Saturday, May 3, 2008

In Spring, A Student's Thoughts Turn to GETTING OUT OF THE EXAM

When I was a student I viewed an exam as a competition at which I would try to excel. For the first time in my 16-year teaching career students in several classes have been trying to get me to delay or cancel my exam. My practice is to wait until very late in the semester to give an exam, and I warn the students from the first day of class that the exam will be competitive. There is only one week left to the semester. I received the following seven e-mails today all from different senders in three different classes. Are our educational system and culture on the right track?

I. Saturday, May 03, 2008 3:16 PM

Hello Professor Langbert,

The reading for the exam has been little much for me, because I'm taking 6 classes this semester and I'm also interning for 20 hours a week. I feel like I need more time and I want to ask if there is any chance you would consider moving the exam date later in May? We can present our papers this Sunday instead of having the exam now. I hope you understand, but if not, I certainly do understand.

Thank you professor,

II. Saturday, May 03, 2008 7:25 PM

Good morning professor Langbert,

How are you? I was wondering if you might be kind enough give the class an extention on the exam? I have 4 other classes and the materials are a lot to cover.

Thank you!

III. Saturday, May 03, 2008 8:57 PM

is there any way of postponing our exam tomorrow ???
wouldnt your rather see 80s and 90s than have to curve the exam ??

please advs
Saturday, May 03, 2008 11:11 AM

IV. Hi Prof. Langbert, this is...and I wanted to know if I can please have an extension on my paper and the exam on May 4. I wanted an extension because i have not finish all my reading.

Saturday, May 03, 2008 12:43 AM

V. Professor,

How are you doing sir?
I got email from the classmates and I found out that some of us are having a hard time preparing for the exam.
I would greatly appreciate if you could post-pone the exam for us.
Thank you very much for your understanding.

Best regards,

VI. I received an email from ... indicating that you may post pone the exam tomorrow. Since I did not see an announcement on blackboard, I was just wanted to confirm that the exam is tomorrow May 4th.

Thank you,

VII. Prof. Langbert -

A few of us were wondering if you would consider postponing the exam.

My response:

The exam is tomorrow at the stated time and place, and it is going to be hard.

Progressives and the Cone of Silence

The very phrase "cone of silence" evokes hilarity, and anyone old enough to have watched Get Smart will agree. Tom Elia notes on Ann Coulter's blog (hat tip Larwyn) that Progressives have been calling for Democratic candidates who appear on Fox News to only do so when the Cone is down:

"Washington (Rooters) -- Angry over appearances of prominent Democrats on the Fox News Channel, some netroots 'progressives' are demanding that Democrats now use only the 'Cone of Silence' when speaking out.

"In response to the report by The Politico's Mike Allen outlining the disgust in the 'progressive' community over the recent appearances by Hillary Clinton and Barack Obama on Fox, as well as DNC Chair Howard Dean's scheduled appearance Sunday, some 'progressives' are demanding that Democrats speak only when using the 'Cone of Silence' made famous by secret agent Maxwell Smart...

Good idea, Tom. Maybe the Democratic networks (CBS, NBC, ABC, HBO, etc.) might benefit from applying the cone full time!

Friday, May 2, 2008

Herbert Hoover as the Pardigmatic Progressive-liberal

Most people who have not read a biography of Herbert Hoover do not know that he was among the most assertive of the Progressives, and in many ways his ideas set the tone for much of progressive-liberalism in the eight decades that have ensued since his election to president. When he ran for president in 1928 almost all progressives supported him, including social worker Jane Addams, Ida Tarbell, Herbert Croly, Walter Lippmann, Franklin Roosevelt (before Hoover declared himself a Republican), and many progressive magazine and newspaper editors of the time. Hoover's ideas were quintessentially progressive: an elitist, he proclaimed his belief in democracy. He believed that firms should be motivated by social responsibility and individual interest. He argued for voluntary national planning and that progress depends on the establishment of trade associations that establish voluntary ethical codes. He believed strongly in efficiency and the importance of cooperation and associations. He advocated expansion of public works. He believed in tariffs and protectionism. Hoover's biographer Joan Hoff Wilson notes (p. 69)*:

"Where the classical economists like Adam Smith had argued for uncontrolled competition between independent economic units guided only by the invisible hand of supply and demand, he talked about voluntary national economic planning arising from cooperation between business interests and government. The aim was to eliminate waste through greater production efficiency, lowering prices, raising wages and controlling business cycles. Instead of negative government action in time of depression, he advocated the expansion of public works, avoidance of wage cuts, increased rather than decreased production--measures which would expand rather than contract purchasing power....'We are passing' he told the United States Chamber of Commerce in 1924, 'from a period of extreme individualistic action into a period of associational activities.'"

What made Hoover the prototypical Progressive-liberal was his belief (1) that rational planning guided by the state rather than markets can best solve problems and (2) that the state's role includes the positive inculcation of moral belief. In particular, Hoover pioneered the use of mass propaganda, not only as Warren G. Harding used it in campaigns, but as part of his political strategy. In 1920, Hoover became a moderate advocate of collective bargaining. Hoover believed that workplace conflict was an engineering problem. He was a supporter of scientific management, which was linked to the Progressive movement. Quoting Wilson (p. 56):

"The socioeconomic system [Hoover's ideas] represented could not accurately be described by such words as progressivism, laissez faire capitalism, communism, statism, socialism, corporatism, guildism or syndicalism. The absolute laws of progress that he believed in required a new and superior synthesis that he simply called the American system. What he had in mind was a pragmatic utopianism that defied standard economic and political classifications and was, in truth, progressive in the broadest sense--it was forward looking. Perhaps it could best be characterized as an informal brand of liberal corporatism.

"...idealism could be balanced with self-interest and technological innovation to counter the equally enervating system of state socialism or monopoly capitalism..."

(p. 59)"...Hoover hoped to change values at the grass-roots level by propagating an ideology of cooperative individualism and playing down materialism. Massive education and propaganda campaigns could transform traditional attitudes about private property and profit into a new sense of social responsibility..."

Hoover's elitism came from his background as an engineer who had achieved dramatic success in international mining. He seems to have believed that engineering principles could be applied to reforming society.

Now, what was the outcome of Hoover's presidential administration? What was the result of his elitist belief of his ability to outhink markets and to be able to reform society according to his values (which were very nice, by the way).

The result was the Great Depression. The result of the Depression was the New Deal (which Hoover opposed because he found it too statist). Thus we see the end result of Progressivism. Increasing coercion, government programs that stall progress, and inflation that supports wealthy speculators at the expense of productive workers.

Progressivism begins as an assertion of value superiority by an elite. The value superiority is moral or expresses a belief in democracy, as does Peter Levine. Government action (e.g., Wilson's establishment of the Fed in 1913) is taken to encourage the belief. Smart people (Hoover was very bright) are selected to implement the vision. But they blunder. The blunders are blamed on the people, on freedom and on markets. In turn, coercive statist violence attacks democracy and freedom further, institutionalizing Progressive-liberal neuroticism.

*Joan Hoff Wilson, Herbert Hoover, Forgotten Progressive. Prospect Heights, Ill.: Waveland Press, 1992 (Original Publication: 1975).

6 Ways Greenspan Caused the Current Economic Crisis

Fiona King of CurrencyTrading.Net just forwarded an excellent blog that she posted concering Alan Greenspan's role in the current economic crisis. I disagree with her policy prescription, but most of her analysis is accurate. Her policy prescription (which is to increase financial regulation) will lead to more of the same problem. But King's blog is excellent.

The problem with more regulation is that, as Enron demonstrated, regulation is an infinite regress. Unscrupulous actors (be they government officials or corporate executives) find ways around the regulation, and the regulator (if not corrupt, which they usually are) has to increase control. But increasing control terminates economic actors' freedom and flexibility. Freedom and flexibility are necessary to growth. Without the ability to respond to market change and to innovate, the economy stagnates. The end result is a controlled system that is like North Korea's or Cuba's at worst and Europe's at best. Stagnant growth is associated with innovation's being forestalled by regulators, corruption, exclusion of people of low socio-economic status from economic opportunity and declining living standards. Regulation solves nothing. It creates poverty.

Moreover, King accepts the explicit purpose or ideological rationale for the Fed and misconstrues its underlying purpose. The Federal Reserve is a wealth transferral device that serves financial interests at the expense of workers (see Howard S. Katz's book Paper Aristocracy for a detailed discussion of this point). The idea that a small amount of inflation will help workers but a large amount of inflation will hurt them is fallacious. A small amount of inflation will transfer a small amount of wealth from producers to investors and bankers, and a large amount of inflation will transfer a large amount of wealth from producers to investors and bankers. Greenspan inflated alot, and alot of wealth has been transferred. Warren Buffett, George Soros and the folks who have bought up Greenwich, Connecticut and the Dakotas have grown wealthy while the average worker has seen flat wages. That is what the Fed will do so long as it is permitted unrestrained freedom to inflate the money supply.

It is the Fed that needs to be regulated through a metallic standard. Any other system leads to abuse and wealth transferral from poor to rich. How many decades of this do progressive-liberals need before they accept that their idea has failed?

The Greenspan Fed has done what the Fed does in a big way. In the 1920s, the Hoover Fed reacted stupidly to the banking crisis of that era, and the depression resulted. In the post World War II period, the Fed has generated inflation, and the result has been flat real earnings since the mid 1970s and reduced innovation. As the federal government responds by transferring even more wealth from producers to Wall Street and commercial banks, such as respecting the Bear Stearns bailout, the public becomes poorer and the assets of multi-millionaires and billionaires are protected.

There is no other purpose of the Fed. The idea that the few percent reduction in unemployment that results from short term stimulus really is the Fed's purpose is naive.

King points out that in response to the technology stock bubble (which, I add, also resulted from the Greenspan Fed):

"The Fed, under the leadership of Dr. Greenspan, moved quickly to slash its bechmark Federal Funds Rate to 1%, the lowest level in nearly 50 years. At the time, Dr. Greenspan was acclaimed by economists for mitigating business cycle volatility and returning the economy back into a period of rapid growth. In hindsight, however, this period of easy money may have enabled the run-up in housing prices that caused the current housing crisis...This in turn resulted in a weak dollar..."

King adds that Greenspan failed to stop incompetent lending strategies by the financial community that had been authorized by the Home Ownership and Equity Protection Act of 1994. As well:

"the inability of the financial system to absorb the shock from the unexpectedly high default rate on subprime loans. This failure to anticipate can be traced back to 1998, if not earlier, when the Federal Reserve spearheaded a bailout of Long Term Capital Management (LTCM), a large hedge fund which lost nearly $5 Billion trading complex securities. Some would say that this created a moral hazard situation, whereby banks became comfortable taking larger risks because of the foreknowledge that they would be bailed out if their bets went sour."

King adds that Greenspan was indifferent to asset bubbles. All of this is accurate. Although this analysis is accurate, I am concerned that the prescription that results is more of the same policy pattern that caused this problem. Regulation created the Fed. The Fed caused the asset bubble because of inflation. American workers have seen decreased opportunities and flattening real incomes because of the Fed's inflation and because of regulation.

King's prescription is even more regulation. I disagree.

Wednesday, April 30, 2008

Ratio of Democrat to Republican Donors at Brooklyn College

Huffington Post lists political donors by employer. The information is publicly available on the World Wide Web. I am not breaching confidentiality by copying the data.

The folks at the American Association of University Professors keep claiming that there is no imbalance between Democrats and Republicans in universities. They claim that the professoriate represents a balanced range of views. That is of course absurd.

The top of the Huffington Brooklyn College list states:

$16,093 was given by people who identified their employer as "Brooklyn College".
$0 to Republicans
$16,093 from 25 people to Democrats

The summary states that it all went to Democrats. However, that is inaccurate, as there is one Republican donor on the list. Me. If you look down the list you will see that I gave $540 to John McCain. I am the only Republican donor on the list. With 25 on the list, the politically interested faculty appears to be 4% Republican and 96% Democratic.

Moreover, the amounts contributed to the Democratic Party are surprisingly large. For example, Professor Leo Zanderer donated $4,600 to Christopher Dodd. Professor Madelon Rand donated $1,950 to Hillary Clinton in the first quarter of 2008. Librarian Howard Spivak donated $1,000 to Hillary Clinton. Professor Barbara Winsolow gave $2,000 to Howard Dean.

My question, friends, is: why does the heading of the list say that there are no Republican donors at Brooklyn when it lists me as having given $540 to John McCain?

Brooklyn College Political Donations

Leo Zanderer Professor Brooklyn College Christopher Dodd $4,600
Madelon Rand English Instructor Brooklyn College Hillary Clinton $1,950
Howard Spivak Director, Academic Information,Brooklyn College Hillary Clinton $1,000
Gail Gurland Professor Brooklyn College Hillary Clinton $600
Philip Thibodeau Professor Brooklyn College Barack Obama $465
Ellen Wayne Professor Brooklyn College John Edwards $450
Renison Gonsalves Updated Q1/2008 Hillary Clinton $420
John Van Sickle Professor Q1/2008 Barack Obama $400
Donald M Levine Professor Brooklyn College Updated Q1/2008 Barack Obama $391
Lindley Hanlon Professor Brooklyn College Updated Q1/2008 Barack Obama $308
Michael Hipscher Teacher Brooklyn College Updated Q1/2008 John Edwards $300
Matthew Moore Professor Brooklyn College Updated Q1/2008 Barack Obama $300
Mac Wellman writer/professor Dennis Kucinich $300
Andrew Meyer Professor Brooklyn College Q1/2008 Barack Obama $272
Sonia Murrow College Professor Brooklyn College Q1/2008 Barack Obama $250
Barbara Winslow University professor Brooklyn College Howard Dean $2,000
Charlene Forest Professor Brooklyn College Updated Q1/2004 DNC $500
Joe Fodor writer Brooklyn College Updated Q1/2004 DNC $500
Ellen Wayne College Professor Brooklyn College Updated Q1/2004 DNC $450
Clement Mbom Professor Brooklyn College Updated Q1/2004 DNC $408
John Van Sickle Professor Brooklyn College Q1/2004 John Kerry $375
Kathleen Axen Professor Brooklyn College Updated Q1/2004 DNC $300
Matthew Moore Brooklyn College Updated Q1/2004 DNC $300
Peter Wayne College Professor Brooklyn College Updated Q1/2004 John Kerry $250
Len Fox college professor Brooklyn College Q1/2004 DNC $250
Todd Holden Professor of Physics Brooklyn College Updated Q1/2004 DNC $250
David Bloomfield Educator Brooklyn College Q1/2004 John Kerry $250
Roni Natov English Professor Brooklyn College Updated Q1/2004 DNC $250
Daniel Mufson Assistant Professor Brooklyn College Updated Q1/2004 Howard Dean $250
Steven Jervis Brooklyn College Updated Q1/2004 John Kerry $200
Corey Robin professor Brooklyn College Updated Q1/2004 Howard Dean $200
Charles Ayes Architect Brooklyn College Updated Q1/2004 John Kerry $200
Len Fox College Professor Brooklyn College Q1/2004 John Kerry $200
Frederick Gardiner Professor Brooklyn College Q1/2004 John Kerry $200
Mac Wellman Professor Brooklyn College Updated Q1/2004 Dennis Kucinich $200
Gary Giardina Physician Assistant Brooklyn College Updated Q1/2004 DNC $150
Daniel Mufson Assistant Professor Brooklyn College Updated Howard Dean $150
John Van Sickle Professor Brooklyn College Updated Q1/2004 Howard Dean $100
Allison Dean Professor Brooklyn College Updated Q1/2004 Howard Dean $60

Progressive-Liberal Economists Murder Children

Economist Ben Bernanke

Weep and pray for children in nations with food shortages, who have been starved by the progressive-liberal Fed policies of the Greenspan and Bernanke Fed. For the past three decades progressive-liberal economists have advocated creation of money, that is, liquidity or credit, to stimulate real estate investment. This misallocation of resouces inhibited food production by transferring resources away from commodities production to construction.

Keynesian progressive-liberal economists have caused a global food shortage. Too little food being produced and the transfer of land to developers mean that agriculture cannot adjust to increasing demand. The Fed's actions, in response to the claims of Keynesian economists, are starving children. The economists are murderers because they have induced the world's banking community to engage in policies that have starved children. Now, their chief concern is that the starvation not impede Wall Street's profit picture.

Recently economist James Galbraith responded to my blog about his television appearance, claiming that higher interest rates would be a catastrophe. But the policies that the Fed has adopted, i.e., creation of money by lending it to hedge fund managers and commercial banks at public expense, has resulted in starvation around the world. Keynesians don't view the starvation that their policies have caused to be a catastrophe. Only a decline in Wall Street's profit picture is a catastrophe to them. Starving children is a detail of no economic consequence to their models.

Woodrow Wilson's Constitutional Government in the United States

Woodrow Wilson. Constitutional Government in the United States. New Brunswick, NJ: Transaction Publishers, 2004. (Original published 1908). 236 pages.

Woodrow Wilson's Constitutional Government in the United States is a great treatise. Wilson had been a fine political science professor before becoming president of Princeton, governor of New Jersey and then president of the United States. Wilson was a Democrat, but he shared some views with the Mugwumps, the Republicans who supported Democratic candidate Grover Cleveland in 1884. Wilson closely read Walter Bagehot and he supported the gold standard in the late nineteenth century. In 1896 he bolted the Democratic Party to support the National Democratic candidate John Palmer. As a proponent of sound money, that year of William Jennings Bryan's "cross of gold speech" Wilson opposed Bryan's free silver candidacy. The National Democrats were libertarian in orientation and favored not only reduced tariffs and the gold standard, but limited government as well. The first year of his presidency Wilson established the income tax and the Federal Reserve Bank, but these laws were not so statist as they sound. Many Mugwumps (who were largely free market and pro-gold) supported the Federal Reserve Bank because they thought it would be better to have an expert agency regulating the currency than to have Congress creating greenbacks. The gold standard that was in place in 1913 and for nearly two decades thereafter limited the Fed's ability to expand the monetary base and create the kind of inflation that we have had since the 1930s and especially since Richard M. Nixon's presidency, which Wilson would have opposed. Likewise, the income tax was an unknown concept in 1913, and he could not have anticipated its extension. Until 1913 federal tax revenue was raised chiefly by tariffs, and Wilson repealed most of the tariffs in the same law that established the income tax. Moreover, the income tax applied to about one percent of the population in 1913. He could not have foreseen the degree to which subsequent administrations extended it.

Wilson had begun to identify himself as a "progressive" during his tenure as New Jersey governor, but his reforms were not especially interventionist or statist in nature. He introduced primary elections, which were an affront to the preexisting boss system. He also established a workers' compensation law, but workers' compensation is as much a realignment of common law liability principles as an employee benefit or regulatory program. His progressivism was conservative.

Wilson's writing is more articulate and subtle than Herbert Croly's or Theodore Roosevelt's, and his ideas are more refined and sophisticated than either's. In contrast to Roosevelt, who was a Republican predecessor to the New Deal Democrats, Wilson's ideas were informed by Burke as well as Bagehot. He not only believed in preserving existing institutions, but also retained a suspicion of big government as well as big business. He was a progressive in that he advocates, in Constitutional Government in the United States, a Darwinian as opposed to what he calls a Newtonian theory of government. That is, he believed that the federal government needed to be reformed to enable some changes. This idea may not have been wrong in principle but it was wrong, in my view, in terms of fundamental errors Wilson made in failing to anticipate the results of the reforms he made as president. However, subsequent generations of conservatives as well as progressive-liberals rely on Wilson's ideas about government. It would be better to throw out government altogether, but unless you've joined the Libertarian Party you probably owe a debt to Wilson's thinking.

Wilson's writing is somewhat flowery but it is eloquent and clear. The book can be read in one or two sittings yet it packs a considerable punch. It contains many beautiful theoretical insights about government. It is probably among the best of the Progressive works on government, and if any one work of the Progressive era might be said to shine a flattering light on the Progressive movement, this is it. The trouble, of course, is that the folks calling themselves "progressives" today are not Wilsonian progressives and have little if any interest in Bagehot, Burke or Wilson.

The United States is fortunate that Wilson and not Roosevelt won in 1912, although Wilson's best efforts were subsequently overturned by his fellow Democrat, Franklin D. Roosevelt, in the 1930s. It is evident that the roots of the Democratic Party's rejection of freedom begins with Roosevelt. The New Deal was an ahistorical response to exigencies and circumstances that occurred in the early 1930s and had absolutely nothing to do with Wilson's ideas. Wilson was not a predecessor of Franklin D. Roosevelt. The one president who can claim that title was Theodore Roosevelt, a Republican.

Wilson argues that there are four stages of evolution of government. In stage one government is the master of the people. In stage two government is no longer master by force but remains master because of superior sagacity. In stage three the leaders of the people confront mastery and agitate to control it. In stage four the people's leaders become the government. The American constitutional government is an example of stage four, but Wilson prefers the British parliamentary system to the American separation of powers, which he believes to be a more primitive model. Wilson admires Hamilton, whom he feels was more comfortable with giving government power than with the system of checks and balances which inhibits government action and leads to the party system, which in his view is associated with corruption and failure of democracy. The party system and bossism was necessitated by American constitutional government because the division of powers made it impossible for the different branches to coordinate their thinking without some integrative device. In management theory this idea is called differentiation and integration, and it was first articulated in the 1960s by Lawrence and Lorsch. Wilson noticed the differentiation and integration problem with respect to the federal government in the first decade of the twentieth century, fifty years before Lawrence and Lorsch.

Wilson believed that there are crucial regional and social differences among Americans that lead to the need for decentralization. He writes (p. 49-51):

"our state governments are likely to become, not less, but more vital units in our system as the natural scope and limits of their powers are more clearly and permanently established...

"...Not only are the separate and independent powers of the states based upon real economic and social differences between section and section of an enormous country, differences which necessitate adaptations of law and of administrative policy such as only local authorities acting in real independence can intelligently effect; but the states are our great and permanent contribution to constitutional development. I call them a great contribution because they have given to the understandings upon which constitutional government is based an intimacy and detail, an adjustment to local circumstances, a national diversity, an immediate adaptation to the variety of the people themselves, such as a little country may perhaps dispense with but a great continent cannot...They have been an incomparable means of sensitive adjustment between popular thought and governmental method, and may yet afford the world itself the model of federation and liberty it may be in God's providence come to work...

"Constitutional government can exist only where there is actual community of interest and of purpose, and cannot, if it be also self-government, express the life of any body of people that does not consititue a veritable community. Are the United States a community? In some things, yes; in most things, no. How impossible it is to generalize about the United States!"

In his discussion of the presidential branch of the American constitutional system, Wilson emphasizes the Darwinian nature of government. Our government was founded by Whigs who, in his view, followed a Newtonian model. Rather, he argues (p. 57), "living political consitutions must be Darwinian in structure and in practice". The nature of the presidency depends on the individual occupying it, in Wilson's view. Although the Whig model is Newtonian, it is elastic. The Whigs who wrote the constitution may have believed that the president was only a legal executive, executing policy and applying the law. Instead, Wilson argues, the president had become "the leader of his party and the guide of the nation in political purpose, and therefore in legal action." The president must embody "the character and purpose (the public) wishes it to have". The president may still function as an executive, but he was becoming "more and more a political and less and less an executive officer" (p. 67). He is the leader of his party. "No one else represents the people as a whole, exercising a national choice; and inasmuch his strictly executive duties are in fact subordinated, so far at any rate as all detail is concerned, the President represents not so much the party's governing efficiency as its controlling ideals and principles" (p. 68).

The chapters on the House of Representatives, the Senate and the Supreme Court are all insightful and brilliant. He argues for an evolutionary view of the Court's role (p. 158-68):

"Expanded and adapted by interpretation the powers granted in the Constitution must be; but the manner and the motive of their expansion involve the integrity, and therefore, the performance, of our entire system of government...if they had interpreted the Constitution in its strict letter, as some proposed, and not in its spirit, like the charter of a business corporation and not like the charter of a living government, the vehicle of a nation's life, it would have proved a strait- jacket, a means not of liberty and development but of mere restriction and embarrassment. I have spoken of the statesmanship of control expected of our courts; but there is also the statesmanship of adaptation characteristic of all great systems of law since the days of the Roman praetor; and there can be no doubt that we have been singular among the nations in looking to the courts for that double function of statesmanship, for the means of growth as well as for the restraint of ordered method."

For me, a professor of management, the most intriguing chapter is the penultimate one on "the states and the federal government". Wilson writes that (p. 173):

"It is clear enough that the general commercial interests, the general financial interests, the general economic interests of the country were meant to be brought under the regulation of the federal government, which should act for all; and it is equally clear that what are the general commercial interests, what the general financial interests, what the general economic interests of the country is a question of fact, to be determined by circumstances which change under our very eyes, and that, case by case, we are inevitably drawn on to include under the established definitions of the law matters new and unforeseen, which seem in their magnitude to give to the powers of Congress a sweep and vigor certainly never conceived possible by earlier generations of statesmen, sometimes even almost revolutionary even in our own eyes...

"Almost every great internal crisis in our affairs has turned upon the question of state and federal rights. To take but two instances, it was the central subject-matter of the great controversy over tariff legislation which led to attempted nullification and of the still greater controversy over the extension of slavery which led to the war between the States...

"The principle of the division of powers between state and federal governments is a very simple one when stated in its most general terms. It is that the legislatures of the States shall have control of all the general subject-matter of law, of private rights of every kind, of local interests and of everything that directly concerns their people as communities, and that Congress shall have control only of such matters as concern the peace and commerce of the country as a whole." (p. 175)

"Which parts of the many sided processes of the nation's economic development shall be left to the regulation of the States, which parts shall be given over to the federal government? I do not propound this as a mere question of choice, a mere question of statesmanship, but also as a question, a very fundamental question, of constitutional law...

"...The war between the States established at least this principle, that the federal government is, through its courts, the final judge of its own power...Its power is to 'regulate commerce between the States,' and the attempts now made during every session of Congress to carry the implications of that power beyond the utmost boundaries of reasonable and honest inference show that the only limits likely to be observed by politicians are those set by the good sense and conservative temper of the country...

"The proposed federal legislation with regard to the regulation of child labor affords a striking example. If the power to regulate commerce between the States can be stretched to include the regulation o flabor in mills and factories, it can be made to embrace every particular of the industrial organization and action of the country. The only limitations Congress would observe, should the Supreme Court assent to such obviously absurd extravagances of interpretation, would be the limitations of opinion and circumstance...

"...Uniform regulation of the economic conditions of a vast territory and a various people like the United States would be mischievous if not impossible. The statesmanship which really attempts it is premature and unwise. Undoubtedly the recent economic development of the country, particularly the development of the last two decades, has obliterated many boundaries, made many interests national and common, which until our own day were separate and local....

"The United States are not a single, homogeneous community. In spite of a certain superficial sameness which seems to impart to Americans a common type and point of view, they still contain communities at almost every stage of development, illustrating in their social and economic structure almost every modern variety of interest and prejudice, following occupations of every kind, in climates of every sort that the temperate zone affords. This variety of fact and condition, these substantial economic and social contrasts, do not in all cases follow state lines. They are often contrasts between region and region rather than between State and State...

(p. 182)"We are too apt to think that our American political system is distinguished by its central structure, by its President and Congress and courts, which the Constitution of the Union set up. As a matter of fact, it is distinguished by its local structure, by the extreme vitality of its parts. It would be an impossibility without its division of powers...America...has come to maturity by the stimulation of no central force or guidance, but by an abounding self-helping, self-sufficing energy in its parts, which severally brought themselves into existence and added themselves to the Union...Communities develop not by external but by internal forces. Else they do not live at all. Our commonwealths have not come into existence by invitation, like plants in a tended garden; they have sprung up of themselves, irrepressible, a sturdy, spontaneous product of the nature of men nurturing in free air.

"It is this spontaneity and variety, this independent and irrepressible life of its communities, that has given our system its extraordinary elasticity...The distribution of the chief powers of government among the States is the localization and specialization of Constitutional understandings; and this elastic adaptation of constitutional processes to the various and changing conditions of a new country and a vast area has been the real cause of our political success.

(p. 186)"No two states act alike. Manufacturers and carriers who serve commerce in many States find it impossible to obey the laws of all, and teh enforcement of the laws of the States

As I have previously blogged, what intrigues me most about Wilson is his emphasis on the potential for states' rights as a biological evolution out of what in his view was the mechanistic federal system. Sadly, his ideas were ignored by the subsequent Republican administrations, which were conservative (i.e., Harding and Coolidge) and conservative-progressive (Hoover). Roosevelt's reforms made government too rigid to adopt Wilsonian progressivism with respect to decentralization. Subsequently, conflicts concerning civil rights made it impossible and inappropriate to give weight to his ideas (as my friend Norma Segal has pointed out, Wilson's upbringing was very much pro-Confederacy and Wilson stands accused of racism (see Jonah Goldberg's article in the Christian Science Monitor.

Wilson's emphasis on the importance of evolution of government puts him in the same category as the other progressives, but today's conservatives have largely adopted the progressivism that Wilson pioneered. The ideological differences between Taft and Wilson versus today's "conservatives" are non-existent. Wilson had at least the familiarly with Burke as any conservative of today and was enamored of Burke. He repeats Burkean ideas throughout this book. Today's conservatives are progressives, not conservatives in the 19th century sense. Today's libertarians are much closer to that. For instance, today's conservatives have adopted a Keynesian monetary stance. No 19th century conservative, including Wilson, would have supported abolition of the gold standard. Keynesian economic ideas, which were advocated throughout the 19th century, were crackpot to 19th century conservatives. Today's conservatives have backed Keynesian presidents since Richard M. Nixon in 1971. This is not progress. It is stupidity.

Wilson's emphasis on state's rights has important implications for today's political milieu. We have forgotten his insights and Wilson scholars do not emphasize them. But similar kinds of ideas are well known in the management field

Tuesday, April 29, 2008

Karkhanis Blasts Professional Staff Congress

Sharad Karkhanis, who has been attacked in a Professional Staff Congress (PSC)-related law suit, has just released his latest newsletter, Patriot Returns. Karkhanis offers brilliant coverage of David Seidemann's case, about which Candace de Russy and I have blogged. The Chronicle of Higher Education has also covered the case. Karkhanis notes:

"Convinced that the PSC had treated agency-fee payers unfairly, David Seidemann, a Yale educated full professor of Geology at Brooklyn College, has been patient and tenacious in seeking justice. Since 2002, he's amassed voluminous documentation, collected and examined all relevant information and legal precedents, and pursued the PSC with the tenacity and conviction of an irate faculty member. Seidemann sensed that there was some hanky panky going on with his and your hard-earned dollars. The 1% of our gross salary that goes to union dues or agency fees should be spent for our benefit rather than being diverted to further the New Caucasians' political agenda."

Karkhanis asks:

"Our question is, although permissible in the eyes of the law for the union to spend monies to march, parade and shout out loud to bring pressure on the management on behalf of the dues paying members, how germane is it for the PSC to spend dues money on excessive participation in such activities?"

See the entire blog here. The PSC leadership has spent its time on anti-Iraqi War crusades while neglecting its function of representing faculty. Barbara Bowen and her colleagues have failed CUNY's faculty.

Are Left-Wing Speculators Causing the Run-Up in Fuel Prices?

A friend who is interested in gold and commodity investing just questioned whether well-heeled left wing or Democratic speculators might be causing a run-up in oil prices as part of a concerted anti-Republican campaign. I wonder if that argument has any merit. Is there an ideological component to the recent run up in oil prices?

Keywords: George Soros, Hollywood, oil prices, speculation, Republican Party, presidential campaign

Global Food Crisis Caused By Federal Reserve Bank

In a recent American Thinker post (hat tip Larwyn), JR Dunn is right to be concerned about potential United Nations and governmental interference in the food market, but in his capable discussion of causes of today's food shortages Dunn omits the fundamental cause: economic distortion or malinvestment for more than a decade due to the Federal Reserve Bank's monetary expansion. Those of us who remember the 1970s recall that the Nixon administration's monetary expansion's resultant price inflation was blamed on OPEC and oil prices. Dunn commits a similar fallacy and blames current food shortages on a litany of proximate causes,such as ethanol, which while important are not fundamental. Dunn is right that ethanol is a mistake that causes food shortages, but it is not the only mistake. For the past fifteen years, from America to China, economic resources have been diverted away from commodity and food production toward real estate investment and construction. In China, farmers have been uprooted to build dams and cities. In America, farmers have sold land to real estate developers. This amounts to malinvestment of artificially created credit. Now there are food shortages. The beneficiaries of the monetary expansion primarily have not been oil producing governments but Wall Street, hedge fund managers, real estate developers and the commercial banking system. Those who pay are those who cannot afford food now, those in dire poverty. Warren Buffett, George Soros and the new residents of Greenwich, Connecticut have waxed rich at the expense of those starving to death now.

Food shortages occur only if demand exceeds supply and supply cannot adjust. Several things can increase demand. These include the factors that Dunn enumerates in his blog: ethanol and the like. But in a free economy supply will expand to meet the higher demand. Supply shocks can be handled over a few year period. If this does not happen it is because there are blockages. None of the factors that Dunn enumerates explain the failure of farmers to anticipate or respond to shortages. Yet most economic theory suggests that firms are rational enough to at least approximately do this. What would explain farmers' hyper-irrationality? Distortion or malinvestment.

Worse, Dunn's analysis overlooks increasing prices across a range of commodities, not just food and oil. Gold has more than tripled in price in the past four years. Copper and other construction materials, rubber for instance, have increased since the millenium. The factors that Dunn enumerates do not explain an across-the-board increase in commodity prices. Does ethanol explain a three-fold increase in the price of gold?

Moreover, Dunn's discussion of OPEC omits the force of mistrust. OPEC has found it difficult to act in unison because of what game theorists call the prisoner's dilemma: economic actors find it difficult to act in unison in their own self interest when any one member can make side deals to sabotage collusion. That is why OPEC failed in the 1970s. Today, a broader swath of nations produce oil, so trust will be considerably less than it was then. Higher prices would motivate players to go behind the backs of their collaborators.

Dunn is correct to argue that the relationship between politics and food should be severed. But he omits the fundamental cause of the global food shortage: malinvestment away from commodity production toward real estate and stock market investment. This follows directly from Alan Greenspan's and Ben Bernanke's monetary policy, which is necessarily the cause of all general inflation.

Community, Progressivism and the States

Woodrow Wilson advocated states' rights as part of his progressive philosphy. In his book Constitutional Government in the United States, first published in 1908 and still considered a classic in the political science field, Wilson argues for the importance of the states. The model of centralized federal authority was a product of the two Roosevelts, not of Wilson, despite his inadvertent contribution by creating both the income tax and the Federal Reserve Bank. Theodore Roosevelt, the most statist of all of our presidents, argued for integration of government and business. Franklin Roosevelt extended state power in numerous areas, most importantly by abolishing the gold standard.

Despite the twentieth century's centralization of power, Wilson understood the importance of local government to community. Excessive centralizaton overlooks the importance of community and so is anti-democratic. Since the primary thrust of the New Deal was such centralization, it was at odds with the progressive era's emphasis on democracy, or at least Wilson's version of it.

Wilson writes (pp. 50-1):

"Not only are the separate and independent powers of the states based upon real economic and social differences between section and section of an enormous country, differences which necessitate adaptations of law and of administrative policy such as only local authorities acting in real independence can intelligently effect; but the states are our great and permanent contrbiution to constitutional development. I call them a great contribution because they have given to the understandings upon which constitutional government is based an intimacy and detail, an adjustment to local circumstances, a national diversity, an immediate adaptation to the variety of the people themselves, such as a little country may perhaps dispense with but a great continent cannot...They have furnished us with an ideal means of integrating a vast and various population, adapting law to changing and temporary conditions, modulating development and permanently securing each item of progress. They have been an incomparable means of sensitive adjustment between popular thought and governmental method, and may yet afford the world itself the model of federation and liberty it may in God's providence come to seek...Constitutional government can exist only where there is actual community of interest and of purpose, and cannot, if it be also self-government, express the life of any body of people that does not consitute a veritable community. Are the United States a community? In some things yes, in most things no. How impossible it is to generalize about the United States."

Big business has likely pressed for centralization, and it is likely in the interest of big business to have consistent regulation and policy across the states. But big business has exited the nation. Manufacturing has moved to Asia and Mexico. The remaining large firms often do not pay high wages. Do the American people owe a favor to the firms that have not been interested in supporting them? Moreover, the problems that confronted big business in decades past have been modified, reduced and eliminated by technology. The coordination of separate regulatory, accounting and legal systems today is far from the problem that it was in the 1930s and 1940s. Integrated computer systems make compliance across diverse regulatory systems simple. Thus, large firms will suffer little from decentralization. Moreover, given the globalization of business and the eagerness with which firms have entered foreign countries with diverse regulatory systems, it is difficult to understand why adding more diversity will pose much of a problem to them, or given the eagerness with which firms have adjusted to diverse regulatory systems they can properly claim that they are an impediment here in the United States.

Monday, April 28, 2008

Toward Separate American Communities

Woodrow Wilson argued that America ought to become a community that is united by common belief. However, Wilson did not anticipate the brokerage of special interest coalitions engendered by the expansive state. Instead of a community of interests, the expansion of the welfare state resulted in heightened factionalism to a degree unforeseen by Madison and the founders of the American constitution. The factionalism is in large part economic. The Federal Reserve Bank has served as a redistributive, extractive mechanism by which wealth is taken from workers and savers and redistributed to investment bankers. This is accomplished with the full support and flourish of the New York Times and the mass media in the name of rationalization of credit markets and similar vacuous phrases. The brokerage of coalitions and privilege extends to almost all facets of state and federal government. It is related to the passage of every law. It imbues the very substance of the American system. Under New Deal Progressivism, America has not become, as Wilson envisioned, a community of shared interests, but rather a land where various minorities wage economic war on the majority.

Progressivism entailed an increase in executive power and a reduction in the power of the states. It depended upon the federal government reflecting a popular will. But today, the popular will is fractured not only by economic but also by severe political criteria. The liberalism of Roosevelt has, for many, turned out to be a failure. The states where the New Deal has been taken to its furthest extremes, such as New York, are the dying states. Yet, the mass media cling to the New Deal paradigm as any reactionary clings to his fossilized ideology.

Many Americans have renewed their faith in traditional American values and adopted a conservative position that evolves from twentieth century progressive-liberalism. The conservative position finds that the ideas of the nineteenth century had more substance than the old Progressives thought. It finds that markets are required for flexibility and progress. It also finds that new ideas cannot be adopted by government rooted in special interest privilege.

The competition between the forces of conservative progress and the forces of progressive-liberal reaction is bitter. There can be no community of interest in a society where one half of the public hates the values of the other; where progressive-liberals reject the conditions for progress, i.e., markets and the entrepreneurial creative destruction; and where progressive-liberals hold their own country as well as conservatives in contempt. Likewise, it is unfair to those progressive-liberals who would like to be subject to government control; who want the guidance of a powerful executive leader and do not care about the independence of entrepreneurship and self employment to have freedom thrust upon them. It is unfair to ask progressive-liberals who need social and political guidance to think for themselves.

The solution to this dilemma of war of all against all, of economic interest against economic interest, is separation. A separation of state powers to enhance competing models. Through competition the states can serve as laboratories of experiment for both conservative and progressive-liberal ideas. A libertarian state can be juxtaposed to one that is progressive-liberal. Differing ideologies and the mutual contempt in which the advocates of liberty and the advocates of state power hold each other need not be brought into overt conflict. Instead, let them separate. Let them experiment. Let us see which state flourishes: the state that extols private use emininent domain, central banking and government intervention; or that state that dispenses with these institutions, views them as failed and frees entrepreneurial talent from government control. Will the anarchic state or the totalitarian state flourish? It is only through experiment that the answer can be found.

The separation of power into separate states would have advantages beyond the role of experimentation. The brokerage of special interests would be diminished with more local control. Special interest pleading depends in large part on asymmetry of resources and organization costs. As political entitites diminish in scope, the asymmetries become smaller and the advantages of wealth and concentrated power diminish as well. Perhaps progressive-liberalism will perform to a better degree should it cover a smaller geographic expanse. Perhaps European states manage themselves more professionally because of their smaller scale and lesser concomitant corruption.

The New York Times on Ben Bernanke, June 20, 1913

The New York Times wrote an article on the McAdoo-Owen-Glass Banking bill, which became the Federal Reserve Act, on June 20, 1913. The Federal Reserve Act was passed in December of that year. The Times wrote:

"Banking and politics would be one. All experience forbids us to assume with any degree of confidence that appointments made by the President and confirmed by the Senate would be made with that careful attention to the need of securing fit and experienced men which the great importance of the banking business and its delicate and easily disturbed relation to the industries of the country so urgently require. We know that our Government is one of the least efficient, most wasteful and loosely conducted of the great business institutions of the country. And into such incompetent hands it is proposed to intrust the control of banking upon which all other business is so intimately dependent. Loans upon the security of farming lands are provided for. Does anybody suppose that the policy of the Federal Reserve Banks or of the Federal Reserve Board would in this particular be determined with entire indifference to the farmer vote? Or that in Congressional or Presidential campaign years the regulation of the discount rate or the determination of banking policy in general would be decided on by minds taking no thought of political ends to be gained? The germinal principle of the bill appears to be distrust of banks and bankers. We may assume that not only financiers and bankers, but business men generally will take sober thought concerning the centralizing features of the bill and the spirit and the policy which have inspired it."

Woodrow Wilson's The New Freedom: Hoisted By His Own Petard

Woodrow Wilson, The New Freedom: A Call for the Emancipation of the Generous Energies of a People. Englewood Cliffs, NJ: Prentice-Hall. Classics in History series. 173 pages. $1.95.

Woodrow Wilson was a Mugwump and was, according to Frank E. Leuchtenberg's introduction to this book. an advocate of liberal (libertarian) ideas until he was elected governor of New Jersey. Even then and thereafter much of his rhetoric is couched in the philosophies of individualism and laissez faire. This book is a compilation of articles in a magazine called World's Work that Wilson wrote in 1912 (the original edition was published in 1913) when he was campaigning for president against Theodore Roosevelt (running on the Progressive Party ticket) and William Howard Taft. The Republican vote was divided between Roosevelt and Taft, and Wilson, a Democrat, won.

Unlike the Republican Theodore Roosevelt, who argued for close government regulation and licensure of "trusts", Wilson argued for a loose regulatory regime. Wilson passionately believed in entrepreneurship and the importance of Americans' working for themselves. Arguably, he was more free market and individualist in orientation than any post-New Deal president, including Ronald Reagan. Of the major post-World War II political figures only Barry Goldwater would have been more interested in economic freedom. It is ironic that Wilson inadvertently did as much as any president to stall economic freedom and laissez faire during his administration notably thorugh the installation of the federal income tax as part of the United States Revenue Act of May 1913 and the Federal Reserve Act in December 1913. It is noteworthy that the federal income tax was an addendum to a tariff reduction bill (the Revenue Act of 1913)that reduced tariffs to their lowest levels in more than 50 years. Moreover, the income tax applied to only one percent of the population (those couples earning over $4,000 per year) and had been authorized by the Sixteenth Amendment, also ratified in 1913. The top rate of 7% was payable by those earning over $500,000 per year, which would be equivalent to more than $10 million per year today.

As much as any man's, Wilson's career reflects human inability to foretell the future or to grasp the facts. Wilson saw the trusts (not so much big business as the conglomerate trusts) as a threat to human freedom. He believed that government subsidies to big business, to include tariffs and land grants, permitted inefficient trusts to flourish. Wilson believed that the kind of close regulation of the trusts that Roosevelt advocated in the 1912 election would have resulted in regulatory capture of government by business. He believed that access to credit should be democratized and likely believed that establishment of the Federal Reserve Bank would loosen the control of credit by big business and Wall Street and improve availability of credit to entrepreneurs. He saw progressivism as a way to protect the rights of entrepreneurs and small business. He did not anticipate that special interests would capture Fed policy and he did not anticipate that the Federal Reserve Bank would serve to narrow access to credit ever further.

Although Wilson argues for greater government assertiveness with respect to monopoly and the trusts, he does so in a way that emphasizes the importance of eliminating government intervention on behalf of the trusts and favoritism by government. In his essay "What Is Progress?" he argues that (p.36) "the laws have not kept up with the change of economic circumstances" and that the law had not adjusted to changes in business, but he is not overly aggressive, and somewhat obfuscatory, about the changes that he would have proposed. He argues (p. 40):

"I believe, for one, that you cannot tear up ancient rootages and safely plant the tree of liberty in soil which is not native to it. I believe that the ancient traditions of a people are its ballast...You must knit the new into the old...If I did not believe that to be progressive was to preserve the essentials of our institutions, I for one could not be a progressive."

Wilson's writing illustrates that progressivism was in large part empty of meaning. Roosevelt argued that progressivism meant that there should be centralized control and direction of industry. Wilson argued that progressivism meant the protection of the man on the make from big business and monopoly. Both called themselves "progressives". Wilson opposed tariffs and argued that they interfere with business competition. Roosevelt favored protection and government integration with big business. Wilson, unlike Roosevelt, was no friend to privilege for business, and he criticized Roosevelt for his close link to George W. Perkins, organizer the US Steel and International Harvester trusts (p. 117).

In his essay "The Old Order Changeth" Wilson illustrates the progressives' interest in "the new". Progressivism is the ultimate modernist philosophy. He writes (p. 20):

"We have come upon a very different age from any that preceded us. We have come upon an age when we do not do business in the way in which we used to do business...You know what happens when you are the servant of a corporation. You have in no instance access to the men who are really determining the policy of the corporation...Your individuality is swallowed up in the individuality and purpose of a great organization."

Yet Wilson does not advocate breaking up big business or excessively regulating it. He was as suspicious of government welfare as of employment in big business. He was no New Dealer. Many of the reforms he advocated, such as workers' compensation and disclosure requirements associated with the issuance of financial securities (p.28) were barely more than changes that modernized common law principles rather than being intrusively regulatory. Wilson emphasized bringing "light" to bear on business practice in order to make the economy fairer. But the remedies he proposed were not intrusive to the operation of business. On the other hand, they have not succeeded in his objectives. For as the late 1990s illustrated, unscruplous businesses can find their ways around regulations; and disclosure requirements are not protection against fraud. But having such requirements is not overly burdensome to business and likely encourages stability in the markets.

He argues vigorously for the importance of the entrepreneur and individual enterprise (p.26):

"The originative part of America, the part of America that makes new enterprises, the part into which the ambitious and gifted workingman makes his was up, the class that saves, that plans, that organizes, that presently spreads its enterprises until they have a national scope and character--that middle class is being more and more squeezed out...what alarms me is that they are not originating prosperity. No country can afford to have its prosperity originated by a small controlling class...There has come over the land that un-American set of conditions which enables a small number of men who control the government to get favors from the government; by those favors to exclude their fellows from equal business opportunity; by those favors to extend a network of control..."

Perhaps the most telling paragraph in the book is on page 56:

"For my part, I am very much more afraid of the man who does a bad thing and does not know it is bad than of the man who does a bad thing and knows it is bad; because I think that in public affairs stupidity is more dangerous than knavery, because harder to fight and dislodge

Wilson established an income tax to compensate for the repeal of tariffs. At the time, he thought the top rate for those making over $10 million in today's dollars was 7%. He established a Federal Reserve Bank thinking that it would democratize credit. Within twenty years the Fed had caused the Great Depression and within 50 years both the Fed and the income tax had become the government's chief tools to suppress individual initiative, to steal from the populace to further the aims of elitist liberals who depend on a monopoly of power, and to suppress entrepreneurship. His legacy was hoisted by Wilson's own petard.

Americans Should Be Free to Choose Their Currencies

An economist named James Galbraith was just on Bloomberg television telling viewers that a raise in interest rates would be catastrophic because US borrowers would have to pay higher interest rates to foreign lenders were interest rates to be raised. This is half true. The half that Professor Galbraith omits is that this policy causes resources to be redistributed from the American people and foreign lenders to borrowers, namely Wall Street and big business. In his view, if commercial banks and Wall Street do not get to cheat foreign lenders and the American people (through inflation) then the situation is catastrophic. The only acceptable situation in Professor Galbraith's view is where Wall Street and big business steal from the poor and where borrowers cheat lenders.

Professor Galbraith's short term thinking is precisely why the American people are becoming poorer. If you cheat your lenders then they will not lend to you. If you subsidize borrowers at the expense of productive workers (through inflation) then productive work will disappear. There is nothing catastrophic about asking that dollars that have been borrowed be repaid in dollars that are still worth the same amount. James Galbraith finds this concept to be catastrophic.

The dialogue about the dollar is steeped in deception of the kind that Professor Galbraith offers. But until the twentieth century, Americans did not have to use the increasingly worthless greenbacks (they are not dollars) that the Federal Reserve Bank prints. We did not have to try to grasp the arguments of academic con men, Wall Street cheaters and perpetrators of banking fraud.

It is time to establish a competitive monetary system. Americans should be free to reject the greenback and to establish a true dollar based on criteria established through private contract. Competition with respect to money would reflect democracy and market freedom. Why not have free choice with respect to the money we need to accept? What virtue is there in being forced to accept mismanaged greenbacks? Why can't the states, private banks or private firms issue their own money? Why can't borrowers insist on being paid back in gold as some did in the nineteenth century?

Cognitive Limits on Progressivism

The limitations of progressivism are illusted in the limitations of progressivism's advocates, such as Peter Levine. Progressivism purports to reform the economy, but progressivism's advocates are not well-schooled in economic problems and constraints. Considerations that need to be integrated in fundamental thinking about society are the unforeseen effects of policy changes; the evolution of technology to render a given set of economic arrangements obsolete in shorter time frames than it takes to implement government reforms that work; the ability of individual employees and entrepreneurs to integrate information more flexibly and intelligently than can experts or central planners; the inability of deliberative processes to anticipate market and technological change; and the inability of deliberators to assess the true costs and benefits of the very changes they propose at the time and place that they propose them. Progressivism assumes unbounded rationality on the part of planners and executives. Yet, planners and executives err more often than they succeed. Progressivism does not anticipate the failure of the firms, technologies, reforms and policies that it proposes, so by definition it results in the institutionalism of antiquated and outdated process, technologies and ideas. There is little that can be new in the ideas that progressives propose; and the reforms that they propose stall progress.

Progressivism aims for contradictory ends and so cannot achieve its purported ends. It aims to increase centralization of authority by enhancing government power. But democracy depends on public participation which in turn depends on decentralization of authority. Progressivism aims for increasing public voice. But it bestows the opportunity for unitary authority on a centralized power. How can such an ideology achieve anything more than tyranny?

Sunday, April 27, 2008

Barack Obama Is A Racist and, Worse, a Social Democrat and a Progressive

Howard S. Katz has just written blog that argues that Barack Obama is a racist:

"...Barack Obama is a racist. He sees white people through the prism of hate. He sees them in clichés...So now we know what the election of 2008 is really about. The Democrats may nominate a racial bigot who hates the large majority of the people in the country he is trying to lead. The campaign will be very simple. The Democrats probably won’t come right out and say it, but their position will be, “We hate America...

"I first met these people at Harvard in the late 1950s. The issue has nothing to do with black or white. They hate America because America is the country based on freedom. They are not liberals. Neither are they democrats (with either a lower or upper case “D”).

"The formal name of these people is Social Democrat. This was a movement founded in 1875 in Germany to prevent the ideas of freedom and democracy from advancing across the continent of Europe. In 1912, the Social Democrats took control of Germany and fomented W.W.I. Then another Social Democrat, named Adolph Hitler, fomented W.W. II.

"...This will be the Presidential campaign of 2008. The Democratic position will be, “We hate America.” The Republican position will be mealy-mouthed compromise. And the people of the world run around killing each other over the food which does not exist"

There is little doubt in my mind that Barack Obama represents a fringe element. There is also little doubt that the Democrats who back him, such as George Soros and Warren Buffett, are anti-American bigots.

Barack Obama and the Republicans

Following three decades of Republican complicity with leftist occupation of our educational system, these spring chickens are coming home to vote for Barack Obama.

Lance Fairchok of American Thinker has an excellent blog (hat tip Larwyn) about Barack Obama's advisors. Barack Obama is not just a befuddling liar. Most twenty-first century politicians can be so described. What distinguishes Mr. Obama is his close association with a catalog of extremists, to include his pastor, Jeremiah Wright, who is obsessed with identity politics, and William Ayers, a founder of the Weathermen in the 1960s.

As I have previously blogged, the close association between Obama and the identity politics fringe of the Democratic party is important because he will select high level staffers from among his extremist catalog. Fairchok performs a public service by pointing out that Obama is:

-supported Daniel Ortega in Nicaragua
-associated with Frank Marshall Davis who is in turn associated with the Communist Party USA
-has hired Sam Graham Nelson, a writer for Socialist Viewpoint, to run an Obama blog

None of this surprises. If you catalogued the staff members of the Democratic Party state assemblies around the country, or catalogued the leadership of various education departments around the country, you would find similar kinds of economic illiterates in important government jobs.

The problem is with the Republican Party as much as the Democratic. I attended a meeting of a Department of Education accrediting agency several years ago and was dismayed to find the Bush administration's Department of Education dominated by the very kind of extremists who would look to a Bill Ayers for guidance. Rather than terminate the Department of Education as any competent conservative would, three Republican presidents, Reagan, Bush I and Bush II, have used it as a patronage plumb and have permitted left wingers to dominate its culture.

Rather than insist that colleges teach more than the left wing version of social science, Republicans have remained mostly indifferent to the occupation of our universities by extremist kooks like Ayers.

Rather than appoint Diane Ravitch to an important policy position, the Republicans have remained silent as left wing indoctrination occurs in elementary schools around the country, specifically to include New York's. I am intimately familiar with New York's because I teach in a public New York university, and if you have any doubt that large numbers of New York City elementary school students have been brainwashed in stupid, Marxist lies rather than educated please allow me to quell your doubts.

The Republicans have remained silent while the left has occupied our cultural institutions. Instead of complaining, the Republicans have viewed the left wing imperialism as a foundation to expand patronage opportunities.

With Barack Obama, the chickens are coming home to roost. America's public has NOT been educated in the founding principles. The concept of limited government is alien to most American school children. The concepts of self reliance and individualism on which progress depends have been neglected. America's young believe that the way to succeed in life is to steal. As a result, they flock to the likes of Barack Obama and Hillary Clinton.

By its indifference to the domination of our political institutions by left wing thugs and criminals the Republican Party has fostered the situation.

Eliot Spitzer and the Progressive-liberals

There is a distinct parallel between the short career of Eliot Spitzer and the history of progressive-liberalism. Eliot Spitzer claimed to be for morality and to hate money laundering, but instead he was philandering with hookers and engaging in money laundering. The progressive-liberals claim to be interested in helping the poor, but instead they harm the poor in the interests of their professions, universities, banks and business. Like progressive-liberals in general, Eliot Spitzer did the direct opposite of what he claimed to be doing. He did it, as progressive-liberals do it, for self-aggrandizement and personal gain.

One Problem the Republicans Need to Address

Please press the downward arrowhead on the right of the toolbar and the "+" in the dropdown menu to make the chart larger.

Read this doc on Scribd: Household Income

One problem that Republicans need to address is declining American household income. According to the Census Bureau real household income declined between 2000 and 2003. The reason is inflation. Flat and declining real family incomes have been characteristic of the American economy since Richard M. Nixon finally abolished the gold standard for foreign dollar holders in 1971. Nixon's decision was very much in the tradition of New Deal progressive liberalism and followed FDR's earlier abolition of the domestic gold standard in the 1930s.

Under George W. Bush and earlier the Repulicans have followed a progressive-liberal inflationary strategy. The Fed has created new dollars, transferring wealth to real estate developers, bankers and Wall Street (to include hedge fund managers, Warren Buffett and George Soros). In the late 19th century increasing real household income was coupled with low profits and non-increasing stock market valuations. The business community did not like this situation and claimed that there were depressions in every decade, in the 1870s, 1880s and 1890s. But real incomes were increasing throughout the post Civil War period despite massive immigration, and in 1913 real wages were considerably higher than they were 20, 30 or 50 years earlier. In 1913, the Wilson administration established the Federal Reserve Bank.

Since World War II stock market valuations have soared while real household incomes have remained flat. During the past ten years the American public has borrowed more extensively than at any point in history, cloaking its impoverishment through debt. Productive workers have been punished through the income tax and creeping inflation while speculators and borrowers have been rewarded by seeing their loan values diminished through inflation.

A nation that rewards speculators and punishes producers will not remain wealthy forever.

The American people have been slow to realize that they are poorer than before and that personal wealth has not grown as it had before President Nixon abolished the gold standard in 1971 and before the Wilson administration established the Fed in 1913. Notice that both Wilson and Nixon claimed to be for limited government.

However, the public has begun to realize that something is wrong. Unfortunately, George W. Bush has behaved as a progressive-liberal and argued for increasing Fed activism.

The choice between the two major parties is: 1. Party (a) inflation. 2. Party (b) inflation. Both parties advocate inflation and so aim to impoverish America. Perhaps it is time for Republicans to wake up and shed the pro-government platform of Bush, Huckabee, Reagan and Nixon that has led to declining household income and massive private and public indebtedness.