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.

Can Employee Benefits Rise Again?

My article "Can Employee Benefits Rise Again?" appears in the August 20 AICPA Career Insider:

>Recent news has been discouraging. The Society for Human Resource Management has featured an article about Watson Wyatt’s study of Fortune 1000 firms that have frozen (i.e., eliminated benefit accruals) their defined benefit (DB) pension plans. Watson-Wyatt found that out of 607 pension plan sponsors in the Fortune 1000 (a reduction from 20 years ago), 190 have frozen their benefit accruals, up from 169 last year. Freezes peaked in 2007 for firms in the Fortune 1000 for at least six years. Only 42 percent of Fortune 1000 firms accrue benefits in DB pension plans.

At the same time, some proponents of private plans are concerned about President Obama’s proposal for a national health plan. While the proposal that was reported out of the House Energy and Commerce Committee did not suggest supersession of employer-sponsored plans (see the The Wall Street Journal, August 1, 2009), some might construe it as a first step. In the workers’ compensation field, public plans like New York’s State Insurance Fund have long competed, often unsuccessfully, with private plans. Nevertheless, the establishment of a health plan of last resort would suggest at least partial failure of the private system.

Read the whole thing here.

Ideology or Economic Interest? Ideology and Academe

Earlier this decade Stanley Rothman and his associates found that the vast majority of university professors are registered Democrats and that the imbalance is greater than had been previously thought. Rather than try to better understand the finding, the American Association of University Professors attempted to smear the research. The finding is unsurprising to anyone who has spent five minutes at college. Not only are university professors "liberal" social democrats but they are virtually universally so. Moreover, there is a vocal minority that is overtly communist. My faculty union, the Professional Staff Congress, is dominated by communist cranks who would be happy to see a repeat of the blood red mass murder that occurred under Chairman Mao and about which the left continually lies.

At the height of the recent discussion about the Bush-Obama "bail out", New York University featured "white papers" by 18 of its economists on its website. I teach at NYU's Stern School of Business as an adjunct and I think very highly of its students, faculty and administration. It is the best run place at which I have worked. My only complaint is that it's hard to find students who don't deserve an "A" and the business school only lets me give one third A's. It is indicative, though, that all 18 of the commentators favored massive wealth transfers to the super rich. None questioned the wisdom of the Bush-Obama policy of socialism for the privileged.

I noticed last night when I was looking for Ayn Rand tapes on Youtube that Michael Moore is coming out with a movie on the bail out in which he is more than willing to take Wall Street to task. There seems to be a division between the populist left represented by Moore and the academic left. While 18 economists are willing to do somersaults to protect Wall Street's interests, Moore lacks the economists' economic motives. No Wall Streeter has contributed to Moore's movies.

While nearly 100% of colleges and universities receive financial support from the public, nearly 100% of university professors support an expansive state that would include significant benefits to universities. The relationship is direct. In the past, only those wealthy enough to enjoy free time to devote to scientific discovery could participate in intellectual life; and only those wealthy enough could enjoy a life of leisure. Under the social democratic university professors can devote their lives to scientific discovery and/or enjoy a life of leisure. Therefore, there is little likelihood that university professors would (a) oppose the inheritance tax or (b) support anything other than an expansion of the state. If expansion of the state means expansion of support to the super rich, then that becomes part of the professorial game plan. Sadly, the chief voice criticizing the bailout is the corpulent and uncouth Mr. Moore.

Democratic Paradox

The Democrats have an interesting plan. Faced with the failure of 90 years of Progressivism and New Deal redistribution; a stagnant real hourly wage; a failed, monopolistic investment and commercial banking system that is the product of New Deal social democracy; an international monetary system that is a Rube Goldberg device fastened to a casino; wasteful real estate and stock market bubbles; and cities that have survived by gutting their economic identities and riding the crest of the same stock and real estate bubbles, the Democrats aim to further restrict economic opportunity; raise taxes; smash economic innovation and impoverish future generations. The Democratic paradox is this: when faced with economic decline, resolve it by deepening the decline. They did it during the depression, causing the 1930s to constitute a much longer correction than any before the existence of the Fed, social democratic programs and Keynesian monetary policy. They aim to do it now.

Cure decline by deepening the decline. The Democratic paradox.