I wrote last week that the Obama Administration and the Democrat Congress' intervention in the banking industry could be considered a precursor to nationalization. Today The Wall Street Journal reports, "The Obama administration could end up with more direct control over some of the nation's largest banks as policy makers consider converting the government's preferred stock in these companies into common equity" (http://online.wsj.com/article/SB124019955514434181.html), which could make the government the controlling stock holder in these banks. Effectively, this would be a hostile takeover of the banking industry.
I can't take much credit on this one. You didn't have to be very smart to see this coming.
Monday, April 20, 2009
Thursday, April 16, 2009
Defend the Separation of Business and State
It really doesn't take much life experience to notice that Georges Santayana was right, that history does have a tendency to repeat itself, especially if we fail to learn the lessons the first time. For anyone who is paying attention, the lesson today is that our current economic troubles have a clear and recent precedent.
The social upheaval of the 1920s, the stock market crash of October 1929 and the Great Depression that followed are often explained as reactions to the horrors and expenses of World War I, but there was more to it than that. The disillusionment resulting from a bitter and protracted war was an add-on to the temptations of easy credit fanned into flame by exciting technological advances. Airmail, Ford's assembly line, radio, recorded sound, "talking pictures," and installment credit plans were all new in the 1920s, and all changed the way ordinary Americans conducted their lives. It would be silly to argue that such changes led to the downfall of civilization, but linked to the cynicism the War engendered, the result was the rejection of traditional restraints both moral and financial, a record-breaking level of personal debt, a pervasive, "easy come, easy go" philosophy, and a sense of class envy that sowed poisonous seeds in U.S. society. The only place the boom could go was directly into bust.
This is when many discovered that the "easy go" part wasn't so easy when it meant the loss of savings, businesses and homes. Many in their shock and disillusion at the crash looked for a complete change in our form of government. Some were Communists and some were Socialists and some were Fascists, but all were determined that they would overthrow the evils of Capitalism and usher in a Utopian ideal under their radical and often anarchistic plans. The dirty little secret is that as much as they hated and railed against each other, they all wanted to pursue their revolutionary goals by the same draconian methods--by nationalizing key industries, raising taxes on and seizing the property of "the rich" (that means anyone who has more money than whomever they were talking to at the moment), and finding a scapegoat that the majority of voters could resent and eventually hate. It was an agenda with a lot of appeal for some Americans, just as it was for many Germans, Italians and Spaniards. In fact, in the 1930s we came nearer to the overthrow of our democratic republic than at any time in our history to date.
Perhaps the best example from that perilous period was Huey Long, Governor of and Senator from Louisiana. Long knew two important truths about politics--that power can be had by promising people the things they don't have, and that you really don't have to give the people what you promised, as long as you show that you're taking something away from the rich who already have too much anyway. And so he promised the people of Louisiana roads and education and health care, and that's what they got--minus the huge graft payments that went into the pockets of Long and his cronies, a legacy the state continues to try to purge to this day--financed by "taxing the rich," which made it all acceptable.
The poor weren't actually getting anything of significance, but they could be happy knowing that the rich were being punished for their success. Long's "Share Our Wealth" plan (notice the "our" which actually begins the appropriation of private property) included a cap on the salaries and fortunes of businessmen, a progressive tax up to 100% of the earnings of the most prosperous, severe government regulation of major industries and a guaranteed minimum annual salary for the working man. Does any of this sound familiar to you?
Huey Long's popular support was so intense and radical that Franklin Roosevelt, certainly no conservative himself, considered Long "one of the two most dangerous men in America," and the New York Times worried that he had established the country's first Fascist State.
Our own era is every bit as dangerous as the Great Depression of the 1930s, and the call for a change in government just as radical. The proposals to cap salaries and tax earnings up to 100% we have already heard. The takeover of the automobile manufacturing industry by the Obama Administration and the Democrat Congress, and their heavy-handed intervention in the banking, investment and now the insurance industries, have been historic precursors to nationalization. The proposed establishment of a national health care system by the Administration will be, by definition, a seizure of that industry as well. What Long dreamed and Roosevelt feared, and the 1930s Fascists of Germany, Italy and Spain enforced, President Obama is pursuing headlong, and achieving.
Observing in 1938 the same radical political measures we are seeing today, Professor Halford E. Luccock of Yale Divinity School warned, "When and if fascism comes to America it will not be labeled 'made in Germany;' it will not be marked with a swastika; it will not even be called fascism; it will be called, of course, 'Americanism.'" Consider that the next time Vice President Biden tells us how patriotic it is to pay more taxes.
The social upheaval of the 1920s, the stock market crash of October 1929 and the Great Depression that followed are often explained as reactions to the horrors and expenses of World War I, but there was more to it than that. The disillusionment resulting from a bitter and protracted war was an add-on to the temptations of easy credit fanned into flame by exciting technological advances. Airmail, Ford's assembly line, radio, recorded sound, "talking pictures," and installment credit plans were all new in the 1920s, and all changed the way ordinary Americans conducted their lives. It would be silly to argue that such changes led to the downfall of civilization, but linked to the cynicism the War engendered, the result was the rejection of traditional restraints both moral and financial, a record-breaking level of personal debt, a pervasive, "easy come, easy go" philosophy, and a sense of class envy that sowed poisonous seeds in U.S. society. The only place the boom could go was directly into bust.
This is when many discovered that the "easy go" part wasn't so easy when it meant the loss of savings, businesses and homes. Many in their shock and disillusion at the crash looked for a complete change in our form of government. Some were Communists and some were Socialists and some were Fascists, but all were determined that they would overthrow the evils of Capitalism and usher in a Utopian ideal under their radical and often anarchistic plans. The dirty little secret is that as much as they hated and railed against each other, they all wanted to pursue their revolutionary goals by the same draconian methods--by nationalizing key industries, raising taxes on and seizing the property of "the rich" (that means anyone who has more money than whomever they were talking to at the moment), and finding a scapegoat that the majority of voters could resent and eventually hate. It was an agenda with a lot of appeal for some Americans, just as it was for many Germans, Italians and Spaniards. In fact, in the 1930s we came nearer to the overthrow of our democratic republic than at any time in our history to date.
Perhaps the best example from that perilous period was Huey Long, Governor of and Senator from Louisiana. Long knew two important truths about politics--that power can be had by promising people the things they don't have, and that you really don't have to give the people what you promised, as long as you show that you're taking something away from the rich who already have too much anyway. And so he promised the people of Louisiana roads and education and health care, and that's what they got--minus the huge graft payments that went into the pockets of Long and his cronies, a legacy the state continues to try to purge to this day--financed by "taxing the rich," which made it all acceptable.
The poor weren't actually getting anything of significance, but they could be happy knowing that the rich were being punished for their success. Long's "Share Our Wealth" plan (notice the "our" which actually begins the appropriation of private property) included a cap on the salaries and fortunes of businessmen, a progressive tax up to 100% of the earnings of the most prosperous, severe government regulation of major industries and a guaranteed minimum annual salary for the working man. Does any of this sound familiar to you?
Huey Long's popular support was so intense and radical that Franklin Roosevelt, certainly no conservative himself, considered Long "one of the two most dangerous men in America," and the New York Times worried that he had established the country's first Fascist State.
Our own era is every bit as dangerous as the Great Depression of the 1930s, and the call for a change in government just as radical. The proposals to cap salaries and tax earnings up to 100% we have already heard. The takeover of the automobile manufacturing industry by the Obama Administration and the Democrat Congress, and their heavy-handed intervention in the banking, investment and now the insurance industries, have been historic precursors to nationalization. The proposed establishment of a national health care system by the Administration will be, by definition, a seizure of that industry as well. What Long dreamed and Roosevelt feared, and the 1930s Fascists of Germany, Italy and Spain enforced, President Obama is pursuing headlong, and achieving.
Observing in 1938 the same radical political measures we are seeing today, Professor Halford E. Luccock of Yale Divinity School warned, "When and if fascism comes to America it will not be labeled 'made in Germany;' it will not be marked with a swastika; it will not even be called fascism; it will be called, of course, 'Americanism.'" Consider that the next time Vice President Biden tells us how patriotic it is to pay more taxes.
Monday, April 13, 2009
TEA--Taxed Enough Already!
Dear Friends,
On Tax Day, Wednesday, April 15, local groups will be holding TEA Parties all over the country. Because of my schedule, I won't be able to get away to go to one, but I will be wearing a tea bag pinned to my lapel all day. I'll be looking forward to explaining it to anyone who asks.
How about you?
PS
On Tax Day, Wednesday, April 15, local groups will be holding TEA Parties all over the country. Because of my schedule, I won't be able to get away to go to one, but I will be wearing a tea bag pinned to my lapel all day. I'll be looking forward to explaining it to anyone who asks.
How about you?
PS
Wednesday, April 1, 2009
A Whole Herd of Goats
Under the Mosaic Law, on the Day of Atonement a goat was brought into the Tabernacle, and over him the priest enumerated all the sins of the people, symbolically transferring those sins from the people to the goat. The animal was then taken out into the wilderness far from the camp and released, never to return. It was a symbolic purging of the people from their sins, and the source of our term "scapegoat," someone to blame to distract us from those who might share the guilt. Not only individuals but whole races and ethnic groups have been persecuted as scapegoats over the centuries. It's a classic Propaganda Technique, and it's being worked hard by the Obama administration.
The AIG executives who received bonuses paid out of the bailout funds provided by the Obama administration out of our pockets, are the most obvious examples. No question, it is galling to think the tax dollars of $30,000/yr laborers are paying the six-figure compensation checks of Wall Street types walking away from the train wreck of our retirement programs, and Congress, the Department of Commerce and the media are making sure everyone stays angry about it. What the media, the Administration and the Congressional harpies, Democrats and Republicans alike, have left out is that the vast majority of those who received the bonuses had no involvement in the "credit default swaps" that brought the company down. They also haven't told you that many of those who received those bonuses had worked the entire previous year for for one dollar to try to address the impending problems, accepting that and the promise of "deferred payments"--spelled b-o-n-u-s--as their total compensation. They also haven't told you that the bonuses were specifically authorized in the 1100 page bailout package that the Congress voted on and the President signed, without either of them ever having read it, or that the clause that authorized the payments was inserted as an amendment by Senator Chris Dodd, Chairman of the Senate Banking Committee which was supposed to oversee AIG's activities! No wonder they want to keep the heat on the AIG execs. If they couldn't transfer their sins to the scapegoats, those dirty little secrets might be darn hard to explain.
Also trussed up and waiting to be led out into the wilderness are the chairmen of Ford and GM. These guys are in a little different situation than the AIG employees. They've galloped forward and volunteered to serve as scapegoats. It's true that the auto companies have been shamefully mismanaged not only by Alan Mulally (Ford) and Rick Wagoner (GM), but by their predecessors as well, and it didn't help their image to fly in for Congressional hearings in their private jets without any plan for recovery beyond demanding a bailout. The part that nobody is talking about is fact that Congressional interference in the auto industry, in the form of Corporate Average Fuel Economy (CAFE) regulations, have forced the automakers to build whole fleets of cars that nobody wants to buy. Popular "green" rhetoric and public proclamations to the contrary, the best-selling vehicles in the United States are and remain trucks, SUVS and family cars. The over-priced and under-performing hybrids, the Ford Escape and Chevy Volt, just haven't won public acceptance, and for obvious reasons. They don't do the job Americans expect of their vehicles. Nevertheless, Congress has mandated the manufacture of these ornamental offerings to the eco-lobby, and the companies keep producing them because they haven't got the guts to oppose the politically correct sentiment that says the government knows better than the free market what the people should have. So Ford and Wagoner will be led off into the woods, never to return. After last week's hostile takeover, the new CEO, President Barack Obama, has fired them, so the people will think their sins are purged. But that won't make the automakers profitable.
To change the metaphor, it's the old Roman trick of placating the people with bread and circuses. On the one hand the Administration is promising to make sure the masses have food on the table and health care down the road, and on the other they provide the spectacle of corporate fat cats being devoured by the lions of official scorn and public outrage, all so that we won't notice the orgy being enjoyed by Caesar and his friends.
PS
The AIG executives who received bonuses paid out of the bailout funds provided by the Obama administration out of our pockets, are the most obvious examples. No question, it is galling to think the tax dollars of $30,000/yr laborers are paying the six-figure compensation checks of Wall Street types walking away from the train wreck of our retirement programs, and Congress, the Department of Commerce and the media are making sure everyone stays angry about it. What the media, the Administration and the Congressional harpies, Democrats and Republicans alike, have left out is that the vast majority of those who received the bonuses had no involvement in the "credit default swaps" that brought the company down. They also haven't told you that many of those who received those bonuses had worked the entire previous year for for one dollar to try to address the impending problems, accepting that and the promise of "deferred payments"--spelled b-o-n-u-s--as their total compensation. They also haven't told you that the bonuses were specifically authorized in the 1100 page bailout package that the Congress voted on and the President signed, without either of them ever having read it, or that the clause that authorized the payments was inserted as an amendment by Senator Chris Dodd, Chairman of the Senate Banking Committee which was supposed to oversee AIG's activities! No wonder they want to keep the heat on the AIG execs. If they couldn't transfer their sins to the scapegoats, those dirty little secrets might be darn hard to explain.
Also trussed up and waiting to be led out into the wilderness are the chairmen of Ford and GM. These guys are in a little different situation than the AIG employees. They've galloped forward and volunteered to serve as scapegoats. It's true that the auto companies have been shamefully mismanaged not only by Alan Mulally (Ford) and Rick Wagoner (GM), but by their predecessors as well, and it didn't help their image to fly in for Congressional hearings in their private jets without any plan for recovery beyond demanding a bailout. The part that nobody is talking about is fact that Congressional interference in the auto industry, in the form of Corporate Average Fuel Economy (CAFE) regulations, have forced the automakers to build whole fleets of cars that nobody wants to buy. Popular "green" rhetoric and public proclamations to the contrary, the best-selling vehicles in the United States are and remain trucks, SUVS and family cars. The over-priced and under-performing hybrids, the Ford Escape and Chevy Volt, just haven't won public acceptance, and for obvious reasons. They don't do the job Americans expect of their vehicles. Nevertheless, Congress has mandated the manufacture of these ornamental offerings to the eco-lobby, and the companies keep producing them because they haven't got the guts to oppose the politically correct sentiment that says the government knows better than the free market what the people should have. So Ford and Wagoner will be led off into the woods, never to return. After last week's hostile takeover, the new CEO, President Barack Obama, has fired them, so the people will think their sins are purged. But that won't make the automakers profitable.
To change the metaphor, it's the old Roman trick of placating the people with bread and circuses. On the one hand the Administration is promising to make sure the masses have food on the table and health care down the road, and on the other they provide the spectacle of corporate fat cats being devoured by the lions of official scorn and public outrage, all so that we won't notice the orgy being enjoyed by Caesar and his friends.
PS
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