Remembering D-Day and the Fight for/against Democracy

Posted by PITHOCRATES - June 6th, 2011

D-Day

It happened 67 years ago today.  The beginning of the end of Nazi GermanyJoseph Stalin finally got his second front.   After a couple of years of hell on earth.  The Eastern Front.  Where the war was the cruelest and most savage.  Killing people by the millions.  The Soviet Union fought and sacrificed to throw the Nazi invader out of their homeland.  A horrific price indeed for their nonaggression pact with Nazi Germany that gave Adolf Hitler the green light to launch World War II.

After years of total war most European countries lay in ruins or were conquered.  Yet they still had armies in the fight.  But by 1944, the Americans would take over and lead the fight.  Untouched by war (other than Pearl Harbor), the world’s largest economy was intact.  Took over war production for the Allies.  And American men volunteered to fight.  Including Hollywood greats like Jimmy Stewart who piloted B-24s.  The most dangerous place to be in World War II.  Before the P-51 Mustang entered service with her drop tanks to provide fighter protection all the way to and from their targets.

The second front opened with the greatest amphibious assault of all time.  The Canadians were making their second assault against Fortress Europe.  Their first, at Dieppe some two years earlier, ended badly.  Most were killed or captured.  But the Germans were tested.  And the knowledge put to use in 1944.  They and the Americans assaulted those beaches not to repel Nazi aggression from their soil.  But to help other nations to throw out the Nazi aggressors from their soil.  They didn’t fight to conquer.  They fought to liberate.  A rather new concept.  Even our then ally the Soviet Union didn’t quite do this.  They did liberate Eastern Europe from Nazi aggression, but they paid themselves handsomely for their efforts.  By taking Eastern Europe as spoils.  Exchanging the Nazi oppressor for a Soviet oppressor.

A lot of men died on this day in 1944.  And many more would die in the following year.  Their deaths helped keep liberty alive for millions.  Let’s not forget them today.  Let’s remember their selfless acts of courage.  For we live free today because they gave their lives for an ideal.  General Matthew Ridgeway, commander of the 82nd Airborne Division, reflected on the promise God made to Joshua on the eve of battle.  “I will not fail thee, nor forsake thee.”  The planners projected that 9 out of 10 paratroopers would die in battle on D-Day.  Thankfully, their losses were not that bad.  God did not fail them.  Nor forsake them.  And nor should we.

Recession?  What recession?

Of course, not everyone serves for an ideal.  A lot do it for the money.  As is evidenced during the worst recession since the Great Depression.  Because while the rest of the country suffers, the communities in and around Washington are doing just fine.  Home to 5 of the top ten richest counties in America (see Meet America’s Richest Counties by Nathan Vardi, Forbes.com, posted 5/13/2011 on Yahoo! Real Estate).

It’s No. 1, but it isn’t alone. In fact, four of the top ten richest counties in the nation are concentrated in the Virginia suburbs of Washington, and a fifth, Howard County, Md., is equidistant between Washington and Baltimore.

In recent decades northern Virginia has become an economic dynamo, driven by a private sector that feasts on government contracting. These counties are also home to corporate lobbyists, lawyers and consultants who work in or around the nation’s capital, soaking up federal government spending. And government-related hiring manages to keep the unemployment rate in places like Falls Church City down to 5.7%.

Recession?  What recession?

So while home values continue to fall throughout America and the national unemployment rate hovers at or above 9%, U.S. tax money is still flowing out from Washington as if there is no recession.  Government contracts.  Corporate lobbyists.  Lawyers and Consultants.  Feeding on all of that government spending.  This is not the ideal that men stormed beaches and jumped out of airplanes for in 1944.  To make people rich off of taxpayers struggling through difficult times.  God may not have failed these men.  But perhaps we did.

Inadequate Demand causes Unemployment, not Cheaper Workers in China and India

It would appear that Washington is more interested in the money than the people they represent.  And they’ve grown tired of the people they represent.  That uneducated rabble.  They don’t know how to vote (based on the 2010 midterm elections).  And they don’t understand monetary policy.  There are some who are tiring of this charade we call democracy.  Because what good is a democracy if the people are too stupid to know what’s best for them? 

And it’s just not the voters.  It’s those in Congress with an ‘R’ next to their name, too.  An Obama Fed nominee was shot down by the Republican opposition.  And he wrote an Op-Ed piece about it.  In it you can feel his exasperation of those less smart that he (see When a Nobel Prize Isn’t Enough by Peter A. Diamond posted on 6/5/2011 on The New York Times).

But understanding the labor market — and the process by which workers and jobs come together and separate — is critical to devising an effective monetary policy. The financial crisis has led to continuing high unemployment. The Fed has to properly assess the nature of that unemployment to be able to lower it as much as possible while avoiding inflation. If much of the unemployment is related to the business cycle — caused by a lack of adequate demand — the Fed can act to reduce it without touching off inflation. If instead the unemployment is primarily structural — caused by mismatches between the skills that companies need and the skills that workers have — aggressive Fed action to reduce it could be misguided.

In my Nobel acceptance speech in December, I discussed in detail the patterns of hiring in the American economy, and concluded that structural unemployment and issues of mismatch were not important in the slow recovery we have been experiencing, and thus not a reason to stop an accommodative monetary policy — a policy of keeping short-term interest rates exceptionally low and buying Treasury securities to keep long-term rates down. Analysis of the labor market is in fact central to monetary policy.

Well pahdon me while I play the grahnd piahno.  Nobel acceptance speech.  You can see why Obama nominated him.  He’s a good Keynesian economist that will toe the Obama line.  And encourage government growth.

These Keynesian policy wonks can’t see the forest for the trees, though.  Their answer to every recession is more government spending to correct for the lack of adequate demand.  Despite the fact that it was excessive government spending that gave us the mess we’re in.  Easy money from the Fed.  Which created the subprime mortgage crisis.  Well that and bad policy putting people into homes they couldn’t afford.  There’s the root cause for this never ending recession.  It wasn’t inadequate demand.  Or a mismatch between jobs and worker skills.  It was bad policy.  Fiscal, monetary, regulatory, etc.  This is what sends jobs to China and India.  Not inadequate demand.

Quantitative easing (QE) has not helped.  Unless you were a Wall Street investor borrowing money for free to invest.  They did okay during QE.  But it didn’t help anyone else.  In fact, it hurt everyone else.  Because there is inflation now.  It’s what pushed gas over $4/gallon again.  And made food prices go up.  Inflation courtesy of that QE.

But we should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight. We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed’s ability to regulate financial firms…

Analytical expertise is needed to accomplish this, to make government more effective and efficient. Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

The problem is that there are apparently too many dumb people.  And too much democracy.  Monetary policy and financial regulation should be in the hands of unelected experts chosen by people from the ‘correct’ political party.  Because these people know what’s best for us.  And the economy.

The NLRB goes after Boeing, helping Competitor Airbus

Or do they?

Boeing employs over 160,000 people.  To build all those planes.  Which is the leading export of the United States.  They’re not doing as well as they once did with Airbus on the scene.  Because Airbus doesn’t play fair.  They get government subsidies.  While Airbus claims Boeing does, too.  Planes are expensive to make.  And with Airbus taking such a large chunk of the market from Boeing, one would believe that the reason for this has to be cost.  And if Airbus planes are cheaper it’s probably because their governments subsidize them.

But that’s neither here nor there.  The point is that Boeing is a huge part of the U.S. economy.  It’s an economic juggernaut.  And you’d think government would do everything to help them to keep those 160,000 people employed.  And to keep exporting all of those airplanes.  So what does the Obama administration do?  They’re taking action against Boeing to make them less competitive.  They’re trying to prevent them from using a new factory in North Charleston, South Carolina.  Where they will use non-union labor (see Spat over Boeing plant sparks political firestorm by Allison Linn posted 6/6/2011 on msnbc).

The new factory is set to open in July. But in April the NLRB, a government agency charged with safeguarding union rights, filed a complaint accusing Boeing of violating labor law in its motive for locating the work in South Carolina.

The NLRB isn’t asking Boeing to close the new facility, but it does want the company to make a temporary production line in Washington state permanent.

Yes, Boeing is trying to be more productive.  They’re tired of fighting subsidized Airbus AND the high cost of union labor AND the costs of labor strikes.  Because they’re losing too many sales to Airbus.  Seems like a reasonable thing for Boeing to do.  But the National Labor Relations Board disagrees.  Because union dues support Democrat candidates.  And Barack Obama.  And even though “skilled analytical thinking should not be drowned out by mistaken, ideologically driven views,” it is.  For ideology always trumps analytical thinking when it favors Democrats.

“U.S. tax and regulatory policies already make it more attractive for many companies to build new manufacturing capacity overseas. That’s something the administration has said it wants to change and is taking steps to address. It appears that message hasn’t made it to the front offices of the NLRB,” McNerney wrote.

Boeing spokesman Tim Neale said the editorial should not be read as a threat that Boeing, the nation’s largest exporter and a major domestic employer, will mo[v]e operations overseas.

Moving manufacturing oversees results in higher unemployment.  So higher unemployment can result from U.S. tax and regulatory policies.  Because it moves manufacturing overseas.  Interesting.  Because there are some who believe unemployment is caused by inadequate demand.  Or a mismatch between jobs and worker skills.  And they would never entertain the thought that government policy caused this unemployment.  Because that’s just silly.  For government is full of experts using skilled analytical thinking.  Who know that in the ideal world they would be proven right.  And the only reason their policies fail is because the world isn’t ideal.  Yet.

Again, not quite the ideal that men stormed beaches and jumped out of airplanes for in 1944.

www.PITHOCRATES.com

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The Left Is Doing What They Do Best – Bankrupting the Nation

Posted by PITHOCRATES - October 16th, 2010

Ronald Reagan Knew How to End a Recession

The Left hates Ronald Reagan.  Perhaps hate is too weak of a word.  If the Left wasn’t so ‘separation of church and state’, a stronger and more accurate description of their sentiment would be to call Reagan their Antichrist.  In the last century or so, Reagan had to be Democrat enemy #1.  For he stood against what they hold most dear.  Big Government.  And big spending.

Reagan dared to say the unspeakable.  Government isn’t the answer; government is the problem.  The Left could not believe their ears.  This was heresy.  They must destroy this man.  They did everything within their power then.  And they continue to do so today.

Their favorite tactic is to lie.  Sure, the 1980s were prosperous, but at what cost?  An exploding deficit?  A mounting national debt?  That’s what they say.  They said his reckless defense spending and tax cuts impoverished our future generations.  But they left out one inconvenient truth.  Cuts in the tax rates INCREASED tax receipts.  And the Democrat controlled congress exploded non-defense spending.  (Okay, two inconvenient truths.)  The Republican in the White House brought more money into Washington with his fiscal policies.  But the Democrats in the House just spent more.  The deficit in Reagan’s last year?  About $150 billion.  And it was the apocalypse if you listened to the Democrats.

Jimmy Carter Knew How to Prolong a Recession

Well, that was then.  What about now?  Associated Press Writers Martin Crutsinger and Andrew Taylor note that the government reports the deficit for the just completed fiscal year at a staggering $1.3 trillion (see Government reports $1.3 trillion budget deficit on Yahoo! News).  That’s about a 750% increase from the apocalyptical Reagan deficit.  And what do the Democrats say?  It’s really not that bad.

Apparently, deficits are okay if Democrats are doing the spending.  A few bailouts/stimulus later, they’re still spending.  Why, it’s as if they have completely forgotten how they once excoriated Reagan for his measly little deficit of $150 billion.  Funny.  Their selective memory.  Crutsinger and Taylor note:

Outside of the bailout, the federal budget went up by 9 percent in the 2010 budget year to $3.5 trillion, the Congressional Budget Office reported last week. Food stamp payments rose 27 percent as record numbers of people took advantage of the programs, while unemployment benefits rose 34 percent as Congress extended benefits for the long-term jobless.

Even after all the ‘one-time’ expenditures to fix the worst recession since the Great Depression, they still increased the regular federal budget by 9%.  And if you count huge increases in food stamps and unemployment benefits as positive economic indicators, then their ‘fix’ fixed the worst recession since the Great Depression.  So then that money was money well spent.  So what if it will run up the national debt to record levels?

Leading officials with the National Association for Business Economics forecast this week that the 2011 deficit will total $1.2 trillion, only slightly better than the administration’s estimate. They cited excessive federal debt as their single greatest concern, even more so than high unemployment.

Oh, that’s what.  Servicing that debt could kill business.  Higher taxes.  Or, worse, monetization (i.e., printing money).  Either way the cost of business goes up.  Which means they can hire fewer people.  Which means more will be on unemployment.  Or collecting food stamps.  Humph.  This economic stuff is trickier than it seems.  So we’ll have to reduce that debt.  Simple.  We just cut spending.  Or raise taxes.  Well, we know what affect higher taxes will have on business (more people will be on unemployment and collecting food stamps).  So the answer seems clear.  We cut spending.

The recommendations of the commission need the backing of 14 of its 18 members to trigger a congressional vote. Building that level of consensus will be difficult. Republicans are strongly opposed to a plan that includes tax increases to chip away at the deficit. Democrats are less inclined to move a package that relies solely on spending cuts.

Well, maybe not so clear.  But we could keep the taxes at their current rates.  Extend the Bush tax cuts.  It may not help a lot, but it sure will prevent a lot of harm by avoiding a massive tax rate hike.  Surely we can agree to this.  Put aside partisan politics.  For the good of the people.  But no.  The Republicans want to extend them all.  The Democrats want to extend them only for those earning less than $250,000.  This will hurt small business, the largest job creator in America.  Yeah, $250,000 sounds like a lot, but it’s not when you’re running a business.  An increase in their tax rate may require that they lay off someone to afford those new taxes.  And it will be unlikely that they would be able to hire anyone anytime soon.  How can this NOT be clear?

The difference between the two parties amounts to $700 billion that would be added to projected deficits over the next decade if the tax cuts for the wealthy were extended along with the other tax cuts.

Oh, boy, here we go again.  Zero-sum Keynesian economics.  Economic activity is finite.  If businesses can keep more then the government must get less.  Right?  WRONG!  Lower taxes stimulate.  Entrepreneurs create wealth.  And jobs.  When Reagan cut the tax rates the amount of money the IRS collected almost doubled.   You’d think that if the Democrats were just spend-happy they’d put party politics aside.  But no.  The thought that government isn’t needed to make business hum is anathema to them.  They’d rather see the economy go into depression than admit that.  So, if they get their way, what’s likely to happen?

“If we get to 2013 and policymakers don’t look like they have a credible plan to deal with the deficit, then interest rates are likely to rise significantly and that will jeopardize the recovery we have under way at that time,” said Mark Zandi, chief economist at Moody’s Analytics.

High inflation and recession?  Egad, it’ll be like Jimmy Carter is back in office.  Stagflation.  Misery.  As bad as that may seem, and, trust me, that’s really bad (as anyone who lived during the Carter years can attest to), it’s worse.  As of now, there’s no Ronald Reagan out there to fix another Carter malaise. 

Woe is us.

www.PITHOCRATES.com

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