Friday, September 4, 2009

Town of Olive Conservative Caucus Nominates Vince Barringer

I attended the Town of Olive Conservative Caucus last night in the Town of Olive Justice Court on Bostock Road. The most remarkable thing about that building is that the men's rooms have two wooden doors. You open the rickety wooden door to the men's room and there's a small ante-room and then you open a second rickety wooden door.

The Town of Olive has a split personality. The Conservative Party has about 85 members and gets about 10 percent of the popular vote in the town. But the town is no longer Republican as it once was. In the late 1980s, I am told, the Republican majority became Democratic as immigrants from New York City, owners of weekend houses, rock stars (no kidding) and other Democrats moved to Olive. Thus, there is a split personality, with a large chunk of the population descendants or long time residents and a large chunk consumers of granola and yogurt. As in New York City, many of the Republicans are left of the Democrats, but the Conservatives can play a decisive role. The candidates need to seem conservative on fiscal issues but liberal on environmental and lifestyle issues. There is a healthy competition for the Conservative Party nod because of the area's split personality.

All of the town's incumbents are Democrats. The Democrats enjoy roughly a ten percent lead in enrollment. The Democratic town supervisor, Berndt Leifeld, has been supervisor since 1988, according to the Olive Press. Timothy Cox, an attorney with the Catskill Watershed Commission and a former Republican, is running for town justice. Bruce Lamonda (who I know from the Emerson Inn and Spa's workout room) and Linda Burkhardt are running for town council and Jim Fugel, who turned down a cross-nomination from the Republicans, is running for highway supervisor. Running unopposed is Sylvia Rozzelle for town clerk. The Democratic candidates are all worthy. However, Republican challenger Vince Barringer makes an excellent point: Leifeld has been serving for over 20 years and is the highest paid town supervisor in Ulster County and among the highest paid in the State. This is excessive given that the Town of Olive is a small town, with less than 4,000 residents.

The Conservatives gave the nod to most of the Republicans, and this was a positive step as their support was not given. Barringer got the Conservative Party nod for town supervisor. Two charming and capable Republicans, both excellent candidates, Don van Buren and Craig Grazier, got the nod for town board. But the compassionate and insightful Earla van Kleeck was nudged out by Tim Cox. Van Kleeck is a good candidate and has an excellent shot at town justice. The Republican candidate for highway supervisor, Chet Scofield, was unable to attend the caucus and was nudged out by Democratic incumbent Fugel.

The candidates spoke to about 20 Conservatives and roughly an equal number of observers, of whom I was one. One of the interesting phenomena of a small town is that the politics are a little less subtle than in Albany or New York City. Two of the Democratic candidates' children are enrolled Conservatives and one of these began to aggressively disrupt and argue when the Republican candidate for town supervisor, Vince Barringer, was speaking. Nevertheless, I thought the Conservative caucus meeting was very well run and the outcome overall is positive for the Republican cause.

Wednesday, September 2, 2009

Tax Slaves in the Town of Olive

The American Association of Retired People reports that there will be no social security increase next year for the first time since 1975. The reason is lack of inflation or deflation. I was previously wrong about this, predicting continued inflation. The reason for the deflation has been credit contraction. The new reserves that the Federal Reserve printed have not yet been lent. When they are, inflation will resume.

Nevertheless, for deflation we see remarkable phenomena. The price of food has been rising. Gasoline now sells in the high two dollars or low three dollars per gallon. The New York City subway recently raised its price. That is a curious set of events for a "deflation". Of course, New York State and local taxes are on the rise. I guess state and local governments have not been reading the propaganda of the New York Times, which incidentally, raised its prices too.

Here in the Town of Olive in the Socialist State of the Empire school taxes were raised about 5 percent and the school budget was raised by a similar amount. It is remarkable that in a deflation the cost of education has been increasing. Berndt Leifeld, the Town supervisor, has not provided data about education results in Olive. I would think that if school costs are rising, educational outcomes are rising too. I'm sure the high school students are reading Cicero these days rather than playing Nintendo or Mafia Wars. The extra 5% in the school budget has unquestionably been well spent. Mr. Leifeld seems to have forgotten to ask the school board to publish statistics on education outcomes. There seems to be a transparency problem in Town government.

One of the local residents has seen his taxes rise 5%, but he lives on social security which has not increased. Therefore, he can no longer afford to live in his house. It seems that the Town of Olive does not follow the inflation principles of the Social Security administration.

The American system of government is one of gradual enslavement. The masters of the slaves are vested special interests who manipulate government: incompetent government employees; educational institutions that do not educate but demand higher wages; and, of course, ever worse management and ever higher taxes. But who puts the masters in place? The slaves themselves.

Let it be said that Americans are the first people who have willingly, as a society, enslaved themselves, appointing their own masters and depriving themselves of property by democratic vote in order to subsidize their masters. We live in a nation of slaves, with slave minds and slave attitudes. This is no longer a free country.

I Told You So

During last year's presidential campaign I came to the conclusion that Barack Hussein Obama was the spiritual successor to George W. Bush and that the best way to continue Bush's policies was to elect Obama. Obama claimed that he would turn around the economy and end the Iraqi War, the two glaring areas in which President Bush demonstrated his incompetence. Especially with respect to these two areas Mr. Obama's promise was "change".

The concept that President Obama represents "change" with respect to the economy is illustrated by his recent reappointment of the architect of President Bush's economic policies, Ben Bernanke. Mr. Bernanke is the best friend Wall Street ever had, and it seems obvious from Mr. Bernanke's reappointment that President Obama is Wall Street's president. With respect to Iraq President Obama reappointed another Bush appointee, Robert Gates. As well, he has done nothing to change the Bush policy in Iraq.

Perhaps we might consider the meaning of the word "change" to have been permanently bastardized. According to Obama, the meaning of "change" is to continue Bush policies, and add a few, like his absurd health reform proposal, that are even worse than Bush's.

One good result of the 2008 election: the American Democratic Party propaganda institutions can no longer be taken seriously. The propaganda system's aggressive support for Obama, a Bush clone, has not only made it into a laughing stock but has convinced us that the left can produce its own George W. Bush. Only Democrats and fools read newspapers or watch televised news.

Tuesday, September 1, 2009

You are Leaving Your Children the Husk: Politics, Debt Addiction and American Decline

I just had a long conversation with a friend in my neighborhood, Ulster County, New York. My friend owns a construction company that specializes in high-end residences. She advocates hyper-inflation and low taxes. The connection between her business and inflation is that debt is necessary to stimulate purchases of expensive houses. Monetary expansion is one and the same thing as debt expansion. The Federal Reserve Bank expands the money supply by increasing bank reserves (i.e., by purchasing government bonds from banks and depositing artificially created dollars in the banks). The banks lend out a multiple of the reserves, increasing the money supply. The new debt is used to build expensive houses, but the purchases of the materials for the new houses increases prices. Increasing prices spread through the economy as suppliers of suppliers face increased demand. The result is higher prices at the supermarket, and widespread wealth reduction for anyone who buys consumer goods. Inflation is thus a tax on all Americans in the interest of specific businesses and government that depend on debt. The biggest debtors are of course big, not small business. Examples are hedge funds and Wall Street. Government is the biggest debtor of all. Direct taxation "crowds out" spending on personal consumption in favor of the black hole of government waste. Inflation allocates consumption to the wealthy who can afford to borrow for expensive houses at the expense of those who buy at the supermarket check out.

The use of monetary expansion stimulates businesses that require debt at the expense of those that do not. Thus, expensive, big ticket items such as automobiles and houses are emphasized at the expense of smaller ticket items that you might purchase at a local fair, a supermarket or a boutique. Innovation of new technology that would not depend on debt for demand is replaced by real estate, investment and luxury markets. Returns to innovation become smaller in comparison with subsidized interests such as hedge funds. Income inequality results when merchandise that requires good credit is subsidized and risky innovation is discouraged. Things that people really need are not produced and instead things for which debt is available are produced. Inefficient businesses that do not reflect neutral demand but rather artificially induced demand are encouraged. Special interests accumulate that demand greater inflation. My friend, for instance, has invested in a construction company that depends on inflation. If inflation were to end, she would be ruined. Thus vested special interests that demand ever greater misallocation accumulate. Funds available for innovation diminish. The economy becomes rigidly committed to construction, real estate and automobiles, forgetting that but 15 decades ago suburbs and automobiles did not exist at all, and only came into being because of unpredictable, spontaneous innovation that social democracy has aimed to destroy since the days of Walter Weyl.

One of the effects of social democratic monetary expansion is to reduce demand for labor as debt for capital investment is made artificially available. Labor-saving machinery is made more readily available because interest rates are low. Therefore, demand for labor in capital intensive industries becomes weaker, resulting in stagnant wages. Also, expensive plant relocations to low wage nations are facilitated by low interest rates. Plant relocation is also a form of capital investment that artificially low interest rates stimulate.

There is considerable mal-investment in the American economy. My friend's construction firm is an example. Expensive house building is subsidized by low-wage consumers. The resources that could have gone into innovation and the creation of jobs to manufacture new products instead subsidizes expensive house building. There is only marginal demand for the expensive houses, so ever lower interest rates are needed to stimulate ever greater amounts of house building.

The same is true of Wall Street investments, hedge funds, and corporate takeovers. Printed money is made available to these special interests, who enjoy profits and a rising market as demand is initially stimulated through artificially low interest rates. The general public pays a tax to the wealthy via the Federal Reserve.

This system of allocation of wealth to wealthy interests is the product of the Democratic Party, specifically Woodrow Wilson, who oversaw establishment of the Federal Reserve Bank in 1913 and Franklin D. Roosevelt, who first abolished the gold standard in the early 1930s. However, the Republicans have also played an active role in establishing this system. President Richard M. Nixon abolished the gold standard in 1971 and Presidents Nixon, Reagan and Bush were aggressive inflationists.

Both parties, Democratic and Republican, are big government, interventionist parties. Both favor monetary creation to subsidize special interests. Both have favored Wall Street, commercial banking and corporate interests.

The problem with allocating wealth to special interests is that less productive investments are pursued at the expense of more productive. As less efficient firms accumulate, from Wall Street firms to real estate construction, waste becomes greater. The nation's wealth is extracted and new, innovative ways of using wealth are neglected because the rewards from innovation are diminished while the rewards of wealth extraction by banking, law and investment interests are expanded. Government work is subsidized while the work of factory supervisors and inventors is diminished. As wealth is squandered, the nation becomes poorer.

One of the ironic effects of this process is that the stimulated industries tend to be harmful to the environment. Thus, suburbs were created by Federal Reserve financed construction that far exceeded the demand that would have existed without subsidies from poorer Americans to suburban borrowers. The effect is enhanced use of the automobile, ever greater commutes and worse pollution.

As resources are squandered the technological model which utilizes them becomes exhausted. Innovation has been squelched so new technological advance does not occur. The result is national decline, stagnant or declining real hourly wages and declining opportunities for future generations.

The Federal Reserve Bank is impoverishing your children. But the interests who benefit are palpable, while the interests that are harmed, those who would benefit from unknown invention that would have occurred in the absence of the subsidies, cannot be identified. Public employees know who they are and form a powerful lobby. Beneficiaries of a yet-unknown cure for cancer or a new form of transportation are not known to themselves or anyone else.

This system is leaving future generations a husk. It is eating the corn without planting for the future. It is a reactionary, declining system.

Monday, August 31, 2009

Work Is for Chumps

In the nineteenth century Americans were taught to rely on themselves and to build a better mousetrap. Although we were much poorer then, progress was rapid. In the late nineteenth century, although the average American was more than twice as well off as at the beginning, there had been an expansion of government related to the growth of big business (this began with the Dred Scott decision, which asserted federal power to regulate the states) and, in large part due to the expanding press of that day, the public saw the affluence of corrupt big businessmen like Jay Gould and John D. Rockefeller as resulting from power rather than innovation. While there was a high degree of corruption then, though no more than there is now, the solution would have been to limit state power to grant land and benefits to private companies. Rather than follow that route, big business interests, reflected by Theodore Roosevelt and his advisers in the National Civic Federation, including George Perkins, a Morgan associate and executive of US Steel and International Harvester, convinced the public that increased government redistribution was necessary for a properly functioning economy.

The result was a ten decade long reduction in the rate of innovation. But Roosevelt-Wilson Progressivism wasn't enough. Theodore's cousin Franklin shifted the rhetoric of progressivism by introducing the rhetoric of fascist redistribution from rich to poor. Much like the Roman system on which fascism modeled itself, the New Deal aimed to shore up the wealthy but to do so in the cloak of free bread and olive oil. This was accomplished using the ideology of Keynesian economics and state activist "liberalism". Franklin D. Roosevelt's New Deal was a recreation of the Roman model of a state controlled, replicative system. Thus, the innovation that occurred after World War II took the "scale" concept that the 19th century had discovered using free market processes and applied it to a far greater degree. It was able to do this because of government subsidization and stabilization of big business. However, there were two effects that the American fascists in the Democratic Party did not want but could not avoid. First, the system caused the rate of innovation to decline. While in the 1960s Americans could still imagine flying cars (as in the children's cartoon "The Jetsons") today we are happy to get cash for clunkers. Second, the system eventually caused real wages to stagnate as it increasingly reflected special interest pressure on the Federal Reserve and banking system to redistribute credit from the innovative to the government, banking and big business sectors. This was also accomplished through high taxes (middle class Americans now pay half their income to the black hole of government waste) as well as Federal Reserve monetary expansion.

The result has increasingly been that those who create wealth are poorly paid and those who do consume it are well paid. That trend has been present since the creation of the greenbacks following the Civil War, and was also associated with both the First and Second banks in the early 19th century.

The result is that people who work hard and create wealth have seen their pay stagnate, while those who play the stock market, consume resources through law suits and are on the government payroll have seen their pay increase.

The election of Barack Obama is a reassertion of New Deal fascism and we can expect increasing efforts to redistribute wealth from those who work to those who do not. This is not a trend that a small number of hard working people can reverse. Ayn Rand had the solution in her book Atlas Shrugged: stop working.

Anyone who works to produce wealth in today's America is a chump. Go on government welfare. This is a socialist/fascist state. Only fools work hard.