Posts Tagged ‘progressive socialism’

Obama plays the political gridlock game

March 5, 2013

With the January 1, 2013, tax revenues in his pocket, it is now clear that President Obama has decided to play the political gridlock game.

The objective of this game is to proffer policy proposals that have no prospect of legislative success. The president’s aim is to achieve a Democratic Party majority in the House of Representatives in 2014, and then to unleash progressive socialism across the nation throughout the final two years of his rule.

If his Democratic majorities are sufficiently large, Obama may ask Congress to initiate the repeal of the 22nd Amendment, in order for him to run for the presidency for a third and perhaps even a fourth term, thus emulating his great progressive predecessor, FDR.

Obama’s political gridlock game has been exposed by The Washington Post, a newspaper that is located deep inside Obama’s trouser pockets and is far from generally hostile to his administration.

“The article says that shortly after finishing his speech on Election Night last year, Mr. Obama called Mrs. Pelosi and Steve Israel, who runs the Democratic House re-election campaign, to discuss 2014. The strategy fits Mr. Obama’s unprecedented new effort to raise $50 million in $500,000 chunks to fund Organizing for Action (OFA), which will spend millions in GOP-held districts. Mr. Israel says he met in January with Jim Messina, Mr. Obama’s 2012 campaign manager who now runs OFA,to discuss the 2014 races.” ‘Obama’s Pelosi II Strategy’, The Wall Street Journal, March 5, 2013

So informed readers can now watch the unfolding of the Obama strategy. No legislation on spending cuts without significant additional tax revenues; no immigration reform without leap-frogging of illegal applicants over legal applicants; no gun law reform without a ban on all multiple-chamber weapons.

The GOP will have to tread warily in order to avoid such Obama foot-traps. The best response is for the House to prepare a high quality tax reform and spending reduction bill designed to take the United States to budget balance by the mid-2020’s. Such a bill should be supported by extensive publicity and promoted by a world-class orator.

If Obama’s strategy succeeds, the United States as we have known it, will cease to exist. It will be replaced by a progressive socialist republic, and the Joad families of this country will be migrating outwards, as best they can to Australia, New Zealand, and Canada and other countries that have avoided the social democratic disease.

Let’s not twist again

September 22, 2011

“Come on let’s twist again like we did last summer

Yea, let’s twist again like we did last year

Do you remember when things were really hummin’

Yea, let’s twist again, twistin’ time is here

Yeah round  ‘n up ‘n down we go again

Yea, let’s twist again, twistin’ time is here.

Chubby Checker Lyrics, 1961″

 Chubby Checker’s  twistin’ time is here again!  On September 21, 2011, The Federal Reserve Open Market Committee  announced its decision to revert to a 1961 policy twist designed to reboot the United States economy.  The stock market saw the policy for what is was worth: the Dow Jones Industrial Average dropped 283.82 points on the news flash.

 Ben Bernanke has done it again! When Bad Ben is about to make a policy statement, sell the U.S. stockmarket short and you will make a packet. That is what happens when progressive socialists occupy positions of authority in a market economy.

To be fair, the problem does not lie entirely with Bernanke and the other six stagflationers on the Federal Reserve Open Market Committee who voted with him, though it surely does not lie with the three dissenters who stood up for price stability and sound money.  The problem lies also with the dual  mandate Congress gave the Fed – to pursue maximum employment and stable prices over the long term. 

 This dual mandate is not required of central banks in the rest of the world, where the pursuit of stable prices is the only mandate imposed.   The current state of economic knowledge does not support the dual mandate, since the goals of maximum employment and price stability often appear to be in conflict. Monetary policy should be restricted to promoting sound money and price stability. Laissez-faire capitalism,  operating under sound money and the rule of law, will do the rest. 

The F-twist, in its 2011 manifestation, involves the Federal Reserve selling off immediately $400 billion of  its  Treasury notes due to mature within three years or less while simultaneously purchasing $400 billion of  Treasury bonds  at the long end of the market – with six to 30 year maturities.  The intent of the F-twist is is to put further downward pressure on longer-term interest rates and to help to make broader financial conditions more accommodative. With long-term interest rates already at historic lows, this policy is unlikely to promote an investment boom across the United States.

The F-twist goes further than this.  The Fed will also invest the principal payments that it receives on its asset holdings into mortgage-backed securities, rather than into U.S. Treasuries.  The objective here is to reduce yet further mortgage rates, thus supporting the housing market.  With mortgage rates already at historic lows, this policy is unlikely to reverse the downward trend in house prices or materially to reduce the foreclosure overhang that is the key symptom of house-market disequilibrium in the United States.

The F-twist clearly worsens the balance sheet of the Federal Reserve. With its balance sheet distorted  by excessive long maturity holdings, should sound money require significant increases in long-term rates of interest, the Fed’s assets could be halved or more as bond prices collapse.  With its balance sheet distorted by holding high risk securitized mortgages, if foreclosures get back on track, significant portions of the Fed’s assets may turn out to be worthless.  Both possibilities render the Fed a hostage to fortune.

If the Fed were restricted to a single mandate of  ensuring sound money, it would more likely acknowledge the evident truth of September 2011. The United States economy is experiencing a capital strike that will continue until President Obama is removed from office, be it in 2012 or in 2016.  Few firms will invest in market development or will hire new employees while uncertainty about the future of the federal debt and question-marks over the direction of progressive socialism hang over the market-place.

Only the political market-place can clear those uncertainties and determine whether the United States will continue on its current trajectory into Second World status, or whether it will recover its exceptionalism and, once again, show other nations a clean pair of economic heels.

Unfortunately no agency of government can twist its way around that epochal  choice. It can only take the economy round ‘n round and up ‘n down again!

Barney Frank prepares the ground for inflation

September 15, 2011

Far-left Democratic Congressman, Barney Frank, co-architect of the Dodd-Frank financial reform legislation, is pushing to curb the influence of the regional presidents of the Federal Reserve system.  He believes that their votes are skewing Fed policy excessively towards containing inflation instead of towards promoting employment.  Ideally, Barney Frank would like to dis-enfranchise the regional members of the Fed.  Failing that, he would like the Regional Presidents to be nominated by the President subject to confirmation by the Senate.

Frank is correct with respect to his fear but completely wrong, as always, with respect to his policy response. The primary role of the Fed is and should remain that of containing inflation. By containing inflation it will set the scene for job creation. Barney Frank does not understand the nature of stagflation – the inevitable consequence of stoking inflation as a misguided mechanism for firing economic growth. It would seem that Barney Frank has no taste for economic history and no memory of the 1970s.

Normally 12 votes are cast in meetings of the Fed open market committee, the Fed’s policy-making body.  Seven belong to the chairman and his board, one to the head of the New York Fed, and four, by rotation, to presidents of the other regional Feds.  With fewer than half  the votes on the FOMC, the regional presidents have accounted for 90 per cent of recent dissents, urging greater caution on monetary stimulus than chairman, Ben Bernanke and his board prefer.  Interestingly, members of the Fed board rarely dissent from its chairman. Voting within that group follows the USSR polit-bureau principle.

The regional Feds represent an interesting public-private hybrid.  Their members are banks-shareholders of a sort, with voting rights.  Inevitably, this constrains their independence from banking interests. But at least it isolates them from Washington politics.

Given a choice between a fully politicized Federal Reserve system or a geographically diversified system containing some representation of the financial services industry, only a progressive socialist like Barney Frank – I am being kind in not fingering him as further left than that – would opt for the former.

In an election year, Barney Frank has little chance of succeeding in this mission. But he surely never stops trying!

The Progressive Movement

May 31, 2010

“Progressivism was the reform movement that ran from the late 19th century through the first decades of the 20th century, during which leading intellectuals and social reformers in the United States sought to address the economic, political, and cultural questions that had arisen in the context of the rapid changes brought with the Industrial Revolution and the growth of modern capitalism in America.” M. Spalding, T.G. West and W.A. Schambra, ‘The Progressive Movement and the Transformation of American Politics’, www.heritage.org. July 2007

I have referred to progressives and to the progressive movement from time to time in these columns, without carefully defining the concepts. So I shall now rectify that omission. Following closely the approach of  T.G. West,  I shall identify the progressive movement in terms of its categorical rejection of the fundamental principles that underpinned the Founding of the United States.

1. The rejection of nature and reliance on history

The Founders argued that all men are created equal and that they are endowed with  inalienable rights to life and liberty and (I would argue) with an imprescriptible right to property. This natural moral order comprises rules, discovered by human reason, that promote human flourishing.

The Progressives dismissed these arguments as naive and unhistorical. In their judgment, liberty is not endowed by God but by the state. Man is a social construct. As Thomas Dewey wrote: ‘Natural rights and natural liberties exist only in the kingdom of mythological social zoology.’

2. The purpose of government

For the Founders, the gift to man by nature – the capacity to reason and the moral law discovered by reason – is more valuable than any gift from government. Yet, since men are not angels, government is necessary for the security of liberty. Government, in this sense, is always and fundamentally in the service of the individual.  Its purpose is to enforce the law of nature, to secure an individual’s negative freedom from the despotic and predatory domination by some men over others. In the Founding, the purpose of government is not to secure positive rights such as the freedom from want or poverty.

The Progressives disparaged this limited view of the role of government. In their judgment, the role of the state is to free individuals from the limits imposed by nature and necessity.  The primary role of the state shifts to the fulfillment of human capacities, that is to the provision of positive freedoms. As Dewey wrote: ‘Laws and institutions are means of creating individuals.’

3. The relevance of consent and compact as the basis for society

The Founders argued that political society is formed by a voluntary association of individuals through a social compact. This consent extended beyond the Founding to embrace its ordinary operations. Government under a universally-endorsed  rule of law was a fundamental premise of this social compact.

The Progressives poured scorn on this notion. As Charles Merriam wrote: ‘The origin of the state is regarded, not as the result of a deliberate agreement among men, but as the result of historical development, instinctive rather than conscious, and rights are considered to have their source not in nature, but in law.’

4.  The limits of government

For the Founders, government – though grounded in the divine law (that is, the laws of nature and of nature’s God) – was itself a human artifact, compromised by all the strengths and weaknesses of human nature.  As such, it must be limited, both because it was dangerous for it to become too powerful, and because its role was not to provide for the highest things in life.

The Progressives, in contrast, viewed the state as divine and the natural as low.  Private property was singled out for particular criticism, with many progressives referring to themselves as socialists. As John Burgess wrote: ‘the most fundamental and indispensable mark of statehood is the original, absolute, unlimited power over the individual subject, and all associations of subjects.’

Although there is much more to the Progressive Movement than I can outline in this short column, the distinction outlined above between the philosophy of the Founders and that of the Progressives surely serves its purpose.  Readers will perhaps  now understand  more clearly the distinction that I make between classical liberalism and progressive liberalism. They may also understand why I refer to President Obama as a progressive socialist.

Hat Tip to Sneaker

Goldman Sachs: Harbinger of the State Capitalist Firm

April 21, 2010

In earlier columns, I have warned about the potential threat to  freedom and  wealth in any nation that drifts away from laissez-faire capitalism under the rule of law towards state capitalism under rule by men.  The European Union succumbed to such drift several decades ago, with predictable consequences. Since 2001, the United States has followed suit, with the September 2008 financial crisis an entirely predictable consequence. Lessons have not been learned since then.  Currently, the United States is on track to drift  beyond the limits of  state capitalism to progressive socialism or  liberal fascism –  two closely- related, ultimately autocratic movements.

Goldman Sachs, is no  exception to, but rather is the epitome of the corporate form best adapted to conditions of state capitalism, progressive socialism, and liberal fascism.  Goldman Sachs, indeed, is the harbinger of America’s corporate future in the absence of some unlikely reversal of political economic direction.  Goldman Sachs is the perfectly designed two-way sewer,  pumping excrement in and out of privately-networked  political markets  and in and out of  politically-networked private markets. Goldman Sachs, to put it more bluntly, is designed to work the sewer system, extracting all valued protein  for itself, while discharging the residuals into any waste dump corrupt enough, or foolish enough to provide access to its  pipes.

Let us briefly outline the complex nature of Goldman Sachs’ linkages between political and private markets within the United States (without forgetting that the corporation is multi-national and that what we see in the United States is at least equally apparent in other countries).

Brody Mullins and Jean Spencer ( ‘Goldman Links Cut Both Ways’,  The Wall Street Journal, April 20, 2010) trace the pattern of Goldman Sach’s direct infiltration into the US political system. This  infiltration started under the administration of FDR when Sidney J. Weinberg, a Senior Partner of GS, 1930-1969,  became Vice Chairman of the War Production Board , remaining there through the ensuing two Truman administrations.  It has manifested itself with increasing force since 1995.  Robert Rubin, Co-Chairman and Co-Senior Partner of GS, 1990-1992, served as Treasury Secretary under President Clinton, 1995-1999.  Joshua Bolten, Executive Director for Legal and Government Affairs in London for GS, 1994-1999, served as Chief of Staff to President George W. Bush 2006-2009.  Henry Paulson, Chairman and CEO of GS 1999-2006, served as Treasury Secretary under President George W. Bush, 2006-2009.

The GS sewer pipes extend more deeply into the regulatory process. Reuben Jeffery III, Managing Partner of the GS Paris office, 1997-2001, served as Chairman of the Commodity Futures Trading  Commission, 2005-2007.  Stephen Friedman, Co-Chairman of GS, 1990-1994, served as Chairman of the Federal Reserve Bank of New York in 2008 and 2009.  Neel Kashkari, Head of IT Security Investment Banking Practice at GS, 2002-2006, ran the $700 billion Troubled Asset Relief Program until May 2009.  Gary Gensler, Co-Head of Finance at GS, 1995-1997, has served as Chairman of the Commodity Futures Trading Commission since May 2009.  Bill Dudley, Partner and Managing Director at GS until 2007, has served as President of the Federal Reserve Bank of New York since January 2009.

Money, of course, is the mother’s milk of politics, and politicians, Republican and Democrat alike, drink deeply from the GS pales.  According to the nonpartisan Center for Responsive Politics, the GS political action committee and its employees, since 1989, has ranked second among corporate donors (to AT&T Corporation)  in total campaign donations – $31.6 million.  Almost two-thirds of the money has gone to Democrats, making GS their largest single donor.  GS is the fourth largest corporate donor to Republicans.  Barack Obama scooped up nearly $1 million from GS employees during his 2008 presidential campaign. The next largest recipient of GS-related contributions was Hillary Clinton, at $500,000.

Undoubtedly, the infiltration of GS personnel and GS monies into US politics has provided opportunity and cover for their dirty dealings in private markets. As I have outlined in earlier columns, GS is currently under investigation by financial regulators around the world, in addition to the US Securities and Exchange Commission’s fraud charges over tts mis-selling of derivatives. GS has now been named in a court filing seeking information about short-selling Lehman shares in September 2008. In a further potential legal case, AIG is considering suing Goldman over $2 billion of losses it incurred when it was forced to pay protection to buyers of credit-default swaps when collateralised debt obligations (CDOs) in GS’s Abacus program lost their value.

It is sometimes claimed that when thieves fall out, honest men come into their own. Unfortunately, in the world inhabited by Goldman  Sachs, the number of honest men appears to be vanishingly small. I am sure that anyone who lived under Benito Mussolini’s Fascist Italy, or Adolf  Hitler’s National Socialist Germany would immediately identify with this depressing  and truly dangerous phenomenon.

Sweet Liberty: Lost in Bruce Bartlett’s Translation

April 12, 2010

“The freedom which consists in being one’s own master, and the freedom which consists in not being prevented from choosing as I do by other men, may, on the face of it, seem concepts at no great logical distance from each other – no more than negative and positive ways of saying the same thing.  Yet the ‘positive’ and ‘negative’ notions of freedom historically developed in divergent directions, not always by logically reputable steps, until, in the end, they came into direct conflict with each other.” Isaiah Berlin, Four Essays on Liberty, 1969

It is always difficult to respond to a column that is permeated with confusion and incoherence, the product of a mind that lacks analytical precision and clarity. Such is the case with Bruce Bartlett’s April 9, 2010 Forbes.com stream of consciousness entitled: Has America Really Become Economically Unfree?  Because Bartlett’s confusion is dangerous for liberty, correctly defined, I return to a topic that I have already addressed in my column dated December 29, 2009.

Bartlett’s confusion stems from his inability to distinguish between negative and positive freedom as defined by Isaiah Berlin in his famous 1969 statement reproduced above. 

The correct definition of liberty or freedom is negative freedom, the condition of men in which coercion of some by others is reduced as much as possible.  Liberty, or freedom, describes the absence of a particular obstacle – coercion by other men.  The presence of liberty, or freedom, does not guarantee man wealth, good health, good looks, happiness, or indeed any circumstance in life except freedom from coercion. Liberty, or freedom is not universally valued by men, but for the man devoted to liberty or freedom, there is nothing that makes it important. And he has no reason for his devotion. The reality that complete liberty, or freedom, is unattainable, because it is the nature of man that the strong will always attempt to dominate the weak, whether through government or through private associations, does not imply that it should not be prized above all else.

The direct enemy of negative freedom is positive freedom, which derives from the desire by man to be his own master, to be independent of external forces of whatever kind, to be rich where he is poor, to be handsome where he is ugly, to be healthy where he is sick, to be happy where he is miserable, all by invading the negative freedom of others, by coercing them to his will, by divesting them of their properties for his own advancement and the supposed advancement of others in society.

In essence, the difference between negative and positive freedom is encapsulated in the difference between the classical liberal doctrine of limited government, private property, individual liberty and the rule of law, on the one side  and  the progressive socialist doctrine of unlimited government, communal property, the  regulatory state,  and  rule by any vote majority, on the other side.  Because the United States teeters on the dividing line between these two doctrines at this time, Bartlett’s attempt to fuse the two into a single murky philosophy must be confronted in the clearest possible way.

Bartlett acknowledges in his column that Government intervention is taking some toll of liberty in the United States.  Concern about such losses, however, is exaggerated by libertarians and conservatives:

“we tend to underappreciate the ways in which technology frees us.  The blessings of things like cellphones, PDAs and the Internet compensate for an enormous amount of waste and inefficiency elsewhere in society and the economy.  To the extent that technology boosts productivity, it makes the burden of government more bearable.” (Bartlett, Forbes.com)

Translated: “Give me digital television and a DVD recorder in my prison cell, and I am free.”

“Another thing we tend to forget is the great benefit of the wealth that almost all Americans have today.  Not many years ago, people had to spend an enormous percentage of their waking hours simply acquiring and preparing food. Now, even among poor households, obtaining adequate food is a minor concern.” (Bartlett, Forbes.com)

Translation:  “Just push my three squares a day through the slit in my prison door and I am free.”

“At the same time, advanced health care and nutrition, not to mention Social Security and Medicare, have vastly increased freedom in old age.” (Bartlett, Forbes.com)

Translation: “Nurse me from the cradle to the grave in my warm prison cell, and I am free.”

In a lengthy column, Bartlett cites example after example of positive freedoms, provided by an ever-expanding, coercive state, as counter-balances to the curtailment of negative freedom. He never remotely recognizes the fundamental difference between the two concepts.  Mr. Bartlett,  positive freedoms are not freedoms at all in the true sense of the term. They are redistributive transfers that  require the coercive power of the state, and that significantly diminish the liberty, or freedom, of mankind.

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.

The Exit Option

March 13, 2010

Mankind, for the most part, is selectively gregarious, attracted to groups that range in size from the family to the nation.  Mankind is less gregarious beyond the limit of the nation state, preferring rivalry to union at those outer-fringes of association. Migration patterns clearly reflect such preferences.  Individuals and families move frequently between local communities,  counties, provinces and states; but much less frequently and more cautiously across national borders. Caution at the border, indeed, is a prudential instinct, because the cost of exit, at that margin,  is discrete and high.

I can speak with a degree of authority on this issue because I exercised the exit option on December 27, 1983 when I migrated from England to the United States, my family following me some few months later, once I had established a  small footprint in the New World. I remember well how nervous and uncertain we were in contemplating that awesome option, how carefully we mapped out the detailed pros and cons, yet how we ignored the most problematic (family-related, culture-related) costs of walking out on our country and our kind.

For a nation is more than a congregation of individuals living in proximity each with the other.  A nation is  a history, a culture, a system of norms and traditions, of laws and protections, that have evolved over unfolding centuries. Surely some of those evolving characteristics grate upon our psyches; how could they not in a community composed of individuals with widely varying tastes and preferences, differing lifetime experiences and divergent economic prospects. 

Yet, within a nation, until a breaking point is reached, evolution itself induces toleration. Like the water that we drink, water that not infrequently brings discomfort to the stomach of the stranger, but not to ourselves, our minds and bodies become attuned to our environment. We tolerate what we do not enjoy as a justifiable price of citizenship. We avoid what we cannot tolerate, until there is no haven left in which to hide. At that point only do we confront the exit option.

A significant number of  talented Americans currently are reviewing that exit option as progressive socialism stalks the land, most especially now that it has seized control, possibly irreversibly, over the instruments of power. As always, in such circumstances, the best are the first to leave; for they have the most attractive options among which to choose. Those nations that value individual freedom most highly, that support property rights most vigorously, that limit their governments most effectively in order to allow laissez-faire capitalism to thrive, are beacons beckoning those who are brave, those who are supremely talented, those who are successful, and those that value freedom highly, to join them in their great journey. 

Americans know this, deep down in their souls, because the United States was such a beacon until its citizens recently and carelessly have extinguished the flame of their exceptionalism, much as the citizens of Great Britain had rejected their exceptional heritage during the dark, tragic,  socialist years that followed  triumph in the war to defend Western civilization. The United States increasingly is the land of those who wish to be unfree, the home of individuals who lack the bravery to stand nobly on their own two feet, but rather would lean upon the crutch provided by a paternalistic welfare state.

The very nature of the club has changed. The United States is now increasingly a magnet, not for the ambitious and the talented,  the highly educated and economically successful, but for the uneducated, and unskilled, the unambitious and  economically unsuccessful immigrant attracted by the housing, welfare and health subsidies increasingly provided by federal state and local government. One can see this most clearly by attending any new citizenship ceremony.  Democratic Party activists are always there, strategically placed to welcome the new citizens into Democratic Party membership and to enroll them into progressive socialist policy programs. There are few impulses of entrepreneuship evident in that room. Those ceremonies are not, at least in my experience, reflective in any real sense of the Land of the Free, the Home of the Brave.

As the nature of the club adjusts away from self-reliance and toward reliance on government, exit as well as entry is affected. As the average quality of the human capital stock is eroded at one end by new entry, so it is eroded at the other by new exit. While those of us who will not confront the exit option  fight the eroding quality of the club, through voice and through example, others predictably choose to leave. In tomorrow’s column, I shall address some of the most important costs of outward migration for citizens of the United States who currently are reviewing such an awesome option.

Hat Tip to Brian Baugus

A Progressive Socialist Takeover at the Federal Reserve?

March 12, 2010

“Hundreds of thousands of rouble notes are being issued daily by our treasury.  This is done, not in order to fill the coffers of the State with practically worthless paper, but with the deliberate intention of destroying the value of money as a means of payment.  There is no justification for the existence of money in the Bolshevik state, where the necessities of life shall be paid for by work alone. Experience has taught us it is impossible to root out the evils of capitalism merely by confiscation and expropriation, for however ruthlessly such measures may be applied, astute speculators and obstinate survivors of the capitalist classes will always manage to evade them and continue to corrupt the life of the community.  The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort.  Already even a hundred-rouble note is almost worthless in Russia.  Soon even the simplest peasant will realize that it is only a scrap of paper, not worth more than the rags from which it is manufactured.  Men will cease to covet and hoard it so soon as they discover it will not buy anything, and the great illusion of the value and power of money, on which the capitalist state is based will have been definitely destroyed.  This is the real reason why our presses are printing rouble bills day and night, without rest.” Vladimir Ilvich Ulianoff Lenin, ‘Interview’, Daily Chronicle (London) and  New York Times, April 23, 1919.

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.  By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method they can not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some.  The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth.  Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of hatred by the bourgeoisie, whom the inflation has impoverished, not less than of  the proletariat.  As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.  Lenin was certainly right.  There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.  The process engages all the hidden forces of economic law on the side of destruction, and it does so in a manner which not one man in a million is able to diagnose.” John Maynard Keynes, The Economic Consequences of the Peace, London: Macmillan, 1919.

“President Barack Obama plans to nominate Janet Yellen as vice chairman of the Federal Reserve Board, a person familiar with the matter said.  Ms. Yellen, president of the Federal Reserve Bank of San Francisco since 2004, has been a strong supporter of Fed Chairman Ben Bernanke’s policies to fight the deep economic downturn.  One of the more dovish policy makers among the fed’s 12 regional bank presidents, Ms. Yellen has been a key advocate of the Fed’s policy of near-zero interest rates and a massive expansion of the central bank’s balance sheet, even as some regional Fed officials advocate for pulling back the monetary stimulus more quickly….Ms. Yellen has been especially concerned about high unemployment and sees little risk of inflation.” D. Paletta, S. Reddy and J. Hilsenrath, ‘Obama to Tap Yellen for Fed Vice Chair’, The Wall Street Journal, March 12, 2010.

These quotations speak pretty much for themselves. As readers of this column are aware, President Obama has the opportunity to fill two additional vacancies on the Fed’s Board of Governors. A judicious choice of nominees will provide him with a clear majority on the Board. Janet Yellen is a progressive socialist, Ben Bernanke has sold out to that cause in return for a coveted second term in the Chair. President Obama is a progressive socialist, Speaker Nancy Pelosi is a progressive socialist, and Senate Majority Leader, Harry Reid is a progressive socialist. A large  majority of Democratic members of both the House and the Senate vote as progressive socialists.  A majority of the electorate is not progressive socialist, at this time.

However, once their hard-earned wealth has been  wiped out by high and volatile rates of price inflation, where do you think that an electoral majority may stand in November 2012, Dear Readers?  More important, where do you think that Obama, Pelosi and Reid (if he is still in office) think that such a financially ruined electoral majority will stand? 

Whatever else they may have been, Lenin and Keynes were not fools.  Like Professor Moriarty and Sherlock Holmes, they were endowed with intellectual genius, just like those characters in the novels by Conan Doyle,  plotting on opposite sides of the spectrum.  The Republican Party minorities in the House and the Senate, unfortunately, score much closer to Lenin’s evaluation of the brain-power of the Russian peasant, than to the genius of Lenin and Keynes.  So, we must continue to enjoy life  in dangerous times.


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