Friday, January 1, 2010

Letter to the Olive Press

Dear Editor:

One of my neighbors took some offense at my recent characterization of Democrats as thieves in the pages of the Olive Press. My neighbor is not a thief, and that is probably true of a majority of the 36% of Americans who are registered Democrats. Nevertheless, I stand by my letter. For there are two kinds of Democrats: (a) thieves and (b) those fooled by (a). Category (b) Democrats might blame 2,500 years of propaganda. In Open Society and Its Enemies Karl Popper argues that Plato was the first to propagandize for collectivism by identifying collectivism with altruism. But collectivism has almost always helped the rich at the expense of the poor, not the reverse. Thus, "limousine liberals" advocate a class- and self-interested view.

The (a) category goes back to the days of Boss Tweed and "Plunkitt of Tammany Hall". In 1932 Franklin D. Roosevelt (FDR) extended the federal edifice that the Progressive Republicans led by Theodore Roosevelt (TR) had established. The crux of the New Deal was FDR's abolition of the gold standard, which permitted the Federal Reserve Bank unlimited power to create ("print") money. The chief function of the Federal Reserve Bank has been and still is to expand the money supply by printing new reserves and then depositing them in money center banks who have the power to print a multiple of the money, as much as six times, of which they lend a disproportionate share to Wall Street. If you doubt that a disproportionate share goes to Wall Street, check out Roger Lowenstein's When Genius Failed about Long Term Capital Management (LTCM). The banking system had lent this early hedge fund 100 billion dollars when it collapsed. One hundred billion that time was more than one percent of the entire economy but LTCM employed only about 200 people. This kind of thing has accelerated during the Bush-Obama administration, with Obama donating untold trillions to his supervisors on Wall Street.

On the local level, the corruption of the Democrats never disappeared, even with the diminution of Tammany Hall in the 1930s under the Mayor Fiorello Laguardia (R-NY). Today, government employees, school teachers, and businesses who receive contracts, that is, category (a) Democrats, unabashedly steal from their neighbors. Category (b) Democrats, confusing collectivism with altruism, confuse the schoolteachers', government employees' and contractors' greed with altruism.

At the level of federal government operations, the edifice that TR and FDR created opened the door to special interest politics. No one knows how much of the federal government's operations budget actually performs any valid "service". Newspapers avoid questions like this, preferring to cheer for the bailout and Obama. My guess is less than 20% goes to any public interest purpose. 80% of your federal taxes are squandered.

Today we are facing a health reform bill, that category (b) Democrats have been told will help the poor. It will not. If you compare the performance of health industry stocks over the past two years with the stock market in general, the fall in the health stocks has been two thirds smaller than in the stock market generally, 8% versus 23%, since January 2008. The stock market thinks that the health reform bill will be a boon to the health industry. This will not be the case for the general economy. New regulations will increase costs; health benefits will be reduced; and the uncovered poor will be forced to buy coverage. It makes category (a) liberals happy to know that people making $50,000 per year will have to pay $6,000 for coverage. For these will be forced to sell their homes and live in city projects while category (a) limousine liberals can buy their houses as investments as they congratulate themselves about their liberal consciences.


Mitchell Langbert

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