Wednesday, February 24, 2010

Bring on Reconciliation

If there were any lingering notions that Barack Obama was a pragmatist, Monday’s release of the White House’s plan for Obamacare should finally put them to rest. Previously the President could hide behind the thin veil of the fact that the disaster we’ve come to know as Obamacare was actually crafted at the other end of Pennsylvania Avenue. No longer… He has embraced the plan and made it his own just as Nancy Pelosi and Harry Reid suggest that they will do whatever is necessary to turn it into law.

The interesting thing about watching this Democratic Kabuki Theater is that it’s really more like watching a completely different of Japanese act, Seppuku, or ritual suicide. The overwhelming majority of the American people do not want Obamacare. It’s not even close. Yet the Democrats are determined to have it because they think they know what’s best for America, and they’re sure we’ll thank them for it afterwards. I’m not so sure that’s how things are going to work out…

Just as Democrats ignore 150 years of socialist failure as they charge headlong into their statist fantasy, with their promise to use Reconciliation to force the economic rat poison of Obamacare down the throats of the American population, they ignore even their own history… and do so at their peril.

In 1993 President Clinton tried to force Hillarycare on the American people. Despite the fact that Democrats had 57 senators, Clinton recognized it was in trouble and threatened to use Reconciliation to pass it. None other than Robert Byrd, the long serving Democrat known for his mastery of Senatorial rules, said no calling it a “prostitution of the process.”

Byrd was right and America was saved from the government healthcare, at least temporarily. The interesting thing is, however, that the damage was already done. Democrats had so infuriated the American public with their elitist notions of knowing what “the people” want better than they themselves do, that voters showed them the door in the 1994 mid term elections. And those elections were not just another shifting of a few deckchairs that slightly tilted the boat… By 1993 the Democrats had controlled the House of Representatives for forty straight years, indeed, other than the 80th Congress from 1947-49, they had controlled the House since 1931. Over that same 62 year span their control over the Senate was not quite as ironclad, coming in at only 50 years. And these were not simple one seat majorities. They had 68 Senators in 1965. Coming out of Ronald Reagan’s first mid term elections they had 269 Members in the House and still had 253 after he won 49 of 50 states in 1984.

Hillarycare was a seminal moment in modern American politics. The Democrats so offended the American polity that they lost a grip on power they had held for almost exclusively for half a century. Now, a decade and a half later they are, rather inexplicably, not only revisiting the scene of their greatest modern failure, but they are doubling down on it by promising to use reconciliation to force their “medicine” down the throats of American patients, regardless of how clearly those patient say they don’t want it. Unlike many of his hypocritical Democratic brethren, the 92 year old Senator Byrd is still demonstrating integrity on this issue, having expressed his opposition to the use of Reconciliation just last year. Fifteen years ago just the threat of forcing Americans into government healthcare caused Democrats to lose the House of Representatives for 12 years and the Senate for 10. If they use a parliamentary tactic to attempt to overcome a filibuster today (Something that was not even done in 1964 when that same Senator Byrd was filibustering the Civil Rights Act) in order to put the yoke of Obamacare on the backs of the American people, they will be sowing the seeds of their own destruction, even if the bill fails, an outcome whose likelihood at I put at about 60%. They will certainly lose the House in November and probably the Senate as well, and then they will lose the White House in 2012. Given the damage they have inflicted on the United States over the last half century, we should bid them good riddance.

It won’t be a quick escape however, from the statist straight-jacket that the Democrats have strapped the American people into, but Reconciliation will be the knife that finally cuts those straps loose. It will take some time for the atrophied muscles of common sense, liberty and individual responsibility to begin to recover and flex their strength, but once unshackled, they will once again become the vibrant muscles upon which this country was built. Soon thereafter the people will begin to use those muscles to return sanity to the affairs of the state– and reversing Obamacare will be the first item on the very long list of progressive disasters that will be ripped from their roots and turned into a giant pyre, fueled by the flames of freedom and liberty.

Bring on Reconciliation… this should make for great theater.

Tuesday, February 16, 2010

Professor Obama and Real Job Creation

We’ve recently been told that to refer to President Obama as a professor is coded racism. (Click here to read my take on such arguments) Interestingly, during the campaign for the White House his campaign didn’t see it that way as he referred to himself as a "constitutional law professor". I don’t know how good of a professor he was, but if he had spent more time reading American history and less Rules for Radicals, he might have been a better President. Two weeks before he was inaugurated the President stated that “Only government" can save us.” The subsequent actions of his administration (and its predictable lack of results) suggest that professor Obama should have spent less time reading Karl Marx or Cloward & Piven and more time reading Adam Smith.

History clearly demonstrates that government is not the engine of American prosperity. The success of the American experiment was played out on the fields of limited government and free markets, guided by the rule of law and powered by the ingenuity, entrepreneurial spirit and quest for success that runs through the veins of the Americans people. Without a doubt, the single best example of the power of that American spirit and its ability to change the world can be found in the life of one man, Cyrus McCormick, the man who freed mankind.

Cyrus McCormick has been called the "Father of Modern Agriculture." His creativity was twofold. The first element of his genius was his invention of a workable reaper, a machine that harvested grain. In the 1820s the limits on agriculture were dictated by how much grain could be harvested before it went bad. A man, using tools and techniques that were largely unchanged for five thousand years, could harvest approximately 2 acres of grain a day. For centuries men had been toiling in vain to invent a tool that would increase that number. In 1831 Cyrus McCormick solved the riddle and created the first effective mechanical reaper. Despite its great limitations, his first reaper more than doubled a man’s capacity to harvest grain and began a technological march that continues to this day.

As if that were not enough, McCormick had more up his sleeve. The second element of his genius was the introduction of financing for his equipment. Farmers moving west often had little more than the clothes on their back and very little cash. Unlike most bankers, McCormick understood the economics of farming and sold his reapers for $30 down and the balance – typically $90 or $100 – in 6 months. (By 1880 when McCormick retired, economies of scale had driven the cost of a far better reaper down to $18.) McCormick also introduced advertising, (including satisfied customer testimonials) replacement parts and the written guarantee to American agriculture. Indeed, "15 acres a day or your money back" was his promise.

By the time McCormick died in 1884, his company had sold over 6 million reapers around the world. A measure of his impact can be found by noting that in 1831, the year he invented the reaper, 85% of the American population was involved in agriculture. Today that number stands at less than 3%. Not only does that 3% feed the United States, (with its 300 million vs. 15 million in McCormick's time), but it also exports millions of tons of food every year. Although the impact on farming was substantial, the real impact of McCormick’s genius was felt far beyond the fields. Millions who had formerly been tied to the farm were now free to pursue their dreams elsewhere. From energy to medicine to manufacturing to retail... and virtually every other area of our economy, the economic miracle that came to personify the United States owes much to the man who freed the population to dream of the possibilities that lay beyond the amber fields.

Cyrus McCormick did more for the advance of the human condition than virtually any politician in human history. His efforts freed the masses of people around the world to leave the farm behind and pursue their passions for becoming… basically anything they wanted. With freedom (in this case from the chains of farming) comes creativity, and McCormick unleashed a flood of it. Because they were no longer chained to a farm, Americans were able to go out and invent and build the world we live in today: photography, movies, electric light bulbs, baseball, television, advertising, computers, the Hula Hoop and the Frisbee, the Internet, FedEx, McDonalds, Wal-Mart and yes, even things like Enron and Lehman Brothers.

If President Obama had undertaken even a cursory reading of American history he would have recognized that Cyrus McCormick was not unique. Rockefeller brought order to the petroleum market and made energy affordable. Edison illuminated the country. Alexander Graham Bell revolutionized communication. Henry Ford brought the assembly line to automobile production and made cars almost anyone could afford. Charles Goodyear brought comfort to driving a car while Elisha Otis made elevators safe and Willis Carrier made movie theaters bearable even during the dog days of August. Not only did these advances make our lives significantly better, but every one resulted in millions of jobs being created.

From Robert Fulton to Bill Gates, America is a country of inventors and innovators who solve great problems and build great fortunes… and those visionaries usually benefit millions of others along the way. This economic malaise is no match for a motivated citizenry of entrepreneurs who are just waiting for their chance to strike out and earn their fortune. If President Obama really wanted to put America back to work he’d unleash the unabashed power of American innovation by slashing taxes, rolling back government spending and moving to reign in the power of unions and lawyers, the numbers two and three obstacles (behind the imperial federal government) to any chutes of recovery that might begin to sprout. If the Professor decides not to pursue such a path, we shouldn’t be much surprised. It’s hard to imagine a shining city on a hill is something to strive for if one is looking down on it from an elevated perch in an ivory tower.

Tuesday, February 9, 2010

I'm from the government and I'm here to help...

How many times have you heard in the last couple of years that there is no golden bullet for solving the country’s economic problems? Regardless of the number, it’s wrong. There is a very simple way to solve our economic problems: Get government out of the way…

Government intervention caused most of the problems we currently face, and its continued (and growing) interventions do nothing but perpetuate them. Its size, scope, compensation and inefficiency combine to make it a hurdle on the road to recovery.

Size of government: Coincidently, just as the unemployment rate reaches double digits for the first time in almost 30 years, government payrolls reach their highest point ever. (And it's not just a federal problem...)

Scope of government: James Madison, the father of the Constitution did not believe a Bill of Rights was necessary. He felt it was unnecessary because government could not exercise powers it had not been given by its citizens in the Constitution. Unfortunately, he was wrong. Not only has government expanded beyond its explicitly limited Constitutional mandate like the Nile breaching its banks and flooding the Egyptian plain, but it has essentially taken over the roles of God, mother and father as well. As a result we have things like a government religion (global warming) whose inane and quixotic demands continue to envelop us even as its foundations crumble; a government infrastructure that attempts to “protect” us from every negative outcome that might ever befall us; an entrenched and insulated bureaucracy that, like the Borg, has as its only objective... survival, and which utilizes its police powers to force assimilation on all who might recoil from its designs. From CAFÉ standards to the Alternative Minimum Tax to No Child Left Behind or any one of a thousand other programs, there seems to be no place left where we can live beyond the reach of the government tentacles.

Government pay: As if power over those insolent enough to seek happiness on their own terms was not enough of an incentive to attract those who cannot find success in the private sector, JFK’s ill conceived introduction of unions into the government ranks has created a very strange situation where government workers earn far more than the private sector’s workers whose tax dollars pay their salaries.

Aside from the lunacy of siphoning off talent from the private sector, where the nation’s wealth is actually created, what makes this situation so ludicrous is that it induces government employees to become as inefficient as possible! How many employees are going to do their jobs so efficiently that they solve the very problems upon which their employment is based, just so that they can go and get a lower paying job somewhere else? How many government agencies have ever closed because they succeeded in their mandates? Is education in America better since the Department of Education was established in 1979? Have our energy problems gone away since the Department of Energy was established in 1977? Has poverty been eliminated since a phalanx of social programs was rolled out in the 1960’s? The answer to all three of course is no. Government rarely solves problems. By making government employment far more lucrative than private sector work, it only makes government more intractable and ineffective.

Government inefficiency: If you absolutely positively needed to have something delivered across the country within 24 hours, where do you go: the Post Office or Federal Express? If you were hit by a car as you were crossing a street and landed an equal distance from a private and a public hospital, which emergency room would you want be taken to? If you could send your child to either a private or public school, which one would you choose? When the chips are down, in almost every circumstance, government proves to be far more inefficient than the private sector, regardless of the arena. Here’s an example of the degree of inefficiency:

When the government-backed Human Genome Project (HGP) started to sequence the human genome in 1990, they expected to be done by 2005. By 1998 they had completed just 3% of the total. Enter a privately funded company named Celera Genomics, and its CEO Craig Venter, who brought a market focus and cutting edge technology to the project. On June 26, 2000 President Clinton announced the completion of a "working draft" of the human genome. The government-backed HGP took eight years to decode just 3% of the sequence. With the private sector acting as a competitor, catalyst and partner, the final 97% was sequenced in just 25 months! Imagine what competition could do for education, welfare or highway transportation.

None of this would be of any consequence if the government was simply a minor player in our daily lives. Unfortunately, it’s not. The American people are living in a jungle of red tape and taxation the founding fathers could never have imagined. The path out of this darkness is to simply take a machete to everything not rooted in the Constitution. While a certain amount of chaos would likely ensue with the closing of the Departments of Commerce, Education, Energy, Health & Human Services, Agriculture and most of the rest, America would no doubt land on its feet as private sector entities emerge to provide whatever information citizens need. Think about it. Who do you trust more to tell you about safe and economical cars: The Department of Transportation or Consumer Reports? Where would advertisers seeking an audience rather put their money: FOX, ESPN or PBS? If your town found itself in the middle of a natural disaster, who would you call first: The Red Cross or FEMA? This doesn’t mean that government should cease all operations, merely those for which there can be no explicit foundation found in the Constitution.

From Cyrus McCormick to John D. Rockefeller, to Juan Trippe to Bill Gates, Americans have a track record of innovation, problem solving, wealth creation, and yes, compassion to look back on. The unique American combination of freedom, capitalism and individual achievement has provided a foundation for two centuries of success, mostly by the private sector. It is time the government got out of the way and let the American people solve their problems on their own, without a government provided mommy holding their hands every step of the way. Sure, we may stumble and skin our knees, but that’s part of life. Besides, we don’t have to look very far to see even modern examples of market success bringing benefits to the country as a whole: Wal-Mart revolutionized the prescription market with its $4.00 a month drug offering, McDonalds perfected the art of feeding people inexpensively while Blake Mycoskie figured out how to give shoes to children in third world countries by creating a private sector shoe company. Given the size of the opportunity (i.e. the number of problems government has created) history dictates that Americans have the right stuff to be able to pick themselves up, dust themselves off, and march with much vigor back towards that “Shining city on a hill” and make the journey there a much better one for everyone involved than the one government has been dragging them down for the last half decade.