David J. Garrow's Rising Star: The Making of Barack Obama

I haven't read David J. Garrow's Rising Star: The Making of Barack Obama, but a friend forwarded Paul Street's review in Counter Punch.  Street's review is from a left perspective--one which would have been called New Left a few decades ago.  Thus, while Street's (and presumably Garrow's) analysis is accurate, we part ways with respect to Street's criticisms of Garrow as well as Street's conclusions and recommendations.

Street's rendition of Garrow makes some similar points to those I made in this blog in 2008 and 2009. Street puts more weight than I did--how could I have known?--on Obama's lack of substance and his pragmatism.  It was evident from the contribution numbers readily available in 2008 that Obama would be deferential to Wall Street, which he was, according to the review.  

The left has never understood that socialism begets elitism, so a more socialistic economy would beget a slightly different but essentially similar set of figures to Robert Rubin and Lloyd Blankfein.  The elites in communist and softer socialist states don't differ much from the current American elite. Cliches like "neoliberalism," "progressive" and "democratic"  confuse leftists like Street, who remain wedded to the false premise that Hoover's Progressivism was laissez faire.

While it is true that Hoover was more laissez faire than Franklin Roosevelt, the basic statist infrastructure--the Fed, the permanent war machine, the draft,  the income tax,  the process for providing regulatory subsidization to special interests--was already in place under Hoover, and he supported it.  The Republicans elected during the 1920s--Harding, Coolidge, and Hoover--had no interest in repealing the big-government institutions that Theodore Roosevelt (R), Taft (R) and  Wilson (D) had put into place.   While Taft was conservative compared to Roosevelt, he was in the Progressive tradition, favoring use of litigation over regulation of trusts to enforce federal regulation. Roosevelt had favored a more regulated approach, so he ran against Taft in 1912, enabling election of Wilson, who signed both the income tax and the Federal Reserve Act into law.

The American imperial state has been evolving since Lincoln and before, and socialism is not the solution. It is the problem. Obama was in the imperial tradition of Leviathan, and Street's review is worth reading.

Romney-and-Obama Supporters Are Good Germans

 I am voting for Johnson not because he is not the lesser of two evils.  I am voting for Johnson because he stands for freedom, while Romney and Obama stand for totalitarianism.  Romney favors tariffs, a significant increase in government.  If your aim is to reduce government, Romney is the greater, not the lesser, of two evils.  

The same was true of Reagan in 1980.  He claimed to be for small government, but he did not reduce government, and he opened the door for massive increases in local taxes through his new federalism, whereby he downloaded programs to the states. Carter had stopped inflation by appointing Paul Volcker as Fed chairman (who implemented monetarist policies starting in 1979); he had deregulated the airlines and trucking.  Reagan reignited inflation and a 25-year stock bubble through supply-side economics, instituted new regulation in areas like human resource management, and did NOT reduce the federal government.  Can you  claim that Reagan was the lesser of two evils?  With the Republican-conceived $29 trillion bailout of banks, the Republicans' bunkum has grown old.   There has been no bigger expansion of the state than the Republican-conceived $29 trillion bailout of 2009. To support Romney is to support socialism.

Choosing between Romney and Obama is choosing between two candidates who support the Federal Reserve Bank’s swap of $29 trillion in real assets for banks’ failed investments. The Fed’s printed money comes out of my pocket--it is stolen.  

I oppose both thieving gangsters:  Romney and Obama.  Neither Romney nor Obama are the lesser of two evils. They both represent significant, direct harm to me and to this country;  their supporters participate in their national socialism, just as the good Germans did under Hitler.

But Who's Bailing Out the Wall Street Protestors?

H/t Bruce Majors and Trish DeBroeck on Facebook:

Just Say No to the Pro-Bailout Media

Gregory Wyche of Perfect Pitch Media Relations wrote a piece on Kitco concerning a Wall Street Journal event he attended surrounding the author of the book Freakonomics.  Wyche was surprised that the author, when questioned by a member of the audience, averred that gold investing is right in the sense that a broken clock is right twice per day.  My suggestion to Mr. Wyche was that he might consider improving the quality of his associates:

Wyche:

On October 19th I was invited by The Wall Street Journal to attend a book party here in Manhattan for the launch of the illustrated edition of “Super Freakonomics” I had just seen and liked the movie “Freakonomics” on opening day two weeks before. When it came time sit down for the presentation I was thrilled to be four rows back from one of the stars of the movie and co-author of the book Stephen Dubner. This guy has become successful by challenging conventional wisdom in way way out methods. To say he has hit the ball out of the park in his ability to look outside of the box is a total understatement...(read the whole thing here).

My response:

Thanks for your Kitco article, which I enjoyed. I had read Freakonomics when it came out and thought it was good. Four points:

1. Economics is not a science and the way that economic theory is practiced is not bounded by testable reality. Hence, in economics thinking outside the box is not a meaningful achievement. For example, deconstructionism is an academic theory that the meanings of texts can be derived by reanalyzing words in ways that reveal power relationships. The conclusions deconstructionism draws cannot be tested against reality. It is like astrology. The same with economics as is practiced in universities. Saying that an economist "thinks outside the box" is like saying that a deconstructionist in an English department or an astrologer thinks outside the box. "Geminis really aren't mercurial." "Wow, he thought outside the box." The problem is that there is no testable or "falsifiable" body of knowledge to contradict claims. Keynesians claim the bailout and the stimulus worked. Monetarists claimed the bailout worked but not the stimulus. Sane people wonder what they are talking about, turn off the TV and do not purchase the Wall Street Journal.

2. It is not necessary to think outside the box with respect to economic history and macro-economic issues. Keyensian economics failed in the 1930s; it failed in the 1970s; and it failed in the '00s. It fails every thirty or forty years. Arguing for Keynsian economics means thinking outside the box in that reality has never confirmed it, hence the Keynesian argument is unbounded by reality. Nor does the anti-Keynesian argument require thinking outside the box. It is a very old argument, nearly but not quite as old as the mercantilism of which Keynesian economics is a restatement.

3. I'm puzzled as to why you would think that anyone associated with the pro-bailout media such as the Wall Street Journal would have anything to say in opposition to the pro-Wall Street monetary expansion. The argument for gold is an argument against both monetarism and Keynesianism; against supply siders and deficit spenders.

4. Since economics as practiced by academics is superstition, akin to astrology or palm reading, it is puzzling to me why you would hope that a speaker that the Wall Street Journal sponsors (or anyone associated with the Wall Street Journal) would have anything useful to say.

Not meaning to be prickly, but maybe the lesson you are suggesting is that it might pay to use some common sense and use the dollar you would have spent on the Wall Street Journal to do something more useful, like saving up for a martini at your local bar.

Best wishes,

Mitchell Langbert

Obama Stimulus Has Failed

 
Remember the 2009 stimulus? Remember Barney Frank and his Merry Band of Democratic Party Idiots and their economic advisors telling us that Keynes's ideas really do work despite a century of failure?  (Their reasoning: how else can we subsidize all-thumbs investment and commercial bankers and hedge fund managers?)

It turns out that a nearly a trillion dollars in stimulus has not improved the jobs picture.  The economics profession is to the economy as doctors like Benjamin Rush who used to use leeches to draw blood are to medicine. 

Unfortunately, quite a few Republicans are just as incompetent as the Democrats. Examples are George W. Bush and his compeer in idiocy and greed, Rick Lazio, the New York State GOP gubernatorial candidate who was instrumental in obtaining $25 billion for JP Morgan during the Bush administration's bailout days.

The ways and means Republicans sent the above table. Scroll down to see how much damage the Democrats’ deficit spending stimulus bill has done in your state.  The three exceptions are North Dakota, Alaska, and of course Washington, DC.

Rick Lazio's Links to Wall Street

Wall Street is the chief force for the expansion of government. Wall Street sells the bonds that finance government, so its stake in the expansion of the state is enormous.  To cloak this relationship the media depicts the debate between advocates of small and big government as one between business and the poor.  That is nonsense.

The big government party in America has always been the pro-big business party.  That started with the Federalists and Alexander Hamilton, continued through the Whigs and Henry Clay, continued further through the Republicans of Abraham Lincoln and then Jay Gould, and was then reinvented by Theodore Roosevelt and the Progressives.  The Democrats learned from the Republicans and became the bigger government and the bigger big business party under Franklin D. Roosevelt, a wealthy New Yorker.

Hence, when Republicans claim to favor small government, voters need to look under the hoods of their lie-mobiles.  When chronically lying Whigs like George Pataki, George W. Bush or Alfonse D'Amato claim to be for small government, it is better to pass on the clunker. Rick Lazio appears to be offering New York a used, big government Whig-mobile, complete with bailout tires and big business subsidy spares.

According to Emily Lenihan of WIVB in Buffalo, Carl Paladino, who publicly states he will cut government by 20% if elected, has made the following statement:

"Rick Lazio is a nice fellow and we have developed a cordial relationship and I think he is a man of his word- but he took a $1.2million dollar bonus as a lobbyist for Wall Street Bank handed $25 Billion in the Federal bail out. That's our tax money Rick put in his pocket," Paladino said.

"While in Congress, Lazio served as the chair of the Banking Committee's subcommittee on housing and community opportunity and was a cheerleader for and supporter of Andrew Cuomo's Federal Housing Goals which forced Fannie Mae and Freddie Mac to buy $2.4 BILLION in sub-prime mortgages while lowering underwriting standards and lowed down payments on 105% financing," Paladino said. "As chair of the relevant House sub-committee with oversight Lazio said....nothing."

Rick Lazio is a supporter of big government, despite the engine sounds of his lie-mobile.

Laughing as You Sink--How Europe Will Not Solve Its Problem

H/t Campaign for Liberty.

Governor Tim Pawlenty

Marty Siegel, a childhood friend who now lives in Minnesota, mentioned Governor Tim Pawlenty (R-MN) as a presidential possibility.  I did my one second barometer test for GOP candidates (did he support the bailout) and he passed. He apparently did not support the bailout.  Esquire ran an interview with Pawlenty on February 12 in which he states:

"Whether the threats or doomsday scenarios that were painted were real or partially real or not real at all. We won't know the answer to that, but we do know that some very bright people said that we faced doomsday, and there were other very bright people who said that, at the very least, the danger was overstated, and this notion that they were too big to fail was untested or untrue."

This does not amount to a strong position on the gold standard or elimination of the Fed, but it is the closest I've seen in the GOP among the major candidates except for Ron Paul.

Sarah Palin supported the bailout and so she is off my list.  Mitt Romney, whom I've never trusted (his support for the health plan in Massachusetts and his background as a consultant to the military industrial complex make me uncomfortable) is slippery about his position in a Glenn Beck interview in September 2008.  First, Beck says that he (Beck) opposes the bailout (a point on which I've had to correct myself) then Romney makes this vague reply:

"Well, there's no question no one has any interest in bailing out the guys on Wall Street who caused this problem. In many respects the term 'Bailout' is a misnomer. The people who caused this problem ought to lose jobs, ought to lose wealth and are going to face some hard times by virtue of their mistakes but what we want to make sure is that the people on Main Street and the homes all over America, that these folks aren't the ones who are suffering and if we had a meltdown of our financial system where banks and financial institutions couldn't make loans, where your life insurance policy was suddenly worthless, where awful these kind of dramatic changes occurred, you'd hurt a lot of people. A lot of people would lose jobs. You could even throw the country into, well, a very severe recession or even the D word which I don't want to use, but it's that which the treasury secretary and the Federal Reserve are worried about and that's why they are taking such extraordinary action."


Romney does not get clearer as he proceeds, which leads me to conclude that he was a de facto bailout supporter. There were plenty of ways to avoid a depression besides throwing trillions at the New York financial institutions.  His opposition at that time might have mattered psychologically but it would not have changed the Paulson-Bush-McCain-Obama position.  Nevertheless, his waffling is over political fear that he might be blamed for supporting subsidies to Wall Street, which was the de facto effect of his position.

Thus, compared to Palin or Romney, Pawlenty is closer to the libertarian one. He is certainly not a libertarian. The Moderate Voice blog describes him:
 
"Tim Pawlenty is a mainstream conservative governor in a traditionally liberal state. When I use the term 'mainstream,' I mean simply that he is in the mainstream of Minnesota conservatism – decidedly less conservative than the heart of Republicanism in the south, but conservative enough for most of the rest of the GOP. This alone gives him a decent shot as an alternative to either Palin or Romney in the 2012 primaries."

Pawlenty's website gives some useful information:

"As Governor, he has balanced Minnesota's budget three times without raising taxes, despite facing record budget deficits. Governor Pawlenty's most notable accomplishments include proposing and signing into law significant new benefits for veterans and members of the military; enacting a property tax cap, eliminating the marriage penalty and cutting taxes; toughening the state's education standards; reforming the way teachers are paid through a nation-leading performance pay plan; instituting free-market health care reforms that increase accountability and provide tax credits to encourage the use of health savings accounts; and implementing a plan to Americanize our energy sources by generating 25% of the state's electricity from renewable sources by 2025."

As mainstream Republicans go, Pawlenty seems like a good choice.  Unless you think that the GOP is going to abolish the Fed tomorrow (ha, ha) the best strategy is to work with a minimax candidate (minimize the maximum possible loss). Pawlenty seems to fall into this category.  

Has the Tea Party Become a Drag?

I just submitted this post at the RLC website:

I was reviewing Sarah Palin’s speech at the Tea Party convention on Youtube and was reminded of her position on the 2008 bailout. In a September 24, 2008 television interview Palin supported the bailout. But at the recent Tea Party convention she objected to bonuses that the support she had previously advocated made possible. I think the expression is that she has been shedding conservative crocodile tears.

Conservatives love to hate Saul Alinsky but in fact all activists, conservative, libertarian or left-wing, follow his advice if they aim to succeed. One of Alinsky’s rules for radicals is that a tactic that drags on too long becomes a drag. This seems to be occurring with the Tea Party.

A reader suggested this blog by the Alantic Magazine’s Andrew Sullivan. Sullivan argues that the Tea Party convention was not economically conservative but was rather dominated by Christian activists. Sullivan writes:

“They have no plans to cut serious spending whatsoever. They love their Medicare, as they screamed at us last August. Do you remember them revolting against Bush’s unfunded, Medicare prescription drug bill, the worst act of fiscal vandalism since the Iraq war?”

I have attended my local Tea Party meeting in Kingston, New York. I do recall others, besides myself, talking about economic issues. One individual brought up the exit of manufacturing from the US, another talked about corruption in government. There are frequent references to the nation becoming worse for future generations. These are all good signs and say to me that the Tea Party has potential left.

Since the Atlantic is not a libertarian source (disclaimer: I read it regularly more than a quarter century ago and not since) my gut would be suspicious of anything its writers have to say about the Tea Party. However, Sullivan makes a good point.

It was obvious from the beginning that the Tea Party rank and file is largely inexperienced. Moreover, these are people who have developed a bad habit of voting for big government candidates who say that they are for small government. They did it for George W. Bush and they did it for George H. Bush. They nominated John McCain, who lept at the bailout like a terrier at a steak, along with Palin and Obama. The Tea Party people realize that something has gone wrong after decades of their de facto support for big government and their solution is…to do the same thing once again. This is seen in their decision to ask John McCain’s running mate, Sarah Palin, to be the keynote speaker at their convention. Palin may speak economic conservative rhetoric at times, but she is not schooled in basic economics and can be seen in the September 2008 interview to be in the Progressive tradition.

I believe that libertarians need to work with the Christian right. However, we have been hammered once before, with respect to George W. Bush. The tactic of working with the Tea Party has helped expose our views, and it has been successful. But should libertarians continue to support the Tea Party? I am not certain that the leadership of the Tea Party supports our mission of limited government. Sarah Palin does not. I don’t think she understands that government activism in the bailout is logically inconsistent with support for limited government. The Tea Party may soon become a drag.

Marco Rubio, the Obama Stimulus and the Bush Bailout

Gary Fineout is a journalist who works in Florida. In October he blogged about the conservative senatorial candidate Marco Rubio's stand on the Obama stimulus. He wrote:

"Rubio has been highly critical of the $787 billion stimulus package for months, repeating that government spending can't create prosperity. In his latest pitch to donors, Rubio's campaign states that Crist's 'enthusiastic support for a big government spending policy' has failed to halt the rise in unemployment while adding to the deficit."

However, it is important to recognize that although the stimulus package was a nonsensical blunder, a much bigger subsidy has been bestowed upon Wall Street. That includes the Bush/Obama/McCain-supported bailout of Wall Street as well as considerable hidden subsidies to the street via the Federal Reserve Bank. Some experts estimate that the actual subsidies to the street have been as high as $14 trillion, 14 times what Obama said in his state of the union address.

There are various kinds of Republicans. One way of classifying them is big versus small government supporters. Small government supporters oppose the Wall Street subsidies. Big government supporters support the Bush/Paulson bailout. It is a sign of the failure of the majority of rank-and-file, small government Republicans that they have allowed big government types to dominate their party nationally.

Marco Rubio claims to be a small government type and so representative of the Tea Party. But did he support or oppose the Paulson bailout, which is the chief reason Obama was elected with such heavy support from the street and the mass media it finances?

In a Miami Herald/St. Petersburg Times article Adam C. Smith and Alex Leary quote National Rifle Association lobbyist Marion Hammer:

"He was a big disappointment to us when he was the speaker...He talked the talk, but he didn't walk the walk."

The article adds:

"The 38-year-old campaigning as an authentic, from-the-gut conservative is the same person who spent tens of thousands of dollars to test political messages on focus groups, gave out big staff salaries and, like Crist, favored a $60 million subsidy for a new Florida Marlins stadium...The candidate Rubio rails against big-government spending and assures voters that as a senator he won't slip earmarks into the federal budget. As speaker, however, he didn't mind a state budget with $800,000 tucked away for artificial turf on Miami-Dade fields where he played flag football."

There is no reason to trust the Miami Herald any more than there is reason to trust Rubio or anyone else that MSNBC or other big media sources tout, as in the video below. But it is imperative that Republicans question Rubio as to his position, not on the partisan Obama "stimulus" issue, which Republicans have used as cover for the massive government spending bloat of the Bush era, but on the Bush/Paulson/Obama/McCain bailout of October 2008, which was a far more damaging, far reaching and larger subsidy.

If you favor small government, the bigger problem is the Fed subsidies, not the stimulus. Where does Rubio stand on this issue, which is orders of magnitude larger than the stimulus?

People need to ask Rubio this question. Then ask it again. And again.

Ann Coulter Is a Right-On Woman

Don't worry, I'm not drawing any analogies to Sappho. Rather, I am referring to Coulter's outstanding post on World Net Daily yesterday about the Democrats' cozy relationship with Wall Street. Obama's recent pretense of criticizing Wall Street amounts to crocodile tears. Some sources put the dollar value of the Bush-Obama welfare subsidies to the Street at $14 trillion, an order of magnitude greater than any other corrupt subsidy in the history of the world.

Coulter quotes a book that I am putting on my to-be-read list: Peter Schweizer's "Architects of Ruin". Coulter notes that the Dems bailed out Wall Street with respect to Mexico's debt defaults:

"Clinton's treasury secretary, Robert Rubin, former chairman of Goldman, demanded that the U.S. bail out Mexico to save his friends at Goldman. He said a failure to bail out Mexico would affect 'everyone,' by which I take it he meant 'everyone in my building.'"

On the other hand:

"At congressional hearings on Clinton's proposed Mexico bailout a decade later, Republicans Larry Kudlow, Bill Seidman and Steve Forbes all denounced the plan to save Goldman Sachs via a Mexican bailout."

But let us not get overly partisan. Recall that it was George W. Bush who proposed last year's and 2008's massive bailout, the biggest in history. And it was Richard M. Nixon who was responsible more than anyone else for the inflationary late 1970s.

But Coulter is showing considerably more anti-Fed spunk than I've seen from any mainstream commentator since my days with Andrew Jackson's Democratic Party (just kidding, my students think I'm that old).

Let us hope that Fox News, which applauded the bailout in 2008 when it mattered, will take a fresh look at its policies on money and the Fed.

Robert Lenzner and Judge Richard Posner Argue for International Socialism

I responded to a Forbes article by Robert Lenzner in which Lenzner quotes Judge Posner in arguing that subsidies to large, incompetently run Wall Street firms that produce no value are essential because otherwise benefits to Posner's employers, the University of Chicago and the federal court system, will slow to a trickle.

Posner has made a career arguing that the judicial system optimizes social welfare. In Posner's view, the United States is wealthy because of judges and academics, not because of the innovation of the free market. In his view, all that is needed to become wealthy is further government control and centralization.

The difference between Posner and Stalin is this: whereas Posner, like Trotsky, argues for international socialism, Stalin argued for socialism in one country.

My response to Lenser follows:

Judge Posner's theory that he is smarter than the dynamic of markets is in a long tradition of advocacy of centralized economic planning that goes back to the days of the Emperor Diocletian. Posner's ideas worked so well in the Soviet Union and Cuba that he aims to transplant them here. The difference is that in the Soviet Union the spoils of socialism went to armed thugs, whereas in the USA Posner aims to distribute them to donors to the University of Chicago and his clients in the federal court system.

Posner's ideas do not work. The court system has done nothing to make the economy more rational. Rather, it has redistributed wealth to the wealthy. Now, Posner aims to extend his failed utilitarian strategy by subsidizing incompetently run Wall Street firms which have been cancer in the lungs of the American economy for a century.

The idea that Bear Stearns needed help from me is like saying that my grandfather's pneumonia ought to have been encouraged by his physician.

If Wall Street created value it would not need subsidies. If it created value, we would not need to transfer massive amounts of wealth to it annually via the Federal Reserve Bank's monetary expansion. Wall Street steals from the productive sector of the economy and donates it to the unproductive, say universities and the court system.

In the 19th century the American economy was relatively decentralized, there was no Fed, the courts had less power, and the real hourly wage increased two percent per year. In the 20th century we have increasing power arrogated to a self-serving federal court system and Wall Street, and real wages are increasing 2% per 25 years.

Posner, Lensner and the rest of the "oh dear Wall Street needs a trillion dollars of your money or the sky will fall" corrupt nexus of mass media, courts and academia should move to Cuba, that benign island nation off the shore of Florida where Posner's ideas flourish.

Michael Mooron Aims to Build Mass Transit For Suburbanites

General Motors went bankrupt in 1919, 90 years ago, and the current bankruptcy has antecedents that are instructive. GM also was reorganized in the 1920s, when the DuPonts, the firm's chief stockholders, removed its founder, William Durant, for manipulating the firm's stock price. Pierre DuPont ran the firm briefly and hired Alfred Sloan, a managerial genius after whom are named MIT's Sloan School of Management (Sloan was an MIT alum) and the Sloan-Kettering Memorial Cancer Center in Manhattan. (Kettering was Sloan's R&D vice president and inventor of the self starting engine and many other automotive breakthroughs.)

The management policies that Sloan implemented transformed GM from a poor second to Ford to the world's largest manufacturing firm. Part of Sloan's insight involved decentralizing or divisionalizing the firm; creating price-based target markets for the automotive divisions; using return on investment to evaluate performance; and targeting higher-priced cars in order that used GMs would compete with the lowest price car--the Ford Model T. Sloan envisioned the used car market, and indeed, by the 1920s used GMs and other brands began to compete with the cheap Model Ts, but not the higher-end GM cars.

The reason Sloan was able to turn around GM was his managerial ability. In particular, Sloan understood markets; he established a market research system; he understood customers; he enhanced and utilized relationships with dealers; he developed cost efficient organizational structures; and he provided incentives for competent management and innovation. Sloan's sharp management skills contrast with the examples of public mismanagement that Michael Moore presents in his film Roger and Me. In the film, the Flint municipal government squanders millions on nonsensical investments like a theme park called "Auto World"; a useless hotel; and an effort to draw tourists to visit Flint.

But the mechanistic management style that Sloan represented had several flaws. Sloan was bad at labor relations and politics. As a result, he became a sacrificial lamb to Franklin D. Roosevelt's New Deal. The unionization of GM could have been implemented in a way to enhance GM's strategic advantage, but instead Sloan created an atmosphere of adversarial labor relations from which the firm never recovered. He was attacked not only by sit down strikers but also by Secretary of Labor Frances Perkins and, if I recall, Roosevelt himself.

Likewise, Sloan failed to develop a succession plan. The executives who followed him at GM were not his equals. Managerial breakthroughs were being made in Japan by the 1950s, yet the GM management was not able to imitate the ideas that Toyota pioneered.

The failure of GM was well documented in the 1972 On a Clear Day You Can See General Motors by De Lorean and Wright. As well, Peter Drucker had written a rather positive account of the firm in the late 1940s entitled Concept of the Corporation, to which the management reacted with considerable hostility. Sloan responded with his 1962 classic My Years with General Motors which is one of the best management books ever written. GM's paranoia about criticism ran deep, and its culture of conformity and groupthink undoubtedly contributed to its demise.

There is a long litany of critics of General Motors and the automobile industry, one of whom is Ralph Nader and another is Michael Moore. Moore's Roger and Me is a darn good film. Unfortunately, Moore's political ideas are downright Mooronic.

Jim Crum just sent me this drivel that Moore wrote about socializing the firm and turning it into a mass transit manufacturer. Moore's strategy is similar to the woman's in his film who conceptualized Flint as a tourist Mecca--and who upon failure made her destination to be tourism czar of Tel Aviv just as the Palestinian Intafada was about to start.

If GM is to be turned around it needs to clean house; eliminate management at the departmental head level and above; and institute nuts-and-bolts, quality-oriented managers who can institute lean manufacturing and a culture of innovation and cooperation. Imposition of the rancid, socialistic tripe that Moore has on offer will create another New York City subway system in the form of General Motors.

One of the problems with America today is that America's wealthy, including Moore, are economically illiterate and persistently self serving. Moore is one of the few who can afford an expensive apartment in Manhattan. He lived on 83rd off Broadway when I lived on Riverside Drive and 87th. I was there because my in-laws lived there. He was there because plunking down $1 or $2 million for an apartment is chicken feed for a Hollywood guy.

Thus, Moore makes the assumption that all Americans live in Manhattan and can afford the $1 million for a one bedroom apartment, just like he can. As a result, all Americans will benefit from more mass transit.

But if anything is worse managed than GM, it is New York City's subways. Moore probably doesn't take the subway. Rather, he is likely chauffeured around, possibly in a specially built hybrid Humvee to accommodate his frame. I doubt he could fit into one of those mini-van style taxis that are environmentally friendly and coming to dominate the New York taxi scene. As well, I suspect his flatulence is a bigger problem than the bovine flatulence and porcine waste about which environmentalists like to complain.

The New York City subway is a nightmare institution. Rats scurry hither and yon. When I travel to Brooklyn, there are 20 people in the subways and thousands above ground in Humvees and Cadillacs. Maybe most of the cars aren't GMs, but building more subway cars isn't going to change that because the subway system is so incompetently managed by the Metropolitan Transit Authority that it would have gone bankrupt 40 years ago if it were a private firm. Of course, before the city took it over in the 1930s, the subways were clean and attractive and the subway firms viable. Now, Moore is looking to turn GM into another incompetently managed subway system. To him, the way to turn around GM is to turn a third rate private firm into a twentieth rate public sector one.

Moore is right to criticize GM's management, but he is one of the few people who feel themselves qualified to comment on management issues whose ideas are more blundering and stupider than Wall Street's or GM's. Socializing GM is guaranteed to establish a management even stupider than Roger Smith. And Moore, a robotized advocate of socialism who has never seen a public institution he was willing to criticize, no matter how putrid, won't be around to tell the tale.

Moore writes:

1. Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices. Within months in Flint in 1942, GM halted all car production and immediately used the assembly lines to build planes, tanks and machine guns. The conversion took no time at all. Everyone pitched in. The fascists were defeated.

Hamilton on Pecuniary Bounties

Pecuniary bounties or direct subsidies to private firms have been a hot topic under the Bush and Obama administrations. In his Report on Manufactures of December 5, 1791Secretary of Treasury Alexander Hamilton advocated subsidies or bounties as a useful tool to promote manufacturing. He proposed bounties in the first Congress. But Jefferson's Democratic Republicans opposed them, as did Madison, Hamilton's erstwhile Federalist ally (see Elkins and McKitrick, The Age of Federalism, for a careful description).

Hamilton believed that bounties can subsidize domestic manufacturers with a smaller price increase than tariffs alone. The reason is that while a $1 tariff raises prices of imports by $1, a 50 cent tariff coupled with a 50 cent bounty provides the same subsidy to the manufacturer (the tariff being transferred to the manufacturer) but raises prices by only 50 cents.

He writes* "Bounties are sometimes not only the best but the only proper expedient for uniting the encouragement of a new object of agriculture with that of a new object of manufacture. It is the Interest of the farmer to have the production of the raw material promoted, by counteracting the interference of the foreign material of the same kind. It is the interest of the manufacturer to have the material abundant and cheap."

However (p. 171), "the continuance of bounties on manufactures long established must almost always be of questionable policy. Because a presumption would arise in every such Case, that there were natural and inherent impediments to success. But in new undertakings they are as justifiable, as they are oftentimes necessary."

Thus, while Hamilton would probably have supported the current banking system in accordance with his views on funded debt to stimulate economic activity and his support for other government policies that subsidize business, he might have opposed the bailout as a subsidy to a lost cause, long established businesses like Citigroup and Bank of America that are not capable of managing themselves.

*Alexander Hamilton, "The Reports of Alexander Hamilton", edited by Jacob E. Cooke. New York, Harper and Row, 1964. p. 169.

Richard Ford's Question for Pickpocket Barack

I just received this e-mail from Bob Robbins:

Dear President Obama,

Thank you for helping my neighbors with their mortgage payments. You know, the one's down the street who in the good times refinanced their house several times and bought SUV's, ATV's, RV"s, a pool, a big screen, two Wave Runners and a Harley. But, I was wondering, since I am paying my mortgage and theirs, could you arrange for me to borrow the Harley now and then?

Richard Ford
Queen Creek AZ




P.S. They also need help with their credit cards, when do you want me to start making those payments?


P.P.S. I almost forgot - they didn't file their income tax return this year. Should I go ahead and file for them, or will you be appointing them to cabinet posts?

Mayor Bloomberg Meets Gomez Addams

One must judge a leader by whether the plans that he has laid have furthered or hindered the purposes of the institution he leads. In the case of Mayor Michael Bloomberg, his record is execrable. Mr. Bloomberg is a former bond trader who, if anyone, ought to be aware that financial markets are cyclical. He has been mayor for nearly eight years, during which time the fifty-year trend of New York's becoming a one-industry town has continued unabated. That industry is, of course, Mr. Bloomberg's first one, the financial industry and Wall Street.

New York has seen industry flee because of its astronomical tax rates, about which Mr. Bloomberg has done nothing. New Yorkers pay more than one half of their incomes to government (including federal and social security as well as state and city taxes) yet the services that the City provides are abysmal. New Yorkers need not watch horror movies. They just need to step into the subway system to be assaulted by the miasma of foul bums, rats scurrying to and fro and a transportation system out of the 1960s television program (based on Charles Addams's New Yorker Magazine cartoon series) The Addams Family.

In nearly eight years in office Mayor Bloomberg did nothing to reverse the long term trend of exit from New York. Taxes are as high as ever and services are worse than ever. He has failed to lead. He has failed to attract industry. His only two accomplishments are absurd televsion screens in taxi cabs and his initiative in abolishing the term limits that prevented Rudolph Giuliani from running for a third term but that will conveniently allow Bloomberg inflict his incompetence on a failing city for four more years.

Mr. Bloomberg joins the other Uncle Festers, Morticias and Pugsleys, and of course, "the thing", their hands reaching, reaching, reaching for ever more handouts, ever more freshly printed Fed bailout money from a corrupt, incompetent Congress.

Congressman Paul Kanjorski Is One Confused Dude

Jim Crum and Mairi have forwarded this video of Congressman Paul Kanjorski's explanation of the "bailout". Kanjorski is one confused dude. There is no benefit to the public from the government's subsidizing incompetently run banks by buying their bad mortgages. It is true that what Congress is doing now is even worse, and the caller has a right to be disturbed. But it is unfortunate that she cannot obtain the information necessary to analyze this problem. Wall Street's publicists, the New York Times, CNN, Fox, et al. have seen to that.

Kanjorski's confusion is particularly acute in his dramatic depiction of a run on money market funds. There is no such thing as a "run" on money market funds. Money market funds are fully backed by loans. The funds could refuse withdrawals until the short term loans expire, and then pay the depositors.

Nor is the current approach to banking essential to the American economy. The banking system is not worth a trillion dollars to the public. It is not worth a dime. It has been a cancer on the American economy for two centuries.

If Kanjorski had bothered to inform himself about the history of money, he would know that America's current arrangement, the fiat paper system and the Fed, is the result of historical decisions that have not been beneficial and that the public fared better under the gold standard. In the 1970s there was a possibility that Milton Friedman's fixed monetary rule might work, but it did not. The only choices are (a) gold and silver without fractional reserve banking, which would result in gradual, stable growth, and (b) the unstable paper and fractional reserve system that has resulted in the Great Depression, the current instability, the 1970s deflation and absurd investment in worthless construction and mortgages.

The Irony of Franklin D. Roosevelt and America's Mainstream Publicists

The irony of Franklin D. Roosevelt is, of course, that Herbert Hoover and he took an economic downturn that should have taken two years to correct, and turned it into an eleven year drama. Then, the American media, historians and "Progressives" claimed that he was a hero for the drawn out harm that he caused.

Now, America has another opportunity to do harm to itself for even less reason than in the 1930s, and once again the dull witted American public buys every confidence scheme that Wall Street and its publicists offer.

I have come to the conclusion that a better term for "media" is "publicists". I had been using "pissant propagandists" but "publicists" captures the media's commitment to serving as a publicity department for America's third rate business community, inept banking community and of course the all-thumbs incompetents on Wall Street.

I have pretty much stopped following the acrobatics of America's moronic publicists and its dim witted discussion of the even dimmer witted "bailout". However, I am even more disturbed that the greedy, easily manipulated asses, apes woodpeckers and chimpanzees who constitute America's failed electorate have been granted the unlimited right to vote for representatives who adopt policies that neither representatives nor voters understand.

Foreign Students No Longer View US As a Land of Opportunity

I had a long discussion with a someone who is a Chinese national on Saturday. The individual is a manager in a manufacturing firm in the New York City area and a weekend MBA student at NYU's Stern School of Business. This student mentioned to me that her Chinese expatriate friends regret coming to this country and are now thinking of returning to China because of America's declining economy, its incompetent policies and its unwillingness to confront its own decline.

Moreover, she was disturbed at the recent inflation of the American monetary base and the foolhardy bailout plan that the American mass media cheers. She said that hyper inflation has begun to afflict China, and the Chinese are not happy either with the American monetary policy or the fact that they are holding over one trillion dollars in treasury bonds.

Obviously, if the Chinese decide to sell some or all of the US bonds, there will be a dramatic decline in the dollar and hyper inflation as dollars return here. Over the long run factories would return here, but the adjustment would take decades.

In my view, the United States is no longer a free country. It is a slave state. Americans in many states, such as New York, pay more than one half of their earnings to the government. Only foolish slaves would be happy to live in this condition. Americans have become a nation who do not deserve the world's respect.

On May 13, 2008 I wrote a blog entitled "Chinese Tragedy Ahead". I wrote that:

'This country and China have squandered resources in stupid ways. The bubble will burst as all credit bubbles do. America may have enough resources to reassess its errors. The Chinese likely do not, and many there will be hurt."

E-mail to Radio Announcer Mark Simone

Dear Mark--I was listening to you on my way to NYC from Woodstock, NY. I teach at Brooklyn College. I heard a caller call in somewhat stridently claiming the need for stimulus. You did not question him. His claims about the Great Depression having been resolved by the heavy borrowing of World War II went unrefuted. This is bad.

You cannot cure America's addiction to socialism if you accept socialist monetary and business cycle theory, i.e., Keynesian economic theory. There is no reason to. Keynesian theory was refuted in the 1970s by Milton Friedman. Your caller, and today's economists, and the media, and all advocates of stimulus, the bail out and the recent inflationary monetary expansion by the socialist Bernanke Fed and Ol' Hammer and Sickle George W. Bush (not to mention his Comintern follower, Goosestepping Socialist Barack Obama) are all ignorant fools.

There is no need for stimulus. Stimulus is not the solution. It is the problem. Unemployment did not become a major problem until AFTER the creation of the Fed and stimulus. In a system of free banking and a gold standard business cycles would be muted. They only exist because of the banking system and stimulus. Trying to cure today's problems with government spending, inflation and stimulus is like trying to cure cancer by drinking a bottle of chlorine.

You might consider inviting a guest from the Cato Institute or my old friend Howard S. Katz at (http://www.thegoldbug.net and http://www.thegoldbugnet.com) to educate your listeners about a more realistic approach to the business cycle than the socialist crap that has become a single chorus Democratic and Republican Hammer and Sickle version of L'Internationale.