Larwyn just forwarded a post by the Dinocrat blog that led me to paraphrase the old '60s anti-war song "Where Have All The Flowers Gone?":
Where have all the conservatives gone?
Long time passing
Where have all the conservatives gone?
Long time ago
Where have all the conservatives gone?
Gone to big government solutions every one
When will they ever learn?
When will they ever learn?
Dinocrat links to Mike Masters' Senate testimony and refers to Dan Dicker's article. Masters and Dicker blame speculators for increasing commodity prices and aim to regulate commodities markets. Dinocrat doesn't indicate whether Masters and Dicker are from Wall Street, are long on stocks or short on commodities and are offering self-serving testimony to Congress or whether they just like the Bear Stearns bail out. Wall Street dislikes commodity speculation.
There is a much more accurate explanation for the run up in commodity prices than commodity speculation: Federal Reserve Bank inflation, which is now currently working its way through the economy. If futures prices are higher than the underlying demand warrants, there will be a correction in prices. The index speculators will pay for their errors if commodities are at higher-than-market prices. As well, foreign producers can enter the market and undersell inflated commodity prices.
There is a more fundamental error in the Masters-Dicker proposals. Few people can outsmart financial or commodity markets, and those who can are very rich. Why should anyone believe Masters and Dicker are smarter than the funds who are buying the commodities indexes? Passing a law limiting economic activity because a few observers have a hunch based on limited information that they are right and the market is wrong would be inept.
If limits are put on ways of trading or holding commodities, these will not reduce commodity prices. For example, if pension funds are not permitted to hold commodities, traders outside of pension funds will profit from the Masters proposals. Likewise, if limits are put on commodity prices, then there will be shortages.
It is true that across-the-board price increases are a major public concern, but these have been caused by the Federal Reserve Bank, not by speculators. If the speculators are over-bidding, then farmers and commodity producers from overseas will undercut the speculators and bankrupt them.
We do not need a "Federal Commodity Commission" to create more bureaucratic waste and to rip off the American public to a greater extent than the Federal Reserve Bank already does.
Friday, May 23, 2008
Thursday, May 22, 2008
Orenstein Reports Sighting of CUNY Faculty Meeting
Phil Orenstein has written an excellent article in Frontpagemag about his close encounter with a handful of fringe CUNY faculty. Professional Staff Congress officer "Sue" O'Malley, currently engaged in a McCarthyist law suit against the awe-inspiring Sharad Karkhanis, was in attendance. Orenstein does not mention whether the panelists were wearing white hoods and sheets. But he writes of this close encounter of the fourth kind:
"What I witnessed was a closed forum dedicated to a veiled radical agenda, riddled by hysterical paranoia, name-calling, slanderous accusations against prominent scholars and city officials, and strategies for their ouster, where the panelists professed that “attacks” against Arabs and professors are a coordinated right wing smear campaign launched by Daniel Pipes, CUNY trustee Jeffrey Wiesenfeld and their ilk, which they dubbed the “New McCarthyism.”
Read all about Orenstein's encounter with uncollegiality among extremist elements of CUNY's senior faculty here.
"What I witnessed was a closed forum dedicated to a veiled radical agenda, riddled by hysterical paranoia, name-calling, slanderous accusations against prominent scholars and city officials, and strategies for their ouster, where the panelists professed that “attacks” against Arabs and professors are a coordinated right wing smear campaign launched by Daniel Pipes, CUNY trustee Jeffrey Wiesenfeld and their ilk, which they dubbed the “New McCarthyism.”
Read all about Orenstein's encounter with uncollegiality among extremist elements of CUNY's senior faculty here.
Institutional Death in America and Europe
The new and old worlds are divided not just by their relative emphasis on flexibility and markets, but also by their openness to change. Radicalism in Europe has generally taken the forms of Hegelian emphasis on historicism. Marxism and its derivatives while pretending to advocate radical change are romantic reassertions of medieval stability and security. The chief outcomes of Russian and eastern European communism were societies that had difficulty with flexibility and change, that could not integrate information about price and consumer demand intelligently and that placed political stability before economic change. As well, Europe has emphasized the Nietzschean will to power and minimized liberal openness to change.
Both Americans like Europeans have revealed prejudices but while Americans are discarding them, Europeans are not. In the 19th century the people of California hated Asians and passed discriminatory laws against them. The first immigration law in America, the Chinese Exclusion Act of 1882, excluded Chinese mining labor from immigration under penalty of law and required that Chinese immigrants obtain certification of their qualification to immigrate. In 1902 Chinese immigrants were required to register with the government and obtain a certificate of residency. Similarly, antagonism and hatred toward African-Americans following Reconstruction led to passage of Jim Crow laws by post-Reconstruction redeemer governments beginning in 1876 and the laws continued in force until passage of the Civil Rights Act in 1964. The northeastern Mugwumps, the educated post-reconstruction Republicans who preceded the Progressives around 1884, did not advocate the Jim Crow laws aggressively but did not oppose them aggressively either. The Jim Crow laws were primarily the product of southern Democrats. The northern Democrats did not oppose them either. As president, Woodrow Wilson intensified the Jim Crow laws and supported them. During the Progressive era, imperialist sentiment fit the racism of the Jim Crow laws. Progressivism was very much associated with racism.
In Europe, there was a parallel history of anti-Semitism. Jews were banned from England, France and Spain in the middle ages and were forced to migrate to Asia Minor and eastern Europe. In Germany and Italy they were forced to live in ghettos. During the Crusades, Crusaders murdered tens of thousands of Jews (along with eastern Christians, southern French Christians and Muslims). There was a brief period of liberalization in the 19th century, but in the twentieth the rise of Nazism, a derivative of Marxism, led to the murder of the majority of European Jews.
Despite this history of bigotry in both continents, in recent decades Americans have reduced but not eliminated the degree of anti-Asian and anti-Chinese racism. In contrast, anti-Semitism is more intense in Europe than it has been since World War II. The European addiction to anti-Semitism attends a deeper inability to overcome antiquated traditions and class structures that inhibit change.
Americans' ability to create and accept change may in part be the cultural residue of the American frontier. The open frontier led this people to see the possibility of the new. As well, the science and technology that freedom made possible, the inventions and progress that came from laissez faire capitalism, led to an openness to change. Perhaps the openness to change went to far under the philosophy of modernism, but it is preferable to the alternative, which is the stagnation of bigotry, impoverishment and lost economic opportunity. The degree of tradition and change is best balanced through private decision, not through bureaucratic laws that require landmark preservation.
As well, Americans are a religious people, and their acceptance of change is likely linked to their faith. In America, religious tolerance has been the norm and religion has been a matter of belief and conscience rather than social imposition and structure. Many Americans have believed that material rewards reflect divine grace. Since belief in God is a matter of conscience, not social institution, and since material rewards reflect divine election, in many Americans' view, American are likely to pursue and feel comfortable with such rewards and with the change that they require.
Since the creation of wealth requires the creation of change, of new ideas, of new markets and new technology, the converse of new ideas, the death of old ones, is critical to change. Europeans are reluctant to give up old prejudices like anti-Semitism and tribal social arrangements like socialism. Firms cannot in the European model be allowed to go bankrupt. Business executives must be permitted to maintain their social position and employees must be secure in their jobs.
To the extent that Americans adopt such tribal, European views they will be unable to change. Change depends on death. The growth of the economy depends on the death of failed firms. Incompetent managements like Bear Stearn's or Enron's do not deserve subsidies. Their managements have failed and deserve the economic returns that failure implies.
Likewise, the introduction of Progressive and New Deal institutions were significant not so much because they reflected change, but rather because the institutions reflected the tribal views of German historicism and so became institutionalized as reaction to change. Few Progressive institutions have been overturned and those New Deal institutions that were not rejected by the Supreme Court have remained in place for the past 70 years. When change in proposed, the American people's reaction is not the openness to change that characterized America in an earlier era but a European-style tribal reacton, a fear of change and a hostility to the possibility that failed institutions ought to change. Likewise, when American business has failed, as it increasingly often has in the past decade, the American people's reaction has been to protect the wealth of those whose businesses failed to produce value for investors or for the American people and so shore up a class system that is decidedly non-American in nature.
Both Americans like Europeans have revealed prejudices but while Americans are discarding them, Europeans are not. In the 19th century the people of California hated Asians and passed discriminatory laws against them. The first immigration law in America, the Chinese Exclusion Act of 1882, excluded Chinese mining labor from immigration under penalty of law and required that Chinese immigrants obtain certification of their qualification to immigrate. In 1902 Chinese immigrants were required to register with the government and obtain a certificate of residency. Similarly, antagonism and hatred toward African-Americans following Reconstruction led to passage of Jim Crow laws by post-Reconstruction redeemer governments beginning in 1876 and the laws continued in force until passage of the Civil Rights Act in 1964. The northeastern Mugwumps, the educated post-reconstruction Republicans who preceded the Progressives around 1884, did not advocate the Jim Crow laws aggressively but did not oppose them aggressively either. The Jim Crow laws were primarily the product of southern Democrats. The northern Democrats did not oppose them either. As president, Woodrow Wilson intensified the Jim Crow laws and supported them. During the Progressive era, imperialist sentiment fit the racism of the Jim Crow laws. Progressivism was very much associated with racism.
In Europe, there was a parallel history of anti-Semitism. Jews were banned from England, France and Spain in the middle ages and were forced to migrate to Asia Minor and eastern Europe. In Germany and Italy they were forced to live in ghettos. During the Crusades, Crusaders murdered tens of thousands of Jews (along with eastern Christians, southern French Christians and Muslims). There was a brief period of liberalization in the 19th century, but in the twentieth the rise of Nazism, a derivative of Marxism, led to the murder of the majority of European Jews.
Despite this history of bigotry in both continents, in recent decades Americans have reduced but not eliminated the degree of anti-Asian and anti-Chinese racism. In contrast, anti-Semitism is more intense in Europe than it has been since World War II. The European addiction to anti-Semitism attends a deeper inability to overcome antiquated traditions and class structures that inhibit change.
Americans' ability to create and accept change may in part be the cultural residue of the American frontier. The open frontier led this people to see the possibility of the new. As well, the science and technology that freedom made possible, the inventions and progress that came from laissez faire capitalism, led to an openness to change. Perhaps the openness to change went to far under the philosophy of modernism, but it is preferable to the alternative, which is the stagnation of bigotry, impoverishment and lost economic opportunity. The degree of tradition and change is best balanced through private decision, not through bureaucratic laws that require landmark preservation.
As well, Americans are a religious people, and their acceptance of change is likely linked to their faith. In America, religious tolerance has been the norm and religion has been a matter of belief and conscience rather than social imposition and structure. Many Americans have believed that material rewards reflect divine grace. Since belief in God is a matter of conscience, not social institution, and since material rewards reflect divine election, in many Americans' view, American are likely to pursue and feel comfortable with such rewards and with the change that they require.
Since the creation of wealth requires the creation of change, of new ideas, of new markets and new technology, the converse of new ideas, the death of old ones, is critical to change. Europeans are reluctant to give up old prejudices like anti-Semitism and tribal social arrangements like socialism. Firms cannot in the European model be allowed to go bankrupt. Business executives must be permitted to maintain their social position and employees must be secure in their jobs.
To the extent that Americans adopt such tribal, European views they will be unable to change. Change depends on death. The growth of the economy depends on the death of failed firms. Incompetent managements like Bear Stearn's or Enron's do not deserve subsidies. Their managements have failed and deserve the economic returns that failure implies.
Likewise, the introduction of Progressive and New Deal institutions were significant not so much because they reflected change, but rather because the institutions reflected the tribal views of German historicism and so became institutionalized as reaction to change. Few Progressive institutions have been overturned and those New Deal institutions that were not rejected by the Supreme Court have remained in place for the past 70 years. When change in proposed, the American people's reaction is not the openness to change that characterized America in an earlier era but a European-style tribal reacton, a fear of change and a hostility to the possibility that failed institutions ought to change. Likewise, when American business has failed, as it increasingly often has in the past decade, the American people's reaction has been to protect the wealth of those whose businesses failed to produce value for investors or for the American people and so shore up a class system that is decidedly non-American in nature.
Wednesday, May 21, 2008
The Sources of Middle Class Anxiety
In today's New York Sun Robert Samuelson argues that middle class anxiety results from an economy that generates greater returns at the expense of greater risk. He claims that we are better off because many of us have purchased technologically advanced consumer products like flat screen televisions and high speed internet access but at the same time the fluidity that a market economy requires has made us less secure. Mr. Samuelson's argument is half right. Americans are less secure, but they have bought less security at the price of stagnant real wages. In the past 36 years wages have increased at lower rates than in any prior period of American history.
According to the Census Bureau, in the 23 years from 1947 to 1971, American males' real incomes in 2006 dollars increased from $17,967 to $31,915, an increase of 77.6%. In 1971 Richard M. Nixon abolished the international gold standard. In the 35 years from 1971 to 2006 American males' real wages increased from $31,915 to $36,011, an increase of 12.8%. The reduction of increase from 77.6% to 12.8% is 83.5%. This is unquestionably the slowest wage growth in any 36-year period of American history.
In contrast, a 1971 dollar was worth $.55 in 1947, an inflation rate of 1/.55= 181.8%, while a 2006 dollar was worth $.20 in 1971, an increase of 1/.20 = 500%. Moreover, the consumer price index was doctored in the early 1980s to omit house prices, price increases of which have been the primary source of economic anxiety among the middle class until this past year. Thus, while real incomes increased at the slowest rate in American history between 1971 and 2006, 12.8% over 35 years, prices increased at the fastest rate in American history over the past 35 years, 500%, and their increase was understated.
According to the Census Bureau, in the 23 years from 1947 to 1971, American males' real incomes in 2006 dollars increased from $17,967 to $31,915, an increase of 77.6%. In 1971 Richard M. Nixon abolished the international gold standard. In the 35 years from 1971 to 2006 American males' real wages increased from $31,915 to $36,011, an increase of 12.8%. The reduction of increase from 77.6% to 12.8% is 83.5%. This is unquestionably the slowest wage growth in any 36-year period of American history.
In contrast, a 1971 dollar was worth $.55 in 1947, an inflation rate of 1/.55= 181.8%, while a 2006 dollar was worth $.20 in 1971, an increase of 1/.20 = 500%. Moreover, the consumer price index was doctored in the early 1980s to omit house prices, price increases of which have been the primary source of economic anxiety among the middle class until this past year. Thus, while real incomes increased at the slowest rate in American history between 1971 and 2006, 12.8% over 35 years, prices increased at the fastest rate in American history over the past 35 years, 500%, and their increase was understated.
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