The left has gained no benefit from the 2008 crisis

May 8, 2013

The financial crisis of 2008 has been touted worldwide as a failure both of an economic system and a political system. More specifically, the apparent inability of democratic politics to handle its aftermath has threatened to undermine the consensus on liberal democracy and lightly regulated capitalism that emerged following the collapse of the Berlin Wall.

Contrary to many expectations, however, political groupings of the left have derived no benefit from the crisis. Socialist movements have waited for more than a century for capitalism to collapse from its own internal contradictions. Yet, when that prospect appeared likely to occur on their watch, leftist governments – especially in the United States and the United Kingdom – vied with each other to avert such a collapse by shoveling public money at the capitalists.

The ‘change you could believe in’, brought to the political arena by Barack Obama and by Francoise Hollande, was principally that they were not their predecessors. The failure of such leftist politics has now opened up opportunities for new political groupings – the Tea Party in the United States and the United Kingdom Independence Party in Britain – designed to destabilize the existing two party systems.

Such new groupings are disparate in nature, seemingly devoid of any unifying political program. What they have in common, however, is a new nationalism:

“Yet they share a resentment of others supposedly responsible for our problems – a media and a political class that supposedly fails to acknowledge popular concerns, and foreigners who do not share our culture or our heritage. United only in grievance, they are so varied because by their nature they can be only national.” John Kay, ‘Sinister or silly, protest politicians are united in grievance’, Financial Times, May 8, 2013

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Posted in economics and public choice, media rhetoric, relevance of economic knowledge, Uncategorized | 1 Comment »

The Chinese Dream of Premier Xi Jinping

May 7, 2013

During his first weeks in power, Xi Jinping, the new head of the ruling Communist Party, has promoted a slogan designed to unite an increasingly diverse nation: The Chinese Dream. News bulletins across the nation are full of his dream, evoking its American equivalent. A talent show on television is looking for ‘The Voice of the Chinese Dream’.

Unfortunately,Xi Jinping’s dream falls somewhat short of the aspirations outlined so eloquently by Thomas Jefferson in The Declaration of Independence and by James Madison in the Constitution of the United States. It does indeed encompass the pursuit of happiness: ‘To meet our people’s desire for a happy life is our mission.’ Unfortunately, it falls well short of any desire to promote individualism, and especially to advance the liberty of each individual from the reach of the Communist Party.

Instead, Xi Jinping’s dream incorporates a troubling whiff of nationalism and of a repackaged form of authoritarianism. It is no coincidence that Mr. Xi’s first mention of his dream of ‘the great revival of the Chinese nation’ came in November 2012 in a speech at the national museum in Tiananmen Square, where an exhibition called ‘Road to Revival’ lays out China’s past suffering at the hands of colonial powers and its rescue by the Communist Party.

In bowing towards a renewed nationalism, Xi Jinping is already courting China’s armed forces. In December 2012, on an inspection tour of the navy in southern China, he spoke reverently of a ‘strong army dream’. Suggestively, he told the generals that the spirit of a strong army lies in resolutely obeying the orders ofd the Communist Party. The Chinese dreams, he stated is an ideal. Communists should have a higher ideal, and that is Communism.

Of one thing, one can be absolutely certain. Xi Jinping’s dream falls well short of any notion of the rule of law. The rule of law can only come to China when dictatorship collapses. And Xi Jinping’s dream does not carry with it any notion whatsoever of a martyr’s death.

Hat Tip: ‘Xi Jinping and the Chinese Dream’, The EconomistMay 4, 2011

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Posted in nature of an autocracy, political philosophy, progressive socialism, relevance of economic knowledge, Uncategorized, war and peace | 2 Comments »

Cyprus should reunite

May 5, 2013

Greek Cypriots confront a grim economic future following banking collapse and bail-out by the euro-zone. Gross domestic product will decline by 15 per cent in 2013, by another 15 per cent in 2014 and perhaps by another 5 per cent in 2015..That is comparable to the decline over 1974-1975 following a failed Greek-led coup followed by a successful Turkish invasion and a Turkish-Cypriot-controlled north.

It will take many years for Greek-Cyprus to return to its pre-crisis level of gross domestic product. A more vibrant north currently rivals the lowered living standards of the south.

The island as a unified whole, however, would enjoy two promising sources of growth. One is the recently discovered Aphrodite gas field in the Easfrern Mediterranean. The other is tourism, an underdeveloped industry with plenty of scope for foreign investment.

Without reunification, both sources of wealth are unlikely to be tapped Both governments lay claim to the gasfield while the cheapest route for exporting the gas would through Turkey. Tourists shy away from unstable regions.

Whether Cypriots will respond to strong economic signals is far from certain. Cyprus, it is said, never misses an opportunity to miss an opportunity. However the combination of a Greek-Cypriot meltdown and the Aprhrodite gasfield may just suffice to return the crazy Cypriot people to to a modicum of rationality. Sometimes even irrational peoples recognize win-win situations.

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Posted in do well while doing good, relevance of economic knowledge, Uncategorized, war and peace | 2 Comments »

Affirmative action should be terminated

May 4, 2013

Above the entrance to the U.S. Supreme Court four words are carved: Equal justice under law. The message is perfect for a people that pursues inalienable rights to life and liberty and an imprescriptible right to property – even a society that once pursued such objectives very unevenly across the races.

It is tempting for some to request unequal treatment under law designed to benefit those treated badly in the past. Such indeed is a current occurrence in the United States with respect to certain ‘minority groups’. But what may be popular and widespread is fundamentally wrong.

Once equal justice under law has been established, it should never be violated again. For to violate the rule is to suggest that there is a better rule, which is untrue. No society can pursue the goals of life, liberty and property effectively in the absence of the rule of law. And those four words carved above the entrance to the U.S Supreme Court perfectly express the essence of the rule of law.

Hat Tip: Time to scrap affirmative action’, The Economist, May 4, 2013

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Posted in do well while doing good, liberty and classical liberalism, political philosophy, property rights, relevance of economic knowledge, Uncategorized | 2 Comments »

Illinois at last moves to control state pensions

May 3, 2013

Illinois has the dubious reputation of the worst state pension deficit in the United States: $98.6 billion.In part because of this, Standard & Poor’s gave Illinois the lowest credit rating in the nation.

Democrats, of course, control both the House and the Senate and the Governorship. So it is to their credit that the House has passed a bill to cut state pensions and to increase contributions. The Governor also supports the bill. The Senate is wobbling but may well endorse the bill.

Do not hold your breath readers, that commonsense is sweeping through Illinois. An 800 pound gorilla lurks in the shadows. The public sector unions threaten to sue the state for breach of contract should legislation go through. It is a truly hard battle to take down these dinosaurs who are the principal cause of such budgetary headaches.

Still there is a chance and that is much better than another roll-over by the state,

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Posted in budget deficits, do well while doing good, economics and public choice, relevance of economic knowledge, Uncategorized | 2 Comments »

President Obama vanishes into the ether of ego

May 2, 2013

“At the president’s news conference Tuesday, when a reporter wondered whether setbacks on gun control and the sequester suggested Mr. Obama was having problems pushing his second-term agenda, the president replied, ‘Well if you put it that way, Jonathan, maybe I should pack up and go home.’ Whoa, big fella. The presidency is a big game. We want you suited up and on the floor.’” Daniel Henninger, ‘Presidential Followership’, The Wall Street Journal, May 2, 2013

That the presidency attracts individuals focused on Number One is no revelation. That the focus sometimes reaches the psychological condition of narcissism, when a president actually lacks self-love, because of a disrupted childhood, and seeks compensatory adoration from campaign followers, is also not unknown. President Obama suffers from an excessive focus on Number One and a chronic form of narcissism. With 40 months in office remaining, this is a dangerous situation for the United States.

It is dangerous because such a leader essentially becomes a follower of any group of adoring citizens, concerned never to breach their love by an act of statesmanship. Standing essentially aloof from the major branch of government – the Congress – unable to lower his self-esteem by negotiating deals that are helpful to the public at large, Obama is trapped by his followers into a followership mode of governance. That is why he is essentially impotent on gun control laws, on fiscal policy, on Syria, and on Middle East policy.

“Whether Roosevelt, Nixon, Bill Clinton or George W Bush, every second-term president must in time come to grips with the reality that it can’t be about just him. It, the presidency, is unavoidably about offering clear leadership for all the American people and a watching, always unsettled world. If Barack Obama insists it’s about something else, everyone, including him, will have their bags packed for a long 40 months.” ibid.

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Posted in economics and public choice, Personality Disorders Among Politicians, redistributive politics, Uncategorized, war and peace | 5 Comments »

One more day, one more Obama wobble

May 1, 2013

In 2008, Barack Obama campaigned to close the prison at Guantanamo Bay, Cuba, a facility that he claimed was assisting the recruitment of terrorists. To that end he appointed the worst Attorney General ever in the United States, Eric Holder, purely because he also was a Bush-hater and a man who had no understanding of the nature of terrorism.

Early on during his first term, Obama discovered that George W Bush had a great deal more wisdom than he had imagined.Those prisoners held in Cuba were truly the scum of the earth. Almost every single prisoner released from that prison went straight back into anti-U.S. terrorism. Obama abandoned his campaign promise early in his first term after resistance from both political parties in the Congress. Eric Holder smoldered with anger at this retreat, but continued to serve in his lucrative and powerful office.

In his 2012 re-election campaign, Guantanamo Bay was well off the Obama agenda. Now he is wobbling once again, in response to a hunger strike adopted by some 100 of the remaining 166 prisoners. Apparently, Obama is deeply disturbed because 25 of those hunger strikers are being force-fed.

Given who and what those prisoners are, Obama should be rejoicing in the hunger strike and advising prison officials to to leave food and water in their cells, but otherwise let them do what they will. If 100 prisoners starve themselves to death, everyone is better off – the prisoners who hope to reach Paradise, the taxpayers who pay hard-earned money to keep them in prolonged captivity, and the civilized world that does not have to protect itself from their evil.

Obama is out of ideas and out of energy. So he looks for a fight with Congress on a truly wobbly agenda that he will not win

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Posted in Personality Disorders Among Politicians, political philosophy, progressive socialism, redistributive politics, Uncategorized, war and peace | 3 Comments »

Obama confronts a bleak second term

April 30, 2013

Barack Obama ran a carefully orchestrated 2012 re-election campaign. For any one who bothered to read or to listen carefully, however, Obama had remarkably little to say on what he would do during his second term, should he be re-elected.

So it comes as no surprise to discover that Obama has only one policy initiative – immigration reform – that stands even a remote chance of passing into law, unless the House of Representatives falls into Democratic Party hands in November 2014. The optimism about immigration reform stems not from any leadership from Obama, but from concern within the Republican Party about losing Hispanic voters, many of whom should find a natural position within the GOP.

After winning a marginal tax rate increase on individuals earning in excess of $400,000 per annum, Obama’s economic policies are in disarray. The sequester, that he had signed into law was allowed to take place, so far with minimal harm to the economy. His attempt to use his presidential powers to impose maximum harm on U.S.citizens – a strange presidential tactic do you not think – failed when a vote-conscious Congress moved to protect the flying public and Obama had to confirm their intervention. He has no chance whatsoever of imposing any additional taxes on Americans – rich or poor – unless he accepts major tax reforms designed to bring down rates while eliminating exemptions. And that he will not do.

His ineffectual attempt to tighten gun laws, even following the gift-horse of the Newtown massacre, has ended in ignominious defeat in no small part at the hands of Democratic members of the Senate. That policy will not be revived certainly prior to 2015.

His parody of a foreign policy is collapsing before his eyes as Bashar Al-Assad openly flaunts the use of chemical weapons jeering at Obama’s non-existent red-line. His shift of emphasis away from the Middle East to Asia is stymied as long as the Syrian civil war results in cataclysmic death rates and as al-Qaeda watches hopefully for chemical and biological weapons’ pickings from the disintegration of what once could be called a country.

Sadly for the United States, President Obama looks increasingly like a man in an empty suit, bereft of ideas, unwilling to take time out from fund-raising to do the heavy lifting of policy formation is a divided government. The President, in short, has decided to coast through his second term.

Bring on the clowns!

Hat Tip: Edward Luce, ‘All Obama’s manoeuvres lead back to impasse’, Financial Times, April 29, 2013

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Posted in economics and public choice, immigration policy, Personality Disorders Among Politicians, political philosophy, pro-union policies, progressive socialism, redistributive politics, Uncategorized | 3 Comments »

The closing of the Yale University mind

April 28, 2013

On Thursday April 25, 2013, Donald Kagan made his farewell address to Yale University. The 80-year old scholar of Ancient Greece provided a biting critique of American higher education in general and of Yale University in particular. He was too civilized to call his farewell address by its correct name: ‘The closing of the Yale University mind’, though his in-office comment prior to the address tells it all:

“You can’t have a fight because you don’t have two sides. The other side won.”

Universities, he proposed in his address, are failing students and hurting American democracy:

“On campus, I find a kind of cultural void, an ignorance of the past, a sense of rootlessness and aimlessness. Rare are faculty with atypical views. Still rarer is an informed understanding of the traditions and institutions of our Western civilization and of our country and an appreciation of their special qualities and values.”

Mr Kagan courted hostility many times during his stint at Yale University. In 1990, as Dean of Yale College, he argued for the centrality of the study of Western civilization in an ‘infamous’ address to incoming freshmen. A storm followed on a campus that was dominated by Marxist-Leninist and Maoist ideology. He was called a racist – or as the campus daily more politely editorialized – as a peddler of European cultural arrogance.

In April 1992, Mr. Kagan resigned the deanship, lobbing a bomb at the faculty that had bucked his administration. His plan to create a special Western Civilization course at Yale – funded with a $20 million gift from philanthropist and alumnus, Lee Bass – blew up three years later amidst a political backlash. ‘I still cry when I think about it’, says Mr. Kagan.

As he looks at his Yale colleagues today, he says: ‘You can’t find members of the faculty who have different opinions.’

The tussles over course offerings and campus speech at Yale speak to something much larger. Democracy, wrote Mr. Kagan in Pericles of Athens is one of the rarest, most delicate and fragile flowers in the jungle of human experience. It relies on free, autonomous and self-reliant citizens and extraordinary leadership to flourish, even survive. These kinds of citizens are not born – they need to be educated. the essence of liberty, which is at the root of a liberal education, is that meaningful freedom means that you have choices to make. If you don’t have that, it’s not only that you are deprived of knowing some of the things you might know. It’s that you are deprived of testing the things that you do know, or do think you know, or believe in, so that your knowledge is superficial.

Evidently, the mold from which Mr. Kagan emerged has now been crushed across the Yale University campus – and many many more across the United States. However, there remains a sliver of hope for the future. Mr. Kagan’s farewell address received a standing ovation from students and alumni in the packed auditorium. The faculty for the most part either boycotted his address or remained sullenly on their seats, resistant to the last to atypical ideas that challenge the hegemony of the closed Yale faculty mind. Let us hope that the current Yale faculty is a dying breed, to be eviscerated by the free-flowing ideas that pulse across the Internet and cannot so easily be shut down.

Hat Tip: Matthew Kaminski, ‘Democracy May Have Had Its Day’, The Wall Street Journal, April 27, 2013

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Posted in political philosophy, progressive socialism, redistributive politics, Uncategorized | 6 Comments »

Francois Hollande and the French economy both down the drain

April 27, 2013

Francois Hollande is down and out in Paris, his popularity rating as President having fallen faster and further than that of any other president since the Fifth Republic began in 1958.

The reason for his decline and fall is the progressive socialist agenda that he touted during the election campaign and that he has attempted clumsily to pursue since gaining office. The French economy has seized up in response to his anti-business rhetoric, unemployment now stands at 11 per cent, and the targeted reduction in the budget deficit to 3 per cent of gross domestic product by the end of 2013 has already been abandoned. That target will not be achieved during a progressive’s presidency.

The 75 percent top marginal income tax rate that he imposed immediately upon accessing the Elysee Palace succeeded in driving a number of top companies and a number of top celebrities into exile in other grateful European Union countries. The increased tax rate failed to generate any net revenue as tax avoidance and tax exile escalated in response to what is widely considered to be government theft.

In December 2012, France’s constitutional council provided Francois Hollande with a second chance when it ruled that the 75 per cent tax rate was unconstitutional and noted that no individual tax should exceed 66.6 per cent. Alas! progressives are not to be deterred by such rulings. Caught between political betrayal and folly, Mr. Hollande naturally chose folly.

On March 28, 2013, Hollande announced that the 75 per cent tax rate would still be imposed on incomes in excess of E1 million, but that they would be paid for by firms rather than their employees. Clearly this stupid man has no understanding of the nature of tax incidence, in particular of the conditions required for an income tax increase imposed on an employer not to be passed on in a salary reduction to an employee.

Why are progressives always so ignorant of basic economics? My former colleague Gordon Tullock explained the lacuna by noting that no good economist could ever be a progressive.

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Posted in economics of John Maynard Keynes, Personality Disorders Among Politicians, political philosophy, pro-union policies, progressive socialism, redistributive politics, relevance of economic knowledge, Uncategorized | 2 Comments »

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