The Music of Global Warming

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We're all screwed. Soon we'll be leading frugal, monotonous, energy-efficient lives. Drastic lifestyle reductions are urgently needed to save the planet. It is a moral imperative (moral euphoria, to some) — that, and a matter of taxes, regulations, rules, and mandates. Occupying solar-powered hovels, we'll eat vegetarian meals in dim kitchens, carpool in horrid electric vehicles to tedious green jobs, work and play in staggering heat and intense dust (ever-watchful for deadly storms and dying species), and shower under tepid drizzles from dwindling water supplies. Our dysfunctional government is broke and our economy has seen its best days. China is the future. And there will be plenty of bad music.

In the 1980s, right after the global cooling scare of the 1970s, scientists began scaring us about global warming (GW). In the 1990s, the Intergovernmental Panel on Climate Change (IPCC) upped the ante to anthropogenic GW (AGW). By 2006, Al Gore brought us catastrophic AGW (CAGW). Today, according to Al and his apostles, we have progressed to incomprehensible CAGW (ICAGW).

For the most part, the leaders of the global warming movement are cultural elites and technocrats who, having failed to save the world through socialism, turned to environmentalism.

For the most part, the leaders of the global warming movement are cultural elites and technocrats who, having failed to save the world through socialism, turned to environmentalism. They are from the ranks of the world's most earth-caring organizations (Friends of the Earth, World Wildlife Fund, Greenpeace, Rainforest Action, Environmental Defense, etc.) and,because of their ecclesiastical benevolence and dedication, have formed a global clericy to which our planet's salvation is entrusted.

This cabal has acquired immense political power through incessant planet alarms of ever-increasing magnitude and variety. The cabal gathers privately from time to time in ritualistic séance. Under subdued lighting and the influence of whale songs, Gregorian chants, and Halloween music, members tell one another climate monster-under-the-bed stories until they are frightened to exhaustion. The most astounding stories are then expressed, publicly, through cries of wolf :

  • Staggeringly high temperature rise, especially over land — some 10°F over much of the United States
  • Sea level rise of 3 to 7 feet, increasing some 6 to 12 inches (or more) each decade thereafter
  • Dust bowls over the US SW and many other heavily populated regions around the globe
  • Massive species loss on land and sea — 50% or more of all life
  • More severe hurricanes, especially in the Gulf of Mexico, proximate to the United States
  • Unexpected impacts — the fearsome “unknown unknowns”

One of the latest cry wolf announcements is that the worst of these incomprehensible impacts will be “largely irreversible for 1000 years.” Holy shit! Now we're talking LIICAGW.

The International Energy Agency (IEA) estimates that industrialized countries must spend $45 trillion over the next 40 years to be Kyoto-compliant. Make that $101 trillion to get us to 2100. And God only knows the cost of those fearsome "unknown unknowns." But a 1998 US Energy Information Administration (EIA) study found that the Kyoto treaty would cost the US economy $400 billion per year — roughly $570 billion annually today. Thus, the US tab for the next 90 years would be about $51.3 trillion. That George Bush would have none of this, angered the cabal.

The anger festered. When we (the only fully industrialized country smart enough to pass on the frantic planet decarbonization race) became skeptical about the AGW hypothesis itself, anger became ridicule. We became ignorant climate deniers. The Economist admonished us that "America needs to build some ladders to help everyone climb out [of the denial]." And lastSeptember, former president and standing jokeBill Clinton said that such skepticism makes us look like "a joke."

A humorless President Obama wants to be the ladder builder. After all, Americans should pay their fair share. At the Copenhagen climate conference in 2009, he promised that US emissions in 2050 will be 83% below 2005 levels. Many Americans cheered, possibly believing that Mr. Obama's soaring rhetoric had a modicum of substance behind it — perhaps a study showing that we can achieve his goal by tweaking our standard of living with Chevy Volts (tires fully inflated), GE Compact Fluorescents, and a few Solyndra solar panels. But a more thoughtful examination indicates that Americans, especially children and grandchildren, may find the adjustment very arduous. For example, to reduce 2050 emissions to 83% below 2005 levels, George Will pointed out, "2050 emissions will [need to] equal those in 1910, when there were 92 million Americans. But there will be 420 million Americans in 2050, so Obama's promise means that per capita emissions then will be about what they were in 1875. That. Will. Not. Happen."

Under subdued lighting and the influence of whale songs, Gregorian chants, and Halloween music, members tell one another climate monster-under-the-bed stories until they are frightened to exhaustion.

Competing with such dire realizations has troubled the cabal. Its most patronizing scientists now struggle to create climate alarms more astounding than economic reality. As the supply of disasters that can be attributed to man shrinks, rumor has it that future announcements of planet tragedies will have Sarah McLachlanmusic playing in the background. Now that’s cruelty to animals. The incorporation of depressing music is more than symbolism. The thinking seems to be that a milieu of despair will amplify the urgency of government action and stimulate the global warming industry.

Many believe that the cabal should lighten up. The absence of warming since 1998 should help. Some have suggested that at its next monsters-under-the-bed meeting, the cabal should watch An Inconvenient Truth a few times, but with banjo music for the soundtrack. Al Gore will seem more comical, LIICAGW less horrifying. But banjos will not brighten the mood in our languishing economy. For over three years unemployment has exceeded 8%, the housing market has been a shambles, and GDP growth has been feeble at best. With our national debt over $15 trillion and annual deficits over $1 trillion, we currently borrow 43 cents on every dollar we spend. Oil prices are rising, and we are not allowed to drill enough of our own or pump new supplies in from Canada. We can't even afford ObamaCare, and the EPA is beginning to charge us for carbon.

Yet, we are seen as the climate idiots and villains, an implacable obstacle to the cabal's bold global vision. In contrast, China gets a pass. The cabal would have us pay $51 trillion to help save the planet, while China — the world's most populous country, with 16 of the world's 20 most polluted cities and an economic furnace relentlessly stoked with as much greenhouse-gas-emitting coal and oil as it can find — pays nothing. With its rapidly growing economic and military power, China has been likened to the Germany of a century ago. Western Europe’s appeasement of Germany led to World War II. Awarding a colossal carbon tax break to an aggressive, planet-ravaging China trumps appeasement with encouragement.

In 2005, James Fallows wrote an article called “Countdown to a Meltdown.” Appearing in The Atlantic as a cover story, it was a speculative article about the American political-economic conditions that Fallows imagined would increasingly worsen through 2016, culminating in turmoil, ruin, and, I'm guessing, record-breaking sales of songs running the gamut from “Yesterday” to “Taps.” The article enshrined an opinion of America that is no doubt still cherished by all self-respecting members of the cabal.

Fallows’ view was that by 2016, China would have better schools, better roads and highways, and, having sent a spacecraft to Mars, better science than the United States. He saw America in 2016 as a place with "an undereducated work force" and "a rundown infrastructure." We would become a stagnant, destitute country where "young people, seeking opportunity, have to wait for old people to die," where "smoking and eating junk food have become for our underemployed class what swilling vodka was for the dispossessed in Boris Yeltsin's Russia." Holy blessed shit! This is even more astounding than LIICAGW.

The thinking seems to be that a milieu of despair will amplify the urgency of government action and stimulate the global warming industry.

Fallows imagined that in 2016, China would have "20 Harvards," as opposed to our one (which would become an academic "theme park" by 2016). Perhaps, therefore, our climate alarmists should consider a visit to Chinese universities, where they would profit from entry-level science and economics courses — not the soft, funny-book classes that they might get here, but the ones with objectivity and rigor. Better yet, they might consider a permanent move to China. In that country, their elitist credentials would surely land them the best jobs at the best companies, especially enlightened businesses that have relocated to escape the anticipated economic blight of America.

It is possible that incessant braying, accompanied by Chinese music, could persuade Communist Party officials of the urgent need for China to pay its fair share in thwarting climate hobgoblins. It's not clear how it will pass as ladder-building music, but it's an elegant metaphor for the discord between imagined climate catastrophes and real economic imperatives. As P.J. O'Rourke said in All the Trouble in the World, it is music that "sounds as if a truck full of wind chimes collided with a stack of empty oil drums during a birdcall contest." I'll be here in America, astoundingly skeptical.




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Breaching the Perimeter

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The Grays Harbor County Superior Court building in Montesano, Washington, has a stately profile that you can see from Highway 12 as you drive past. The vibe of the courthouse is low key. It wasn’t so very long ago that petitioners and respondents could represent themselves in civil disputes. As long as they showed respect for the proceedings, litigants could count on some help from the clerks and judges; and everyone would work to craft reasonable solutions to disagreements.

In recent years, the approach has become more formal. A growing number of methamphetamine-related drug cases has made the place more tense; and the growing role of state agencies in the affairs of troubled families has made the proceedings more bureaucratic. But the clerks are still friendly. And, if you’re not sure where you’re supposed to go to file paperwork or pay a fee, the person who shows you the way to the proper office might be one of the judges.

On the morning of Friday March 9, a man named Steven Kravetz was hanging around on the first floor of the courthouse. He was dressed “business casual,” in slacks and a blue button-down shirt; and he was carrying a briefcase, so some of the courthouse staff assumed he was there on business and went about theirs. Eventually, though, one of the judge’s secretaries thought the man was acting a little strangely and asked the county corrections officer working security that morning to find out why Kravetz was in the building.

If reports be true, and there’s no reason to doubt them, this is what happened next. The officer, a woman named Polly Davin, approached Kravetz and asked his name and whether he had business in courthouse. He gave her a false name and mumbled something about a hearing. Davin pressed for more details — and Kravetz lashed out, stabbing her repeatedly with a small knife he’d been hiding in one hand.

Kravetz lashed out, stabbing the officer repeatedly with a small knife he’d been hiding in one hand.

County Judge David Edwards, whose secretary had first noticed Kravetz, saw the scuffle from his office on one of the building’s upper floors. He rushed downstairs to Davin’s aid — separating her momentarily from Kravetz. This infuriated Kravetz, who stabbed Edwards several times in the neck and shoulder.

Davin drew her service weapon, a .45 semiautomatic pistol, and ordered Kravetz to stop. He didn’t. Having disabled the judge, Kravetz climbed back toward Davin and grabbed her pistol. He fired twice, hitting her once in the shoulder, and fled the building.

Courthouse staff responded quickly. Paramedics arrived in minutes to tend to Davin and Edwards and moved them to the country hospital a few miles away. Sheriff’s deputies and local police assembled to search the surrounding area for the shooter.

There were a few early missteps in the manhunt. At one point, the cops and deputies got a tip that Kravetz was hiding in a private home a few streets away from the courthouse. They surrounded the house, flooded it with teargas, and entered forcibly. It was empty.

Then, working from a report that included the false name Kravetz had given Davin, sheriff’s deputies in nearby Thurston County arrested a man named Michael Thomas. It quickly became evident that he had nothing to do with the shooting.

Back in Montesano, the cops ordered lockdowns of local public schools because someone had suggested that Kravetz might be a domestic terrorist, bent on attacking public buildings. Initial media reports on local radio and online picked up on this excitable theme, stating that “several people” had been shot and that the violence might have been politically motivated.

Rather than a method of last resort, courts have become the front line determining what the state can do and how it can do it. And they are overwhelmed.

Meanwhile, Kravetz had walked from the courthouse to a nearby lawyer’s office, where he asked to borrow a phone to call his mother — with whom he lived, about half an hour away in the suburbs of Olympia. While law enforcement agents were following SWAT procedures and ordering school lockdowns, the shooter’s mother came and picked him up in her late-model Ford Focus. She was unaware that her son had done anything wrong.

At the hospital, the news for Davin and Edwards was good. Their injuries were not life-threatening. The knife wounds weren’t deep and Davin’s bullet wound had gone “through and through” soft tissue near her shoulder. Both were examined, stitched up, and released by the early evening.

Local law enforcement eventually pieced together Kravetz’s real identity from the courthouse staff who’d seen him. Some remembered seeing him in the courthouse before. He had a history of minor run-ins with law — mostly related to his reputed bipolar disorder and a few episodes of petty violence against himself or his mother. During one hearing on his mental condition, Kravetz had submitted a 50-page “manifesto” that raved about the collapse of society and the inherent inferiority of women.

Friday evening, having muddled through the earlier miscues, the Grays Harbor County Sheriff’s office posted a picture of Kravetz (who was 34 years old but looked and moved like a man at least a decade younger); they confirmed he was the main suspect in the attacks.

Kravetz’s mother saw the pictures the next morning and immediately contacted the authorities to cooperate. Her son was arrested without incident later Saturday.

In the wake of the attacks, several media outlets noted that Judge Edwards had previously warned the Grays Harbor County Commissioners that the courthouse lacked sufficient security systems to protect staff from the growing number of defendants, convicts, and other troublesome sorts being processed every day. He’d even filed a lawsuit — on behalf of himself and his two fellow judges — to force the county to reconsider state-mandated budget cuts that would deny the courthouse basic security.

In his lawsuit, Edwards had made the point that the court was stressed by the growing number of complex cases involving issues like drug distribution, domestic violence, heated custody battles, mental health disorders, etc. Specifically:

Within the past two years, two attorneys were physically assaulted in the Superior Court: A defendant charged one of the judges in a courtroom; a man came to the courthouse armed with a knife and asking for directions to the office of a judge; and there was inadequate security protection available when a judge received a death threat during a trial. . . . The Superior Court is the only superior court in Washington state with more than one judge that is totally without courtroom security.

The judge’s stab wounds and the deranged man who’d caused them would certainly underscore that argument. In the days after the incident, the County Commissioners agreed to move courtroom security to the top of its budget priorities list. They were said to be looking into metal detectors and closed-circuit video systems.

This story brings together two troubling trends in public policy, which conflict with each other — and will likely conflict with each other more intensely as this country’s finances grow weaker.

The first trend is the use of litigation as the ultimate tool of public policy. This trend serves as a kind of ideological parent to its subset, the criminalization of broad categories of private behavior. When the U.S. legal system was first developed, criminal cases were relatively rare things. Most legal actions were civil; and they were designed to serve as a formal process for resolving disputes that couldn’t be resolved informally by free citizens and their local . . . non-governmental . . . institutions.

This has changed. Rather than a method of last resort, courts have become the front line determining what the state can do and how it can do it. And they are overwhelmed.

Because our courts are, by design, the branch of government least responsive to the whims of the voter, feckless legislators and executives pass the buck to the judges. They pass laws and promulgate policies that are often imprecise, internally contradictory, and intentionally vague — all capped with the cynical qualification that “the courts can decide” the final outcomes.

In some of these cases, with no other father figure to rebel against, damaged people like Steven Kravetz lash out against officers of the court.

This pass-the-buck mentality trickles down to all levels of the statist bureaucracy. Faced with impossible or conflicting orders, some government agencies sue — literally, file lawsuits — for permission and instruction on how to proceed. This means job security for the armies of lawyers (specifically exempted from ethics rules against lying) employed by government agencies; but it’s bad news for everyone else.

Just as the Grays Harbor courts have become more bureaucratic and stressed, so has the entire American court system. Simply said, we count on courts to do too much: review (and, in some cases, finish writing) thousand-page laws; settle intensely personal family problems like domestic violence, divorce, and child custody; enforce poorly-conceived legal prohibitions against drug use and other behaviors; allocate dwindling resources among ambitious government agencies.

A side note: as a result of this overreliance, courts and judges become the main authority figure in the lives of some of our weakest citizens — the criminals, lunatics, and impaired ones who cannot fend for themselves and no longer have nongovernment institutions to look after them. In some of these cases, with no other father figure to rebel against, damaged people like Steven Kravetz lash out against officers of the court.

The second trend is the looming insolvency of the American government.

As I’ve noted above, one of the major responsibilities weak legislators and executives have ceded to the courts is allocating dwindling public-sector financial resources. As the federal government’s debt soars and the dollar loses value, the fight over scarce money inside the walls of the state will get fierce. Broke public-employee pension plans will sue to get money instead of underfunded welfare agencies . . . which will sue to get money instead of over-committed regulatory agencies.

Here, Judge Edwards’ suit against the County Commissioners over security resources for the courthouse is a harbinger.

Judges tend to be smarter than most government employees — they see the coming battles over government money. They know that they’re going to have to make hard and unpopular decisions. And what then? If nutters and irate divorcees are grievous security threats to the men in robes, what will we call hundreds of public-school teachers and government-employee unionists whose promise of gilded pensions has been reduced to a reality of threadbare 401(k)s? There aren’t enough metal detectors and CCTV systems in the world to secure against that threat.

Judge Edwards’ suit is also something like an M.C. Escher drawing. It’s an example of the very sort of action that will create more security risks courts in the future. Americans have lived by the sword of rampant litigation as our economy expanded; we may very well die by that sword as our economy contracts.

Edwards is a decent man (and I say that with some insight; he’s one of my neighbors) in an impossible situation. He tried to do the right thing when a deranged man attacked a courthouse staffer; and he’s trying to do the right thing by demanding additional resources to secure his courthouse.

When he grappled with Steven Kravetz, Edwards underestimated the violent capacity of a lone madman. As he fights the County Commissioners for more security budget, the judge may be underestimating the violent capacity of a growing line of angry litigants passing through the hard-won metal detectors.

Americans have lived by the sword of rampant litigation as our economy expanded; we may very well die by that sword as our economy contracts.

Security is a difficult thing to achieve and even more difficult to maintain. It’s situational — and can be lost when circumstances change even slightly; in times of social upheaval, it’s practically impossible. This is one reason that some experts argue security is most effectively established for individuals, not large groups or institutions.

Maybe judges should be armed in their courtrooms. As they were a hundred years ago, when the Grays Harbor County courthouse was built.




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The Coming Anti-Mormon Rage

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In a recent article, I reflected upon the shape that the presidential campaign against Romney will take. I suggested that the Obama administration cannot easily defend its record, and so will focus on attacking the Republican candidate — who, after Super Tuesday, is likely to be Romney. But the problem for the Obama regime is that Romney has no obvious flaws: messy divorces, past affairs, tax dodging, DUIs, misdemeanors, or what have you. So the Regime will be reduced to hammering away at the fact that Romney is rich, white, and Mormon.

The attack is already well underway.

The administration’s war-machine has three phalanxes. First is the direct reelection team, funded by perhaps a billion dollars. The second is the Obama “independent” super-PACs, funded by all those wealthy people to whom Obama gave billions in taxpayer subsidies for their "job-creating" businesses. These super-PACs, which are already being staffed by Regime members, will probably net another billion bucks to reelect their guy. Labor unions alone have pledged $400 million for the upcoming race; 96% of all union contributions go to Democrats.

But let’s not forget the third phalanx — the mainstream media. The soi-disant “journalists” of the New York Times, the Los Angeles Times, MSNBC, NBC, ABC, CNN, and so on are outright whores for this administration.

No, I retract that: I don’t want to insult hookers. At least they get paid in honest money for their services. By contrast, the pseudo-journalists with the MSM cheerfully service this administration pro bono, or for some motives less creditable than money.

The Obama regime will be reduced to hammering away at the fact that Romney is rich, white, and Mormon.

You can expect the attack on Romney’s wealth (“He’s rich, so he cannot relate to you common folk!”) will be the one openly directed by the administration’s reelection committee. The race card will be played by the Regime’s allies . . . indeed, Obama just set up an “African-Americans for Obama” group to advance that attack. The open attack on Mormonism, however, will not be carried on directly by the Obama campaign, but by super-PACs and especially by the media.

The anti-Mormon card is being dealt even now, in a sudden rush of news “stories” about Romney’s faith.

Let’s start with leftist comic Stephen Colbert, who stepped up to the anti-Mormon plate with his spoof on the Mormon practice of baptisms for the dead, a religious custom that has irked some people (some prominent Jews in particular). Colbert mockingly “converted” all dead Mormons to Judaism. Isn’t that hilarious? But is it purely coincidental that Colbert has only now found this obscure Mormon practice worthy of national notice? Perhaps he will next make fun of the Catholic practice of having masses for the dead. Oh, but wait — JFK, Ted Kennedy, John Kerry, Nancy Pelosi, and many other liberal icons have been — Catholic!

John Turner is concerned to appear more balanced. In a recent piece, he doesn’t say Romney had to answer for Mormon baptismal practices, although he discusses them in lavish detail. But he does say Romney should address the Mormon ban on admitting men of African descent to the priesthood, a ban that Turner notes didn’t end until Romney was 30 (in 1978). Of course, Turner never tells us what Romney could have done about the ban. But Turner got his chance to play the race card, because this issue reminds African-Americans that Romney is white.

At least hookers get paid in honest money for their services. The pseudo-journalists with the mainstream media cheerfully service this administration pro bono.

Also miming some degree of neutrality is one Randall Balmer, who recently wrote an article that obliquely warns us of the Mormon menace. Balmer is an Episcopal priest, and one usually expects Episcopal priests to have better manners. Still, prejudice drips from every line of his article. He construes the fact that only Mormons in good standing are allowed in Mormon temples as a sign of "the Mormon penchant for secrecy" and insinuates that Romney, by refusing to belabor the public with his religious beliefs, is being secretive about their nature. In fact, Mormon beliefs and practices are as well known as those of mainline Christian denominations. If you don't know about them, you're just not interested, that's all.

Balmer says that Romney’s “quest for the White House” will be “buffeted by questions about his religion.” Talk about a self-fulfilling prophecy! I haven’t heard many ordinary people who care about it one way or the other, outside of the mainstream media, truth be told. Romney will be buffeted on his faith only by the likes of Balmer, to whom the “essential question” is the very “nature of Mormonism,” an “upstart” religion from — New York state! But wait — isn’t Episcopalianism a variety of Protestantism — from England? From the Roman Catholic point of view, Balmer's denomination is an “upstart” religion. And from the perspective of Judaism, isn’t Christianity itself an “upstart” religion? These are questions clearly beyond Balmer’s capacity to address.

Balmer — the very model of tolerance — moves on to note that Mormons refer to non-Mormons as “Gentiles.” But then, Jews refer to non-Jews as “Gentiles” — which seems to be OK with Balmer. Yet, Balmer intones gravely, “many Americans doubt" that Mormons are Christians, because they accept the Book of Mormon as scripture. What this means, of course, is that most Americans don't believe in the Book of Mormon. This passes for news — in the context of a presidential campaign.

Of course, Balmer reminds us that the Mormons “only” ended polygamy in 1890. But let me expand on this a bit. The Mormons allowed polygamy until 1890. Some Muslims, I believe, practice it to this day. But hasn’t America, at least since the Great Society craze of the 1960s, openly and completely embraced polygamy in practice? I mean, don’t our welfare laws allow — nay, encourage — a young man to impregnate as many young women as he can, secure in the knowledge that the taxpayer will pay for the children? Isn’t the first of the month, when welfare checks arrive, derisively called “Father’s Day” in the inner city? And don’t sperm banks allow many women to impregnate themselves from the same “donor”? I guess what I’m asking is — why all the brouhaha about Mormons allowing polygamy more than a century ago?

It doesn’t seem to occur to Bruni that the reason Romney’s faith is not a big deal in this primary fight is precisely because it is old news.

Balmer notes archly that Mormons believe that the Constitution is divinely inspired. He says that Romney should be asked how that affects his view of it. Why? I daresay many non-Mormons believe that as well. Even nonbelievers such as I think that it is, in some sense, inspired. What does it matter? The president is supposed to execute the law, not make it. He is sworn to uphold the constitution. What is Balmer's view on this? Does he think that reverence for the constitution is a vice?

Another suspicious thing about Romney, according to Balmer, is that Mormons believe they have the true faith. Strange indeed! If they didn't believe that, they would be members of some other faith.

To Balmer, Romney seems “cagey” for answering questions about his religion by saying such things as “I’m not a theologian” and “I don’t speak for my church.” What would he say if Romney proceeded to lecture everyone about the church's theology? Then Romney would be a nut or a weirdo, right? Balmer compliments Joseph Lieberman for having "patiently answered the [very few] questions [asked about his religion], declaring, for example, that he was an observant Jew, not an Orthodox Jew, and explaining the difference." However, if we consistently apply the standard that Balmer applies to Romney, shouldn’t Lieberman have gone into detail about why he is not a (mainstream) Christian, and the political implications of all that?

But after all, Lieberman ran for office on the Democratic ticket. So Balmer naturally does not apply the same standard.

So much for the Reverend Mr. Balmer. Then there is Frank Bruni, New York Times columnist and general attack dog for Obama. His recent snark-piece, “Mitt’s Muffled Soul,” went after Romney for not mentioning in his debate in Florida that his father was born in Mexico because Mitt’s grandfather had fled there to avoid the ban on polygamy that the Mormon Church had instituted. Bruni’s complaint apparently is that there is less discussion of Romney’s Mormon faith than there was four years ago. It doesn’t seem to occur to Bruni that the reason Romney’s faith is not a big deal in this primary fight is precisely because it is old news. That is, everyone on the planet now knows that Romney is a Mormon, because that was thoroughly explored in the last primary campaign. And the fact that Mormons once allowed polygamy is also old news, centuries old, in fact.

Bruni has decided that since most Americans seem indifferent to Romney’s religion — what with $5 a gallon gas and the prospect of our economy going the way of Greece’s — he is personally going to “home in on Romney’s religion.” Bruni’s claim is that the Mormon religion has left a “cultural, psychological and emotional imprint on” Romney. Are his “guardedness” and “defensiveness” due to his belonging to — get this! — a “minority tribe”? Does his stamina reflect his years as a Mormon missionary?

It never occurs to Bruni that his target has every reason to be defensive, given the attacks he and all the members of his faith have had to endure — not least from snarky journalists. The idea that maybe Romney’s stamina reflects a healthy lifestyle seems beyond Bruni's ken.

Of course, Bruni plays the race card, reminding us that the Mormons' ban on blacks in the priesthood lasted until 34 years ago.

The most extended and vitriolic hit-piece on Romney and his faith ejaculates from that monarch of snark, Frank Rich, formerly of — what else? — the New York Times, now of New York Magazine. Reptilian Rich is in a fury about Romney. (But then, he would be in a fury about any Republican — his self-appointed mission being to throw acid at anyone who dares oppose the current Regime.) In his meandering, self-contradictory screed on Romney, he is obviously frustrated at the total lack of real dirt he can find.

Rich never considers why a devout, middle-aged Mormon, trying to raise a large family, might not want to go out boozing it up at Hooters with the other Masters of the Universe.

For example, he quotes unnamed fellow Bain Capital coworkers who say that Romney was a great guy to work with, bright and good at what he did — but, “Still, whenever the rest of us would go out at the end of the day, we’d always find ourselves having the same conversation: None of us knew who the guy was.” The obtuse Rich never considers why a devout, middle-aged Mormon, trying to raise a large family, might not want to go out boozing it up at Hooters with the other Masters of the Universe.

With Rich, no Republican can ever win, no matter what his lifestyle. If he is known to have been a partier, such as Dubya was when younger, that will be used to attack him as a drunk. If he doesn’t party, as Romney doesn't, the Republican will be bashed for being aloof and self-contained.

Then there’s physical appearance. If the Republican candidate is out of shape or unattractive, Rich will attack him for that. If he is good looking, Rich will take the opposite approach: “Unlike Nixon’s craggy face, or, for that matter, Gingrich’s, Romney’s does not look lived in. . . . Even at Mitt’s most human, he resembles George Hamilton without the self-deprecating humor or the perma-tan.”

So Rich wants us to believe that Romney’s so good looking he’s not human! This is weird stuff — Rich comes across here like a jealous schoolgirl with an unrequited crush on the school’s quarterback.

Of course, Mitt’s whiteness becomes important: “Romney is in some ways more exotic and removed from ‘real America’ than Obama ever was, his gleaming white camouflage notwithstanding. Romney is white, all right, but he’s a white shadow.” Budding bien pensant writers please note: this is what passes for witty writing in progressive circles. Romney’s white skin camouflages what? A black interior? So if he is elected, will he be our third black president, after Clinton and Obama? In the oxymoron department: "a white shadow”? What the hell is a “white shadow?”

Rich dismisses Romney as a man of no real accomplishment — unlike Rich’s messiah, Barack Obama: “Aside from his ability to build Bain capital and pile up profits there, Romney has remarkably few visible accomplishments to show for his 64 years.”

Really? Yes, Romney’s accomplishments are truly feeble. He has only done such things as:

  • Graduated from BYU with highest honors.
  • Graduated from Harvard with both a JD and an MBA, again with honors, but — please note — without affirmative action.
  • Built a quarter-century career of distinction in the management consulting business, earning about a quarter billion dollars along the way, while helping such companies as Burlington Industries, Corning, Domino’s Pizza, Monsanto, and Staples become successful.
  • As head of Bain Capital for 14 years, helped get investors a average yearly return of 113% , and saw to it that the profits were widely shared within the company.
  • Helped these companies succeed without a nickel of taxpayer support.
  • While getting his education and then pursuing a business career, helped raise a large family.
  • Ran against Ted Kennedy for his lifetime Senate seat, giving Kennedy his closest run, and losing only after Kennedy was forced to spend a fortune in negative ads.
  • Was called to rescue the floundering, deficit- and scandal-plagued 2002 Olympics, and did so, making the games successful and financially profitable.
  • Was elected in 2002 as governor of Massachusetts, where he eliminated a $3 billion deficit and greatly improved the state's business climate.
  • Provided tens of millions of dollars to charities both secular and religious.

Reluctantly, Rich acknowledges that two reporters (Michael Kranish and Scott Helman, of the ultra-liberal Boston Globe) who set out to dig up the dirt on Romney, and published a critical biography, really couldn’t find any “bombshells.” This, however, is somehow “revealing” — revealing of more oxymoronic crap.

Rich is left to fill his piece with anti-Mormon slurs. The title tips us off: “Who in God’s Name is Mitt Romney?” Then the attacks start coming: “The big dog that has yet to bark . . . Romney’s long career as a donor to and lay official of the Church of Jesus Christ of Latter-Day Saints.” “That faith is key to the Romney mystery.” “Romney is not merely a worshipper sitting in the pews but the scion of a family dynasty integral to the progress of an American-born faith . . .”

Naturally, Rich feels obligated to remind to remind us that the Mormons once practiced polygamy, while pretending to say it is irrelevant: “The questions [about Romney’s faith] are not theological. Nor are they about polygamy, the scandalous credo that earlier Romneys practiced even after the church banned it . . .” No, Rich wants to know whether Romney “countenanced or enforced [the Church’s] discriminatory treatment of blacks and women.” Does he also wonder whether Nancy Pelosi has done her part to make the Roman Catholic Church ordain women?

This is weird stuff — Rich comes across like a jealous schoolgirl with an unrequited crush on the school’s quarterback.

Rich is able to get in a dig at Romney’s wealth (yes, yes, Romney is rich) while continuing his bashing of Mormonism: “Much as the isolating cocoon of Romney’s wealth can lead him to dismiss $347,327 in speaking fees as ‘not very much’ . . . so the demographic isolation imposed by his religion takes its own political toll.” And on and on. Rich obviously wants readers to share his disgust about Mormons.

Perhaps the most blatantly bigoted attack on Romney’s religion came from Charles Blow — what else but another New York Times columnist? As the aptly-named Blow listened to Romney on the CNN Republican primary debate, he tweeted his followers the constructive comment, “Let me just tell you this Mitt ‘Muddle Mouth,’ I’m a single parent and my kids are ‘amazing’! Stick that in your magic underwear.” Blow was referring in this derogatory way to the Mormon belief that certain garments are of religious significance. One wonders if Blow has derogatory ways of talking about yarmulkes, or nuns' habits.

It is amazing that nobody at the Times has demanded Blow’s resignation — considering how famously sensitive the paper is when it comes to certain kinds of slurs. Amazing, that is, until you remember that a Mormon is running against the paper's chosen messiah. Notice also that the media hypocrites I have mentioned never seem to have never uttered a peep about the religion of Harry Reid — the buffoon who shoved Obamacare down the nation’s throat. Reid is also a Mormon, but nobody asks him to explain his church’s history, theology, or religious customs.

It is even more hilariously hypocritical that none of these people are busying themselves about Obama’s religion. As far as I know, they have not demanded that Obama explain why he stayed so long in a church that held, for example, that AIDS was created by white people and deliberately inflicted on black people. When this came out in the counter-media, and Obama dropped his affiliation with Reverend Wright, the mainstream dropped what little notice it had paid to the matter. Can you doubt that, had Obama been a Mormon (for there are black Mormons), the media would never have discussed Mormonism at all?

My suggestion to the Romney campaign — not that they are looking for suggestions — is to be under no illusion about what is coming at them. Obama’s minions will attack Romney without mercy, or religious grounds.

How should he handle these attacks? Well, when they come from the press in the form of persistent questions about his faith, he should reply in the same way every time, a la Senator Lieberman: “I am an observant Mormon. Which is irrelevant to my candidacy. If you want to learn about my proposals for fixing what Obama has broken, ask me about them. But if you want to learn about my faith, may I suggest that you go to the library and check out a book?” He should avoid at all costs the media trap trying to get him to discuss any aspect of Mormon theology. Why? Because non-Mormons will then be drawn into disputing it, and then will confuse disagreement with his theology with disagreement with his policy proposals. The mainstream media is hoping that the public will be tricked by this irrelevant association.

In any election, you try to do two things: get your voters out to the polls, and get your opponent’s voters to stay home. It is likely that the Obama super-PACs will run anti-Mormon ads, especially in areas of heavy evangelical Protestant concentration, with the intention of making the evangelicals stay home, under the theory that many evangelical Protestants dislike Mormonism — which, in fact, many do.

Countering this will be a job for the pro-Romney super-PACs. Here’s my suggestion for them: tape some homilies delivered by Romney’s pastor, and play parts of them juxtaposed with the juicier parts of Reverend Wright’s rants (“God Damn America!” comes to mind), with an announcer asking in the background which is more disturbing. Rely on the fact that evangelical Christians are invariably deeply pro-American. Run these ads wherever and whenever the Obama super-PACs run their anti-Mormon propaganda.

So that the reader will know exactly what is motivating me, let me state for the record that I am completely agnostic in matters religious. I was exposed to religion early on, and it didn’t take, whereupon the nuns dropkicked my posterior out of St. Mel’s Catholic School. (They were quite within their rights so to do, and I have never blamed them for it.) Ever since, I have oscillated between total unconcern and complete indifference to religion. I believe no more in Mormonism than I do in Buddhism, Zoroastrianism, Judaism, Islam, or anything else. I just hate intolerance, and I profoundly despise hypocritical intolerance.

Harry Reid is also a Mormon, but nobody asks him to explain his church’s history, theology, or religious customs.

Unless one finds a religion whose practices pose a clear threat to society — say, a crazed Kali cult, setting fire to people’s homes — I see no reason to fear it or demand of its adherents that they explain and justify their faith, to me or anyone else. It’s their business.

While I am far from an expert on Mormon theology, my own eyes tell me that members of the Church of Jesus Christ of Latter-day Saints are far from dangerous citizens. In general, they appear to work hard and avoid harming others. In this respect, they seem exemplary citizens.

That should be an end to it.

Sadly, it won’t be.




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Obama and the Harvard “We”

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When I attended Harvard Law School, just before Barack Obama and at the same time as his wife, it was (surprise) a place steeped in a particular sort of elitism. I think there are two kinds of elitism, a good one and a bad one, and that President Obama may have been corrupted by the latter during his time at Harvard. I don’t suppose that the Harvard of my and Obama’s generation intentionally aimed to produce the bad kind of elitism, but it soaked its students in a bad elitist culture. Even the vocabulary of the students changed to accommodate elitism. The best example is what I call the Harvard “we.”

You have heard the editorial “we,” as in “we believe that HLS promotes insidious elitism.” In that case “we” means “I,” because the editorialist thinks that “I” is bad style. You have also heard the nursing “we,” as in “have we had our daily enema?” The nursing “we” means “you,” and I think might be derived from baby talk. Further, you have heard the spousal “we,” as in “we need to take out the trash,” which actually means “we,” but as between the two of us, it’s really your job. And you have heard the royal “we,” as in “bring us our scepter and our breakfast.” The royal “we” means “God and I,” because the king’s power derives from God. In addition, you have certainly heard the Harvard “we,” and I’m going to tell you what it means.

The Harvard “we,” as in “we need to make a rule prohibiting home schooling,” means “we” but not just any “we”; it means we who know better than you. It means we who have power, or should have power.

The “we” speakers themselves often are unaware of this, but any sentence in which the Harvard “we” occurs refers to the uses of state authority. It’s sort of the obverse of “they,” as in “they just passed a new law that says you can't drive and talk on your phone,” or “they say we don’t have enough information to make our own health insurance decisions,” or “check this out: they made somebody put a warning label on a toilet brush: ‘do not use for personal hygiene.’”

The Harvard “we” means we who know better than you. It means we who have power, or should have power.

(By the way, when “we” elites become the all-powerful “they” of whom regular folk speak, you become an inferior “them” as in candidate Obama’s notorious observation, “It's not surprising then they get bitter. They cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”)

At Harvard, the professors constantly use the elite “we,” and most of the students pick it up within the first month or two. Like their professors, they become the mighty “they,” at least in their own minds; and so when referring to the powerful “them,” they say “we.” The students don’t openly admit it; they simply assume that they are fit to make decisions for other people. The Harvard “we” is a paternalistic “we.”

Right now, unkempt, spotty geeks who got better grades than you did are sitting in Harvard (and Stanford and Princeton and Yale) lecture halls saying things like, “We should deconstruct the bundle of property rights into its constituent parts and eliminate the strands that impinge on legitimate community rights” — which when translated means, “The government should have the power to take your property in the name of certain social interests that my classmates and I consider to be worthy.”

By the end of the first year, the habit is ingrained. The students have become the “they” and have lost the natural fear of being told what to do by bureaucrats, agencies, and policemen — because they assume that they will now be making the rules. They no longer see any humor in Ronald Reagan’s famous line, “The nine most terrifying words in the English language are, ‘I'm from the government and I'm here to help.’”

By the end of the first year, the students assume that they will now be making the rules.

I’m happy to say that when I was at Harvard Law, I didn’t go in for that “we” business. Despite my own snobbery and angry-young-man ardor, I didn’t want to be part of an elite class that would beneficently lord it over the little people. I still don’t.

The Harvard “we” is an elitist “we.” I admit that elitism isn’t always wrong. People in the good elite stand for good values and set an example that encourages good behavior. People in the bad elite use power to dictate your behavior, because they know better than you. Meanwhile, they exempt themselves from the constraints of values, because they think that their ends justify their means.

Barack Obama is the greatest living practitioner of the Harvard “we.” To understand that is to understand his presidency.

How would the elitist-in-chief govern? He would seek to expand his rule, intervening in important areas of life, without respect for process or checks or balances.

Are there examples?

Certainly there are. One is the fact that “we” want much more power over financial transactions, so “we” — that is, Obama — put Harvard Law professor Elizabeth Warren in charge of the new Consumer Financial Protection Bureau without the inconvenience of a Senate confirmation or any other kind of open political process. She probably would not have survived a confirmation hearing. Even the left-liberal Senator Chris Dodd warned Obama that she might not be confirmable and objected to his nomination maneuver. Naturally, she is one of “us,” having been a professor of Obama’s at Harvard.

This new bureau can grant itself its own budget and has independent rulemaking authority. It is not subject to the oversight involved in congressional appropriations. But it will largely determine how credit is extended by banks, other financial firms, and even small businesses that grant credit to consumers. It will be a huge office with extensive powers. Its director is an important officer of the government. What about the advice and consent clause? Article II, Section 2 of the Constitution says the president “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint . . . Officers of the United States.” The Wall Street Journal put it this way: “To deflect this question, the president’s lawyers have cobbled together yet another legal fiction. The trick is to give her [Warren] a second appointment. In addition to serving as President Obama's special assistant, she will also serve as a special adviser to Treasury Secretary Timothy Geithner. This allows her to pretend she is Mr. Geithner’s humble consultant when she and her staff come up with an action plan for the new agency. This legalistic gambit serves as a fig leaf for a very different reality: Mr. Geithner will never reject any of Ms. Warren's ‘advice.’ The simple truth is that the Treasury secretary is being transformed into a rubber stamp for a White House staffer.”

Of course “we” also want power over the businesses of medicine and health insurance. By use of a recess appointment and without a debate in the Senate, Obama put Harvard professor and Harvard alumnus Donald Berwick in charge of Medicare. Under ObamaCare, Medicare has extensive new powers to reshape the business of medicine.

Obama and the man he chose to run the newly empowered agency don’t seem to see any difference between actual government-mandated rationing and the “rationing” that occurs through individual cost-based decisions resulting from a market for services. Berwick said, “The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.” And the White House, according to the Wall Street Journal, issued an internal memo with this talking point: “The fact is, rationing is rampant in the system today, as insurers make arbitrary decisions about who can get the care they need. Don Berwick wants to see a system in which those decisions are transparent — and that the people who make them are held accountable.”

Stunning spin. That really is the same as my saying that Ferraris are being unfairly rationed, because I can’t afford one.

By the way, don’t ever think that Obama’s Harvard “we” means “my constituents and I” or even “my supporters and I.” To know how he really thinks and acts, observe him in a tight spot. My definition of “character” is how you behave under pressure. By October 2010, with midterm elections coming up and his party on the ropes, President Obama was under some pressure. So he said it would be “inexcusable” for Democrats to sit out the November 2nd elections, given the stakes for the country and the potential consequences for their own agenda. He went on to criticize the enthusiasm gap between energized Republicans and members of his own party. Asked about his party’s political troubles, he said, “And so part of the reason that our politics seems so tough right now, and facts and science and argument does [sic] not seem to be winning the day all the time, is because we’re hardwired not to always think clearly when we’re scared, and the country is scared, and they [sic] have good reason to be.”

That really is the same as my saying that Ferraris are being unfairly rationed, because I can’t afford one.

What a linguistic nightmare. Trying to explain why so many of his supporters were abandoning his party, he used another “we” — we the lame-brained human animals who were not admitted to Harvard. Not for a second, though, did he sincerely include himself in the class of great apes not smart enough to “think clearly” when fear strikes. No, he made that very clear. In the same sentence, he ungrammatically shifted to the second person plural, saying, “They have good reason to be [scared].” There, I have to agree.

The idea is that the president is right and rational and, if you voted Republican in 2010, you are scared and irrational. But don’t worry. The president will take some falsely modest blame for the election results. As he told a reporter for the New York Times, “Given how much stuff was coming at us, we probably spent much more time trying to get the policy right than trying to get the politics right. There is probably a perverse pride in my administration — and I take responsibility for this; this was blowing from the top — that we were going to do the right thing even if short-term it was unpopular.” Allow me to translate that into Obama’s Harvard-we voice: “We spent all of our time figuring out how to make you do what is best for you, and not enough time telling you fairy tales.”

Obama’s own aides, it seems, learned a little wisdom and humility, unlike their boss:

"It’s not that we believed our own press or press releases, but there was definitely a sense at the beginning that we could really change Washington,” another White House official told me. "‘Arrogance’ isn’t the right word, but we were overconfident." (New York Times, October 17, 2010)

Yet the question remains: what were they “overconfident” about? What did they want to “change”? All the evidence indicates that these apparatchiks, as well as their boss, were overconfident about their ability to change “they” into “we,” to turn a set of blinkered, bigoted, undereducated elitists into a committee with absolute power over everyone else. Pardon me if I fail to sympathize.




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The Metamorphosis

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When the Cuban people awoke last April 2011, they did not find themselves transformed into giant insects. That change had already occurred. Over the course of the previous 50 years, Fidel Castro had transformed the island into one giant beehive or ant colony laboring single-mindedly for his vision of a Caribbean utopia. What they did wake up to find was something entirely novel: a vibrant options market in 1950s vintage Detroit automotive classics.

In “Cuba: Change We Can Count On?” (Liberty, December 2010), I reported the passage of enabling legislation by the Cuban government to guide the Congress of the Communist Party in implementing far-reaching reforms to the economy. Though the fine print of implementation had yet to be worked out, a big change was decreed. It included the legalization of self-employment in ”dozens” of areas, the privatization of many small state-owned businesses as cooperatives, and the establishment of limited property rights in real estate and some bits of movable property such as cars, boats, and appliances, many of which can now be bought and sold.

The impetus for all this hope and change was money. Cuba’s economic and fiscal health was dire. The reforms hoped to eliminate one-fifth of the government work force (thereby cutting expenditures); incentivize former government employees into joining taxable petit-capitalist enterprises (thereby raising revenue); and — along with liberalized foreign investment reforms — stimulate the economy and improve Cuba’s fiscal prospects.

In April 2011 the details of the new legislation were announced. In a recent paper entitled “Economic Impact of New Employment, Tax and Financial Policies in Cuba,” presented at the XXI Annual Meeting of the Association for the Study of the Cuban Economy (Miami, August 2011), Luis R. Luis, former director, Latin America Department, of the Institute of International Finance and chief economist at the Organization of American States (OAS) in Washington, applied macroeconomic analysis and a crystal ball to predict the effects of the reforms.

To a populace that has never paid taxes, much less dealt with the fine points of business expense deductions and tax accounting protocols, the entireexperience must have been far from “liberalizing.”

Given the market sophistication of the Congress of the Cuban Communist Party — akin to that of the Creation Science Institute, sequencing the malaria genome — the reforms are still a work in progress. They aim primarily at improving state finances, but the use of price controls, size limits on firms, confiscatory tax rates, complicated monthly payment requirements, and petty regulatory activity “could result,” as Luis drily observes, “in even larger evasion than is usual in developing countries by single proprietorships and the self-employed, [and] will also result in many activities taking place wholly or partially underground, limiting tax revenue and fostering operation of undersized and inefficient activities.”

The very first modifications to the April bill were made a scant few weeks later, following a strike by cocheros (horse cart drivers) in Bayamo, Granma Province (née Oriente Province). The provincial capital is immortalized in Cuba’s national anthem as the birthplace of independence. It is a place redolent with symbolism, and a situation best handled with care. Bayamo cocheros, members of one of the newly privatized occupations, discovered that when they added their new tax liability to their clients’ bill, demand plummeted. So they went on strike.

The new self-employment taxes consist of four categories: social security tax, personal income tax, sales tax, and payroll tax. Let’s look at each.

1. The social security tax is levied at 25% of the tax base (in the US, it’s about 13% — with half paid by the employer). So far, so progressive.

2. The personal income tax gives a whole new meaning to “taxing the rich.” Marginal rates rise to 50% for annual incomes of $208! When combined with the social security levies, the personal tax nears 60%. Mindful of the reader’s attention span, I will skip all the qualifying fine print, ceilings, and permutations that complicate the base tax rate — except for business expenditures, aka deductions. These are limited to 20% or 40%, depending on the enterprise.

As Luis notes: “These rates discriminate against enterprises whose cost of inputs exceed[s] 40%, which will lead to curtailment of activity, firm creation, and widespread tax evasion.” Cocheros, for some unknown reason,were limited to a 20% business expenditures deduction.

To a populace that has never paid taxes, much less dealt with the fine points of business expense deductions and tax accounting protocols, the entireexperience must have been far from “liberalizing.” It was reminiscent of a farcical zarzuela, the Spanish version of a Gilbert and Sullivan operetta, with a dose of Monty Python thrown in for gravitas. The Congress responded by raising cocheros’ allowable deductions from 20% to 40%.

3. Sales taxes for all products are levied at 10%, except for farm products, which are taxed at 5%. Simple enough.

4. The new payroll taxes are not only complex; they (along with the other taxes) actually, as Luis observes, “pose a formidable constraint on employment.” The following summary — through no fault of Luis — is beyond this author’s ability to make intelligible, much less fun:

A new 25% payroll tax is instituted. The base of the tax is the overall wage bill except that there is a minimum taxable amount equal to a multiple of the average wage for specific workers calculated by the appropriate local labor office. The base is made progressive as the minimum taxable amount increases with the size of the payroll. Thus for firms with 1 to 9 workers, the minimum equals 1.5 times, rising to 2 times for those between 10 and 15 workers and to 3 times for those firms that have more than 15 employees.

So much for the new taxes. Will Cuba’s vision of self-employment provide the fiscal salvation the government so desperately needs, or is it just a tempest in a teapot?

If the government succeeds in shifting 250,000 government workers into self-employment, and they pay all their taxes, Luis estimates a $40 million revenue windfall for the government (not to mention all the supplies and material that would not be pilfered or stolen from state companies and offices, as supplements for employees’ meager salaries — a point important enough that Luis footnotes it in his report). But so far, no more than 50,000 state employees have taken the bait.

The eminent French art critic and father of surrealism, André Breton, visiting Cuba in the late 1920s, observed that, “Truly, Cuba is too surrealistic a country to be livable.”

Furthermore, it’s impossible to predict the tax compliance rate, which, worldwide, is low for the self-employed. “However,” Luis observes, “it is expected that the fiscal authorities will enforce the tax code with some vigor. Undoubtedly, the high tax rates will act as an incentive to evasion and to a reversion of business to the underground economy. Sizeable underreporting of revenues is to be anticipated.”

In 2011, Cuba’s population was 11 million. As of mid-May 2011, about 300,000 people were self-employed (excluding farmers); or (with slightly different numbers), never more than 3.5% of the labor force. Though the passage of the new legislation doubled the number of self-employed, a large percentage of them were people who came out of the black market closet and hope to become legal.

Luis’ analysis bears some contextual elaboration because, as Miguel Bretos, author of Matanzas: The Cuba Nobody Knows, has stated, “Those seeking to understand Cuban history in conventional ways are doomed to frustration.” He was referring to the eminent French art critic and father of surrealism, André Breton, who, visiting Cuba in the late 1920s, observed that, “Truly, Cuba is too surrealistic a country to be livable.”

What makes the details of the reforms so surreal is their schizophrenic set of objectives. When first proposed, the reforms were compared to the Chinese model: an infusion of capitalism to build wealth, with the Communist Party retaining absolute power. But, as the Chinese are discovering, when laissez faire markets infect a regime of total power, the liberty virus proves hard to cure.

The Chinese are a practical people with few Maoist ideologues left among them. No one, from the highest party apparatchik to the lowliest peasant, objects to becoming richer. Meanwhile, power is being incrementally ceded through a phenomenon usually foreign to absolutist regimes: limited but sensitive responses to popular dissatisfaction with corruption, judicial arbitrariness, environmental degradation, out-of-control eminent domain, and even — very slightly — the transfer of some political power. (For example, provincial officials in Wukan, Guangdong Province, are allowing local elections to take place.) Moreover, the Chinese are rather comfortable with duality; witness the Taoist concept of yin and yang.

It’s not quite so simple for Cubans.

The competing objectives of raising capital through economic liberalization while retaining absolute power are — in Cuba — complicated by a third factor that tips the reforms from the bipolar into the surreal: an anti-capitalist idealism so fervent that it equates private employment with involuntary servitude, profit with depravity, and self-employment with crimes against society. These attitudes not only saturate the nomenklatura — with their source and apogee in the moralist-in-chief, Fidel — but also pervade the majority of the Cuban population. Cubans are poor and unhappy; they sense that something is wrong with the system; they are starving for change. Yet they idolize St. Fidel’s idealism and venerate him as the conscience of the Revolution.

As the Chinese are discovering, when laissez faire markets infect a regime of total power, the liberty virus proves hard to cure.

National character, along with its kinfolk — ethnic, religious, cultural, and racial character — has fallen into disrepute as a way of defining a population. Whatever validity it might once have possessed has evaporated. It has been dismissed for its oversimplification, unscientific methodology, racist undertones, and complete absence of political correctness. But it retains a great deal of insight and literary utility, when considered informally. Hedrick Smith was definitely onto something when he described the Russian character as a cross between German and Mexican temperaments.

Cuba was ruled by Spain for over 400 years — longer than any of its other colonies. During the Latin American wars of independence in the 1820’s, Cuba remained staunchly Spanish. By the time it won its independence in 1902, it was considered an integral part of Spain. That date is so recent that in 1966 the last surviving Afro-Cuban general of the War for Independence, Generoso Campos Marquetti (by then living in the US, in exile from Castro’s revolution), was asked to testify before the US Congress during hearings investigating the nature of the Castro Revolution. It’s as if Nathanael Greene or Henry Knox had still been alive within our living memories, to comment on US current affairs.

The Cuban character is a diversely spiced mélange. Settled by immigrants from Galicia, Asturias, Catalonia, and the Basque Provinces in northern Spain, Cuba was infused with a strain of rigid, dour, doctrinaire, and humorless temperament. Fidel Castro is a second-generation Galician — he can’t dance, carry a tune, or tell a joke. Though he would reject the comparison (in spite of his early flirtations with Falangism and Fascism) Castro has much in common with the long-lived and long-ruling Francisco Franco and his Minister of Propaganda, José Millán-Astray — both Galicians.

General Millán-Astray was a serious parody of himself. Founder of the Spanish Foreign Legion and a decorated war hero who’d lost an arm and an eye, he personified Spanish fascism. He was obstinate and ruthless, yet impulsive; flamboyant, reckless, and self-aggrandizing. At rallies he resembled the mad Dr. Strangelove. Wearing one white glove and a black eye patch, he would exaggeratedly throw out his one arm in the Nationalist salute, while shouting his telltale mottoes, “Viva la muerte!” ("long live death") and “Death to intelligence!” ("death to the intelligentsia").

Cubans are poor and unhappy; they sense that something is wrong with the system; they are starving for change. Yet they idolize St. Fidel.

Ladino and Canary Islands immigrants added cunning, perspicacity, and some levity to the Cuban national character; Andalucians, Valencian gypsies, and West African slaves tempered the whole with rhythm and a wry sense of humor. Provincial and (in the case of the West Africans) tribal clubs, mutual aid societies, and other ethnic affiliations lasted well into the 1960s.

The Spanish component of the Cuban character alone suffices to explain the paradoxes inherent in holding multiple contradictory perspectives. Pepe Azcarraga, a 91-year-old Spaniard from a small village in Aragon (but now a retired college professor living in the US), personifies this Weltanschauung. He recounts that once, as a teenager, he accompanied a friend to the dry goods almacén to buy towels. On the way back, he helped her carry the goods, stacked on his doubled arms. As he passed by his own house, his mother, perched on the second-floor balcony, spotted him on the cobbled street below supporting the pile of towels in front of him as if they were the Blessed Sacrament and he was leading an Easter procession. She beckoned to him angrily. Puzzled, he detoured into his house.

Once inside, she asked him what the diablo he thought he was doing carrying a pile of towels for all the world to see. Before he could answer, she walloped the fear of propriety into him, moaning that “the whole town will think the Azcarraga family needs towels!”

Pepe tells the story without a hint of irony, as if his failure to anticipate the finer etiquette of towel buying in a gossipy small town were an obvious sign of his stupidity. At different times, depending on the context of the conversation, he’ll call himself a socialist, a capitalist, a libertarian, or simply a man of the left. He and his immediate family sided with Franco during the Civil War — for the sake of order and stability. Yet as members of the local militia guarding the frontier against infiltration from Republican guerrillas holding out in the French Pyrenees after the war, Pepe and his friends, when off-duty, would cross over and (avoiding politics) socialize with the enemy, many of whom were friends, family, and acquaintances. They shared snacks, smokes, stories, and beer. A devout Catholic who attends Mass every Sunday, he is nonetheless skeptical of the existence of an afterlife — and he harbors a sense of unworthiness that keeps him from communion.

Pepe stands on the shoulders of giant, original, way-outside-the-box thinkers: surrealist artist Salvador Dalí, whose melting clocks epitomize the persistence of memory; philosopher Miguel de Unamuno, who introduced doubt to faith, and found that they got along just fine; writer Miguel de Cervantes, whose Don Quixote — the patron saint of hopeless causes — made tilting at windmills not only intelligible but honorable; and Grand Inquisitor Tomás de Torquemada (literally, twist and burn), whose auto da fés melted heretics in order to save them. To an Anglo-Saxon who can only shake his head in perplexity, like a mental centrifuge spinning to separate the conflicting strains, little of this intellectual anarchy makes sense.

Fidel Castro, the Cuban Communist Party, and their recent economic reforms embody this cognitive dissonance. Luis’ assessment is not sanguine: “It is evident from the multiple constraints, prohibitions, regulations and high taxes involved in the new measures the authorities are striving to maintain tight control over the liberalization process. These controls will dampen or even fully contain the output and consumption gains from market opening.”

And the controls are extensive. One-hundred-and-seventy-eight self-employment occupations have been legalized (up from 157); most require little or no capital (animal caretaker, hairdresser, locksmith, plumber, mason, mattress repairman). A few others, such as room renting (though not to foreigners, and no subletting) and transportation services (truck and taxi driving) imply greater use of property or equipment. Restaurants are now allowed 50 tables, up from 20. Capital investment is capped at $800.

Even the most touted reform, the buying and selling of real estate, is less than meets the eye. Ownership is limited to domiciles — one residence and one vacation home — and possession is limited to citizens or foreigners permanently residing in Cuba.

Additionally, the domestic portion of the reforms requires that all transactions take place in nonconvertible pesos. (Cuba has dual currencies: convertible and non-convertible pesos — one for tourists, the other for Cubans — both highly controlled.) Foreign investment in the newly allowed enterprises is forbidden; as are family and personal remittances (also subject to taxes), which must only be used for personal consumption. Wholesale activities, inter-provincial trades, and most intermediation among firms are also forbidden.

“Intermediation” — a fancy word to describe the place that banks (among other entities) hold between savers and investors: they take deposits, then lend them out to entrepreneurs. Cuba’s (official) private savings rate for the last six years is about 2% of income — not an important source of financing for new enterprises, though probably understated because of non-bank and in-kind savings. As Luis again drily notes, “Most bank loans are made to state enterprises. A vibrant self-employment sector would be helped greatly by access to credit from the banking system. This would require building-up a credit system, with an important role for micro-credits by local branches of banks with appropriate credit expertise . . . [as in] Asia.”

Fidel Castro is a second-generation Galician — he can’t dance, carry a tune, or tell a joke.

Any reforms along those lines are unlikely, because they would undermine the institutionalized apartheid system that attempts to minimize economic fraternization between Cubans and foreigners. Very few of the newly approved occupations affect the export or tourist sector, and the government monopoly on labor for joint venture and foreign enterprises has not been affected. It is surprising that the new employment and tax measures do not address Cuba’s external accounts, even though more foreign investment — under the pre-existing framework — is being attracted.

Luis boldly sums up his report with an estimate of the impact of the reforms on Cuba’s GDP. He admits he’s on shaky ground — with disclaimers, caveats, weasel words, and the assumption that many more black-market enterprises will come into the open. Despite the effects of government controls, he broadly predicts a 2% GDP increase as a low estimate, with a 6.4% GDP increase if all the hoped-for 250,000 state employees become successful entrepreneurs, make lots of money, and pay all their taxes.

The Cuban reforms are a tug-of-war among various conflicting objectives: on the practical level, increasing state revenue while maintaining total state power; on the philosophical level, allowing enough “human action” (in the Misesian sense) without diluting the “social justice” objectives of the Revolution by introducing greed, ambition, and a subversive focus on individuality.

On that last point — to paraphrase Charles Darwin, who, at the conclusion of The Origin of Species, foretold that “light will be thrown on the origin of man” — the Cuban reforms will shed much light on how far the capitalist goose that lays the eggs of prosperity can be starved, strangled, and robbed, without killing it.




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Insurance: For Me or Thee?

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Once upon a time, before we got married, my wife Tina got a ticket for driving without insurance and decided to contest it pro se. Her argument to the judge was simple: insurance was designed to protect the insured from potential losses to herself — not to protect a third party. Anyone she might harm had recourse to indemnification by demanding recompense either voluntarily or through civil action — the traditional recourse for most torts. She added, for good measure, that compulsory insurance laws were a racket — nothing more than rentseeking, insurance industry full-employment legislation.

At the time, Tina was very poor and couldn’t afford insurance. Burdened by a heavy student-loan debt and no job prospect, she was treading water running a one-woman cleaning business. Her $300 Chevy Nova was basic transportation. She had no other assets and was living in a $150-per-month apartment on the wrong side of town.

The judge — in a totally unnecessary flourish of engagement — cited these very reasons to show that mandatory insurance was necessary. Tina retorted that you can’t squeeze blood from a turnip; that, traditionally, once the perpetrator’s assets, however large or small these might have been, had been exhausted in compensation, that was all she wrote; that, in essence, mandatory insurance schemes forced the poor to cover wealthier people who could afford to insure themselves against damages perpetrated by those who could barely afford food and a roof.

Of course, she lost, but the judge admired her spunk and charged her only half the usual fine. While trying to settle up at the cashier's window, she argued her case to the cashier too. He asked her if she was black or Mexican or Indian and pregnant. She wasn’t, so she didn’t get off.

With the prospect of mandatory health insurance coming in 2014, will we get off? Where will the unfunded mandates stop?

Mandatory car insurance is premised on the assumption that driving is a privilege, not a right. Therefore, greater state control is justified. The counter-argument is that people have a right to travel; that driving a vehicle is the modern equivalent of using a horse, and that horse travel was never considered a privilege. It was a necessity.

Alongside the privilege argument (which actually came later) was the “assurance” argument, the argument that there is “no way of assuring that even though fault was assessed the victim of an automobile accident would be able to collect from the tortfeasor” (as Bill Long recounts in Automobile Insurance: A Brief History).

This argument prompts the question: since there is no assurance that a victim may be able to collect damages from a pedestrian, bicycle, equestrian, horse and buggy; or any other type of accident — including accidents on property normally covered by homeowner’s, renter’s, or liability insurance — will we one day be forced to buy these also? I can just imagine governments requiring panhandlers and the homeless to carry liability insurance to make it easier for citizens to collect damages from unfortunate encounters with them.

The “assurance” argument is better described as a “convenience” argument: an argument about providing a convenience for insurance companies and the better-off, at the expense of the poor. (The uninsured better-off face serious loss, if not destitution, when at fault.)

With the invention of the automobile in the late 19th century came the inevitable side effect of automobile accidents.These were perceived — rightly or wrongly (and probably as a natural response to a new and untested technology) — as more frequent and more harmful than previous, more familiar torts. Therefore, it was thought, new laws were required to govern automobiles.

Connecticut led the way in 1925 with a modest “financial responsibility” law. This required any vehicle owner involved in an accident with damages over $100 to prove "financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least $10,000."This early financial responsibility requirement applied to vehicle owners only after their first accident. In the same year, Massachusetts passed the first compulsory insurance law as a prerequisite to vehicle registration.

Mandatory insurance schemes force the poor to cover wealthier people who could afford to insure themselves against damages perpetrated by those who could barely afford food and a roof.

By and large, traditional tort practices remained effective, since — for over 30 more years — no other state saw a need to enact special automobile accident legislation. Then, in 1956, New York passed its compulsory insurance law, with North Carolina following suit the next year. Today, every state bar New Hampshire has some sort of compulsory insurance scheme, and even it has a “personal responsibility” requirement.

Minimum insurance coverage requirements vary wildly from state to state, since estimating the cost of an accident before it occurs is very difficult.The requirements are often expressed in tripartite form — as, for example, in Alaska’s and Maine’s laws, with the highest requirement at 50/100/25, or in the District of Columbia’s, at 10/25/5. These numbers are shorthand for thousands of dollars and refer, in sequence, to: "bodily injury per person/bodily injury per accident/property damage."

After an accident, and once these limits have been reached — again, that’s all she wrote. Limits on insurance coverage have no relationship to liability limits, which are determined only by a judgment and restricted only by one’s net worth.

How effective is the mandatory auto insurance system? An Insurance Research Council study estimated that about 15% of the US population is uninsured — in Colorado, almost 23%.

Many of the logical shortcomings in the mandatory car insurance laws must be evident to people generally, because there is no political will to enforce them effectively. In most states, it's pretty easy to avert the mandates. Most people who fail to comply with the laws do so because they cannot afford the additional cost. It doesn't seem that the will exists to remove these people's means of transportation, and often their means of earning a living. (California and New Jersey, however, have taken a perverse approach toward incentivizing compliance: if uninsured drivers are victims in an accident, they are — by law — prevented from recovering non-compensatory damages, such as damages for “pain and suffering” from the perpetrator.)

Instead of being fined or having their vehicles taken away, motorists are ordinarily given a ticket, and the fee is waived when they show up in court with proof of insurance. Naturally, they can then cancel the coverage or cease making payments once the court date has passed. All this does is create a hassle for the uninsured who happen to get caught, and increases the paperwork for the insurance companies — a small price to pay, I assume — that minister to the captive market.

Do states that have more uninsured drivers actually have lower fatality rates or lower accident rates, because uninsured drivers will presumably drive more cautiously? This is a milder form of economist Walter Williams’ thought experiment, in which he mused that traffic accident rates would decline dramatically if every car’s steering wheel were equipped with a razor-sharp rapier extending from the center of the wheel to within a few inches of the driver’s sternum.

Many of the logical shortcomings in the mandatory car insurance laws must be evident to people generally, because there is no political will to enforce them effectively.

Would the costs to the auto liability system be lowered if we had no mandatory coverage? Perhaps. The narrowing of the base might work against the lowering, but the reduction in regulation would certainly promote it. On the other hand, rates might increase with a broader use of uninsured and underinsured coverage — a pittance to pay for greater freedom of choice and much more convenience.

Soon after the enactment of the first mandatory car insurance laws, the imposition of compulsory social insurance (or retirement insurance) in the form of Social Security became a reality. Lately, after some of the floods, hurricanes, and tornados that have devastated various regions of the country, precipitating massive federal and state relief programs, mandatory flood insurance has been proposed.

Today we are faced with the prospect of compulsory health insurance, beginning in 2014 — if the Supreme Court upholds the constitutionality of Obamacare, a program being challenged by several states because of its compulsory nature.

One major provision of the new Health Care Act requires employers above a certain size to buy health insurance for their employees — definitely a third party mandate. The irony of this requirement is that the practice of employer-provided health insurance began during World War II as a way for businesses to get around government imposed wage and price controls. Since employers couldn’t offer salary hikes, they began to offer perks which, by some loophole in the wage and price control legislation, were not considered pay raises. Yesterday’s dodge becomes today’s mandate.

Advocates of compulsory health insurance argue that it is in the best interest of every individual. It broadens the base of insured people, thereby lowering premiums. But this argument hides the underlying logic of compulsory health insurance: whether or not it actually benefits individuals, it benefits third parties — insurance companies, paying patients (mostly insured), hospitals, and taxpayers, all of whom, to one degree or another, now pick up the tab for deadbeat patients (mostly uninsured).

Only a small minority of uninsured patients are destitute. For the rest, being uninsured is a lifestyle choice made possible by the widespread requirement that hospitals treat the seriously ill regardless of their ability to pay. The repeal of such laws would provide the strongest incentive for everyone to choose to buy insurance, while the truly destitute would rely either on charity or on Medicaid.

Insurance was invented to protect people from unforeseen losses to themselves, not to protect third parties. Transferring the definition of insurance into the realm of bonding muddles the distinction. Some states, such as Arizona, recognize this and offer a bonding option — based on the premise that driving a car is a privilege, and on the state constitution’s prohibition against forcing an individual into any sort of a private contract. But it’s a messy compromise, with folks overwhelmingly choosing insurance instead of bonding.

And when it comes right down to it, isn’t it reprehensible for a majority that is mostly well-to-do to force a less well-off minority to buy insurance merely for the majority’s convenience?




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Censoring South Park

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Earlier this year I read an interview with Matt Stone and Trey Parker, the creative duo behind the hit animated comedy South Park, in conjunction with their new Broadway play The Book of Mormon. What struck me was one of them saying that in the episode of South Park in which they lambasted the cult of Scientology, they had wanted to say that Tom Cruise is in the closet. Their lawyer advised them that Cruise could sue them for defamation, so instead they put the cartoon version of Tom Cruise in a literal closet that he refused to come out of. The result was laugh-out-loud comedic gold, but it highlights one of my major peeves about legal causes of action, which is the law of defamation.

Defamation is a cause of action under which a plaintiff can sue a defendant for damage to his reputation. In For a New Liberty, Murray Rothbard wrote that he believed defamation law should be abolished, because a person’s reputation exists in the brains of other people and the plaintiff has no property right in other people’s minds. My concern is broader; I believe that defamation law scares people away from making statements that might offend those among us with the money to hire lawyers. This fear of being sued for defamation chills people's ability to say what they want. It scares them away from criticizing others, even when the criticism might be justified and deserved.

This danger is often poignant in the case of such artistic representations as South Park, which makes deep, meaningful social commentary by making jokes, often offensive ones, directed at people who could easily take offense and who generally have money. The strange thing is that the first amendment has a clause that guarantees freedom of speech. Why isn't the First Amendment regarded as making charges of defamation unconstitutional?

There is a larger and a smaller answer. The larger answer is that the members of the Supreme Court, even the supposedly “textualist” and “originalist” conservatives, do not take the words of the Constitution literally. They make interpretations that twist and mangle it into something that looks like what they want, something that deforms the meaning of the words on paper, written by the Founders. The smaller, more specific answer is that the Supreme Court has grappled with the conflict between free speech and defamation, and has chosen a middle ground that tries reconciles the two.

Why isn't the First Amendment regarded as making charges of defamation unconstitutional?

In the landmark case of New York Times v.Sullivan (1964), an overseer of Southern police officers, sued the Times and members of the civil rights movement under a defamation theory, accusing them of damaging the policemen’s reputation by publishing an ad indicating that the police had committed crimes against demonstrators. Instead of holding defamation unconstitutional, the Supreme Court found for the defendants, holding that when public officials assert defamation they must prove “actual malice,” meaning that the defendant knew his statement was false or acted with reckless disregard for truth. This is a much higher standard than the “negligence” requirement that applies to defamation against private individuals on matters of public concern or the mere “publication” requirement that applies to defamation by private citizens on a matter of private concern. However, after Sullivan the Supreme Court expanded the actual malice rule to cover “public figures” as well as public officials, so most celebrities, such Tom Cruise, must prove actual malice.

Actual malice was designed to prevent censorship. I am sure that the Court believed it was being quite generous by creating such a high barrier to recovery. But because defamation continued to exist, the fear of being sued and the expense of litigation remain a serious impediment to American free speech and to our ability to criticize people of political and social importance. Speaking freely about the flaws (real or alleged) of our political and cultural leadership is a basic requirement for democracy to function.

A more recent important case is Hustler Magazine & Larry Flynt v.Jerry Falwell, a 1988 United States Supreme Court case in which evangelist Jerry Falwell sued a pornographic magazine for printing a joke that accused him of having sex with his mother. The accusation was obviously a joke that no one could take seriously. It was also clearly an example of the use of charges of defamation to censor criticism and take revenge against people who offend you. The jury found against Falwell on his libel claim, but found against Hustler on the “intentional infliction of emotional distress” claim, which is a somewhat similar cause of action that is also used to censor criticism and punish offensive behavior. The jury awarded substantial monetary damages. The Supreme Court, however, found in favor of the magazine on the “IIED” (as lawyers call it) claim, citing the need to protect the American tradition of political satire cartoons, and held that the New York Times v.Sullivan “actual malice” standard for defamation against public figures should also be used in cases involved intentional infliction of emotional distress claims against public figures, in order to protect free speech and create breathing room for vigorous debate. Regarding the right to be offensive towards other people, the court said that offensive speech is protected by the First Amendment.

But again, the Court refused to see the truth sitting right under its nose, which is that the only real purpose of claims of defamation (or intentional infliction of emotion distress claims alleged against plaintiffs because of what they say or write) is to censor speech; and this violates the first amendment. The law of defamation has no place in a society that believes in intellectual freedom for all citizens. We libertarians are basically the only group of people in America who say that the emperor has no clothes and who criticize governmental mistakes that modern-liberals and conservatives ignore or condone. Defamation is an obvious abuse of the law and of the state’s coercive power to repress independent thinking, and we should all get angry about it.




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Office Complex

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Recently, I missed a flight and ended up in a vast airport-adjacent suburb with a few hours to kill. My first stop was at a Starbucks to do some quick work. (Although I don’t drink coffee, I travel enough to know that Starbucks outlets almost always have clean bathrooms and reliable wireless Internet connections.)

One appeared quickly, at the corner of a big box shopping center. It was larger than most of the shops in the Pacific Northwest, so I figured there’d be plenty of room near noon on a weekday. But I was mistaken. The place was packed.

It took a few minutes to find an empty table where I could set down my tea and set up my laptop. In the meantime, I noticed dozens of commercial conversations, negotiations, and meetings going on in this semi-public space. It had the feel of a Middle Eastern bazaar.

A youngish man with a carefully cultivated scraggly beard and black apparel was plugged into his laptop via elaborate headgear. He was facing me, so I couldn’t see the screen of his computer; but, from the cadence of his talk, it was evident that he was participating in some sort of video conference. He made direct eye contact with me for a few moments — which I thought might be a reproach for looking at him — but then he changed his gaze to another person and spoke into his mic.

I noticed dozens of commercial conversations, negotiations, and meetings going on in this semi-public space. It had the feel of a Middle Eastern bazaar.

Something I’d read somewhere came back to me: videoconferencing veterans suggest choosing people or things in the room around you to represent the other participants in a conference call. On video, this creates the impression that you’re responding to specific others in the “meeting,” as if they were in a real room with you. He was just using me as an eye-contact avatar.

I couldn’t make out everything the fashionable man said. He was too far away and the Starbucks had too much background noise. But a few phrases made it across the space. “Elevations.” “Build-out.” “Retrofit.” “Improvements.” Because my wife is an architect, I recognized these as terms from a construction project — and, specifically, the expansion of an existing building.

Other snippets of words he used conveyed a certain fastidiousness; he constantly asked others what they thought and if they understood what someone else had said. Sounded like he was the construction manager or coordinator on the project.

I noticed that he’d chosen a seat with a blond panel wall behind it. The small video camera atop his computer screen would frame him in a background that could be from some fashionable office. And the elaborate headgear probably filtered out the background noise. Smart. His clients would have no idea he was sitting in a coffee shop.

Closer to me, a middle-aged salesman and saleswoman huddled at a smaller café-style table and swapped office gossip. The man did most of the talking — an overweight man with an overbearing voice: “The guy is so clueless that he has no idea Everett actually hates him. And he’ll never figure that out.” “I tried to give him some advice. Live on your draw and save your commissions. Don’t count on commissions for paying bills. But he doesn’t listen.” “I told him, ‘Look, it’s not my fault it’s like this. I mean, times are hard. We’re all cutting back.’”

The woman listened and nodded agreement with most of this. But she looked tired and clearly wished she were somewhere else.

As they reached the bottoms of their lattes, the salespeople plotted their afternoon. They were sharing one rental car but had separate appointments before their flight home that evening. He sketched out a plan for dropping her off at her next call while he made his and then switching driving chores, so that she’d drop him off at his last call while she made hers.

If times were better, they’d each have rented their own car.

Just behind me, two women — one older and very sharply dressed, one younger and casually dressed — talked about graphic design work. Their conversation was more about practical matters than aesthetics. The older woman opened a nice leather portfolio and showed the younger various business forms: letterhead, contracts, purchase orders and invoices.

It wasn’t clear whether the business forms were the product of the older woman’s practice or the forms that she used to deal with clients. And the younger woman’s questions were so elementary that they didn’t make matters any more clear.

This meeting seemed to be a “Can I pick your brain?” session. Perhaps the younger woman was the daughter of one of the older woman’s friends. The younger may have read somewhere that asking an established person for “advice” is the best way to get intelligence on employment.

Corporate America can’t afford to be the babysitter that it was for most of the last century. Working people understand this.

I’ve been on the older woman’s side of the table for a few of these meetings myself. I caught a glimpse of her face. She was in her late 40s or early 50s, quite attractive and carefully appointed. But her eyes looked sad. They squinted a lot — in contempt, I think — at the younger woman, whose childish questions and cadence made her sound simple-minded.

If the meeting behind me was a job interview, the younger woman wasn’t going to be hired. As the older woman folded up her portfolio, the younger asked her about any contract work that might be available. “It would be subcontract work,” the older said ruefully. “Give me a couple of business cards. I’ll keep them handy.”

Nearly finished with my emails, I took a break to use the men’s room. There were a couple of men ahead of me. While waiting, we listened to a white-haired man pitch four or five other older men and one woman on an investment scheme.

He’d handed each of his marks letters and information printed on heavy-stock paper which had a Baroque-style firm name ending in “Capital” at the top.

“ . . . our record speaks for itself, of course. But, like everyone, we are always looking for more business. And advertising on radio or television, frankly, isn’t something that interests us.”

The others nodded eagerly. This was a job interview. The white-haired man was selling them on becoming sales representatives for his firm — which was involved in some capacity with reverse mortgages. But my turn to use the bathroom came before I could hear the details.

Reverse mortgages are, essentially, the subprime loans of the coming decade. They are legal but unwise financial vehicles that are most effective at separating gullible people from their wealth. The gullible people, in this case, are seniors with real estate that they own outright or nearly outright; with a reverse mortgage, they get a monthly stipend in exchange for leaving their property to the mortgage company when they die.

If they die after just a few years of payments, the gullible old people have effectively sold their property for a fraction of its value.

Although he had the cheap sophistication of a game-show host, the white-haired man couldn’t have been very high up on the food chain of his shady industry. Multilevel marketing schemes are usually desperate to seem established, so they aren’t usually run out of coffee shops. But, hey, times are hard. And we’re all cutting back.

Back from the bathroom, I packed up my computer and scanned the place one last time on my way out. There were at least a dozen intense conversations going on; and another dozen or so people working intensely on computers or other devices. Did any of these people have “jobs” in the sense that the Department of Labor defines them?

Statist hacks like Robert Reich, Paul Krugman, and Barack Obama think of “jobs” as compliant proles lining up at the gates of General Motors for hourly-wage work, performing clearly defined tasks in clearly defined places. But this thinking is antiquated and wrong. Corporate America can’t afford to be the babysitter that it was for most of the last century. Working people understand this.

For most people, a “job” means — and will mean, for the foreseeable future — hustling for freelance work. Contracts and subcontracts. Commission sales. Multilevel marketing. There’s money in it, but that money doesn’t come easily. And, sometimes, it doesn’t come reliably.

That’s what I saw at the suburban Starbucks freelance labor bazaar.




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New Light on a Great Libertarian

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One day in September 2011, I received the following email:

“I’ve just ordered your book on Garet Garrett, brother to my grandmother, Gertrude Garrett Graham, and my great uncle. There are a few anecdotes from his later years of retirement in Tuckahoe NJ and his relationships with his family and I’d enjoy talking with you, once I’ve read your book.”

It was signed, “Trudy Beth Bond.”

Garet Garrett (1878–1954) author of The Driver, The People’s Pottage, and The American Story, was one of the great libertarian journalists of the 20th century. I wrote a book about him, Unsanctioned Voice, published in 2008.

The book is more about Garrett as a writer than as a person and necessarily so. Most of his papers were lost. He had no children. His third wife, Dorothy Williams Garrett, had a son from a previous marriage, and he also had died, but I found his daughter. She had a few photos of Garrett but was too young to have known him.

Digging for details more than half a century after he died, I found one person who had known him: Richard Cornuelle, who had worked with Garrett in the early 1950s (and who died on April 26, 2011). Cornuelle had gone on to become an official at the National Association of Manufacturers — and had written a book, Reclaiming the American Dream, championing the nonprofit sector as an alternative to the welfare state. In 2007 I flew to New York City to meet him at his Greenwich Village townhouse and hear of his time with Garrett. Cornuelle, then 80, was delighted that someone wanted to know about the man who had been his mentor.

My book was more about Garrett as a writer than as a person and necessarily so. Most of his papers were lost.

Cornuelle gave me some personal details about Garrett, some of them incomplete. He told me one of Garrett’s sisters lived in a farmhouse on Garrett’s property at Tuckahoe. But which sister? Why was she there? What role had Garrett played in her family? He didn’t know. My book wasn’t mostly about things like that, but more personal details would have improved it.

After the book came out, I wondered whether I would hear from some lost relative. Three years went by. Then came the email from his grandniece, Trudy, who lives in the very town, Port Townsend WA, in which Liberty was founded and published for more than 20 years — a town about two hours’ drive and a ferry ride from my house.

Trudy was born in 1941. Through her, I got to talk to her brother Marshall, born 1943, and her sister Connie, born 1945. They knew Garrett as kids, aged 9 to 13. They were also part of a family that would have some stories about him. They might fill in some of the blanks in my account.

I had known that Garrett and his third wife, Dorothy, lived somewhere along the Tuckahoe River in New Jersey. From Connie, I received a satellite photo of the property.

At the beginning of the book I had listed Garrett’s siblings from Census records: Gertrude, Mary, Sarah, Thomas, and “what looks like ‘Clarra.’” But I knew nothing about them. Now I had their full names — it was “Clara” — and the dates of their births. I noticed that all but two of Garrett’s siblings were born in different towns, most of them not far from Garrett’s birthplace at Pana, in central Illinois. Garrett’s father Silas was a tinker — an itinerant tinsmith — and his family moved around.

From my new acquaintances, I heard one story of the children’s youth. Garret’s father, Silas, was a Protestant. What denomination was never said, though his funeral was in a Methodist church. According to Marshall, Garet’s mother, Alice, was a devout Catholic.

“They had made a pact when they married that their children would be allowed to make up their own minds,” Marshall said. “But the priest prevailed on Alice, and she did certain things behind her husband’s back, such as putting them in catechism class.” The effort backfired, and Clara, Gertrude, and Marie embraced the new religion of the time, Christian Science.

Then came an email from the very town, Port Townsend WA, in which Liberty was founded and published for more than 20 years.

“The Christian Science thing was a big schism in the family,” said Trudy, who was raised in that faith but abandoned it. She heard the story through her grandmother, Gertrude, who was zealous enough to become a Christian Science practitioner. Garrett was not a follower of Christian Science, and Trudy says his religious sisters disapproved of his drinking, smoking, and being married three times. But Gertrude and Marie also respected his achievement. They called him “Brother,” as if it were his name.

I learned little about Clara, who had stayed in Illinois. Sarah, whom they called Sadie, married a veterinarian and lived in Missouri and Iowa.

“I met my Aunt Sadie when I was 10,” Trudy said. “She seemed to have escaped the whole religion thing.”

Garrett’s younger brother Thomas had been an artist, and Connie has a painting of his (“landscape on the front, female nude on the back”). Thomas died young, in 1917, of somedisease. He is buried in the same cemetery as Garet and Dorothy Garrett, in Tuckahoe, which suggests that his elder brother had taken care of him — and perhaps had removed his remains, because Garrett didn’t move from Egg Harbor, NJ, to Tuckahoe until the mid-1920s.

The sister living on Garrett’s property was Marie. Trudy recalled the story that Marie had been living in Chicago. She was a man’s secretary for many years, and had become his mistress. “Supposedly his wife was sickly and when she died, he said, he would marry Marie, but he did not.”

His religious sisters disapproved of his drinking, smoking, and being married three times. But they also respected his achievement.

Trudy’s sister Connie writes: “As mother told me, Marie fell in love with a successful lawyer in Chicago. He was married and his wife was in a mental institution, and he told Marie there was some law that prevented a spouse from divorcing a spouse who is in an institution. So Marie consented to stay with him (my impression was that he paid for her apartment), something she otherwise would never have done.” Connie visited her Aunt Marie there, and recalls “Uncle Walter” stopping by with candy for the kids.

When the man’s wife died, he wouldn't marry Marie. Connie continues: “Humiliated, Marie went east to Garet’s, where she stayed on, and where Joe French, Garet’s tenant farmer, fell for her and asked her to marry him.”

French was not an educated or worldly man. His claim to fame was playing baseball in the minor leagues in San Francisco, Topeka, Sioux City, Dubuque, Peoria, and Beaumont in the years before World War I. Trudy recalls that his fingers had been broken from playing catcher.

As Connie recalls the story, Marie went to Garet and asked his advice, telling him, “Imagine. That man is no more than a tenant farmer and he wants to marry me!” To which Garet replied, “At least he wants to make an honest woman out of you.” Trudy says that Marie married French “under duress from Garrett, who didn’t want to support Marie for the rest of his life.”

In none of Garrett’s writings does he talk about taking care of his family, or the stress of an obligation to do so. Garrett left his family in Iowa in his mid-teens. Several of the characters in his fiction are without family, and none of his fiction or his vast amount of journalism focuses on family issues or champions family loyalty. He addresses other things. Yet he takes care of his sister when the gamble of her life fails. He nudges her into a marriage with a man who loves her, and he provides them both with a house.

It is what honorable people do, if they can, when there is no welfare state.

Trudy, Marshall, and Connie recall Garrett as the success, the urban sophisticate, of the family — and, of course, much older than they. As preteens and early teens, they moved with their parents from suburban Chicago to New York City in 1953. She believes they were the only relatives of her generation who lived close enough to visit Garrett, and the only ones today who remember him.

In none of Garrett’s writings does he talk about taking care of his family, or the stress of an obligation to do so.

From the summer of 1953 to Garrett’s death in late 1954, they visited Tuckahoe often, staying at Marie and Joe’s, in the farmhouse on Garrett’s property. This other building was not a farmhouse really. It was a three-story brick house, covered with ivy. It had a ship’s binnacle on the porch, and Connie remembers it as “the captain’s house.” The place was the subject of a feature story in the Atlantic City Press. (Trudy has the clipping.) Part of the Stille Homestead, the house had been built in 1795 “by slaves,” the newspaper said, using “bricks brought from England.” It had thick walls and five fireplaces, two of them in the basement, “where in the cold winter time the first families cooked, ate and kept warm.” Upstairs it had a “borning room” where mothers gave birth, and outside was a small graveyard.

One of the side buildings had been made into a glassblowing studio for Garrett’s wife, Dorothy. Connie has a small bottle that Dorothy created, with a dime in it.

Trudy turned 13 in 1954. Of the captain’s house she remembers “a wonderful attic where I spent many, many hours reading old Saturday Evening Posts” that Garrett had kept in bundles. His articles were mostly above her head, but she saw his name on them in the Post. “It wasn’t really until then that I knew what Uncle Garrett did.”

Garet and his wife lived several hundred yards from the old house in a new house he had built. “Garet and Dorothy's house was enchanting to me,” Connie recalls. “It had the biggest fireplace I had ever seen and I remember very well the bust of Nefertiti that you mention in your book, as well as the high bookshelves that flanked the fireplace.”

Trudy remembers Garrett’s room with the two-story ceiling and the big fireplace. “The room had a cozy feel to it, almost like you would feel in a log home. Garrett was the boss of that room. Really he was the boss of the whole place. Dorothy was pretty much in her cups all the time.”

I had mentioned Dorothy’s alcoholism in the book, and all three of Gertrude’s descendants remembered it. They remembered Garrett drinking, too, but not being drunk.

They also remembered the outbuilding Garrett called his “cave,” where he wrote. “He built that,” Marshall recalled. “He was proud of that. He had a little storage area underground where he kept his ink cool. He had these big bottles of Scripps ink. Four of them. He’d refill the well on his desk.”

I had quoted Richard Cornuelle in the book about how Garrett would research a topic, keeping everything in his head, “muttering and fuming quietly. Then, suddenly, he would seize an old-fashioned pen holder, jam a new point into it, and scrawl on white foolscap, often for hours, panting and sweating, jabbing the pen in the ink now and then, until he had it all down.”

Scripps ink, from big bottles.

I had said in the book that Garrett sometimes hid in his “cave” from kids, and Connie, who turned 9 in Garrett’s last year, recalls:

“Although we did often go over to Garet and Dorothy's house, and I did catch my first fish off their dock, and Garet helped me unhook it, on the whole not too much happened of a family gathering nature when we were over there. We kids generally weren't allowed in his little building where he did his writing, but sometimes we were sent out there to fetch him or take him a snack, and I would look around in awe at all the books and papers around him.”

Trudy and Marshall remember Garrett showing them his artesian well, and how he had piped the water into his house. Garrett did his own plumbing.

In Unsanctioned Voice, I quote Cornuelle saying that Garrett had buckets of silver dollars under his porch as insurance against a feared inflation. (If he had lived another 20 years, they would have paid off.) Trudy and Marshall remember the stories of buried coins, either silver or gold. Marshall recalls that silver coins were found inside the ship’s binnacle, under a layer of sand.

When Garrett died, his property went to Dorothy. She died six months or so later, willing the property to her son, James. That was a setback for Marie and Joe, because they had to move out of the captain’s house into town.

Perhaps Garrett had an influence on the family. Connie was the closest to Garrett in her career: she became a writer and editor of Smithsonian magazine. Marshall is the closest to Garrett in his philosophy.

“I don’t think anybody knew about libertarianism then, if they called it that,” he says. “Most of us are still quite conservative, maybe not to the extent of libertarianism, but pretty near.”

“When I read about the attitudes of Garet Garrett, I see my brother,” Trudy says.

Trudy was an attorney, teaching classes in how non-attorneys could file papers and defend their rights. She recalls once going out with a man who admired Ayn Rand, and telling him, “I am the grandniece of Garet Garrett.”




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Cash Poor

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In spite of Liberty contributing editor Mark Skousen’s observation that “income isn’t distributed, it’s earned,” much handwringing has followed recent reports that income distribution in the US is becoming increasingly unequal.

To a libertarian, how much one earns or owns — so long as it’s acquired honestly and honorably — is nobody’s business. But at the other extreme are the still-influential Rawlsian redistributionists. They believe that since each person’s station in life is due to little more than a roll of the existential dice, income distribution ought to cluster tightly. If it doesn’t, it’s an indication of an unjust society, and something must be done about it. That’s the ideology.

Nevertheless, there’s a pea under that ideological mattress: the fear of revolution if the rich get richer, the poor get poorer, and the middle class disappears. Though probably a reductio ad absurdum, it is nonetheless a theoretical possibility under a laissez-faire economic system.Friederich Hayek understood this, which is why — to the consternation of many libertarians — he advocated a minimal welfare state as a worst-case scenario safety net.

Whatever the chances might be that a just economic system — laissez-faire capitalism — could lead to the penury of a majority, income distribution is a concern to the inner Hobbesian in all of us. So when income inequality rears its ugly head, it bears critical investigation.

In 1912 Italian statistician and sociologist Corrado Gini devised the eponymous Gini Coefficient, a statistical formula based on the Lorenz curve, to measure variability and mutability among data in any discipline. The index is now widely accepted as a measure of income inequality in economics. Values range from 0, total equality, to 1, maximal inequality.

As of 2009, Sweden scored .23, the lowest Gini Coefficient, indicating the highest income equality; while Namibia rated a .74, indicating a large income inequality. Most first-world nations have Gini coefficients in the high point-twenties to the mid-thirties, with a .31 for the EU average. Back in 1980, the US rated a .40 Gini; today we rate around .47, a figure comparable to Russia or Turkey and a trend that is alarming to many.

The fear of revolution, though probably a reductio ad absurdum, is nonetheless a theoretical possibility under a laissez-faire economic system.

Paul Krugman, who could be considered the Linus Pauling of economics — for his previous Nobel-recognized genius, followed by descent into crankhood for his advocacy of snake-oil remedies: vitamin C in the latter case, dirigisme in the former — refers to the period after 1979 as the “Great Divergence,” because of the rapid increase in inequality that had occurred. According to a 2011 Congressional Budget Office report, “Real income (adjusted for inflation) in the US grew by 62% for all households between 1979 and 2007. However, after-tax income of households in the top 1% of earners grew by 275%, while income growth for the bottom fifth of earners was 18%.”

If, instead of income distribution, we look at wealth, the disparity is even greater. While the bottom 60% of the US population lost about 6% of its wealth, the net worth of the top 5% increased by 40% between 1983 and 2009.

Why the increasing inequality in a political and economic system deemed among the freest by classical economists?

* * *

Before addressing that question we must deal with a concept clamoring for immediate attention: fuzzy numbers.

Nearly all the figures quoted in this article come from Wikipedia compilations replete with references, from various other internet sites, The Economist,Scientific American, Money,Chris Martenson’s The Crash Course, and PuruSaxena’s Money Matters. Although these sources are ostensibly reliable, please take them with a pinch of salt. Some figures purporting to measure exactly the same thing vary wildly.

For instance, that 275% of after-tax household income growth for the top 1% earners, derived from 2011 Congressional Budget Office figures of 1979 to 2007, becomes a 176% increase — from 1979 to 2005, nearly the same time range — in a 2006 New York Times article.

Exactly what is being measured, how it is defined, over what period of time it is measured (a variable often manipulated for calculating equity returns down to the day), and what statistical tools are employed can have considerable impact on the figures. Just the difference between ‘”household” and “individual” income measurements can affect income inequality figures substantially.

Dodgy numbers can also lead to convertibility problems and out-of-this-world results — literally out of this world. Composite numbers (such as indices, among others), which are built up from subsidiary numbers, can become statistical black holes, swallowing endless data but illuminating little. As The Economist reports, “In theory, countries’ current-account balances should all sum to zero because one country’s export is another’s import. However, if you add up all countries’ current-account transactions, the world exported $331 billion more than it imported in 2010, according to the IMF. Are aliens buying Louis Vuitton handbags?”

And of course, ideology plays a big part. As the old saw goes, “He who frames the question determines the shape of the answer.”

On top of this are myriad unexamined assumptions. Statistician Joseph Locascio has identified what he calls “publication bias,” which means that academic journals “often give greater weight toward publishing articles that report statistically significant findings over those that don’t.” With this kind of review process, if out of 20 studies one shows a slight significance (perhaps because of chance), while the other 19 show none, that one will be published and the others ignored.

Not all people are driven to make the most money they can, all the time. Many earn and live below their possibilities, and spend the rest of their time pursuing their passions.

Hoover Institute economist Thomas Sowell suggests that many discussions of income equality are based on fallacious reasoning. For example, “an absolute majority of the people who were in the bottom 20% [of income] in 1975 have also been in the top 20% at some time since then. Most Americans don’t stay put in any income bracket. At different times, they are both ‘rich’ and ‘poor’ — as these terms are recklessly thrown around in the media.”

Finally, somewhere between the last two observations, lies individual choice. Not all people are driven to make the most money they can, all the time. Many earn and live below their possibilities, earning what they consider a sufficient amount, and spending the rest of their time pursuing their passions: music, rock climbing, walking around the world preaching the gospel . . . whatever.

So, to that pinch of salt, add a squeeze of lime and, what the hell, a shot of tequila.

* * *

But back to the ostensible causes of inequality, which remain unknown to many, even to theNew York Times, as proclaimed in an article onJune 5, 2005. Let’s consider these causes.

1. The rich work more than the poor. As of 2005, 42% of all US households had two or more income earners. However, in the top quintile of households, nearly twice as many (76%), had dual-earners. Among the lower class, the most common source of income is not occupation but government welfare (according to the leftish Winner-Take-All Politics by Hacker and Pierson, 2010).

2. The rich are more educated than the poor. In the top quintile, 62% of householders are college graduates; while many at the bottom half of earners hold at most a high school diploma. Educational and occupational achievement and the possession of scarce skills correlate with higher income.

3. People of modest means keep giving their money to the rich. George Mason University economist Walter E. Williams recently recognized that “the millions of people who watch LeBron James play are the direct cause of LeBron’s earning $43 million and are thereby responsible for — in Paul Krugman’s terms — ‘undermining the foundations of our democracy.’” The same can be said of the millions of Walmart and Microsoft shoppers who keep enriching the Walton and Gates families.

4. Government policies. Among the usual partisan suspects — such as decreased expenditure on social services and labor’s diminishing political clout, suffering from declining union membership — are Republican tax policies, specifically the “low” progressivity of US tax rates. Reversing these factors through government diktat is a crude cure that doesn’t address the underlying ecology (Thomas Sowell’s term) of the marketplace. The enforcement of legislation such as higher redistributive taxes and the imposition of closed shops would require force, a road down which classical liberals would prefer not to travel. Might there be another cause of the increasing income inequality that hasn’t yet been identified? One whose correction does not require coercion?

I believe there is, and that culprit is inflation — in spite of the fact that nearly all of the above statistics are adjusted for inflation. And, as Milton Friedman recognized, since “inflation is always and everywhere a monetary phenomenon,” it is a direct result of government policy. Inflation is a word often misunderstood. It is the decreased purchasing power of currency, caused by the expansion of the money supply, and not to be confused with price increases caused by scarcity.

Krugman’s “Great Divergence” begins soon after America’s divorce from the gold standard and the subsequent collapse of the Bretton Woods currency exchange system in the early 1970s. After that, the Federal Reserve instituted a Keynesian monetary expansionist policy. In 1972, the price of a new house averaged $27,600; in 2010 (despite 2008’s deflation of the housing bubble), the average price was $272,900. A 1972 Coke cost a dime; today it’s a buck. By 1973, gold hit a high of $126 per ounce; in 2009 it topped $1,212. In 1972 the Dow Jones Industrial Average hit 1,000; by 2010 it had reached 11,000 — a ten-fold increase in only four decades. A $10 Hamilton from 1972 is today’s $100 Franklin. How does this stark change affect the disparity between rich and poor?

* * *

But first, more fuzzy numbers.

Without an objective anchor such as gold, the value of money is subject to fluctuation according to the active “monetarist” policy set by the central bank. That policy is based on many variables — prominently including the consumer price index (CPI), with a nod to gross domestic product (GDP), processed through complex formulae and topped with a generous dollop of intuition. The objective is a stable currency — a very difficult goal with such a capricious policy, and one whose results always lag policy implementation.

For a variety of reasons, the central bank considers deflation a greater evil than inflation. So, wishing to avoid deflation at any cost, the Federal Reserve sets an inflation goal of 1–2%. It often misses this goal. The October 2011 rate was 3.53%, according to the Bureau of Labor Statistics (BLS), as measured by the CPI.

How reliable is this number? Not very — as it is neither accurate nor even precise. Like an aging diva afflicted with weight gain, wrinkles, fatigue, loss of figure and overexposure, the CPI has been massaged, injected with Botox, subjected to fad crash diets, over-cosmetized, face-lifted, repackaged, and rebranded. Richard Nixon, for example, bequeathed us the so-called “core inflation” measure, which strips out food and fuel — a bit like weighing yourself without your belly. In 1996 Bill Clinton implemented three oddities in the measure of inflation: substitution, weighting, and hedonics.

Krugman’s “Great Divergence” begins soon after America’s divorce from the gold standard and the Federal Reserve’s institution of a Keynesian monetary expansionist policy.

With substitution, it is now assumed (for example) that if the price of salmon goes up too much, people will switch to something cheaper, such as hot dogs. So as the price of an individual item within a representative basket of thirty goods rises, that item is removed and substituted with something cheaper, chosen by a trained bureaucrat. According to the BLS, food costs rose 4.1% from 2007 to 2008. But according to the Farm Bureau, which tracks exactly the same shopping basket of 30 goods from one year to the next without substitution, food prices rose 11.3% for the same year.

Weighting is an even sharper tool for cutting the measure of inflation. Anything that rises too quickly in price is undercounted in the CPI, under the assumption that people will use less of those things. For example, although healthcare is about 17% of the economy, it is weighted as only 6% of the CPI basket.

But the most creative way to fiddle with inflation is hedonics. This adjustment is supposed to reflect quality improvements. Here’s how it works, based on a presentation by a commodity specialist at the BLS and explained by Chris Martensen:

In 2004, the commodity specialist at the BLS noted that a 27-inch television selling for $329.99 was selling for the same price in 2007, but was later equipped with a better screen. After taking this subjective improvement into account, he adjusted the price of the TV downwards by $135, concluding that the screen improvement was the same as if the price of the TV had fallen by 29%. The price reflected in the CPI was not the actual retail store cost of $329.99, which is what it would cost you to buy, but $195. Bingo! At the BLS, TVs cost less and inflation is heading down. But at the store, they’re still selling for $329.99.

Hedonics rests on the improbable assumption that new features are always beneficial and are synonymous with falling prices (never mind that most old rotary phones still work, while modern cell phones seldom seem to last three years). Hedonics is now used to adjust as much as 46% of the total CPI.

What would the inflation rate have been for, say 2008, before all the fuzzy statistical manipulation gussied it up? John Williams of shadowstats.com, using early 1980’s formulas, computed the figure at 13%: the BLS reported a 5% inflation rate for the same year — a stunning 8% difference.

But that’s not all. During Alan Greenspan’s tenure at the Federal Reserve — particularly while the real estate bubble was growing gangbusters — some economists bemoaned that, without asset prices such as real estate and equities being included in the CPI, true inflation rates would be misleading, thereby skewing monetary policy.

While inflation has been massaged down, GDP has been steroided up, by similar sleight-of-hand manipulations — further inflating the money supply.

So, at this point, brace yourself with another shot — this time of hedonic Cuervo Añejo.

* * *

Inflation affects the poor and the rich in completely different ways, though both lose wealth. No one benefits — except for government and banks, which, having access to newly created money before it hits the streets and raises prices, can buy goods and services at the old, cheaper rate. By the time the surplus money has permeated the economy and reached the masses, prices have usually risen significantly.

Broadly speaking, the poor — for the purposes of this essay, people in the lower 40% of income distribution — have fewer assets, lack financial sophistication, and tend to hold, at most, a high school diploma. They deal in cash and its derivatives and equivalents — CD’s, bonds, and interest-bearing accounts. In an inflationary regime, these lose value. In an underreported inflationary regime, the effect is not only obviously greater but, because wages only grudgingly and loosely track the “official” inflation rate of the CPI (if at all), “much of the developed world’s workforce has been squeezed on two sides, by stagnant wages and rising costs,” as The Economist opined in its November 19, 2011 issue.

There is one factor leading to wealth disparity that Rawlsians and Marxists most seem to ignore, but classical economists believe is fundamental — productive innovation.

As if this situation were not bad enough, many of the poor were lured into buying homes by dodgy loans and government social engineering policies (such as the Community Redevelopment Act, Fannie Mae and Freddie Mac practices, and lower than historic interest rates) in the middle of a bubble. When the bubble burst, these folks lost whatever equity they had managed to cobble together, as well as ending up with ruined credit. And they couldn’t even rely on their savings (what little they might have saved between stagnant wages and rising costs), as these too had dwindled along with the higher interest rates that made savings more attractive.

So, without a doubt, the poor are getting poorer. What about the rich?

While cash loses its value, real goods such as commodities, equities, and real estate track the changing value of money and, long term — with the dips and highs of the business cycle evened out — generally keep pace. The rich, with more education, more financial sophistication, and more discretionary income, invest. The poor, on the other hand, save (if they can afford to). All other things being equal, inflation makes investments tread water, but savings lose. Without inflation, income inequality might not have become so pronounced over the last 40 years.

Though the above analysis might go a long way toward explaining the increasing income inequality in the United States, it still isn’t the full picture.

There will always be income inequality, if for no other reason than the fact that people’s work habits, education, and ambition vary tremendously. But the one factor leading to wealth disparity that Rawlsians and Marxists most seem to ignore, but classical economists believe is fundamental — productive innovation — also plays a big part.

A study done by University of Texas economists James K. Galbraith and Travis Hale found that

During the technology boom of the late 1990s, most of the gains enjoyed by the top 1% came from a small number of counties, rather than a national trend. Almost all of the richest 1%’s gains occurred in the economic hotbeds of Silicon Valley, and also New York City. If the top four counties in those regions are removed, there is almost no trend towards income inequality during the years studied (1994–2000). On this basis, the researchers ascribe the growth in income inequality in the late 1990s to the growth of information technology.

Earned income.

Definitely.




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