Monday, January 24, 2011

Obama's unconvincing feint to the center

Reading President Obama’s piece in the Wall Street Journal last week made me think of something Tom Dye, one of my Political Science professors at Florida Sate used to say when discussing the Soviet approach to arms negotiations: “If it’s someone’s goal to kill you, you should not be surprised to discover that they are more than willing to lie about it in the first place.” That basic truth of that statement seems fairly obvious, but it’s a lesson liberals never learned during the Soviet era and President Obama demonstrates he thinks Americans have not learned it today.

He starts off paying homage to the free markets that he rightly acknowledges allowed the United States to become the most prosperous nation in the history of the world. He then goes on to (again accurately) state that it is our entrepreneurial spirit that is the key to our continued leadership in the world.

The remainder of the piece involves his demonstrating for us his understanding that too much government regulation can be a hindrance to those free markets and can suffocate entrepreneurship. He talks about regulatory excess and highlights how agencies can even work at cross purposes to one another. He also discusses his plan to sign an executive order that will instruct federal agencies to reduce excessive regulation, eliminate redundancy and repeal regulations that are obsolete.

The take away from this piece however is that President Obama thinks Americans are incapable of logical thought. He says all the right things, but few people paying attention will believe a word of it.

The President’s stated willingness to destroy the coal industry, his nationalization of the auto industry and his administration’s threats to business leaders who go off script might suggest to a reader that he may not be quite the fan of the free markets as he suggests. It is the 5th paragraph however that puts a lie to the entire piece: Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

After rubbing one’s eyes and re-reading that two sentence paragraph then re-checking the byline you have no choice to conclude that either President Obama is a victim of body snatchers or he thinks you were born yesterday. The President’s assertion that his administration has been a model for good governance and balanced regulation is like someone beating you to a pulp and then proclaiming himself a pacifist.

President Obama’s first two years could hardly have been any less balanced had Ralph Nader been sitting in the Oval office. The examples of the President’s duplicity are legion.
  • His FCC Chairman, Julius Genachowski has moved forward with rules to regulate the Internet despite a court ruling in April explicitly stating the Commission had exceeded its authority.

  • His EPA, led by Lisa Jackson was a regulation machine. Not only did it seek to regulate CO2 (the stuff we exhale) as a pollutant but it also decided that states that disagreed with its air quality rules (Texas in this case) would simply lose their ability to issue industry permits within its borders.

  • He appointed a Pay Czar to dictate salaries for private companies, some of whom were forced to take loans from Uncle Sam.

  • His (recess) appointment of Andy Stern’s right hand man, Craig Becker to the National Labor Relations Board did not suggest a balanced approach to a free market America. Becker once said "employers should have no right to be heard" in cases before the Board, which supervises union elections, investigates labor practices and most ominously, issues rulings that interpret the National Labor Relations Act.

Then there is of course the minor issue of the 159 new bureaucracies, agencies, boards, commissions, and programs that ObamaCare creates, not to mention the myriad mandates such as the one requiring restaurant companies with more than 20 locations to list their nutritional information virtually everywhere but on the toilet paper. Then there are the 1099’s. And of course, not to be forgotten is the unknown number of agencies and regulations that Dodd Frank – one of the most far reaching and incomprehensible financial laws ever passed – will produce. Together these two laws alone – all 4,000 pages of them – will produce strangling regulation for almost 1/4 of our economy.

Given that the beginning of the 2012 election cycle has just begun no one should be surprised that the President is seeking to paint himself as a centrist once again. No doubt his SOTU speech will be full of rhetoric that tacks to the right. It certainly worked well three years ago. Now however, despite a still fawning media, we have demonstrable proof that Barack Obama is nothing but a man of the far left. There’s an old saying: “Trick me once, shame on you; Trick me twice, shame on me.” The question is, how many Americans are going to be sufficiently gullible to take the President’s words at face value and disregard Ronald Reagan’s advice of “Trust but verify?” Hopefully fewer than did in 2008.

Monday, January 17, 2011

Common Sense: The antidote to too much government

Conservatives and libertarians are constantly railing against government intervention in the lives of citizens. As such, they are often accused by the left of hating all forms of government and seeking to deregulate everything to the point where corporations can take over the country and rob and enslave the citizenry.

Nothing could be farther than the truth. Conservatives understand a successful nation requires a functioning government with a strong rule of law. Without a well functioning government a society devolves into chaos and anarchy. Anarchy in turn usually leads to the rise of a strongman or powerful groups who take control and rule with an iron fist. (See Haiti and the return of Baby Doc or Mexico or Post Soviet Russia) It is not government per-se that conservatives despise; it’s pernicious, inefficient, ineffective and suffocating government.

A husband and wife in Houston who have spent the last year feeding the homeless is feeling the effects of just such a government right now. The city’s Health and Human Services department recently decided to shut the couple down for a lack of permit. Indeed, even the head of a local homeless advocacy group supported the action: “Even though their intentions are good, they ran into ordinances that are designed to protect the public.”

For the couple, Bobby and Amanda Herring, the idea of getting the necessary permits and ensuring that the food (which was often donated by local restaurants or cooked by Amanda in their home) was prepared in “a certified kitchen with a certified food manager” was simply not possible. Their only choice was to work with other properly certified or permitted groups or cease and desist. As of this week the pair were still trying to find a solution.

A spokesman for the HHS stated that the regulations in question are all the more essential in the case of the homeless, because "poor people are the most vulnerable to food borne illness and also are the least likely to have access to health care." So what you have is the government protecting the homeless from the hypothetical danger posed by potentially bad food by imposing the very real condition of taking food away from them. Brilliant.

This episode of course is far from unique. Last summer saw pint sized entrepreneurs in Portland and San Francisco get their lemonade stands shut down for not having the necessary licenses. Nor is it just food. Last week a New Jersey legislator proposed a law requiring registration and license plates for all bicycles - for a fee of course - to protect the elderly from future Lance Armstrongs.

These are perfect examples of bureaucrats fundamentally misunderstanding the function of government. The government cannot and should not try to protect citizens from every possible danger that exists. Why? Simply put, because the number of dangers are infinite. The phrase that comes to mind, if only because its opposite seems to hold sway in the United States today, is “That government is best which governs least.” The phrase, which can be found in Henry David Thoreau’s Civil Disobedience, is sometimes attributed to Thomas Jefferson or Thomas Payne. Regardless of the phrase’s provenance, it seems to be the perfect paradigm for the problems that we face today. Dangers are everywhere and regardless of how many regulations government bureaucrats foist upon the citizenry, most of those dangers will still exist. Bureaucrats are simply not capable of protecting us from all of them, and they should not try. Interestingly, at the very time the governments of Houston, Portland and San Francisco are bullying Good Samaritans and budding entrepreneurs, it appears that Al Qaeda is interested in poising the food in restaurants, one of the most heavily regulated industries in the country.

Conservatives do not argue that there should be no government or regulation, merely that government should be limited and effective in the pursuits it undertakes. The question becomes, what fills the void? Common sense: Sound practical judgment that is independent of specialized knowledge, training, or the like. i.e. things that people figure out through experience, by taking risks, by failing, by watching what goes on around them, from understanding how things function and understanding that actions have consequences. That is the one thing that cannot be legislated, and indeed is something that can actually be regulated out of existence.

Perhaps there is no better example of government action doing just that than the Ft. Hood shooting in early 2010. Common sense would have dictated that a military officer publicly expressing his sympathy for jihadists and the need to kill innocents in the name of Allah would at a minimum be evaluated and had his access to military facilities limited. Instead, officers within the chain of command and others who closely interacted with Major Hassan bit their tongues because of the very real fear of being accused of racism or prejudice and as a result having their careers destroyed. More importantly I suspect, those officers felt confident (again with good reason) that even had they spoken up, nothing would have been done.

In the case of the recent shooting in Tucson, the fact that the shooter purchased his gun legally does not suggest more gun legislation is necessary. Laws already exist to prohibit the mentally unstable from purchasing weapons, and Loughner was certainly that. One question might be: did privacy or civil rights laws keep him from being evaluated and or labeled as such?

The New Year presents conservatives with a moment of opportunity. The GOP has control of the U.S. House, 29 Governor’s mansions and 58 out of the 99 state legislative chambers. Many of the men and women who hold those seats can thank conservatives and Tea Party organizations across the country. If 2012 is going to be another step in the rollback of the progressive agenda smothering the country, conservatives (either via the GOP or over its carcass) will have to stand up and do battle against the perpetually growing bodies of legislation and regulation that effect governments across the country.

Doing so not only requires demonstrating the absurdity of laws already on the books, but at the same time making the argument that government cannot solve every problem any American might ever encounter. Common sense is a muscle. The less it is used the more it atrophies. The more it’s used the stronger it becomes. If the President is so keen on providing benefits to the citizenry, perhaps he can pay for a magical gym membership where members can work on their common sense skills between bench press sets. Now that would be a social program worth paying for.

Monday, January 10, 2011

Liberals see America as a series of problems waiting for government solutions

In some respects liberals and progressives have it easy. All they have to do is look around and they can find problems for government to solve. Kids are too fat? Let’s get the government to decide how restaurants market their offering. Somebody walked away with a bad haircut? Impose government testing and licensing for barbers. Crime getting out of control? Let’s ban all guns. Someone loses their job? Let’s give them three years of unemployment checks. And just in case there were not enough real problems, liberals try and use government to solve problems that don’t even exist: global warming, disappearing polar bears and widespread discrimination of minorities.

For liberals the country is a boundless universe of problems just waiting for government solutions. The problem with that of course is that the supply of problems is literally endless. Most men are imperfect humans, and until they find a way to fix that, problems will always exist.

It is the ease with which liberals can point to problems and proffer ostensibly reasonable solutions that make it so difficult for conservatives to make headway, particularly with a population that is focused on things like American Idol, Facebook or Xbox. Of course those simplistic solutions often turn out to be anything but simple and more often than not resemble nothing like a solution. As an example, one of the driving forces of the economic malaise we find ourselves in today was the result liberal regulations forcing banks to give mortgages to people who should probably not have had them. Those regulations were government solutions to the “problem” of banks not making enough loans to minorities.

In a world where problems lay below every surface, around every corner and just in plain sight, it’s sometimes difficult to engage voters with a message that we don’t need more government regulation. When a kid is dead in the street of a gunshot wound or a family has lost its health insurance it can be challenging to carry on a rational conversation on the big picture politics of regulation vs. freedom.

Every now and then however a situation comes to light that so starkly discredits the liberal philosophy that even the least engaged citizen almost takes notice. Just such a situation is taking place in California, and it has nothing to do with the state slowly committing economic suicide via untenable regulations and confiscatory tax rates.

The situation to which I’m referring involves the conspiracy amongst environmentalists, the state and the federal governments to turn what is possibly the most fertile land on the planet into a desert wasteland, and take with it tens of thousands of jobs. I’m talking of course about the San Joaquin Valley. The Valley, which occupies much of the center of California from approximately Bakersfield in the south to Sacramento in the north, is the breadbasket of the United States, having in some years produced more than 25% of all the food consumed in the country. It produces everything from grapes to broccoli to tomatoes to rice to pistachios to milk and cream. It’s also a major producer of non food items such as hay and cotton.

In 2008, the Valley, already suffering the effects of a years long drought, was dealt a body blow by the government. That December the U.S. Fish and Wildlife Service issued a “biological opinion" that imposed draconian water reductions on many farms in the San Joaquin Valley. Why? Because California is running out of water? No. Because there’s too much food and they wanted to reduce the supply? Plausible by government standards, but no. No, the government decided to cut off 100% of the water supply (later reduced slightly) of much of the Valley to protect a two inch fish called the delta smelt. The decision was the result of a 2006 lawsuit brought by the environmental group National Resources Defense Council. And the diverted water, is it being sent to other farmers someplace else? No. Is it being held in a giant reservoir for later use? No. It’s being dumped into the San Francisco Bay.

The predictable result of all of this is that not only is a wide swath of some of the most arable land on the planet turning into a dustbowl, but tens of thousands of farm workers are now unemployed and standing in food lines. On the state level, although the Governator claimed that were the decision up to him he would turn the water back on, when he had the opportunity to ask the federal government to review the decision he chose not to.

Not that it had to be this way. The government had much leeway in how it might have approached the “problem” of the delta smelt. Given all of the possible routes the bureaucrats might have taken, they chose the most heavy handed avenue possible and the result has been predictably bad. And it’s not even a matter of depraved indifference. This was a case of regulators actively seeking to advance the environmentalist agenda at the expense of jobs, families and communities. If there were any doubts about that the perniciousness of the government’s actions U.S. District Judge Oliver Wagner put them to rest on the 15th of last month, stating in his decision that the U.S. F&WS had acted in an “arbitrary, capricious and unlawful” manner when issuing their “biological opinion”.

Rarely are the ruinous consequences of progressive / liberal policies as rapid and stark as they are in the dying fields of the San Joaquin Valley. Nonetheless, ruinous they usually are. Be they banking regulations seeking to bring about social change, gun laws seeking to diminish crime or regulations seeking to guarantee every American health insurance coverage, progressives look at the troubled world as a place that must be fixed by government intervention.

Unfortunately, in addition to being pernicious and totalitarian, progressives are also immune to objective evidence of their failures. It doesn’t matter that the outcomes from their policies are usually the exact opposite of their stated objectives or cause irreparable harm to the unwashed masses who actually have to live with them. The only thing that is important is growing government control so that citizens can finally be saved from themselves and the negative consequences of their unenlightened choices.

Monday, January 3, 2011

Democrat Pixie Dust Strangles Jobs

Last week the fewest jobless claims in 2 ½ years were reported. President Obama and Democrats will likely begin crowing that at long last their policies are beginning to kick in and turn the jobs market around. I'm not so sure. Let’s see how things look in six months as even a blind squirrel trips over a nut every now and then. At the end of the day Democrats are simply ignorant of what it takes to actually create jobs other than those financed by government money, i.e. by taking money away from productive citizens to inefficiently distribute it to others.

The funny thing about jobs is that you don’t find them sitting on a shelf or stuck in a closet. They are not items like tires or boxes or cars. They are not assets you can put into a vault and count and protect and take out whenever you want to use them. No, jobs are dynamic things that exist only in their exercise. Fundamentally jobs are nothing more than energy expended in the pursuit of accomplishing something.

As such, there are private sector jobs and there are public sector jobs. The difference is (besides the fact that public sector jobs pay twice what private sector jobs do…) that jobs in the private sector are typically created when some entrepreneur or investor decides that he or she wants to put their capital at risk for the purpose of growing it, and the vehicle they are choosing for that effort is starting a business. Whether they begin with a great idea they’ve patented, a process they feel they can improve upon or a service they decide customers might be willing to pay for, invariably they look at what it will take to make that business a success.

At a minimum they want to be able to sustain that endeavor and eventually turn a profit. Because of that, most businesses start out small, with owners putting their own time and money into the business. Assuming things go well, at some point the entrepreneur decides they would like to grow, to become bigger and to ideally make more money. A big part of growing most businesses is adding people, particularly at the beginning. This is where President Obama and the Democrats simply loose all connection with reality.

They suggest that government regulation does nothing but protect consumers, make businessmen more honest and generally make society a better place and has no detrimental effect on business decisions. This view is as absurd as their view on taxes. They look at the world of taxes as a static environment. They say that if a 25% tax rate on X raised $4 billion this year, then by raising the rate to 50% next year the government will take in $8 billion. For them taxes operate in a vacuum. They never seem to appreciate the fact that taxpayers have choices and that they respond to incentives. Like Maryland, New York and New Jersey discovered over the last few years, raise taxes and tax payers decide to take their marbles and go play somewhere else.

Obama and the Democrats look at regulation the same way. They assume that jobs too exist in a vacuum and that regardless of what regulations they impose, jobs will eventually return.

The reason for that is simply that in the universe Democrats exist in there is no correlation between profits and jobs. Who votes for Democrats? Union members. Lawyers. Academics, students and intellectuals. Government employees. People on the receiving end of government redistribution programs. Most of those people are beneficiaries of government largesse in one form or another. If it’s not an actual government check it’s government “protections” that allow unions to blackmail businesses, court systems that encourage legal lotteries or loans or grants that sustain the nation’s ivory towers. At the end of the day none of these people has a vested interest in the success of business in America, other than the size of the bank account it creates so it can be looted via the tax code or a class action lawsuit.

Private sector jobs are the backbone of the United States and they always have been. The reason unemployment today stands near 10% is because the people who are responsible for creating private sector jobs are increasingly unsure about the future. Why? Uncertainty about costs.

The cost of a job is not just the paycheck the employee cashes. It includes things like employee recruitment and training, wages, unemployment insurance, employer social security payments, benefits programs and various other employee specific expenses. And those are just the employee specific benefits! Fundamentally an employer needs to assess whether or not an employee will bring more value to the business than it will cost the boss to write all those checks.

As regulation and taxes increase, it raises the bar in terms of what value an employee must bring to the job for a private sector company to hire them. Imagine the direct cost of an employee is $35,000 per year. If regulation and taxes cost the employer an additional $2,000 for that employee, then the employee must generate at a minimum of $37,000 worth of value to that business in order to make that job sustainable. If however regulation and taxes cost the employer $4,000 per employee, then that same employee must generate $39,000 worth of value to sustain that job.

Anyone with a rudimentary understanding of the private sector would recognize that at some point employers, entrepreneurs, investors and other job creators will decide that there is simply no opportunity to make money by creating or sustaining jobs in the United States. They will seek to get more work out of existing employees, they will look for technology to replace employees and when the cost of running a business itself finally becomes prohibitive, they may close up shop altogether and ship their investments and jobs overseas.

A year ago President Obama said “You would be hard pressed to identify a single piece of legislation that we have proposed out there that, net, is not good for business”. Unfortunately for most Americans, they don’t breathe the rarified air Democrats do that allows them to exist in such a fantasy world. Instead they are left to twist in the wind as Democratic regulatory pixie dust chokes the life out of the real American economy.