Archive for August, 2012

When in doubt review the candidates’ resumes

August 31, 2012

Most Americans are disappointed in the first-term performance of President Barack Obama.  This disappointment runs across the political spectrum.  The man talked an uplifting talk in 2008 but could not walk the walk in the following four years. In every aspect of his portfolio, President Obama has failed to deliver. His failure is most marked in the most important responsibility – helping to create an environment conducive to job creation and economic growth.

Obama made two crucial errors of judgment in the first year of his administration. First he chose as key economic advisers  Lawrence Summers and Christina Romer, two left-leaning Keynesian economists who locked his economic policies into job destruction and economic stagnation.  Those advisers gave the President exactly what he requested, with a  gift that almost certainly will take him out of the White House in 2013. Second, he allowed his attention to switch from the economy to health care reform at a moment of economic crisis. That was a completely unforgivable error for which surely he will be punished

Barack Obama came to the White House with the slimmest of resumes. His principal career in Chicago was that of a community activist. His record of non-attendance in the United States Senate  was a disgrace to his office and to those who voted him into the upper Chamber. Since then, I suggest, a poor resume has spiraled downhill.

Mitt Romney, of course, has no prior White House experience to put on the table – that is always the handicap of the challenger. However, he has built an impressive, diversified resume both in the private and in the public sector that should attract national attention:

“If a resume decided the question, the former Massachusetts Governor would win in a walk.  As convention viewers have heard this week, his range of experience, and success in multiple endeavors, far exceed anything Barack Obama could boast in 2008 or today.  It’s clear that he can make decisions and delegate authority and his choice of Paul Ryan as a running mate suggests good judgment and an eye for talent.  The Mormon Church elder has led what is by all accounts an exemplary life.  He has an admirable marriage and family that seem odd in this era only because they are so free of obvious dysfunction.  Mr. Romney also seems to be comfortable enough in his own skin that Americans needn’t worry about another President with deep but hidden flaws.  He is competitive but not obsessive.  He would not be another paranoid Nixon, bullying LBJ, or Slick Willie.” Editorial, ‘The Romney Opportunity’, The Wall Street Journal, August 31, 2012

Of course, resumes alone are an insufficient basis on which to base one’s vote in a presidential election. Because Governor Romney had to fight off challenges from two trash-talking lightweights – Newt Gingrich and Rick Santorum – he was dragged away somewhat from his admirable focus on job-creation and economic growth into areas that should lie outside the scope of the legislative and executive branches of government – abortion, religion and marriage.

So now that he has been nominated, a courageous Mitt Romney should forcefully explain that economic and not social or religious policy will be his exclusive domestic focus, should he be elected into office. The religious right will not like to hear that message. But will their fanaticism be better served under Obama than under Romney?  Some may not turn out, but they will be overwhelmed by the independents who carry Governor Romney into a White House newly- focused on helping to revive an ailing economy.

 

The Medicare debate: how much do the old care about the young?

August 30, 2012

The leaders both of the Democratic Party and the GOP  obfuscate as best they can about the future of Medicare in the United States.  They do so because they each fear that telling the truth will cost their Party the votes of senior citizens in the November 2012 elections.

The harsh economic truth is that federal outlays on Medicare are currently on an unsustainable path. Today they account for some 3.5 per cent of gross domestic product. As the baby boomers retire, these costs will rise relative to the economy by some thirty percent, lifting Medicare outlays to some 5 per cent of gross domestic product by 2020.

What is unsustainable will not happen.  So per capita federal  outlays on Medicare assuredly will decline over the coming eight years. This decline will not be passed down exclusively to future retirees. It will quickly impact the present as well as the future. Now not all seniors understand this unpleasant arithmetic – there is a great deal of stupidity in any nation – but many undoubtedly do so.

How those seniors with functioning brains respond to this reality will determine the economic future  of the United States.  If they press narrow self-interest over the well-being of the future generations – their own children and grandchildren – they may be able to drag out reforms until economic Armageddon imposes its will upon the nation.  By ramping up the federal debt and paralyzing entrepreneurship they will lie comfortably in their hospital beds while their offspring stand forlornly  in ever-expanding dole lines.

Somehow, however, that does not seem to me to square with the American way. Most, though surely not all, American adults care about their offspring more than they care about themselves.  In such circumstances, sacrifices will be made, once the options are fully outlined for their consideration.

The President is the person on whose shoulders the relaying of unpleasant arithmetic morally should fall. President Obama has no shoulders for such a responsibility, apparently no moral integrity for such a task. But that will not make the Medicare problem disappear. It will simply fester and infect the economy as the disease metastasizes, thereby rendering the eventual surgery much more problematic for the future good health of the nation.

Republican Convention Day 1

August 29, 2012

Yesterday in Tampa, Florida was a good day for the GOP.  The program was well-organized and well-promoted with an excellent slate of speakers.  With only one exception – the slimy anti-abortion- focused Rick  Santorum – the speakers kept a relentless focus  on the economy.  This is essential, because if the election turns primarily on the economy President Obama is toast. His record is backward not forward on all fronts: worse unemployment, worse economic growth, worse indebtedness, worse hope, worse change. ‘No we can’t.’   There is no economic Morning in America for 2013  if an Electoral College majority sticks with Barack Obama.

The theme of Day 1 was  ‘We made it’. Those three words perfectly projected the essence of the American Dream that drives enterprise in free-market America. It was aimed like a dagger at the heart of President Obama’s exclusively negative and mean-minded divisive election campaign.

Political conventions easily slide into shallow rhetoric and, of course, there was much of that.  The Speaker of the House was the worst offender and that was unfortunate as he opened the evening program.  Rick Santorum followed up with a speech that made me cringe with almost every self-serving word that he uttered.  Mitt Romney served the nation well by disposing of this corrupt politician in the GOP primaries.

Political conventions also lend themselves easily into self-promotion. Governor Chris Christie served up a banquet in that respect as he prepared the audience for a 2016 run for 1600 Pennsylvania Avenue, rather than setting the scene for a Romney/Ryan victory in 2012.  Surely, The Governor  will have to discipline his appetite to have any chance at all of victory.  Indeed, he will have to discipline his appetite to live long enough to run.  It is difficult to appear serious about putting one’s nation on a debt diet when one evidently will not offer an example to an increasingly obese nation by remotely attempting to eliminate excess belly-fat.

Political conventions rarely lend themselves to authenticity. And in this respect, the Republican convention dramatically defied the odds. First the balanced, factually accurate account of Virginia Governor, Bob McDonnell set the tone.  Then the simply magnificent Ann Romney stole our hearts and souls. With a First Lady like Ann  Romney, who clearly loves and respects  her husband just as much as she loves and respects her country, the nation will be well blessed. It is impossible to imagine that Hillary Rodman could have spoken so authentically about Bill Clinton in the wake of the Gennifer Flowers ‘affair’ during the 1992 Democratic Party convention..

Now we await the remainder of the convention to determine whether Mitt Romney and Paul Ryan live up to the high standard set by Bob McDonnell and Ann Romney.  The bar is set extremely high. If the two candidates vault it effectively, the White House is theirs to lose.

 

Government Motors pays the price for indulging Obama

August 28, 2012

General Motors announced yesterday that it plans to suspend production of its battery-powered Chevrolet Volt for 26 days as part of a move to pare excess inventory.  This is the second time this year that output has been idled due to demand-failure for this $40,000 vehicle.  About 1,400 hourly workers will be affected by this production halt.

The Volt has been heavily promoted by GM as an example of the company’s technological prowess.  It is a creature of President Obama’s extravagant bailout in 2009, following the complete economic collapse of the company.  President Obama has touted the vehicle as an innovative step forward in support of energy conservation and the green economy. Detractors justifiably counter-claim that it is a boondoggle completely out of sync with consumer preferences.

The evidence mounts that the detractors are right and that the President is wrong. As usual, the President floats in  a dream world in which consumers are robots primed to respond to his every fantasy. It is an encouraging sign that George Orwell’s  1984 nightmare is not yet a reality and that consumers remain free to flip the United States President, and the company that he now owns,  the proverbial bird.

Hat Tip: Jeff Bennett, ‘GM Curbs Volt Plant Production’, The Wall Street Journal, August 28, 2012

Political advertisements versus talking with cabbies

August 27, 2012

Because the Commonwealth of  Virginia is considered to be  marginal  in the upcoming presidential election, the television is suffused with moronic advertisements from both presidential candidates and their well-heeled supporters.  Without exception, I find these interruptions offensive to my intellect and to my palate. They are almost all negative attacks.  Rare indeed is even a nugget of a positive statement about what either candidate actually will try to do in the next four years,  if elected. After Labor Day, when these campaigns take off in earnest, we shall switch off entirely from any program that allows advertising and focus on cable movies for the limited time that we indulge ourselves in television entertainment.

Is it not interesting how patronizing presidential candidates are of their captive audience?  The messages are designed for individuals with an IQ of approximately 50. They are blatantly dishonest with respect to facts. And they always end or begin with a sneeringly elitist candidate telling his audience just who he is, as if anyone with functioning eyes and ears could have any doubt whatsoever. At least we are not exposed to their body sweat!

Now compare that experience with entering into a conversation about the upcoming election with virtually any taxicab driver that you encounter in any city in the United States. The taxicab driver will swiftly size up his customer’s likely political preferences. He will never offend.  He will always discourse in knowledgeable terms about any issue in which his customer advances an opinion.  Rarely will you leave such a cab without being better informed than when you hailed the ride.

Cab-drivers are well-informed because they usually listen to news programs on the radio as they patrol the street.  They do so no doubt in order to keep informed about the weather and traffic jams.  Since they are seeking tips from satisfied customers, they share their acquired knowledge willingly and in an interesting fashion. Since they have higher IQs and a much better sense of direction  than the typical presidential candidate, they have much more of relevance to impart and much more sophisticated ways in which to impart it.

Maybe we should restrict presidential candidates to the nation’s cab-drivers. At least I would not have to shut down my television for the last two months of a two-year long campaign on matters trivial.  I might even enjoy the uplifting experience of a knowledgeable debate.

Progressive philosophy and political correctness in US universities

August 26, 2012

The term university itself suggests and implies that such institutions should be open to all ideas rationally advanced.  Surely, they should not be institutions dedicated to advancing any particular brand of social philosophy.

Sadly, this is not the case.  Almost without exception, U.S. universities are controlled by senior bureaucrats of progressive, left-leaning persuasion.  Unconstrained by any profit-motive, these individuals indulge their own personal preferences in the organization of ‘their’ universities. They do so through a discriminatory allocation of budgets to specific programs, through hiring and tenuring practices,  and through the imposition of speech restrictions to enforce political correctness across ‘their’ campuses.

Evidence is irrefutable about the success of their interventions. University faculty are inexplicably out of balance regarding politics by comparison with the general population.  Regularly, opinion polls show university faculty committing  86 per cent in favor of Democratic Party presidential candidates – even when the choice is between Ronald Reagan and Jimmy Carter, or Ronald Reagan and Walter Mondale. The history of much more evenly-contested  US presidential elections suggests that enormous bias exists in faculty hiring and promoting, and that enormous pressures are exerted against non-tenured  hired  faculty who fail to toe  the progressive line in their academic publications.

This situation is enormously unhealthy.  Even scholars committed to the progressive philosophy surely must recognize that the closing off of debate, to such an extent, is detrimental to human flourishing.  Safely ensconced at George Mason University, the Virginia Political Economy program has withstood powerful progressive pressures to survive for just short of 60 years as one of a small number of high-quality, non-progressive departments of economics across the nation.

It has done so only through an established academic eminence – two Nobel Prize winners in James M. Buchanan and Vernon Smith, an inter-disciplinarian genius in Gordon Tullock,  the world’s finest black economist, Walter Williams and an army of international recognized scholars attracted by inspired leaders – that has overwhelmed  bureaucratic resistance.

By the way, note that I refer to Walter Williams as black and not as African-American. That is the way that he likes it. Walter is  an American and understands that the noun requires no qualification. Walter’s office also openly displays a Confederate Flag, something that is not widely on display in public offices in this land of the free.

The Virginia Political Economy program was not always so well-placed to survive the onslaught of progressive philosophy. It commenced life in the 1950s at Mr. Jefferson’s academical village in Charlottesville, Virginia. A left -leaning University of Virginia administration, during the late 1960s, viciously attacked and dismantled that program, in the process driving out  two future Nobel Prize winners – James M. Buchanan and Ronald H. Coase –  as well as Gordon Tullock.  Well worth the price, those bureaucratic progressives  defiantly would pronounce once the Prizes were won.

Fortunately for free markets, the Virginia Political Economy program was able to regroup  in the foothills of the Appalachian Mountains, welcomed by President Marshall Hahn of Virginia Tech who cared much more for scholarship and for putting one over on Mr. Jefferson’s academical village, than he did for any form of crude ideology.

When a revitalized Virginia Political Economy program came down from the mountain to the Big City in 1983, Washington itself realized that a significant blast of fresh air had blown in just south of the Mason-Dixon line. With Ronald Reagan in the White House, the intellectual program, for a time at least, was  warmly welcomed by the government of the nation.

The future of university libraries

August 25, 2012

Over the past fifty five years, since I first entered the University of Nottingham as an undergraduate student, university libraries have always played a central role in my life.  The moment I enter one of those libraries, I feel at home. The sweet sense of silence that always greets me, in a world of largely senseless noise, is a tonic to my  soul.

Of course, not all libraries are equally well-endowed as sources of knowledge. Libraries at the universities of  Oxford, Nottingham, London School of Economics, and Newcastle Upon Tyne ranged (in that order)  from outstanding to excellent. Those at the newer universities of Kent at Canterbury, York and George Mason, naturally were less well-endowed, but still imbued with the basics for scholarly endeavor.

So I have been deeply disturbed during the summer of 2012 to find the library of George Mason University decreasingly occupied, either by scholars or by students. On some occasions, indeed,the number of staff significantly exceeded the number of visitors.  Last week, I asked a librarian why this was so. ‘ Libraries are increasingly viewed as obsolete’, she replied to my question.  ‘Individuals below the age of 40 pick up everything they can on line and do not have the attention span to explore a library, to read a lengthy tome from cover to cover, or to sit quietly in one place for more than 40 minutes.’

Sic transit gloria mundae!

 

The importance of being able to speak freely

August 24, 2012

The United States prides itself on being a free country. And in many ways it is. The constitution protects speech fairly well by comparison with many other countries.

However, most Americans are far from free to say what they like about many issues that directly affect their lives.  In particular, those who work for others are highly constrained about what they may say about their superiors without endangering their job security. Even those at the peak of the workforce are vulnerable to media coverage should they wander out into politically incorrect territory.

The result is the suppression of controversial ideas, not by force, but by economic pressure.

I was thinking today just how fortunate I am in this respect. I am now just about as free from economic pressure from above as any one can be. And that is such a wonderful gift. When I encounter bad behavior, as not infrequently I do, from senior bureaucrats in institutions with which I am acquainted, I am free to say, without fear of significant harm, that such behavior is not only gross, but that it is entirely predictable.

I am free to say, as  I now so do, that many of the most senior bureaucrats in state universities predictably pursue policies that maximize their own personal wealth and hunger for power.  If a choice must be made between providing excellent education or padding the bank accounts of such administrators, the decision to pad will be made. If world-class   academic programs threaten the quiet life or the ideological bias of the senior bureaucrat, those programs will be efficiently repressed. That is simply the nature of the game.  Cooks’ perks, I believe they are called.

Freedom of speech is a very special liberty. On it depends many other freedoms that underpin the good society. It is in scarce supply even in the most free of nations.  It takes a great deal of individual courage to preserve, especially in the non-profit sector of the economy, where bureaucratic  discretionary power is most abundant.

Hat Tip:  Friedrich von Hayek,  (1944) The Road to Serfdom, Chapter 10, ‘Why the Worst Get on Top’.

 

 

It is the economy, Governor Romney

August 23, 2012

Most Americans dislike, even fear, Islamic fundamentalism. They fear it because it is irrational and encourages crazy behavior on the part of its adherents.

So why do many Americans relish Christian fundamentalism, even desire to eliminate the separation between Church and State, so that evangelical Christianity can flourish across the Republic?  Why do so many Tea Party members support the outrageous ranting of Representative Todd Akin, about ‘legitimate’ rape and the ability of women to shut down their bodies against intruding sperm?

Surely what is sauce for the goose is sauce for the gander, to mix a metaphor. Do Americans not understand that if Todd Akin had the power once wielded by Osama bin Laden, he  would be out on a similar warpath against liberated woman?

Akin’s rant, and subsequent intransigence against stepping aside from the upcoming Missouri Senate race, offers Governor Mitt Romney a unique opportunity to focus the presidential race where it surely must be: on the economy.

Romney, if he is in any sense a statesman, should grasp the nettle that threatens to tear the GOP apart. He should clearly and unequivocally distance his campaign from the social positions held by the right-wing of his party including, to some extent, by his running-mate.  He should emphasize that a Romney presidency will not pursue any active role on such issues as gay marriage and abortion.  He should stress that his exclusive focus, following an election victory, will be on the economy and foreign affairs.

Of course, such a stance would provoke unrest from the extreme right. But where else will they go?  Turn out and vote for Romney and conservative economics; or stay at home and endure another four years of Barack Obama!  For sure, most of them will turn out. And the independents – including independent women –  will then flock to Romney’s court.

Why do big government projects escalate in price?

August 22, 2012

John Kay (Financial Times, August 22, 2012) notes that  price increases for  big government projects systematically exceed the general inflation rate by enormous orders of magnitude. Most though not all of his examples are British, but the phenomenon itself is world-wide.

The general price level in Britain increased by a factor of 10 between the Victorian era and 1960 and by another factor of 10 in the 50 years that followed.From this perspective let us review two of John Kay’s several examples.

The London Olympics of 1908 cost just 20,000 pounds. The London Olympics of 1948, allowing for price inflation, should have budgeted out at no more than 160,000 pounds, especially as it was supposed to be a post-war austerity event. In fact, it budgeted out at 750,000 pounds. On a similar calculation, from 1908 to 2012, the London Olympics of 2012 should have budgeted out at 2 million pounds.  The current estimate for that spectacle is 12 billion pounds!

The earliest underground railway lines in London – and in the world – cost half a million pounds a mile to build.  The cost of the Victoria Line , built in the 1960s, rose almost exactly in line with general inflation, coming in at 7 million pounds a mile.  A short decade later, the Jubilee Line cost 36 million pounds a mile to build – way above the interceding rate of price inflation.  and its extension in the 1990s cost 360 million pounds a mile, many degrees of magnitude above the interceding rate of price inflation.  In 2012, the tunnels for Crossrail – the newest underground railway connection in London – are budgeted at 1 billion pounds a mile!  Exponential budget increases of this magnitude raise serious questions about the accountability of big public sector projects.

For sure, increases in the number of events scheduled for the Olympic Games and heightened risks of terrorist interventions play some role in justified cost increases for the Games.  Equally, changing public views on construction safety and on mitigating adverse environmental consequences, play some role in justified cost increases for underground construction.  However, given the magnitude of the budget increases outlined, something else must be in play.

John Kay acknowledges this reality in his column, gently skirting around the  real culprit:

Only a few global companies are now perceived as capable of running mega projects, and they are hired by often inept public sector purchasers.  These clients change their minds frequently and are prone to insist on idiosyncratic specifications. Perhaps the principal culprit is technological overkill.  The argument that we need the best and latest is powerful in political decision making, even among people who would never behave that way in their everyday lives.” John Kay, ‘Why do we need to pay billions of pounds for big projects?’ Financial Times, August 22, 2012

Public choice scholars are a tad more blunt than the gentlemanly Oxford scholar, John Kay.  Rent-seeking, we call such behavior. Rent-seeking is the process whereby well-heeled bidders invest in politicians and government agencies, lashing out money in the form of campaign contributions and personal bribes in return for government favors of one kind or another.The objective, of course, is to get back significantly more than what they have outlayed, and to protect those fruits from their less-well-heeled competitors.

The result is a 12 billion pound Olympic games and 1 billion pound per mile for digging  holes in the ground. And public debt rising to unsustainable levels.

 


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