Cafe Hayek

The Founders Would Be Appalled

Cato's David Boaz defends the memory and principles of America's founding generation from the grotesque misrepresentations of modern politicians.

I Don't Want Those People to Have a Say in How I Live My Life

Here's a letter that I sent yesterday to the Detroit Free Press:

28 June 2009

Editor, Detroit Free Press

Dear Editor:

Mitch Albom is correct that "We're wacko in how we view Jacko" (June 28).  But not all of us are wacko.  I, for one, am no more touched by Mr. Jackson's death than I am by the death of any of the thousands of other Americans who died last week, all of whom - like Mr. Jackson - are strangers to me and to the vast majority of people now so self-indulgently and flamboyantly grieving for a man they never met.

Americans' proclivity to mass hysteria causes me to want government to have as little power as possible.  I neither can nor wish to stop other persons from doing with their lives as they wish.  But I also damn sure despise the fact that, through their votes, so many persons prone to such childish sentiments and displays have a say in how I lead my life.

Sincerely,
Donald J. Boudreaux

On the Sanford Affair

Here's a letter that I sent yesterday to the Boston Globe:

Dear Editor:

Scott Lehigh argues that "infidelities shouldn't end political careers" (June 26) - to which I say: it depends.

A politician who holds himself or herself out as a savior - as such a paragon of virtue that he or she can be trusted with vast swaths of our lives and property - certainly should not be suffered to remain in office once that person is revealed to be simply another ordinary human being, as faulty as the rest of us.

In the case of Gov. Mark Sanford, however, he's that rare politician who does not fancy himself to be more sagacious or virtuous than the rest of us.  While not excusing Mr. Sanford's broken promises to his wife and family - or his use of public funds to finance his trysts - I regret the likely loss to the public of an official who never posed as being worthy to lord it over ordinary human beings.

Sincerely,
Donald J. Boudreaux

Mr. Sanford's use of public funds to pay for his tryst-inspired trips is the far worse offense to the public.  As for the much-commented-upon fact that Mr. Sanford disappeared without letting any other South Carolina officials know of his whereabouts, well, Mr. Sanford understands that states are not really governed by governors -- that if a high-ranking government official is absent, dead, or comatose, the society will still continue along productively.  The idea that the people of South Carolina were in some sort of danger because their governor was AWOL is absurd.

Having said that, I doubt that Mr. Sanford's political philosophy played much of a role in his excuse-making for his secret trips.  Mr. Sanford no doubt had only one thing on his mind and he behaved irresponsibly and immorally -- chiefly to his family.

George Will on Green Jobs

George Will is always worth reading.

More Bruce BDM on Iran

His TED talk is here. Filmed last February and with three predictions about Iran. How did he do?

Quixotic

Here's a letter that I sent recently to the Los Angeles Times:

You want to "Keep the politics out of UC" (Editorial, June 22).  Impossible, as the UC system is a government entity.  And a government entity free of politics is, as my colleague Russ Roberts says, quite as unthinkable as is a ham sandwich free of pork.

Sincerely,
Donald J. Boudreaux

Stupid Cult of Political Personality

Here's a letter that I sent today to the New York Times:

Maureen Dowd wants President Obama to display his healthy, low-fat eating habits more publicly ("Hold the Fries," June 17).  The idea is that Our Leader's ostentatious display of his preferred diet will inspire ordinary Americans to eat better.

What has become of Americans?  How different are we now from Louis XIV's French subjects who gazed in awe upon him at his table?  And are we so childish that our dietary choices are directed by political celebrities?

If we Americans are indeed such mindless lemmings as Ms. Dowd assumes, I'd prefer that Pres. Obama spend lots of time being filmed gobbling Big Macs while, between bites, insisting that each of us take control of our own individual lives and that we would do well to reject the stupid cult of celebrity that now surrounds high government officials.

Sincerely,
Donald J. Boudreaux

More on Goverment Motors

George Will understands the real purpose behind Uncle Sam's takeover of General Motors.  Here's the final paragraph of his column appearing in today's Washington Post:

The administration is determined to prop up GM as a jobs program for the UAW and Midwestern states rich in electoral votes. This frenzy will intensify as the administration's decisions deepen the debacle.

Inspiring - Not

Here's a letter that I recently sent to a local Washington, DC, radio station:

This afternoon you interviewed a pundit who claims to be "inspired" by the way that Bill and Hillary Clinton, having been so critical of Barack Obama during the presidential primary campaign, now work so agreeably with him.  I'm not inspired; I'm suspicious.  Were the Clintons being disingenuous during the campaign, or are they being disingenuous now?

Herbert Spencer understood the charade of politics when he wrote the following in 1884: "While before them as candidates, they are, by one or other party, jeered at, lampooned, 'heckled,' and in all ways treated with utter disrespect.  But as soon as they assemble at Westminster, those against whom taunts and invectives, charges of incompetence and folly, had been showered from press and platform, excite unlimited faith.  Judging from the prayers made to them, there is nothing which their wisdom and their power cannot compass."*

Sincerely,
Donald J. Boudreaux

* Herbert Spencer, The Man versus the State, with Six Essays on Government, Society and Freedom, ed. Eric Mack, Introduction by Albert Jay Nock (Indianapolis: LibertyClassics, 1981), p. 96.

Insulting Theater

On Monday President Obama proclaimed that General Motors "will be run by a private board of directors and management team.  They, and not the government, will call the shots and make the decisions about how to turn this company around."  And yesterday, two high-ranking members of his administration, writing in USA Today, dismissed the concerns of those persons who doubt the President's commitment to have politics "play no role" in running this company.

Alas, this political chicken wasted no time in coming home to roost.  Time reports today that

Top executives from General Motors and Chrysler face tough questions from lawmakers about sweeping plans to close hundreds of car dealerships as the auto companies undergo government-led bankruptcies.

The wonder is not that politicians are meddling.  The wonder is that America is populated with a sufficient number of people so gullible as to encourage Mr. Obama to issue his 'no politics' assurance with a straight face.

How do you figure?

Valerie Jarrett, White House advisor, talks about the benefits of children in the White House:

JARRETT: You know, we can be in a very serious meeting in the Oval Office, and out of nowhere, here comes Michelle with Malia and Sasha right behind, and you could be talking about the most serious thing in the world, and they have the ability to break the tension and come in and provide joy and laughter and youth and spirit and energy, and I think all of that's good for our country.

Now I suspect that Jarrett doesn't really think it's a good idea that the First Family bursts into the middle of meetings with all that joy and laughter and youth and spirit and energy. But I guess she thinks we, the electorate and the body politic must think it's a good idea. Not sure which interpretation is more depressing.

How the world really works

Is it a good idea to have medical records stored in electronic form rather than paper? Maybe. One argument is that if there are stored electronically, it will help us find the "best" treatments because we will have all kinds of data. This optimism may be warranted. Against it, is the consideration that "best" is often unclear, depends on the individual, depends on the cost, and is subject to political manipulation if the determination of the "best" treatment is a government decision.

Another argument often advanced for electronic records is cost-saving. It will prevent needless duplication. But of course mobilizing the medical profession to do something they don't seem to think worthwhile doing on their own will have its own costs as well.

This article in the Washington Post deserves to be read in its entirety. It explores how implementing electronic records became part of the stimulus bill. Not because it's a great idea but because the people who would profit from it lobbied like crazy. It may be a great idea. Suffice it to say that the evidence is highly biased.

At the center of this picture is the proposed savings in costs of $77 billion.  But as the Post reports:

The stimulus bill suggests that the government will recoup about a third of the spending allocated for electronic health records over the next decade, an assumption that some health-care observers question, in part because of a critical analysis by the Congressional Budget Office last year.

The CBO, then led by Orszag, examined the industry-funded study behind the $77.8 billion assertion, among other things, and concluded that it relied on "overly optimistic" assumptions and said much is unknown about the potential impact of health information technology.

A CBO analysis of the stimulus bill this year projected that spending on electronic health records could yield perhaps $17 billion in savings over a decade.

This is how the world really works. When Obama says that electronic record-keeping is a crucial way to control costs, it seems like a really cool idea. It may be. But I doubt it. And the real reason we're going this route isn't because a wise President sees a cost-saving opportunity. It's a lot uglier than that.

As for this being part of the stimulus plan, what a joke. The main thing that will be stimulated are the bank accounts of the people who make the products that help computerize the records.

What Happened to Freedom of Speech?

I can find no words to describe just how frightening and infuriating this letter is.  A private citizen objects peacefully to a proposed government action, and, as a result, is not only forced to appear before Congress to explain but also to be threatened with further burdens if he doesn't cooperate with the arrogant power-mongers on Capitol Hill.

(HT Bob Levy)

Politicians' 'Principles'

I wrote the following lines in a private letter to friends back in December when George W. Bush, then still president of the executive branch of the U.S. national government, announced that he was abandoning his free-market principles.  The truth of these lines, however, transcends time and political party.

The man who never cheats on his wife because no other woman will have him is not particularly principled - but he proudly fancies himself that way. So the first bimbo he sniffs who'll do him the honor will prompt him to "abandon his principles" with as much alacrity as a hungry dog will attack a ham. Such are the principles of our "leaders."

(P.S. One cannot abandon what one never possessed.)

The Grappler

From USA Today:

For a guy grappling with recession, bank and auto bailouts, and record-setting budget deficits, President Obama also has a longer-term headache: The worsening financial condition of Social Security and Medicare as the Baby Boomers age.

Grappling? In the movie version, maybe Mickey Rourke can play the President. Grappling? That makes it sound as if the President has all these vipers and snakes and Rouses surrounding and attacking him and all over him that he as to fend off. Grappling? Usually you grapple with stuff that surprises you, not stuff you did to yourself. You can't blame Obama for the recession or the bank bailouts and maybe even the auto bailout. Those started on Bush's watch. But the record-setting deficits? Those are Obama's idea. He's not grappling with that problem. He created that problem, certainly in the dimensions that we're talking about. It's not one of his short-term "headaches." A headache is what usually happens out of the blue. But if a guy is banging his head against the wall, you don't want to say that one of his short-term problems is a headache. The short-term problem is that he's banging his head against the wall.

Dog Bites Man, Part II

Congress can't handle $17 billion in cuts out of a $3.4 TRILLION budget. Too draconian:

President Obama's modest proposal to slice $17 billion from 121 government programs quickly ran into a buzz saw of opposition on Capitol Hill yesterday, as an array of Democratic lawmakers vowed to fight White House efforts to deprive their favorite initiatives of federal funds.

Sen. Dianne Feinstein (D-Calif.) said she is "committed" to keeping a $400 million program that reimburses states for jailing illegal immigrants, a task she called "a total federal responsibility."

Rep. Mike Ross (D-Ark.) said he would oppose "any cuts" in agriculture subsidies because "farmers and farm families depend on this federal assistance."

And Rep. Maurice D. Hinchey (D-N.Y.) vowed to force the White House to accept delivery of a new presidential helicopter Obama says he doesn't need and doesn't want. The helicopter program, which cost $835 million this year, supports 800 jobs in Hinchey's district. "I do think there's a good chance we can save it," he said.

The news releases began flying as Obama unveiled the long-awaited details of his $3.4 trillion spending plan, including a list of programs he wants to trim or eliminate. Though the proposed reductions represent just one-half of 1 percent of next year's budget, the swift protest was a precursor of the battle Obama will face within his own party to control spending and rein in a budget deficit projected to exceed $1.2 trillion next year.

Good luck, Mr. President.

Dog bites man

The Washington Post headline:

Obama's Budget Knife Yields Modest Trims

Shocking, isn't it? I was so confident they'd cut a lot. The opening of the story:

President Obama has said for weeks that his staff is scouring the federal budget, "line by line," for savings. Today, they will release the results: a plan to trim 121 programs by $17 billion, a tiny fraction of next year's $3.4 trillion budget.

I guess that's the only fat in the $3.4 trillion. The rest of it is just too essential.

Tyranny in a Sentence

Here's one of the scariest lines that I've read in a long, long time.  It's from Michael Copps, Interim Chairman of the Federal Communications Commission, uttered back in February:

“If markets cannot produce what society really cares about, like a media that reflects the true diversity and spirit of our country, then government has a legitimate role to play."

Mr. Copps apparently can divine "what society really cares about" from his armchair or from his big, tall chairman's seat at the F.C.C.

What Mr. Copps's statement amounts to in practice, of course, is the following:

If market do not produce what I really care about -- what I judge to be acceptable -- then government under the control of myself and of my friends (or at least of people who think like me) must force suppliers and consumers to behave as I wish them to behave.

(HT Roger Meiners.)

Gordon Tullock

Gordon Tullock, who retired last August from GMU, was back on GMU's campus today -- visiting from his home in Tucson with his lovely sister Mary Lou and his brother-in-law Bob -- to discuss economics with our students.  What a treat!

At 87 Gordon's mind is as sharp as ever.  No scholar has done more than Gordon to disabuse people of any romantic or religious notions that they might have about the nature of government.  Gordon did this disabusing, along with Jim Buchanan and other public-choice scholars, with world-class scholarship.  His ten-volume Selected Works are a must-read for anyone interested in understanding the nature of government -- and a must-avoid for anyone interested in maintaining his or her faith in politicians' goodness or specialness, or any faith in the capacity, or even the willingness, of government officials to work together to make people generally, rather than just politicians and interest-groups, better off.

Among the most important of Gordon's insights are

- his demonstration that good political decisions are public-goods no less than are the public-goods that allegedly are provided in only sub-optimal quantities on private markets;

- his demonstration that people and institutions spend resources in socially (if not privately) wasteful ways seeking privileges from government;

- his demonstration that there is nothing at all special about majority rule as a means of arriving at collective decisions; that is, a supermajority rule is at least as likely -- and, probably, more likely -- to maximize welfare over time than is a rule of simple majority.

I've always believed that, if there were such a phenomenon as reincarnation, that Gordon must be the present embodiment of Jeremy Bentham -- a mind brilliantly creative, bowing to no dogmas; a yearning (a bit too eager for my taste) to re-engineer legal institutions; an absolute inability to see the world romantically; and a capacity for work that embarrasses us mere mortals.

No economist still living deserves the Nobel Prize in Economics more than does Gordon -- and only Armen Alchian deserves it as much.  It's a damn shame that neither Gordon nor Alchian has yet received this award.

Audacious Theater

Here's a letter that I sent last night to U.S. News & World Report:

You report that President Obama today "challenged" his cabinet to "cut the budget by $100 million" ("Obama to Cabinet: Cut $100 Million from Budget," April 20).  What courage.  A President who proclaims the importance of making "hard choices" calls upon his government to trim away a whopping one thirty-six-thousandth of its projected expenditures for the year - or, alternatively reckoned, one twelve-thousandth of its projected budget deficit.

To put this budget "cut" in perspective, suppose that the typical American family, earning $50,000 annually, plans this year to run a budget deficit proportionate to the deficit that Uncle Sam will run.  Such a family would plan to spend $75,000.  Now suppose that this family, seeking to signal its faux-commitment to financial prudence, promises spending cuts equal, in proportion to its budget, to the cuts announced today by Mr. Obama.

This family would declare - surely with much fanfare - that it will reduce its planned expenditures for the year by $2.08!  Perhaps it might promise to survive the year with one less gallon of gasoline or with one less cup of coffee.

Who would take such a gesture to be anything other than audaciously insulting sarcasm by the chronically irresponsible?

Sincerely,
Donald J. Boudreaux

Update: I like this breakdown to the minute by BloodyMaryBreakfast.

On Voting to Spend Other People's Money

In response to comments at this post, I link here to this op-ed of mine from this past December.  In this op-ed, I discuss public choice -- not exhaustively, by any means, but in one of the ways that is relevant to the naive notion that representatives chosen by majority rule can reasonably be assumed to tax and spend in ways that promote the public interest.

I'm Not A Member of this Religion

Here's a letter that I sent yesterday to the Wall Street Journal:

Paul Singer's case for more government regulation of financial markets has at least two flaws ("Free-Marketeers Should Welcome Some Regulation," April 3).

First, Mr. Singer ignores the possibility that errors made in the private sector - such as balance sheets leveraged too highly - were artifacts, not of too little government intervention, but of too much.  Double taxation of profits combined with deductibility of interest on debt; implicit government backing of Fannie and Freddie; and (most significantly) the Fed's monopoly control over the money supply, are just some government policies that might have promoted the great bulk of the private-sector errors that Mr. Singer laments.

Second, even if today's problems are at root the fault of the market, Mr. Singer writes as if he's proposing new regulations to an apolitical and unbiased agency, one immune to interest-group pressures and to the weaknesses in human judgment that Mr. Singer himself believes contributed to the market's implosion.  I dare say that no error in judgment is so dangerous as the one that leads Mr. Singer and others to regard government as being something akin to a god-like institution.

Sincerely,
Donald J. Boudreaux

Vox Dummies?

Surely, a people so dumb as to justify the Ad Council's preaching cannot be assumed to exercise good judgment when voting for government officials.  David Harsanyi explains.

Why Not?

Seems like the decent thing to do.  Here are the opening passages:

Americans for Limited Government President Bill Wilson today in a letter urged President Barack Obama and members of Congress to “return the $4.37 million they received in campaign contributions from AIG since 1989, including the $644,218 they received in 2008.”

“If the American people are to believe all the angry words and threats coming from the White House, President Obama must return the $104,332 he received from AIG during the 2008 campaign cycle,” declared Wilson in a statement.

Hubris

The AP reports:

"I realize there are those who say these plans are too ambitious to enact," Obama said in his weekly video and Internet message. "To that I say that the challenges we face are too large to ignore. I didn't come here to pass on our problems to the next president or the next generation. I came here to solve them."

As I think Thomas Sowell said, economics teaches us that there are no solutions, only tradeoffs.

Tell all from the Teleprompter

Very funny. (HT: Drudge) Perfect tone. I suspect that this won't be the last problem caused by this technology.

Venting

Arnold Kling is dialing down his anger.  I'm dialing mine up -- or, rather, circumstances are dialing my anger up.

We can, and should, debate economic theory -- for example, what is the value of aggregate concepts? to what extent do investors today take account of the likelihood of higher taxes or inflation tomorrow? does free trade reduce real wage rates?  The list of debatable topics is long.

But at some point I cannot help but assert that, for me, ultimately the greatest value is individual liberty and not the efficacy of free markets.

So when I read articles such as this one from the Washington Post's Steven Pearlstein, my blood pressure (literally, alas) rises.  Here's the most offensive passage:

Then there is Richard "Is This America?" Kovacevich, the chairman of Wells Fargo. Late last week, Kovacevich gave a talk at Stanford University, complaining about how unfair it is that the government forced his bank to take $25 billion in bailout money last year when it could have easily raised private capital -- and then compounded that outrage by changing the terms of the deal and forcing Wells to cut its dividend. Kovacevich said it was "asinine" for the Treasury to order his and other big banks to undergo a special "stress test," explaining that well-run banks like Wells were routinely doing their own stress tests.

Kovacevich apparently believes that because his bank is still relatively healthy, he and his shareholders shouldn't have to assume the same costs and burdens as banks that aren't, particularly when those costs and burdens are imposed by incompetent government officials. That's the way it works in America.

Except, of course, when it doesn't. The reality is that, if the government had not stepped in to take over Fannie, Freddie and AIG; had not recapitalized Citigroup and Bank of America; had not provided the guarantees to allow for the orderly sale of Merrill Lynch and Bear Stearns; had not become the buyer of last resort for commercial paper and home mortgages, then the entire financial system would have melted down by now and taken Well Fargo and its arrogant chairman with it. Rather than bellyaching about how un-American it all is, Kovacevich ought to be thanking the government and asking what more he could do to help.

The idea that private business persons are "arrogant" if they don't genuflect to the hypocritical and utterly immoral scumbags who work on Capitol Hill is outrageous.  The idea that, if government forces a private firm to take taxpayer money, that firm should be grateful and should cooperate with the political theater that plays 24/7 in Washington sickens me beyond words.

And as I predicted here, the notion that only those firms that requested and received government help will be the ones who suffer detailed intrusions by government is naive.  The obnoxious collectivism that permeates the "thinking" of persons such as Steven Pearlstein will press as far as it can to assert control over as many private choices as it can get its greedy and officious paws on.

The single greatest instance of intellectual foolishness today is the continuing pretense that politicians are serious people worthy of serious consideration.  They are scoundrels, each and every one, regardless of party (although some of them, it is true, are more scoundrelly than others).  For any scholar to pretend that these people are disinterested servants of the public welfare -- to pretend that the words politicians utter or send out in press releases are meant to promote any goal other than politicians' own glorification and pursuit of power -- is for that scholar to be duped to a degree that should be more embarrassing than would be the discovery that that scholar believes the earth to be flat or that Big Foot was in league with Lee Harvey Oswald to murder JFK.

Chapman on the wisdom of Washington

Superb. Read it.

Disconnect

From the New Mexico Independent:

Tom Udall and a group of fellow U.S. senators has sent a letter to embattled AIG CEO Edward Liddy.

Udall, in a statement, said the letter sent a message to Liddy: “Give the bonuses back, or we’ll find a way to take them back.”

That's called a threat. Lovely. But it's obvious that Udall doesn't like to see our money going to a bad cause. Unless it's friends of his. From KFDA in Amarillo:

As part of the $410 billion Omnibus Spending Bill, US Senator Tom Udall says he included over one million dollars for Eastern New Mexico industries.

Over $200 thousand is going to a dairy consortium so they can boost research on improved dairy production.

And more than $950 thousand is going to the Sapphire Energy Algae so that company can create and grow technology that turns the algae into fuel.

Udall says the algae company could create 100 jobs.

Love that word, "could." Can't wait to count them.

The Senator does not seem to understand that these two stories conflict with each other. AIG has failed to generate private capital to keep it afloat. It can only stay afloat with my money. AIG can't raise private capital because it has lost the trust of potential investors. They're bankrupt and exist only because of the government's largesse funded by taxpayers. Why would you want to repeat the same mistake with that dairy consortium and Sapphie Energy Algae? If they're good investments, let private investors take the risk and either reap the reward or lost their money. If they're bad investments, why am I being forced to pay for them?

Awkward

I guess he was hoping no one would notice. FoxBusiness reports (HT: Drudge):

Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.9468, 0.1667, 21.37%) bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,” which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.

Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. 

Dodd’s office did not immediately return a request for comment.

One of AIG Financial Products’ largest offices is based in Connecticut.

Grassley is unhappy

Senator Grassley of Iowa is unhappy. I have made some modest changes to this article on his happiness. My additions are in italics:

Sen. Charles Grassley is so angry over AIG bonuses the Senate's oversight of the various bailouts and giveaways that he says the executives Senators should resign or kill themselves.

In a comment aired this afternoon on WMT, an Iowa radio station, Grassley (R-Iowa) said: “The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide.”

The radio clip was also aired on WTOP, a news radio station in Washington. 

In response to a POLITICO inquiry, Grassley spokeswoman Jill Gerber clarified Grassley’s comments, saying “clearly he was speaking rhetorically – he meant there’s no culture of shame and acceptance of responsibility for driving a company country into the dirt in this country. If you asked him whether he really wants AIG executives Senators to commit suicide, he’d say of course not.” 

“Point being, U.S. corporate executives politicians are unapologetic about running their companies the country adrift, accepting giving away billions of tax dollars to supposedly help, and then spending being surprised when those tax dollars get spent on travel, huge bonuses, etc,” Gerber said.

Grassley’s statement was the most over the top among the many expressions of outrage Monday, as the White House and Congress struggle to figure out how to recoup $165 million in bonuses from AIG, which has received more than $170 billion in federal bailout funds.

“With millions of Americans out of work, staying up nights trying to figure out how to make this week’s paycheck last until the next, wondering how they’ll make the next mortgage payment or pay the overdue tuition bill, these executive bonuses are that Senators continue to collect ridiculously large salaries and pensions they haven't earned is beyond outrageous,” Senate Majority Leader Harry Reid said Monday.

Senate Minority Leader Mitch McConnell joined the chorus, saying the bonuses lack of accountability of politicians and their total lack of remorse for doing such a poor job with other people's money were is “appalling.”

Trashing AIG the Senate (and the House) has become should be a no brainer for campaigners. Jim Tedisco, a candidate in the special election for New York’s 20th congressional district, says AIG is a “poster child for Wall Street greed political incompetence” and wants a state investigation.

Rep. Phil Hare (D-Ill.) went for a play on words, saying: “Clearly, the ‘G’ in AIG Grassley stands for greed. It is outrageous that taxpayers are subsidizing bonuses as much as $6.5 million Senatorial salaries of almost $200,000 with an absurdly generous retirement plan at a time when working families are struggling to make ends meet.”

Nobody else has suggested hara kiri for AIG executives Senators, and Grassley’s spokeswoman tried to make clear the senator didn’t really mean it.

Real money

China is worried:

The Chinese prime minister, Wen Jiabao, expressed unusually blunt concern on Friday about the safety of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to provide assurances that the securities would maintain their value in the face of a global financial crisis.

They probably should have gotten the guarantees before they bought the securities.

Interesting to know that China has a trillion dollars of our debt. That's it? What are they so worried about? They have a billion or so people. That's only $1000 per capita.

Of course if you think of the Chinese system as a bit of a kleptocracy benefiting the top echelon of the political class disproportionately and assume that class has maybe 1000 influential people, that's $1 billion per relevant person. That would be real money. No wonder they're worked up.

Change

From the Washington Post, no commentary necessary:

President Obama today announced guidelines aimed at curbing the number of pet projects in appropriations bills, setting up a potential battle with lawmakers who have clung to the spending items known as earmarks.

Obama called on Congress to enact a series of reforms that he said would not eliminate earmarks but would force lawmakers to be more transparent about them and would crack down on those that benefit private companies. He said it "should go without saying that an earmark should never, ever be traded for political favors."

Speaking in the Eisenhower Executive Office Building next to the White House, Obama said he would sign a $410 billion omnibus spending bill that was passed by the Senate yesterday, even though it contains more than 8,500 of the pet projects.

Another disappointed fan

Like Paul Krugman, Camille Paglia is disappointed (HT: Drudge) with the Obama Administration. In her case, she has yet to lose faith in the man himself—it's his underlings who are letting him down:

Yes, free the president from his flacks, fixers and goons -- his posse of smirky smart alecks and provincial rubes, who were shrewd enough to beat the slow, pompous Clintons in the mano-a-mano primaries but who seem like dazed lost lambs in the brave new world of federal legislation and global statesmanship.

Heads should be rolling at the White House for the embarrassing series of flubs that have overshadowed President Obama's first seven weeks in office and given the scattered, demoralized Republicans a huge boost toward regrouping and resurrection. (Michelle, please use those fabulous toned arms to butt some heads!)

First it was that chaotic pig rut of a stimulus package, which let House Democrats throw a thousand crazy kitchen sinks into what should have been a focused blueprint for economic recovery. Then it was the stunt of unnerving Wall Street by sending out a shrill duo of slick geeks (Timothy Geithner and Peter Orszag) as the administration's weirdly adolescent spokesmen on economics. Who could ever have confidence in that sorry pair?

I think that last question is supposed to be rhetorical. But if we take it straight, the answer, alas, is the President. I suspect that soon enough, Paglia will be wondering if some of the problems are actually coming from the top rather than the bottom or the middle of the Administration.

Obama on the couch

Pethokoukis puts Obama on the couch and identifies the behavioral shortcomings of the administration.

Socialism?

On the Kojo Nnamdi show, Harold Meyerson and I discuss whether Obama is a socialist and a bunch of other stuff.

Obamanation

I, too, like the Charles Krauthammer op-ed that the Independent Institute's David Theroux prominently features in this blog post.

My suspicion is that Obama is an empty suit, that his rhetorical skills are mistaken for intelligence, and that even if his I.Q. were 3,000 he is sorely lacking in wisdom and honesty.

Deal with it, Paul

Here is Krugman on the state of the economy and Obama's policies:

There are now three big questions about economic policy. First, does the administration realize that it isn’t doing enough? Second, is it prepared to do more? Third, will Congress go along with stronger policies?

On the first two questions, I found Mr. Obama’s latest interview with The Times anything but reassuring.

“Our belief and expectation is that we will get all the pillars in place for recovery this year,” the president declared — a belief and expectation that isn’t backed by any data or model I’m aware of. To be sure, leaders are supposed to sound calm and in control. But in the face of the dismal data, this remark sounded out of touch.

And there was no hint in the interview of readiness to do more.

A real fix for the troubles of the banking system might help make up for the inadequate size of the stimulus plan, so it was good to hear that Mr. Obama spends at least an hour each day with his economic advisors, “talking through how we are approaching the financial markets.” But he went on to dismiss calls for decisive action as coming from “blogs” (actually, they’re coming from many other places, including at least one president of a Federal Reserve bank), and suggested that critics want to “nationalize all the banks” (something nobody is proposing).

As I read it, this dismissal — together with the continuing failure to announce any broad plans for bank restructuring — means that the White House has decided to muddle through on the financial front, relying on economic recovery to rescue the banks rather than the other way around. And with the stimulus plan too small to deliver an economic recovery ... well, you get the picture.

When Bush didn't save New Orleans, it was because he was a Republican. Roll eyes, here. (Never mind that the Governor was a Democrat.) Of course government didn't work well between 2000 and 2008. Insert snicker, here. Some people think government doesn't work well when Republicans are in charge because Republicans (fill in the blank here with your own partisan vitriol).

But once Obama got into the White House, I think some people actually thought it would be different. He cares, after all, and he has such a high IQ.

Krugman is going to have to come to grips with the possibility that maybe it wasn't Bush that made government so incompetent. It was government.

It takes a long time for government to spring into action. It takes a long time for government to do stuff. It even takes a long time for government to spend money. On top of all that, it is very hard for politicians, Republicans or Democrats, to say the words, "I made a mistake." So even though I sympathize with Krugman's view that Obama doesn't seem to realize that we're in a bigger mess than he may have thought and the solutions so far aren't working, I don't really expect a change of course until, oh, sometime close to the next Congressional election. Close means a year or so in advance.

The title of the Krugman's piece is "Behind the Curve." That's the essence of government. Behind the curve. Surprised? You shouldn't be.

Truth Through Humor

(HT Leon Louw)

The beautiful harmony of collective community

One of the arguments against decentralized decision-making is that it's too selfish. There's no collective action. There's no community. When the government does stuff, it's collective and therefore—so goes the argument—there's an opportunity for everyone to be acting on everyone else's behalf.

These arguments have always struck me as strange. There's lots of collective action, it just isn't coerced. And I've never understood the "community" created by taxation.

The romantic vision of government created community is getting exposed a bit under the Obama plan to increase spending by a trillion or so for the bottom 98% financed by the top 25. When I suggested earlier that this wasn't an ideal situation for a democracy, some commenters responded that the top 2% had plenty of money so what was the big deal.

Of course taxing the top 2% to finance consumption of the bottom 98% isn't exactly the community that progressives usually invoke. But it's interesting to see the lovely effects of such a scheme. Michelle Singletary at the Washington Post isn't too happy about it:

I want to speak frankly and directly to the many people who have written to me complaining that they aren't directly benefiting from the federal government's efforts to resuscitate our gasping economy.

The sniveling sentiments of these people come down to one question: "What about me?"

"How come only those who spend irresponsibly get bailed out?" a reader asked. "As a person who thinks before he spends, I have a lot to be frustrated about these days."

Another reader from Indiana wrote: "Frankly, I'm infuriated. I don't make a ton of money, but I live within my means. I purchased my home eight years ago and just paid my mortgage off this past November. It's extremely frustrating to see us bailing out people who made foolish decisions while many others meet the obligations they agreed to."

Singletary continues later:

These people are suffering from what I call "WAM Syndrome" or "What About Me?" disease.

My children have WAM. I see them looking as I pour juice or cut a piece of pie. They watch closely to see whether their siblings get more. If I give one child a little extra of something, the other two pout and whimper, "What about me?"

But I expect this from children. They often don't understand that sometimes one person -- whether he or she deserves it or not -- will get more. They can't comprehend that life isn't fair.

Am I frustrated that my investment accounts are significantly down? You'd better believe I am.

Am I upset that my home value has dropped? You betcha.

However, why are you grousing that you aren't getting money or a tax break if you don't truly need the help?

It's a fair question. Let me try to answer it. It is perfectly normal to try to use the power of the state to exploit others. And when you see others getting goodies, it's natural to wonder why others are benefiting and you are not. And when we protect people from their bad decisions, we treat them like children. Not surprisingly, such public policy creates child-like behavior.

Singletary continues:

Several readers have complained that they can't take advantage of the new $8,000 first-time home buyer's credit. This is an improvement on a $7,500 tax credit that is really a 15-year, interest-free loan.

Margaret, a first-time home buyer from Massachusetts, said she was outraged that some people will benefit from the $8,000 tax credit, which doesn't have to be paid back.

"I am a single woman who has worked long and hard to finally purchase a home," she wrote. "I purchased a home on July 30, 2008, and await my $7,500 interest-free loan. I was thrilled and grateful that this was offered to me."

After learning about the better tax break, Margaret is no longer grateful.

"I am totally disgusted. I would like justification and an answer to how this administration can justify doing for some and not for all," she wrote. "If you do for one, you must do for all. After all, this is America." 

Singletary thinks Margaret should suck it up and be glad she has a house.

But I think Margaret is on to something. The constant bailing out of this group but not that one is bound to lead to resentment and feelings of unfairness. Or as the progressives promised, feelings of community. But there is little unity in such community.

Not from the Onion

From The Hill (HT: Drudge)

Minority Leader John Boehner (R-Ohio) declared a return to “the era of big government” the day after President Obama’s first formal address to Congress.

And what did we have the day and the week and the year and the decade before Obama's address? Ah yes, I remember. The Milton Friedman inspired laissez-faire world of free market capitalism and a limited Jeffersonian state.

I almost feel sorry for the Republicans. They know what their role is supposed to be. Having failed to inhabit the role for the last eight years (and a lot longer) they don't realize how silly they look slipping into the same old costume. It's like a fat man trying to do an ad for a weight loss regimen. It doesn't sell that well.

Hyperbole

Here is Steven Pearlstein in the Washington Post, commenting on Obama's State of the Union address:

Not since Franklin Roosevelt delivered his first fireside chat, eight days into his presidency, have Americans been more hungry -- and more desperate -- for economic leadership. 

Can't agree with that. In January of 1982, Reagan gave his first State of the Union address. Unemployment was over 10%. It is currently at 7.6%. Inflation in the previous year had exceeded 10%. Today it is roughly zero.

Pearlstein continues:

And not since FDR has there been an economic agenda as bold or ambitious, or as likely to reshape American capitalism.

Just a month in office, Obama has already pushed through additional fiscal stimulus equal to 5 percent of the country's economic output. His Treasury Department is about to embark on the second phase of a program that will lead to greater government control and ownership of some of the nation's biggest banks. He has assembled a team to pull off what amounts to a bankruptcy reorganization for automakers that will leave taxpayers as one of the industry's biggest creditors. And within months, the president has promised to deliver the blueprint of a new regulatory architecture that will dramatically increase the government's oversight of financial firms.

Yes, Obama is spending a lot of money. But the spending itself isn't reshaping capitalism. The rest of the stuff is reshaping capitalism, at least for now. The attempts to salvage the auto industry and de facto nationalization of the banks are leftovers from the Bush Administration and I wish Obama had but them in the garbage rather than adding them to the menu. As for government's oversight of financial firms, no details are available yet.

The sound of the world's smallest violin

I'm playing it now for Senator Byrd. (HT: Drudge)

Waste fraud and abuse

Every President promises to root it out:

Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office.  My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs.  As you can imagine, this is a process that will take some time.  But we’re starting with the biggest lines.  We have already identified two trillion dollars in savings over the next decade.

In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them.  We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use.  We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas. 

Can't wait to see the two trillion dollars of spending that we can do without. And ending education programs that don't work? Looking forward to that too. The most politically amusing moment of the evening was when Obama mention expanding charter schools and Nancy Pelosi looked lost. She wanted to clap—she'd been clapping like a maniac all night long—but there are limits and she couldn't bring herself to do it. Obama also mentioned "competitive" schools but I think he just meant "competitive" as in "good."

Democracy

I just heard Obama guarantee that no one making less than $250,000 a year will pay a dime in higher taxes for the budgets he is proposing. He said he would be rolling back the tax cuts for the wealthiest 2% of the American people.

The top 1% of all taxpayers currently pay about 40% of the income taxes. So what Obama is saying is that that is not enough. The wealthy need to pay more.

And he is also saying that the other 98%, who are getting all the goodies are going to get it for free.

This process cannot be sustained.

UPDATE: Just to make it clear--I'm talking about the extra goodies Congress just passed, $787 billion. The way I understood Obama tonight is that the bill for that will not require the bottom 98% to pay higher taxes. That's what's unsustainable--giving 98% of the population a free lunch at the expense of the top 2%. Because why stop at an extra trillion. How about two trillion? It's the political economy that's unstable, not higher marginal tax rates. It's not higher marginal rates that are problematic, it's ZERO perceived marginal rates. Yes, I know about the payroll tax. I've written here many times about why the income tax is not an accurate measure of tax burden. But it may be an accurate measure of perceived tax burden as I argue here.

Jeff MacNelly

Watching the members of Congress respond to Obama's speech, I miss Jeff MacNelly. Does anyone out there have a cartoon of his that shows the members of Congress the way that only he could?

Nice rant

Here's a nice rant from Rick Santelli on CNBC (HT: Drudge). I wonder if and when the moral issue is going to start to bite. When you bail out the states and the car makers and the home owners and the bankers and the Fannie Mae investors, eventually, the rest of us start to feel a little annoyed at how the system works. Santelli's leap to Cuba is the high point for me and how he uses it to slam Detroit.

Volunteer. That's an Order.

Orwellian newspeak from the Secretary of Agriculture.

Bootleggers and Baptists

George Will's latest Newsweek column is wise and wonderful -- not least because it mentions Russ and our good friend Bruce Yandle.

Corrupt

On the same day the Washington Post reports the passing of a $790 billion spending package that includes about $50 billion for so-called infrastructure, it also reports on a Department of Transportation audit of spending on roads:

Design and engineering companies helping to build the nation's highways ran up millions of dollars in inappropriate charges at the expense of taxpayers, including bills for parties, luxury car leases and hefty paychecks for executives, according to auditors.

Among the "unallowable expenses" singled out:

$355,767 to pay the personal income taxes of executives.

$301,667 to lease 45 automobiles,

including Mercedes, BMW and other luxury brands.

$247,685 for dinners, tickets to sporting events, theme-holiday parties.

$60,000 paid to a consultant with only a verbal agreement.

$35,352 charged by two firms for "image-enhancing items such as golf shirts."

The Transportation Department audit, which took four years, examined bills from a sampling of 41 design and engineering firms picked from 3,580 firms that had active contracts with state departments of transportation. Auditors looked at data from 2003 because it was the most current year available when the review began.