The Political Cowardice of Barack Obama
Soaring rhetoric won't fix the economy.
Do we really believe our enlightened politicians who promise free lunches as long as we follow their lead and everyone pitches in and we “work” together? The source of America’s greatness is freedom NOT group think and compliance with a government vision. America’s greatness can be traced to entrepreneurship, individual risk taking and creative and dynamic competition and cooperation. The greatness of America is not in a deep and abiding faith in government to show us the way. America has prospered despite government, not because of it. Do we really believe "the" answer is to follow the wisdom of some Dear Leader (or anointed leadership) who points the way, and we all follow like sheep to the slaughter? The appeals to collective sacrifice by our politicians is code for "do the right thing and trade individual liberty for (the promise of free lunches and) collective safety.”
Remember what ben franklin said about those willing to sacrifice liberty for security … They don’t deserve either!
Collective sacrifice is code for the government’s interest in securing and centralizing power inclugind regulatory power and power of the purse, both of which are MASSIVE powers. Maybe our wise politicians believe that with such power they can fix society. my cynical side believes that politicians have no real interest in saving society and instead are focused on designing new and clever ways to purse rent seeking activities. most probably there are some do gooders out there. But, it doesn't matter. whether or not ones intensions are pure, the result of public policy is going to be a net negative for society.
one reason we know this is that power tends to corrupt and absolute power corrupts absolutely. We saw what happens when a great and moral man like Joe Paterno who has dedicated his life to the highest moral ideals accumulates too much power (even probably by no fault of his own) and is no longer subject to checks and balances. If Joe Paterno is subject to the insidious and often invisible (even in hindsight) corrupting influence of power, who is safe? Our politicians?? Is it only a matter of choosing the right politicians who will enforce “right” policies who will put our economy on a so called sustainable path?
Handing over the hard work for fixing society to governments in the name of good morals is a total cop out. We are brainwashed to believe that the only moral choice we have is to delegate the solving of social problems to our political leaders – because we assume only they have ability, and expertise and resources to do so.
HOWEVER, I can guarantee that the more confidence we put in our leaders in Washington DC, the more they will disappoint us.
Local leaders who are sensitive to our needs and bound by checks and balances are a vital part of a functioning society. government may play a critical role in ensuring sanctity and mutual respect of private property rights.
The problem with centralizing power in the Federal government is that checks and balances are even harder to maintain than in local government. and the power accumulated at the center is enormous. We worry about monopoly in the private sector. But what about monopoly power in the public sector???
Government power (as measured in size of assets and annual budgets) is orders of magnitude larger than even our largest companies like Microsoft or Google or Exxon.
How massive is the power delegated to our government via its monopoly over printing money for example?? What about the power of public unions in primary school system which block reform and turn the system into a piggy bank for teacher pensions and self interest. Fiat money funding massive public debt accumulation paves the road to collective serfdom for our society. Ultimately, government solutions entail a lose/lose result for society, resulting in accumulation of stifling debt loads as we see in Japan and Eurozone and in the US. when public debt becomes overbearing for a country the result is pain one way or the other either via a debasing of currency (effectively a tax on private property – ending in the impoverishment of individual households and ultimately of wider society) or a debt deflation / depression spiral.
Money doesn’t grow on trees. Life isn’t fair. you’ll never hear a politician utter those words. Politicians always promise win/win solutions. If only you vote for me, I’ll make sure we have a cleaner environment AND a better economy. Win/win solutions are fantasy. The only free lunch in life is provided by the law of comparative advantage resulting from free exchange. free exchange across society leads to the whole (social wealth) being greater than the sum of the parts. Politicians can’t inject free lunches into society with enlightened policy. we can’t reduce income inequality and at the same time improve the economy. if there is a problem with income inequality it came from some previous government policy intervention.
The market leads to a natural rate of income inequality. If income inequality becomes stretched beyond some point where social tensions start to fracture society, the cause of that inequality is NOT the market. a market based on private property rights and sanctity of free exchange and mutual respect for rule of law (not rule by man or arbitrary government fiat) leads to a society with a natural rate of income inequality.
How could it not? Perfect equality suggests that everyone is equally poor, such as in North Korea. There is no way to micro manage or reduce income inequality once government interventions cause a widening of income inequality via well intended policy. Interventions to fix problems caused by well intended government policy in first place will just make things worse, either by slowing growth or by causing income inequality to stretch even further despite intention of policy measures aimed at fixing the problem.
Do we really think that the government can invest in the future and create an “America built to last.” The only thing government can create is an economy built to be more vulnerable to systemic collapse than it already was thanks to previous well intended government interventions such as our current fiat money central banking system. Since the Fed was established in 1913, the dollar has lost 96% of its value, we’ve had the only Great Depression in the history of the modern world, we had an unprecedented era of stagflation in the 1970s, and we are currently in an unprecedented global recession. Sure, we had 20 years of bull markets and economic stability, but we are paying the price for all of that now, with public debt up to our eyeballs in Japan, China, EZ and USA. it is finally time to pay the piper. The way forward is not going to be paved by government decisions about where to invest. It will not be paved by government run public schools. It won’t be paved by government subsidies for green energy or R&D.
public subsidies distort the market, they distory the markets ability to allocate capital and they ultimately lead to booms, bubbles and eventually to busts as we have seen in every major sector of our economy, all of which are massively subsidized. Consider housing (bubble- bust), banking (bubble – bust), financial sector (bubble-bust), public primary and secondary education (bubble as evident in per pupil cost of primary education and in annual tuition for college), health care (bubble – as evident in spriarling health care costs), green energy (bubble in ethanol, bubble in electric cars, etc etc). such bubbles will eventually turn to bust. govenrment solutions will just hasten the bust. Obama offered some hair brained scheme to reduce college costs saying he will introduce a system where public subsidies will no longer go to colleges who don't lower their tuition. how will this happen? by magic?? output prices reflect input prices. slapping a market incentive onto a subsidized system will not work.
We also have massive farm subsidies which has fueled the corn-based cheap beef fast food economy leading to obesity crisis. If Michelle Obama wanted to help solve childhood obesity, she would lead the rollback of corn subsidies!!! cheap corn is at heart of our fast food (cheap corn is fed to cows and we get cheap beef) and processed food society (corn syrup is in everything processed and is BAD for you).
The market has not failed us. we have failed the market. the market is imperfect.
anyone who claims the market will fix all social problems given enough time is dreaming. anyone claiming politicians can fix market failures are also dreaming.
there is no such thing as a market failure. the market can't fail. the market has unattractive features, but these are not failures per se that are capable of being fixed. unattractive features are part of the natural landscape of life on earth, including natural disasters caused by weather, the earth system and the economy -- all of which are perfectly natural systems vulnerable to natural disaster. earthquake, tsunami, business cycle. they all are natural features of the world we live in. do we want to try to eliminate hurricanes and earthquakes and business cycles. what are possible unintended consequences of such intervensions?
The market leads to income inequality, to business cycles, to inflation and deflation, to creative destruction dynamics which are often painful for individuals forced to change jobs. the so called free market capitalism also leads to big companies that appear to have monopoly power (but never do), and it leads to pollution and occasionally to industrial accidents. There are asset market bubbles and busts. Free markets are no panacea for solving social ills. Free markets are not fair. there is no such thing as a level playing field in markets. some people have innate advantages in their skills and in their starting spot in life.
Free markets entail painful trade-offs. Free markets will always entail a constellation of unattractive features. However, these “features” are not BAD per se. income inequality is an inherent feature of a free market. income inequality is not a market failure per se. can income inequality become so stretched that it causes social instability? yes. but the cause of such destabilizing income inequality is not the market. the cause of increasing income inequality can always be traced to some constelation of well intended public policies aimed at fixing some other macro/social problem. if we try to fix problems caused by some other previous policy intervention, we will just complicate things and trigger a new cascade of unintended consequences likely resulting in even worse income inequality or a lower growth rate for economy and equal impoverishment across society. you can't make some wealthier without making society as a whole poorer. no free lunches. life isn't fair.
Reason Magazine
The Political Cowardice of Barack Obama
Soaring rhetoric won't fix the economy.
Now, a return to the American values of fair play and shared responsibility will help protect our people and our economy. But it should also guide us as we look to pay down our debt and invest in our future.—President Barack Obama, State of the Union, January 24, 2012Criminologists have remarked on “the banality of crime,” the idea that most criminals are not dark geniuses, but ordinary dolts driven by the basest motives. The State of the Union is the ultimate example for the banality of American politics, of the reality that the people who want to reform us haven’t the slightest clue about anything. They are predictable and bland, traders in base ideas and driven mainly by ego and the desire to help those groups that assure their re-election. California is the starkest example. A friend of mine called the other day and told me that it finally dawned on him that Gov. Jerry Brown, despite his clever word plays is really not so brilliant. Here’s a man who actually believes that raising taxes and “investing” in green jobs will save California.
Politicians from Obama to Brown to Mitt Romney to Newt Gingrich want so desperately to build a legacy, save our state or nation, and create some shining city on the hall, but they want it all on the cheap. Democratic pols want to sound like John F. Kennedy while Republicans sing hosannas to the legacy of Ronald Reagan, but such legacies don’t come from cheap banalities and the retreading of empty words. They come from tackling real issues and fixing real problems. The courage needed to do the latter is in short supply, given that most politicians crave adulation but don’t realize that those who put that first almost assures that they won’t receive it. Look at Arnold Schwarzenegger, who had a historic opportunity to bring the state back from the brink, yet changed course dramatically after his first defeat. He chose to be loved above all else and has ended up a scorned figure.
Many of us had hoped that Brown, who no longer seeks higher office, would embrace the tough work of real governance and take on his own allies—i.e., the public sector unions—who are the key obstacle to reviving California. Instead, he has embraced one foolish answer, a massive tax increase, and has governed in a way that’s not too different from the two failed governors before him. If Brown were a serious man, he would acknowledge that it’s the way the state spends money that’s the problem, not the lack of revenue. But he has taken the easy, banal course and will in time be forgotten. And so too will Obama who continues to believe that government is the font of all wisdom and energy in this nation and that populist attacks on evil-doing mortgage companies are more crucial than serious policy.
“Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same,” he intoned. “It’s time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.”
Banality is one thing, but this veers into dishonestly. No president—not even the terrible one that preceded him—has embraced the culture of bailouts, handouts, and copouts more than Obama. His administration epitomizes the term “crony capitalism,” whereby friends of the leaders get large infusions of taxpayer cash (see Solyndra) and then are full of copouts about why the money disappeared. In his speech, Obama sung the praises of the automobile bailout and called for more bailouts and government investments.
Instead of dealing seriously with the financial crisis, he embraced a kindergartner’s view of what happened (greedy banks foisted bad mortgages on decent people!), called for a special investment crimes unit to crack down on financial wrongdoers, and then pledged a new bailout for homeowners who are underwater in their mortgages, many of whom acted irresponsibly as they bought houses they couldn’t afford and tapped the equity in those houses and spent it on consumer goods. Said Obama, “And while government can't fix the problem on its own, responsible homeowners shouldn't have to sit and wait for the housing market to hit bottom to get some relief. And that's why I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates.”
Just what we need—yet another irresponsible subsidy courtesy of U.S. taxpayers. In reality, the real estate market needs to hit bottom before it can rebound, and Obama’s plan will only delay the day of reckoning. This is more pabulum and more false hope for people who think the government is going to save them.
Soaring rhetoric and promised bailouts won’t fix what’s wrong in California or in the United States. It’s time for a little reality and some tough choices. It’s time for leaders with less banal rhetoric, better ideas and more courage.
Steven Greenhut is editor of CalWatchDog.com.
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This is title of Wonderful article copied below. where is the articulation of trade-offs and tough choices by leaders of either party?
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