Kennedy.
  • a massive showing for the person who is probably one of the most effective leaders we have seen in a long time.

(from the Daily Kos)

In many ways, these comments are typical of political commentary of all political stripes on the internet. Personality-driven. Egocentric (note how many of the comments start with and focus on the “I” of the commenter). Infantile. At their best, such sentiments can be charming; at their worst, they’re moronic.

And, when Warren is observed in this light, she begins to resemble someone her fans at the Huffington Post and Daily Kos ritually hate: Sarah Palin.

On the surface, Warren is a sort of anti-Palin. Dowdy. Scolding. Harvard professor. Twice-married (the second time to a deferential fellow Harvard professor). Credentialed. Elitist.

But dig a little deeper. Oklahoma native. Scholarship student at a third-tier college. Married at 19. Less-than-gilded law school at University of Houston and Rutgers-Newark.

She’s like Palin in significant ways. They both have built bases of popular support on checkered histories in public service; they both welcome the biases and preconceptions of their supporters.

Here’s an illustrative anecdote: When I told one lefty acquaintance that I was surprised an academic of such modest background had advanced so far, my acquaintance replied indignantly: “What are you talking about? Elizabeth Warren went to Harvard.”

Warren fairly cried out for libertarian scrutiny with one recent quote. A supporter filmed some video of the candidate speaking at a fundraising event. Asked about the president’s ineffective attempts to raise taxes on the wealthy, Warren said:

I hear all this, “You know, well, this is class warfare. This is whatever.” No! There is nobody in this country who got rich on his own. Nobody! You built a factory out there? Good for you! But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You, uh, were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did.

Now, look: You built a factory and it turned into something terrific or a great idea, God bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

The video became a sensation on the internet. Collectivists cheered Warren’s “full-throated” arguments for wealth redistribution.

But reread the quote — it’s not quite that. It’s a poorly-made argument about externalities.

Like a debater who knows she’s making a weak argument, Warren picks the easiest points to support her case for a social contract. Only the most rigid anarchist would deny legitimate externalities like roads and reasonable law enforcement. Those aren’t the things that are bankrupting America. Welfare programs, subsidized mortgages, “free” public services and defined-benefit pensions are the problems.

The promiscuous enthusiasms of Warren’s fans lead them to some genuinely bizarre conclusions.

As far as her talk of workers that the collective has paid to educate, Warren needs to talk to some actual employers. The failure of the American elementary and secondary education system is driving some firms to look abroad and in some cases relocate for competent employees.

Lastly, the notion of “pay it forward” as part of a social contract is dubious. A social contract should more modest than her ambitions for investment in future outcomes. Support of externalities and infrastructure aren’t about paying it forward — a phrase that has developed a popular connotation of karmic debt that people today owe people in the future — they are about paying for external goods in the here and now.

Warren’s fans aren’t likely to hear any of this, of course. In fact, their promiscuous enthusiasms lead them to some genuinely bizarre conclusions. Here’s what one halfwit fan wrote about Warren’s “pay it forward” quote:

She's wonderful, and dead on with her comments about public investments enabling private success. But she's wrong about "debt" and the national "credit card". Money is a public monopoly. The primary way it comes about is thru federal deficit spending. And US dollars precede US Treasury debt. So there is nothing for children or granchildren to pay back, and there is no "hole" in the budget.

A challenge for a politician who has lots of stupid people cheering for her everywhere she goes is to avoid losing any connection to reality. Life in an echo chamber can lead to bad choices.

Recently, the Daily Kos ran an adoring article on Warren that included a picture of a room full of lumpenprole women and pear-shaped men, cheering on their majestic crusader. To that crowd, and later to several media outlets, Warren bragged that she was the spiritual founder of the Occupy Wall Street protesters. “I created much of the intellectual foundation for what they do.” And:

. . . no one understands better what the frustration is right now. The people on Wall Street broke this country. And they did it one lousy mortgage at a time. It happened more than three years ago, and there has still been no basic accountability, and there has been no real effort to fix it. That’s why I want to run for the United States Senate. That’s what I want to do to change the system.

The National Republican Senatorial Committee jumped on that, issuing a quick press release noting that some of “her Occupy acolytes in Boston” had fought with the police. And ended up in chains.

At the same time, some wild-eyed Occupy Wall Street protesters have demanded that Warren “repudiate” — a totalitarian word — Obama’s bailout of big investment banks (which, again, she oversaw) before they will support her bid for the U.S. Senate. Doesn’t seem like a nice way to treat the lady who created much of their intellectual foundation.

Warren invites this lunacy. By throwing in with the Maoist protesters, she’s likely to have marginalized herself.

There’s a whole year in which candidate Warren’s signals to campus radicals will come back to haunt her. At the Daily Kos, people who “love” Warren are begging her to run for president, in 2016 if not sooner.

A rational person can only hope their love for Warren will be fleeting, just as their love for Obama was. In the mean time, the woman who oversaw the Wall Street bailouts will have talked a lot about her deeply-held feelings. And inched free people who build factories or have great ideas a little closer to slavery.




Share This


Easy Money

 | 

Not too long ago I received an email solicitation for money from an old acquaintance. A breast cancer survivor, Patty (her real alias) proposed to ski across the middle of the Greenland ice cap with three other female cancer survivors to "raise breast cancer awareness."

Though it was easy to see how the proposition might work — give me money and the cure for cancer will be one step closer — I couldn’t connect the "awareness" dots.

How does "awareness" actually help the struggle against cancer? Those who have it are already aware, and those who don’t have it know someone who’s had it, and are, therefore, also aware. That covers pretty much everyone. I know, the reasoning goes something like this: the more people are aware that cancer exists, the more they are likely to donate money for research, so cancer will be cured sooner. But this is tenuous and specious sophistry at best. If cancer research is the objective, why not just solicit funds for that, and skip the arctic junket? What Patty really wanted was one more great adventure in her life, and she didn’t want to pay for it.

Actually, I was envious. Adventure junkies (of whom I am one) are driven to ever more outrageous accomplishments. It gives meaning to our lives. It’s what we live for. Transcending our own abilities doesn’t always put food on the table, but it builds “human capital” (in the words of Thomas Sowell) — capital that recharges our energy and creativity, capital that can be invested in future endeavors. But these adventures cost money. Last time I checked, climbing Mount Everest cost over $70,000. Put that on your resume.

I’d faced this before. Contemplating crossing sub-arctic Canada from Great Slave Lake to Hudson Bay along the Thelon River in kayaks, my partner (a journalist) suggested we raise funds by "doing it for charity" — any charity that deigned to associate itself with us. I asked her how the accounting would work. She responded that the funds would first be used to pay for our expedition; then whatever money was left over would go to the good cause. We’d solicit media coverage, write up our trip account, get it published, and donate the receipts (if any) to our charity.

Yeah, right.

Our incentives didn’t align with the still-unchosen charity’s. Our primary objective was crossing Canada above the 60th parallel: raising money and awareness for a generic "good cause" was just a way to finance our trip. To me, it seemed dishonest to flip the two and pretend that our charity was our primary objective while our trip was a self-imposed hair shirt to show dedication to the cause. So, in a spirit of greater transparency, I suggested soliciting commercial sponsorship from companies whose products we could use and who would actually benefit from supporting our venture through ads and testimonials. After all, I couldn’t — with a straight face — declare that I was kayaking the Thelon for Jerry’s Kids when I was actually doing it for Miller’s Adult: me.

Kelty, Hormel, and L’Oreal responded. They sent a tent, two cases of tinned meat, and assorted cosmetics. (Our pitch to L’Oreal had been that outdoorsy women also use cosmetics. They bought it.) In the big scheme of expedition funding, this was chump — albeit honest — change: we were very grateful and never failed to mention them.

Now don’t get me wrong. I am not against charity (with the caveat that charity, either with someone else’s money or at the expense of one’s own needs, is no virtue [while stinginess with one’s own property is no vice]). And I’m a firm believer in the libertarian value of uncoerced, private funding. Additionally, my heart always skips a beat whenever I think of Terry Fox, the cancer amputee who attempted to run across Canada with a 1970’s-era prosthetic leg, in unimaginable pain, come rain or shine, and in a constantly deteriorating condition, to inspire people to donate funds for cancer research. Fox’s only motivation was to cure cancer: he literally ran himself into the grave in a heroic act of total dedication. It was about the only thing left he could do.

I turned Patty down, telling her I needed my money for my own inspiring adventures, wished her luck, and congratulated her on her gambit.

She responded that I was small-minded, and that it was people like me who were what’s wrong with modern society.

Patty’s expedition succeeded in crossing a notable portion of Greenland’s ice cap but met with defeat for the usual reasons: weather, personal conflicts, equipment failure, less-than-perfect conditions, etc. — all understandable. Still, I can’t help but think that perhaps a bit of the wrong motivation had something to do with the failure.




Share This


A Prayer for the Council of Economic Advisors

 | 

Have you ever said a prayer for the President’s Council of Economic Advisors (CEA)?

Neither have I.

It seems an odd thing to do, doesn’t it? To nonbelievers, it would, of course, be a pointless act, and while it would not necessarily be pointless to believers, surely even they would see it as presumptuous.

In any case, people do say prayers for their leaders, particularly in times of strife; and since we may be entering such a time, I have selected a prayer for the CEA just in case I ever feel the urge to use it.

It is a simple prayer, taken from the King James Bible, Luke 23:34: “Father, forgive them; for they know not what they do.”




Share This


And the Winner Is — Ryan Gosling

 | 

Ryan Gosling is having a helluva great year. First he demonstrated his comedic depth and timing in Crazy, Stupid Love. Then in Drive he gave one of the quietest, subtlest, most understated, and yet most over-the-top-brutal performances since Javier Bardem in No Country for Old Men.

Gosling is the man who made grown men cry in The Notebook. He's one of the finest actors in Hollywood. And he's thinking of retiring. At 30. Please, Ryan, say it ain't so!

But now he has stolen the spotlight from the master scene-stealer himself, George Clooney, in The Ides of March.

Gosling plays Stephen Meyers, a campaign staffer and media specialist for presidential candidate Mike Morris (Clooney). Stephen is a career campaign worker with the goal of becoming a campaign manager some day. But Morris is a candidate Stephen believes in. This time it goes beyond business. He really wants Morris to win.

As a libertarian, I had a hard time agreeing with the idealistic Stephen on this. During several scenes, Morris is heard campaigning in the background while political intrigue is developing in the foreground between Stephen and other characters. His slogans are intended to be taken seriously (director-producer-screenwriter Clooney is, of course, an outspoken Democrat), but they are laughably naive. Here’s a sampling:

"The rich complain that our tax policy is a redistribution of the wealth, but what they really want is distribution of the wealth to the richest Americans by our government." This is received with wild applause, as though our paternalistic government somehow creates all the wealth in the country and then doles it out to its favorite sons. (Sadly, this silly idea seems to be believed by many Americans.) In case we didn't get the point that the wealthy cause all our ills, he adds, "Greed and corruption ruin our industries and our shorelines." Shorelines? I’ll bet you weren’t expecting to see that at the climax of the sentence.

"The cause of terrorism is oil," he naively observes. "If we don't need oil, the terrorists will go away." This simple-minded foreign policy is quickly followed by Morris' economic strategy: "Within four years of my administration, no new cars will run on combustible engines, and we will lead the world again!" Now there's a plan to jumpstart this economy!

And this one: "Everyone should be able to afford college. Under my administration, all 18-year-olds will perform two years of mandatory national service, and when they return, their college tuition will be free." Stephen cynically tells Morris this is a win-win proposition because voters are over 18 and thus would not have to serve, while people under 18 can't vote. Doesn't he realize that people under 18 have parents who are over 18? Doesn't he realize that the "free tuition" would have to be funded by taxpaying voters? And doesn't he realize that "mandatory service" is not “free”?

In case we didn't get the point that the wealthy cause all our ills, he adds, "Greed and corruption ruin our industries and our shorelines."

The first half of the film focuses on the background machinations of the campaign trail, especially Stephen's interactions with Morris's campaign manager Paul Zara (Philip Seymour Hoffman) and Tom Duffy (Paul Giamatti), the manager of Morris' chief opponent. These scenes are intended to create suspense leading toward the second act, but they are dialogue-heavy and rely too much on the audience’s understanding of the background politics. The film is adapted from a stage play, and often this leads to a screenplay that is too heavy in exposition. The scenes are smart and sassy and intended to be ironic, but irony only works when the audience knows the dual meaning of what is said and can anticipate the punchline or unintended result.

In this case, it doesn't quite work. The film's conflict pivots on a meeting, early in the train of events, between Stephen and Tom. The meeting is in a public place and lasts a few minutes. Ida (Marisa Tomei), a seasoned campaign reporter, gets wind of the meeting and threatens to print the story, as though it would create a major scandal. Sure, people working behind the scenes might be concerned about the purpose of such a meeting, but in light of the fact that no information is exchanged, would the public be alarmed? Would anyone care? Come on! There are any number of legitimate reasons for representatives of the two campaigns to meet. James Carville and Mary Matalin, darlings of the Democratic and Republican parties respectively, are married, for heaven's sake! This is no scandal, and it weakens the first half of the story, when suspense should be developing.

Nevertheless, if the viewer is able to suspend disbelief about that, the scandal that develops in the second half of the film, when the campaigning ends and the dirty tricks begin, is dynamite. It involves a beautiful young intern (Rachel Evan Wood) whose father (Gregory Itzin, the Nixon lookalike who played slimy President Logan in 24) is president of the DNC. Tension mounts, rising toward a showdown that more than makes up for the slowness of the first act. But now the focus is on personal relationships, not on politics.

Director Clooney wisely allows his fourth-billed actor to run away with this show. Giamatti, Clooney, and Hoffman may be the award-winning veterans, but Gosling is the ascending star. At one point his character is struggling with what to do about the clashing dilemmas. Instead of hamming it up with scenery-chewing angst, a la Giamatti (who plays his role with Machiavellian effect, I might add), Gosling turns inward. At one point we see him seated in a straight-backed chair, eyes staring forward, virtually interrogating himself. Suddenly his eyes glance to his right, as though he were reading his own mind. Nothing else moves, and nothing is said. So simple. So effective.

Clooney's own politics are well known in Hollywood and throughout the country. He uses his celebrity to spread political propaganda for the Democrats. So it may seem surprising to see him portray a Democratic candidate who is corruptible and opportunistic. But this cagey maneuver effectively defuses any sense that this is a propaganda project. It allows the film to transcend party politics and appeal to a broader audience. Unfortunately, however, Clooney adds a throwaway line early in the film that reveals his true feelings. Campaign manager Zara defends a campaign decision by saying, "We are simply doing what the Republicans have been doing successfully for years." In other words, the Republicans made him do it. Mike Morris may be a Democrat in philosophy, but his mistakes are entirely Republican. Bravo, Clooney!

The film's title, The Ides of March, suggests a conflict between loyalty and betrayal in high places, and in that respect, the film delivers. Clooney's own politics aside, it is not so much about political policy as it is about office politics. It is about friendship, revenge, and disillusionment.

My favorite line from the film is a character's justification for retaliation: "You didn't make a mistake. You made a choice." The Ides of March isn't a great film, but it's a good film with several great performances. I think it would be a mistake if your choice is to miss it. Moreover, Ryan Gosling recently announced on Conan O'Brien's show that he might not be making any more. And that choice would indeed be a mistake.


Editor's Note: Review of "The Ides of March," directed by George Clooney. Columbia Pictures-Cross Creek, 2011. 101 minutes.



Share This


Immigration: Meeting the Challenge

 | 

A deeply contentious issue in American politics is immigration, especially illegal immigration. As recently as 2007, the issue caused major fissures in both major parties. And the debate is equally heated in many European countries.

Stepping boldly into the immigration debate is economist Gary Becker, who proposes a novel — nay, radical — solution to the problem in a short new book by the Institute of Economic Affairs. Becker is the 1992 Nobel Prize winner in economics, receiving it for producing a wealth of research using the standard microeconomic model to explicate a wide variety of human behavior, including behavior in fields traditionally considered outside the domain of economic analysis. He has done seminal work in areas such as addiction, marriage and family economics, human capital, criminal behavior, national demographics, and discrimination.

Becker begins by reviewing the international immigration trends. He notes that one of the main motives for immigration is the large average income gap between rich and poor countries. Despite the fact that poor countries have progressed economically, that gap is still large. Another big influence is fertility gaps among nations, with almost all European nations having fertility levels well below replacement level (2.1 children per woman), while in many areas of the developing world, the fertility rate is still high.

Becker notes that opposition is strong against unrestricted immigration in developed countries; and accordingly all of them — including the US since 1925 — have more or less restrictive immigration laws. But as he adds, while many other countries (such as Australia, Canada, and the UK) allow people in for work-related reasons, our law permits immigration primarily for family and humanitarian reasons.

In an aside, Becker mentions a common feeling among his libertarian friends, who say we ought just to go back to our (alleged) historical position of welcoming all comers. But while he usually inclines towards libertarian principles, he objects (as did Milton Friedman) that modern America is a welfare state, and this will give an incentive to some people to come for governmental benefits.

To the idea of just limiting by law how quickly new immigrants could receive welfare benefits, he replies that such laws would be hard to implement, and anyway, the immigrants would soon be voters, so unless we could select people inclined to vote against welfare programs, the new immigrants would simply vote for the limitations to be lifted.

Becker points out the anomaly of America's limiting immigration by the most highly trained foreigners (for example, by means of the low cap on the H-1B visa program), and indicates that these limitations on legal immigration lead to large amounts of illegal immigration.

Recognizing that besides bringing benefits, immigrants bring costs (crime, welfare, and medical costs, etc.), Becker devises a characteristically direct and simple solution: countries should just sell the right to immigrate. The government could exclude the obvious cases (such as criminals, possible terrorists, and people with communicable diseases) and charge everyone else who wants to come, say, $50,000 (Becker’s figure).

He argues the merits of this simple scheme by adducing a number of points. First, it would attract the most skilled immigrants — such as those with technical degrees — who could easily either pay the fee themselves or find employers who would pay it for them. Again, more young people would immigrate than old ones, because the young would have more time to pay off the fee or earn it back (if they borrowed it from a third party). Moreover, his system would attract the immigrants most committed to being permanent citizens, because the ones who only plan a temporary stay would be deterred by the loss of their fees.

Another argument Becker offers is that his system would lessen the resentment citizens feel toward immigrants. In a welfare state, ordinary taxpayers fear that immigrants will be “free riders,” taking government benefits but not fully contributing to pay for them. The revenue brought in every year by the immigrants’ fees (about $50 billion for America under its existing rate of legal immigration) would help to offset the costs incurred by them.

A problem with this argument is that in America, hostility to immigration grew dramatically in the 1910s and 1920s, leading to legislation in 1925 that virtually ended it, but welfare programs as such were virtually nonexistent at the time.

Becker also argues that his system would not block poor though highly skilled workers, because they would be able to get loans, which their employers would be ready to pay. A counter here is that if other nations don’t charge a similar fee, the skilled immigrants would likely choose to immigrate to those nations. Similarly, his system would incentivize domestic high-tech firms to move their operations to countries with no immigration fees.

Becker concludes by noting that the fee amount he picked is arbitrary, and might be set higher or lower depending upon how many people we would want to allow in, and that there are many details that would have to be worked out, such an how to set the fee for spouses, children, and people fleeing persecution. In a later discussion, he admits that a variant on his scheme might be to set an annual quota and let prospective immigrants bid, with the highest bidders getting the available slots.

But this brings up another problem with his proposal: it is silent about how high to set the limit for legal immigration. This is no minor matter, for research done by Robert Putnam and others seems to show a significant cost to society from widespread immigration, especially when immigrants cluster in a community. The issue is that of “social capital” — the depth and breadth of social networks in a community, from which spring the valuable but hard to quantify habits of mutual trust and reciprocity. Under Becker’s proposal, how do we know whether asking even $50,000 for each immigrant will keep immigration to a level at which assimilation will occur quickly enough that social capital is not undermined?


Editor's Note: Review of "The Challenge of Immigration," by Gary Becker. London: The Institute of Economic Affairs, 2011. 66 pages.



Share This


Legacies

 | 

Looking down the vista of time I see an epoch in our nation's history, not in my time or yours, but in the not distant future, when there shall be in the United States but one people, molded by the same culture, swayed by the same patriotic ideals, holding their citizenship in such high esteem that for another to share it is of itself to entitle him to fraternal regard; when men will be esteemed and honored for their character and talents.

The sentiment expressed in these words may sound familiar, especially considering that the monument to Martin Luther King was dedicated just last week. You might think that these words are from an early draft of Martin Luther King, Jr.'s famous "I have a dream" speech. It would be a good guess, but it would be wrong. The words above were written by Charles Waddell Chesnutt in 1905, more than half a century before Dr. King uttered his poetic and powerful prose on the steps of the Lincoln Memorial, August 28, 1963:

I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.

I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

Born in 1858, Charles W. Chesnutt witnessed the Civil War and lived through the reconstruction and racism that followed it. Both his parents were considered black, although both had some white ancestors. Photographs of Chesnutt reveal that he could easily have passed for white, as many mixed-race people did in those days. Chesnutt chose not to pass into that easier world. Instead, he embraced his black roots and wrote short stories about the complex issues of racial relationships. He was well respected in the literary community, writing for the Atlantic Monthly and other mainstream publications. He was even invited to attend Mark Twain's posh 70th birthday party.

Nevertheless, Chesnutt's political sensibilities ran deep. He was an early civil rights activist and a founding member of the NAACP. The words quoted above are taken from an essay he wrote for the NAACP's literary magazine, The Crisis, entitled "Race Prejudice, Its Causes and Its Cure."

Like the man who would follow in his footsteps, Chesnutt did not believe in violent reprisals for the wrongs committed against African-Americans. He wanted fair treatment, but without retaliation or reverse bigotry. Chesnutt and King both longed for a day when color simply would not matter. In that 1905 essay, Chesnutt continued:

[I see an epoch] when hand in hand and heart with heart all the people of this nation will join to preserve to all and to each of them for all future time that ideal of human liberty which the fathers of the republic set out in the Declaration of Independence, which declared that “all men are created equal.”

Similarly, King's 1963 speech proclaimed: "I have a dream that one day this nation will rise up and live out the true meaning of its creed: 'We hold these truths to be self-evident: that all men are created equal.'"

Interestingly, King's heirs sued CBS for copyright infringement after CBS aired a segment of the speech as part of a documentary on the civil rights movement. They claimed that the speech was a performance and thus was protected by “common law copyright,” even though King did not register the speech in advance with the Registrar of Copyrights. In 1999 the court ruled in the estate's favor, giving King's family the right to license the speech and receive royalties whenever it is copied, aired, published, or performed. Now if the speech is printed in a textbook or quoted on Martin Luther King’s birthday, for example, his heirs will earn a royalty. It’s a little like singing “Happy Birthday”… even though it seems to be in the public domain, it isn’t. This copyright will remain in force until 70 years after King's death (2038).

I am happy for King's heirs, especially in light of the monument that was recently unveiled near the steps where he delivered his famous speech. I applaud the distance we have come toward seeing his dream become a reality, as well as toward seeing Chesnutt's “vista” move into the foreground. Sadly, however, to my knowledge none of King’s heirs has ever acknowledged or credited the article that Charles Chesnutt published in The Crisis all those years ago, even though its influence on the "I have a dream" speech can hardly be disputed. Let’s acknowledge the contributions of both these great civil rights leaders.




Share This


The Return of Coxey’s Army

 | 

In 1894, Coxey’s Army, a legion of purportedly needy people, came to Washington to demand radical reform of the capitalist system. It was supposed to be a “march,” but some of Coxey’s soldiers tried to make their trip to the capital by hijacking railroad trains. The depredations of the Army were widely feared, especially by communities that lay on its route, but by the time it reached Washington its numbers had dwindled. It ended when its leaders were arrested for walking on the capitol grass. That took care of Coxey’s Army.

During the past few weeks, downtowns across the country have been the unwilling hosts of tribes of ignorant savages shouting about the wickedness of, guess what, the capitalist system.  They maintain that they represent the 99% of Americans whose lives are controlled by the remaining 1%, who supposedly own 99% of property in this country. Ironies abound: people who have nothing better to do than hang out in a park and empty their bladders in a McDonalds restroom are lauded and supported by labor unions; people who want to abolish wealth are bankrolled by “liberal” billionaires; and people who never vote are courted by the highest official representatives of the Democratic Party. Friendly media note with relief that the Occupy mobs are (usually) “peaceful.” I suppose that if you come over to my condo complex, pitch a tent, and refuse to leave, denouncing me day and night and threatening my neighbors with the risk of epidemic disease, you are being “peaceful.”

It’s a safe bet that not one Occupier, or mainstream commentator on the Occupiers, has ever heard of Coxey’s Army. So such people haven’t fully realized what the lowest level of police power can do to wipe up a “movement.” On October 13, all around the country, local mayors and cops started moving against the demonstrators, evicting them from their zones of occupation for reasons of health. Their tent cities were fouling the environment.

Of course, that’s another irony that should be savored.  One of the Occupiers’ great complaints is that capitalism is ruining the environment. Well, just look at what the Occupiers did to New York’s Zuccotti Park (which by the way is privately owned, despite Mayor Bloomberg’s apparent assumption that he owns it and can let protestors in and out whenever he wants). It’s hard to imagine a more degraded environment.  For this reason, the protestors were nearly kicked out of the park on October 14, a mere four weeks after they started to degrade it. On that day and the day after, they were kicked out of parks and other civic spaces in many other cities. On October 16, they were prevented from starting a camp in Chicago’s Grant Park.

A few more run-ins with local government, and the movement will probably go the way of Coxey and Friends. This is yet another irony, because what the protestors, “anarchist” or not, are really screaming for is more government, government that will run everyone’s life in the minutest detail. That’s the only way in which their multitudinous demands — for equal incomes, free money, vast solar energy projects, whatever — could ever be satisfied.

But there’s one nice, nonironic touch.  For once, one of the Occupiers said something correct. According to a CNN report on October 13, Occupy Wall Street spokesman Tyler Combelic promised resistance to any attempt to move the protest out of its usurped location, observing. "It's not an occupation if you can't occupy the park."  How true, how true.




Share This


99 to 1

 | 

I am sick of hearing about the “99%.” I am in the 99%, but you won't see me marching on Wall Street and making signs about my worthless college education. That’s because I’m working my ass off trying to get into the 1%.

My husband and I have a small business. We do software testing. We have some employees, and we use a lot of temps. We've probably created or saved as many jobs as President Obama has. Probably more.

Nevertheless, almost all the people we hire are in their early twenties, just out of college, with a useless "Game Design degree." Just the kind of people you see marching on Wall Street.

I just heard that one of our workers was complaining about some other company "being cheap" because they didn't want to pay for someone's health insurance.

Damn.

Why can't companies not be "cheap"? Why can't they just pay you more?

First of all, why can't you pay more? Well, why don't you pay $300 for a videogame? Because it’s not worth it to you. But if you paid that much, then maybe videogame testers would make more money. But you won't pay $300 for a game, and neither will anyone else. So companies who make games need to control their costs.

Testers do not make a ton of money. It's true. But the companies that employ you don't make much off of you. We charge our clients your hourly rate plus $X. And X ain't a big number. Believe me, we would like to charge more per hour for your services, but we can't. If we charged a reasonable markup on your rate, then the companies that hire us might just decide to take their business elsewhere, like Bangalore or Hyderabad. We need to keep our profit margin mighty slim, or we'll be paying you zero — because you won't have a job.

So, yes. We are all "cheap.” But you have a job.

By the way, the competition has testers in foreign lands. Their daily take-home pay is a little bit more than what you make for one hour. And they aren't complaining.

But even so, you think, we must charge our clients some kind of markup on your hourly rate, don't you? Where does all of that money go?

Well, it goes all over the place. We have to pay the rent for the offices you are sitting in. We have to buy power strips, chairs, desks, lamps, cabinets, tape dispensers, paper, pens, pencils, notebooks, toner for the printer, and paper for the toner to go on. It adds up.

We also have to pay for the people who clean up after you when you spill coffee on the carpet or you use the bathroom and leave a mess.

Believe it or not, we have to pay the electric bill. We have to pay for the water, the coffee, the cream and sugar, the Red Vines, the occasional well-deserved doughnut feast.

We have to pay for the very fast internet connection that we need to do business. We have to pay for the phones. We have to buy computers and the hardware that you are testing on. Even if we only use it for three weeks, we have to buy every Microsoft test kit, every Sony test kit, every Nintendo test kit, etc., etc. They aren't cheap. And we have to buy a lot of them.

We have to buy software so you can do your work — bug tracking software, operating systems, secure instant messaging systems, general office software. We have to pay to have the network installed at the office, so that we can do our jobs.

But to return to you yourself. We have to buy workers' comp insurance, because one day, you may get a hangnail and sue us. Who cares, you think, it's the insurance company that’s going to pay for it. Yes. And we pay for the insurance. And if there’s a hangnail lawsuit, we’ll have to pay more and more for that insurance.

Lawsuits have made it more expensive to do business. If we have a client with deep pockets, and you’re trying to be crafty and so sneaky, you'll sue the client for that hangnail, too. But our clients are crafty and sneaky, too, so they require that we have certain supplementary insurance as well. Meanwhile, we need lawyers to read, write, and review our contracts so we don't get sued by you or by our clients. Lawyers are not cheap.

In addition, we have to pay for alarm systems, just in case you've told your ne'er-do-well brother-in-law who just got out of jail that you work at this cool company that has a bunch of computers.

We have to pay for those silly little taxes that cities decide to place on businesses, just for the pleasure of existing in them, and employing their citizens.

Naturally, we need to pay interest on the large amount of money we borrowed to pay for all of the above.

Oh, yeah. I almost forgot. We need to eat, too.

One day, we will finally pay off our debt — if we manage to stay in business, despite the lackadaisical, whining employees who do poor work because they are lazy, or maybe no work at all because they really couldn’t care less about their low-paying jobs.

At the end of it all, after years of stress and lack of sleep and no vacations and strained family life, we just might end up wealthy.

On that day, I will happily tell the rest of you 99%-ers to screw off.




Share This


What Is a Job?

 | 

The usual chatter has begun following President Obama’s Sept. 8 call for a $417 billion government spending package designed to stimulate economic growth and create jobs. As always, the commentary, both pro and con, focuses on speculation about the results of the program. Will this latest stimulus money actually reach “shovel-ready projects,” or will it disappear down the black hole of state subsidies for Medicaid and education? How many jobs will the program actually create, and what happens to those jobs when the program is over?

There is never any clear winner in debates of this nature. While the future is still unknown, Republicans will predict failure while Democrats will predict success. Once the program is over, Republicans will pronounce failure while Democrats will declare victory. The retrospective debate about the results of the program will continue until the media move on to something else. The debate will be resurrected at election time when Republicans will characterize the program as another “bridge to nowhere” and the Democrats will claim that it saved the economy.

Even after the fact, there is rarely a definitive answer to questions about the results of government action, as compared to government inaction. This may be one reason why most government programs never really end. The answers are much less ambiguous and elusive when the discussion is shifted from results to rights. But before exploring how Obama’s program affects the rights of the various parties involved, we must answer a previous question.

What is a job?

One might assume that everyone knows the answer to this apparently simple question, but I doubt that’s true. In fact, judging by what politicians, media, and even friends and neighbors have to say about jobs and unemployment, I’m convinced that almost no one in America today understands what a job really is.

As I’ve said before, a job is a transaction between a buyer and a seller. The employer is the buyer and the employee the seller, selling his services to the employer for a mutually agreed upon price. This is a voluntary transaction for both parties, just like the buying and selling of lawn mowers or breakfast cereal. The buyer offers to purchase services at the price he can afford, and the seller decides whether to accept those terms or not. Both parties are free to decide not to go through with the sale. Unless a specific term of employment has been agreed to, both parties are also free to cease doing business at any time. The employee can quit the job (refuse to continue selling the service) and the employer can terminate employment (refuse to continue purchasing the service).

There is only one way in which a purchaser of services can continue to employ people on an ongoing basis. The services provided by the sellers must produce some product that makes a profit. If the firm loses money, then the employer must increase his sales or lower his operating costs. The latter solution most often means purchasing fewer services (layoffs).

The voluntary association between the buyer and the seller of services (the employment contract) depends upon another voluntary association between the firm and its customers. The firm’s customers must choose to pay more for the firm’s products than the cost of producing them, including labor, material, rent, administration, and all other costs of production. It is that choice by customers that creates a market value for the products, for the market value is merely the amount of money the highest bidder will voluntarily pay. If no one was willing to buy the firm’s products at any price, then those products would have a market value of zero.

When the opportunity exists to sell products at a higher price than the cost of producing them, it typically attracts more than one firm, and those firms compete with each other for the customers willing to buy their products. Thus, employment opportunities become abundant in that particular industry, as more and more firms enter the market to take advantage of the opportunity.

Before the first product of any of these firms is created, the owners must purchase the labor, materials, production facilities, equipment, and other capital goods necessary to make its products. The owners purchase these capital goods and labor with savings — which are the result of consuming less than they (or their lenders) produced over a period of time in the past. The only reason they choose to invest these savings is the opportunity for profits. Without that opportunity, they would consume their savings in the present or hold them for security against future misfortune instead of risking losing them by starting a new firm.

Almost no one in America today understands what a job really is.

As long as there are customers willing to buy the products the firm produces, the model is self-sustaining and productive. From a societal view, the owners, employees, and customers are adding more goods and services to society. Remember that the customers are only able to buy the firm’s products because of the products they’ve produced and sold to their customers, including their employers. Just like the firm, they must produce products that other people are willing to buy voluntarily. This is what gives them their purchasing power.

There is one word that sums up the entire process of economic growth and job creation: choice. The market price of products, the wage levels that can be sustained in the production of those products, the number of people who can be employed, and the quantity of products that can be produced — these all depend on the ability of economic agents to make rational choices in their own self-interest. Without freedom of choice, there can be no market, no division of labor, no prices, and ultimately no jobs. It is the degree to which all economic agents are free to make the best choices they can that determines how productive, efficient, and prosperous an economy will be.

All of this goes out the window the minute that one begins talking about the government’s “creating jobs.” By definition, nothing the government does allows any individual freedom of choice. This is where most people get confused, because they imagine the government to be a wealthy benefactor with money of its own. This misconception is reinforced whenever President Obama (and neither he nor the Democrats are by any means alone on this) refers to government spending programs as “investments.” It all sounds very prudent and morally sound, until one considers what is really going on.

Whenever the government “invests” in a particular industry, whether it is producing “green” cars, bridges, buildings or roads, it is overriding the choices made by customers. I refer to the choices made by taxpayers not to purchase that car, bridge, building or road, but to purchase something else, something they actually want and are willing to pay for. As we’ve seen, when there are people willing to buy products at a price higher than the cost of producing them, there are entrepreneurs ready to take advantage of that opportunity, and the products get produced. Customers do not choose to do this to help society, but to help themselves; nevertheless, they do help society by producing the needed or wanted products and employing the people necessary for that production.

Government-created jobs actually make society poorer, because they result in products that are worth less than the cost of producing them.

When government intervenes, not only are taxpayers forced to purchase products that they have previously chosen not to buy, but the entire nature of the employment contract is fundamentally changed. No longer does an employer purchase services from an employee for the sole purpose of realizing a return on his capital investment. Now, the taxpayer is forced to purchase the services of the employee, with no hope of the return he desired for his money. The best he can hope for is that somewhere a bridge, building, or road that he had previously chosen not to pay for gets built, or some service is rendered at a higher price than anyone had been prepared to pay. Employers who happen to be the beneficiaries of government intervention are able to make profits that would otherwise be unavailable to them, but only because the government has forced taxpayers to pay at least part of the operating costs.

While society does get a new car, bridge, building, or road, and some people get government services, the value of those products is lower than the cost of producing them. This is why government-created jobs end as soon as the government stimulus money is removed. If the products produced and the jobs related to producing them were economically viable, entrepreneurs would already be creating them. Government-created jobs actually make society poorer, because they result in products that are worth less than the cost of producing them. Ironically, politicians often boast that they created more jobs than their opponents — which actually means that they created more poverty than their opponents.

By definition, all government spending comes from savings, because it is wealth produced by economic agents but not consumed. Therefore, government-created jobs actually destroy capital, as no self-sustaining production or profits result from that capital investment. Not only is that capital wasted and destroyed on the unproductive temporary jobs, but it is no longer available to create other jobs producing products that people would voluntarily buy. But in terms of the economic harm caused by government stimulus, this is only the tip of the iceberg. For more, read Peter Schiff’s testimony to Congress on this subject as well as one of his primary sources, Frédéric Bastiat’s That Which is Seen and That Which is Not Seen.

Once you understand what a job really is, a lot of what you hear about jobs from politicians and the media sounds completely outlandish. You may hear it stated that everyone has a right to a job, but that can’t be true. How can anyone have a right to force other people to buy his products? If such a right existed, then no company need ever go bankrupt. Whenever it began losing money, it would simply appeal to the government to protect its right to force people to buy from it; the government would oblige; and the economy would support every one of the otherwise bankrupt businesses.

More often you will hear that everyone has a right to “a living wage,” but this makes no more sense. The price of any product in a free society is the result of mutual agreement between the buyer and the seller. Either party has the right not to make an exchange if he is not satisfied with the price. Government interventions, such as minimum wages, obviously interfere with this right. In fact, it is the seller of services (the employee) whose rights are most infringed by minimum-wage laws, which prevent him from selling his services below a certain price even if he wishes to, thereby enabling employers who otherwise could not afford him to offer him a job. That anyone believes that the government has a legitimate authority to set an arbitrary price level and then forcibly prohibit people from selling their services at a lower price speaks volumes about how little we value freedom in the land of the free.

No, the supposed right to a job or the right to forcibly fix the price of a job are not real rights. They both involve initiating the use of force against other people, and no one has a right to do that. In fact, the true rights that are at issue with this program are the rights of the unwilling buyers, the taxpayers. They have a right not to be forced to buy goods or services against their will. Yet violating this right is the only way in which any government can ever create a single job. The fact that the debate between either major party is over how the government could create jobs, rather than whether the government should attempt to create jobs, reinforces the fact that liberty is not even a consideration in the formulation of federal government policy.

It is the government’s thousandfold trampling of liberty that has created the economic malaise that the government is now trying to end. If we ever want to see the unemployed people get back to work, we have to understand what a job is and how and why jobs are created. Then the government's part in the solution will become clear: Start securing our rights instead of violating them. Stop wasting our money, and our opportunities, in the misguided attempt to “create jobs.”



Share This


It’s Not Even Keynesian

 | 

In a Facebook discussion of tax policy, I came up with an idea. It seems obvious, and on reflection also useful.

There are three basic categories of government taxing and spending:

One — tax to spend on government services;

Two — tax to redistribute wealth;

Three — tax to spend on stimulating economic activity.

The debate about one is always just a debate about which government services are necessary and desirable. The debate about two is very complex and can be approached from many angles, but it helps the analysis to state clearly when you are talking about redistribution.

The debate about three, when brought into clear focus, has a clear answer. Raising taxes (in current government jargon "paying") for "stimulus" is a certain mistake. It does not even have the theoretical support of the most rabid Keynesian theory.

Keynesian theory favors fiscal stimulus (that is, deficit spending) in times of high unemployment and recession. This can be achieved by lowering taxes while keeping expenditures stable or by raising expenditures while keeping taxes stable. The Keynesian hope was to put an end to the business cycle.

President Obama has lately made a stupid proposal. He wants to be seen as doing something about poor economic conditions. He recognizes that the idea of more deficit spending is very unpopular. So he proposes a false stimulus. It would be paid for by higher taxes on the rich. Grabbing more money and spending it (as opposed to deficit spending) may provide government services and may redistribute wealth, but it cannot provide a Keynesian stimulus. When it is considered as a "stimulus" proposal, the only theoretical argument in favor of it is a purely communist one — the planners will better allocate the money than would private enterprise. That's a bankrupt, and also an unpopular theory, and I don't think Obama or his advisors like it.

I think they like taking and spending (for purposes of redistribution and abuse of power — tossing billion-dollar favors around for one's personal benefit) and appearing (for political purposes) to be doing something. So they have dressed up a policy that would increase corrupt central planning while dressing it in the clothes of "economic stimulus."




Share This

© Copyright 2013 Liberty Foundation. All rights reserved.



Opinions expressed in Liberty are those of the authors and not necessarily those of the Liberty Foundation.

All letters to the editor are assumed to be for publication unless otherwise indicated.