The Law of Unintended Consequences

The biggest argument against increasing government involvement is the Law of Unintended Consequences. Basically, it states that changes to a complex system may result in different results than originally desired. Sometimes the changes make things worse than they were in the beginning. This tends to happen more often with government for several reasons. One is that Congress likes to be seen responding to problems. Election cycles being what they are, it doesn't matter if the problem is actually solved or not. The important thing it to be seen doing something. Problems big enough to warrant Congressional scrutiny are seldom easy to understand so Congress allows their staff to write the actual bill. The people voting on the bill seldom bother to read them and probably could not understand them anyway (I'm getting this part straight from a recent quote from a committee chair). Finally, bills are seldom pure. Lobbyists exist to make legislation more favorable to their clients and Congress is happy to oblige. The result is that legislation to solve a problem often makes things worse.

A few examples:

Credit reform caused most people's interest rate to rise. That's because banks offered low rates but would raise them in case of late payments or other infractions. Unable to raise rates on offenders, they raised everyone's rate instead.

Last year's popular Cash for Clunkers program raised the cost of used cars. Hundreds of thousands of low-end cars in drivable condition were destroyed. Just try to find one now. The environmental gains are also debatable since it takes a lot more energy to make a new car than will be saved by trashing existing low-mileage cars.

The most recent addition to this list - the three hour rule for airlines. This said that airlines could not keep people in planes sitting on the tarmac for more than three hours. While this sounds reasonable, a new report says that, in order to spare 110,000 passengers an average 3.26 hour wait, 400,000 people will have their flights canceled. This will cause more disruption.

The increase wasn't due to bad weather or air traffic control issues, says Marks, but the new rule and the airlines' reaction to it. "Hundreds of flights were canceled directly because of the rule and indirectly as airlines pulled back flights after as little as 60 minutes on the tarmac out of fear of the fines."

Obama and the Election

President Obama must have finally taken a look at the polls and realized that joblessness and the economy are people's top priorities. It is probably a lost cause for several reasons. The biggest is that this realization is a year too late. The economy and jobs have been a top priority for Obama's entire administration but they fell off of his radar after the stimulus bill passed. Instead the Obama administration focused on health care reform. This goes beyond being tune-deaf. The Democrats were actively ignoring the polls in favor of advancing their own agenda. The President can talk about how joblessness keeps him up late at night but it did not affect his priorities when he was awake. I pointed this out several times in 2009.

A year and a half into his administration, Obama continues to blame President Bush for the nation's problems. In a recent interview he said,

This is going to be a choice between the policies that got us into this mess and my policies that are getting us out of this mess. And I think if you look at the vast majority of Americans, even those who are dissatisfied with the pace of progress, they'll say that the policies that got us into this mess we can't go back to… What I'm prepared is to be held accountable for the policies that I've put in place. But they Americans don't have selective memory. They're gonna remember the policies that got us into this mess as well. And they sure as heck don't wanna go back to those.

The Democrats have taken this line since the economy started collapsing at the end of 2007. It is an over-simplification and they know it. So do the voters. Obama failed to mention which specific policies caused the problems with reason. Some of them date back to the Clinton administration. Others were pushed by Democrats. The financial reform bill that is supposed to prevent future melt-downs has racial quotas which will inevitably lead to further problems.

At the same time, Obama failed to say what policies he changed prior to the financial reform bill. It is true that banks have clamped down on credit. People with good credit ratings are being turned down for loans. This will prevent future melt-downs but the Obama administration is not responsible for this. They have been trying to increase the flow of credit at the risk of future inflation.

This blame-Bush attitude hurts Obama and the Democrats in other ways. They promised to end the partisan bickering that has dominated DC politics for a generation. If anything, they made it worse. Ont he economy, Obama is not willing to say that mistakes were made and leave it at that. He has to point fingers.

Broken campaign promises continue to haunt Obama and the Democrats. Between 2004 and 2008 they told us that deficits were bad and that they would balance the budget once they were back in power. They took back Congress in 2006 but continued to blame Bush for increasing deficits. Now that they control both Congress and the White House they reversed themselves, committing the country to increasing deficits as far as the eye can see. Granted, Obama's original budget projection planned on halving the deficit but that was to only last for a year before it began increasing again.

Obama made many promises about foreign relations. He was going to engage our enemies while regaining the respect of our friends. Instead he has been ignored by our enemies and has alienated our friends. His major success has been Russia but the cost of this was abandoning several strong allies including Poland and Turkey.

He was going to have the troops out of Iraq by now out of a stabilized Afghanistan in the near future. Gitmo was to have been closed and rendition ended. The Patriot Act was supposed to have been repealed. The best that can be said of these goals is that some of them are in the works.

Mid-term elections are always a problem for the party in power. Everyone knew that this one would be especially brutal. Frustration with Bush hurt Republicans in 2006 and 2008. Obama's name at the top of the ticket brought in millions of new voters who are unlikely to vote in an off year. Democrats currently hold nearly every swing seat in the country. It would be hard to hold on to these in any circumstance. Add in high unemployment, the possibility of a double-dip recession, and a general disappointment with Obama and his policies and you have the makings of a disaster for the Democrats.

Obama had planned on spending the summer convincing people that we are in an economic recovery that he engineered. With bad news coming weekly, this plan has to be discarded. That leaves the Democrats with a two-pronged strategy. The first part is to blame Bush for everything bad that happened. The second part is to personalize every race by demonizing the Republican candidate. We will not hear a single issue from Democrats. Instead we will hear about any tenuous ties between the Republican challengers and Wall Street.

Which brings us back to the negative campaigning that the Democrats promised to end.

Where Do Libertarians Belong?

Reason Magazine in hosting this debate. They lead off with a piece by Brink Lindsey calling for a complete split with the Right.

There is no question that the last decade has been a bad one for Libertarians. George W. Bush was a big-government Republican. Prior to 9/11, his two significant accomplishments were No Child Left Behind and the Medicare drug benefit - both significant expansions of government. Bush's two wars, especially the war in Iraq, also alienated many Libertarians. The Bush administration was a poor champion of individual rights, especially broadcast speech. This lead Libertarians like Lindsey to propose an alignment with the Left back in 2006. The theory was that the Left was the true protector of individual rights and as good a fit for Libertarians as the Right.

The problem with that theory is that Lindsey was looking back at the Liberals of his youth instead of the Progressives who have taken over the party. While it is true that some Progressive goals mirror Libertarian ones - things like gay rights, drug legalization, and anti-war - these are not major goals of the Democrats and the Democrats who endorse these tend to be Progressive on most other issues. On most issues, Progressives are the polar opposites of Libertarians. Progressives hate free markets and want to insinuate the government into as many aspects of life as possible.

You might think that Lindsey would propose an alliance with the Tea Party movement. After all, they share more values with Libertarians than Progressives do. Lindsey will have none of it. He finds them "authoritarian and unpopular" plus he despises Tea Party darlings like Sarah Palin and Glen Beck. After several hundred words savaging the Right, he does manage to throw in one sentence acknowledging that aligning with the Left is equally unappealing. Instead he suggests heading for the center. He wants to lower the importance of free markets and raise the importance of individual freedoms.

All of this reminds me of why I stopped subscribing to Reason Magazine. They changed their focus. The new editorial staff moved to DC and the new editorial focus seemed to concentrate more on being cool than anything else.

The Tea Party agrees with Lindsey on many more issues than the Left did in 2006 when he proposed allying with them, so, why won't he associate with the likes of Palin or Beck? Because they are not cool enough. He wants to be able to hang out with Liberals without the shame of consorting with Conservatives. If the Conservatives suddenly rediscover free markets and small government then the Libertarians need to deemphasize it and start talking about individual liberties.

If Lindsey wasn't trying to cozy up to the Left he would notice that they have their own problems with individual liberty. Yes, they are pro-abortion and pro-pot but they invented speech codes and hate speech laws. They think that the FDA and the EPA have not gone far enough.

For the first time since the Reagan years, the Right is taking Libertarian ideas seriously. Lindsey needs to try to embrace this shift and guide it rather than recoil from it because it isn't as cerebral as he is.

It's Hot - So What?

It is inevitable - there is a heat wave and someone starts claiming global warming. This time it was Washington Post columnist Eugene Robinson. He writes:

It's odd how little we've heard lately from the skeptics who deny that climate change is real. What's the matter, people? Heat stroke?The Venus-like heat that much of the country has been suffering this summer is almost enough to make anybody a believer in global warming. Almost, but not quite: Honesty compels me to acknowledge that a few weeks of record-setting temperatures do not constitute proof of anything. Climate scientists have to analyze data covering decades and centuries to discern what's really going on.

Of course, the unusually heavy snowstorms that buried Washington and other East Coast cities this past winter didn't prove anything, either. But that didn't deter the climate skeptics from gloating. Sen. James Inhofe (R-Okla.) and his family went so far as to build an igloo on Capitol Hill and label it "Al Gore's New Home." Care to apologize to the Nobel laureate, senator?

Actually, it was more like a few days of heat than a few weeks. Also, if you start looking at the temperature records for the 1930s, you see what a real heat wave was like. Our local weatherman showed the number of days over 90 degrees for the last couple of years and in the 1930s. While we have had a handful of hot days now, most of the summer had 90+ days in the 1930s.

But what about that snowstorm? Did it prove anything? After all, it was just another weather event.

But, and I pointed it out at the time, that was different. While it was just an isolated weather event, it was one that Al Gore said would never happen again because of warming that already happened. In science, that is called a prediction. When a prediction is proved to be false then your theory (in this case, global warming) has to be reevaluated.

In contrast, no one has predicted that we would stop having heat waves so an isolated heat wave is not as significant as a cold wave.

He also mentions that a panel exonerated the British Climate Research Unit (CRU) but failed to mention that the panel did not investigate the underlying science, only allegations of scientific malpractice.

Robinson closes with an important question:

It's time to end the silly "argument" over whether climate change is real. Here's a better question: Would it be more appropriate for humanity to spend, say, $1 trillion reducing carbon emissions, and thus save thousands or millions of lives that could be lost to drought or sea-level rise or whatever at the end of this century or the next, or to spend that money providing clean water in places such as Congo or Bangladesh, saving thousands or millions of lives right now?

This cuts to the heart of why the debate on climate change is not silly. Gore and others are taking worst case projections and asking for a total change of civilization based on it. If Gore is wrong or overstated the potential harm then we will have wasted money that could have done real good, right now.

Obama and NASA

I was 14 when we landed on the moon. I consider this to be mankind's greatest achievement. The magnitude and complexity of it is incredible. Even more impressive is that we did it in so short a period.

Not only was the moon program a marvelous example of doing something because we could, it was also our nation's largest peace-time applied research project. The spin-offs from the moon program form all of the technologies that separate the 2010s from the 1960s.

But I'll tell you a secret - that isn't why Congress funded it or why three presidents supported it. The moon program existed so that we could show the world that a capitalist democracy is better than a communist dictatorship.

That's why we stopped going to the moon early and never returned. We showed that we could do it and the communists gave up. If they had announced that they were going to put a man on Mars, we would be there by now.

NASA's current head, Charles Bolden, caused a stir when he listed the priorities that President Obama gave him.

One, he wanted me to help re-inspire children to want to get into science and math; he wanted me to expand our international relationships; and third, and perhaps foremost, he wanted me to find a way to reach out to the Muslim world and engage much more with dominantly Muslim nations to help them feel good about their historic contribution to science and engineering -- science, math and engineering.

This sounds pretty dumb. What happened to manned spaceflight?

But, after thinking about it I realized that it does not matter. If inspiring Muslims helps fund NASA then that is fine. What matters is the funding.

Oops. NASA is already on an austerity budget. The space shuttle program is being retired after two more flights. Future flights have been outsourced. The return to the moon has been scrapped because we have already been there. The Mars program is underfunded and probably will never get off the ground. None of this is going to inspire anyone to do anything.

What's Wrong With the Economy?

The recovery continues to be weak. Why? Businesses have accumulated huge cash reserves, $1.8 trillion, but they refuse to spend them. What's going on?

Fareed Zakaria asked this question of a number of CEOs. While Zakaria did not come right out ans say it, there are some telling quotes in his column.

Economic uncertainty was the primary cause of their caution. "We've just been through a tsunami, and that produces caution," one said to me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, the CEO of General Electric, complained last Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad new laws and regulations being cooked up in Washington.

One CEO said to me, "Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what's in store for us for the future." Another pointed out that between the new health-care bill, financial reform, and possibly cap-and-trade, his company had lawyers working day and night trying to figure out the implications of all these new regulations. Lobbyists in Washington have been delighted by all this new activity. "[Obama] exaggerates our power, but he increases demand for our services," the superlobbyist Tony Podesta told The New York Times.

Most of the business leaders I spoke to had voted for Barack Obama. They still admired him. Those who had met him thought he was unusually smart. But they all thought he was, at his core, anti business. When I would ask them for specifics, they pointed to the fact that Obama had no businessmen or women in his cabinet, that he rarely consulted with CEOs (except for photo ops), that he had almost no private-sector experience, that he'd made clear that he thought government and nonprofit work was superior to work in the private sector. It all added up to a profound sense of distrust.

So there is the real problem - President Obama. Business leaders are afraid of his administration and the growth of government. Because of this, they refuse to invest their cash reserves.

Think about this. Here is a sum of money more than twice Obama's stimulus. It is not borrowed so it can be spent any way that seems profitable. There's your recovery but it is just sitting there, unused - a hedge against future government action.

This is exactly what President Reagan warned of. The more government expands its power the more it slows business growth. That phrase, "Almost every agency we deal with has announced some expansion of its authority..." shows how Obama's progressive attitudes have permeated his administration. The Progressives see government intervention is every aspect of life as a good thing but there is a cost. The more government intrudes itself, the more it costs everyone else.

No one in the Obama administration realizes this. He stocked his cabinet with professors and lawyers. They have never had to deal with the government from the other side. They are theorists, not realists.

As long as business leaders distrust Obama the economy will continue to limp along. No amount of stimulus spending can change this.

The Democrats and Wall Street

For the last several years, Democrats have raised more money from Wall Street thanthe Republicans have. This has been true regardless of the party in charge. In 2006, when the Republicans still controlled both houses, the Democrats still got twice as much money from Wall Street.

That suddenly changed. The Democrats have been cut off. What happened?

Any relationship between Democrats and hard-core capitalists has to have some strain. The two reasons for donating to a candidate are because you support his positions in issues or because you expect to gain future influence. The Democrats have moved to the anti-capitalist, progressive left so you would not expect them to share many values with the kings of capitalism. Certainly that are some rich men like George Soros who are willing to pour money into candidates who, by all rights, should hate them, but even Soros has made it clear that he expects a return on his dollar.

This part gets interesting. Many corporations are quite willing to support measures that seem anti-capitalist as long as there is an advantage for them. Walmart was in favor of health care reform because they already provided it and were hoping that it would hurt their competitors. BP is one of many energy producers who expect to benefit from cap and trade. Apparently these companies felt that they could do business with the Democrats.

Then a funny thing happened - the Progressives, led by President Obama, started demonizing Wall Street. Obama started using the now-cliched "Wall Street vs Main Street" during his 2008 campaign. Suddenly everything that Wall Street does is held to scrutiny and assumed to be inherently wrong, if not outright evil. As an example, in the Ohio governor's race, Democrat Ted Strickland's campaign centers around his opponent, John Kaisich, having worked in the Ohio branch of Lehman Brothers. You would think that there would be something in Kaisich's 18 years in the House of Republicans worth mentioning but that seems to be nothing compared to a Wall Street connection.

So, after a year and a half of having their every move questioned, why would Wall Street executives continue to support Democrats?

Do We Want To Be Like the Germans?

A recent column by Robyn Blumner proposes that most Americans would be better off in a European-style socialist country than in the US. Her source for this is an advance copy of a new book:

Were You Born On The Wrong Continent?, a new book (available in stores later next month) by Chicago labor lawyer Thomas Geoghegan, makes those comparisons, and they are truly eye-opening.

The fact that the book is by a labor lawyer tells you that he has biases. Blumner shows her own biases in her second paragraph when she described President Obama's agenda as "mildly progressive". Keeping these biases in mind, let's see how her version of utopia stands up to close scrutiny.

Most of the book, and Blumner's column, focus on Germany which is presented as a worker's paradise.

Since 2003, Germany and its 82 million people have either beaten China in export sales or about tied China for first place. The country is arguably the world's leading industrial power, even as its workers enjoy high wages, six-week vacations and other benefits that an American worker only dreams about.

Keep that six week vacation figure in mind. I will get back to it.

Blumner points out that Germany's unemployment rate is lower than the US's. This is correct. Germany's unemployment rate is currently 7% while the US's rate is 9.5%. She insists that Germany's industrial policies make up the difference but it this is much more complicated than she makes out. Many economists believe that stimulus spending hurts employment and Germany spent less on stimulus than the US. Further, the unemployment rate in the US has been much lower than in Germany for most of the last decade.

Most arguments against European-style socialism point out that the population as a whole is poorer and that the GDP is lower. Blumner's book has an answer for that:

Critics of Germany can still point to the fact that German per capita GDP is lower than that in the United States, which is true. But a fascinating part of the book suggests that what drives our economy and inflates our GDP actually makes our lives less comfortable.

Part of America's higher per capita GDP is due to our lack of land-use planning. Americans spend huge sums on sprawl and the inefficiency it spawns. Without sprawl, traffic and all the wasteful spending they engender, our GDP can't keep ahead of France, Geoghegan writes.

Blumner does not elaborate and the book is not out so I will have to guess what she is talking about here. From the context, I am guessing that the point here is that we spend money on large private houses in the suburbs and that, if you subtract that spending, our economy would be smaller. This is an indirect way of saying that we should all be bottled up in high-density housing in the cities. With smaller houses and without cars and yards then we wouldn't need as large an economy.

What about the high tax rate?

Our lower taxes boost per capita GDP but also mean that we are on our own for collective-type goods like college education, retirement, health care, transportation and child care — things that are efficiently bought with taxes for everyone in European social democracies.

She is really splitting hairs here. This is not a yes/no equation. The US already spends significant amounts of tax money on everything on her list and entire books could (and have been) written on the supposed efficiencies of tax funding. Let's just say that she is making a lot of questionable statements here.

The next part is really interesting.

Americans work hundreds more hours per year than their European counterparts, and so burdened, have to outsource duties of life. We eat out more, because who has time to make dinner. We hire outside help to clean, provide lawn care and care for children. To make ourselves more essential so as not to be laid off, we buy computers to work at home.

A number of studies have shown that Americans, in general, are wealthier than their European counterparts and are able to use this wealth to pay for services that Europeans have to do themselves. By the time you factor in the extra time the Germans spend on tasks that most people would classify as household drudgery, they lose that time that they do not put in at work.

This is a vice-to-virtue argument. Blumner is arguing that Germans are better-off because they spend more time cooking and washing. She does not get into it and I doubt that her source material mentions it either, but many devices that we consider standard are unavailable in Europe. Dishwashers and clothes-driers are at the top of this list.

So, Blumner's eye-opening book says that we would all be happier if we lived in crowded apartments and spent more time doing household chores and less time at work. I am sure that many people do prefer this but the choice is not as sweepingly obvious as she makes out. Worse, by painting an incomplete pictures, she is presenting a false choice.

Underwater House Values

I've seen several columns on Huffington saying that it is not your fault if you owe more on your house than it is worth, it is the fault of predatory banks who need regulating.

Let's go back several steps. Houses are durable. If you own a house, chances are, it will outlast you. What's more, the value of houses tends to go up faster than inflation. There are reasons for this. One is that the cost of new houses constantly rises due to rising labor costs. Another reason is competition for land. the old mantra: "Location! Location! Location!" is based on this. Growing cities and ones with legislation designed to slow or stop urban sprawl increase the competition for land and therefore prices.

Regardless, none of this constitutes a real bubble. That is when prices rise so fast that the price-rise starts becoming self-sustaining - people no longer care about the underlying item, they begin buying in order to profit from future price rises (think of flipping a house). Eventually the price increases become unsustainable and prices crash. Bubbles have been happening for centuries. In the 17th century in Holland, there was a tulip craze with the price for rare bulbs reaching astronomical heights. In the late 1990s, it was Beanie Babies. There is probably a bubble going on in gold prices right now.

The problem with the housing bubble is twofold. First, people can choose not to invest in Beanie Babies but they have to have someplace to live. The second problem is that the housing prices reached astronomical heights and the drop is more than many people can afford. Even though this was mainly limited to five states, it is still affecting the world economy.

But, back to the basic question - who is to blame?

Banks did a lot of things wrong but I have trouble assigning them primary blame. There are several reasons for this. A big one is that people paying inflated prices for houses should have known that they were paying too much. Let me give an example. Vancouver is in the middle of its own housing bubble. The price for modest houses is now over $1 million. Someone in Vancouver illustrated this by creating a quiz Crack Shack or Mansion? and its follow-up Crack Shack or Mansion II? None of these million-dollar mansions would be worth a fraction of that amount anywhere else. Eventually the prices on these over-priced houses will drop and pull down the value of all of the Vancouver properties.

So where should banks fit into this? Should they stop lending based on inflated prices? If so, who decides when a price becomes inflated? Keep in mind that this decision has its own costs. If banks stop accepting the appraised price on houses, that will hurt housing values all by itself, potentially cutting off all house sales.

One other factor is involved when looking at underwater house values - second mortgages. It is true that banks encouraged people to treat their house as a piggy bank and take out loans based on the increasing value. At the same time, the people who took them up on these loans acted as if they were getting something for nothing. that never works.

Obama and the World

Remember when electing Barrack Obama as President would restore America to it's natural place as a world leader? we did our part. Now, someone needs to remind the rest of the world to do theirs. Obama seems to be isolating us more than ever.

Prior to the G20 conference, President Obama sent the members a letter urging them to do more stimulus spending and leave deficit-cutting until later. They ignored him and pledged to cut their deficits in half in the next couple of years. Trying to save face, Obama remembered that he had projected a deficit reduction so he announced that they had an agreement, even if it was the opposite of the agreement he wanted.

Last week's foreign relations triumph was the official resetting of relations with Russia. In order to reach that point, the Obama Administration turned on allies like Poland and Turkey and gave up completely on human rights abuses. A few days later the FBI arrested ten Americans for spying on behalf of the Russians.

Our standing in the world is diminishing even as we watch. George W. Bush was able to put together coalitions with dozens of members to invade Afghanistan and Iraq. Does anyone think that Obama could put together a similar coalition?

One of President Bush's foreign accomplishments was increased ties with India. Most of Tony Blair's government personally disliked Bush but relations with Britain remained close during the Bush years. France changed governments and became a US supporter (at least for them).

Obama has pushed India and Britain away. He has been lectured on economics and foreign relations by the French.

Israel, closely supported by the Bush Administration, has almost been cut loose.

I've been complaining for years that the Progressives think that they are the smartest people who ever lived. This tendency is showing in foreign relations. Obama has abandoned successful policies, sure that he knows better. All of Europe has told him that defects matter and that stimulus packages don't work but he does not believe them.

A frequent charge about Bush was that he was incurious and arrogant. If that described Bush then how do we describe Obama?

Shakedown

Last week, President Obama met with BP executives. After the meeting, he announced that they were setting aside a $2 billion dollar fund to compensate victims. The next day, Representative Joe Barton apologized to BP executives for being subjected to a Chicago-style shakedown. He was immediately pressured by Republican leaders to reverse himself. Despite the retraction and the fact that no Republican leaders agreed with him, the Democrats plan on using this as a major campaign point and tarring all conservatives with it. This column by NYT columnist Eugene Robinson is typical of what we can expect:

Just to review: A group constituting roughly two-thirds of all Republicans in the House takes the position that President Obama was wrong to demand that BP set aside money to guarantee that those whose livelihoods are being ruined by the oil spill will be compensated. In other words, it's more important to kneel at the altar of radical conservative ideology than to feel any sense of compassion for one's fellow Americans. This, ladies and gentlemen, is how today's GOP rolls.

Two things should be made clear. The first is that no one is saying that BP should not pay. They are complaining about Obama's actions. The second is that the radical conservative ideology that Robinson complains about is the Constitution and the rule of law. The President cut a backroom deal - BP would put up a large fund but would be protected from future claims. Obama got a PR boost when he needed it. The fact that the President did not have the authority to do this didn't slow him down.

Normally I might complain about the precedent that this sets but Obama does this sort of stuff all the time. He used TARP money to and ignored bankruptcy laws to bail out GM and Chrysler. He has proposed using repaid TARP funds for other uses even though the law says that they will be repaid into the treasury. He set new mileage standards for cars and trucks by going through the EPA rather than waiting for Congress to amend the CAFE standards. He made the pharmaceuticals pay millions in ads supporting health care reform in exchange for not being included in the reform legislation. Two days ago a judge ruled that Obama exceeded his authority when he placed a six month freeze on deep water drilling.

Robinson sees this as a matter of helping people in need and it might be... this time. What about next time? Like most politicians, Obama has difficulty distinguishing between actions that help the country and ones that help him politically. Even his shake-down of BP helped his image.

I admit that the rule of law sometimes gets in the way of compassion. It can take years for things to work their way through the courts but there are reasons for this. The courts are supposed to act as a counter to corruption or mob rule. It is satisfying to take a suspect out and lynch him but it is not right. We are supposed to be better than that. We are supposed to be a nation of laws, not one ruled by a populist strongman.

Just to review, A group of liberals/progressives led by the President of the United States thinks that it is better to have the President force immediate action fro BP than to wait for the legal system. In other words, it is more important to kneel at the altar of progressive ideology than to follow the law and the Constitution. This, ladies and gentlemen is how today's Democrats roll.

UPDATE: After I posted it I realized that upholding the Constitution and the rule of law is no longer a priority for many progressives. Robinson's fellow NYT columnist Thomas Friedman has openly wished that our government could be like the Chinese government and just do things. Others such as auteur, Woody Allen, have openly wished that Obama would go ahead and become a dictator long enough to solve all of the world's problems.

Troops In Harm's Way

American policy about putting troops in harm's way has undergone a major policy shift over the years.

For all his hawkishness, Reagan seldom deployed troops. The two most notable instanced were Grenada and Lebanon. Grenada fell quickly. Lebanon, on the other hand, was a disaster. Suicide bombers ran a checkpoint and exploded two trucks filled with explosives, killing 299 American and French troops who were there as peacekeepers. The country quickly lost its appetite for peacekeeping and the peacekeepers were withdrawn.

The Gulf War (Operation Desert Freedom) under George H. W. Bush was the first example of the Powell Doctrine. The part that is relevant here was to attack with enough overwhelming force to keep casualties to a minimum.

Clinton learned his own lessons about troop casualties. Shortly before leaving office, Bush ordered troops into Somalia to stabilize the region. Under Clinton, the mission changed to nation-building. This soured after the events depicted in Black Hawk Down. The result was footage of dead soldiers being dragged through the streets. Clinton withdrew the troops shortly after that.

Clinton's take-away message from Somalia was that the American people would not support any action that involved the death of American servicemen (women were kept well away from combat). When the US intervened in Kosovo, the operation was designed to keep American's safe. The operation was conducted almost exclusively by high-altitude bombing. There were some complaints when bombs missed their targets and a general feeling that it was "unsporting" for Americans to bomb from untouchable heights.

September 11th changed everything. George W. Bush invaded Afghanistan. That operations was quick and nearly bloodless. Bush followed up with an invasion of Iraq which was also fairly quick but did have some casualties. Support for the war remained fairly high for the first year or so but the MSM (mainstream media) started playing up each casualty as the insurgency became organized. The constant drip, drip of bad news turned public opinion against the war. Eventually, Bush had to convince not only the American people, but Congress and his own generals, that the war was winnable at an acceptable cost. The cost was a sharp upswing in troop deaths as the Surge progressed. This was followed by a stunning drop in troop deaths and an admission that the Surge worked.

Obama came to office with a stabilized Iraq but an unstable Afghanistan. Bush had never pushed the new government's influence across the entire country and the Taliban was known to be taking refuge in Pakistan. Obama had campaigned on winning Afghanistan. He implemented his own version of the Surge. This included new rules of engagement. Under Bush, the rules of engagement had been tightened to minimize civilian casualties. This was tightened even more under Obama. The result has been a complete reversal of the Clinton-era priorities. Under Clinton, civilian casualties were acceptable if it kept the troops safe. Now, air  and artillery strikes that could save troops are only allowed if there is no chance of civilian casualties.

While this is a defensible counter-insurgency strategy, it is affecting troop moral and causing troops to question the wisdom of their leaders.

1937 or 1930?

Economists continue to debate the lessons of the Great Depression. This is important because, if they get it wrong, our economy will suffer for years. We could easily repeat Japan's "lost decade", which is also being debated.

The two economic theories come down to the role of the government. One side says that government spending is the only thing keeping us from falling over the abyss. The other side says that the government is interfering with the natural economic recovery and making it worse.

The pro-government spending side it championed by Paul Krugman and endorsed by President Obama. They believe in a simplified version of Keynes. There are several core beliefs that the neo-Keynesians have:

1. During economic downturns, the government has to increase spending in order to make up for the decreased private spending.
2. All spending is good. The usual example is to hire one person to dig holes and a second one to fill in the holes.
3. Government spending is more efficient than tax cuts or rebates since taxpayers might save some of the money or use it to pay down debt. Government spending can be targeted to do the most good and none of it will be "wasted".
4. There is a multiplier effect where a portion of each dollar spent is re-spent. President Obama expressed this at the ground-breaking for the 10,000th project when he said that lunch workers would benefit from the money spent by the road workers.
5. We should not worry about short term debt. The time to worry about the debt is after the crisis has passed.
6. The economy was recovering from the Great Depression until 1937 when FDR decided to do something about the growing national debt. The resulting cutbacks caused a new recession.
   

There are problems with many of these points. The biggest one is that it assumes that employers are stupid and will make long-term hiring decisions based on short-term stimulus projects. Take the example that President Obama gave of the lunch worker. If you owned a lunch counter near a construction site and your business increased because of the construction, would you assume that the increase was permanent and expand your facility or would you add temporary workers and assume that business will return to normal when the construction project ends?

Obama's example of the lunch counter worker has an additional problem - it assumes that the construction worker would not eat lunch without the stimulus. In this example, the stimulus moved where the lunch is eaten and may have increased the amount spent. There are better examples but real life intrudes. If the government gives a rebate to a worker, he may spend it or he may bank it. Having the government hire the same worker to dig holes is supposedly more efficient but that same worker may bank his hole-digging wages.

There is some evidence that government spending crowds out private spending rather that stimulating it. The money for this spending has to come from somewhere - either borrowing, new taxes, or high inflation.  Currently businesses are holding huge reserve funds. Collectively they worry that there will either be a double-dip downturn or that the government debt will affect them. Either way, this is affecting their spending.

The idea that government spending is targeted sounds good in principle but the actual stimulus bill that was passed had more to do with politics than efficiency. Spending was not targeted at areas with high unemployment. It was closer to old-fashioned pork-barrel spending except names were removed to make it harder to identify earmarks.

The idea of spend today, save tomorrow sounds good on paper but tomorrow never comes. Government spending increases in the bad times. When the good times come, the pressure to deal with the debt and the size of government is off. No one wants to make hard economic choices when times are good and economists like Krugman insist that it is harmful to cut when times are bad. The result is ever-expanding government and government debt. At some point the debt becomes so burdensome that it strangles the government. Greece is already at that point. Spain is making major cutbacks to avoid the same fate. Krugman thinks that their problems would be solved if they could devalue their currencies but that would raise the future cost of borrowing.

The opponents of the neo-Keynesians point out that the economy was recovering from the crash of 1929 until the government involved itself in 1930. That's when unemployment skyrocketed. There was a similar crash in the 1980s. The government did nothing and the stock market recovered without pulling the economy into a decade-long depression. The fear is that we will repeat the mistakes of the 1930s instead of the lessons learned in the 1980s.

The effects of government stimulus are debatable. Obama's economic advisers made their reputations saying that stimulus spending never worked (once they went to work for Obama then insisted that "This time is different"). There have even been studies that show that cutting government spending can cause an economic boost.

The neo-Keynesians, at heart, believe that the government knows better than the people how things should work. It is no coincidence that a president who took over health care believes that the economy cannot mend itself without government aid.

The impulse to help is deeply ingrained. Back when children grew up on farms they were taught not to help a hatching chick. If you helped it you inevitably injured it but a chick that hatched on its own was healthier. The same applies to an economy but the ivy-league lawyers running the government cannot believe this.

Why Aren't the Democrats Fired Up?

This piece echos one by E. J. Dionne in asking why Democrats aren't fired up and ready to go? It lists their accomplishments but fails to recognize an important point - their accomplishments are not popular. In fact, Obama was in Columbus today trying to convince people that his economic stimulus worked. A majority of the country dislikes health care. When the man at the top is still trying to sell his signature accomplishments, the people further down are in trouble.

Then there are other factors. The economic recovery is slowing. Unemployment is still the highest it has been in a generation with no sign of dropping in the next several years. The deficit is unsustainable. Everyone knows it but no one will admit to a plan to do something about it. The various bail-outs may have saved the economy but they gave the impression of rewarding bad behavior. The coming financial reform bill reinforces that impression.

Voters are in an anti-incumbent mood. Some long-time incumbents couldn't even make it past the primaries. Long-time Democratic allies (unions) have turned on moderate Democrats. Without Obama at the top of the ticket, Democrats from traditionally conservative districts can expect a tough fight which many will loose.

Given all of this, I can't imagine many Democrats looking forward to the coming election. How can they get fired up when they are already on the defensive?

What Kind of Capitalist is Obama

New York Times columnist, David Brooks, recently wrote a column about the two types of capitalism seen today.

On the one side are those who believe in democratic capitalism — ranging from the United States to Denmark to Japan. People in this camp generally believe that businesses are there to create wealth and raise living standards while governments are there to regulate when necessary and enforce a level playing field. Both government officials like President Obama and the private sector workers like the BP executives fall neatly into this camp.

On the other side are those that reject democratic capitalism, believing it leads to chaos, bubbles, exploitations and crashes. Instead, they embrace state capitalism. People in this camp run Russia, China, Saudi Arabia, Iran, Venezuela and many other countries.

My question is if President Obama falls as neatly into the first camp as Brooks thinks.

As president of the world's leading democratic capitalist nation, Obama is in that camp by definition but is that where his heart lies? After all, Brooks has mistaken Obama's motives before, projecting his own onto the President.

Obama has made several speeches against the current economy with its boom and bust cycles. He has vowed to make fundimental changes to eliminate these cycles. He and his fellow Democrats have blamed the Bush administration for allowing bubbles.

Progressives in general and Obama in particular are in favor of redistributionist policies. They are more concerned with the disparity between the rich and the poor than with rising living standards for everyone. Their view of the government goes far beyond ensuring a level paying field.

Quoting Ian Bremmer, Brooks continues:

Bremmer points out that under state capitalism, authoritarian governments use markets "to create wealth that can be directed as political officials see fit." The ultimate motive, he continues, "is not economic (maximizing growth) but political (maximizing the state's power and the leadership's chances of survival)." Under state capitalism, market enterprises exist to earn money to finance the ruling class.

That's pretty close to the Chicago way of politics - use of political power to reward supporters. There is a reason that Wall Street gives more to the Democrats than to the Republicans even though the Republicans are supposed to be their natural allies.

Brooks goes on to talk about large national energy companies. We do not have anything like that but we could. There has been a lot of pressure for Obama to seize BP. Obama has resisted that but he did take over GM last year, bypassing bankruptcy laws and splitting ownership between unions (heavy Obama supporters) and the government. He also let the banks know that he owned them for taking TARP funds, even if it was forced on them.

While Obama is a long was from exercising the type of control that Brooks describes, many of his supporters would be thrilled to see this happen. On several occasions, Thomas Friedman has openly wished that our government had the same power as China to implement policies. Woody Allen joined him in wishing that Obama could become a dictator long enough to solve our problems.

Countries like these look better from the outside than the inside. Outsiders see things happen and assume that it is all for the common good. Those on the inside see favoritism and corruption. One lesson from the Gulf oil spill is that the closer regulators get to the industry that they are supposed to monitor the less likely they will do their job properly.

Obama's Speech and the limits of the Presidency

Last Tuesday, President Obama gave his first Oval Office speech. While the subject was the Gulf oil spill, the real reason for the speech was to try to save his presidency. This effort was doomed from the start.

Obama's problem is that the country suffers from heightened expectations for what the government in general and the President in particular can do. The oil spill has been called Obama's Katrina but, in a way, he is a victim of Bush's Katrina.

After Hurricane Katrina, the federal government did as much as was possible as fast as it could be done. This wasn't enough for most people. Day after day the news anchors stood in front of flooded houses and reminded the country that New Orleans had not been fixed yet. Many people on the left spent enormous effort blaming the disaster on Bush - either because he allowed Global Warming which caused the hurricane or because he didn't spend enough money on the levees. Bush added to the expectations on his own. His White House never pointed out that they were not meant to be first responders or that the rescues began almost immediately after the storm ended.

Like Bush, Obama is a great believer in the power of government. Neither man would ever quote Reagan's joke about the scariest phrase in the English language, "I'm from the government and I'm here to help."

But there are some things that the government cannot do. It does not have the technology to stop an oil leak a mile underwater (not that BP's technology is doing such a great job). At the same time, there are things that the government could do. A 1990 law allows it to take over the clean-up effort but the Obama administration failed to do that. In fact, there have been several holes in the government's response. Obama's speech did not address any of those. He did not announce any new policy changes. His administration continues to outsource everything to BP while demonizing it and implying that it is not doing everything in its power to stop the oil.

That's why Obama's speech will be judged as a failure. It didn't change anything. The country still wants the leak stopped and that is still weeks in the future. Obama got BP to pledge $20 billion. That made today's headlines but it will be forgotten long before the oil stops leaking. Obama called for an energy bill - any bill - without giving any specifics. All of the pundits called him on his lack of anything concrete.

Without lowering expectations, Obama will continue to face the same problem daily for weeks - the oil continues to gush and the President has not done anything to stop it. A single speech cannot change that.

The Wrong People in the Wrong Place at the Wrong Time

I have come to the conclusion that President Obama and the Democratic congressional leadership are exactly the wrong people to be in charge of the country at this time. The country is in a long-term economic slump with a real possibility of a double dip recession but the people in charge have no idea of how economics work. Worse, they are offended by basic fundamentals of economics like profits.

During the 2008 election, Obama let it slip to Joe the Plumber that he is in favor of redistributing wealth. During a recent graduation speech he told graduates to stop worrying about making money and to do other things with their lives. While that sounds good, it does not create jobs.

The Democratic response to the economy in general has been contradictory but guided by the overriding conviction that only they know what is best.

Look at the outrage they express when banks that previously received TARP funds paid legally mandated bonuses or simply made a profit. After taking over GM, the President suspended long-established rules for paying off debt under bankruptcy in favor of unions (which coincidentally were major campaign contributors).

Obama's signature achievement was his health care reform but it will act as a drag on the economy.

The latest are the actions surrounding the BP oil spill. Members of Congress talked about requiring BP to suspend paying dividends (on earning from the quarter before the oil spill) and even stopping them from advertising until all cleanup costs have been paid. This would amount to seizing a foreign corporation without bothering to go through legal proceedings.

The oil spill is hurting Obama's popularity but his reactions are having international repercussions. By stressing their old name, "British Petroleum" instead of their current name, "BP", he is alienating an entire nation. Treating BP as a faceless, possibly evil, entity ignores the fact that a lot of its dividends go to regular people. Retirees in England face major cuts in their pensions because of Obama's actions.

While most of the above problems are shared between the President and the Congressional leadership, Obama has put his personal mark on international relations. Even before the BP incident he went out of his way to insult the British Prime Minister. Many people think that this stems from a personal dislike that Obama has for the British stemming from their colonial control of his father's native Nigeria. Since Obama's withdrawal strategies for Iraw and Afghanistan hinged on European countries taking over peace-keeping duties, it is irrational to spurn our strongest supporter in those theaters.

Other countries such as India, Poland, and Turkey have seen a cooling in relations. No explanation has been offered but speculation is that they are being punished for their good relations with the Bush administration. Israel has seen a major shift with relations being at their lowest point in a half century.

At the same time, outreach to hostile countries has failed miserably. Obama was supposed to heal relations with the world but instead he has isolated us further.

A year and a half into his administration and it is difficult to think of a policy that has actually succeeded.

Party Polarization

There is no doubt that the Tea Party movement is meant to pull the Republican party to the right into territory normally ceded to Libertarians. While they dislike President Obama and his progressive policies, they are also upset with free-spending Republicans often called RINOs (Republicans In Name Only). It is a matter faith among the left that this will ultimately doom the Republicans' expected gains this November. They are sure that the Tea Party is unattractive to most voters and that candidates that the Tea Party approves of will be too far from the mainstream to win. Robert Creamer, writing at Huffington, calls the Tea Party "an extremist cancer in the Republican Party".

What is interesting is that the same thing is happening in the Democratic party but is largely overlooked. The best example was the attempted challenge to Arkansas Senator Blanche Lincoln. The difference is that this was conducted by party insiders - unions and MoveOn. Lincoln is an example of the type of Democrat that was recruited in 2006 to take back Congress, the so-called Blue Dog Democrats. She is a moderate Democrat from a conservative state.

Lincoln's sin was to come out against "card check". This would allow union organizers to bypass secret elections if they could get a majority of workers to sign pledge cards. Considering the leg-breaking tactics that the supporters of card check have been using elsewhere (1), it is likely that undue pressure would be applied to workers to get them to sign the cards. The unions want the Democrats kept in line so they spent $10 million in an effort to unseat Lincoln. While they failed, Creamer points out that the effort was still intimidating to politicians. The Democrats are now on notice that they may face a rough primary instead of running unopposed if they deviate from the unions' agenda.

Two points here - the White House and the unions made it clear that they disagreed on this. The White House pointed out that this was $10 million that could have been used on other races. The unions replied that they are not a subsidiary of the Democratic party. The implication is that they are more interested in keeping Democrats in line than in getting them elected in the first place. This attitude is almost identical to the Tea Party.

Strangely, Creamer, who thinks that this is a cancer when coming from the right, applauds the same thing when coming from the left.

Polls continue to show that we are a center/right country. Most people support free enterprise and dislike unions. The progressives are way to the left of this. They have convinced themselves that the elections of 2006 and 2008 mean that the country moved to the left and that they can abandon the centrist candidates that let them regain power.

Republicans have a similar view. After eight years of Bush centrism, they think that their party no longer stands for anything and want a return to the days of Reagan when government was the problem instead of the solution.

The result of all this is that the parties are polarizing along the proper role of government in daily life. The Democrats want more involvement in everything. The Republicans think that the government is already too intrusive. The next couple of elections will decide what course the country will take. Two more years of Democrat control will put the country on a course that will be almost impossible to change. A Republican victory will bring the Obama agenda to a screeching halt.



(1) - SEIU members have attacked people associated with the Tea Party on multiple occasions. More recently, a group hundreds of protesters showed up on the lawn of a bank officer on a Sunday demanding changes to the bank's policies.

Our Kick-Ass President

A couple of days ago, President Obama said that his first trip to the Gulf after the oil spill began was so that he could find out whose ass to kick.

That trip was a month ago and the leak continues. Has he kicked anyone's ass yet? If so then why didn't it work? It not then what is he waiting for?

Also, why is he willing to travel to the Gulf to talk with smart guys but can't even pick up a phone to talk to the head of BP? I know that Obama is averse to corporate executives but refusing to even consider talking to the guy in charge seems childish. Is this the same man who would talk to the enemies of the US without precondition?

Maybe he just hates the British accent?

The Many Problems of Mr. Obama

Sometimes it sucks to be president. Look at everything on President Obama's plate:

Health Care - the promise was that once it passed the public would accept and embrace it. Instead it is becoming even less popular. Obama is launching a new campaign to convince the country that we wanted this legislation. Congressional Democrats are avoiding town hall meetings for fear of a repeat of last year's meetings when opponents of health care outnumbered supporters. What should have been Obama's biggest triumph threatens to become a millstone.

The Gulf Oil Spill - Obama is still trying to find the right tone. Today he is talking about firing the head of BP and kicking the right asses. Tough talk only goes so far while the spill continues. This may hurt the Democrats in November. In the meantime, it is a constant distraction.

The Economy - For the last few months the Obama administration is taking credit for saving the economy. The real economic news is not good for them. The White House had originally predicted a sharp recovery, comparable to the recovery under Reagan. This is not happening. At its best, the Obama economy was holding unemployment stable rather than reducing it. The May figures show that even this has stopped. Except a big jump in the unemployed when the temporary census worker positions end. Hopes for a V-shaped recession have failed. Now the talk is of a double-dip recession where we drop back into a recession before recovering from the last one. This is the Democrats' worst nightmare. For the last two years they have insisted that the recession was caused by insufficient government control and spending. A double-dip recession would repudiate them and their advisers.

Afghanistan - Obama came to office insisting that this was the real war and that he would win it. A year after his version of a surge, things are not going particularly well. The US-supported government is viewed as corrupt. The Taliban is entrenched. Training of native soldiers and police is behind schedule and may never produce the desired results. The war has moved into Pakistan which is becoming increasingly touchy. About the only piece of luck that Obama has here is that the anti-war movement died down, at least for now.

Mid-East Peace - It's all bad news here.

Iran and North Korea - So much for smart diplomacy. Nothing Obama is willing to do has had any effect on Iran's nuclear ambitions. North Korea is worse, going so far as to torpedo a South Korea ship. What happens if either country starts a war after creating a nuclear stockpile?

Progressives - While Obama is the most radical left president in decades, he and the Democrats are still not keeping the Progressives happy. This group has the potential to do to the Democrats what the Tea Party is doing to the Republicans - replace safe, moderate candidates with fire-breathing radicals. Much of the country is already uncomfortable with how far left the country has drifted so the Democrats will have to choose between appealing to the centrists or their most active supporters.

Mid-term Elections - It all comes down to this. It is a given the the Republicans will pick up seats. Without George Bush to drag the Republicans down and without Obama at the top of the ticket to help the Democrats, seats in normally conservative districts will shift back to Republican hands. The economy and a general anti-incumbent feeling will also hurt the Democrats. Their only hope is to mobilize the huge number of first-time voters from 2008. This is a poor strategy since most of those people cared more about voting for the black man at the top of the ticket than about politics in general. The Republicans have a shot at regaining control of the House and making gains in the Senate. At the least, this election will take the edge off of Obama's most radical proposals.

Helen Thomas and the Jews

Helen Thomas, the nearly 90-year-old columnist and White House correspondent, stirred up a lot of trouble after some statements she made at a Jewish Heritage Celebration. Thomas complained that the Jews are occupying Palestine and should go back where they came from. She clarified this to mean Germany, Poland, and the US.

Thomas issued her regrets over the weekend but this was too little and she announced her immediate retirement today. Good ridance.

There are still several disturbing things about this. Thomas is old enough to remember first-hand the persecution of the Jews in Hitler's Germany. She should be very aware of why the Jews felt the need for a defensible homeland and why it had to be Israel. As a member of the White House press core, you would think that she would know that "Palestine" was part of Turkey when she was born and became a British possession after WWI.

The matter of fact way that she said this shows that her statements were part of a long-held belief. This echoes statements by the rulers of Iran that the Jews' homeland should be in Europe instead of the middle-east.

Thomas's statement shows that she does not believe that modern Jews are related to the biblical Jews and that Israel does not have a right to exist. Since she didn't think twice about blurting this out, she is either senile or is so used to being among like-thinking friends that it didn't even occur to her that she said anything wrong (or possibly both).

Ironically, a new genetic study of the Jews shows that they are what they have always claimed to be - the biblical Jews, forced to scatter by the Romans more than 2,000 years ago but still a distinct people.

Did Free Markets cause the BP Disaster?

Bob Cesca has a column on Huffington blaming free markets for allowing BP enough freedom for the Gulf Oil Disaster to occur. He then urges the government to act on Robert Reich's plan for the government to seize BP. Cesca and Reich are convinced that BP is not making every effort to stop the oil flow and that nothing short of full government control will fix this.

I will not argue that BP has been negligent - even their CEO has admitted this. The question is what the government's involvement should be?

Reich thinks that BP should be placed into receivership until the crisis is solved then cut free again. Cesca claims that he is for capitalism, just not libertarianism but fails to make specific recommendations. I think that his desired result would be to shut down BP (but not until they fix the oil leak).

So, that's a couple of votes for strong, direct government oversight of the oil business.

Rather that speculate how that works, let's look at some real world examples. Lots of countries have nationalized all or parts of their energy producers.

Let's start with China. I admit that I don't know much about Chinese oil industry but the Chinese coal industry makes the news fairly often. It is a disaster. Being a coal miner in China is one of the world's most hazardous jobs.

How about a couple of countries that do control their oil companies - Iran and Iraq under Saddam? Sitting on some of the world's biggest oil reserves and controlled by the government, they must have been models of safety and efficiency, right? Stop laughing. Iraq's oil industry was a model of corruption. Iran's is so poorly run that they cannot power their own country. For years they claimed that the only reason they were building nuclear reactors was so supplement their declining oil production.

Ok, all three examples are third-world countries. What about the USSR during its glory days? That's where things get really instructive. The reports that came out of Russia and the former satellite countries was that they were environmental disaster areas. Look at Chernobyl. It lacked most of the safety features that were standard in US reactors. Somehow, profit-minded US companies were able to build safe nuclear reactors and countries run by and for the people were not.

That's what happens when government and business get too close or government takes over business. Corruption settles in. Safety is forgotten. Politics become the order of the day.

We already saw that happen with the Gulf Disaster. This week we were told that the nuclear option was off the table. While a strong list of good reasons were given, the list included Obama's desire for total nuclear disarmament. What would Cesca or Reich say if they found out that BP passed on an option because it would make them look bad?

Obama's Perpetual Motion Machine

The employment news for May sounded good at first - 431,000 jobs were created. The fine print tells a different story - most of those jobs were government jobs. Only 41,000 jobs were in private industry. Worse, the biggest share of the nearly 400,000 government jobs was for temporary jobs as census workers.

Remember how stimulus money was supposed to work? It is supposed to get extra bang for the buck. For every dollar spent, some of that is supposed to lead to additional economic activity which leads to more economic activity, etc. Before you know it, the economy has so much activity going that it doesn't need any further help from the government.

There is considerable question if this ever worked anywhere but it certainly did not work this time.

In a way, economic stimulus is like a perpetual motion machine. It sounds simple and elegant but it just doesn't work in real life. You cannot tax or borrow money to create stimulus and expect it to keep running.

Obama's Katrina

We've been hearing it for weeks - the oil spill will be President Obama's Katrina. What exactly does that mean?

Hurricane Katrina marked the beginning of a long slide in President Bush's popularity. Let's quickly review what happened. The Bush administration suffered from internal failures, problems beyond its control, and from bad press.

The internal failures came early. Bush was partying in Arizona at McCain's birthday when the levees broke. The next day the White House released pictures of Bush looking at the damage through the windows of Air Force One from a high altitude. He had good reasons for not landing and inspecting the damage first-hand but he didn't share them until years later. To make things worse, he publicly praised the head of FEMA while press reports indicated that he was giving the effort less than his full attention.

A lot of problems were beyond the White House's control but they were blamed for them, anyway. FEMA was never meant to be a first-responder but people expected it to be on the ground hours after the storm cleared. The governor of Louisiana lost time in requesting the National Guard because of disputed over jurisdiction. The guard had to clear its way into the state through blocked roads. The Guard and FEMA arrived about as soon as possible but, to a nation glued to the TV, this was days too late.

The extreme Bush-haters wet on to blame Bush for every aspect of the disaster. He was blamed for the hurricane itself (if only Kyoto had been ratified then global warming would have already been solved) and for underfunding levee repair. Some insisted that he had ordered the levees dynamited in order to get rid of the minorities.

On top of all that, the press coverage failed to shine. Rumors were breathlessly repeated without any attempt at verification. TV anchors mislead their audience. For days they showed the Superdome and the convention center full of people waiting to be taken elsewhere. They failed to mention that these were holding areas for people who had been rescued from their flooded houses and that they were being transported out almost as fast as they came in.

Obama has not had to deal with bad press but the story is hurting his credibility in many ways. Like Bush, he is a victim of unrealistic expectations.

Technically the federal government is not responsible for fixing the leak. According to a law passed during the Clinton administration, BP is responsible for stopping the leak and cleaning up the oil. The government's job is to sit on the sidelines and supervise. Further, as poor a job as BP has done, I doubt that the government could have done any better.

The American people do not want to hear this. With the exception of a few on the right, people want the problem solved and they don't understand why Obama has not fixed it. After all, he stopped the economy form crashing, he saved GM and Chrysler, he took over health care and he is regulating Wall Street. The letter of the law didn't stop him when he gave GM TARP funds or when he rewrote bankruptcy laws on their behalf.

The Obama Administration talks tough. The President talks about arresting anyone who broke any laws and changing the law if need be (one hopes that he understands that he cannot make something retroactively illegal) but his administration still has to defer to BP.

When the oil spill is the top story night after night, there is no way to stay aloof from it.

Obama himself is in a difficult position. He talks like someone who hates capitalism but his took more oil dollars than anyone ever had before and he had announced a plan to allow new off-shore drilling just days before the disaster. Taken together with the Wall Street bail-outs and Obama's actions some across as pro-big business regardless of what he says.

There is speculation that oil will continue to erupt until August. This would hurt any president but Obama is uniquely vulnerable. He came into office claiming to be the one who would fix the world's ills. Now the spill shows that he is mortal, after all.

The Primaries

I smile whenever I think of the plight of Arlen Specter. Rather than face a tough primary challenge, he switched parties. Imagine his disgust when he found out that he would face a primary challenge after all - this one from the left. Worse, President Obama reneged on is support. The result - Specter is out anyway. If he had stayed with the Republicans there would have been a gnashing of teeth from the left over an honest moderate being forced out by a radical Republicans. Instead they will write about how the two Democrats believed in the same things and Specter fell victim to a wave of anti-incumbent sentiment.

Obama did campaign for Blanche Lincoln but it was not enough for her to capture a majority vote. She will have to participate in a run-off contest.

On the Republican side, Rand Paul upset the candidate endorsed by the Republican establishment in favor of one endorsed by the Tea Party.

The Regulatory State

I saw an editorial cartoon that listed the financial melt-down, the coal mine deaths, and the deadly oil rig explosion and leak with the caption "How's that handsy offy thing going for you?" (sorry, I couldn'f find an on-line copy).

I'll ignore the slam at Sarah Palin, and look at the real issues implied by the cartoon. The message is that the government took an hands-off approach and things fell apart. If you believe this then the obvious fix for everything bad that has happened is more government. There are problems here.

To start with, I hope that no one actually believes that banks, coal mines, and oil rigs are not regulated. So the real question is "How is that regulation thingy working out for you?"

I'm going to skip over the coal mine disaster. The results of the investigation are not in. The mine operators had been cited for lots of safety violations prior to the deaths.

What about the oil rig that exploded? The MMS, the federal agency that inspects these rigs is supposed to do monthly inspections. At least a quarter of these were skipped over the last five years. There are allegations of a too-cozy relationship between the MMS and the oil industry.

Then there is Wall Street. I doubt that there is another portion of the economy that has more regulations but the regulators were too busy watching porn to regulate. Congress didn't cover itself in glory here, either. Prior to the crash, Barney Frank insisted that there was nothing wrong with the sub-prime market and that more sub-prime loans be made.

The point to all of this is that the regulators we have did a terrible job. There is not reason to think that adding new regulations will help prevent future disasters.

The Republican Presidents and the Tea Party

Newsweek has a piece gloating that the Tea Party has moved the Republicans so far to the right that even Reagan would not be acceptable today. It gives a rundown of the last five Republican presidents and scores them on behalf of conservatives. The point of the piece is to comfort liberals that the Republicans will not regain power because they have moved too far to the right. Accordingly, the list deserves a closer look.

The first president on the list is Richard Nixon. There is no question that he was too liberal to be a modern Republicans. He was one of the most liberal men to hold that office and possibly the most liberal president of the last 50 years (possible contenders - LBJ and Obama). The country had a brief flirtation with hard-core liberalism in the 1960s and recoiled.

The next on the list is Gerald Ford, out country's only unelected president. He was defeated in his only national election. A big factor in his defeat was Reagan. While Ford won the 1976 primary, Reagan attracted large and passionate support. There is little question that modern Republicans would reject him. If he hadn't been a (sort-of) incumbent he would never have made it on the ticket in the first place.

I'm going to skip to George H. W. Bush. He got the VP slot on Reagan's ticket by placing second to Reagan in the primaries. In 1988, he won the presidency as Reagan's successor. While he had been skeptical of Reagonomics in 1980, he claimed that he had seen the light while Reagan's VP. While president, he reneged on his promises and raised taxes. He also increased spending, cut the military, and expanded government supervision into such things as how much water a toilet could use to flush. He supported the ADA and legislation on sulfur-dioxide (acid rain). He almost passed a sweeping health care initiative similar to what Obama proposed during the 2008 campaign. In addition to all of this, he was also a one-term president. Yes, Reagan Republicans would reject him but most of the country rejected him in 1992.

Reagan Republicans never liked George W. Bush and he never liked them. His only take from the Reagan years was cutting taxes. Otherwise, many of the things that today's conservatives hate about the Obama administration began with the Bush administration. Given Bush's poor performance rating when he left office, it is hard to see what Republicans would gain by embracing him.

That leaves the sainted Reagan. Would he be acceptable to today's Republicans? Almost certainly he would. They had not deserted him by the end of his term. True, he did not cut the size of government or the deficit, but conservatives are willing to cut him some slack for these. He did slow the growth of government. The size of the Federal Register increased less during the Reagan administration than any other time in the last fifty years. Granted Reagan sponsored an amnesty program for illegal immigrants and  most conservatives are against today. The reason conservatives are against it today is because Reagan tried it and it did not work (not because they hate immigrants in general as Newsweek claims). Given the total failure of Reagan's amnesty program, I doubt that he would support it again.

So, of the last five Republican presidents, only one would be acceptable to today's conservatives. Before we conclude that this makes them hopelessly polarized, let's take a quick look at the Democrats.

While Nixon was too liberal to be a Republican today, Kennedy was too conservative to be a Democrat. He was pro-defense and anti-communist. He cut taxes. His support for civil rights legislation was, at best, lukewarm. He even allowed the FBI to investigate Martin Luther King jr and other civil rights leaders.

Socially LBJ is acceptable to today's liberals/progressives but they never talk about him because of Viet Nam.

Carter is popular now because of his years as an anti-Bush spokesman but no one seeks to bring back the glory days of the carter administration. The biggest insult than many Republicans can heap on Obama is to compare his foreign policy to Carter's.

Clinton was the Democrat's only two-term president since FDR (Truman served most of FDR's 4th term and one of his own). You would think that the Democrats would love him. In fact, many felt betrayed during his presidency. He was a moderate and adopted many Republican issues as his own. His wife, Hillary, had to run to his left when she ran as president. The fact that she lost shows that Bill Clinton is not held in the same esteem in his party that Reagan is held by the Republicans.

In 2008, Democrats embraced Obama because they recognized a true liberal. He still won a convincing victory. Republicans hope to do the same thing. Obama's victory shows that a candidate can be well out of the center and still win an election.

The Politics of Iron Man

SPOILER WARNING. I'm going to assume that you have seen both movies.

The Iron Man movies have an interesting political viewpoint. At the beginning of the first movie, Stark was an unapologetic weapons-maker. He was injured by one of his own weapons but, rather than turn into a pacifist, he built a flying suit of armor and took revenge. His other response was to shut down weapons-making, but only until he found out how his weapons got into the wrong hands.

Given that background, it is easy to see why Stark is reluctant to turn his armor over to the government. He knows that his technology can end up in the wrong hands once he gives up control.

There are sub-texts in the movie about the government take-overs.

Neither movie gives you a good feeling about weapons-makers. Stark is out of control. His partner, Stane, was the one selling weapons to the bad guys. In the second movie, Hammer's main motivation is to sell weapons to the government and to show up Stark. He is willing to do this through illegal and unethical means.

In the first movie, Stark was more interested in building his armor as a means of personal flight. The weapons potential was an afterthought (although he did build a tank-killing missile into his suit and his suit in the second movie had a lot of drone-killing gimmicks). When the army got a hold of a suit, the first thing they did was "weaponize" it which implies that they agreed with Stark that the suit alone was not exactly a weapon.

Whiplash told Hammer that drones are better. He was right in general. If there is no one in the suit then no one will be killed if the suit is destroyed. Also, in the context of the movie, drones were better because one person could take over all of them. They were destroyed pretty easily but, after all, they were built by Hammer.

There are parallels between Stark and Steve Jobs. Both are treated as rock stars at their company events and almost died of an unannounced health problem. There are also similarities to Larry Ellison from Oracle (who makes a cameo as the "Oracle from Oracle").

The Black Widow started out as a spy for the Russians so I was expecting her to be working for Hammer instead of for SHIELD.

The Stark Expo 64 was a cross between the 1964 World's Fair (including the location and the Unisphere) and Disneyland. Stark's father came across as the Walt Disney of technology. It was moved to 1974 so that Stark could be in his 40s instead of his fifties.

Rhodey had an interesting choice. On one hand, he was stealing a piece of valuable hardware from a friend. On the other hand, Stark's increasingly unstable behavior made this almost unavoidable. Stark's message was not to worry, he would use the Iron Man armor responsibly but he could not fulfill that promise.

What were Stark's plans for the armor after his death? He already turned his plant over to Pepper. Did he plan on turnign the silver suit over to Rhodey? Is that why the suit worked for him in the first place - it was meant to be his? Is that why it had its own arc reactor instead of running off of the one in Stark's chest like the others?

Lessons Learned from the Times Square Bombing (Attempt)

A few days ago I debunked some lessons learned on the attempted bombing in Times Square. This entry has some real lessons learned.

1) The attack was a failure on multiple levels. Not only did the bomb fail to go off, it also failed to produce any terror. By some accounts, Faisal Shahzad was motivated by anger over drone attacks on Pakistan. This came and went in the news cycle, overshadowed by speculation that losing his house was what really motivated Shahzad.

2) America is not as safe as we think. We all subscribe to a Fortress America syndrome. We are so far removed from most conflicts that we are shocked when violence touches our shores. The only significant military attack on the US mainland was during the War of 1812 when the British sacked and burned our capitol. The few attacks since then shocked the nation. That includes Poncho Villa and Pearl Harbor. During the Obama administration we have had two failed bombings (Times Square and the Underwear bomber) and two shootings (a recruiting station and Fort Hood). Since September 11, terrorist attacks on the US have either been stopped, failed, or did not rise above the background noise of everyday violence. Eventually the attackers will manage to pull off terrorist attacks on a large scale.

3) The left hates the right more than it fears Islamic militants. Between the discovery of the failed bomb and the arrest, the main reaction from the left was to blame the right. Mayor Bloomberg was sure that the bomb was planted by a health care protester. On MSNBC, Contessa Brewer said what I am sure many believe:

I get frustrated… There was part of me that was hoping this was not going to be anybody with ties to any kind of Islamic country. … There are a lot of people who want to use terrorist intent to justify writing off people who believe in a certain way or come from certain countries or whose skin color is a certain way. I mean they use it as justification for really outdated bigotry.

Bombings by Islamic militants are so Bush administration. If we are going to have people bombing us, Brewer wants a new enemy - one she is more comfortable with.

Since the anti-deficit and anti-tax protests began, the left has ascribed darker motives to them. Now we have a situation where someone is disappointed because a group that we are in a shooting war with tried to harm us instead of a new group.

4) The Left's grasp on reality is slipping. They are letting their prejudices get in the way. They will not take the Tea Parties at face value. They jump to the wrong conclusion on a bombing. When the wrong group attacks, they try to frame it differently (he was motivated by the loan crisis, not his religion). In fact, they try to ignore thinking about Islam completely - a threat by Muslims against South Park was largely ignored, would a similar threat by a Christian group be treated similarly? It may be a coincidence but the Times Square bomb was right outside Comedy Central's office. No one mentioned this until after Shahzad was arrested.

None of these lessons are comforting. People want to hurt us and will probably keep trying until they succeed. A large portion of the population is too busy hating a different part to recognize actual threats.

Whose Country?

Yesterday, on the fifth of May (Cinco de Mayo in Spanish), some high school students in the Bay Area of California were sent home for wearing clothing with flags or flag-like designs. The clothing was considered offensive to the school's Mexican population since it was a Mexican holiday. The school district has since stated that this is not school policy. Some Mexican students have asked for an apology but the students' families responded, "Fat chance."

There is an implied dig at illegal immigrants by the flag-wearing students but this could become a slippery slope. If wearing a flag on a Mexican holiday is considered offensive then can wearing a flag at any time also be considered offensive if it is worn where the wearer knows that illegal immigrants will see it? This could easily become a situation similar to Christmas where people often refer to it as "the holidays" for fear of offending people who do not celebrate Christmas.

To put things in perspective, let's contrast Cinco de Mayo and Saint Patrick's Day. Both of these are bigger holidays in the US than in their native country and have been adopted as a day to celebrate an ethnic heritage, and both are mainly celebrated by drinking large quantities of beer.

I play Irish fiddle so I am around a lot of Irish Americans. They tend to be proud of their American citizenship and their Irish heritage. The slogan of the local Saint Patrick's Day Parade here was "America First/Irish Always". I have seen a number of Irish Americans wear buttons with similar sentiments.

There are two big differences between the two groups. The Irish came legally (when it was easier) and have assimilated. Obviously, many Mexicans are here illegally and have not assimilated.

The big question is what will happen next? Will we, as a society, start downplaying our country and patriotism for fear of offending a growing minority and will the Mexicans (and other Latins) assimilate?

Our culture is so averse to offending anyone (except Christians and Tea Party members) that it will not surprise me to see flag-wearing discouraged in the near future.

Cheney's Right, Slate's wrong, and Cameras Don't Work

Fred Kaplan, writing in Slate has a column about the attempted terrorist bombing in New York. Typically, it tries to reassure that everything is fine. He looks at three lessons from the attempt but he gets them wrong.

1. Dick Cheney - Cheney called the attempt an act of war. Kaplan, following the usual logic, insists that terrorism is nothing but criminal acts. Kaplan points out how many would-be terrorists have been caught by police and tried in criminal courts. This is true to a point. He conveniently ignores the fact that many of these plots would never have hatched without a foreign instigator. The suspect, Faisal Shahzad, is currently claiming that he worked alone but he was having financial problems. Where did the money for his trips overseas come from?

If you can stop the source of the plots then you have a good chance of stopping future plots. Police action fails when you are going after someone who cannot be extradited. This requires military action.

Update: the Taliban link seems pretty strong. They recorded a video taking credit before the bomb went off and Shahzad is now admitting that he went to bomb-making school in Pakistan (he must have slept through class). Law enforcement is useless against the Taliban. It takes the army to dig them out.

2. Jane Jacobs and crowded streets - Kaplan says that crowded streets are safe streets. The facts argue otherwise. The SUV with the bomb was left in plain sight. Even after it started smoking, dozens of people including a mounted policeman failed to notice it. By the time the tee shirt vendors saw smoke, the bomb had already failed. It was another half hour before the bomb squad arrived.

3. Security cameras - a camera caught someone taking off his shirt a block away from the SUV. We have not heard if it was actually the bomber or just someone who got off work and didn't want to be seen wearing his work shirt. (Update: it was not the bomber.) Regardless, the footage was not good enough for a positive id. Shahzad was caught through old-fashioned police work, not through surveillance cameras. More important, as with the street vendor, the footage from the camera did not prevent the attempt. It was only useful after the fact in trying to identify the perpetrator.

Immigration Issues

Immigration is an international topic.

A couple of years ago France held an election to ratify the EU constitution. It failed, mainly because of worries about "Polish plumbers" and other eastern Europeans moving in and taking jobs from higher-paid native French.

The United Kingdom takes in around 220,000 immigrants. Recently Prime Minister Gordon Brown met with a supporter during a campaign trip. Part way through she started talking about immigrants taking British jobs and how people couldn't talk about them. Brown muttered something about the number of emigrants balancing the immigrants and left. Forgetting that he was wearing an open mic, he told his staff that the woman was a bigot. This was repeated by reporters and Brown has been trying to control the damage ever since.

In Arizona, a law was passed trying to slow the influx of illegal immigrants. The left insists on seeing this in the harshest possible terms. Bob Cesca of the Huffington Post insists that this will bring back slavery. Desmond Tutu sees dark skinned people being arrested in the middle of the night for not keeping their papers with them in bed.

All of this reduces a complex issue into stereotypes. Yes, an influx of foreign workers can reduce demand and pay. During the boom years a few years ago, this was a good thing. Five percent unemployment is considered "full employment" meaning that there are jobs for everyone who wants one but some people have trouble locating the right job. Our employment rate was closer to three percent for years. That means jobs are not being filled. Things were not quite so bright in Europe but they were still pretty good.

Those days are gone and it makes sense to stop adding to the number of people looking for scarce jobs - especially to the unemployed.

In America, politicians (especially Democrats) have been avoiding this issue. The country is sharply divided. There is no middle ground. President Bush was attacked from both sides when he proposed a guest worker program.

Keep in mind that Arizona is concerned about illegal immigrants. Nearly one out of every fifteen people in Arizona is there illegally. This has a lot of ramifications besides "press 2 for Spanish". If Bob Cesca looked further into the issue he would find that thousands of illegal immigrants are being held in slavery in Arizona, right now.

Currently our Mexican border policy is the equivalent of "Don't ask. Don't tell." We make it difficult to enter the US but if you are willing to walk across desert, climb walls, and risk death from heat and human predators then you can stay.

After being burned under Bush, Republicans are reluctant to take up the issue again. The Democrats have actively avoided it, hinting to Hispanic voters that they support amnesty but failing to deliver.

An amnesty program was tried under President Reagan. It was supposed to be accompanied by stronger border enforcement. This part didn't happen and the immigration fight under Bush showed that there is strong resistance to closing the border. In the meantime, the possibility of another amnesty draws more illegals and insults legal immigrants.

President Obama made it clear that he does not intend to address immigration this year and he will not give any hints about what policies he supports. His administration has stepped up workplace enforcement but that misses the labor black market and drives illegals further underground. It also makes them easier prey for criminals - both domestic and imported.

Possibly the end result of all of this is that the individual countries in Europe and North America will become as porous as the individual states in the US with people free to travel between them at any time. This is opposed by a majority in most countries. Attitudes may change over the next several decades but in the meantime politicians need to be more responsive to their populations.