January 12, 2014

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Craig Pirrong posts on Bob Gates’ revelations.

… And it’s not just Afghanistan.  As I posted a few days ago, riffing off a WSJ article, this was Obama’s MO in Syria.  He didn’t want to take decisive action, but he didn’t want to make it look like he was abandoning the opposition.  So he took half-measures to support the rebels, and ostentatiously drew a red line–until Assad called his bluff, and left Obama scrambling for a face saving exit, which Putin oh-so-graciously provided.

This is beyond dispiriting.  The office of president carries with it awesome burdens and responsibilities.  Obama shirked those burdens, attempting to avoid politically unpalatable choices by deciding not to decide, or taking middle paths that were doomed to failure.  And doomed to cost thousands of American lives for no purpose in Afghanistan, not to speak of many more thousands of Afghan lives.  And doomed to cost tens-of-thousands of lives in Syria, not to mention the imponderable costs associated with making the United States appear hopeless and feckless in a region where such appearances encourage the wolves. (Not to mention the effect this has on, say, China.)

Obama has not taken his awesome responsibilities seriously, treating them instead as ancillary to his domestic political concerns.  Tens of thousands are paying the price in Southwest Asia.  Who knows what price is to be paid in the future.

Gates has only had the temerity to call attention at this very late date to what was obvious to those that had been paying attention, but which the political class had collectively decided to avert its eyes from. …



More from Ed Morrissey at Hot Air.

When the first excerpts of former Defense Secretary Robert Gates’ new memoir My Duty emerged before its January 14 release date, they seemed calculated to do maximum damage to Barack Obama and Hillary Clinton.  Without a doubt, the quotes released had significant sensational value — accusing Obama of sending more troops to a war he didn’t think he could win, and Clinton of admitting that nothing nore than baldfaced politics lie in her opposition to the 2007 surge that salvaged — for a time, anyway — western Iraq. Those quotes did get people talking, but will the damage last, or does this just confirm long-embraced narratives?

In my column for The Fiscal Times, I predict that nothing much will come of these releases, especially the context in which Gates frames them in the book:

The decision in December 2009 to increase force strength by adding 30,000 combat troops to the theater followed from Obama’s campaign pledge to put the “distraction” of Iraq behind the US and focus on the legitimate front of the war on terror. However, in private discussions, Gates writes that Obama was “skeptical if not outright convinced it would fail,” even while ordering the troops into combat.

Needless to say, this feeds into a lot of pre-existing opinions of President Obama. Conservatives, especially those in favor of a robust forward military strategy, never believed that Obama was in it for victory. In fact, many pointed out at the time that the President never once included the word “victory” in his speech announcing the escalation. …



Roger Simon reacts to the latest jobs report.

Tell all your “Objectivist” friends and the libertarian gang at Reason magazine to break out the champagne. Americans may have skipped the movie of Atlas Shrugged, nor have many read any of Ayn Rand’s works, but they have taken the author’s advice anyway and gone John Galt, quitting the work force in record numbers.  According to Zero Hedge, the latest figures show the labor participation rate at 35 year low.

Realistically, it’s even more than 35 because that figure reflects an employment bump when larger numbers of women joined the work force in the seventies and eighties.  (They’re gone now, with or without Gloria Steinem.)

Currently a record 91.8 million Americans are no longer looking for work. That’s almost one and a half times the entire population of France.

Although I admit to libertarian tendencies, I don’t think any of us can celebrate because of this.  It’s an economic disaster that should be blowing even Chris Christie off the front pages. …



P. J. O’Rourke has a suggestion for curing Detroit’s ills – turn it into Hong Kong. 

Detroit is beautiful—though you probably have to be a child of the industrial Midwest, like me, to see it. As you may have heard, the city is in trouble. At the end of the 2013 fiscal year, Detroit had a balance sheet with liabilities of $9.05 billion. The city’s emergency manager, Kevyn Orr, estimates long-term debt at $18 billion.

But I know how to fix Detroit, because it reminds me of another favorite place, Hong Kong—two things so opposite that they evoke each other the way any Kardashian is a reminder that you love home and mother.

Hong Kong’s per capita GDP is among the highest in the world. But it was once a worse mess than Detroit. Devastated by Japanese occupation, the British colony’s population had declined from 1.6 million in 1941 to 600,000 by 1945. Then, after the 1949 communist victory on the mainland, a million refugees arrived. Most of them were penniless. Britain’s Labor government was penniless, too. Maybe Hong Kong could have gone into Chapter 9. But who would have been the bankruptcy judge? Chairman Mao?

Instead Hong Kong had the good fortune to get John (later Sir John) Cowperthwaite, a young official sent out to push the colony’s economy toward recovery. “I did very little,” he once said. “All I did was to try to prevent some of the things that might undo it.”

Such as taxes. Even now, Hong Kong has no sales tax; no VAT; no taxes on capital gains, interest income or earnings outside Hong Kong; no import or export duties; and a top personal income-tax rate of 15%.

Cowperthwaite was financial secretary from 1961 to 1971, Hong Kong’s period of fastest economic growth. Sir John, however, wouldn’t allow collection of economic statistics for fear they’d lead to political meddling. Some statistics nonetheless: During Cowperthwaite’s tenure, Hong Kong’s exports grew by an average of 13.8% a year, industrial wages doubled and the number of households in extreme poverty shrank from half to 16% …



According to a blog called Quartz, there are some who have to curtail or shift shopping at the dollar stores because of weakness in our economy.

… Economists argue that things like food stamps and unemployment act as crucial bits of stimulus when the economy is weak. Cutting them can act as a headwind to growth. That’s certainly the case for low-end retailers such as Family Dollar. The store chain’s shares fell sharply this week after it reported disappointing earnings.

Family Dollar CEO Howard Levine had this to say on the subject:

For the last several quarters, we’ve discussed the economic challenges our customers are facing. Over the last two years, I think we’ve seen a growing bifurcation in households. Higher-income households who have benefited from market gains, better employment opportunities, or improvements in the housing markets have become more comfortable and confident in their financial situation. But our core lower-income customers have faced high unemployment levels, higher payroll taxes, and more recently reductions in government-assistance programs. All of these factors have resulted in incremental financial pressure and reduction in overall spend in the market.

Translation? As poor Americans come under more and more pressure, more and more of Family Dollar’s revenue is tied to low-margin sales of necessities like food. (Sales were strongest during the first fiscal quarter in Family Dollar’s “consumables” category, especially in areas like frozen food.)

The fact that so many Americans are being forced to curtail spending at the cheapest discount retailers should give anybody cheering the US recovery something to think about.



Megan McArdle with a great post on the real issues for small business owners.

Health insurance just isn’t high on the list of small-business owners’ worries.

Warren Meyer, whose company operates campgrounds, is getting the hell out of Dodge, by which I mean Ventura County, California:

“Never have I operated in a more difficult environment. VenturaCounty combines a difficult government environment with a difficult employee base with a difficult customer base.

It took years in VenturaCounty to make even the simplest modifications to the campground we ran. For example, it took 7 separate permits from the County (each requiring a substantial payment) just to remove a wooden deck that the County inspector had condemned. In order to allow us to temporarily park a small concession trailer in the parking lot, we had to (among other steps) take a soil sample of the dirt under the asphalt of the parking lot. It took 3 years to permit a simply 500 gallon fuel tank with CARB and the County equivalent. The entire campground desperately needed a major renovation but the smallest change would have triggered millions of dollars of new facility requirements from the County that we simply could not afford.

In most states we pay a percent or two of wages for unemployment insurance. In California we pay almost 7%. Our summer seasonal employees often take the winter off, working only in the summer, but claim unemployment insurance anyway. They are supposed to be looking for work, but they seldom are and California refuses to police the matter. Several couples spend the whole winter in Mexico, collecting unemployment all the while. So I have to pay a fortune to support these folks’ winter vacations.” …

… We tend to talk of entrepreneurship and business growth as if it were a matter of tweaking a few simple policy buttons: lowering taxes, making health insurance cheaper, hamstringing the EPA. Unsurprisingly, these issues map well onto big national policy battles. And yet, when I talk to small-business owners, I’m more likely to get an earful about their state’s workers’ compensation scheme or the local utility’s pricing schedule than I am about the federal tax rate. Yet almost none of the policy journalists I know could even describe in detail how workers’ compensation insurance works, much less articulate a coherent policy agenda for it.

Then there are the sort of soft institutional issues that Meyer highlights, such as whether the local legal system encourages frivolous lawsuits, or some arcane regulatory issue that’s specific to businesses. These things matter a lot, but they’re hard to measure and even harder to fix.

There are a few lessons in this: If you want to encourage entrepreneurship, talk to business owners, not policy wonks. And you often need to think local, not global.

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