Smart Government is Big AND Dumb (on the left and right)

Big government or so called "smart government" (as progressives are beginning to prefer) is a slippery slope ... because by definition big / smart government (of the progressive left) allies itself with "labor", and thus it makes promises it can't possibly keep to labor --or if it does keep them, the promises are clearly unsustainable and unaffordable.  

 See the bloomberg article copied below describing France's new socialist government's decision to REDUCE retirement age by 2 years for those who began work at 18 years old!!! 

To be fair, the political right has the same deep and fundamental problem with self delusion.  the right also claims its "big government" military industrial complex can be transformed into "smart / small military" as well. 

but any way you slice it, "conservative big government" requires a massive military industrial complex and hawkish foreign policy that leads to constant war or preparation for war (cold war) and thus drains the treasury and impoverishes society. 

Remember the neocons including Rumsfeld talking about smart war and 21st century military -- streamlined, much cheaper to finance and technologically sophisticated (in the lead up to the Iraq War).  the quick collapse of Iraq and the capture of Baghdad by US military in just days had neocons clapping each other on the back for an inexpensive and decisive victory according to a new smart war doctrine.  But the "victory" proved illusory, just as all big government victories eventually prove illusory (no matter whether we talk about foreign war or domestic wars promoted by the right or left respectively.)

Both sides promise "smart" (rather than BIG) government because BIG governmetn has a negative connotation.  But is smart government even possible?  i argue smart government is an oxymoron.   Smart government is elusive and ultimately unattainable, because it ultimately promises free lunches that are impractical in the real world we live in where social outcomes cannot be engineered by government and where democracy cannot be injected into foreign lands at the point of a gun -- no matter who well intended.

Progressive smart/big government is the Great Society fantasy, which has come in many different shapes and sizes for 200 years.  Great Society programs always begin with great fanfare and optimism before they ultimately crumble on their own self contradictions.   this is because smart government still means the same thing as Big government:  permanent mobilization of government to fight domestic wars against poverty, inequality and FOR social justice.  government grows no matter whether it is successful or not in achieving its aims.

the idea that we can fight wars smarter (and thus on the cheap) is a fantasy.  if we fight a war, let us at least admit the massive costs associated with the war, no matter if the war is a so called "just war" or not. 

Foreign or Domestic war mobilizations are bad enough (that is I mean, big/smart govt of the political right or left is bad enough), but together they are certain disaster for society as we saw in 60s and again since early 2000s -- and as we've seen play out through world history, including with the fall of Roman empire which went broke (morally and financially thanks to debasement of the currency).  rome was forced to debase its currency in a final desperate attempt to fund the unfundable:  ie. simultaneous mobilizations of both foreign and "domestic wars" (i.e. welfare programs).  we are engineering virtual currency debasement thanks to the Federal Reserve and the mainstream inflation targeting framework elites have implemented in order to finance and ensure they remain elites and the poor remain poor.

when society attempts to combine big government of the right with big government of the left -- as we had in 1960s and 1970s with Johnson's great society experiment + Vietnam war and as we have repeated again with GW's wars and compassionate conservatism -- put on steroids by Obama (who has cut military but expanded safety net and exploded the deficit!!!) what we get predictable social, moral and economic disaster.  The disaster comes because war mobilization directs national resources into unproductive activities, which eventually improverishes society.

It is easy for either the political left or right to disassociate itself from the French govenrment's recent move.  neither side in the US is dumb enought to do that!!!  (reduce the retirement age for social security).  But that is beside the point.  Both the political left and right, the Dems and GOP are apologists for Big government any way you slice it or whatever you call it, progressive or neocon or whatever. 

Governments who come to power on war mobilization promises (for either domestic or foreign wars) end up sowing seeds for self fulfilling prophecy and domestic public financial disaster -- and gradual impoverishment of society.

whether you are a dedicated member of the political left or political right, do not fall for temporary shadenfruede regarding the insanity of the socialist french government.  both the left and right in the US are doing the same exact thing only with much more clever and non transparent methods and sophsticated rhetoric.

-----Original Message-----
From: DANIEL GARDELLA (FREIMARK BLAIR & COM) [mailto:dgardella@bloomberg.net]
Sent: Wednesday, June 06, 2012 1:16 PM
To: Sam Baker
Subject: wow!! (TEL) French President Francois Hollande Cuts Retiremen

wow!!    (TEL) French President Francois Hollande Cuts Retiremen

t Age

+------------------------------------------------------------------------------+

French President Francois Hollande Cuts Retirement Age

2012-06-06 16:39:32.907 GMT

Emma Rowley

     June 6 (Telegraph) -- France's new socialist government cut the country’s retirement age in the face of the eurozone’s deepening crisis, citing “social justice” to explain a move that goes against austerity efforts across the region.

     Workers who entered employment aged 18 will be able to retire at 60 rather than 62, under the decree agreed at a cabinet meeting on Wednesday.

     The decision follows pre-election promises from the new president Francois Hollande to reverse the rise in the retirement age introduced by his predecessor Nicolas Sarkozy in 2010.

     At what age do you expect to retire?

     “We committed to put this measure in place quickly for social justice for those who started working early,” said Social Affairs Minister Marisol Touraine.

     The reforms will cost the state billions of euros a year but can be afforded through higher worker and employer contributions, according to the government.

     The €1.1bn (£890m) annual cost up to 2017 - €3bn thereafter

- will be met by a 0.1 percentage point rise in payroll charges, amounting to an extra €2 a month on the average monthly French net salary of €1,600, it said.

     Around 110,000 people are expected to benefit from the measure in the first full year.

     Jean-Francois Cope, leader of France’s conservative UMP party, called the policy move “madness”.

     “It risks the downgrade of France’s credit rating and at this rate tempts fate,” he said.

Can Romney Change his Corporatist Stripes: PART 2

One of the key new watch-words in national politics is “Corporatism.”  This article doesn’t use the word, but it describes early decision making and behavior that warns of more Corporatism from Romney if he is elected. 

Corporatism is the scourge of modern American politics.  It means cronyism and favoritism and mutual dependency / back scratching between big government and big business.  I fear BOTH the GOP and Democrat Party have sold their souls to Corporatism. 

Obama’s health care agenda was clearly compromised by lobbying efforts done by BIG pharma and BIG insurance and Big Law -->> tort reform never had a chance in Obamacare because of special interest influence of trial lawyers on Democrat party!!)  The result was a plan that increased coverage but scrapped the advertised cost savings, as cost saving ideas were jettisoned thanks to big biz lobbying (behind closed doors). 

 

Obama has demonized Wall Street in speeches but at the same time treated Wall Street with kid gloves.    Larry Summers lobbied to break up the big banks, but Geithner’s pro-big banking position won the day.  Team Obama blames the GOP for watering down Dodd-Frank, but the Dems have plenty of blame to share when they look in the mirror.  See hard core progressive Matt Taibi's articles in Rolling Stone lambasting the GOP but also Obama for watering down Dodd Frank.  By the way, I am not advocating Dodd-Frank or breaking up the banks, I am merely observing the fact that the Democrat Party is just as (if not more) beholden to big Finance than the GOP.  look at the connections between Goldman Sach alumni and Obama administration.  Geithner is exhibit A for prominent policy makers with connections to Goldman in particular and Wall Street in general. 

And look at the total pass Jon Corzine has gotten (at least so far) from the mainstream press and by Federal prosecutors.  This is a blatant example of the Dems protecting one of theirs in Big Finance.  Corzine should be a poster boy for Wall Street greed and abuse and he should be used as an example by Dems of zero tolerance for excess risk taking and greed run rampant on Wall Street.  If Dems were truly serious about financial sector “reform” progressive pundits and mainstream press would be clobbering  Corzine and holding him up as example of Wall Street dysfunction.   Martha Stewart was abused and used as an example to mainstreet that wealthy elites are not beyond the law.  Why isn't Corzine frying too?  He is a perfect cautionary tale for the public about what happens to elites -- no matter how well connected politicially -- when they abuse their position and power and commit obvious crimes.  Reforms mean nothing if implementation is selective and politicized.   

In this article we have a early warning signs that Romney is locking himself into corporatist interests if elected with his “puzzling” choice for head of his transition team.  

 

GW showed how beholden the GOP party is to big Military with his decision to go to war with Iraq.  Both parties are beholden to Big Special Interests because special interests focus big money on politicians. 

Does Romney's decision outlined in article below suggest that presidential candidates believe they must play ball with Big Business if they want to win the White House?  Is this a fact?  if it is, we are in trouble. 

 

Corporatism limits the ability of policy makers to implement important reforms that special interests find detrimental to their own self interests, and at the same time, it encourages “reforms” that aren’t reforms at all but new regulatory regimes that merely introduce new rent seeking opportunities for big biz.  

 

ps... the answer to Corporatism is NOT campaign finance reform.  Campaign finance reform has been a total bust; all it does is entrench establish interests even more.

 

The answer is "less direct government" intervention in the economy that come in many (disingenuous) forms including special regulations and subisidies and favoratism -- all packaged as free lunches to society, but are really goodies to special interests. 

 

Progressives ridicule the modern debate between more and less government.  I saw a lady on Bill Mahrer saying it isn't more or less government -- the idea is "smarter" government.

 

unfortunately there is no such thing as "smart government" when Corporatist interests dominate policy making decisions.  This is clearly evident in Obama care, which ended up leaving out the big cost saving ideas because big pharma and big insurance and big law successfully lobbied them out of the final legislation.  Progressives might say the government needs to initiate and implement such policies as universal health care and anti-global warming because these are areas where the so called market is failing. 

 

To these defenders of big government, i argue that as soon as the government gets in the game of providing universal healthcare and fixing such systemically important issues as global warming or trying to eliminate for example systemic risk in financial markets, it opens itself up to special interest lobbying and money politics.  there is no way for government to be simulataneously "smarter" and "bigger."  as soon as government grows its responsibility domain, it creates new ways for big business to co-opt big government for its own selfish purposes.  Smart government is an oxy moron.

 

Let government treat everyone equally under the law.  Let government root out and prosecute crime with complete and utter equality for the 1% and the 99%.  But don't let the government get in the business of promising to deliver economic results such as greater income equality or fewer business cycles or stable inflation.  don't let governmetn promise universal health care that is more efficient and fair than what free market entities can supply.

 

So called Market failures are never "failures" in the literal sense of how we typically think of the word failure.  MArket failures are either normal features of the market or they are abnormal dysfunctions caused by well intended government policy.    just like earthquakes are a natural feature and not a failure of the earth system, stock market crashes are not a "failure" per se of markets.    Stock crashes happen.  The difference between a normal stock market crash and the Great Depression is the Great Depression only happened AFTER the Fed was established in 1913!!!  The Fed supplied the easy money that caused the historic boom and bust.  without the Fed we may have had a Panic, like we did periodically in the 1800s and early 1900s but it would NOT have been a Great Depression if not for the wonderful interest rate manipulation the Fed managed in the 1920s (when the Fed systematically kept interest rates lower than they otherwise would have been if not for Fed intervention).

 

Consider what would happen if the government tried to eliminate earthquakes or hurricanes from our earthly experience ...  environmentalists are already suggesting eco-engineering plans such as seeding hurricanes with aerosols to slow them down and make them less harmful when they hit human societies.  i've also seen grand plans for fixing global warming by putting a zillion tiny reflectors up in the earth atmosphere.  Such ideas are exactly analogous to policy makers attempts to fix the economy with a central bank. 

 

If we focus on fixing a natural system by locking it into a particular range that we consider "safe" we unleash the dangerous law of unintended consequences.  Natural systems paradoxically retain their dynamism and sustainablility and resiliance as a result of natural volatility!!!  Central banking attempts to squeeze out volatility of business cycles by stabilizing "inflation."  This is impossible!!!  The more we engineer the system to reflect stable "inflation" the greater systemic weakness we inject into the system as a whole.  superficial stability sows systemic vulnerability.  on the other hand natural volatility delivers natural robustness!!!

 

there are no free lunches in the world!!  when government promises the same growth and innovation but without the business cycles or inflation BEWARE.  government cannot deliver results without paying a steep price.  the government may be able to deliver a period of great growth and prosperity as in the 1920s and in the 1980s and 1990s, but the government can't take credit for such engineered prosperity without taking credit for the artificial and un-natural BUSTS that inevitably play out and are much worse than any "normal" market correction that would have played out without the government intervention.

 

 the record of the Federal Reserve stabilizing inflation and markets since 1913 is abysmal -- as compared to pre-1913.  See George Selgin's paper "Has the Fed been A Failure?" which uses carefully measure empirical evidence to "prove" the Fed hasn't made the economy or financial markets any safer and likely has made them much riskier.  see http://www.cato.org/publications/working-paper/has-fed-been-failure  )

 

do we really want to put the government in charge of stablizing the temperature of earth or the inflation rate of the economy?  such well intended (but fanicful) ideas beg a disastrous outcome because by the time we see the effect of our policy on earth temperature (or inflation) it is too late to adjust policy decisions baked into the system.  This is exactly analogous to inflation targeting.  Central banks over shoot and create systemic risk that wouldn't otherwise be there with no central bank.  of course we would still have business cycles without a central bank.  but business cycles are a natural feature of natural markets we should learn to live with rather than assuming human technology has the answer.  

 

Rather than fixing global warming, let us not build houses near a flood plain or hurricane path or near the shoreline.  Or if we do build houses in risky locations, let the builder pay the full price of such decision making.    Rather than fixing business cycles, let us understand that business cycles are part of the cycle of life, just like hurricanes.  Why do we let politicians tell us we can't prepare for hurricanes any more than business cycles. 

 

Ironically it is only the government induced business cycles, like the Great Depression that causes deep and widespread social suffering on historic scale.  Government promises to protect us with "smart" policies, but such policies are pipe dreams and fantasies and wishful thinking because they defy the law of No Free Lunches.   if ever government promises to fix the market and at the same time improve it -- or even keep its inherent dynamism the same -- we know this is a dream.  There are always trade offs.  Let us talk in terms of trade offs.  If we want less income inequality, let us not pretend the governmetn can fix income inequality without some other cost to society -- and unintended negative consequences for those the policy is most aimed to help.   Wishful thinking and promises are peddled by the GOP and Dems equally.  the Free lunch promise is a bi partisan scourge.  Smart government is an oxymoron no matter whether the neo cons are talking about "efficiently" rep-engineering the Middle East or the Dems are promising to engineer a New Foundation for US economy with public initiatives.  no chance.

 

Examiner Editorial: Romney's transition pick a red flag for conservatives

June 04, 2012 -- 7:49 PM

Comments

Republican presidential candidate, former Massachusetts Gov. Mitt Romney speaks during a campaign rally at Somers Furniture on May 29, 2012 in Las Vegas, Nevada. Mitt Romney is holding campaign event and attending a fundraiser hosted by Donald Trump in Las Vegas. (Photo by Justin Sullivan/Getty Images)

Examiner Editorial

Mon, 2012-06-04 19:49

One of the major questions during the Republican presidential primaries was whether Mitt Romney intended to actually govern as a small-government conservative if he is elected president, or whether he was merely talking tough about shrinking government to appeal to a conservative GOP electorate.

Unfortunately, Romney has already given limited-government advocates reason to worry.

Over the weekend, Politico reported Romney had tapped former Utah governor and Health and Human Services Secretary Mike Leavitt to lead his transition effort should he win the presidency. At best, Leavitt is a puzzling choice. Although most Republicans, including Romney, have warned about the dangers of President Obama's national health care law, Leavitt is a leading Republican advocate for implementing Obamacare's burdensome health insurance exchanges in all 50 states. Conveniently, his consultancy group won a contract last month to set up the new exchange in New Mexico.

This is troubling. Romney, who championed a health care law in Massachusetts that included exchanges like the ones in Obama's national law, has vowed to repeal Obamacare and replace it with market-based reforms. But how does this square with his choice of Leavitt for such an important post, from which he would lay much of the policy and personnel groundwork for a Romney presidency?

Beyond the health care issue itself, there is a cronyism issue involved. One of the biggest fears about the "CEO presidency" that Romney's election would herald is that his business background would cause him to conflate a pro-business philosophy with one that favors free markets and a limited government.

As somebody who could profit personally if more states implement Obamacare exchanges, Leavitt clearly comes from the tradition of a Republican Party that is willing to expand government in the name of helping well-connected businesses.

Leavitt's embrace of big government, unfortunately, does not end with health care. As governor of Utah, Leavitt received a D in the Cato Institute's 2002 Fiscal Policy Report Card on America's Governors -- the same grade as then-Vermont Gov. Howard Dean received that same year. Cato detailed how Leavitt boosted spending and became known as "Mr. Internet Tax" because he lobbied for a federal law to allow states to tax out-of-state Internet companies. "It is ironic that one of the most conservative states in the union has one of the most pro-big government governors," the report remarked.

The old adage that "personnel is policy" is an important piece of Washington wisdom. Through appointments such as this one, presidential candidates send signals about how they intend to govern if elected. Romney's choice of Leavitt, for that reason, is a huge red flag that should prompt conservatives to watch carefully what follows.