Post-Mortem, Episode II

“Well, Doctor, what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it.”

— Benjamin Franklin, upon leaving the Constitutional Convention in 1787

I do not want to say much about the election today, but I do want to share a few thoughts.

I will begin by referring the reader to my post-mortem of the 2008 election. When I wrote that post, much was still unknown: how Barack Obama and his Democratic colleagues in Congress would govern; whether they would unite us or divide us; whether the campaign-trail talk of bipartisanship was at all legitimate or just so much smoke; and so on. Now, four years later, we know the answers. Obviously, half of the people who voted in the last few weeks liked the answers they came up with.  Others — nearly as many, in fact — did not like the conclusions that they reached, and so we are even more bitterly divided than we were four years ago.

As those who know me well — or read this blog — already know, I think last night was a catastrophe. But it was a catastrophe in the sense that a heart attack is a catastrophe for a person who has smoked heavily and drunk too often and too deeply for the first seventy years of his life: terrible, frightening, but hardly unexpected to anyone paying attention. The election was only a symptom of the nation’s condition, not an unforeseeable landslide or a paradigm shift.  This is simply true, whether or not you were happy with the outcome. People went to the polls, and they voted for what they believed in; they did not suddenly reach some new and startling conclusions in the privacy of a voting booth. The results are a symptom: either that we are recovering from many of our maladies, or that we have taken a turn for the worse. Either way, our course of treatment is largely set for at least two more years and arguably far longer.

The good news today is that, as I observed after the 2008 election, we still are a nation, and we have again chosen new leaders with essentially no bloodshed or rioting and with minimal (but not zero) fraud and voter intimidation. The framework set out in the Constitution and its handful of amendments has survived, at least in this sense, for another four years.

As for the bad news, there is plenty of it.  We are a deeply divided nation in countless ways, a reality that only got worse, not better, in the last four years. We are mired in debt, bitter factionalism, and debates that involve more ad hominem attacks than reasoned arguments. There are very few topics that we can talk about without someone hurling (meaningless) epithets such as “one-percenter,” “____-phobic,” “anti-woman,” “anti-child,” and so on. Measured without accounting gimmicks, our deficits and our debt are soaring and are already well beyond levels that can be bridged even with punitive levels of taxation. Indeed, our country’s credit, once seen as the safest in the world, has been downgraded and is on multiple watch lists for further downgrades. Our military is weakening and faced with further, eminent, and debilitating cuts unless action is taken quickly. Our foes are emboldened, while some of our most faithful allies no longer even question whether we can be depended upon; we have proven all too often that, at least for now, we cannot. I pray that our leaders — all of them — can work together to preserve, protect, and defend the Constitution of the United States and the people governed by it.

Whether we can overcome the challenges ahead, only time will tell. A look at the history of nations with such deep debts and deep divisions does not bode well. If we are to overcome the tests ahead, it will be a remarkable feat, and it will take all of our effort. As a start, please pray for this nation and her people. They do sorely need our prayers.

Election 2012: Please Vote

I have been quiet about this year’s election, but not for lack of caring.  The last few months have been extremely busy for me; to my shame, my busy schedule has meant that I have been silent about what is likely the most important presidential election in more than 30 years, not to mention extremely important battles for control of Congress, many governorships, and thousands of other state and local elections.

The first and most important thing that I want to say is this: go vote.  Voting for our executive, legislative, and — at the local level, anyway — many judicial and administrative offices is a huge part of what makes this country special.  It made America unique at the time of her founding, and it still makes us unique today for the orderly, peaceful, and overwhelmingly honest and fair way in which we manage transitions of power.  So, vote.  Please.  If you don’t, you can’t complain when whomever we elect does things you don’t like.  Yes, you may still have the constitutional right to complain about it, but the choice not to vote is a choice to waive any moral right to whine about the outcome.  At the very least, it waives any chance of the rest of us taking you seriously.  If you care about how this country — or your state, or your city — is run, go vote.

As for my take on the election, well, I don’t expect to persuade anyone here and now, but I have to share my thoughts anyway, just in case.

I am a conservative first and foremost, in the tradition of Edmund Burke.  My heroes are people like Ronald Reagan and Russell Kirk.  In this post, if I can accomplish nothing else (beyond reminding you again to go vote), I hope to outline briefly why conservatism is the only safe choice for this election.  I am not going to delve into social issues such as abortion, not because they are not important, but because, realistically, how we vote in this election has little to no impact on these issues.

Our nation is at great risk, due to years of inattention to the federal budget, a military with aging equipment and little new materiel coming online, and a foreign policy that is naive at best and timid, even spineless, at worst.  Government increasingly intrudes upon the lives of average citizens, making it harder and harder to afford a good education; harder for our teachers, schools, and universities to pursue knowledge and learning rather than focusing first and foremost on the bottom line; harder to get and keep a good job; harder to start and run a business; and harder even to exercise everyday rights such as freedom of speech, freedom of religion, and freedom of conscience.  Every new statute, rule, regulation, executive order, permit requirement, or other government action serves only to make government’s powers larger at the expense of the rights of the people.  More startling still, those powers are increasingly concentrated in a national — not federal — government, of which, as Reagan warned, the states are becoming mere administrative districts.  Our democratic federalism is dying, and it is being replaced by a monolithic, paternalistic government of bureaus, administrations, agencies, and czars.

The result is this: our official national debt is 16 trillion dollars — that’s $16,000,000,000,000 — and counting, or more than $51,000 per citizen.  But the real story is far, far worse.  By the standards that public companies must use (known as GAAP), the government has unfunded liabilities in excess of $120 trillion, or more than $1,058,000 per taxpayer.  And it only gets worse; every time the government passes a “stimulus” package which fails to stimulate, engages in quantitative easing, or even repairs a pothole, that number — and your share of it — gets bigger.  This is scary enough when we are only talking about legitimate functions of government, such as defense and administration of a justice system.  But that’s not all we’re talking about; we are also buying countless handouts to private parties, pork-barrel projects, and a reality in which more people than ever are on food stamps, even as it gets harder for employers to offer good jobs due to the crushing regulatory and tax burdens they face.

To fund all of this, we are borrowing trillions of dollars from China, Japan, Brazil, Russia, Taiwan, Switzerland, and so on.  Even worse: the single biggest creditor of the United States government is our own Social Security system, which, when combined with other federal pension systems, holds 5 trillion dollars in federal debt.  Who will be left holding the bag for that?  Our children and even my own generation, because the debt train will run out of track long before we reach retirement.  We need to spend less.  We need fiscal responsibility, but our elected officials don’t seem to have any.

Meanwhile, our military is weak.  Our navy and coast guard have aging ships, and fewer of them than anytime in the last decades.  The air force is flying old and increasingly obsolete planes, leaving us entirely dependent on drones to project air power; it’s not the same, and it’s not enough.  The army drives vehicles that are ill-equipped for a world of IEDs and fighting wars in which the enemy does not always do us the courtesy of wearing uniforms.  Our ever-faithful marines are underfunded, with all of the problems of the other forces.  Our elected officials seem to think the military is an obsolete relic of a dangerous world that no longer exists, which we can always “turn on” again if the world becomes dangerous.  Yet that same military is engaged in multiple undeclared wars and countless “peacekeeping” missions, even as our nation’s diplomatic representatives come under attack and die due to a lack of security.  We need to maintain a strong defense, but we are at risk of losing it.

We need a foreign policy that other nations respect, even if they do not find it pleasant.  There is a reason that President Obama has been endorsed for reelection by the likes of Putin, Chavez, and Castro, and it is not that they think he is strong.  We need a president who recalls that he is President of the United States of America, not of the world, and who bows to no one.

Our country was founded on a simple idea: the people, not their rulers, are supreme.  They have endowed the government with certain powers; the government has not bestowed upon the People the rights that they received from their Creator.  The Founding Fathers gave us an intricate system, balancing the need for unity with the demands of individualism, local needs with national interests, and the need for a strong government with the even more important need that it never be too powerful.  It’s time to reclaim their great idea, and restore a government of the people, by the people, and for the people, not of technocrats and career politicians, by the same, for the same.

It’s time for some real hope and change — hope for a stronger future, in which America is prosperous, strong, and free, and in which Americans do not fear their own government’s excesses.  It’s time for a real conservative.  Not a neoconservative who runs up our debt and needlessly engages in protracted wars, not a statist who sees government as the solution, but a Reaganite conservative who sees government for what it is: the problem, not the solution.

As in 2008, I am again endorsing Mitt Romney and other Republican candidates for office.  Governor Romney is a proven leader and strong conservative, as is his running mate, Paul Ryan.  They are merely men, with no pretensions to be more than men, but they are good men and proven leaders.  I honestly believe that this presidential ticket is the most genuinely conservative ticket this country has seen since Reagan proclaimed that “it’s morning in America.”  They are the right choice for America in this election cycle.  When you vote, please vote for these proven leaders and all of the others who want to get this country back on track by restoring the proper balance between the People and their government.

If you are so inclined, please consider donating to help Governor Romney and Representative Ryan bring real hope back to America.

More on Inequality

On the heels of my post on upward mobility comes an insightful post by Cato’s Michael Tanner. Two key quotations:

In the end, however, one has to ask a more basic question. Why do we care about inequality at all?

Poverty, of course, is a bad thing. But is inequality? After all, if we doubled everyone’s income tomorrow, we would eliminate an enormous amount of economic hardship. Yet, inequality would actually increase. As Margaret Thatcher said about those who obsess over inequality, “So long as the [income] gap is smaller, they would rather have the poor poorer.”

Another Nobel Prize winner, F. A. Hayek, concluded, “The rapid economic advance that we have come to expect seems to be in large measure a result of this inequality and to be impossible without it. Progress at such a fast rate cannot take place on a uniform front but must take place in an echelon fashion, with some far in front of the rest.”

We should all seek a prosperous, growing economy, with less poverty, and where everyone can rise as far as their talent and drive will take them. Equality? Who needs it?

Well put.

Upward Mobility

I read an interesting article on economic mobility in National Review Online, which got me thinking. The article is good in that it points out some of the statistical challenges in measuring upward mobility. For example, who counts as poor? Who counts as middle class? Are we measuring intergenerational or intragenerational mobility? In acknowledging these questions, the article does well. Where the article falls short is in two key areas.

First, it assumes that upward mobility in the United States is lower than in many other countries. This may or may not be true, depending on how it is measured. For example, how much credit should be given to official statistics as reported by various countries? Certainly, focusing on the official “poverty” level will give bad results, as discussed here.  But even using income percentiles poses challenges. For example, should welfare and other “benefits” in socialist European countries be counted as income? When I lived abroad, I routinely encountered people making more money than I did, for doing absolutely nothing. The individuals in question were not independently wealthy or trust-fund babies; they were merely beneficiaries of a very generous welfare state, which rewarded them for being unemployed and sitting around various public areas all day, which making no effort to find work. The artificial support given to such individuals may mask the natural cause-and-effect relationships between work and prosperity on the one hand and sloth and poverty on the other.  The NRO article, like most discussions of economic inequality, also totally ignores wealth, focusing only on income. There are good reasons for this, chiefly the availability of data on income and lack thereof on wealth, but the distinction is still an important one and is totally ignored in the article in question.

The second and more significant failing is in the article’s assumption that increasing upward mobility is always a good thing.  That’s not necessarily true.  Certainly, increasing opportunities are always good, but one can easily imagine a very high-mobility society with an extremely dysfunctional economy.  For example, imagine a tax system in which anyone whose parents were in the top 40% of the income distribution at the time of his or her birth pays a tax surcharge of 40% of his or her gross income, which funds are then distributed to those whose parents were in the lowest 40% of the income distribution.  This would, at least temporarily, result in incredibly high mobility, but it would be manifestly unfair and strongly disincentivize anything resembling ambition or hard work.  The point is that mobility is not the goal; opportunity is. Past a certain level, increased mobility can only be achieved at the cost of stability and fairness.  For every person who moves up the income distribution, somebody else moves down, because rankings are a zero-sum game.  Foster too much movement from the lower end of the distribution into the higher end, and you are by extension fostering an environment in which many of the highest earners suffer precipitous plunges in their incomes.

These are just some quick musings on the article; I would be curious to hear what others thought.

Hard Times

You know times are bad when large corporations start accepting advertising money to do product placement in their web chat tech support sessions. For example: “Thank you, I’ve found your account information.  While I’m looking up your account info, be sure to check out _____, where you can meet friends, play games, etc.” That just happened.  And yes, I really was told that my account info had been located, then pitched some nonsense third-party garbage while the tech support person “looked up” my account.

Oh, and said company did not resolve my issue. This, despite the fact that this was my second contact with tech support stemming from the complete failure of their website to display the option I need to access, except in how-to diagrams.

Truly impressive.

Reading List

A number of people have asked me lately what I’m reading on economics and the financial markets right now.  Truth is, I’m always reading such things, and no short list can even come close to covering the variety of material I try to read, from the scholarly and serious (e.g., Posner, Becker, Mankiw, etc.) to the popular and light.  That said, I thought my other readers might appreciate a list of some of what I’ve been looking at on the internet in the last few weeks, at least.  Without commentary, opinion, analysis, or even a particular ordering (in fact, the first list was intentionally randomized), here it is.  I express no public opinion on the accuracy, validity, merit, or usefulness of anything below; these are just links I have found interesting – in some cases because I think the contents to which I’m linking are totally wrong or even bordering on insane… but I think I’ll decline to say which ones.  Read the material for yourself, if you’re interested – it’s more likely to be useful, that way, anyway.

Sites or people with lots of information in general, some good, some bad, some possibly crazy:

Some interesting specific links:

An Economic Record for the Ages

When the Bank of England does anything for the first time – it’s 315 years old this year, after all – it’s worth noting.

Slope of Hope – We’re on it

My favorite new (but not new favorite) blog is Evil Speculator (tagline, “bent on market domination, one nefarious trade at a time”). It posted a fantastic and disturbing chart from Gold-Eagle. The chart is one of the best demonstrations I’ve seen of a concept called the “slope of hope.” The idea is that (in significant declines) markets go down slopes of hope – long, bumpy slides in which optimism repeatedly kicks in early and causes dramatic, but short-lived and futile, rallies. In contrast, bull markets start by climbing a “wall of worry” – pessimism is so extreme near bottoms that most investors are late in realizing the worst is over.

In any case, this chart correlating Great Depression DJIA readings with news clips is an invaluable reminder of where we likely stand. Check it out.


Wow, look at it go.

For reference: this is only 8 days after the $7.4 trillion estimate and only 14 days after the $4.284 trillion estimate. That’s $4,216,000,000,000 in two weeks.

If you really want a fright, keep reading. If we were to keep spending at this rate through the first 100 days of the Obama presidency (149 days from now), the tab for the crisis would hit a whopping $53,370,285,714,285. That’s about 4 times GDP, 4 times the national debt prior to the crisis, and 21 times what the federal government receives in taxes each year. That would only be, oh, about $177,901 for every man, woman, and child in the country. Chump change.