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We have more on the Kansas speech. This time from Richard Epstein.
… No amount of data can slow down this president. His deep protectionist instincts are revealed when he stokes the jingoist fires by saying: “If you’re somebody whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages or better benefits, especially since fewer Americans today are part of a union.” At no point does he bother to note the tension between protectionism and his general proposition that Americans are entitled to have better quality goods at better, i.e. lower, prices. Instead, he thinks he can square the circle by forcing wages up while keeping prices down. He takes a regressive stand against automation, outsourcing, and the rationalization of business facilities when he writes:
Factories where people thought they would retire suddenly picked up and went overseas, where workers were cheaper. Steel mills that needed 100—or 1,000 employees are now able to do the same work with 100 employees, so layoffs too often became permanent, not just a temporary part of the business cycle. And these changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the Internet.
To anyone schooled in economics, these statements reveal a breathtaking ignorance about the sources of national prosperity. It is a good thing when plants can achieve the same output with less labor. Do we really want an America in which thousands of people work in dangerous occupations to turn molten lava into steel bars? Far better it is that fewer workers are doing those jobs. The jobs lost in that industry will be in part replaced by newer jobs created in the firms that build the equipment that make it possible to run steel mills at a lower cost and far lower risk of personal injury. The former workers can seek jobs in newer industries that will only expand by competing for labor.
And what about those ATM machines? Does the president really want people to have to queue up in banks to make deposits or withdraw cash in order to make a boom market for human tellers? Perhaps we should return to the days before automation, when phone calls were all connected by human operators. And why blast the Internet, which has created far more useful jobs than it has ever destroyed?
The painful ignorance that is revealed in these remarks augurs ill for the long-term recovery of America. With the president firmly determined to set himself against the tides of progress, innovation will be harder to come by. The levels of unemployment will continue to be high as the president works overtime to impose additional restrictions on the labor markets and more taxes at the top of the income distribution—both backhanded ways to reward innovation and growth.
The problem, therefore, with the president’s speech is not that it is demagogic in tone. The problem is that it is intellectually incoherent. As a matter of high principle, the president announces his fealty to markets. As a matter of practical politics, he denigrates and undermines them at every step. It is a frightening prospect to have a president who lives in a time warp that lets him believe that the failed policies of 1935 can lead this nation back from the brink. His chosen constituency, the middle class, should tremble at the prospect that his agenda might well set the course for the United States for the next four years.
As is his want, Newt really stepped in it a few days ago when he trashed Mitt Romney’s career at Bain Capital. David Harsanyi has it.
This week, Republican presidential hopeful Mitt Romney called on newly minted front-runner and noted historian Newt Gingrich to return the estimated $1.6 million he made providing “strategic advice” to Freddie Mac, the quasi-governmental agency that has done the hard work of making “toxic home mortgages” a forever feature of our national portfolio.
To this, Newt, the great American theorist, unsheathed his trademark intellect and offered a completely irrelevant yet vaguely smart-sounding retort: “If Gov. Romney would give back all the money he’s earned from bankrupting companies and laying off employees over the years at Bain, then I would be glad to listen to him. But I bet you $10, not $10,000, that he won’t take the offer.”
Nice, Newt. When the former House speaker wins the nomination, he and the president can discuss how the rich are “bankrupting companies,” engaging in profit-mongering and risky behavior, and generally messing up the world for kicks. And throwing in Romney’s recent debate gaffe (or what I’m told is a gaffe) was a nice touch, as well. You may not have heard: Romney laid down a bet with fellow candidate Rick Perry for a cool $10,000 (or what Newt probably spends on lunch every week) during a recent debate. Doesn’t Mitt know that candidates, no matter how successful they may be, must always act as if they mow their lawns and eat curly fries at diners on Friday nights. If not, the electorate will be deeply insulted.
This kind of rhetoric is nothing new for Republicans. During the 2008 primaries, Mike Huckabee noted that “Mitt Romney looks like the guy that fires you.” This assessment was backed up by then-candidate John McCain, who, we soon found out, understood as much about the economy as Meghan McCain. …
Nice piece by Reason’s Matt Welch illustrates a DC BS generator.
The Aspen Institute, an international public policy nonprofit founded in 1950, describes itself as a “convener.” Rather than push for a specific ideological agenda, the organization brings together elite politicians and journalists in a “neutral and balanced venue for discussing and acting on critical issues.” What happens in Aspen (and Washington, D.C., and other cities where the institute facilitates debates) does not stay in Aspen; the whole point is to influence policy wherever it is discussed and manufactured.
So it was with keen interest that I received an invitation to attend an October 27 Aspen Institute confab in D.C. on “The Role of Government in the Economy.” Libertarians, after all, tend to hold the view that the greater the role of government, the worse the economy. Of even keener interest was the lineup: on the left, recently departed chief economist for Vice President Joe Biden Jared Bernstein; on the right, former Bush administration Pension Benefit Guaranty Corporation executive director Bradley Belt, and moderating between them the New York Times’ Pulitzer Prize-winning Washington bureau chief and former economics columnist David Leonhardt. Surely there would be some wide-ranging disagreement on the federal government’s role in precipitating and exacerbating the economic malaise of the past four years.
No such luck. In his introductory remarks, moderator Leonhardt laid out as a factual starting point the government’s “extraordinary and largely successful moves to spare us from another Great Depression.” Bernstein went on to decry the “irrational fear of budget deficits at a time when the budget deficit really should be very large.” And Belt repeatedly declined to enumerate a specific appropriate size and scope of government. So much for the debate.
Even more interesting than the soft consensus in favor of government intervention was a strong undercurrent that those who disagreed with it were guilty of denying basic truths. …
Speaking of BS, Charles Gasparino shows how crony capitalism might have greased the skids for Corzine’s MF Global fraud.
… Corzine is to appear before the House Financial Services Committee’s Subcommittee on Oversight and Investigations tomorrow, and informed sources tell me the panel is keenly interested in how Corzine (who’d been out of the brokerage business for over a decade) managed to take this firm from nothing to something almost overnight — that is, before its spectacular demise last month.
Keep in mind that being a primary dealer — with the rare privilege to underwrite US government debt sold at auction and then resell those bonds to investors — is no small-fry position. The coveted assignment is usually reserved for the biggest firms that are also considered the market’s safest bets.
The New York Fed selects the best and most financially solid firms for this task for obvious reasons: When markets become volatile, it wants to make sure the firm buying government bonds can withstand the volatility. In other words, the government wants to make sure its primary dealers can take a punch and won’t implode at the slightest turn of the markets.
Yet MF Global was anything but one of the market’s soundest outfits. Not only did a simple disclosure of its of its European debt exposure cause a severe cash-crunch, but the very fact that it lost more than $1 billion in customer funds during its final hours shows that (at minimum) MF Global lacked basic and routine controls.
So how did all of this manage to evade regulators, despite all the new rules promulgated in the aftermath of the 2008 financial crisis?
Well, William Dudley, who runs the New York Fed (which, again, selected MF Global as a primary dealer), is just one of Corzine’s old Goldman cronies to be found in the MF Global mess. …
Washington Examiner has an example of DC BS. The Navy is paying $15 for a gallon of fuel and patting itself on the back.
With President Obama delaying the Keystone XL oil pipeline that would facilitate access to the estimated 1.7 trillion barrels of oil in North America, the United States Navy is reportedly slated to spend $12 million at a rate of $15 per gallon on a biofuel-gasoline blend — a purchase justified by the proposition that dependence on oil is a national security threat.
“We are doing this for one simple reason: It makes us better fighters,” Navy Secretary Ray Mabus said, according to a National Journal report last week. “Our use of fossil fuels is a very real threat to our national security and to the U.S. Navy ability to protect America and project power overseas.” …
Hot Air explains the expensive fuel. Turns out, there is an intersection of BS and Obama’s transition team. Can you say crony capitalism?
This is going to help the Defense Department weather looming budget cuts, for sure. Teaming up with the Department of Agriculture (which has a cheery Rotary Club ring to it), the Navy has purchased 450,000 gallons of biofuel for about $16 a gallon, or about 4 times the price of its standard marine fuel, JP-5, which has been going for under $4 a gallon.
You won’t be surprised to learn that a member of Obama’s presidential transition team, T. J. Glauthier, is a “strategic advisor” at Solazyme, the California company that is selling a portion of the biofuel to the Navy. Glauthier worked – shock, shock – on the energy-sector portion of the 2009 stimulus bill.
The Navy sale isn’t Solazyme’s first trip to the public trough, of course. The company got a $21.8 million grant from the 2009 stimulus package. …