Sacrifice

Early in his term, President Obama stressed shared sacrifice as a means to correct the various problems with which he said we were beset. He has shied away lately from that terminology. Why is that?

Perhaps it is because having it called for it incorrectly, and then been stung with his own blatant hypocrisy, he now also incorrectly reckons it politically damaging to call for sacrifice at all. Or perhaps it's just incompatible with his new lifestyle.

Like Dan Perrin, I think Mr. Obama's slide in the polls is a self-inflicted wound, almost an own goal.

Americans understand sacrifice. If all virtue consists in risking something of known value for something of greater, but uncertain value, then some sort of sacrifice is inherent in all acts of virtue.

In our nation's past, we have rallied to the cry of shared sacrifice. In times of war, we have been willing to risk life and limb for the sake of a cause no more definite than putting down evil in some far off place. When presented with a clear goal -- defeating an enemy, sending a man to the moon -- we are inspired to greatness. When some are called on more than others, such as in Southeast Asia, we rebel.

And so it is with economic hardship. When asked to sacrifice to get the nation past economic hard times, we chafe. Such sacrifice is passive, and we are a people of action, immigrants all. To come to these shores we first had to leave somewhere else, and I think that's burned into our culture. Or perhaps we merely distrust that the sacrifice will indeed be shared.

And we are already sacrificing, thank you very much. With the onset of $4 per gallon gasoline in 2008, Americans quickly changed their consumptive ways, altering their lifestyles. More and more of us are turning away from living by credit. We're cutting back on spending now, and saving for later. We're responding to the crisis in a rational way, which happens also to be the virtuous path that got our parents and grandparents through Great Depression I.

We suspect that government policies forcing cheap and easy credit led us into the economic mess, and the only way out of the mess is to shun the cheap and easy credit.

And 10% of us are unemployed; even more underemployed, our talents lying fallow. In that situation no one wants either to sacrifice or to benefit from the sacrifices of others.

Even more fundamentally, we don't believe that such sacrifice would be required if we hadn't wasted our resources on foolish consumerism. We believe in the economic engine our personal liberty creates, and we don't think it ought to be controlled from Washington.

Mr. Obama conceives of sacrifice as shared sacrifice, a thing imposed on the People by the State. And it is not to all of the people that he calls, but merely the Haves. The Haves are asked to sacrifice their capital, the very thing most Americans believe will enable them to end our economic troubles. The Have Nots are not called to sacrifice, but to benefit from the bounty he will lay before them.

And at that, whether Have or Have Not, we chafe even more.

Sphere: Related Content

Following

I'm tivoing the Iranian revolution. I have people right now gathering the information into book form, and in a few months I will purchase the paperback.

That's my way of saying it's great the the Iranians are dissatisfied with Ahmedicatedad, but I don't have to spend my day following it. It's not like I can affect the situation.

On the other hand, it does show once again that the global connectivity in general and the Internet in particular make it hard to keep tyranny going. Just as the PC and fax machine are said to have helped bring down the former Soviet Union, it appears that the Iranian revolution is being broadcast on Twitter.

But that presupposes that this is a revolution. It's impossible for me to know whether that is true or not -- are the protests against Ahmedinnerjacket, or against the Islamic regime itself?

And if they are against the Islamic regime, with what form of government will the revolution replace it?

I guess Barack Obama thinks maybe the revolution will bring something worse than totalitarian dictatorship - capitalism.

Sphere: Related Content

Permissive Parents, Leftist Children?

I have an hypothesis. It is that children of permissive parents grow up to be liberals, while children of strict parents grow up to be conservative.

I'm sure, before I even start, that if my hypothesis is true it is only a matter of degree, a question of percentages and leanings.

What I know for certain is that liberals generally act like spoiled children, and never want anyone to suffer consequences for their actions (nor to be rewarded for hard work).

Sphere: Related Content

Tax Loopholes

Tax loopholes are measures enacted by Congress to achieve some policy goal, like encouraging oil production or getting people to move back to central urban areas from the suburbs.

Tax loopholes are evil economic manipulation, I think.

But closing a loophole doesn't help the economy, generally. All it does is remove the incentive it was put in place to provide, so discouraging the activity it was designed to foster. Generally there isn't a lot of money for the government to gain.

Another effect of closing tax loopholes is to raise the general level of economic uncertainty. What is a good business activity? Companies and individuals don't know what the rules are if they keep changing.

Similarly, the more loopholes that are created and subsequently removed, the less effective tax policy will be.

But I guess in the end, any business which bases its activity on the presence of a tax loophole for it deserves what they get when the loophole goes away.

Sphere: Related Content

Fisking the White House Bailout of GM and Chrysler

President Bush has decided to give some number of billions of dollars of TARP money, which was supposed to be used for financial firms, to two failing car companies.

In doing so, he said ... well, let us fisk, shall we?

Bush said in normal economic circumstances

What are "normal" circumstances? Is there any set of circumstances that we could call "normal" that would cause companies the size of GM and Chrysler to fail, while other companies are not failing? Or would the fact of two of these companies failing be considered evidence that circumstances were not "normal"?

he would not intervene to save the automakers

Intervening is one word, "meddling in private business by Executive fiat to favor two companies over their competitors with an unconstitutional bill of attainder" describes it better. And saving the automakers may be what he says he's doing, but it's really his own image he's worried about. "Something must be done, this is something, therefor this must be done." These steps are neither necessary nor sufficient to save the automakers from anything except a painful, newsworthy Christmas. In these times of pain avoidance, Mr. Bush is just doing the expedient thing: borrowing money to loan to people who have no clear means to pay it back.

but "in the midst of a financial crisis

The financial crisis has very little to do with the automakers problems, except that their problems were caused primarily by the run-up in oil prices, making people unwilling to buy inefficient but high-markup trucks and SUVs that they had previously wanted as toys and status symbols.

To the extent that the financial crisis is a cause of the GM and Chrysler problems, it's because they have continued to make ever-more-expensive vehicles believing that people would continue to buy them on credit. When people suddenly became credit-wary, realizing the foolishness of taking a loan against a depreciating asset, the car makers were sunk.

But now that people have realized that it's foolish to pay interest on something which is losing value, no amount of Federal credit assistance is going to rescue the car companies.

"and a recession,

Again, would there ever be a car maker failure during some other economic phase?

"allowing the U.S. auto industry to collapse

The collapse bogeyman, too big to fail, etc. If these companies cannot make it, they should be allowed to fail now before we dump huge amounts of money we don't have into propping them up. We will be paying the interest on the debt we incur propping up the failing companies long after they go under anyway.

"is not a responsible course of action."

Saying it doesn't make it so. The responsible thing is to let people face the consequences of their actions. Call it compassion, call it anything else, but responsible it is not.

Sphere: Related Content

TPM Watch: Josh Marshall is half right

Josh Marshall of Talking Points Memo writes that Democrats may use their majority to do away with the filibuster in the Senate. I agree with Marshall that they should not do that, that having a minority with some power to act is good for the republic.

But then, there is this:

Finally, this issue now goes well beyond the fate of the American automakers. Senate Republicans are following this course for three key reasons -- first is payback against a major industrial union; second is payback against states like Michigan and Ohio who have been moving away from the GOP; third is the desire to advantage Japanese auto manufacturers who disproportionately do business in their southern states.

What even the White House can see at this point is that having one or more of these companies go under right now will rapidly accelerate the economic crisis, and in unpredictable ways.

I don't think Josh understands Republicans at all, or perhaps prefers his narratives to be untarnished with the stain of reality. There is no "payback" involved, either against a labor union or especially against the voters of any State. That's just stupid. Payback?

This is about Republican Senators standing up for capitalism and against socialism. If you want to be cynical, they're establishing their conservative cred -- pandering to the base, you would say.

And the last paragraph is a repeat of the false dilemma: the choice is bailout versus Chapter 11 restructuring, not going under.

Sphere: Related Content

Capitalist Victory Over Unions, Obama, Bush, Detroit, Democrats and Media on Bailout

Despite strong support among Democrats in Congress and the media, Republicans led by Senators Corker and Shelby won a key vote Thursday evening, with support for capitalism showing renewed strength in the against the socialist forces led by lame duck President George Bush, former Senator Barack Obama (D-IL), House Speaker Nancy Pelosi (D-CA), and Harry Reid (D-NV) in the Senate.

Both the United Auto Workers (UAW) labor union and the Detroit auto makers supported a plan by Mr. Bush and the Democrats to loan approximately $15 billion to the failing Detroit auto industry. The plan would have called for bankruptcy-like changes for the troubled companies, as well as the appointment of a government ombudsman or "car tzar" to approve all major decisions for the companies accepting the money.

Negotiations failed when the labor union, whose workers receive over $70 per hour in benefits, refused to take a pay cut to allow the plan to go forward.

The public was overall against the plan, despite intense support from the news media. Media reports portrayed the total collapse of the American automotive industry as the alternative to this plan.

Former Illinois Senator Barack Obama (D-Chicago), who resigned last month amid the corruption scandal which has so far resulted in an indictment against his close allies Antoin "Tony" Rezko and Illinois Governor Rod Blagojevich (D-Chicago) was not directly involved in the negotiations.

Sphere: Related Content

The Trouble with the Base

Reading this Corner piece from the great Ramesh Ponnuru, two things struck me.

First, I noticed a trend: people are picking apart the Republican party and the conservative movement into constituent groups -- Married Anglo-Saxon Protestants, conservative Catholics, et al. Seeing a lack of physical diversity, they then prescribe as remedy the abandonment of foundational ideology.

The troubles with that line of thinking are legion, but the main thing about it is the continual confusion of the Republican Party with the conservative movement.

The Republican Party is a liberal organization. It was founded in the liberal furnace of Abolition, tempered by war with the truly conservative forces of Southern aristocracy, and had its new car smell become malodorous with the stench of Reconstruction. It was the party of the intellectual, of noblesse oblige, and of the black voters they freed from bondage.

Nowadays, the Republican Party exists as a vehicle to win elections, based primarily around the popularity of laissez faire economics. That social conservatives largely identify with it is because A) social conservatives are largely free-market types, as well, and B) they have nowhere else to go.

Modern Conservatism, forged by Buckley, Goldwater, and Reagan, is an alloy of the conservative notion of not fixing what is not broken with the ideas of Enlightenment and classical liberalism. It attempts to keep America fixed in its foundational form. It's a bit of a coincidence that conservative in America means classical liberal.

This unification of the Republican Party and conservatism is a holdover from Ronald Reagan, so forged by the power of his ideas and his steadfast support of them. People are naturally wont to label themselves, and to adopt the ideas of those peers and leaders with whom they largely agree. This, too, welds the Republican Party and conservatism.

But even with the difference between the Republican Party and the conservative movement, it must be recognized that the people who make up these groups are motivated by a set of beliefs. Almost all Republicans have as a core belief that people are better off when they can fend for themselves economically. Government, in this mindset, exists to defend us from each other and from outsiders. As Reagan said, government is not the solution, but the problem.

Another core Republican belief is that all men are created equal. We do not want discrimination, even if it is intended to remedy earlier discrimination in some other direction.

And it is these ideas which fundamentally bind us together, and these ideas we seek to further.

We cannot therefore reach out to other "groups" without recoiling in horror at the thought of dividing mankind up into groups. It stinks of the corpse of that war we fought in our youth, and it is not our way.

We believe our ideas are of universal appeal, and do not need to be packaged to pander to people based on their personal place in the nation's demography.

The second thing that struck me is that Ramesh Ponnuru is for some reason still reading Kathleen Parker.

Sphere: Related Content

Detroit CEOs: Beatings to Continue Until Morale Improves

These guys should not be in Washington, asking for money. They should be in Detroit, making it.

Actually, they should be standing in front of a judge, asking for Chapter 11 protection from the unions bankrupting them. They plan to do some of that, according to this unreliable source, but not enough.

General Motors Corp., Ford and Chrysler LLC said they would refinance their companies’ debt, cut executive pay, seek concessions from workers and find other ways of reviving their staggering companies.

The only thing they need to be asking Congress to do is to drop the stupid CAFE standards and let the naturally rising gas prices influence which kind of cars people buy.

Now Ford is promising to boost fuel economy across its fleet by 14% this year. But they can't keep that promise, because it again depends on which cars people buy. For Ford to make the effort means that they are pursuing something other than the long-term viability of their company, which will inevitably lead to a suboptimal result.

Further, the car companies are expected to put a moratorium on incentive pay for salaried workers. Rather than reward success, the companies are going to punish failure.

And by selling airplanes, restructuring operations, and undergoing other cost-saving changes, they are simply nibbling along the edges of their problem, which is that because of their high labor and tax costs, they can't make money selling fuel-efficient cars..

Selling 14% more of something is not a recipe for success when you lose money selling each one.

Sphere: Related Content

The Coming Incorrect Response to the Wrong Problem

In all likelihood, when the Electoral College of the United States meets in December, Barack Hussein Obama will be elected President. Despite his unproven eligibility, Obama is very good at behind-the-scenes political arm-twisting and race-baiting, and will probably garner enough votes push aside his closest competitors.

But leaving aside how we got to this point, Obama will live in the White House.

So what is he going to do? He's going to respond to the economic "crisis" as FDR responded to the depression of 1929: spend like mad, in an effort to get reelected. But as Yid With Lid puts it, that won't help us recover:

As late as 1938, nine years into the depression, almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation, and the increased power of labor. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth.

And this is not the depression of 1929, or even 1932. It's a crisis in credit confidence brought on by years of systemic government over-regulation and intervention.

Companies have been burdened with reporting requirements that cost them millions in accounting charges, for little tangible benefit. Compliance with the Sarbanes-Oxley rules alone costs a business about a million dollars a year, and for the small-to-medium businesses that are the backbone of the economy -- where the jobs are -- that's a serious hurdle. And it's for nothing more than paperwork.

After forcing banks to make loans to people who couldn't afford them, Congress and the Obama-led forces of political correctness are now going to double down to keep people in the homes they still can't afford, in the name of pain avoidance. It will lead to the same place it did before: default and crash.

Now as each new company deemed too big to fail teeters on the brink of failure, rather than allowing them to fail and trusting that the system which has worked for hundreds of years will continue to work, we assume that we are smarter than our forbears. We can succeed in directing from Mount Etna the affairs of men. Yes, we can.

So rather than admit the failure of the Community Reinvestment and Sarbanes-Oxley Acts, we expand government without care or concern as to what the long-term effect of doing so may be.

It's a crisis!
We must to something!
This is something!
This must be done!

In reality we are not addressing the same problem they were faced with in 1929 or 1932. Even if we were faced with the Great Depression, imitating Hoover and Roosevelt would not solve it. The only answer is to first stop doing, with excessive intervention and regulation, the damage we are doing, and allow the natural wonder that is the American economy again to display its awesome powers.

Sphere: Related Content

Why Can't the Government Do Something?

"Why can't the government do something about the American auto industry?"

They can do something about it.

"Why don't they fix it, then?"

They can't do that.

"But you said they could!"

No, I said they could do something about it. They can outlaw it, they can subsidize it some more, and they and even take it over. But none of those things would fix it.

"'Take it over'?"

Yes, they could easily buy a controlling interest in the car companies.

"Why don't they do that?"

There is nothing in our Constitution about that.

"Exactly my point! Why don't they just buy the auto makers?"

Our government doesn't do that kind of thing. And it wouldn't fix the problem. It would only make the government more interested in funding them further.

"But you said they could."

Republicans would never stand for it.

"But they were voted out of power."

Ah. Just so.

Sphere: Related Content

Giving Thanks

I started out to write about Pilgrims and Indians, Mayflowers and Compacts, and how we really ought to be thankful for their courage, their cooperation, and above all, for their faith. But I realized that's been done, and overdone, and deconstructed, and reconstructed already. I mean, we've had Captain John Smith and Pocahontas, and this very year, it seems every blogger and pundit has some kind of message today.

For instance, Ken Taylor does a fine work writing at The Minority Report.

And it occurs to me why there is so much blogging about this holiday: despite its origins as a government-approved religious observance, everybody likes Thanksgiving.

Even angry vegetarian Pagans can grit their strident, protesting teeth and get behind the idea of a feast at the end of a harvest. Usually in North America the summer grain crops are all but totally harvested by now, though this year cool, wet weather has delayed that in some areas.

But it would be very difficult to plan the start of the Christmas marketing season if we had to wait until the crops were actually brought in before we were to give thanks. Cynicism aside, Thanksgiving itself remains remarkably uncommercialized. Only the NFL, Macy's, and Ocean Spray have had any real success with it, though the people who make turkey friers are giving it a push.

The politically incorrect holiday is Christmas, with its parallel traditions of Christian Virgin Birth on the one hand and elvin, reindeerish images evoking the diversity-challenged Northern Europe of the Little Ice Age on the other.

On Thanksgiving, everyone seems to take a step back, reflect, and exhale a bit. We see siblings, or not, gorge on big, slow birds, or not, and watch the Detroit Lions lose a football game, or not. The Lions will lose, that is, but not everyone will force themselves to watch them do it.

Sphere: Related Content

Bailout Bank Boycott

I intend not to do business with any of these people.

w/t BeyondBailouts

Sphere: Related Content

Why Is It So Hot?

And why are we in this handbasket?

The government response to the credit crisis is going to destroy our economy. It may unravel the nation itself.

These companies should have been allowed to fail. It's not PC to say I don't care about the people involved losing their jobs, but I don't care about the people involved losing their jobs.

I've lost jobs before. Sometimes you find another, sometimes you declare personal bankruptcy, sometimes you start your own business. You never die from it, and you are always better for it.

We have lost the freedom to fail. Without failure, there is no success -- just a lifelong muddling. We're to be a civilization of muddlers.

But the direct consequences are to be just as bad. In order to fight the specter of deflation, the government is pumping money into the economy right off the printing press -- except without even the need to actually mint anything. They're pretending that they have the money.

Eventually, someone is going to demand that they show it. When that happens, they'll lose their credit rating, and the ability to borrow along with it.

Without the ability to borrow, the US Government goes bankrupt.

Sphere: Related Content

Big Three Bailout Options

Mary Katherine Ham follows the usual logic of the false dilemma as she writes:

For the auto industry to completely collapse would be a disaster in this kind of environment, not just for individual families but the repercussions across the economy would be dire. So it's my belief that we need to provide assistance to the auto industry. But I think that it can't be a blank check.

Filing for Chapter 11 bankruptcy protection allows a company to continue its operations under some framework approved or managed by a court. It should be distinguished from Chapter 7, which forces a company to dissolve (or in Ham's phrasing, to completely collapse). Chapter 11 forces a business to admit the failure of its business model, restructuring it to become a going concern.

In particular, GM needs to renegotiate its labor contracts.

It would be very helpful if GM could decide what kind of cars to make, as well. But that won't happen, since it can't renegotiate the CAFE standards with Congress.

I've predicted that if GM were to get bailout money, there would be nothing stopping them from entering bankruptcy protection anyway. That's right, Madam Speaker-In-Law, they could take the money you want to give to your union thug pals and declare a fat dividend followed by bankruptcy. In fact, the board would be fiduciarily remiss not to do so.

But in the NY Times, Harvard economist Edward L. Glaeser has another suggestion.

There is a middle path between bailout billions and car company catastrophe: the possibility of limited government aid after automobile companies have entered Chapter 11.

I don't think he's right. There is no need for a bailout, and if one comes it will worsen the losses.

But if we have to accept one, it would sure be nice if GM could admit the failure of its business model before getting it.

Sphere: Related Content

Unions Throw People Out of Work and Keep Them There

The UAW has succeeded in limiting how many people the automotive industry has been able to hire, by forcing it to pay too much to those it does.

And now, the threat is that because of its outrageous labor costs, GM may go out of business. If it does, all of those union jobs will go away.

So, the title.

The minimum wage works the same way. The more money a business has to pay per worker, the fewer workers it can hire. Those it can't hire will just have to keep looking. If the business can't cut wages in response to tough times, its employees will have those nice minimum wage jobs right up until the moment they don't.

Sphere: Related Content

Soakitalism

What you get when government takes ownership in companies to "save" them.

w/t FrankJ

Sphere: Related Content

Prediction: GM, Ford, Chrysler Get Bailout, Then Go Bankrupt As Well

Do I really need to explain why?

• The former Big Three are hemorrhaging cash, which an infusion will not stop.
• They'll have a larger debt load.
• Strings attached to the bailout will include limits on executive compensation and, possibly, government mandates to produce smaller, more efficient cars.

Since the Big Three lose money making smaller, more efficient cars, making more of them in itself won't help profitability. Since a big problem with the automakers has been poor management, limits on executive compensation will only cause the best managers to leave for more pastures which are perhaps less green, but more golden.

Only bankruptcy followed by fundamental changes in the labor environment can help American automotive manufacturing.

Sphere: Related Content

Without Obama, G20 Talks Produce Results

According The Hill:

White House officials said President Bush and other leaders had achieved five key objectives, stating they reached a common understanding of the root causes of the crisis; reviewed actions to be taken to strengthen growth; agreed on principles for financial market reform; drafted an action plan; and reaffirmed their commitment to free market principles.

With Barack Obama absent, experienced statesmen were able to agree on the root causes of the crisis, concluding with everyone else who doesn't drink the liberal happy sauce that Barney Frank, Maxine Waters, and Barack Obama were exclusively at fault.

Sphere: Related Content

Hyperinflation is Coming

All of these bailouts are going to have the effect of making our money worth a lot less.

The criminals looting the Treasury should be hung for treason.

Throw them all out. The Democrats, Republicans, and anyone who voted for the Troubled Asset Relief Program, voted to bail out Fannie and Freddie, or who give away money to any failing company.

Companies which fail should go bankrupt. Propping them up will only make the problem worse, as managers (both in the bailed out firms and in the rest who observe them) see that failure is rewarded.

The pathological avoidance of pain is going to ruin us, and in fact, may already have done so.

Sphere: Related Content