Stock Buybacks and the Wisdom of Presidents

Steven Pearlstein of the Washington Post published an article that draws a parallel between the mortgage bubble of the Bush years and the current corporate stock buyback bubble, which to be fair began under Obama but continues under Trump. Pearlstein omits the biggest bubble of all:  the Obama bailout that sustained years of malinvestment in derivatives and real estate.  Also to be fair, the Obama bailout began under Bush but was ramped up.  At one point economists at the Jerome Levy Center at Bard College identified $29 trillion in subsidies to Wall Street; hence, Obama oversaw the largest subsidization of any industry in the history of the world.

Here is the wisdom of presidents, reflecting the democratic, Progressive genius of the American people:

Bush:  Have the Fed print lots of money and sell houses to people who can't figure out how to find a job. 

Obama: Have the Fed print lots of money and give it to Wall Street investors who can't figure out how to invest. 

Trump: Have the Fed print lots of money and give it to corporate executives who can't figure out how to innovate.

Public Opinion about the Fed

Pew has done an interesting opinion survey about the Fed. Pew finds that Democrats and leftists tend to like the Fed while Republicans and pro-freedom Americans tend to dislike it. The breakdown of the opposed-to-favor ratios is as follows. The omitted proportion is "don't know": Rep:48:39; Rep-Cons 54:33; Rep-Mod: 40:13; Dem: 28:57; Cons-Dem: 26:59; Left-Dem: 30:56. Overall, 37:47.
The Fed is among the most-entrenched federal institutions, yet the total difference is a mere 10 points (37:47).
The Fed is an institution that subsidizes the wealthy and those who do not work at the expense of those with moderate and lower incomes. It fosters corrupt, insider relationships among government, money center banks, and Wall Street. It has supported one bubble after the next, to include the Latin American debt crisis; the Hunts' cornering of the silver market; Long Term Capital Management; the millennial derivatives bubble; the ongoing stock, bond, and real estate bubbles; and a whole slew of other kooky bubbles and mistaken economic policies. Leftists like the Fed because it permits ongoing indebtedness to subsidize welfare benefits. Rockefeller Republicans like it because it subsidizes and bails out their incompetent investment decisions.
Unfortunately, though, American indebtedness is now in excess of 105% of GDP, and Social Security will be 25% underfunded in 15 years. Sooner or later the debt bubble will burst, and Americans used to welfare will suffer because of the left's good intentions. The left has always had a taste for gambles that lead to mass suffering, and we will see that outcome again, although I doubt that we will see the mass murders of Cuba, the USSR, and the PRC. Rather, we will probably see some riots and mostly quiet suffering, elderly people eating pet food, and a reversal of the 180-year-old free market trend of lengthening life spans.
I also suspect that conservatives have trouble vocalizing these concerns because elite conservatives are in bed with elite leftists. The military industrial complex, for instance, receives support from the paper money system.

Totalitarianism and Externalities

The extent to which an ideology claims that behavior creates externalities can be viewed as a measure of the extent to which the ideology is totalitarian.  Merriam-Webster defines externality as something that is external or that involves a secondary consequence, such as pollution.  The perception of externalities arises when behavior is viewed as eroding public morals or being immoral or that activity that is private harms society at large.  Hence, in the extreme, communism views private economic contracts as being exploitive, hence harmful and immoral.   Theocracies view dissenting religions as immoral, hence threatening the state, and this works both ways: the commitment to secular humanism views religious belief as threatening its moral assumptions, hence threatening its version of the state.       

                                                     

Once a claim is made that a private behavior creates externalities, the solution is enhancement and centralization of state control, i.e., increasing totalitarianism.  Merriam-Webster defines totalitarian as:

a : of or relating to centralized control by an autocratic leader or hierarchy : authoritarian, dictatorial; especially : despotic

b : of or relating to a political regime based on subordination of the individual to the state and strict control of all aspects of the life and productive capacity of the nation especially by coercive measures (such as censorship and terrorism)

2 a : advocating or characteristic of totalitarianism

b : completely regulated by the state especially as an aid to national mobilization in an emergency

c : exercising autocratic powers

In other words, there is a tradeoff between the claim that behaviors are externalities and the claim that we have a right to engage in the behavior, that is, that we are free.   The claim that behaviors create externalities is equivalent to the claim that totalitarianism needs to be increased.

A quantitative measure can be derived that gauges the extent to which a given ideology is totalitarian.  A list of characteristic behaviors and the extent to which the ideology claims that they create externalities and are not purely individualistic and private can be scored and weighted.  A totalitarian score can be created to compare ideologies, such as those of the Democrats and Republicans, as to how totalitarian they are.

To what degree are today’s American political parties totalitarian?  With respect to Merriam-Webster’s definition (a), both parties have increasing opted for centralized control and the rejection of federalism and states’ rights.  Democrats do so based on the history of racial discrimination, while Republicans do so based on economic efficiency.  As well, Americans have been increasingly susceptible to authoritarian leadership during the past century. 

With respect to (b), we also see increasing subordination of the individual to the state. Mental health regulation, child protection regulation, environmental regulation, substance abuse regulation,  minimum wage regulation, and workplace regulation increasingly subordinate Americans’ lives to the state and strictly control the life and productive capacity of the nation by coercive measures, including terror.  

Hence, the democratic process increasingly results in totalitarianism.  In the past 10 years both parties’ presidents have used executive orders to exercise autocratic powers, and Congress seems to consider its powers unlimited.

To operationalize the concept of totalitarianism, we may consider the extent to which the state regulates or controls a list of specific personal behaviors, for example consumption, production, economic activity, recreational activity, sexual activity, and the extent to which it views such activities as externalities.   

Political Correctness and Ritual Purification

Purification has been a constant in the worst 20th century totalitarian crimes, such as gulags, mass murders, and ethnic cleansing. Totalitarian, socialist movements, which aim to supplant religion with belief in the socialist state, reinvent purification rituals and infuse them with violence and intolerance.

Religious purification rituals are, in today's world, mostly not coercive. In the Jewish faith, the ritual bath or mikveh is used by men and women in association with sexual relations and childbirth and as part of the conversion process. The tradition was adopted by Christianity in the ritual of baptism. All religions have processes and rituals of purification, to include the separation of men and women and dietary rules such as kashrut and halal. In Catholicism there are seven sacraments, and several Protestant faiths believe in the cleansing power of the Holy Spirit.

The impulse toward purification is ingrained in the human psyche, and it may have arisen because of tribal relations, both in terms of acceptance of new members and exclusion of those who violate tribal norms. It is difficult to know whether such patterns are instinctive or cultural. In either case purification is common to most cultures, but the left in its interest in radical transformation of society has put greater and more violent emphasis on purification than ever before.

The nineteenth century saw a rejection of religious faith and  an invention of newly violent and punitive varieties of purification. The French Revolution saw the Reign of Terror, in which supporters of the Catholic Church and the monarchy were guillotined. Marx believed that society needed to be purified of capitalists and exploitation and that the purest, most sacred form of economic relation was that of the industrial working class or proletariat managed by its own dictatorship. Wilhelm Marr, the left-wing, German founder of the Anti-Semitic League--and creator of the term "antisemitism"--saw purification as the elimination of Jews. The American eugenicists, who were an important if not dominant element in the Progressive movement, saw purification as the improvement of the genetic stock. Hitler and the Nazis carried forward these left-wing purification faiths.

The concept of purification among left-wing activists has evolved into an even more totalitarian doctrine of political correctness. From a faith in industrialization and proletarian work, through the efforts of Frantz Fanon and 1960s activists, who substituted race for class in their analyses, the left became a movement of identity rather than class politics. Purification became political correctness, the belief that any who oppose the agenda of left-wing identity politics, including those who believe in Christianity, those who oppose government-enforced equality agendas, and those who tell off-color jokes, must be cleansed.

The purification rituals of the American left target Republicans, classical liberals, Christians, and supporters of the Second Amendment, all of whom are banished by media, school district and university committees of public safety.

In the media, the telling of off-color jokes is grounds for immediate banishment. Much as Increase Mather and his followers burned witches to purify their community, so does ABC Television fire comedians for political incorrectness. Some forms of sexual deviance, those forms allied with the American left-wing committees of public safety, are hallowed and pure. Other forms of sexual deviance, which are not so allied, are impure.