Archive for March, 2010

Laissez-Faire Capitalism

March 31, 2010

“When I say ‘capitalism’, I mean a full, pure, uncontrolled laissez-faire capitalism – with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.” Ayn Rand, ‘The Objectivist Ethics’  The Virtue of Selfishness

“In a capitalist society, all human relationships are voluntary.  Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate.  They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit.  The right to agree with others is not a problem in any society; it is the right to disagree that is crucial.  It is the institution of private property that protects and implements the right to disagree – and thus keeps the road open to man’s most valuable attribute (valuable personally, socially, and objectively):  the creative mind.” Ayn Rand, ‘What is Capitalism?’ Capitalism: The Unknown Ideal

“Observe the paradoxes built up about capitalism.  It has been called a system of selfishness (which, in my sense of the term, it is) – yet it is the only system that drew men to unite on a large scale into great countries, and peacefully to cooperate across national boundaries, while all the collectivist, internationalist, One-World systems are splitting the world into Balkanized tribes.  Capitalism has been called a system of greed – yet it is the system that raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of.  Capitalism has been called nationalistic- -yet it is the only system that banished ethnicity, and made it possible, in the United States, for men of various, formerly antagonistic nationalities to live together in peace.  Capitalism has been called cruel – yet it brought such hope, progress and general good will that the young people of today, who have seen it, find it hard to believe.  As to pride, dignity, self-confidence, self-esteem – these are characteristics that mark a man for martyrdom in a tribal society and under any social system except capitalism.” Ayn Rand, ‘Global Balkanization’, The Voice of Reason

Since my columns are so favorable to laissez-faire capitalism, let me define the term more precisely, picking up on the above-outlined thoughts of Ayn Rand. For without question, I share her enthusiasm for the economic system that enabled the United States to achieve its former greatness as a nation; a greatness that now has been squandered in a rush to state capitalism and progressive socialism. For the United States economy has not remotely resembled  laissez-faire capitalism since Woodrow Wilson used World War I as an excuse to build a command economy. Since March 21, 2010 the United States is a social market economy, virtually indistinguishable from Germany, France and the United Kingdom.  Under progressive anti-capitalist  leadership, it is headed towards liberal fascism in a manner not at all dissimilar to Mussolini’s Italy during the 1930s.

Laissez-faire, a French term that translates loosely as ‘let things alone’, originated in the eighteenth century with a school of French economists known as the Physiocrats, who opposed trade restrictions that supported mercantilism.  Adam Smith popularized the term and gave it added influence in his 1776  book, The Wealth of Nations.  Smith argued that a nation’s well-being and economic progress are assured when individuals are free to apply their capital and labor, without state intervention, in a competitive market economy. He outlined how the self-interested activities of individuals promotes the general welfare under such conditions.  The doctrine of laissez-faire thus involves not only a  policy implication of non-intervention by the state, but also a positive philosophy that recognizes a natural harmony between individual and social interests.

In the hands of Jeremy Bentham, the doctrine of laissez-faire became a philosophy of individualism and of utilitarian ethics. The doctrine reached its zenith during the nineteenth century,  in the writings of  the young John Stuart Mill, who defined what has become accepted (with the exception of anarchists in the tradition of Murray Rothbard) as the minimum level of state intervention.  Among such interventions for the greater good, Mill included the power to secure property rights and to enforce contracts, as well as to provide for internal order, protection from external threats, and such public goods as transport systems, sanitation, public health and state-supported education. Throughout the second half of the nineteenth century, following the Repeal of the Corn Laws, Great Britain epitomized the system of laissez-faire capitalism, thus creating the wealth that  enabled it to become the greatest Empire that the world had ever known.

The United States never adhered unconditionally to the doctrine of laissez-faire, either theoretically or practically. Tariffs were key revenue-raising components of American trade policy almost from the country’s independence.  Antitrust laws – in the form of the Sherman Act (1890) and the Clayton Act (1914) similarly violated laissez-faire principles.  During the first half of the twentieth century, numerous examples of state intervention – minimum wage laws, workers’ compensation statutes, hours legislation, and social security laws belied professed allegeiance to laissez-faire principles. Since the Great Depression and World War II, only a small minority of Americans espouse laissez-faire capitalism, correctly defined.

Truth, however, is not to be found necessarily in numbers. In my judgment, the Remnants are correct in their judgment that laissez-faire capitalism is the only system known to mankind that simultaneously promotes individual freedom and the wealth of a nation to the highest feasible levels.  As such, the doctrine is to be revered and not derided, as is the current unfortunate, irresponsible tendency throughout the United States.

A Grin Without A Cat

March 30, 2010

“‘All right,’ said the Cat: and this time it vanished quite slowly, beginning with the end of the tail, and ending with the grin, which remained some time after the rest of it had gone.  ‘Well!’ I’ve often seen a cat without a grin,’ thought Alice: ‘but a grin without a cat! It’s the most curious thing I ever saw in my life!’”  Lewis Carroll, Alice’s Adventures in Wonderland

Tomorrow, March 31, 2010, the Cheshire Cat slowly begins to vanish from the non- market in toxic mortgage-backed securities in the United States, as the Federal Reserve’s $1.25 trillion buying spree formally ends.  Now, one should not overstate the extent of this limited withdrawal, which more appropriately might be described as sitting on one’s hands (or rather on one’s Nancy Pelosi-sized false grin).  Well not exactly sitting on one’s grin.  Bad Ben Bernanke is actually sitting on a toxic waste dump of  largely worthless mortgage-backed securities that he has generously taken off the hands of Fannie Mae and Freddie Mac.  Well, not exactly ‘generously’, since he is debasing the nation’s currency to prop up a housing market that is way out of equilibrium at this time.

The question for Alice is not whether one can have a grin without a cat, but whether that grin will  slowly transform itself,  first into a grimace, as mortgage rates begin to rise to market-clearing levels, and ultimately into terror as the nation’s house of cards comes tumbling down.  A lot now depends on how skillfully  Bad Ben Bernanke and Timothy Geithner can stack the deck while  playing no limit hold em poker  with a pile of worthless chips. I suspect that ‘Bad Ben’  Bernanke is no Stu ‘The Kid’  Unger and that  ‘Tiny Tim’  Geithner is no Doyle ‘Texas Dolly’  Brunson at the  No Limit  Hold Em tables. They will  both be swiftly detached from their coveted covered wagons.

And do not forget the Chinaman who serves as banker to this gambling duo.  He knows how to shuffle a deck of cards, how to move a good and a bad hand around the table, as he deftly plies the unwary duo with a pipe or two of  opium, and encourages them to inhale its white and yellow vapors. Push hard on that money pipe,  Bad Ben,  to fuel the ole mortgage market.  Ease back on the ole bills pipe, Tiny Tim, to lower the yields on  those suckers.  Hang on to your shirts, fellers.  That’s all you have left to lose!

The market in Treasury notes and the market in mortgage-backed securities repay close attention as the Federal Reserve and the Treasury Department gamble with our fortunes.  All is not well along Constitution Avenue and Pennsylvania Avenue. All is not well at all.  Already, the Chinaman has made his first move in the game, vacating his seat at the table for last week’s auction of Treasury notes. In consequence, the yields on 10-year Treasury notes surged upwards to 3.852 per cent, pushing Fannie Mae’s benchmark 30-year bond from 4.33 per cent to 4.45 per cent, and mortgage rates above 5 per cent.

Although the yield gap between Fannie Mae bonds and Treasury notes so far has not widened, once the yield on Treasury notes leaps the 4 per cent barrier, that yield gap will surely increase. And, of course, bondholders will suddenly smell the toxic fumes emanating from that mortgage-based securities waste dump. Oh, yes, and they may just begin to remember that old-fashioned relationship between increases in the supply of money and price inflation; and between inflationary expectations and mortgage rates.  What is going to happen to the value of all those toxic assets, Bad Ben, once mortgage rates reach 14 per cent per annum?

The Chinaman reshuffles the cards, noting all the  while  the drug-induced,  false euthoria of the gambling duo.   Time to fold your hands fellers. Now please do not perspire too freely, Bad Ben and Tiny Tim.  After all, those shirts on your backs will shortly belong to me.   The Chinaman recirculates the opium pipe around the table…The chips (and the shirts)  are moving in his direction…

Oh,  and by the way,  please advise  boss-man that he  no longer welcome at  table;  his credit  no good. You come back anytime.  Chinaman likes US tailored shirts; so few of them nowadays!  Please accept China-made anti-perspirant;  much less toxic than Fed assets.  Here, take opium pipe  for boss-man; help him dream of  Second American Century!

A Return to Free Market Triumph 3: A Budgetary Contract With America

March 29, 2010

If the Republican Party is to reassert its political relevance following the wasted years, 2001-2010, it will necessarily have to refocus its policy agenda to the pursuit of traditional Republican goals – limited government, private property rights, individual freedom and the rule of law.  This will take considerable effort and discipline, given how far the party has strayed from these objectives since the departure of Ronald Reagan from the Presidency and of Newton Gingrich from the House Speakership.  It will also take the immigration of some real intellectual horsepower into a party that is sadly handicapped in that dimension.  Fortunately, the Democratic Party is self-destructing into the creation of unsustainable debt and impending stagflation, opening up a real entrepreneurial opportunity for a return to free market triumph from 2012 onwards.

I do not view myself as a political entrepreneur, indeed I have no experience in that role.  Nevertheless, drawing on my many years of experience as a leading scholar of public choice and as a classical liberal who helped to bring Margaret Thatcher into office in Britain in 1979, let me advance, in broad-brush terms, a  potentially attractive  budgetary contract with America, that might provide a starting point for electoral success in 2012.

The center-point of the contract is the elimination of all federal budget deficits within the four year presidential term, 2012-2016.  Thereafter, the goal would be the achievement of budget surpluses sufficient to draw down the national debt to no more than 30 per cent of gross domestic product by 2020.  These goals must be achieved without recourse to inflation in excess of 2 per cent per annum.  These goals must be realised without false accounting (i.e., by placing all entitlements fully on-budget).

Such a program of budgetary tightening will require significant cuts in federal expenditures, reining them in to no more than 20 per cent of gross domestic product. To achieve such a budget cut will require revisiting the fundamental role of the federal government, eliminating its excursions into production, reducing its regulatory role, decentralizing many activities to the states, and requiring full funding through taxation and through targeted cuts in  its transfer programs.  It will  require significant job attrition and real salary and benefit cuts for federal employees. It will necessitate raising the age for accessing social security and medicare benefits to reflect increases in life expectancy.

Even with such spending cuts, federal taxes will have to rise somewhat to meet the expenditure targets. My suggestion is that the Republican Party should investigate a fundamental reform of income taxation, providing a flat income tax solution, without exemptions,  with a negative rate for households operating at below the poverty level, sparingly defined.   Presumably, such a flat tax, in combination with the payroll tax, if that is retained, will have to raise federal revenues slightly in excess of 20 per cent of gross domestic product in order to reduce the long-term debt to GDP ratio. With the flat tax, the burden would be shared proportionately across all earners, rather than discriminating sharply against the most productive members of society.

Such a radical reform in budgetary policy can be sold to an electoral majority in terms of its positive implications for economic growth and its protection of the international reserve status of the dollar, as well as in terms of fundamental fairness and transparency. To do so, however, requires intellectual horsepower of the highest order and an ability to explain the underpinnings of free market economics at a level beyond the capacity of any practising politician in the United States.

Trauling for such leadership is a pre-requisite for  a return to free market triumph in 2012.  In an educated population the size of the United States, surely there is a vein of such talent available for discovery.  If not, then the drift to progressive socialism will not be stemmed and reversed, but rather will continue until the Red Revolution is complete.

A Return to Free Market Triumph 2: Winning Elections

March 28, 2010

In my column dated March 27, 2010, I identified a switch in dominant political philosophy from that of  Hobbes to that of Locke as a pre-requisite for victory.  In itself, that is a huge task. The second task is that of preparing to implement this change in philosophy through electoral victory. This is an equally daunting task, but one that must be achieved, unless anarchy is contemplated.

In planning for electoral victory, a number of public choice issues arise.  First, the vote mechanism in the United States, plurality (or first-past-the-post),  lends itself to a two party system. Duverger’s Law implies that a majority in the vote tends to be exaggerated in the legislature. Third parties do badly enough in such a system. In the United States the two major parties have bult cynical barriers to successful new entry.

So free market lovers have little option, at this time, but that of converting a statist Republican Party to free markets. That is not impossible, given the huge stakes in forthcoming elections, as the Democratic Party mainstream lurches leftwards to progressive socialism, with a strong tail of Marxist extremists pushing a sympathetic President beyond the limits even of state capitalism. At such critical times, freedom lovers must reach deeply into their membership  to locate leaders (think  of a Ronald Reagan in 1980 or of a Newton Gingrich in 1994) capable of thinking strategically and leading the Rublican Party to a  new contract with America.

And of capturing the sympathetic attention of the mass media.  For the Marxist mainstream media in the United States know full well how to play on the rational ignorance and the emotional vulnerabilities of  a potential electoral majority to persuade it to support policies directly detrimental to its interests.

And of shifting an electoral drift back from state capitalism to laissez-faire capitalism during difficult economic times. This requires not just political skill, but also a professional understanding of free market economics, a requirement that rules out any Republican  in office anywhere at this time.  The search for a potential president will have to trawl in deeper waters than is customary, even in the United States.

And of winning the election. Elections are won, for the most part, by a combination of two factors. First,  candidates and parties must  achieve salience (that is advertise their policy program successfully) close to the center of the distribution of voter preferences (the center may have to be calculated across more than one dimension of  political space), while still energizing support from the right-hand tail of the distribution.  Elections typically are won at the median, not at the tail, of the distribution.  Second, the leadership (potential President most especially, but also House and Senate leadership) must have the necessary valence characteristics to attract an electorate accustomed to celebrity competition. Command of the English language, charisma, looks, integrity, as well as political and economic expertise, are all essential. Well, I do not have to tell you just how much this limits the Republican field at this barren time!  Oh where are you now, Ronald Reagan or Margaret Thatcher?

The key elections are in November 2012, providing barely sufficient time to organize for battle. In the meantime, the Democratic Party appears poised to self-destruct by over-reaching,  following on its unexpected victory in the battle over health care reform.  Let it over-reach, is my advice, just as General Kutuzov retreated and retreated and retreated across his beloved Russia in order to lure an increasingly arrogant Emperor Napoleon into his dangerous backyard at Borodino. 

Barack Obama, I assure you, is no Napoleon. The task confronting freedom lovers is far less complex. Just make sure that the Obamanian armies end up in the frozen wastes and blizzards of a late Fall debt crisis, a rising inflation rate, and a falling US dollar  in 2012. Oh yes, and do pray for some real  snow blizzards on election day.

A Return Road to Free Market Triumph:1 – Hobbes versus Locke

March 27, 2010

As recent columns have emphasized, citizens of the United States presently confront a choice between free markets and progressive socialism. A majority of the electorate, in my judgment, still favors free markets, though they voted in a decisive majority in November 2008 for progressive socialism.  One reason for that potentially disastrous vote, again in my judgment, was a justifiable distain for the failed governance, both domestic and international, of President Bush (2001-2008)  and of the Republican majorities in the House and the Senate (2001-2006). A second reason for the vote was the financial crisis and pending economic contraction of September 2008. In combination, these factors shifted the political philosophy of many freedom-loving Americans from that of John Locke to that of  Thomas Hobbes.  Recognizing the nature of that shift is absolutely essential to setting foot on any return road to free market triumph, whether that road conforms to the conditions of constitutional republicanism established by the Founding Father, or whether it does not.

Two great antitheses dominate the political thought of all times: oppression – freedom and anarchy – unity (Norberto Bobbio 1909). John Locke definitely belongs in the company of those whose political thought is inspired by the former antithesis: the ideal that he defends is that of liberty against oppression. Thomas Hobbes equally definitely belongs in the company of those whose political thought is inspired by the latter antithesis: the ideal that he defends is unity against anarchy.  I hypothesize that it is all but impossible for anyone to bestride those two great antitheses at the same time.  In November 2008, a sufficient number of Americans flipped from Locke to Hobbes to change the political course of a nation, to open the flood gates for progressive socialist policies that are always waiting in the wings for such a reversal of fortune.

Thomas Hobbes and his followers are obsessed by the idea of the dissolution of authority, the disorder that ensues from the freedom to disagree about what is just and unjust.  They are obsessed with the disintegration of the unity of power, doomed to become reality when individuals begin to argue that power must be limited. In essence, they are obsessed by the threat of anarchy, which they consider to be the return of mankind to the state of nature.  The evil that Hobbesians most fear is not oppression, which derives from the excess of power, but insecurity, which derives, on the contrary, from the lack of power.  Hobbes felt called upon to erect his philosophical system as the supreme and insuperable defense against insecurity. Insecurity, first of all, of one’s life, which is the primum bonum; second of material goods; and last of that small or  great liberty that man may enjoy while living in society.

John Locke and his followers are obsessed by the idea of the loss of individual freedom, the oppression that follows from an excessive unity of power, such as was advocated by Thomas Hobbes. Locke felt called upon to erect his philosophical system as the supreme and insuperable defense against oppression.  Oppression that constitutes a threat to the life, liberty and property of any individual; oppression that threatens individuals in the original state of nature, or in the state of war that is imposed upon them by a political society that fails to uphold the inalienable and imprescriptible rights of the individual.

Citizens of the United States spring from a hardy stock of individuals who truly prized liberty above all other values, individuals who rose up in successful revolution against a tyrant who imposed his will upon them; individuals who forged a new constitutional republic, under God, based largely on the principles of John Locke’s Two Treatises of Government (1690). The blood lines of that original stock, with a few notable slips, have served later generations well by imbuing them with a spirit of liberty that has made the United States the exceptional nation above  all others; that has preserved and protected the image of the Shining City on the Hill, so revered by President Ronald Reagan.

That spirit, alas is now under threat of marginalization in the United States as the  weak and fearful spirits of Thomas Hobbes stalk the land, desperate to protect themselves from individual failure through the socialization of all risk, desperate to protect themselves, through policies that impose an equality of outcome,  from any acknowledgement of individual failure, be that failure due to poor genetic endowment,  laziness and sloth, intemperance, or sheer bad fortune. 

Phase one on any return road to free market triumph must be a clear recognition of the nature and causes of  this fateful shift  from the  oppression – freedom to the anarchy – unity  antithesis; for it is this shift  that has made the current rush to progressive socialism politically feasible in the United States.

Those, like this columnist, who value liberty as the highest among all achievable goals, will have to work hard to redress that shift in philosophy, as a fundamental prerequisite for any non-trivial reversal of fortune. If our Founders could rise to such a task, surely those of us who now stand on their giant shoulders can do the same both for ourselves and for our own children and grandchildren.

 

 

Tragedy to Triumph?

March 26, 2010

The immediate battle over health care reform in the United States is now over, with an apparently decisive victory for progressive socialism. In defeat, however, freedom lovers may yet find a route from tragedy to ultimate triumph.  To do so, it is important to understand what has occurred.

Let me liken recent events to the early stages of what would become known as the European Theatre of World War II.  The forces of national socialism grew quietly and all but unnoticed in the United States during the years of The Great Moderation that were ushered in by President Ronald Reagan and Federal Reserve Board Chairman, Paul Volcker during the early 1980s and that  lasted until the end of the Clinton Presidency in 2000. The ‘Brown Shirts’ of the progressive socialist  movement gradually dominated the mass media,  the public schools, the universities and  the law schools, and linked arms with the public sector unions and the growing expanse of those making good livings in the non-market economy. 

 The  US equivalent of Krystalnacht in Germany (November 10, 1938) was September 15, 2008, when Lehman Brothers filed for bankruptcy and the stock market went into a free fall.  Just as German Jews were on the run, and Hitler’s Third Reich began to flex its muscles throughout continental Europe after Krystalnacht, so laissez-faire economics was on the ropes in the United States, and the forces of progressive socialism were rampant after the stock market collapse.

The Battle for France (health care reform) is now lost and the British Expeditionary Forces are in full-scale retreat from Dunkirk. If tragedy is to be turned into triumph, a defensive war until 2012 must now be skillfully engaged, under new leadership, with the intent of  turning the hinge of fate with an election victory in November 2012,  just as the Allied desert victory at Alamein on November 6, 1942 turned almost uninterrupted disaster to almost unbroken success.

In order to achieve an Alamein victory, those who love liberty will have to regroup forces and rethink strategy during difficult times. The rethinking will have to reach out to the entire regulatory and entitlement program that is slowly strangling freedom and economic prosperity in the United States – Social Security, Health Care Subsidies, Housing Subsidies, Food Subsidies, Green Subsidies,  and the like - and the implications of such burgeoning programs for the national debt, taxation and inflation. Such rethinking will have to combine intellectual ingenuity,  media savvy, and financial support, with widespread ground support under entrepreneurial leadership. The War surely cannot now be won piecemeal – there are too many vested interests to overcome. It can only be won comprehensively by offering an attractive package of fiscal and deregulatory reforms, designed to roll back the state,  to a decisive majority of an electorate that will be increasingly disenchanted by the stagflation of progressive socialism.

As on June 4, 1940, when the Retreat from Dunkirk was completed, so on March 25, 2010, when the Battle over Health Care Reform ended, the future for freedom looks bleak. At times like this, let us recall the immortal words of Winston Spenser Churchill delivered at the nadir of fortune for the British Empire:

“Never give in – never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense.  Never yield to force: never yield to the apparently overwhelming might of the enemy”  Speech to students at  Harrow, 1941.

“In Victory: Magnanimity

In Peace: Goodwill”

Health Care Reform in a Public Choice Perspective

March 25, 2010

The health care legislation has not yet been finalized through the reconciliation process, nor has it been tested in the courts. For the purpose of this column, I am going to assume that the reconciliation process succeeds and that the final legislation withstands judicial challenges. I am going to make some stylized assumptions about the nature of the outcome for the health care mixed economy in the United States over the coming decade.

First, I assume that some additional 32 million Americans will participate as health care  ‘customers’, through medicaid expansion and the subsidized health care exchanges. Second, I assume that changes in incentives will lead to some 9 million Americans to lose employment health coverage and to enter  the subsidized exchanges. Third, I assume that some 10 million Americans will pay fines rather than submit to political coercion to consume health care at the point of a government gun. Fourth, I assume that the legislation’s tax impositions on the rich, for the time being, exhaust its taxation capacity. Fifth, I assume that The People’s Republic of China will reduce its appetite for American debt, forcing the United States to fund 70 per cent of its additional debt domestically (up from 55 per cent in the mid-2000s and up from 62 per cent in 2010). Fifth, I assume that the private savings rate will not increase from its present elevated rate of 4.6 per cent of private disposable income, even should real interest rates on government notes rise significantly.  Sixth, I assume that the 10 year deficit arising from the health care reforms in fact will be approximately double that projected by the false accounting of the CBO (i.e., $2 trillion). Sixth, I assume that supply elasticities of physicians and nurses are near zero within the decade under consideration, in the absence of significant increases in incomes.  Seventh, I assume that such income increases will not occur because of government subsidy constraints and constrained private sector budgets.

With these assumptions in mind, let us now take an observant walk through the health care commons.  The first observation is that medical reimbursement rates will differ significantly across the commons. The highest reimbursement rates will emanate from the Cadillac employer plans, followed, on a sliding scale, by the regular employment plans, followed by Medicare, followed by the private exchanges, and finally wound up  by the hapless Medicaid programs. The second observation is that, with an increase in quantity demanded against a fixed quantity supplied, there will be potential congestion on the commons.

How will this congestion be resolved?  Well, even under socialism, markets do not disappear. The Cadillacs and the better-endowed employer programs will skim the cream and largely self-protect against the erosion of service. Medicare will operate with significantly lowered access, lengthening queues and access to second tier medical practitioners, who will work for reduced returns. The private exchanges will operate at spartan access levels, with long access queues, providing minimalist coverage. Medicaid patients will be the lepers of the system, squeezed by the private exchanges and suffocated by the expansion in their numbers. Their ‘custom’ will be dreaded rather than welcomed by  overwhelmed suppliers. Hospitals that take them in in siginificant numbers will be quickly bankrupted (20 per cent of all United States  hospital capacity, if the projected  Medicare cuts also hold).

Of course, some of the individuals on the commons have the opportunity to vote (i.e., have access to the political commons). Children and felons, do not have such access, so we know what will happen to them, should they fall under Medicaid. The poor typically do not vote as frequently as the better off.  And the oldies vote most frequently of all, even if some of them are less than fully aware of what levers they are pulling, or what chads they are or are not puncturing.  So the prediction is that the Medicare contingent will bat above its numerical strength. The implication of that prediction  is that the Medicare cuts required in the legislation will not be upheld.  If the fiscal constraints traced out above apply, this means that subsidies to the private exchanges will decline in real terms;  and that Medicaid patients will be right back into the emergency wards.

Our walk through the commons does not seem to have detected much in the way of observed change, does it?  Certainly no reason to suppose that this legislation will be revered down the road, as the United States returns to stagflation under an unsustainable burden of public debt, and an enervating burden of progressive socialism. Of course, the commons will clear a little, as the more enterprising US citizens migrate to more welcoming shores.  But that exodus will simply drain the commons of its most productive inhabitants.

In War: Resolution – In Defeat: Defiance

March 24, 2010

 

“A SCORPION and a Frog meet on the bank of a stream and the Scorpion asks the Frog to carry him across on its back.  The Frog asks, ‘How do I know you won’t sting me?’  The Scorpion says, ‘Because if I do, I will die too.’  The frog is satisfied, and they set out, but in midstream, the Scorpion stings the Frog.  The Frog feels the onset of paralysis and starts to sink, knowing they both will drown, but has just enough time to gasp ‘Why?’  The Scorpion replies: ‘It is my nature…’ ” Aesop’s Fable, The Scorpion and the Frog

“WOLF, meeting with a Lamb astray from the fold, resolved not to lay violent hands on him, but to find some plea to justify to the Lamb the Wolf’s right to eat him.  He thus addressed him: ‘Sirrah, last year you grossly insulted me.’  ‘Indeed’, bleated the Lamb in a mournful tone of voice, ‘I was not then born.’ Then said the Wolf, ‘You feed in my pasture.’ ‘No, good sir’, replied the Lamb, ‘I have not yet tasted grass.’  Again said the Wolf, ‘You drink of my well.’  ‘No’, exclaimed the Lamb, ‘I never yet drank water, for as yet my mother’s milk is both food and drink to me.’ Upon which the Wolf seized him and ate him up, saying, ‘Well! I won’t remain supperless, even though you refute every one of my imputations.’  The tyrant will always have a pretext for his tyranny”  Aesop’s Fable,  The Wolf and the Lamb

“Lee raised a hand. ‘General Pickett, I want you to reform your Division in the rear of this hill.’  Pickett’s eyes lighted as if a sudden pain had shot through him.  He started to cry.  Lee said again with absolute calm, ‘General, you must look to your Division.’  Pickett said tearfully, voice of a bewildered angry boy.  ‘General Lee, I have no Division.’   He pointed back down the hill, jabbing at the blowing smoke, the valley of wrecked men, turned and shuddered, waving, then saying, ‘Sir? What about my men?’ as if even now there was still something Lee could do to fix it.  ‘What about my men?  Armistead is gone. Kemper is gone.  All my colonels are gone.  General, every one. Most of my men are gone.  Good God, sir, what about my men?”  Michael Shaara, The Killer Angels

“Having thus taken each citizen in turn in its powerful grasp and shaped him to its will, government then extends its embrace to include the whole of society.  It covers the whole of social life with a network of petty, complicated rules that are both minute and uniform, through which even men of the greatest originality and the most vigorous temperament cannot force their heads above the crowd.  It does not break men’s will, but softens, bends and guides it; it seldom enjoins, but often inhibits, action; it does not destroy anything, but prevents much being born; it is not at all tyrannical, but it hinders, restrains, enervates, stifles, and stultifies so much that in the end each nation is no more than a flock of timid and hard-working animals with the government as its shepherd.” Alexis de Tocqueville, Democracy in America

Taken together, these extracts, warn lovers of freedom, at this time,  to react cautiously to a major defeat in the war against progressive socialism.  Greed, stupidity, and an excessive desire for personal wealth on the part of Republicans, when  in office,  opened up the opportunity for the hard left to gain power.  Tyrants listen to reasoned argument only to treat it with open contempt; that is their nature, they can do no less and no more.  The progressive socialists currently have the divisions, and freedom lovers do not. Ideas are always trumped by power as the Emperor Napoleon recognized in his contemptuous dismissal of the Vatican: ‘How many divisions has the Pope?’  General James Longstreet was correct and General Robert E. Lee was mistaken. One should never attempt  to defeat  a significantly superior force  by a massed assault against a heavily fortified position.

An out-numbered army in defeat is tempted to engage in open battle on every available occasion.  That is the stuff that legends are made of;  but it is also the certain Road to Appomattox.  Now is the time for freedom lovers to regroup, to rethink their strategies, to engage in a defensive guerrilla warfare, designed to encourage the tyrant to overreach, to over extend his lines of supply, and then to turn and take him down.

Make no mistake, lovers of freedom are now engaged in a Great War, a war that will determine whether the United States can survive as a Land of Liberty. To open up an opportunity for victory, what is now required is not an aggressive General Lee at Gettysburg on July 3, 1863, but a defensive General Kutuzov at Borodino on September 7, 1812.  The  date for that battle is November 2012, not March 21, 2010, when the forces of freedom are still significantly under-manned and ill-prepared for a decisive engagement.

 

Lies and Damned Lies Versus Statistics

March 23, 2010

Throughout the year in which he  campaigned in favor of health care reform, President Obama threw out lie after lie, damned lie after damned lie,  about the implications of his legislative program.  A largely lazy,  gullible, and fawning media  provided him with a free pass, though a growing body of independent bloggers did not.

 A leading expert in this field, John Goodman of The National Center for Policy Analysis has closely tracked Obama’s terminological inexactitudes concerning health care reform.  In a column dated March 22, 2010, Goodman draws upon independent statistical estimates to refute each of Obama’s many false statements. In this column, I focus attention on  the most egregious of Obama’s Adventure in Wonderland:

Lie # 1:  “If you like the plan that you are in, you can keep it

Statistical prediction: Between 8 and 9 million individuals will lose their employer plan (Congressional Budget Office).

Statistical prediction: 33 million individuals in traditional Medicare are at risk of a significant reduction in access to care as a consequence of $523 billion of enacted cuts in Medicare spending (Medicare Chief Actuary).

Statistical prediction: 20 per cent of all hospitals in the United States will become unprofitable as a consequence of cuts in Medicare spending (Medicare Chief Actuary).

Statistical prediction: 8.5 million individuals are at serious risk of losing Medicare Advantage plan benefits as a consequence of the health reform legislation  (Medicare Chief Actuary).

Lie #  2: “There will be no tax increases for anyone who earns less than $200,000 per annum

Statistical prediction: 73 million individuals who earn less than $200,000 per annum will see their tax bills increase (Joint Committee on Taxation).

Statistical prediction:  A 40 per cent tax rate will be imposed on ‘Cadillac’ health care plans (Reconciliation Summary).

Statistical prediction: The legislation contains a hidden health insurance tax estimated to bring in $60 billion (Reconciliation Summary).

Lie # 3: “The average family will save $2,500 in health care costs by the time I complete my first term as President

Statistical prediction: The annual health care premium will increase by $2,100 for the average family (Congressional Budget Office).

Lie # 4: “Over the past year, the House and the Senate have been working on an effort to provide health insurance that lowers costs and that guarantees access to care

Statistical prediction: Health care spending will increase by $220 billion over the next 10 years (Medicare Chief Actuary).

Statistical prediction: 15 million new individuals will be added to Medicaid, where care is increasingly rationed and where provider choice is increasingly restricted (Congressional Budget Office).

Statistical prediction: There will be a zero number of new doctors, a zero number of newly trained nurses and a zero number of new hospitals built to meet the needs of 32 million newly-insured patients (Congressional Budget Office).

Lie # 5: “This is not about big government

Statistical prediction: 16,500 additional IRS auditors will be required to enforce the legislation (Ways and Means Minority report).

Lie # 6: “We are going to get rid of special deals

Statistical prediction: The new Bill provides for an extra exemption of $7,300 from the Cadillac premium tax, but only for members of labor unions (Ways and Means Minority Report).

Any CEO of a public corporation who advertised company stock on the basis of such a set of lies would end up with Jeffrey Skillings of Enron in a medium security prison.  Yet, Barack Obama claims that the rule of law reigns in the United States. 

Well, he would, wouldn’t he…

 

Liberty Dies in the United States of America

March 22, 2010

In Affectionate Remembrance

of

 LIBERTY IN THE UNITED STATES

WHICH DIED ON CAPITOL HILL, WASHINGTON, DC

21 MARCH, 2010

Deeply lamented by a large circle of sorrowing friends and acquaintances

___________________

R. I. P.

___________________

 

N. B.  – The body will be cremated and the ashes taken to Hong Kong


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