Hey, Mr. President, Leave Those Kids Alone
by Gene Healy
At noon Eastern time today, President Obama will deliver a speech to America's schoolchildren on what, for most, is their first day of classes. Many of them won't be watching, however. Parents across the country are pressuring schools not to show the speech — or even keeping their kids home.
Is the president's speech part of a sinister plan to create a socialist Obama Youth movement? Hardly. The transcript, released yesterday, reveals a pretty standard homily to educational excellence, and there's no evidence it was ever supposed to be anything else. Even so, there's something grotesquely collectivist about the idea of the president addressing a captive audience of 50 million schoolchildren, hectoring them to turn off the X-Box and hit the books.
After all, the president has no constitutional power over education and no proper role in it. Our Constitution's framers thought schooling was too important to be left to a federal government that would be far removed from local communities, and whose principal responsibility was to deal with large national concerns, like defense, that the states and localities couldn't handle.
Is the president's speech part of a sinister plan to create a socialist Obama Youth movement?
The framers were wiser than they knew: The lesson plans Obama Department of Education officials came up with after several meetings with the White House make it clear that federal education bureaucrats should be kept as far away from children as possible.
One of the plans envisioned teachers making kindergartners write letters to themselves about what they can do to help the president. After parents rightly recoiled from that recommendation, the DOE tried to throw it down the memory hole, deleting it from their Web site.
Given some of the cultish questions that survived DOE's hasty revision, however, concerned parents can be pardoned a few overheated references to Kim Il-Sung:
How will [President Obama] inspire us?"
What is President Obama inspiring you to do?
Why is it important that we listen to the president and other elected officials?
These are question-begging questions, especially if you're one of those sensible Americans of all ages who aren't particularly inspired by President Obama, and who aren't convinced that listening raptly to elected officials is the best possible use of your time.
Worse still, the goofy pedagogical theory that informs DOE's lesson plans assumes that if we just get kids to express themselves about how a speech makes them feel, then they'll get smarter.
Gene Healy is a vice president at the Cato Institute and the author of The Cult of the Presidency.
More by Gene HealyWhen they're old enough, in history class, kids ought to read and listen to presidential speeches like Ike's farewell address, LBJ's Great Society speech, Carter's malaise speech, and George W. Bush's second inaugural. And then they should be encouraged to dissect those speeches: What's the argument here? Is it convincing? We ought to ask kids to think critically about presidential rhetoric, instead of prodding them to burble appreciatively about his compassionate plans for everybody.
Of course, Barack Obama wasn't the first president to deliver an address to all of America's schoolchildren. George H.W. Bush did it 18 years ago, and though he didn't include an obnoxious lesson plan, he did — shades of Obama's DOE — ask kids to "Write me a letter about ways you can help us achieve our goals." Liberals are right to ask why people weren't just as offended when Bush 41 did it. They should have been.
It's just not the president's job to urge students to shun "kids who think it's cool not to be smart" (Bush 41) or "stand up for kids who are being teased" (Obama). If students need inspiration, they shouldn't be encouraged to get it from professional politicians, who generally make even poorer role models than professional athletes.
The president isn't a benevolent father-protector, charged with the welfare of all creatures great and small — and educators do kids a great disservice if they help promote such a childish notion. Still less was he supposed to be the educator in chief, presiding over a centralized education bureaucracy, handing out Title X grants (with strings attached) and falsely promising that no child will be left behind. The framers thought of the president as a mere constitutional officer, whose main job is taking care that the laws are faithfully executed. Students — and presidents — could stand to learn a lot more about how far we've drifted from that ideal.
Listening to a Liar
The most important thing about what anyone says are not the words themselves but the credibility of the person who says them.
The words of convicted swindler Bernie Madoff were apparently quite convincing to many people who were regarded as knowledgeable and sophisticated. If you go by words, you can be led into anything.
No doubt millions of people will be listening to the words of President Barack Obama Wednesday night when he makes a televised address to a joint session of Congress on his medical care plans. But, if they think that the words he says are what matters, they can be led into something much worse than being swindled out of their money.
One plain fact should outweigh all the words of Barack Obama and all the impressive trappings of the setting in which he says them: He tried to rush Congress into passing a massive government takeover of the nation's medical care before the August recess-- for a program that would not take effect until 2013!
Whatever President Obama is, he is not stupid. If the urgency to pass the medical care legislation was to deal with a problem immediately, then why postpone the date when the legislation goes into effect for years-- more specifically, until the year after the next Presidential election?
If this is such an urgently needed program, why wait for years to put it into effect? And if the public is going to benefit from this, why not let them experience those benefits before the next Presidential election?
If it is not urgent that the legislation goes into effect immediately, then why don't we have time to go through the normal process of holding Congressional hearings on the pros and cons, accompanied by public discussions of its innumerable provisions? What sense does it make to "hurry up and wait" on something that is literally a matter of life and death?
If we do not believe that the President is stupid, then what do we believe? The only reasonable alternative seems to be that he wanted to get this massive government takeover of medical care passed into law before the public understood what was in it.
Moreover, he wanted to get re-elected in 2012 before the public experienced what its actual consequences would be.
Unfortunately, this way of doing things is all too typical of the way this administration has acted on a wide range of issues.
Consider the "stimulus" legislation. Here the administration was successful in rushing a massive spending bill through Congress in just two
days-- after which it sat on the President's desk for three days, while he was away on vacation. But, like the medical care legislation, the "stimulus"
legislation takes effect slowly.
The Congressional Budget Office estimates that it will be September 2010 before even three-quarters of the money will be spent. Some economists expect that it will not all be spent by the end of 2010.
What was the rush to pass it, then? It was not to get that money out into the economy as fast as possible. It was to get that money-- and the power that goes with it-- into the hands of the government. Power is what politics is all about.
The worst thing that could happen, from the standpoint of those seeking more government power over the economy, would be for the economy to begin recovering on its own while months were being spent debating the need for a "stimulus" bill. As the President's chief of staff, Rahm Emanuel, said, you can't let a crisis "go to waste" when "it's an opportunity to do things you could not do before."
There are lots of people in the Obama administration who want to do things that have not been done before-- and to do them before the public realizes what is happening.
The proliferation of White House "czars" in charge of everything from financial issues to media issues is more of the same circumvention of the public and of the Constitution. Czars don't have to be confirmed by the Senate, the way Cabinet members must be, even though czars may wield more power, so you may never know what these people are like, until it is too late.
What Barack Obama says Wednesday night is not nearly as important as what he has been doing-- and how he has been doing it.
Inflation and Deficits: Politicians Cause Inflation
With the massive increases in federal spending, inflation is one of the risks that awaits us. To protect us from the political demagoguery that will accompany that inflation, let's now decide what is and what is not inflation. One price or several prices rising is not inflation. Increases in money supply are what constitute inflation, and a general rise in prices is the symptom. As the late Nobel Laureate Professor Milton Friedman said, "(I)nflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output."
Thinking of inflation as rising prices permits politicians to deceive us and escape culpability. They shift the blame saying that inflation is caused by greedy businessmen, rapacious unions or Arab sheiks.
Instead, it is increases in the money supply that cause inflation, and who is in charge of the money supply? It's the government operating through the Federal Reserve Bank and the U.S. Treasury.
Our nation has avoided the devastating hyperinflations that have plagued other nations. The world's highest inflation rate was in Hungary after World War II, where prices doubled every 15 hours. The world's second highest inflation rate is today's Zimbabwe, where last year prices doubled every 25 hours, a rate of 89 sextillion percent. That's 89 followed by 23 zeros. Our highest rate of inflation occurred during the Revolutionary War, when the Continental Congress churned out paper Continentals to pay bills.
The monthly inflation rate reached a peak of 47 percent in November 1779.
This painful experience with inflation, and collapse of the Continental dollar, is what prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit. The U.S. Constitution's Article I, Section 8 permits Congress: "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
The founders of our nation feared paper currency because it gave government the means to steal from its citizens. When inflation is unanticipated, as it so often is, there's a redistribution of wealth from creditors to debtors. If you lend me $100, and over the term of the loan prices double, I pay you back with dollars worth only half of the purchasing power they had when I borrowed the money. Since inflation redistributes (steals) wealth from creditors to debtors, we can identify inflation's primary beneficiary by asking: Who is the nation's largest debtor? If you said, "It's the U.S. government," go to the head of the class.
Inflation is just one effect of massive increases in spending.
Some might argue that future generations of Americans will pay for today's massive budget deficits. But is there really a federal budget deficit? The short answer is yes, but only in an accounting sense -- but not in any meaningful economic sense. Let's look at it. Our GDP this year will be about $14 trillion. If 2009 federal expenditures are $3.9 trillion and tax receipts are $2.1 trillion, that means there is an accounting deficit of $1.8 trillion. Is it the Tooth Fairy, Santa or the Easter Bunny who makes up the difference between expenditures and revenue? Is it a youngster who is born in 2020 or 2030 who makes up the difference? No. If government spends $3.9 trillion of our $14 trillion GDP this year, of necessity it has to force us to spend privately $3.9 trillion less this year. One method to force us to spend less privately is through taxation. Another way is to enter the bond market and drive up the interest rates, which put a squeeze on private investment in homes and businesses. Then there is inflation, which is a sneaky form of taxation.
Profligate spending burdens future generations by making them recipients of a smaller amount of capital and hence less wealth.
Washington's Lies
President Obama and congressional supporters estimate that his health care plan will cost between $50 and $65 billion a year. Such cost estimates are lies whether they come from a Democratic president and Congress, or a Republican president and Congress. You say, "Williams, you don't show much trust in the White House and Congress." Let's check out their past dishonesty.
At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee, along with President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. That's nine times Congress' prediction. Today's Medicare tab comes to $420 billion with no signs of leveling off. How much confidence can we have in any cost estimates by the White House or Congress?
Another part of the Medicare lie is found in Section 1801 of the 1965 Medicare Act that reads: "Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine, or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer, or employee, or any institution, agency or person providing health care services." Ask your doctor or hospital whether this is true.
Lies and deception are by no means restricted to modern times. During the legislative debate prior to ratification of the 16th Amendment, President Howard Taft and congressional supporters said that only the rich would ever pay federal income taxes. In 1916, only one-half of 1 percent of income earners paid income taxes. Those earning $250,000 a year in today's dollars paid 1 percent, and those earning $6 million in today's dollars paid
7 percent. The lie that only the rich would ever pay income taxes was simply a lie to exploit the politics of envy and dupe Americans into ratifying the 16th Amendment.
The proposed tax increases that the White House and Congress are proposing will probably pass. According to the Washington, D.C.-based Tax Foundation, during 2006, roughly 43.4 million tax returns, representing 91 million individuals, had no federal tax liability. That's out of a total of 136 million federal tax returns. Adding to this figure are 15 million households and individuals who file no tax return at all. Roughly 121 million Americans -- or 41 percent of the U.S. population -- are completely outside the federal income tax system. These people represent a natural constituency for big-spending politicians. Since they have no federal income tax obligation, what do they care about higher taxes or tax cuts?
Another big congressional lie is Social Security. Here's what a 1936 government pamphlet on Social Security said: "After the first 3 years -- that is to say, beginning in 1940 -- you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year ... beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. ... And finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year." Here's Congress's lying promise: "That is the most you will ever pay." Let's repeat that last sentence: "That is the most you will ever pay." Compare that to today's reality, including Medicare, which is 7.65 cents on each dollar that you earn up to nearly $107,000, which comes to $8,185.
The Social Security pamphlet closes with another lie: "Beginning November 24, 1936, the United States government will set up a Social Security account for you ... The checks will come to you as a right." First, there's no Social Security account containing your money, but more importantly, the U.S. Supreme Court has ruled on two occasions that Americans have no legal right to Social Security payments.
We can thank public education for American gullibility.
Ecuador: Chevron’s Shakedown – Investor’s Business Daily
Chevron, which has been battling the most expensive lawsuit in history from Ecuadorean environmental radicals, released a video Monday showing the “political coordinator” from Ecuador’s ruling party telling a couple of contractors that he’d be glad to get them contracts to remediate rain forest pollution — for a $3 million fee.
See, the fix was already in that an Ecuadorean judge would rule against Chevron on a $26 billion lawsuit. After that, the “remediation” gravy would flow. Nevermind that Ecuador’s state oil company created the pollution. It was already in the bag that the judge would make Chevron pay.
The $3 million the “political coordinator” of Ecuador’s ruling party tried to extort would be divided three ways: $1 million for the judge, $1 million for “the presidency” and $1 million for the plaintiffs — a radical group known as the Amazon Defense Coalition.
But little did the Ecuadoreans know, their mafioso way of getting paid so repelled the two contractors, Wayne Hansen and Diego Borja, that they recorded it.
We understand why — their 22-minute video showing the shakedown plays like a sleazy knockoff of “The Godfather.” One of the contractors, who had done work for Chevron in the past, gave it to the company. The film can now be seen by anyone who cares about the facts of the case (or who just likes mafia movies) at chevron.com/ecuador. “If this was in the Onion, it would be funny,” Chevron spokesman Kent Robertson told IBD.
But the tapes confirm three serious things: the Ecuadorean judge has already decided to rule against Chevron later this year, even before he’s heard the evidence; that he can no longer preside over this case; that the government, though not a party to the lawsuit, will benefit from the $26 billion jackpot; and that the judge can no longer credibly preside over the case; and that any appeal of the court’s decision would be, in the judge’s words on the video, “a formality.”
Whatever this is, it’s not justice.
The merits of Chevron’s case are irrelevant to Ecuador, whose judge is internationally recognized as the arbiter of the case. And the U.S. government’s passivity in this case is foolish. Chevron’s fate should be a lesson: Ecuador’s crooks will shake down American corporations for everything they have — and then some.
Source: IBD Editorials
Venezuela: Chávez’s Covert War – by Otto Reich
Venezuela’s strongman Hugo Chávez recently warned that the “winds of war” were blowing in South America, and called on his military to “prepare for combat” against neighboring Colombia, a U.S. ally. Should we take his prediction seriously, or is this another cry of “wolf” by the loud lieutenant colonel? And how worried should be the American government be in either case?
An overt Venezuela-Colombia war is unlikely. To be sure, saber-rattling by someone who wears battle fatigues in public cannot be ignored. But Chávez’s generals are in no mood to face the Colombians or anyone else. Corruption and politicization have weakened Venezuela’s military, despite its acquisition of billions of dollars of Russian and other foreign weaponry. Plus, in his 10 years in power, Chávez has only ever pointed his guns at defenseless Venezuelan civilians. Bullies like him do not forewarn their intended victims. He does not fight openly, preferring to intervene covertly — either directly or through his regional “anti-imperialist” alliance, the Bolivarian Alternative for the Americas (ALBA), a collection of the highest-decibel, lowest performing leaders in the region, from countries including Cuba, Bolivia, Nicaragua, Ecuador, and, until June, Honduras.
Honduras has been the most recent target of Chávez’s subversion. There, he convinced a gullible follower, Manuel Zelaya, to retain his office through ALBA’s so-far successful modus operandi: After reaching power democratically, change the rules, neutralizing the legislative and judicial systems so that no opposition leader can ever rise democratically again. Chávez has guided this strategy in Bolivia and Ecuador, and ALBA member Daniel Ortega is attempting the same in Nicaragua. Thankfully, however, Honduras’s institutions of democracy — the justice system and legislature — proved too strong. The Supreme Court unanimously found Zelaya guilty of high crimes and ordered the military to remove him from office.
Losing Zelaya — the first reversal in the drive to spread “21st Century Socialism” in the region — has driven Chávez to near hysteria. He has repeatedly promised to “overthrow” the new Honduran president, Roberto Micheletti, who was constitutionally appointed to office by an overwhelming congressional vote. (All but three members of Zelaya’s own party voted for Micheletti.) No Chávez soldiers have been spotted in Honduras, but there are reports that Venezuelan and Cuban intelligence operatives are fomenting violence in order to damage the government’s image, a common tactic in Latin America.
In Colombia, Chávez cries wolf to disguise his concealed aggression, such as his support for the Revolutionary Armed Forces of Colombia (FARC), internationally condemned as a “narco-terrorist organization.” The discovery of Venezuelan support for terrorists has routinely triggered Chávez’s public tantrums. In March 2008, for example, Colombian Special Forces raided a FARC command and training camp situated more than a mile inside Ecuador. They captured laptops belonging to the FARC’s second-in-command, Raul Reyes, who was killed in the assault. The computers revealed Chavez’s long-standing financial, political, diplomatic, and military aid to the FARC. They documented Chávez’s offer of $300 million for the FARC in Colombia and for other Marxist groups in Latin America, as well as collaboration with and political contributions to Ecuadorian President (and ALBA cheerleader) Rafael Correa, one of Chávez’s most vocal allies. Correa a! nd other leftist leaders condemned Colombia for its “violation of Ecuador’s sovereignty” — rather than denouncing the presence of a transnational terrorist camp, which must have existed with government acquiescence.
At that time, Chávez’s hysteria reached a fever pitch. Chávez called Colombian President Álvaro Uribe “a criminal” and Colombia a “terrorist state,” equating its aggressiveness with Israel’s. On television, Chávez histrionically ordered his generals to “send 10 battalions of tanks” to the border, which he closed, stopping all trade. The measures soon had to be repealed lest they damage Venezuela’s economy more than Colombia’s.
Thus, the winds of war announced by Chávez last year did little lasting damage. Is this year any different?
The latest cause of Chávez’s bellicosity is the announcement that Colombia will host U.S. advisors at some of its army, navy, and air bases. Chávez and his leftist chorus, including Argentina and Brazil, immediately accused Uribe of providing “military bases” for “an aggression by the empire against our region” (in the words of Bolivian President Evo Morales).
The United States has repeatedly stated that there are no military bases being established in Colombia. Nor are there plans for any. No additional U.S. forces are being sent. In fact, the number of American military and civilian advisors in Colombia has steadily declined over the past few years, and today totals less than a thousand. At the same time, the number of Cuban and other rogue-state advisors in Venezuela is reported to be many times that number.
The U.S. presence on Colombian soil is not a threat to regional peace — quite the contrary. U.S. advisors have helped Colombia’s security forces crush narcotics traffic and terrorism. Under Uribe, the number of Marxist guerrillas has been halved, from about 18,000 to 9,000. Right-wing paramilitaries have lost so many men (over 30,000 have surrendered) that they no longer exist as organized forces. And an official U.N. report credits Colombia’s anti-narcotics programs for cutting coca cultivation and production by double digits in one year.
So why the cries of war? Because, once again, Chávez’s ties to the illicit weapons and drugs pipelines have been exposed.
On August 3, the New York Times reported: “Venezuelan officials have continued to assist commanders of Colombia’s largest rebel group, helping them arrange weapons deals in Venezuela and even obtain identity cards to move with ease on Venezuelan soil.” The article adds that captured materials “point to detailed collaboration between the guerrillas and high-ranking military and intelligence officials in Mr. Chávez ’s government as recently as several weeks ago.”
A recent example illustrates Venezuela’s brazen arms trafficking. When Colombia found Swedish-made anti-tank rocket launchers in FARC hands, the Swedish government asked Venezuela for an explanation. In the original sales agreement, Venezuela promised Stockholm that the weapons would not end up in the hands of terrorists — but there they were. Chávez has refused to issue an official reply, saying in public only that the arms had been “stolen” from a Venezuelan military base.
Chávez’s government is also deeply involved in drug trafficking. Last September, the U.S. Treasury Department designated three senior Venezuelan government officials as “Significant Foreign Narcotics Traffickers” under the Drug Kingpin Act. They charged Henry Rangel Silva, Ramon Rodriguez Chacin, and Hugo Armando Carvajal with “materially assisting the narcotics trafficking activities of the FARC.”
In equivalent positions in the United States, these individuals would be director of the FBI and CIA, director of the Defense Intelligence Agency, and U.S. attorney general and secretary of homeland security. Does anyone really think these men act without Chávez’s knowledge and protection? Not surprisingly, in July, the non-partisan U.S. General Accountability Office reported that “Venezuela has extended a lifeline to Colombian illegal armed groups by providing significant support and safe haven along the border. As a result, these groups, which traffic in illicit drugs, remain viable threats to Colombian security.”
But Colombia is far from the only target. The United States is the principal market for Colombia’s illicit drug industry, of which Chávez’s allies in FARC control 60 percent of production. Clearly, an undeclared war is already underway between Hugo Chávez’s government and the United States and Colombia.
Faced with this and much more damning evidence, some still classified, of Chávez’s covert war, what should the U.S. response be? First, call Chávez what he is: a supporter of drug trafficking and terrorism. Second, designate Venezuela as an official state sponsor of terrorism. The National Security Council has made this recommendation since 2003. Some U.S. officials, well-meaning but misguided, feel that diplomacy alone will convince Chávez to change his ways. It has not and will not. Third, end the self-defeating U.S. dependence on the Venezuelan oil that finances Chavez’s anti-democratic and anti-American aggression. The United States can find new sources for 8 percent of its imports much more quickly than Venezuela can find an alternate market for 72 percent of its exports.
Some may say this last response is “disproportionate” or “confrontational.” They should try saying that to the mother of the American child who died of a drug overdose, the wife of the U.S. policeman murdered by traffickers, or the orphan of the Colombian soldier killed by weapons provided by Hugo Chávez. Such a non-belligerent reaction by the United States, whose national security is under attack, is fully justified.
* Otto Reich has served three U.S. presidents in the White House and State Department, including as U.S. Ambassador to Venezuela and assistant secretary of state for Western Hemisphere affairs.
US: Obama vs. Honduran Democracy – by Mary O’Grady
If the Obama administration were a flotilla of ships, it might be sending out an SOS right about now. ObamaCare has hit the political equivalent of an iceberg. And last week the president’s international prestige was broadsided by the Scots, who set free the Lockerbie bomber without the least consideration of American concerns. Mr. Obama’s campaign promise of restoring common sense to budget management is sleeping with the fishes.
This administration needs a win. Or more accurately, it can’t bear another loss right now. Most especially it can’t afford to be defeated by the government of a puny Central American country that doesn’t seem to know its place in the world and dares to defy the imperial orders of Uncle Sam.
I’m referring, of course, to Honduras, which despite two months of intense pressure from Washington is still refusing to reinstate Manuel Zelaya, its deposed president. Last week the administration took off the gloves and sent a message that it would use everything it has to break the neck of the Honduran democracy. Its bullying might work. But it will never be able to brag about what it has done.
The most recent example of the Obama-style Good Neighbor Policy was the announcement last week that visa services for Hondurans are suspended indefinitely, and that some $135 million in bilateral aid might be cut. But these are only the public examples of its hardball tactics. Much nastier stuff is going on behind the scenes, practiced by a presidency that once promised the American people greater transparency and a less interventionist foreign policy.
To recap, the Honduran military in June executed a Supreme Court arrest warrant against Mr. Zelaya for trying to hold a referendum on whether he should be able to run for a second term. Article 239 of the Honduran constitution states that any president who tries for a second term automatically loses the privilege of his office. By insisting that Mr. Zelaya be returned to power, the U.S. is trying to force Honduras to violate its own constitution.
It is also asking Hondurans to risk the fate of Venezuela. They know how Venezuela’s Hugo Chávez went from being democratically elected the first time, in 1998, to making himself dictator for life. He did it by destroying his country’s institutional checks and balances. When Mr. Zelaya moved to do the same in Honduras, the nation cut him off at the pass.
For Mr. Chávez, Mr. Zelaya’s return to power is crucial. The Venezuelan is actively spreading his Marxist gospel around the region and Mr. Zelaya was his man in Tegucigalpa.
The Honduran push-back is a major setback for Caracas. That’s why Mr. Chávez has mobilized the Latin left to demand Mr. Zelaya’s return. Last week, Dominican Republic President Leonel Fernández joined the fray, calling for Honduras to be kicked out of the Central American Free Trade Agreement (Cafta). Mr. Fernandez is a close friend of Mr. Chávez and a beneficiary of Venezuela’s oil-for-obedience program in the Caribbean.
Mr. Obama apparently wants in on this leftie-fest. He ran for president, in essence, against George W. Bush. Mr. Bush was unpopular in socialist circles. This administration wants to show that it can be cool with Mr. Chávez and friends.
Mr. Obama’s methods are decidedly uncool. Prominent Hondurans, including leading members of the business community, complain that a State Department official has been pressuring them to push the interim government to accept the return of Mr. Zelaya to power.
When I asked the State Department whether it was employing such dirty tricks a spokeswoman would only say the U.S. has been “encouraging all members of civil society to support the San Jose ‘accord’”—which calls for Mr. Zelaya to be restored to power. Perhaps something was lost in the translation but threats to use U.S. power against a small, poor nation hardly qualify as encouragement.
Elsewhere in the region there are reports that U.S. officials have been calling Latin governments to demand that they support the U.S. position. When I asked State whether that was true, a spokeswoman would not answer the question. She would only say that the U.S. is “cooperating with the [Organization of American States] and [Costa Rican President] Oscar Arias to support the San José accord.”
In other words, though it won’t admit to coercion, it is fully engaged in arm-twisting at the OAS in order to advance its agenda.
This not only seems unfair to the Honduran democracy but it also seems to contradict an earlier U.S. position. In a letter to Sen. Richard Lugar on Aug. 4, the State Department claimed that its “strategy for engagement is not based on any particular politician or individual” but rather finding “a “resolution that best serves the Honduran people and their democratic aspirations.”
A lot of Hondurans believe that the U.S. isn’t using its brass knuckles to serve their “democratic aspirations” at all, but the quite-opposite aspirations of a neighborhood thug.
The Trouble with Democracy: Maslow Meets Hoppe
H.L. Mencken described politicians as "men who, at some time or other, have compromised with their honour, either by swallowing their convictions or by whooping for what they believe to be untrue."[1] "Vanity remains to him," Mencken wrote, "but not pride."[2]
The Sage of Baltimore had it correct, that to be elected and stay elected in American politics to any full-time position requires the suspension of any ethics or good sense a person may possess. Even those who begin political careers with the best intentions and have measurable abilities that would make them successful in any field soon realize that the skills required to succeed in politics are not those required outside politics.
Lew Rockwell explains that, while competition in the marketplace improves quality, competition in politics does just the opposite:
The only improvements take place in the process of doing bad things: lying, cheating, manipulating, stealing, and killing. The price of political services is constantly increasing, whether in tax dollars paid or in the bribes owed for protection (also known as campaign contributions). There is no obsolescence, planned or otherwise. And as Hayek famously argued, in politics, the worst get on top. And there is no accountability: the higher the office, the more criminal wrongdoing a person can get away with.[3]
Thus it becomes "a psychic impossibility for a gentleman to hold office under the Federal Union," wrote Mencken.[4] Democracy makes it possible for the demagogue to inflame the childish imagination of the masses, "by virtue of his talent for nonsense."[5] The king can do the same thing in a monarchy but only by virtue of his birth.
In stark contrast, in the natural order, as Hans-Hermann Hoppe explains in his monumental work, Democracy: The God that Failed, it is "private property, production, and voluntary exchange that are the ultimate sources of human civilization."[6] This natural order, Hoppe notes, must be maintained by a natural elite, which would come by these positions of "natural authority" not by election as in the case of democracy, or birth as in the case of monarchy, but by their "superior achievements, of wealth, wisdom, bravery or a combination thereof."[7] This is just the opposite of what Mencken and Rockwell describe as a characteristic of democracy.
Instead, democracy affords the opportunity for anyone to pursue politics as a career. There is no need for the masses to recognize a person as "wise" or "successful," as Hoppe's natural order would require. Nor does one have to be born into the ruling family, as in the case of monarchy. As the great American comedian Bob Hope, who was actually born in England, once quipped, "I left England at the age of four when I found out I couldn't be king." Maybe because he knows he can never have Prince Charles's job, Sir Richard Branson — knighted for "services to entrepreneurship" — sticks to business and reportedly owns 360 companies.
But, as Hoppe explains, democracies have expanded, and since World War I have been viewed as the only legitimate form of government. In turn, more people who have been successful at other pursuits are running for political office or becoming politically active. For instance, more and more wealthy billionaires are entering the political arena. While the wealthy tycoons of a previous generation were private and tended to covet seclusion, today's captains of industry such as Ross Perot, Michael Bloomberg, and Jon Corzine are running for office.
And while Warren Buffett, Bill Gates, and George Soros haven't sought public office personally, they spend millions of dollars on political contributions and are visible in trying to sway the public debate on political issues, when their time would obviously be more productively spent (both for them and everyone else) on other, wealth-creating endeavors. Plus, a quarter of all House members and a third of all members of the Senate are millionaires.[8]
There may be politicians that pursue elected office for the money, but many elected officials are already wealthy by most people's standards. What makes the wealthy and otherwise successful want to hold office? Is it, as Charles Derber describes in The Pursuit of Attention: Power and Ego in Everyday Life, that politicians since "Caesar and Napoleon have been driven by overweening egos and an insatiable hunger for public adulation"?[9]
The work of psychologist Abraham Maslow may provide an understanding as to why even successful entrepreneurs would seek public office. Maslow is famous for his "hierarchy of needs" theory that is taught in most management classes in American universities.
The theory is generally presented visually as a pyramid, with the lowest or most basic human need — physiological need — shown as a layer along the base of the pyramid. Maslow's view was that the basic human needs — thirst, hunger, breathing — must be satisfied before humans could accomplish or worry about anything else. The next tranche within the pyramid, shown on top of the physiological need, is the safety need. After satisfying thirst and hunger, humans are concerned about their continued survival. If a man is constantly worried about being eaten by a tiger, he doesn't concern himself with much else.
The next layer presented within Maslow's pyramid is the belonging need, which lies just above safety need. After the satisfaction of the two lower needs — physiological and safety — a person seeks love, friendships, companionship, and community. Once this need is satisfied, according to Maslow, humans seek esteem. These first four needs were considered deficit needs. If a person is lacking, there is a motivation to fill that need. Once the particular need is filled, the motivation abates. This makes these needs different than the need at the top of Maslow's pyramid, the need for self-actualization. The need for self-actualization is never satisfied, and Maslow referred to it as a being need — be all you can be.
Thus, humans continually strive to satisfy their needs, and as the more basic needs are satisfied, humans move up the pyramid, if you will, to satisfy higher-level needs. Of course, different humans achieve different levels, and it was Maslow's view that only two percent of humans become self-actualizing.
Maslow studied some famous people along with a dozen not-so-famous folks and developed some personality traits that were consistent with people he judged to be self-actualizing. Besides being creative and inventive, self-actualizers have strong ethics, a self-deprecating sense of humor, humility and respect for others, resistance to enculturation, enjoyment of autonomy and solitude instead of shallow relationships with many people. They believe the ends don't necessarily justify the means and that the means can be ends in themselves.
One readily sees that Maslow's self-actualizers have nothing in common with politicians in a democracy, but closely fit the profile that Hoppe describes of the natural elite that would lead a natural order.
But a step down from the top of the hierarchy-of-needs pyramid is the need for esteem. Maslow described two types of esteem needs according to Maslow expert Dr. C. George Boeree: a lower-esteem need and a higher one. And while the higher form of esteem calls for healthy attributes such as freedom, independence, confidence, and achievement, the lower form "is the need for the respect of others, the need for status, fame, glory, recognition, attention, reputation, appreciation, dignity, even dominance."
"The negative version of these needs is low self-esteem and inferiority complexes," Dr. Boeree writes. "Maslow felt [Alfred] Adler was really onto something when he proposed that these were at the roots of many, if not most, of our psychological problems."[10]
Now we see the qualities displayed by virtually all politicians in democracy: the constant need for status and recognition. The ends — compensating for an inferiority complex — justify whatever Machiavellian means.
Because democracy is open to any and all who can get elected — either through connections, personality, or personal wealth — it is a social system where leadership positions become a hotbed for sociopaths. Maslow's self-actualizing man won't have an interest in politics. But those stuck on the need for esteem are drawn to it like flies to dung.
With leadership in such dysfunctional hands, it is no wonder. "In comparison to the nineteenth century, the cognitive prowess of the political and intellectual elites and the quality of public education have declined," Hoppe writes in Democracy.[11] "And the rates of crime, structural unemployment, welfare dependency, parasitism, negligence, recklessness, incivility, psychopathy, and hedonism have increased."[12]
So while the electorate recognizes that they are electing at best incompetents and at worst crooks, the constant, naïve, prodemocracy mantra is that "we just need to elect the right people."
But the "right people" aren't (and won't be) running for office. Instead, we will continue to have "the average American legislator [who] is not only an ass," as Mencken wrote, "but also an oblique, sinister, depraved and knavish fellow."[13]
The Fight for Capitalism Against Impostors
After the financial collapse of 2008, there was plenty of finger pointing. Yet by far the most blamed agent was unregulated, laissez-faire, liberal capitalism. It is the word on the street; it is in the media; politicians constantly talk about it. And it is an especially favored subject of leftist intellectuals — among whom is Slavoj Žižek, a champion of Lacanian and Marxist theory.
However, contrary to what Žižek believes, the United States has not been practicing liberal capitalism. While one could perhaps make the case that some warped and watered-down version of capitalism was in place, it is a far cry from the liberal capitalism Žižek criticizes in his essay "It's the Political Economy, Stupid!"[1]
Proponents of true capitalism have an upward battle to fight. The definition of capitalism itself has been skewed by many, and its reputation has been tarnished in the resulting confusion. Free-market advocates around the world should shudder at Žižek's blatant stereotype of the financial meltdown of 2008 as a product of capitalism.
But is capitalism really what caused the economic crisis? If capitalism is defined as private ownership of property and wealth, as opposed to state control, then there is truly a problem on our hands if a leading intellectual believes capitalism accurately describes our economy. For what caused the financial meltdown of 2008 was not capitalism, but rather a form of fascist, state-controlled economics. And with each false attribution, capitalism is seen as a less viable system.
What Causes Speculative Bubbles?
Citing Keynes, Žižek argues that in a capitalist economy, markets go up and down based solely on what "average opinion expects the average opinion to be."[2] There is a kernel of truth here: the market often goes up and down based on what the majority anticipates. However, more often than not, the market comes down not because of speculation, but because the reality of a company's status does not live up to the expectations people had for it.
The market facilitates the creation of bubbles based on speculative growth, but these bubbles are consistently corrected when people realize investments are overpriced. The only determinate of long-term growth is how well an industry produces a product in accordance with demand. Thus, speculation alone has a long-run handicap. Every independent study shows that the vast majority of active investors do not outperform the average of index investments over time.
If the speculation that is intrinsic to free markets did not cause the meltdown, then what did? Friedrich Hayek argued that central planning and government debt, which belong to the nanny-state ideology, contribute the most to business cycles:
What we should have learned is that monetary policy is much more likely to be a cause than a cure of depressions, because it is much easier, by giving in to the clamour for cheap money, to cause those misdirections of production, that make a later reaction inevitable, than to assist the economy in extricating itself from the consequences of overdeveloping in particular directions.[3]
There comes a point at which speculative expectations cannot stand in the way of depression. Even if investors on Wall Street — the men Žižek believes are running the show — were to believe that an easy-money policy was the right thing to do, the system is nevertheless doomed to fail because its economic fundamentals are impaired.
Expectations and the Present Crisis
The horror of all this is not even so much that Žižek believes markets in general are driven by expectations of expectations, but rather that he believes our existing economic framework relies upon this principle!
But is economy really a science? Does the present crisis not demonstrate that, as one of the participants put it: "No one really knows what to do"? The reason is that expectations are part of the game: how the market will react depends not only on how much the people trust the interventions, but even more on how much they think others will trust them — one cannot take into account the effects of one's own interventions.[4]
Are we to believe that the right thing to do is what the majority of people will react well to? Perhaps, if real economic growth was — like a democracy — based solely on what the majority of investors believe we should invest in.
For Žižek, it is a "sudden shift in uncontrollable circumstances" that causes a loss of wealth, through speculation.[5]
When circumstances are truly out of control — such as a war in the Middle East that drives up the price in oil or an overestimation of stock value in the case of the digital bubble — prices should come down. What caused a catastrophic loss in wealth around the world in 2008 was not an uncontrolled circumstance, but rather an overly-controlled circumstance. In the case of the housing market collapsing, it is easy to blame Wall Street for being "drunk," as President George W. Bush described, but as Austrian economist Peter Schiff consistently reminds his audience: who provided the alcohol?[6]
When the tech bubble burst in 2000, Alan Greenspan initiated an even bigger bubble — the housing bubble — by lowering interest rates. Even while masquerading as capitalism's best friend, Bush supported the endeavor. Washington followed suit by passing housing legislation to help stimulate the real estate market.
Žižek is astute enough to pick up on the way one bubble transfers its malinvestment to another bubble, writing that "today's meltdown is the price paid for the fact that the United States avoided a recession five years ago."[7] In a true, liberal, capitalist country, there is no feasible way to avoid a recession without making it worse. It is only due to its fascist regime that the United States was able even to attempt to prevent a recession.
A Capitalist Economy?
This financial meltdown exposes the larger problem, which is that our economic system is not as capitalist-driven as we may believe it to be. The existence of a central bank which adjusts the money supply, such as the Federal Reserve, cannot serve as a back-bone for liberal capitalism.[8] Only a currency system in which the private banks individually control interest rates can serve as a back-bone for a capitalist economy. Otherwise, the state has control and can manipulate the markets, and the market is doomed to instability. As Hayek writes,
The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process.[9]
The twentieth century saw the creation of what seems to be an endless number of government-sponsored agencies, which make it impossible for anyone to refer to the United States as a capitalist country. The Departments of Commerce, Energy, Agriculture, Labor, Health and Human Services, and Housing and Urban Development are but a few from a very long list — all of them designed to control how private companies and individuals carry on in their affairs.
Even the FDIC, which insures the money an individual places into the bank, belies our capitalist system.
Such agencies, along with the Federal Reserve, actually fight the cause of capitalism. The role of government in a capitalist society is very simple: provide transparency and enforce fraud. Only a government that does this and only this may preside over a true liberal-capitalist economy.
Part of Žižek's argument is his claim that capitalism is not a system that just works. He writes that "the very notion of capitalism as a neutral social mechanism is ideology (even utopian ideology) at its purest." He disputes Guy Sorman's description of capitalism, in which Sorman claims that the system itself does not give rise to dreams or love, and is not enchanting or seductive. Žižek counters this by writing,
This description is, again, patently not true: if there ever was a system which enchanted its subjects with dreams (of freedom, of how your success depends on yourself, of luck around the corner, of unconstrained pleasures), it is capitalism.[10]
Žižek is correct in asserting that capitalism is inherently ideological. However, what Žižek misses is that these ideologies are built upon the laws of economics, which simply are what they are. Even if a culture is founded upon egalitarian principles, the laws of the economics still apply. A culture of capitalism is one that utilizes and exploits the laws of economics.
The laws of economics from which liberal capitalism is built are not scientific in the sense that they can be falsified. Mises rejected the notion of scientific fallibility in relation to providing answers to economic theory. Instead, Mises considered the economic science to be founded upon psychological conscious action, as described in his theory of praxeology.[11]
High-profile proponents of Austrian economics such as Ron Paul refer to the validity of these economic laws based upon a study of history: Countries that have flourished have done so only by exploiting the laws of economics by adhering to liberal capitalism. Countries that trend toward planned economies have not flourished. Either way, the laws of economics remain.
A Potent Combination
The US Constitution is believed by small-government proponents (such as Ron Paul) to ban almost all central planning. It does so by stripping down the function of government to a few services that do not interfere with the marketplace. This is how capitalism must function to remain true to its laissez-faire origins.
Strict constitutionalists have a problem, however. The text of the Constitution is elegant and simple, and it is easy to interpret it in the context in which it was written. However, modern interpreters of the Constitution, including the Supreme Court, want to interpret it in a different context.
There was an interesting exchange of dialogue with Peter Schiff and other news pundits in which they argued over the constitutionality of TARP.[12] After Schiff explained that there was no constitutional authority for the federal government to enact TARP, one pundit argued that the commerce clause (located in Article I, Section 8, Clause 3 of the Constitution) allowed for the kind of deficit spending that occurred during the Roosevelt presidential terms and is the constitutional justification for enacting TARP.
The clause itself is very short and simple. It states, "The Congress shall have power … to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." With such a statement open to endless interpretation, it is no wonder that the federal government has drifted so far away from its humble origins. Schiff responded to the pundit by saying,
That's an abuse of that clause. According to you the government can do whatever it wants so let's just tear up the Constitution.
Here Schiff hits a key point: if the federal government can interpret the Constitution in such broad ways, there is no real limit to its power.
Unless America's mentality towards governance transforms overnight, proponents of capitalism have a problem.
Conclusion
The fate of the US economic system depends upon a society full of people who have learned to despise what they think is capitalism. The only hope for actual capitalism — and our economy — is to distinguish true liberal capitalism from the neoconservative and Keynesian interpretations that have replaced it.
The liberal capitalists of today agree that any money pumped into the economy by the Federal Reserve will directly increase the prices of everyday goods without an increase in wages. The only question left is, will this environment serve better the cause of extreme collectivism and socialist agendas, or will capitalism prevail? It is on this note that we should resonate with Friedrich Hayek when he writes,
The supposed chief weakness of the market order, the recurrence of periods of mass unemployment, is always pointed out by socialists and other critics as an inseparable and unpardonable defect of capitalism. It proves in fact wholly to be the result of government preventing private enterprise from working freely and providing itself with a money that would secure stability.[13]
No comments:
Post a Comment