Twin Peaks to Run on Showtime

In 2008 I opined that HBO should reprise Twin Peaks. Even better, Showtime has started to run ads saying that the show will run soon, presumably in 2017.   The idea wasn't mine--I got it from Laura Palmer, whose Black Lodge spirit promised to Special Agent Dale Cooper that she'd see him again in 25 years. That was back in 1991, so she was off by but a year.  Unfortunately, the show will run only as a limited series of  nine episodes.  My question is whether Hillary Clinton or Donald Trump will replace Frank Silva as Killer Bob.  Sadly, Silva, a stagehand whom David Lynch had discovered, died of complications of AIDS twenty years ago, in 1995. Either candidate can do a passable job.

Bernard Iddings Bell's Crowd Culture

I picked up a copy of Bernard Iddings Bell's Crowd Culture, which the Intercollegiate Studies Institute had sent me ten years ago when I had helped a student start an ISI chapter at Brooklyn College.  I hadn't heard of Bernard Iddings Bell before.  According to Wikipedia:

Bernard Iddings Bell (1886-1958) was born in Dayton, Ohio. After studies at the University of Chicago, he was ordained to the priesthood in the Episcopal Church USA. He served as dean of St. Paul's Cathedral, Fond du Lac, Wisconsin from 1912-1919. He was warden of Bard College from 1919 to 1933.

It is a short book, 136 pocket-sized pages, but it is a worthwhile one.   Bell is not a libertarian; rather, he is a social conservative critic of Progressivism. The book is based on lectures that he gave in 1952 at Ohio Wesleyan University, and the difference between then and now is stark.  I suspect Bell would not be allowed to speak on many college campuses today.

Two important points are his criticisms of the press or media and of secular humanism, which he calls a "nontheistic and merely patriotic Secularism."   He writes (p. 48):

There are many religions in America, no one of which has a right to monopolize the schools or to appropriate all the funds provided by taxation for the schools. But in our present school system, which has a professed desire to be fair to all faiths and to teach the peculiar tenets and practices of  none, all religions except one are in practice negated, and to that one religion is given monopoly care. The religion of the public schools is a nontheistic and merely patriotic Secularism.  The public schools, without its being generally perceived by those who direct the schools, have become, because of this monopoly advocacy, the most dangerous opponents of religious liberty visible on the American horizon.

However, Bell is not a libertarian (Ibid.):

Because of this, if we desire the preservation  of real religious liberty in the schools, each major variety of religion in America (including of course Secularism and Atheism) must not only have the right but be encouraged to conduct its own schools and to run them at public expense.   Such various schools must be and can be unified by rigorous public control in all matters except religious teaching.

A more liberty-oriented solution to America's dismally failed public education system is Milton Friedman's vouchers, with the public having zero control over the content taught in schools. Voluntarism and decentralization have more in common with traditional Americanism than Bell's solution.  I would also do away with laws that require children to stay in school to age 16. For many students, doing so is a waste of time and money.  Properly run schools would by grade four teach writing at a level that today's average college student has not attained by her senior year of college. (I use the female pronoun because most college students today are female; political correctness and lack of job opportunities have driven away male students.)  Today's college students are subjected to 12 years of ignorant preaching by badly educated, half-literate teachers in America's public schools. They graduate unable to read and write at a sixth-grade level.  Bell makes this point correctly, but he nevertheless conforms--the subject of his book--to Progressive norms.

Bell is in effect a Progressive who would replace atheism and crowd culture with Mathew Arnold's sweetness and light: poetry, the classics, and philosophy. Such pursuits are, Bell rightly observes, available only to a minority.  Thus, his criticism of Dewey is this: You are right to advocate public control, but you are wrong to advocate conformity to group norms and experimentation to derive policy.

Although, as Bell rightly observes, Dewey placed the crowd ahead of the individual, collective values ahead of individualist ones, and social adjustment ahead of individual achievement, at heart Dewey was an elitist. This is evident in his book The Public and Its Problems in which Dewey claims that the public can resolve public problems by hiring social scientists and allowing journalists free rein in painting of artistic portraits of the experts' observations for public consumption. That is very much an elitist argument, although it is cloaked in collectivist and democratic rhetoric. Dewey was a master at painting authoritarianism as a function of democracy, and he is part of the twentieth century's Progressive apologia for the mass murder that occurred under Progressivism's sister ideologies, international socialism, national socialism, and fascism.

In other words, Bell and Dewey have more in common than Bell admits because Bell does not reject Dewey's state authority, and Dewey does not reject Bell's elitism.  Rather, Bell would replace Dewey's elite of expertise with an elite of religious humanism.

In contrast, libertarians reject the state altogether; religious state control is no better than secular state control.  True diversity occurs without authority.  Each can find his own faith within himself and within the institutions to which his conscience directs him.

Moderation as Vacuity

Americans sometimes claim to be moderate in their views.  "I don't believe in abolishing the Fed, for I am a moderate," is an example.  Moderation means limiting change to a moderate distance from present policy. But what if present policy is extreme?  Franklin Roosevelt might have said: "I don't believe in ending concentration camps for Japanese Americans. I believe in a more moderate course." Andrew Jackson might have said: "I don't believe in ending my policy of banishing all Native Americans east of the Mississippi. I believe in the moderate course of extending the Indian Removal Act to just one more tribe."

Is moderation as a mere increment meaningful in the context of policies whose effects are devastating or reprehensible?

There are other possible meanings, though. Perhaps moderation underlies a claim that state action is not a moral but a pragmatic question. "Only extremists hold that theft is wrong under all circumstances. We moderates hold that taxing some to redistribute to others is a pragmatic course."  Here, however, the claim is contradictory. If  morality that prohibits theft is extreme, why is the morality that motivates redistribution of wealth not an extreme? If it is wrong to say that theft is wrong, why is right to say that income inequality is wrong?

Since all government action involves violence, and since the elimination of violence is a prerequisite to the foundation of civilization, all government action involves moral choice.  Choice about violence,murder, or theft is inherently moral, and all government action involves violence, murder, or theft. Therefore, all government action is extreme if  extreme  is to be defined as making state decisions on the basis of morality.

A third possible meaning of moderation is that it accords with the majority.  The majority in America believe the claims made on television and in newspapers.  The writers in these sources are not well educated, and they have demonstrated a repeated capacity for advocating erroneous courses of action. One example was the Vietnam War.  Another was, in New York City, the urban renewal policies of Robert Moses.  A third was the Iraqi War and the strategy behind it. A fourth is America's monetary policy.  Ancient Athens lost the Peloponnesian War because it chose to invade Sicily, a decision that was politically popular. America's disastrous invasion of Iraq was similarly popular, and I was among the mistaken supporters.

In other words, defining moderation as incremental decision making, pragmatism, or accordance with majority rule potentially leads to policies that are extreme.  A fourth definition is mathematically certain, but it is also self-contradictory and equally vacuous.  The ancient Greeks defined sophrosyne (σωφροσύνη)  as temperance or moderation in the sense of  being well balanced.  Aristotle spoke of a range of virtues such as prudence, justice, and courage as well as sophrosyne. Moderation, in Aristotle's view, is the mean between two extremes.  Courage is the mean between rashness and cowardice, for instance.

Perhaps moderation in state action can mean the mean between two extreme courses of action.  In this sense, though, current American policies are not moderate.  An economy in which public debt is in excess of $55,000 per man, woman, and child, forty-four percent of whom have no savings, is hardly a mean between two extremes. It is an extreme. The same may be said of monetary policy. The tripling of the money supply in 2008 and 2009 can hardly be called a mean between two extremes: Historically, monetary expansion of that magnitude has led to economic collapse. Nor can we say that a nation that subsidizes one industry, banking, to the extent that the US government has is taking actions that are the midpoint between two extremes.

Moderation can be defined as a small increment over current policy, pragmatism, majority rule, or the mean between two extremes, but none of these meanings is inconsistent with policies that are genocidal, horrific, radically redistributive,  or economically destructive.  Americans' claim that their choices are moderate, like their claim that they are free or their claim that they are prosperous, is a chimera.

The Minimum Wage Is a Vicious Policy

PO Box 130

West Shokan, NY 12494

September 24, 2015

The Honorable Kevin Cahill

One Albany Avenue

Kingston, NY 12401

Dear Mr. Cahill:

In the course of a project that I have pursued over the past few months, I have reviewed the contents of 540 academic articles in the three leading industrial relations journals: Industrial and Labor Relations Review, Industrial Relations: A Journal of Economy and Society, and Journal of Labor Research.  The field of industrial relations was established as a left-wing response to mainstream economics, and its support for the minimum wage was one of the key reasons.

Nevertheless, the majority of the studies that appeared between 2008 and 2013 found that the minimum wage is associated with increased unemployment.  That is not surprising because the majority of mainstream economists have long agreed that the minimum wage causes unemployment.   The reason is that an enforced wage floor above the market rate increases the supply of labor but reduces demand.  The reduction in demand comes about because employers leave the state; higher wages lead to higher prices and customers leave the state; moreover, employers find new production methods that reduce demand.  The reduction in demand forces unskilled labor into permanent unemployment and dependency.

Until 2014 Germany did not have a federal minimum wage.  Its youth unemployment rate has been half that of Great Britain.   Britain, which has had a lower minimum wage than France, has had a slightly lower youth unemployment rate than France.  France, with its suburbs or Banlieue overflowing with unemployed minority youth who live lives of desperation and violence, has the one of the highest minimum wages.

Until a few years ago the US minimum wage was low enough that modest increases had limited effect on unemployment. Nevertheless, Walter Wessels, an economist at North Carolina State University, realized that the minimum wage has led to a decline in training and the end of the great American tradition of working one’s way up from the bottom. That has occurred because in order to compensate for the minimum wage without layoffs, employers reduced what Wessels has called “fringe benefits”: training investments and other benefits.  They spend less on low-wage employees and they replace them with capital investment.  The result has been increasing income inequality because minimum wage employees are locked at the bottom.

At a meeting of the Labor and Employment Relations Association this past May, I asked a panel that was held concerning the minimum wage, including two of the zealots advocating the minimum wage here in New York, what the effect on business startups is.  The countries with high minimum wages are not famous for dynamic economies, innovation, or progress.  No one on the panel knew what the effects on innovation or startups will be.  Andrew Cuomo, the HUD chief who required that banks make subprime loans, may not be the best one to ask. 

The claim that the minimum wage is benevolent, progressive, liberal, altruistic, generous, or kind is false.   The minimum wage forces a section of the public into permanent unemployment and dependency.   The workers who cannot earn the $15 per hour that the minimum wage will require  are among the most vulnerable in society.  Compelling a large share of them to remain permanently unemployed and dependent on welfare because that’s what the SEIU and social democrats whose ideas have driven New York’s economy into the ground for the past century want is illiberal, reactionary, and vicious.   

Sincerely,

Mitchell Langbert

More on the Ulster County Railroad Dispute

Yesterday, I blogged about the Catskill Mountain Railroad dispute. This is an email that I sent to Senator James Seward:

Dear Senator Seward:

There has been an ongoing dispute between County Executive Mike Hein and the Catskill Mountain Railroad, which leases a railroad right of way that Ulster County bought about thirty years ago.  I have blogged about the dispute at  http://www.mitchell-langbert.blogspot.com/2015/06/an-open-bidding-process-is-needed-to.html  .  The best way out of the conflict is to introduce open bidding so that the party that can most efficiently use the right of way can acquire it through privatization at optimal gain to the county.  That can be accompanied with a tax credit to businesses local to the track, which have been hurt for a century by the Ashokan Reservoir and New York City’s predatory policies. 

The possible bidders are New York City, the existing railroad, and the railroad’s competitors, one of which has told me that it wishes to acquire the track.  The city has already offered a grant to fund removal of the track and replacement with a trail, but it is far from clear that the $2.5 million offer contemplates losses due to the ensuing depression in tourism.  In 2014, the existing railroad’s first good year, about 40,000 visitors came to the railroad.  This meant a million dollars in revenue. At three percent interest, the present value of lost [railroad] revenue of one million dollars per year into infinity is $33 million, but costs need to be subtracted. [In the email I omitted to mention that there may be as much as a $1 million annual loss-- an additional $33 million present value--to local diners, stores, and restaurants; that would reflect $25  in spending per visitor. The present value of the total loss may be closer to $20 million.]  A more complex estimate would need to determine what the value added to the county is; value added includes local wages and purchases of supplies from local businesses.  A $10 million price is probably closer to the value that the city should pay to remove the track.  The city has long exploited Ulster County through one-sided, manipulative deals, as David Soll’s Empire of Water makes clear.

The conflict has reached the point at which a Republican insurgent candidate, Terry Bernardo, has stepped forward.  The solution set of both sides has heretofore been limited to two artificial poles:  (1) the city and  the Catskill Mountainkeeper’s proposal for a trail, which makes artificial projections about the extent of potential use and is indifferent to the effects on small businesses, and (2)  the existing Catskill Mountain Railroad’s proposal to extend the existing arrangement, possibly through a rail plus trail. The Catskill Mountain Railroad  has failed to live up to its 25-year agreement to rebuild the track and has refused to make its financial statements public.  Its business plan does not contemplate its ability to raise the appropriate level of financing.  To be competitive, the city’s bid would need to add say $10 million to the bid that the CMRR or other railroads make to compensate the region for the loss of tourism.  That amount of money could be used, if the city’s bid is successful, to fund tax credits that will enable existing businesses to expand and develop alternative tourist attractions.

Although this issue is not in your direct domain, Senator Seward, I would like to suggest that you offer to procure expertise at the state level to help the county structure public hearings and a public bidding process that will enable the diverse interests to make competitive bids for the property so that it can be privatized and used for the best benefit of the people of Ulster County.  The competition between secretive lobbyists at the DEP and the Mountainkeepers versus the secretive lobbyists at the CMRR is no way to resolve a public debate.  I am copying the Ulster County Legislature with respect to this idea.

Thanks,

Mitchell Langbert

Thoughts on the Mugwumps

I just sent the following email to a colleague who was talking about the Mugwumps. The Mugwumps were a group of elite Republicans who switched sides and voted for Grover Cleveland in 1884.  The name derives from a bastardization of a Native American word for chief, but the above cartoon suggests a different interpretation.

I don't consider them moderates. They switched party because of strong political belief, specifically in rational government. They were laissez faire Republicans, and many had been abolitionists. There was nothing moderate about them even though they switched sides.

The confusion many people have about today's two extremist parties leads to the mistaken impression that if you don't favor either party you are in between.  The crank TV newscaster Bill O'Reilly makes a similar claim.  He is moderate because he splits the opinions of the two big parties.  

The two parties are close, and they are both extreme in their support for big government. By historical standards, today's America occupies the extreme Whig end of the spectrum, and that's true of both parties. Only an extremist can call two parties that both advocated lending as much as $29 trillion to Wall Street to be moderate.  Today's America is an extremist, authoritarian state. There is no Aristotelian mean here.

This is the email to my colleague:

A classic in the study of the Gilded Age is Edward Wiebe, The Search for Order http://www.amazon.com/Search-Order-1877-1920-Robert-Wiebe/dp/0809001047/ref=sr_1_1?ie=UTF8&qid=1427393497&sr=8-1&keywords=wiebe .

The first book I read on the Mugwumps was Nancy Cohen’s Reconstruction of American Liberalism 1865-1914, which is an intellectual history that gives a good overview. You can piece together a libertarian perspective from it.  See http://www.amazon.com/Reconstruction-American-Liberalism-1865-1914/dp/0807853542/ref=sr_1_1?ie=UTF8&qid=1427393591&sr=8-1&keywords=nancy+cohen+progressivism .

The third book I recommend is a little different. It is Burton Bledstein’s Culture of Professionalism: The Middle Class and the Development of Higher Education in America. http://www.amazon.com/culture-professionalism-development-education-America/dp/0393055744/ref=sr_1_3?ie=UTF8&qid=1427393672&sr=8-3&keywords=bledstein . It traces the creation of professionalism in a host of fields.  Professionalism was intimately connected to the Mugwumps’ interest in civil service reform. The impetus for rationalization led directly to Progressivism. Once the commitment to organized professions took hold, it was a small step to building legal standards and regulations for the professions.  That, in turn, was linked to the development of universities. Hence, big government, the organized professions, and universities have always been linked.

The institution of the modern university in 1876 via the founding of Johns Hopkins came near the heart of the Mugwump era, which was in 1884, during the election of Grover Cleveland.  I don’t think historians have a clear understanding of why the Mugwumps opposed James Blaine and turned against their own Republican Party to support Cleveland.  [My colleague] may be right that there was a laissez faire impetus, but showing that would require a new, or at least clearer,  historical treatment of it.  Among the interesting Mugwump figures (see Cohen) were EL Godkin, David Ames Wells, and William Graham Sumner.

I also don’t believe that historians have a clear understanding of the role of the greenbacks in stimulating the expansion of industry in the Civil War era and what the economic effects were on bondholders, so the post-1873 gold deflation, which harmed other asset holders (likely Western and Southern farmers as well as stockholders) and generated Populism and Bryan (and which Friedman calls “the crime of 1873” in an article that was published in the Journal of Economic History), may have been a reaction to the post-Civil War inflation. Godkin writes about his anger at the effects of inflation on redistributing wealth to Jay Gould and others. 

One question that no one has asked is whether there was a relationship between Wall Street and Bryan or the Populists.  Mark Hanna, a high school friend of John D. Rockefeller,  was, of course, McKinley’s close adviser. On the other hand, it may be that the election of McKinley (as propped by Wall Street) was not really opposition to silver, but rather it may have been preemptive and done in the hope for the central bank that was recommended fourteen years later, in 1910, by the same Rockefeller (with Morgan and Kuhn Loeb) interests.  It is unlikely that there is much public information on something like this.

In any case the 1896 election had an opposite dynamic from what today’s pro-inflation banking community offers, and I suspect that something is not being said about who the Populists were and, more importantly, who their opponents were.  Was a central bank being quietly considered by ‘96? 

The same is true of the conflict within the Democratic Party between Bryan and the Bourbon Democrats,* of whom Cleveland was the chief representative. Wilson had been a Bourbon Democrat, and I think that he voted for a third party, the Gold Democrats, in 1896.  His connection to Morgan is mentioned in my paper on colleges, and I suspect that his signing of the Federal Reserve Act came from his relationship with Morgan.  An interesting point in the biography of Frank Vanderlip is that Wilson dropped him as a friend, and Wilson would have nothing to do with Vanderlip once Wilson was elected. Wilson did not want to seem to be linked to bankers.  I wonder who thought up that plan of action.  Wilson went from voting for gold in 1896 to refusing to have to do with bankers so he could propose the Federal Reserve Bank.  As a result of secrecy, it may be hard to get data. But was the opposition of the banking community to silver a strategic one?
  

*Wikipedia: Bourbon Democrat was a term used in the United States from 1876 to 1904 to refer to a conservative or classical liberal member of the Democratic Party, especially one who supported Charles O'Conor in 1872, Samuel J. Tilden in 1876, President Grover Cleveland in 1884–1888/1892–1896 and Alton B. Parker in 1904. After 1904, the Bourbons faded away. Woodrow Wilson, who had been a Bourbon, made a deal in 1912 with the leading opponent of the Bourbons, William Jennings Bryan; Bryan endorsed Wilson for the Democratic nomination, and Wilson named Bryan Secretary of State. The term "Bourbon" was mostly used disparagingly, by critics complaining of old-fashioned viewpoints.

My Radio Interview with Dan Elmendorf on Redeemer Broadcasting

My friend Dan Elmendorf, who lives in nearby Olivebridge, runs Redeemer Broadcasting,  a Christian radio network that airs locally and in a couple of other states. The stations are FM WFSO Olivebridge, 88.3, Kingston, 105.3 Catskill, 101.1, Newburgh, 90.3 WNEQ, Taylortown, New Jersey 90.3, and WXMD California, Maryland 89.7.  

Dan interviewed me last Friday, and the interview aired today. The subject was the United Nations and its Agenda 21, which Olive residents know from the town plan battles of the past few years.  The link is http://www.redeemerbroadcasting.org/podcasts/apa_030715_Agenda_21--M_Langbert.mp3

Mary Margaret McBride in West Shokan

Ray Faiola of Ellenville has uploaded to Youtube a pilot of a 1951 television program with Mary Margaret McBride, who interviews Ed Dowling.  Dowling was the director of the first major Tennessee Williams play, The Glass Menagerie.   The interview takes place in her West Shokan home, which is a two-minute drive from mine. The panoramas of the reservoir and the mountains look as they do today.  McBride's house is still there; I've met the owner. 

McBride was a personal friend of Eleanor Roosevelt. Roosevelt frequently visited the same West Shokan home in which the interview takes place. According to Wikipedia, during World War II McBride was among the first to break the color barrier in radio.  She broadcast on all the major networks until 1960. She was known as the first lady of radio.  One of the old timers in West Shokan told me that he recalls Mrs. Roosevelt's visits.  In this 1960 newspaper article, Roosevelt writes about an afternoon at one of McBride's local radio broadcasts:

On Monday of this week I went from Hyde Park to West Shokan, where Mary Margaret McBride lives in a house on the side of a mountain. The house is built of redwood, and the porch looks out on the reservoir.

Mary Margaret McBride was her charming self, sounding as though she had really never thought till that minute of the things she was about to say, and yet never forgetting the thread of what she said or of what she wanted the person she was interviewing to say. I think she is one of the most expert interviewers I have ever known.

She had about 50 of her neighbors as an audience, and she does this local broadcast, with local commercials, just as she once did her New York broadcasts. I just have a lovely time talking to her, so I enjoyed every minute with her and was delighted to have lunch with her afterwards, sitting on her porch and drinking in the beautiful view.

She is one person who accumulates books just the way I do, so everywhere you go in every room of her house, there are books and more books. I was encouraged, for I never have enough room for my books and I felt I could now go on building shelves in many places I had not thought of before.

Someday I hope I will have the time to read the books I now have on my shelves, besides all those I know I will accumulate in the next year or so.

Wikipedia describes her last years, which were spent in West Shokan: 

As time went on, she appeared in smaller radio media markets, in upstate New York, and toward the end of her life hosted "Your Hudson Valley Neighbor" three times a week on WGHQ Kingston, NY from the living room of her home. Her longtime companion and business partner, Stella Karn, died in 1957.^[2]

She died at the age of 76 on April 7, 1976 at West Shokan, New York. McBride's ashes were placed in her former rose garden. She has a star on the Hollywood Walk of Fame for her work in radio.^[3]

 Her name was spoofed on the classic CBS-TV sitcom I Love Lucy in Episode # 79, "The Million Dollar Idea", which aired on January 11, 1954. In that installment, Lucy (Lucille Ball) comes up with an ambitious idea to make money. She decides to appear on television selling her Aunt Martha's salad dressing. Assisting her on the program is her best friend Ethel Mertz (Vivian Vance) as "Mary Margaret McMertz."

McBride's celebrity was hardly a secret confined to daytime radio listeners, either: her 15th anniversary celebration in 1949 was held in Yankee stadium, the only facility large enough to hold the 75,000 people who filled every seat and formed huge crowds outside. Her magazine show was on the air continuously for 25 years.

My Cousin Mordecai Lawner's Death

My cousin Mordecai Lawner died five days ago, and I attended his memorial service this afternoon.  He had been an acting instructor at the Neighborhood Playhouse, Carnegie Mellon University and the High School of Performing Arts for many years, and his students included hundreds of professional actors.  Jeff Goldblum sent a memorial oration from LA via video, which my cousins played as part of the memorial service. Goldblum said that when Morty taught at Carnegie Mellon he introduced Goldblum to acting and had then been his lifelong mentor.  Morty appeared with George C. Scott in Death of a Salesman and played Woody Allen’s father in Annie Hall: http://youtu.be/G7L5FKh3EMM .  He was a wonderful guy and a veteran. 

He once talked me out of a show biz career. I  asked him whether I should consider becoming a producer, and he told me to read Elia Kazan’s autobiography.  By the time I had gotten half through it, I gave up the idea.  The Variety and Newsmax articles are here and here.

Why I Don't Support the Separation of Upstate from Downstate New York

Following the reelection of Andrew Cuomo as New York's governor, I began thinking hard about separating upstate New York from downstate New York.  Downstate New York includes the five counties of New York City and the four counties that surround it--Westchester, Rockland, Suffolk, and Nassau.   Upstate New York is more Republican than downstate, although it is not as Republican as it was 50 years ago because few retirees can afford to remain here, and most of the productive business--as opposed to real estate developers, Wall Street, and other businesses on public outpatient support--have fled.

The issues of guns, fracking, religion, and regulation divide the state, but views are variable. The upstate urban centers of Albany, Buffalo, Rochester, and Syracuse are Democratic, and the many university-and-college centers sprinkled throughout upstate also are Democratic. Woodstock and Olive, where I live, dominated by  the music, film and art businesses as well as weekend homeowners from New York City, is Democratic too.  Nearby Kingston and New Paltz, home of a state university campus, are also Democratic.  Therefore, upstate New York is variegated; nevertheless, there is a difference because the big-government philosophy dominant in New York City is less prevalent upstate.  The recent gubernatorial election saw small-government candidate Rob Astorino lose in downstate New York but win the majority of the vote and the majority of the counties in upstate New York.  Crooked, big-government advocate Andrew Cuomo, closely linked to super rich real estate developers, hedge fund managers, and other of the privileged rich on government outpatient support, handily won downstate.

I thought I'd write a piece about separating the two regions for the Lincoln Eagle, and I interviewed a leading activist in the separation movement. He told me that there is increasing support for the idea, especially following Cuomo's reelection.  Cuomo's dictatorial approach to guns and his fascistic attitude toward conservatives (he says that they don't belong in New York) stimulated strong opposition upstate.

My thought was that the values and needs of upstate differ sharply enough from New York City that government would be more representative if it were more decentralized.  I've changed my mind.  Having interviewed the separation activist and read an interesting piece in the Rochester Business Journal, I am coming to the conclusion that separation isn't worth the fight.

The decision to separate or not should not be financial; it should not be based on on net monies transferred from downstate to upstate.  First, no one is clear about the direction in which money actually flows. Second, even if money flows upstate, if the political union doesn't work, then the money isn't worth it.  Readers who posted   on the Rochester Business Journal article claim that upstate could not build roads without New York City's financial support; they might consider turning their heads toward Vermont, Maine, and New Hampshire, whose roads are fine without New York City's help.

Two elements counterbalance each other.  First, New York City probably does subsidize the rest of the state because of the taxes collected from the financial industry, although the subsidization probably benefits two categories: special interests and welfare recipients.  Second, upstate suffers heavily from regulation and political mandates that emanate from the city.  These include a bloated, stupidly managed Medicaid system and heavy demands from public sector unions, to include the Service Employees International Union--which has successfully lobbied for the bloated Medicaid plan--teachers' unions, and statewide bureaucrats' unions like PEF and CSEA.  There is also the current prohibition on fracking, by which the environmental ignorance and superstitions of New York City's ideologues and cranks have deprived New York's Southern Tier of billions in revenue.

The question that remains is whether, given freedom, upstate will repeal the mandates,  regulations, and bloat that the city has imposed.  If it does not, will not, or cannot, there is no point to separation.  Having lived in Albany, Kingston, Potsdam, Binghamton, and New York City, my guess is that the people of New York are unable to overcome the lobbying of the special interests, the unions, the developers,  and crackpot green advocates, who have driven business away from the state.  The same processes of special interest brokerage will continue to dominate upstate New York, just as it has,  and I have no reason to think that upstate New Yorkers will gain 15 IQ points and start to think rationally about the costs and benefits of government policies.  North Dakota, with a population not much bigger than Buffalo's, has, but few states have.

The inner cities in upstate New York, such as the small city of Kingston, which is near me, are as backward as New York City; New Yorkers in rural areas are often co-opted by welfare and Medicaid programs that make them advocates of the bloated state, and a large share of upstate New Yorkers are public union looters.  The result will be, like the breakup of Standard Oil, two behemoth operations rather than one.  In the case of Standard Oil, the oligopoly included Exxon, Mobil, Chevron, ARCO, Sohio, and Pennzoil. In the case of New York, the oligopoly will become the bloated bureaucracy to the north and the bloated bureaucracy to the south. I don't think upstate New Yorkers have the brains to end the bloat that has deprived them of an economic future.

I'm Betting on a Rising Stock Market

The belief that the stock market will go up forever is  a bubble psychology that goes back to the South Sea Bubble, which fooled even Sir Isaac Newton. Since 2009, and especially since President Obama's reelection in 2012, the stock market has been going at a tear. The tear will continue. The editorial page of the New York Times proves it.  The Times wrote this yesterday: 

On one side is a small yet vocal minority of Fed officials who want to head off inflation by raising rates sooner rather than later. On the other is a majority that thinks a near-term rate hike would stifle growth and, with it, any chance of restoring health to the labor market. That group includes Janet Yellen, the Fed’s chairwoman, and most members of the Fed’s policy committee…The economic evidence indisputably favors Ms. Yellen, who has indicated that rate increases should not begin until sometime next year, at the earliest. It will take until then to be able to say with confidence whether recent improvements in growth and hiring are sustainable.

The reason that the Times's editorial is important is that the nation's hierarchy of decision making with respect to interest rate policy is as follows:

Investment banker cronies--> Ochs Sulzberger family-->The New York Times--> public opinion among Democrats --> President Obama's opinon --> Janet Yellen's opinion --> Federal Open Market Committee decision

If a Republican were in office, the Wall Street Journal would play the equivalent role.

Rates will be lower, or will increase less, than stock market participants expect because the Democrats have a commitment to boosting the stock market. The Times goes on to make the curious claim that keeping interest rates low will improve real wages; that real wages have declined while interest rates have been kept at historically low levels for the past 43 years does not deter them.  Recall the old saying about insanity.  

 Seeking Alpha says that George Soros is currently hedging the S&P 500. I'm sure that there is a logical or statistical basis for his tactic  because all evidence says that the stock market is high now.  The support of the Fed will continue to keep the market at high levels into next year, though.  I'm not buying the S&P short ETF, SH, just yet. However, I have about 1% of my portfolio in the VIXX index and an interest rate short index, both of which have declined and are near all-time lows. The VIXX index measures market volatility, and it goes up when the stock market goes down.  It is at all-times low, which is an indicator that the stock market will go down.  

From a policy standpoint the New York Sun's Seth Lipsky continues to offer a still, small voice of financial sanity among the Sodom and Gomorrah of the American media.  Sadly, Paul Krugman will have to turn into a pillar of salt before any change in America's addiction to print-and-spend economics ends. 

For now, I'm buying a little more Chicago Bridge and Iron (CBI).  It's gone up a few percent since Buffett bought a second set of shares; according to Seeking Alpha several other hedge funds are piling in.  The sharp decline due to rumors about improper accounting and the firm's president's illness seems to have offered Buffett and other hedge funds a buying opportunity; including pension fund holdings, Berkshire may own 25%. 

Opposition from Giuliani, Christie Suggests That Astorino Is a Man of Character

Big-government Republicans like Rudolph Giuliani and corrupt ones like Chris Christie have chosen to either support Andrew Cuomo or avoid supporting the small-government GOP candidate, Rob Astorino.

The New York Daily News reports that on July 24 Christie gave Astorino the brushoff because he doesn't think Astorino can win. Unlike Democrat Andrew Cuomo, who is facing a corruption investigation concerning the Moreland commission,  Astorino probably isn't corrupt enough for Christie.  Like Cuomo, Christie is under a corruption investigation:  Christie's close aides have admitted to closing lanes at the George Washington Bridge because the mayor of Fort Lee, Mark Sokolich, didn't endorse Christie in 2013. Christie has allowed his aides to take the blame, but why on earth would anyone believe that he didn't know?  The Newark Star Ledger adds that Christie's private attorneys have billed New Jersey taxpayers $6.5 million for legal services in his private defense.

At the same time, New York City's Mayor Giuliani, a guy who claimed to be for less government but never cut government, has been quietly supporting Andrew Cuomo.  There are so many things that Giuliani might see in Cuomo: the exodus of 400,000 New Yorkers during Cuomo's three years as governor, his attack on the Second Amendment, his failed Common Core school reform, or his narcissistic plan to rejuvenate New York's economy by appointing eight SUNY campuses to house a few well-connected tech firms, then spending $200 million dollars in TV ads around the country that use the dumb plan as a pretext to promote Cuomo himself.

 I rejoined the GOP out of desperation to get Cuomo out, but the GOP's bankrupt leadership is truly a gang that can't shoot straight. Perhaps Astorino would be best off disowning the GOP and using the GOP ticket to run a Libertarian campaign.

Is It Time to Buy Socialism Insurance Now That Federal Debt Exceeds GDP?

On April 8 2013 when the gold index fund, the GLD, was at 153, I got out of much of my gold, and I wrote that gold might hit $1,200. The GLD is currently at 127, and gold has already dipped below $1,200.  My guess is that there is still some downside in the gold market, though.  The reason is that the effects of the monetary creation since late 2008 through this year have had stimulative effects on the stock market.  The monetary stimulus of Reagan-Bush-Clinton years had a depressing effect on commodity prices,  which is part of why inflation was not as extreme as it might have been. The Bernanke-Obama monetary creation since 2009 will have larger effects than I initially thought, although I did start buying stocks around Thanksgiving of '09.

One of the characteristics of markets is that they tend to bottom with an overreaction, and we haven't seen capitulation in gold.  The decline has been orderly.  I am therefore still somewhat bearish in gold, although buying gold now will make sense in the long term.   Gold is socialism insurance, and we need socialism insurance now more than ever.  The monetary expansion keeps interest rates low, so gold exploration--along with other natural resource exploration--becomes more competitive, pushing down gold and gold stocks. Lower interest rates lead to more exploration, which leads to lower commodity prices, which lead to lower short-term inflation. Ultimately, inflationary expectations will escalate.

Writing in Seeking Alpha, Kirk Lindstrom points out that federal indebtedness, $17.7 trillion, now exceeds the US GDP, $17.3 trillion, a sign of socialist excess.  Lindstrom posts a revealing chart: Gold has gone steadily down since November '12 while the stock market has gone steadily up since April '11.

The gold market is complicated by additional factors.  The Chinese and other central banks have been buying gold in spite of Wall Street, Warren Buffett, their wholly owned media and academia's persistent hostility toward gold.   Second, the Obama monetary expansion occurred on top of a significant contraction and rising gold price.  Therefore, the deflationary and the inflationary processes are intermingled.  Third, the dollar is heavily subsidized by the world's central banks, so inflation may not come gradually; rather, there is a risk of a sharp monetary correction or collapse.  The third consideration makes owning gold more important than it was in the 1970s--even in a flat or declining market.

I am still waiting for capitulation in the gold market.  My stock investments have been OK, but I made the error of focusing on low-risk (low-beta) stocks that didn't appreciate to the same degree as tech stocks. VNR, Vanguard Natural Resources, is one of my holdings, and it's had a few short-term setbacks, but I'm holding onto it. It yields over 8%, and until the recent setbacks everyone believed the management to be fine, and most still do.  At the same time, there has been good news about Kinder Morgan, which I also own, and the MLP went up almost 30%.  I was also holding Heniz when Buffett bought it.  I had been holding CBI, Chicago Bridge and Iron, but I pulled out when it fell by about 20% on rumors.  I am going to buy it back soon. (It's since fallen another 20%.)  I also bought Kellogg (K) recently. It had fallen on poor Special K sales.  I am holding Philip Morris, Pepsi, and Kimberly Clark, which all had nice price appreciation over the past few years.  I like the MLPs because they pay rich dividends.  I also am making long-term investments in Dollar General, Traveler's Insurance, and Dominion Resources (D).  D is priced high for a utility, but they also hold a considerable amount of energy pipelines, which makes them similar to a midstream MLP.  Critics of D say that the dividend coverage is poor.  Also, I am making an exception to my pe-below-15x earnings rule. At the same time, the company is poised for more rapid growth than other utilities when natural gas prices rise.  The down side to investing in lower-risk companies with low price-earnings ratios is that they don't jump in a hot market like last year's.  However, I am holding Intel, Apple, and Microsoft, which have been doing well this year.  I also bought CSX, the railroad.  The railroads have been a play on energy, and I believe that they still have a way to go.  My stocks have been weak in the past few weeks, but so has everything else.  I have to learn not to listen to Warren Buffett's friend, Mr. Market.  

I am waiting for the gold market to fall. Maybe I'm on a fool's errand, but I don't believe that either the stock market run up or the gold market run down is over.

Mineoloa Mothers Support Rob Astorino's Stop Common Core Ballot Line

  

Rob Astorino put together a Stop the Common Core ballot line. They got 62,000 signature to introduce it. Because mothers around New York State are outraged about the common core standards, which Cuomo adopted to appease the Democratic Party and Bill Gates, the additional line should effectively supplement the Republican Party line.  Astorino is a great candidate.

Astorino for Governor

I have decided to support the Astorino campaign. I have it on good advice that Rob is a man of integrity. He has been campaigning against the corruption in the Cuomo administration.  Running against Andrew Cuomo is like shooting fish in a barrel.  There are so many issues. Rob is electable because he is successful at reaching out to Democrats, and he can improve things from the low level to which New York State has sunk.