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David Goldman compares the lost decade of Japan with the economic mess here in our country.

…During Japan’s “lost decade” of the 1990s, everyone was working, everyone kept their homes, everyone maintained their lifestyle (minus some shopping trips to Paris), and life carried on more or less the same. America enters the second decade of the millennium with un- and underemployment around 20%.

Japan went through its great retirement wave in the 1990s, just as America must during the 2010s. But the Japanese for years had saved massively, and exported massively in order to do so. If a country’s population ages rapidly, the soon-to-retire cohort will shift from consumption into savings. Japan had insufficient young people to absorb the investment requirements of the 40- and 50-year-olds, and therefore had to invest overseas. Japan’s industrial genius made it the world’s premier exporter, and Japan was able to save successfully to fund the retirement wave–even though consumption remained weak and real estate prices fell and the stock market fell to a third of late 1980s peak.

How are Americans going to save? They can’t buy home mortgages; they could buy US Treasuries at 2.5% for a 10-year maturity; they can buy the junk bonds now flooding the market; or they can leave their money in cash at a fraction of a percent. As aging American shift from consumption to saving, they must do so by reducing domestic purchases. The Japanese could save by exporting and remain close to full employment. American’s savings requirement cannot be met in the same way, because Americans have forgotten how to export. There aren’t enough soybeans and corn to make much of a difference; with a few exceptions, America has lost its edge in capital goods as well as consumer goods, excepting commercial aircraft and a few other pockets of strength. …

James Glassman writing in Commentary on the failure of the liberal stimulus experiment.

… Perhaps a lack of stimulus spending would have made matters even worse. No one knows. You can’t do a controlled experiment. But you can understand the public reaction: We spent all this money, and got almost nothing.

Bastiat would have appreciated one of the obvious explanations for the impotence of the stimulus. In 1957, Milton Friedman argued that attempts to increase consumer demand through government spending are doomed. The reason, Friedman wrote, is that individuals make their decisions about consumption by looking at their likely income and wealth far into the future. (He called it the “permanent income hypothesis.”) If the government starts spending huge sums today, consumers foresee higher taxes and, by inference, presume that their lifetime incomes will drop because of the increased level of their tax burden.

If government spending is short-term or one-time-only, which is what the stimulus was supposed to be, then individuals might be expected to take a more benign view. But the 2009 stimulus did not take place in a vacuum. It was soon accompanied by other economic policies and proposals of the Obama administration and the Democratic Congress: health-care reform extending public coverage to 30 million new people, cap-and-trade energy proposals featuring vastly higher taxes, and the imminent expiration of the Bush tax cuts at the end of 2010.

Because of these policies, the “unseen” became “seen” in a fashion devastating to the politicians supporting them. Americans judged that the party in power intends the radical expansion of the size of government in perpetuity. That expansion will have to be paid for. There is no reason to expect very much good from the future if you are the sort of person who generates income and creates jobs. Your “permanent income” is going to decline, and your gut response will be to husband your resources. …

… For the public, the worry extends beyond the debt itself to the very role of the federal government. According to Gallup, by a margin of 57 percent to 37 percent, Americans say there is “too much” rather than “not enough regulation of business by government.” Big business is unloved, but more and more, government is seen as clumsy, venal, and self-serving.

There is no denying that the narrative about how greedy financiers caused the economic crisis still has currency. But another narrative now looms larger. It is that the government’s attempts to fix the problem through spending have been ineffectual at best and, more likely, dangerous to our economic health.

When the financial meltdown occurred, it seemed almost certain that Americans would judge that the conservative economic experiment of 1981-2008 had failed. Instead, they seem to be leaning in the opposite direction—toward a conclusion that it was the liberal economic experiment of 2009-10 that has failed.

This conclusion is not being warmly embraced so much as reluctantly conceded. Things could change. Conservatives will face a challenge later this year over whether to extend tax cuts that, at least from a “seen” viewpoint, will further increase the debt. Still, when you consider that a repudiation of free-market capitalism and what President Sarkozy called a “return of the state” appeared almost certain when the crisis broke, we should be both humbled by and thankful for this strange and constructive turn of events.

In Forbes, Richard Epstein advocates scaling back government to allow the economy to grow.

…Our economic woes are so manifest that we have to look for an alternative strategy to getting out of the current hole. It will not do to take a fatalist attitude toward lackluster private demand. Something has to be done to revive it–now. Here is one agenda: reduce the level of economic uncertainty by getting government out of the stop and go business once and for all. What is needed are stable economic policies that work as well in good times and in bad ones, so as to remove the need to articulate and implement some nonexistent exit strategy.

There are only two ways to do this. The first is a set of permanent tax cuts on capital gains and high incomes, which will give our most productive individuals the incentive to invest and innovate that they so sorely lack today. The hostility of the Obama administration to these moves right now causes more harm than any public stimulus program can undo.

The second approach, on which Tyson and Krugman take a seeming vow of silence, is major deregulation to stimulate growth, while cutting wasteful government expenditures. No single regulatory program has the general pop of a sound fiscal or tax policy. But the cumulative effect of countless bad policies exerts a profound negative effect on both employment and growth. …

In the Economist blogs, W.W. in Iowa City, who we’ve heard from before, discusses different theories about the economic crisis, and then sums up the role that government played. What caused the credsis will be debated for decades, so we will keep highlighting items we believe add some clarity.

…I think it at least fair to say that it is very plausible that government policy played a central role in the crisis. If the combination of low interest rates, favourable tax treatment for residential capital gains, a web of heavily promoted initiatives to make it easier for lower and middle-income Americans to buy houses, regulations mandating the purchase of subprime loans, capital requirements goading banks into holding lots of “safe” assets do not “put government at the center of the crisis”, I can’t imagine what would. Which is not to say that the market did not fail. Indeed, it is impossible to specify what the market is in isolation from the rules that define the possibilities and terms of exchange. The market failed. And the market was what it was because government made it that way. …

The NRO staff post several of Charles Krauthammer’s remarks about the president. This one is accurate and bad news for the country:

…On whether ideology will keep Obama from changing his position on allowing the upper-income Bush tax cuts to expire:

“I’m not sure it’s entirely ideological. I think part of this is pure narcissism. I don’t think I’ve ever heard him say I changed my mind or I was wrong. …”

Daniel Hannan comments on Greenland’s criticism of Greenpeace, in the Telegraph, UK, blogs.

…The prime minister of Greenland – a socialist, no less – has attacked Greenpeace for sabotaging an Arctic exploration rig. Kuupik Kleist is plainly not a politician given to circumlocution:

The cabinet regards Greenpeace’s action as very serious and an illegal attack on the country’s constitutional rights. It is worrying that Greenpeace, in their hunt for media exposure, violate security rules made to protect human lives and the environment.

…Lefties have always liked the idea that they are speaking for those who would otherwise have no voice – which is, of course, a very creditable motive. The trouble is that, when the previously voiceless do find their tongues, they often say things that their erstwhile protectors find awkward. A hundred years ago, socialists presumed to speak for the proletariat. When the proletariat turned out to have some uncomfortably conservative views, they shifted their attention to the oppressed peasantry of the Third World. When these, too, turned out not to have the correct opinions, they moved on to more recherché communities: hunter-gatherers in rainforests and the like. …

In Newsbusters, Noel Sheppard highlights a surprising conversation on Hardball.

A truly astonishing thing happened on MSNBC Monday: three devout, liberal Obama supporters said the President is responsible for people thinking he’s a Muslim.

During the opening segment of “Hardball,” in a discussion about Glenn Beck’s “Restoring Honor” rally and how the host and attendees view Obama’s faith, Newsweek’s Howard Fineman said, “Barack Obama probably should have joined a church here…some things in politics you have to do at least for the symbolism.” …

The Economist reports on exciting new technology in a surprising place.

BIG crowds, strong surf and powerful rip currents are only a few of the obstacles that lifeguards must overcome to keep swimmers safe. Strong winds can pull many bathers out to sea simultaneously, overwhelming the guards if there are only a few of them. And, since average swimming speed is about 3kph (2mph) even a single rescue mission can take more than half an hour.

A profession ripe, then, for automation. And that automation is now at hand. Hydronalix, a marine-robotics firm based, rather surprisingly, in landlocked Arizona, has come up with EMILY—the Emergency Integrated Lifesaving Lanyard. This device, which is being tested at Zuma beach in Malibu, California, is a remote-controlled, 1.4-metre-long, 11kg buoy with a foam core covered by red canvas and surrounded by ropes. A human lifeguard can keep but a single person afloat. EMILY, by contrast, is buoyant enough to save five at a time. The ropes let swimmers cling to the device or climb on top of it until a lifeguard arrives on the scene. …

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Toby Harnden comments on the Ground Zero mosque controversy and interviews a Muslim man who is against the building location. Ahmed Sharif is an amazing example, though, for the positive attitude he has of America despite having been the victim of an anti-Muslim attack. 

It took a Manhattan taxi driver called Ahmed Sharif to speak out for America, which is being vilified as bigoted and Islamophobic because of the controversy generated by opposition to the so-called “Ground Zero mosque”.

The United States was his dream country, he enthused, and he loved New York City. “I feel like I belong here. This is the city actually [for] all colours, races, religion, everyone. We live here side by side peacefully.” …

…Ahmed Sharif, a victim of real anti-Muslim bigotry, stated that the attack on him was an aberration and that America is a land of tolerance and opportunity. What a shame that Obama, despite his much-vaunted gift with words, appears unable to speak about such things with similar eloquence.

Roger Simon responds with logic to the name-calling from the Left.

…With very minor exceptions, I have seen little irrational fear of Islam in our society. What I have seen is a lot of serious and justifiable dislike of the religion for its ideology — notably its heinous treatment of women and homosexuals and its opposition to the separation of church and state, all codified by its all-encompassing Sharia law that seeks to legislate all facets of existence while instituting a global caliphate.

Nevertheless, soi-disant liberals and progressives or whatever they want to call themselves accuse those who dislike Islam for those reasons of irrational fear.  …

… Today there are 1.5 billion adherents of Islam, 21% of the world’s population. Achieving a global caliphate is not entirely unlikely. Irrational fear or ideological battle?

Mark Helprin writes an eloquent explanation why the mosque should not be built near Ground Zero.

…Building close to Ground Zero disregards the passions, grief and preferences not only of most of the families of September 11th but, because we are all the families of September 11th, those of the American people as well, even if not the whole of the American people. If the project is to promote moderate Islam, why have its sponsors so relentlessly, without the slightest compromise, insisted upon such a sensitive and inflammatory setting? That is not moderate. It is aggressively militant.

Disregarding pleas to build it at a sufficient remove so as not to be linked to an abomination committed, widely praised, and throughout the world seldom condemned in the name of Islam, the militant proponents of the World Trade Center mosque are guilty of a poorly concealed provocation. They dare Americans to appear anti-Islamic and intolerant or just to roll over.

But the opposition to what they propose is no more anti-Islamic or intolerant than to protest a Shinto shrine at Pearl Harbor or Nanjing would be anti-Shinto or even anti-Japanese. How about a statue of Wagner at Auschwitz, a Russian war memorial in the Katyn Forest, or a monument to British and American air power at Dresden? The indecency of such things would be neither camouflaged nor burned away by the freedoms of expression and religion. And that is what the controversy is about, decency and indecency, not the freedom to worship, which no one denies. …

David Warren theorizes about some of the pressures that Islamist radicals are placing, directly and indirectly, on moderate Muslim communities.

…Reasonable Muslims and their children — trying to get on with their lives… — are the targets of a very sick propaganda, designed to persuade the psychologically unstable that Allah loves to kill infidels gratuitously. And over the world at large, Muslims are by far the most numerous victims of Islamist acts of carnage: quite literally tens of thousands killed and maimed in the time we’ve been counting since 9/11.

But when they look outside the community, they feel themselves being held responsible for a murderer’s creed. …

…Moreover, the very strategy of the Islamists is to isolate Muslim emigrant communities; to prevent their assimilation into the West and its (truly corrupted) values. In other words, to put every Muslim in a position where he is either with the Islamists, or against every aspect of his own identity. …

…The mosque insistence on distinctive Islamic dress contributes more to this separation, day by day, than isolated acts of terrorism.

Our media insistence on publicizing the more radical Islamic spokesmen, at the expense of the more reasonable, also contributes mightily to this by enhancing and promoting the radicals’ prestige. …

The president walked into this one. Peter Wehner comments with polling numbers on Obama’s response to the oil spill.

In his interview from New Orleans yesterday with NBC’s Brian Williams, commemorating the fifth anniversary of Hurricane Katrina, President Obama assured the world that his handling of the oil spill in the Gulf of Mexico was not his administration’s Hurricane Katrina.

The president is right, if the people of Louisiana are to be believed. Mr. Obama’s handling of the BP oil spill is judged by them to be considerably worse than how Bush reacted to Katrina.

A Public Policy Polling survey reports this:

The oil spill in the Gulf may be mostly out of the headlines now but Louisiana voters aren’t getting any less mad at Barack Obama about his handling of it. Only 32% give Obama good marks for his actions in the aftermath of the spill, while 61% disapprove.

Louisianans are feeling more and more that George W. Bush’s leadership on Katrina was better than Obama’s on the spill. 54% think Bush did the superior job of helping the state through a crisis to 33% who pick Obama. …

Peter Wehner also blogs on the president’s good work spreading conservative ideas.

Here’s the latest from Gallup:

“Republicans lead by 51% to 41% among registered voters in Gallup weekly tracking of 2010 congressional voting preferences. The 10-percentage-point lead is the GOP’s largest so far this year and is its largest in Gallup’s history of tracking the midterm generic ballot for Congress.”

What Barack Obama is doing for the fortunes of the GOP is nearly unmatched by anyone in modern political history.

Michael Barone looks at the anti-liberal mood in two places minimally affected by the recession.

…In Alaska, Republican Sen. Lisa Murkowski was expected to be easily renominated over Fairbanks lawyer and political newcomer Joe Miller.
But the voters had other ideas.

In Alaska, Miller’s narrow lead of 1,668 votes may vanish as at least 7,600 absentee and mail ballots are counted.

…Whatever the final outcomes, there are lessons to be learned. One is that the current unpopularity of leftist parties in the Anglosphere (Republicans lead Democrats by a record margin in polls on voting for the U.S. House) are not just a reaction to bad economic times.

…Murkowski was hurt by her assertion in debate that the Constitution put no limits on Congress’s ability to make laws.  She won votes from Alaska insiders and Alaska Natives for supporting spending on local programs, but not as many as local pundits expected. …

In the WSJ, Kelly Evans reports on the reintroduction of the Austrian school of economics, and the man, Peter J. Boettke, who is leading the charge. Evans also pinpoints the challenge for these economists: how to scale back government intervention and allow the needed market corrections to occur.

Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution.

But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead. …

…It wasn’t a lack of government oversight that led to the crisis, as some economists argue, but too much of it, Mr. Boettke says. …

…But as much as the Austrian diagnosis may resonate now, it doesn’t provide a playbook for what to do next, which could limit its current resurgence. …

In Forbes, Paul Johnson asks whether a college education is worth the investment.

…The quality of higher education received seems to bear no relation to the success or failure of most Presidents. The two greatest, George Washington and Abraham Lincoln, had to learn the hard way. On the other hand, another distinguished President, Woodrow Wilson, first attracted notice as president of Princeton.

It is striking how much or how little great inventors and scientists learned at university. Thomas Edison never attended one, discovering his genius instead while working as a teenage telegraph operator. Charles Darwin went to Cambridge to study for the church but derived the greatest benefit to his career during long rambles with J.S. Henslow, a professor of botany. Darwin was known in his student days as “the man who walks with Henslow.” What Cambridge did give Darwin was the opportunity to reinforce his capacity to work hard and systematically and to expand the range of his enquiring mind.

Indeed, the study of universities and the great men and women who have attended them leads me to think that the best of these schools are characterized not so much by what they teach and how they teach it but by the extent they provide opportunities and encouragement for students to teach themselves. The best also help to instill certain intellectual virtues in young minds, including respect for the indispensable foundation of democracy, the rule of law; the need to back up opinions with clear arguments, empirical evidence and hard work; the varying importance of resolute conviction and friendly compromise, when appropriate; open-mindedness at all times; and the perpetual need for courage in the pursuit of truth. …