Hillary mouthing Marxist myths

Hillary Clinton keeps advocating a “gas tax holiday” paid for by “big oil companies” out of their “record profits." Excuse me, Senator, but you have it all wrong in saying we need to "take on" those companies. The nation’s problem is not Big Oil and its alleged record profits, but lack of supply. But when you have outfits like the Sierra Club opposing any kind of drilling at the top of their lungs and with huge propaganda budgets, we wind up with a policy of NDAAAT or "Endat" -- No Drilling Anywhere At Any Time. More supply would bring down profits and prices as a matter of course, but the progressives will have none of it.

But let's look at the root belief behind Clinton's self-defeating policy recommendations. The left-wing progressives have what can only be considered an “agrarian view” of wealth. Like farmland, as they see it, wealth is fixed and indestructible. The crops grow and produce income, which also is fixed, and can be taken for granted. Therefore, the grand task is to redistribute the income and “eliminate poverty." What person of good will would not want to confiscate the farm land from the greedy parasitic land owners who do nothing but ride around in their carriages and cane their tenant farmers?

Trouble is, this was not even a good theory when it was formulated by Karl Marx in 1848; it certainly doesn’t fit an information age economy of the 21st Century.

These days, free markets can create wealth that expands or contracts with confidence or lack of confidence. Take Microsoft for example. When Bill Gates took Microsoft public, his founders stock suddenly made him a wealthy man! But the progressives believe in the Labor Value Theory which states that all wealth is the product of someone’s labor (such as planting and harvesting the crops in the 1848 model). Therefore, profits and wealth can only be exploitation of someone else, and are therefore bad. Therefore, Bill Gates’s wealth is something he should be ashamed of.

This is of course utter nonsense. The wealth creation, jobs, and supporting industries created by Microsoft are a great source of well being for our society as a whole! But the progressives, stuck in the 1840’s, don’t get it! They would like to kill Bill Gates and confiscate his wealth and redistribute it.

Okay, say we do this. Bill Gates is arrested and shot, and the Government announces it will now confiscate every share of Microsoft! What happens to the market price for MSFT? It will go to zero! So the government now has all the outstanding shares of Microsoft, ( 1 or 2 billion?). It redistributes those to every citizen in the country. Now everyone has 10 shares of Microsoft, but they are worthless, good for only toilet paper! Microsoft and the jobs and supporting industries all collapse and the economy contracts! But you can count on the progressives to blame everyone but themselves for the economic malaise.

Too bad the Democrats have put up Marxist lawyers as candidates instead of those who understand how a modern economy works.

Our self-indulgence spells fiscal folly

We are Americans, and we want the best. Now! Instant gratification has become the American ethos. In roughly three generations, American society has been transformed from a nation of penny-pinchers, scrimpers and savers to a nation of consumption-addicted spendthrifts oblivious to tomorrow. Despite the second-highest per capita income in the world, we save next to nothing. As late as the mid-1980s, the savings rate regularly exceeded 10 percent.

Once upon a time, families actually saved to purchase a home. Young people saved money from their summer jobs to purchase a car. People even saved to prepare for unforeseen trouble or opportunity — "a rainy day."

Forgoing spending to save for something important taught crucial disciplines of delayed gratification and prudent spending. After several years of sacrificing certain comforts or pleasures, we are much more diligent to make certain that what we buy will last, to take care of that purchase, and to understand contracts before signing them.

That personal stake is absent from purchases that require little more than a promise to make future payments. When we have no skin in the game, it seems we have nothing to lose. As a result, Americans have amassed $2.5 trillion in household debt — more than $23,000 per household.

It's no wonder that we transfer that same instant gratification ethos to government. When we the people fail to practice self-discipline at home, we cannot possibly be serious about fiscal restraint in government.

Politicians of all stripes use our shortsightedness to their advantage. With rare exceptions, the populace doesn't embrace candidates who call for tough choices. That's why elections are typically won by the candidate who tells the most people what they want to hear.

For the last 30 years, high school students have learned virtually nothing about the proper limits of government, although they may hear that government should "stay out of your bedroom," which facilitates more instant gratification.

Nearly 200 years ago, Frederic Bastiat wrote: "Government is the great fiction by which everyone endeavors to live at the expense of everybody else."

It used to be that politicians sought to ingratiate themselves to the masses by vowing to tax "the rich." By now, most voters are savvy enough to realize that "rich" means everyone with a job and a pulse.

So candidates now promise more government goodies – health care and mortgage bailouts – at the expense of our children and grandchildren. They won't say it that plainly because we wouldn't fall for it if they did. But that's exactly what is happening.

When Congress and President Bush rushed to pass their popgun economic "stimulus" package, they increased the current year's deficit by more than 150 percent and charged another $152 billion to future generations.

The federal debt is more than $5 trillion — $48,359 per household. And that's just the tip of the iceberg. We owe another $5 trillion to federal employees and veterans for health care and retirement benefits.

However, the cost of retirement and health care programs for the general public really shafts our children and grandchildren. The unfunded cost of providing Social Security and Medicare benefits to everyone alive today is more than $45 trillion. That's not the total cost; it's the cost that cannot be covered by existing revenues.

The board of trustees of these two programs says the promises we've made to ourselves "are not sustainable under current financing arrangements." Social Security's existing surpluses will "turn into rapidly growing deficits as the baby boom generation retires."

"Medicare's financial status is even worse," the trustees warn. That should make any clear-thinking American recognize the sheer foolishness of creating a new health care entitlement for everyone.

Too many Americans, whipped into a frenzy by groups like AARP, prefer to sentence our children or grandchildren to stratospheric tax rates than to consider simply slowing the growth of future benefits. Without changes, government will grow from an historic cost of about 18 percent of GDP to 30 percent in just 22 years. In some 40 years, spending will consume 50 percent of GDP — more even than during World War II.

Our decisions today determine if we will saddle our children and grandchildren with an unrestrained government that drains the economy and makes the dollar virtually worthless.

If we hope to secure the blessings of liberty for our posterity, we must force our leaders to confront the future responsibly and aggressively. Most of us did not endure the Great Depression nor any of our country's most demanding tests. However, we face a moment of truth that is just as crucial to our nation's future.

It would be tragic if we who have been asked to do so little fail even this test.

What tent cities, Rep. Paul?

"Tent cities on the edge of empty neighborhoods" are cited by Congressman Ron Paul as evidence that "now the crisis has come" for America's economy, as he has long warned. He makes the claim in his own words on TV and radio spots for his presidential campaign, airing in Colorado ahead of the Feb. 5 caucuses. It's a dramatic and powerful image, evoking the darkest days of the Great Depression. But how valid is it? If there were any sort of national outbreak of Bushervilles resulting from the subprime mortgage mess, you can be sure major media organizations would be all over it. But a web search turns up no evidence of same -- even if an outbreak is defined to mean two or more.

Google "tent cities" and you come up with exactly one (1) relevant result, a YouTube video depicting some tents pitched in Southern California "after the housing bubble burst." The only other search results from current news, a cluster of church-sponsored homeless encampments in Seattle and 84 shantytowns erected across the country by deaf activists upset about Gallaudet College, don't seem relevant to the candidate's generalization.

Like Ron Paul, I sympathize with the hardship of those who have lost their homes through unwise borrowing. But also like him (presuming the sincerity of his free-market professions) I can't blame that unwisdom on anyone but the borrowers themselves. For Rep. Paul to blame policymakers and regulators, as these ads imply, would be unworthy of him as a small-government constitutionalist and apostle of personal responsibility.

What am I missing here? Maybe you Pauliacs can tell me. Absent some documentation of numerous tent cities and some theory of liberals' responsibility for them, your man's broad hint to voters that as President he, of all people, would have an interventionist plan to remedy or prevent mortgage foreclosures leaves me with the uneasy feeling of intellectual dishonesty bordering on demagoguery.

Such over-claiming hurts the credibility of an honorable man who is right about a lot of things, economically and politically. It makes him sound like just another of those doomsayers and hard-money pessimists who have correctly predicted 13 out of the last three recessions.

Disclosure: I will be advocating for Mitt Romney when I chair my precinct caucus in Centennial on Tuesday night.

Supply-side Rudy, fumbling Fred

(Lyon, France, Jan.14) However off-target many polls might be, as the New Hampshire primary demonstrated, Rudy Giuliani’s freefall in the latest surveys is being established as a fact. This might be well due to his strategic plans to focus exclusively on Florida and the February 5 states, and thus deliberately leave the early January limelight and momentum to the other contenders in the Republican field. More likely, his glissade may be the result of some conservative voters’ initial, albeit reluctant, support for his tough stance on terrorism finally draining away from him as supposedly more conservative candidates wisecrack voters into paying attention or work harder to get some traction.

Whatever the case might be, Rudy Giuliani is in trouble. He should not be. Asked a similar question about what to do to ward off a looming recession, Rudy Giuliani, the allegedly least conservative candidate in the Republican race because of his views on social issues, and Fred Thompson, proudly endorsed by Human Events on January 11 as a “solid conservative”, gave such very different answers as to turn the conservative world upside down.

Here is what Fred Thompson said on “Late Edition” on January 13: “(…) Increase the child credit, that would get money into the hands of lower income folks (…) At some level, I think a stimulus package and tax rebates would be beneficial.”

Stimulus packages delivered by government, including putting more money into people’s pockets for them to spend, has a name. It is called Keynesianism. It is what liberals do.

Now compare Thompson’s reply with what a dubious conservative like Giuliani had to say on Fox News Sunday the same day:

“ The kind of short-term stimulus you need is to present a realistic picture of an economy that’s going to grow and then the private sector and the investment sector, the multiples of money that that would involve, dwarfs anything you’re talking about [Hillary Clinton’s stimulus package]. (…) If the government in Washington presents the picture of immediately moving toward pro-growth policies, you have growth right away. A lot of the movement of money, not just in markets, but in general, is a prediction of not just where the economy is today, but where it is going to be next year, the year after, and the year after that.”

Stimulating the economy through private sector investment has a name too. It is called supply-side. It is what genuine conservatives do.

Now comprehensive conservatism should be about free-market economics, traditional values, and strong national defense. Rudy Giuliani might reasonably give pause to some social conservatives because of his views on abortion and gay rights -- but even social conservatives have to work and support their families and Giuliani’s supply-side answer would tangibly help them. Might his prescription also lift the remaining scales off their eyes and show them who the real conservative is when it comes to the crunch?

Note: “Paoli” is the pen name, er, nom de plume, of our French correspondent. Monsieur is a close student of European and US politics, a onetime exchange student in Colorado and a well-wisher to us Americans. He informs us the original Pasquale Paoli, 1725-1807, was the George Washington of Corsica.

Beware those slippery statistics

"Lies, damned lies, and statistics," the comment attributed to Mark Twain and Benjamin Disraeli, is typified by today's government economic stats. Some people are shocked when I tell them that the government's “core inflation rate” (also known as the CPI) doesn't include food or energy. And that our economy isn't as good as the government says it is. But such is the case. I'm not being a doom-and-gloomer; there are always opportunities to profit in and successfully navigate any market, if you know how to do it. But this government understatement of inflation overstates our country's GDP, and hence misrepresents current economic conditions. It's also an overlooked reason why Democrats and Republicans have basement-low polling numbers, and why Republicans lost badly in 2006.

Voters don't believe what Washington pols tell them about immigration, Iraq, inflation – and pretty much everything else. GOP candidates who did the best in '06 were the ones with (or perceived to have) the most consistency and credibility on the issues: Namely Tancredo, Coffman, and Hillman (even though he lost by a nose in the state treasurer's race).

Here are a few of my favorite economic whoppers:

Economic Lie #1: “The dollar decline isn't that bad, because it only affects our purchases of imported goods.”

Even if this were true (and it's not), most of the products we buy are imported. We really don't produce or manufacture much in America today. Except for agricultural commodities, YouTube videos, and hot air from so-called business 'gurus' on HeeHaw (CNBC) and Fox Business News.

The declining dollar affects the cost of all products and services. Companies face increased costs for oil and gas, utilities, and other commodities, so they have to pass them along to the end consumer. Gasoline has tripled in the last 5-6 years. Crude oil has quadrupled to almost $100/barrel. Part of this is due to stagnating supplies and increased demand from China and India, along with the increase in monetary inflation.

Economic Lie #2: “You just need consistency with the inflation numbers, not accuracy.”

Huh? This is like fixing the gas gauge on your car to show a full tank, even though it's almost empty. You feel better about it, but doesn't change the reality of your situation. Even though the Fed says the CPI is acceptable, it's not in the 'comfort zone' of American consumers and businesses who have to absorb these costs. Excluding food and energy from inflation numbers is absolutely insane.

Wall Street folks can say that plasma-screen TVs and computers are going down in price, but you only buy these items every one to three years. Americans consume food and energy on a daily basis.

Economic Lie #3: “We want inflation in small doses, it's good for our economy. Deflation gives you scenarios like the Great Depression of the 1930's” (see video here, at the 6:20 mark).

Small doses of inflation eventually turn into big declines in purchasing power, as we've seen over the past few decades. It hits savers and seniors especially hard, who live on a fixed income or rely on their life savings during retirement. Pat Powell has been smoking the Wall Street funny weed, and Peter Schiff delivers a powerful rebuttal to this load of intellectual horse apples.

I'll wrap this up, and resume my Thanksgiving weekend escape out here on the Great Plains with family. Best wishes to you and yours for a happy holiday.