Saturday, August 2, 2008

House Republicans Tricked Into Supporting Obama Aid Measure

Senator Barack Obama's foreign aid proposal ought to be enough to dissuade any conservative bolter. Unsurprisingly, the M-S-M has not emphasized it enough.

On February 12, Cliff Kincaid of Accurary in Media (AIM) reported that Joe Biden and the Senate have supported Barack Obama's "Global Poverty Act", which has received too little attention from television and M-S-M sources. According to Kincaid, the legislation:

"would commit the U.S. to spending 0.7 percent of gross national product on foreign aid, which amounts to a phenomenal 13-year total of $845 billion over and above what the U.S. already spends."

Kincaid notes that:

"The bill, which has the support of many liberal religious groups, makes levels of U.S. foreign aid spending subservient to the dictates of the United Nations."

Contrairiimarie just forwarded the following excerpt from a July 29, 2008 Investors' Business Daily article:

"A plan by Barack Obama to redistribute American wealth on a global level is moving forward in the Senate...if the Global Poverty Act (S. 2433) he has sponsored becomes law, which is almost certain if he wins in November, we're also going to be taxpayers of the world... Obama's Global Poverty Act offers us a global socialist destiny we do not want...It calls for the 'eradication of poverty' in part through the 'redistribution (of) wealth of land' and 'a fair distribution of the earth's resources.' In other words: American resources...Obama's bill would force U.S. taxpayers to fork over 0.7% of our gross domestic product every year to fund a global war on poverty...During a time of economic uncertainty, the plan would cost every American taxpayer around $2,500."

Kincaid of AIM adds:

"The House version (H.R. 1302), sponsored by Rep. Adam Smith (D-Wash.), had only 84 co-sponsors before it was suddenly brought up on the House floor last September 25 and was passed by voice vote. House Republicans were caught off-guard, unaware that the pro-U.N. measure committed the U.S. to spending hundreds of billions of dollars."

Can we not ask a little honesty of Mr. Obama, who seems to put little stock in openness or truthfulness, but asks us to rely on his good faith and judgment in increasing taxes to ever greater heights for his bird-brained, social democratic schemes?

WireandMedia on the Illinois Birth Certificate Petition

Hat tip ReunionPI, WireandMedia gave this coverage to Barack Obama's supporters' attack on this blog:

Illinois Petition for Investigation of Barack Obama’s Birth Certificate

X -Posted from Mitchell Langbert’s Blog H/T Larwyn I have it on good authority that yesterday 7/31/08 Mitchell Langbert was locked out of his blog by Google/Blogspot. Mind you the post date is Thursday, July 31, 2008. His blog was reported as a spam blog. One day people! IT ONLY TOOK ONE DAY FOR OBOTS TO ATTACK! FASCISTS! Illinois Petition for Investigation of Barack Obama’s Birth Certificate Thursday, July 31, 2008 has drafted a petition for residents of Illi

My Blog is Back---Obama's Supporters and His Corrupt Candidacy

Barack Obama's supporters tricked Google and Blogger, the Google subsidiary that manages Blogspot, into denying me access to this blog since yesterday. They just let me back on. Obama supporters reported my blog as "spam", i.e., as engaging in fraudulent activity that violates the firm's terms of agreement, because I posted contrarimarii's petition here. Raquel Okyay and Pamela Geller of Atlas Shrugs have covered this story and I appreciate their support.

Previously, many other anti-Obama bloggers have been attacked in this way. Pamela lists several blogs that have received similar treatment from Obama supporters:

Blue Lyon @
Come A Long Way @
Hillary or Bust @
McCain Democrats @
NObama Blog @ @
Reflections in Tyme @

As well, ReunionPI has forwarded a link to Bloggasm that discusses this as well as a New York Times blog about this when Obama supporters were doing it to Hillary supporters (of course, the Times will not note when Obama supporters do it to McCain supporters since McCain supporters are not of the aristocratic, New Deal Whig Democratic caste). Also thanks to Rorschach, Contrairimaiiri and Jim of Gateway Pundit who were supportive. Most of all thanks to Larwyn who was terrifically supportive through a painful illness.

I have drafted a letter to Google's Vice President and Chief Internet Evangelist, Vincent Cerf, that I plan to edit over the next few days. I have copied the first draft below.

This incident sheds a bit more light on Mr. Obama. It is fair to judge a candidate by the nature of his supporters. Nor is this kind of behavior unrelated to a long history of left-wing hooliganism and violence. The ideology of socialism is the most macabre in the history of the world. Obama does not claim to be a socialist, but rather a "progressive", a social democrat, who utilizes socialistic rhetoric but avoids being pinned down to appeal to his real clientele: investment bankers, Morgan Stanley, George Soros and Warren Buffett.

The line between socialists and social democrats is thin. Theodore Roosevelt was a "Progressive" but by the end of his presidency he was a socialist, and he was an overt socialist during his Progressive Party or Bull Moose Party presidential bid in 1912. During this period one of his chief advisers was George W. Perkins, a prominent financier and associate of JP Morgan. Many of Franklin D. Roosevelt's ideas were indeed enunciated in Theodore's speeches, and the claim that there was a big difference between the Republican Progressives along with President Woodrow Wilson and the New Deal is claptrap.

Social democrats are not Lockean in their core but pragmatic in function, as Louis Hartz claimed. Nor are they "moderate". Social democrats argue that they can use state violence to implement their ideology, but they have no evidence that their ideology works. Hence, social democracy involves the use of violence to enforce stupidity. Historically, Bismarck concretely implemented social democracy in Germany in the late nineteenth century and it influenced American ideology through the thousands of Americans who attended German universities during that period. Within 50 years of Bismarck's introduction of "liberalism", actually social democracy, in Germany Hitler rose to power. Today, we are seeing an America impoverished because of New Deal social democracy. The liars in the social democratic institutions, the New York Times and the universities will do all they can to distract you from the simple evidence, for instance today's poor benefit/contribution ratio of social security or the underlying cause of inflation and declining real wages, the Federal Reserve Bank.

The naked lust for power cloaked in the garb of "change", "justice", "reform" or "revolution" is nothing new. There was enough blood let in the last century to drown all of Obama's supporters. The willingness to defraud, lie, and manipulate is characteristic of a social democratic or socialist demagogue like Mr. Obama. The deceit that Mr. Obama's followers exhibit characterizes his campaign's values.

Here is my letter to Mr. Cerf

PO Box 130
West Shokan, NY 12494
Vinton G. Cerf
Vice President & Chief Internet Evangelist
Google Inc.
1600 Amphitheatre Parkway
Mountain View, CA 94043

Dear Mr. Cerf:

I am writing to alert you to a management problem with Blogger and was hoping that you could direct this to the appropriate party. The problem has some public relations and policy ramifications and so I thought it might be of interest to top management.

I am an associate professor at Brooklyn College in New York and have been blogging on Blogger for about a year or two at I was locked out of adding any blogs yesterday because a "robot" indicated that my blog is "spam". However, when I told several others about this issue, they indicated that many Blogger blogs that are critical of Barack Obama have been blocked for spam reasons. Pamela Geller of Atlas Shrugs, the New York Times and Blogasm blog this:

Google put a block on my blog when I wrote a piece about an Illinois woman who is circulating a petition to obtain Mr. Obama’s birth certificate. It so happens that Blogger put a block on my account the same day that I had about 250 visits to this particular entry mostly via

My access was restored in a day, and I do appreciate your firm's abilities. Moreover, I do not believe that this is Google's direct fault but there does seem to be a control problem whereby you have allowed the problem of spam blogs to outweigh the risk of spam reports of spam blogs. If what Pamela Geller is saying in her Atlas Shrugs link above is so, as a statistician would put it, Google is allowing an "alpha" or probability of rejecting the assumption that nothing is wrong at a much too high level. Put another way, Google is trusting malicious complainers and permitting them to staunch the free speech of honest bloggers.

I raise this question with Google’s management because your policy against Spam has been turned into a policy that facilitates a malicious form Spam—the kind that suppresses free discourse and exploits your firm into becoming a tool of the Obama campaign. The individuals who are reporting something like 10 anti-Obama sites as Spam are as culpable as those who would use your company’s blog site for unethical purposes. Hence, there needs to be better balance in your policy, and Google needs to improve its PR by coming out and publicly stating that you support free speech and that you will block further complaints from those who complained about my and the other blogs.


Mitchell Langbert, Ph.D.

Thursday, July 31, 2008

Obama's Divisiveness Aims to Distract Voters

One of the old tricks of European monarchies, social democracies and communist states for millenia past has been to distract the people from economic mismanagement and decline by introducing a scape goat or highly charged issue to deflect public attention. Perhaps the classic literary example of this is in the beginning of Shakespeare's Henry V when the Archbishop of Canterbury designs to suggest to the King that he is entitled to the kingdom of France under the Law of Salique in order to distract him from considering imposing a tax on church lands. And, of course, the Czars of Russia and later the Communist regimes frequently used the Jews to distract the populace from the mismanagement and poverty that the highly centralized feudalist system of Russia entailed. This strategem continued on through the Communist era. Today, Le Pen of France attempts a similar strategy.

The Obama campaign resorts to the "distraction card" in order to deflect attention from his intent to reenforce failed social democratic economic policies, especially the Federal Reserve Bank, economic regulation and cartelization of health care, that have increasingly impoverished the average American. Since the international gold standard was abolished in 1971, workers' average hourly real wage has declined worse than one percent per year, but the mass media has been telling the public that there is no inflation and that things are great because of cell phones even though both parents now work two jobs whereas thirty years ago one parent worked one job. Academic economists, the media's high brow equivalent, attribute economic decline to marginal income tax rates, a non-sequitor.

Given the economic instability that the social democratic system has created that go well beyond nonsensical explanations like marginal tax rates, Obama has decided to emphasize divisive race issues. Thus, John McCormack of Weekly Standard (hat tip Larwyn) reports that ABC News has video of Barack Obama telling voters in Missouri that the Republicans

"are going to try to...make you scared of me. You know he--oh, he's not patriotic enough. He's got a funny name. You know, he doesn't look like all of those other presidents on those dollar bills."

Meanwhile, Hugh Hewitt (hat tip Larwyn) reports that Obama favors reparations:

"I consistently believe that when it comes to whether it's Native Americans or African-American issues or reparations, the most important thing for the U.S. government to do is not just offer words, but offer deeds."

By raising the reparations issue Obama aims to distract Americans from the economic pain that they are about to suffer at the hands of our national economic planning czars, Alan Greenspan, Ben Bernanke and Henry Paulson and their identical-twin-replacements under an Obama administration. What better way to distract from economic crisis than the reparations bugaboo?

Illinois Petition for Investigation of Barack Obama's Birth Certificate has drafted a petition for residents of Illinois that demands an investigation of Barack Obama's birth certificate. If you live in Illinois please sign the petition, pass it around to your friends and forward it to her at

We, the undersigned residents of the State of Illinois, hereby demand that Barack Hussein Obama produce documentation of American citizenship in the form of a legal birth certificate. It is our understanding that Mr. Obama has heretofore refused to produce such a document. The residency requirement for qualification as a United States Senator includes United States citizenship. Without documentation, under United States law, Barack Hussein Obama may not legally qualify to represent the citizens of the State of Illinois. By signing this petition, we request that the State of Illinois investigate Mr. Obama's eligibility to serve in the Senate and make his birth certificate public immediately, and that with continued coverup
of documentation, we demand Mr. Obama's immediate removal from the Senate.

Previously, Rorschach of the Red Ink: Texas blog has reported that a petitioner closed down his petition because Obama supporters threatened him. The Obama candidacy is truly divisive in a way that the United States has not seen for a quarter century.

>"One person put up a website for an online petition calling for the REAL birth certificate to be released, but within hours of it going up, someone, using the site operator's home address, left a veiled threat against the site operator and his family.

"Petition Closed...A veiled threat was made against myself and my family which included our home address, so I have decided to close the petition for good. It is truly sad that political discourse in our country has come to this. "

The American Media Crisis--The One Who Pays Is You

The media's monotonous support for the Obama campaign ratchets my curiosity about its declining standards. Yellow journalism and bias go back to the Federalist period of American history and before, and Jefferson was not above planting friendly journalists in positions in order to maximally irritate his opponents. But there are several differences between the factionalism of today's media and that of only a few decades ago. In the 1960s, there was still a significant degree of variability in the opinions of the major New York newspapers. Today, television and newspaper outlets conform to a social democratic norm and are increasingly shrill.

Conservatives believe that there is a liberal bias in the media and this is in part true. The corporate and financial interests that control the television and newspaper outlets are corporatist and social democratic because social democracy supports their financial interests. Thus, to understand the reason for the media's liberal bias, it is necessary to fathom the corporate interests that control the major media outlets and the economic conditions that favor their health.

Social democracy has always been a method by which corporate power deceives and controls a naive public. The history of the Progressives and the New Deal as ensuing from the exercise of a broadened interpretation of corporate power, that is for instance, as opposed to small business power, is well documented. The increased stridency of the mass media not only in support of Barack Obama but in its shrill uniformity (examples are MSNBC's Chris Matthews and CNN's Jack Cafferty and Lou Dobbs) suggest a crisis of confidence on the part of American elites. The crisis is economic and it is in its early stages.

The Bush administration has intensified the inflation of the past 25 years to a point that will necessitate a recession. But American financial and business institutions have been considerably weakened due to mismanagement and may not withstand a recession. The media's advertisers and corporate owners are in for a rough ride.

Wealth has been reallocated away from the economy's productive sectors such as manufacturing and agriculture, and the manufacturing firms as in the automobile industry that might be able to produce value are frequently not globally competitive. For them to become competitive the dollar needs to depreciate to the point where their exports become so. This will attract talent back to productive areas of the economy but will reduce the wealth base and force many Americans to reduce their living standards. As well, the reduction in the purchasing power of the dollar will be associated with an influx of dollars from abroad, causing additional price inflation here. This will cause instability. The reason for the price inflation is of course Federal Reserve policy that has subsidized the same firms that advertise through the mass media and include the mass media firms themselves.

In response to the depreciating dollar the Fed will need to raise interest rates. This will cause difficulties and perhaps bankruptcy of major American firms.

The mass media adopts an increasingly lock step tone in order to prepare for a series of economic crises whose causes it aims to distort. The beneficiaries of the long inflation of the past 25 years have been top managers, Wall Street and hedge funds. Oil speculation is not really an important component of this, and the media's recent tap dance about oil speculation is evidence of how it will continue to lie about the economic problems in the next decade. Barack Obama has received more donations from Wall Street and the financial community than has John McCain. He will avoid, with media support, addressing the underlying sources of the need for adjustment.

The one who pays is you.

Wednesday, July 30, 2008

My Neighbor and American Ingenuity

My neighbor had his sister's pressure washer for a few weeks. I hired him to do our front chimney at our house in West Shokan. The chimney hadn't been cleaned since Clayton's uncle built it in the 1950s. My neighbor is very talented. There is still some old fashioned American inegenuity left:



William Graham Sumner on 19th Century Corporate Fraud and Government Subsidies to Business

The Progressive movement that developed in the 1890s into one of the most important political movements of the twentieth century was in large part a reaction to the development of big business and the trusts of the late nineteenth century. Theodore Roosevelt, a Republican as were the vast majority of Progressives, ultimately believed that nationalization or at least federal licensure of big business firms was necessary to ensure that trusts remained good and reasonable.

But did the very existence of trusts depend at least in part on government subsidies in the first place? This is what William Graham Sumner wrote in 1883 about corporate fraud and government subsidies to business:

"I have said something disparagingly in a previous chapter about the popular rage against combined capital, corporations, corners, selling futures, etc., etc. The popular rage is not without reason, but it is sadly misdirected and the real things which deserve attack are thriving all the time. The greatest social evil with which we have to contend is jobbery. Whatever there is in legislative charters, watering stocks, etc., etc., which is objectionable, comes under the head of jobbery. Jobbery is any scheme which aims to gain, not by the legitimate fruits of industry and enterprise, but by extorting from somebody a part of his product under guise of some pretended industrial undertaking. Of course, it is only a modification when the undertaking in question has some legitimate character, but the occasion is used to graft upon it devices for obtaining what has not been earned. Jobbery is the vice of plutocracy, and it is the especial form under which plutocracy corrupts a democratic and republican form of government. The United States is deeply afflicted with it, and the problem of civil liberty here is to conquer it. It affects everything which we really need to have done to such an extent that we have to do without public objects which we need through fear of jobbery. Our public buildings are jobs--not always, but often. They are not needed, or are costly beyond all necessity or even decent luxury. Internal improvements are jobs. They are not made because they are needed to meet needs which have been experienced. They are made to serve private ends, often incidentally the political interests of the persons who vote the appropriations. Pensions have become jobs...The California gold-miners have washed out gold, and have washed the dirt down into the rivers and on the farms below. They want the Federal Government to now clean out the rivers and restore the farms. The silver-miners found their product declining in value, and they got the Federal Government to go into the market and buy what the public did not want in order to sustain (as they hoped) the price of silver. The Federal Government is called upon to buy or hire unsalable ships, to build canals which will not pay, to furnish capital for all sorts of experiments, and to provide capital for enterprises of which private individuals will win profits. All this is called 'developing our resources' but it is, in truth, the great plan of all living on each other.

"The greatest job of all is a protective tariff. It includes the biggest log-rolling and the widest corruption of economic and political ideas...The farmers have long paid tribute to the manufacturers; now the manufacturing and other laborers are to pay tribute to the farmers. The system is made more comprehensive and complete, and we all are living on each other more and more...

"...Attention is all absorbed by the clamorous interests, the importunate petitioners, the plausible schemers, the pitiless bores. Now who is the victim? He is the Forgotten Man...."

Social Democratic Fallacies

Social democracy, which has at various times inappropriately been called liberalism and progressivism, is a doctrine that has created problems in the name of problem solving. Among the first to recognize the pattern of social democracy's multiplying and intensifying problems was William Graham Sumner in his essay "What Social Classes Owe to Each Other", first published in 1883. Toward the end of this small book, Sumner describes the "forgotten man", not the poor man who is the beneficiary of proposed regulation, but the third party whom the reformer aims to coerce and who will pay an escalating price for the reformer's fallacious schemes.

Since Sumner wrote the essay, we have seen urban renewal programs supposedly aimed to help the poor that drove jobs and housing from cities, resulting in homelessness and escalating real estate values that destroyed the possibility of urban life for all but the wealthy. We have seen welfare programs that have institutionalized poverty. We have seen massive subsidies to failed corporations that encourage a culture of incompetence and waste in a business community that is already self indulgent. We have seen a housing code in New York City whose aim is to further inflate construction costs. We have seen housing prices rise, and when they declined slightly, a declaration of a "crisis" because bankers, whose job it is to lend intelligently, could not be bothered to screen borrowers. We have seen earmarks and bridges to nowhere. We have seen billions squandered in cancer research that has been politicized to the point where Fortune Magazine asserts that cures have been staunched by senior academic researchers who feel threatened by new theories. We have seen high schools graduate seniors who can barely read, and universities graduate semi-literate college seniors under failed, progressive education theories. We have seen one social democratic blunder after the next, and as Sumner put it, the forgotten man or woman is the one who pays.

What is this social democratic doctrine to which our nation has found itself committed? Social democratic and progressive ideologies dominate both the Republican and Democratic Parties, yet the assumptions that their advocates make deviate from the core beliefs of most Americans, core beliefs that are pragmatic and liberal in the Lockean sense. Social democracy is neither pragmatic nor liberal, yet it uses the terminology of pragmatism and Lockean liberalism to cloak fallacious underlying assumptions:

1. The fallacy of scale. Social democracy argues that bigger is better and that progress involves progressive governmentalization on ever larger scale. Since the 1950s and before, most economic progress has not required large scale, and economies of scale have not been fundamental to new economic and technological advance. Yet, social democracy subsidizes scale through financing mechanisms like the Federal Reserve Bank, political favoritism, direct grants and regulatory systems that freeze out small business.

2. The eschatological fallacy. Social democracy believes that society is headed toward a specific end or purpose related to its model of large scale production, namely enhancement of government control or socialism. The belief that the "problem of production has been solved" characterized the modernist period--until the Japanese showed American firms that they were clueless about production problems and that there will always be improvement in production. Moreover, the solutions to the problems of production require information, not scale. As well, large scale organizations are too rigid to adopt the steps needed to improve production.

3. The predictability fallacy. Social democracy believes that it can solve problems because rationality is the primary ingredient to problem solving. In fact, rationality is but one of several elements in problem solving. Because demand, technology and other conditions change, information specific to time and place is often more important to solving technological and market problems, as the Austrian economist Friedrich A. Hayek argued. Therefore, experts in large governmental bureaus are not only ill-equipped to solve problems, but are guaranteed to fail to grasp what the important problems are.

4. The infinite regress fallacy. Social democrats believe that if business is corrupt, all that is needed to correct corruption is a layer of regulation. But who is to guarantee that the regulators are less corrupt than the firm? Are regulators descended from a special race of especially honest men? Might not regulators develop economic interests in the industries that they regulate? And if so, do social democrats propose regulators of the regulators, and do they believe that this additional layer, or Congress itself, is somehow better equipped or motivated to regulate?

5. The social democratic invincibility fallacy. Social democrats imagine themselves, as Sumner points out, to be smarter, more moral and better equipped to solve problems than others. Few social democrats have solved problems competently. I can state this with assurance because few government programs work. The groupthink associated with participation in the social democratic movement is the social democratic movement's greatest obstacle to pragmatism. The readers of the New York Times imagine themselves "smarter" because they read the Times, and so on. This sort of egotistical delusion precludes intelligent thinking and guarantees a rigidity and closed mindedness among social democrats that ensures the failure of any and all of their ideas.

William Graham Sumner on Social Doctors

"The amateur social doctors are like amateur physicians--they always begin with the question of remedies, and they go at this without any diagnosis or any knowledge of the anatomy or physiology of society. They never have any doubt of the efficacy of their remedies. They never take account of any ulterior effects which may be apprehended from the remedy itself. It generally troubles them not a whit that their remedy implies a complete reconstruction of society, or even a reconstitution of human nature. Against all such social quackery the obvious injunction to the quacks is to mind their own business.

"The social doctors enjoy the satisfaction of feeling themselves to be more moral or more enlightened than their fellow-men. They are able to see what other men ought to do when the other men do not see it. An examination of the work of the social doctors, however, shows that they are only more ignorant and more presumptuous than other people. We have a great many social difficulties and hardships to contend with. Poverty, pain, disease, and misfortune surround our existence. We fight against them all the time. The individual is a centre of hopes, affections, desires and sufferings...But we have inherited a vast number of social ills which never came from Nature. They are the complicated products of all the tinkering, muddling and blundering of social doctors in the past. These products of social quackery are now buttressed by habit, fashion, prejudice, platitudinarian thinking, and new quackery in political economy and social science...the greatest reforms which could now be accomplished would consist in undoing the work of statesmen in the past and the greatest difficulty in the way of reform is to find out how to undo their work without injury to what is natural and sound."

---William Graham Sumner, What Social Classes Owe to Each Other, Originally published in 1883.

Tuesday, July 29, 2008

Herbert Clark Hoover on Twentieth Century Human Resource Management

In most standard treatments of twentieth century history such as Louis Hartz's Liberal Tradition in America Herbert Hoover is painted as a conservative advocate of laissez-faire who caused the Great Depression through indifference and inaction. He is contrasted with Franklin Roosevelt who is painted as a true social democrat and harbinger of socialist progress. In New History of Leviathan Murray Rothbard does a good job of debunking this nonsensical mythology. Hoover was very much a Progressive in the early twentieth century sense, and his policies anticipated much of the substance of the New Deal. One of the sources that Rothbard cites is the reprinting of a speech that Hoover gave in November 1920 to the Federated American Enginnering Societies in the American Federationist, the journal of the American Federation of Labor (January 1921 issue, volume XXVIII, pp. 35-40).

What is remarkable about Hoover's speech is not just his warmth toward organized labor and his fulsome expression of favor toward regulation of industry and collective bargaining but also the degree to which he anticipated flexible labor relationships that characterized late twentieth century Japanese and US factories. Hoover advocates competency-based pay, cooperation between labor and management guided by collective bargaining, employee involvement in problem solving, flexible work hours to adjust for business downturns, hours of labor that vary with trades and government restructuring of labor markets to facilitate job search among seasonal workers. This last concept was being touted as innovative by labor economists of the 1990s, seventy years after Hoover discussed it. Along with the flexible work practices, Hoover advocated collective bargaining and regulation of industry. He was not an advocate of laissez-faire. One must wonder about the historians who would claim so given easily available evidence such as this speech. Allow me to quote from part of the speech:

"Among the greatest of the problems before our country -and in fact before the world- are those growing out of industrial development....The congestion of population is producing subnormal conditions of life. The intermittency of employment due to bad coordination of industry...The aggregation of great wealth with its power of economic domination, present social, economic ills which we are constantly struggling to remedy...Our mass of regulation of public utilities and of many other types of a monument to our efforts to limit economic domination...A profound development in our economic system apart from control of capital and service during the last score of years has been the great growth and consolidation of voluntary local and national associations. These associations represent great economic groups of common purpose...And to me, one question of the successful development of our economic system rests upon whether we develop the aspects of these great national associations towards coordination with each other in the solution of national economic problems or whether they grow into groups for more violent conflict...There are certain areas of conflict of interest but there is between these groups a far greater area for common interest...

"...In the question of industrial conflict resulting in lockout and strike one mitigating measure has been agreed upon in principle by all sections of the community. That is collective bargaining...

"There lies at the heart of all these questions the great human conception that this is a community working for the benefit of its human members, not for the benefit of its machines or to aggrandize individuals..."

Among the steps that Hoover advocated to encourage community of interests were hours of labor varying with trades; improvement of labor exchanges; flexible hours to adjust for business downturns; competency- or pay-for-knowledge-based wages with wage structures graded for skill; cooperation between labor and management; employee involvement in problem solving; and the use of the closed shop to encourage greater worker efficiency. The Japanese have done much along the lines of the last point with their "enterprise unions", but Hoover was not saying "company unions" or "representation plans". He used the phrase "closed shop", an approach that was illegalized under the Taft Hartley Act as granting excessive power to labor.

It is also of special interest that Hoover emphasized the role of factions or special interest groups. His hope that they would cooperate never really materialized, although as Rothbard shows during World War I and as Radosh shows during the early period of the New Deal, fascist-like regulation of the economy through governmentally-mandated cartels were attempted.

Late 19th Century Closing of America's (Economic) Frontier

In the 19th century there were two strands in American political ideology: the statist-developmental and the laissez-faire-agrarian. In the Federalist period from 1788-1800 the conflict between Hamilton and Jefferson concerned in part the extent of government intervention, taxation, central banking and centralized planning in which the federal government should be engaged. The Federalists favored a high degree, Jefferson's Democratic Republicans a lesser degree. Due to the nature of American economic development, the influence of the French physiocrats who emphasized the importance of agriculture to wealth, and Jefferson's personal background in Virginia, he coupled his belief in reduced centralized power with a belief in the importance of agriculture. The Jeffersonian perspective defeated the Federalist one in 1800, and for two decades there was a single party. Differences reappeared over centralization by the 1820s. Henry Clay's Whigs, an offshoot of the Democratic Republicans, adopted some of the impulses of the Federalists coupled with Jeffersonian distrust of big cities. Clay's American System emphasized government investment in public works and canals, economic development, central banking, and high tariffs to support business, and in these ways shared some of Madison's Federalist impulses. Thus, the American System and the Whigs were more Madisonian than Jeffersonian. Madison had initially been a Federalist, and then rejected Hamilton's more aggressively statist ideas. The Whigs' basic orientation was derived from the country philosophy but may be said to be suburban as opposed to country. Clay and the Whigs believed in balance in government and opposed the spoils system. They favored a middle course between city and country and perhaps today's love of suburban life hearkens back to the Whigs. In contrast, Jackson is most famously associated with the spoils system and central banking. The opposition to central banking is a country position but the spoils system is a court position.

Neither the Whigs nor the Jacksonian democrats were fully associated with the court and country philosophies that characterized England under George III. Historians emphasize this distinction, but by the 1830s both sides had elements of the country philosophy and both sides had elements of the court philosophy. Jacksonians believed in the spoils system, which was characteristic of the elitist court philosophy but tended to favor agrarianism, states' rights, slavery, racism, dispossession of the Cherokees and other Native Americans, and the rights of plantation farmers, the closest American class to the English landed gentry who were associated with the English country philosophy.

In contrast, the Whigs favored central banking, the corporate form of economic development, government investment in the economy and linkages between government and business, which were court philosophies. On the biggest fight between the Jacksonian Democrats and the Whigs, the Whigs took the pro-bank court position and the Jacksonians took the anti-bank country position. Clay and his followers, including John Pendleton Kennedy, Daniel Webster, and evangelical leaders like Charles G. Finney began calling their party the "Whigs" in part because they saw Jackson as an excessively strong executive. With respect to his own power, Jackson adopted a court perspective.

The Whigs combined the religious views of evangelicals who were often Abolitionists with an opposition to slavery, opposition to "manifest destiny" and expansion through war, especially the Mexican War, and rights of Native Americans, which were all anti-elitist views. Also, they were less aggressively in favor of the spoils system than were Jackson's Democrats. But they favored economic development through statist, centralized means.

Jackson, a Democrat who was in many ways Jefferson's heir, believed in the country philosophy too, but the Democratic egalitarianism was reserved for white males. As president, Jackson ignored John Marshall's Supreme Court (Marshall was a Whig, not a Democrat) and allowed Georgia to force the Cherokees to leave their settlements that had previously been established by legal treaty to march in the famous "trail of tears". The nineteenth century attacks on the Indians and racism were in large measure partisan attitudes. The Whigs opposed them, the Jacksonian Democrats favored them.

Abraham Lincoln was a Whig who implemented many of Henry Clay's ideas. This was overshadowed by the Civil War and abolition. Although the nineteenth century is remembered as a laissez-faire period, it is important to keep in mind that key improvements such as the Erie Canal and high tariffs throughout the century protected American business. Thus, big business flourished not just because of laissez-faire but because of laissez-faire and government support. It is not clear that firms would have become so large without the government support.

In the post-Civil War period the Republicans, the successors of the Whigs, adopted a more laissez-faire economic philosophy than the ante-bellum Whigs held. The reason for this may be that business had grown to the point where public works, tariffs and other subsidies became less important than they had previously been because business, to include the railroads, oil and manufacturing, had begun to grow to a point where it was internationally competitive.

The ideological assertion of laissez-faire in the late nineteenth century via the ideas of Charles Graham Sumner, EL Godkin and other "Mugwumps" was short lived. One of the characteristics of the Whigs was their strong emphasis on morality, and these late 19th century Whigs (cum Republicans) shared the belief that the economy ought to be moral and ought to inculcate morality. Thus, the apparent conflict between the corruption associated with the growth of big business, urban government-business connections and the laissez-faire ideas of the late nineteenth century Republicans created considerable cognitive dissonance. Again, it was not the laissez-faire so much as the government support coupled with laissez-faire that caused the corruption in cities. You cannot have bribery unless politicians are bribed.

This led to an odd step. Seeing the corruption in government associated with big business, Americans began to argue that the corruption could be solved by more government. This is an "infinite regress" argument that is a logical fallacy. But almost all of social democratic ideology (under the misappropriated rubrics "liberalism" and "progressivism") is based on this infinite regress. If government in the cities was corrupt and so failed to manage its relationships ethically, then the solution is to add additional layers of government. By the 1880s Charles Sumner in his book "What the Social Classes Owe to Each Other" was debating this logical fallacy, but it somehow was ignored by the advocates of social democracy. Hence, over the next 100 years, increasingly corrupt and ineffective government expanded for illogical reasons. The end products of social democracy, Enron, Worldcom, Bear Stearns and Fannie Mae are examples of corruption and incompetence on a scale that nineteenth century moralists could not have imagined.

Frederick Jackson Turner's thesis that the frontier had closed intensified a sense of scarcity as the rugged individualism of the late nineteenth century seemed to have lost its primary outlet. Moreover, in the late nineteenth century Americans increasingly looked to Germany for higher education because of the absence of research universities here. In the late nineteenth century more than 10,000 Americans obtained degrees in Germany at a time when fewer than five percent of the population had attended college. This coincided with the institution of Bismarck's social democracy, and it is natural that many of those educated in Germany would have imported social democratic impulses when they returned to the United States. This resulted in battles between the Mugwumps and advocates of the anti-laissez-faire historical school that Richard T. Ely and John R. Commons advocated in America in the late nineteenth and early twentieth century. Although institutionalist economics never became dominant in economics here, it had a strong effect on practical policy. Commons drafted the first workers' compensation laws, for example.

The laissez-faire philosophy of the late nineteenth century anticipated developments that were to occur in the twentieth century, but its advocates could not anticipate the developments theoretically and so lost the policy debate. First, the growth of corporations in large scale "trusts" and the employment of thousands of workers in a single firm or even in a single plant seemed to augur the end of individual entrepreneurship. Second, the belief of Abraham Lincoln and the Whigs that work as an employee was a temporary stop-off to self-employment was difficult to believe given the increasing scale of industry. Third, the spoils system in the cities between the 1830s and the early twentieth century had become associated with corruption and with support for the same large firms, so that the moralistic Whig impulses were violated by the growth of somewhat corrupt big businessmen like Jay Gould. Fourth, the opponents of laissez-faire emphasized the role of freedom in the growth of big business, ignoring the tariffs, land subsidies to railroads, public improvements and various other supports that government had provided to big business in order to facilitate its growth. Fifth, the advocates of dissolution of the trusts and then Progressivism ignored the fundamentally fluid nature of the economy which meant that the trusts were not permanent and were not necessarily economically viable unless grounded in efficiency. Over time, it turned out that some trusts, like Standard Oil, were efficient, but that others were not. Sixth, and most importantly, developments in the economy beginning in the 1930s began to render scale of considerably less significance in economic development. These developments included changes in the nature and rate of innovation, changes in manufacturing technology and changes in the importance of information flow to production processes. America (and the developed world) began to move from a mass scale economy where low costs were paramount to one where innovation was the most important variable. The supports to business that encouraged investment of capital in a single, large-scale firm with long production lines and large plant investments that would take a long time to recapture were no longer what was needed for economic development.

However, government policy did not change. The Progressives, failing to anticipate the coming emphasis on lean manufacturing, the transmission of information, flexibility, and the need to replace firms with new ones that were better attuned to change, emphasized policies that facilitated investment in large plants. These included regulatory regimes that deterred entrepreneurial start ups, central banking, diversion of capital to large firms and support for large firms' exports that favored large firms over small ones at the very time that fluidity and innovation were becoming more important in the economy than scale.

Sadly, the late nineteenth advocates of laissez-faire did not anticipate the importance of fluidity of the economy until the Austrian economists, Ludwig von Mises and Friderich A. Hayek discussed the impossibility of centralized economic planning. Thus, the Progressives, believing themselves to be pragmatists and to be coping with change and solving problems related to change instead developed regulatory and central banking that were forestalling economic development and change. The American frontier closed not physically but fiscally because of human inability to know the future direction of economic and technological innovation. The cognitive limits on information have been so severe, that eight decades past the point where these changes began to manifest, social democrats like Barack Obama and the New York Times continue to ritualistically harp on the importance of modernist regulation that is eight decades out of date.

Monday, July 28, 2008

Needed: An Anti-Obama Chicago Seven

A correspondent has forwarded an e-mail from David Plouffe stating that Barack Obama intends to make his nomination acceptance speech at the Democratic National Convention outdoors among 75,000 people (also see Rocky Mountain Newsarticle). Might not a creative counter-demonstration be appropriate?

>This was sent to a friend of mine on "Facebook" because she is a supporter!...

>Big Announcement: Open Convention
Monday, July 7, 2008 at 4:46pm

>I wanted you to be the first to hear the news.

>At the Democratic National Convention next month, we're going to kick off the general election with an event that opens up the political process the same way we've opened it up throughout this campaign.

>Barack has made it clear that this is your convention, not his.

>On Thursday, August 28th, he's scheduled to formally accept the Democratic nomination in a speech at the convention hall in front of the assembled delegates.

>Instead, Barack will leave the convention hall and join more than 75,000 people for a huge, free, open-air event where he will deliver his acceptance speech to the American people.

>It's going to be an amazing event, and Barack would like you to join him. Free tickets will become available as the date approaches, but we've reserved a special place for a few of the people who brought us this far and who continue to drive this campaign.

>If you make a donation of $5 or more between now and midnight on July 31st, you could be one of 10 supporters chosen to fly to Denver and spend two days and nights at the convention, meet Barack backstage, and watch his acceptance speech in person. Each of the ten supporters who are selected will be able to bring one guest to join them.

>Make a donation now and you could have a front row seat to history.

>We'll follow up with more details on this and other convention activities as we get closer, but please take a moment and pass this note to someone you know who might like to be there.

>It will be an event you'll never forget.

>Thank you,


David Plouffe
Campaign Manager
Obama for America