Bunyan replies to Peale

Editor: Answering Dose 1 below, Crater signed this one John Bunyan, identifying with the author of "Pilgrim's Progress." Dave Crater writes:

Interesting you should take Dr. Peale as your namesake - there is the "power of positive thinking" irony in your note of course, but more substantively there is the hollowing out of Christian faith in the 20th century in which Dr. Peale was at the center.

It is that hollowing out which has been bearing bitter fruits like our current ones for about a century now - where faith in God becomes merely "positive thinking," belief in free markets and property rights becomes merely welfare state "capitalism;" where a government that tries to play God then plays the savior from the economic disasters it causes; where economic and financial understanding becomes merely "monetarism" or "Keynesianism" or, as Larry Kudlow wrote this morning, "we need government to act in order to fix the free market"; where genuine compassion and private generosity become merely taxation and wealth redistribution; where personal responsibility and moral hazard get pushed off to a later date when we've solved the latest crisis caused by the dearth of those very values; when political statesmanship becomes merely Barney Frank; and where republicanism and Republicanism become merely John McCain.

We'll never get the politics right until we get right who God is - hint: He's not in Washington - but from a political standpoint, "neoconservatism," a modern incarnation of the classical principles of conservative thought, has been more observed by the Bush administration in passing and in the breach than in the observance. It is the answer, not the problem.

Responses to your notes:

1. Agreed. The race is over.

2. Ditto. Perhaps now we can stop the empty cheerleading among the GOP political classes? McCain is pathetic - there is no other word for it.

3. GWB as right as ever on Iraq and history will remember him so. GWB as wrong as Hoover on financial crisis, what causes it, what fixes it, and what economic leadership is, and history will remember his $700 billion bailout as simply another weak capitulation to 20th-century statism.

4. GWB indeed a shell - the kind of shell that has taken a steady beating for doing what is right (Iraq), then instead of permanently choosing the right side of the street and building on this foreign policy conservatism a coherent and courageous set of socially and economically conservative initiatives, a la Reagan building himself and the nation a genuine legacy in exchange for the unavoidable public relations beating in the media, he routinely sells out to welfare state expansion and economic statism, trying like McCain to drive in the middle of the street and getting himself hit by traffic going in both directions. He, the nation, and the GOP have suffered inordinately as a result.

5. Agreed, though few will understand where they actually went wrong. See aforementioned dearth of economic understanding rooted in dearth of spiritual understanding.

6. Those who maintain traditional Christian faith sleep peacefully amidst the confusion, for the Almighty is still in His temple. Psalm 2 comes to mind: "Why do the nations rage, and the people plot a vain thing?"

7. We should align with traditional (i.e., true) faith and classical (i.e., true) political conservatism. That means no more John McCains, Bob Doles, or Gerald Fords - how much mediocrity do we have to endure before we recognize what it looks like?

8. "A bit more deflation"? Deflation ended 5 years ago. Commodities are at twice their historic levels - we are well into a period of inflation.

Economic cold shower

One of the villains of Amity Shlaes's The Forgotten Man is uncertainty. Markets hate nothing more than uncertainty, which paralyzes decision-making and freezes capital. Typically, marketuncertainty is nasty, brutish, and short. Typically, government uncertainly is agonizing and long.

At the end of Roberts's and Kling's podcast (see my View from a Height blog at JSharf.com), Kling points out that there are vulture funds waiting to buy distrssed securities and properties in order to resell them at a profit, but that the holders are waiting for a better deal on a bailout. (Something like this may have happened with Citigroup and Wells Fargo fighting over Wachovia.)

This is bad for about 100 different reasons, but I'll pick 5 ways this royally screws up market operations:

1) It prevents mark-to-market rules from working, hiding losses when there effectively is no market.

2) It keeps distressed securities off the market, keeping markets illiquid.

3) The lack of a market in certain securities makes it impossible to issue new securities of that type.

4) It keeps the market from finding its level; something priced at 80 might sell for 50 after being dumped at 30; you'll never know the true value.

5) It keeps the vultures from earning money while not capitalizing the guys holding onto the assets.

I could go on, but you get the idea. It all adds up to nobody knowing what anything's worth, and nobody being willing to take risks because they can't price that risk adequately. As a result it freezes capital and damages the real economy.

FDR didn't help this problem, he made it worse. He got the politics of it - he didn't need to suggest a solution to get elected, and he steadfastly refused to work with Hoover after he was elected. I don't see anything from the forthcoming Obama administration to suggest anything different.

Political cold shower

Editor: New contributer N. V. Peale writes from Denver. His dark humor is typified by the use of "slightly sub-optimistic" to mean "gloomy as hell." His icy realism would probably horrify the late positive-thinking clergyman from whom our man borrows a pen name. Random thoughts on a Friday lunch hour

Just seeking to stir the pot a little. Apologies if slightly sub-optimistic.

1. I don't see how McCain pulls it out, at this point.

2. The last debate a sad spectacle. To the point of my deep personal embarrassment. For America.

3. GWBush has given two small TV addresses lately, aimed at reassuring markets. Both have made things worse. Credibility zero.

4. GWBush has become a "shell." Fresh out of hemoglobin and neurotransmitters. Probably wishes he didn't run for reelection in 2004. Down to the last penny, we observe the blooming fruits of Neoconservatism.

5. The word "Greenspan" will soon become a grandiose pejorative. "Bernanke" and "Paulson" likewise.

6. None of the talking heads (elected or otherwise) knows what they're doing. Americans beginning to sense it. Bad advice everywhere. We're all on our own. Caveat emptor.

7. Expecting major forthcoming realignment in GOP and conservative movement. Which way should we align? Where will each of us land in the new land?

8. My economic hypothesis continues to be -- A bit more deflation, then significant inflation. But not sure when we hit the other end of the wishbone.

Barack channels Marx

It's no accident that Obama dwells on the purported economic malaise as his main selling point. His solution is the Marxist one: redistribution. This is why he constantly refers to “taxing the rich” as the solution, a solution that all good Marxists long to impose on our nation. But would it really be a solution? Consider the underlying assumptions. The first assumption is that the economic pie is fixed and can be taken for granted. When Karl Marx wrote Das Kapital in the 1840’s, the industrial revolution was young and its underlying economic theories were largely unformed. Marx drew upon the agricultural themes laid down by Malthus. Wealth was indestructible land, and the income crops grew regardless of who owned the land. Therefore, why would not industrial wealth be the same: fixed and indestructible? And if “justice” in agriculture is to redistribute the land, why would not workers “owning the means of production” not be the same expression of justice?

The next assumption is the desirability of a “steady state” economy. The green movement which opposes population growth and economic activities of most kinds are the natural allies of the Marxists. Both groups strive for the mythical static economy that neither shrinks or grows, that is predictable and controllable, that is “in harmony with nature”.

But these assumptions are false and dangerous. It is no accident that most of the ardent Marxists are liberal arts majors, gleefully devoid of real economic knowledge! The typical Marxist is a professor somewhere who continually spouts off about “the workers” without owning a pair of coveralls and without calluses on his hands. With tenure, feeding at the public trough in some state university, the professor doesn’t know what he doesn’t know!

For one thing, to define justice as equality is a mistake. Not all members of society have equal gifts. If the entrepreneurial spirit and success are punished, all of society is poorer! Once the seizure of power and the redistribution is over, the economy will contract, bringing with it poverty for all. “ Equal outcomes” means all of society equally poor at the subsistence level.

The next thing the Marxists don’t get is that wealth is NOT a static fixed pie! Economies grow or die. To stick to the agricultural metaphor, entrepreneurs can, in effect, "create farmland." The wealth pie expands or contracts depending on the policies and incentives put in place. For Obama to dwell on the “haves” and the “have nots” is a fraud. With 70% of the millionaires in this country SELF MADE, the real issue is between the “doers” and the “do nots." But every member of society CAN be treated with equal dignity!

This is the fraud perpetrated on blacks in this country by the likes of Jesse Jackson. Rather than tell his flock to stay in school, to work hard and to work to improve their lives, he tells his people they are victims. The problem is “white people conspiring to keep you down." Dropping out of school, getting pregnant at 13, being content to stay generation after generation on welfare has “nothing to do with their poverty!” His solution is to march on the capital and demand that society just “give” them money, (such as the “reparations for slavery”, classic victimology!) But the promise of America is not equality of condition but equal opportunity. Until these leaders change this emphasis, blacks will remain on the bottom of the economic ladder.

The last thing the Marxists don’t understand is the American ideal, which is if you work hard, there’s no limit to what you can achieve. The “rags to riches” stories are what attract people to this great land of ours! Americans want to get ahead. Americans want to do well, they want to grow their potential, not be stuck in a static planned economy with a Marxist Party elite telling them how to live their lives.

Finally, a voice for prosperity

Here comes the cavalry at last, I told a press conference at the State Capitol today. Too few powerful voices speak up for productive Coloradans in a Colorado political scene currently dominated by advocates for redistribution, regulation, and anti-market schemes. Now at last a proven success model called Americans for Prosperity is riding over the ridge to help change that. I'm pleased to be on the group's advisory board. Here's their press release with full details. ================================

The national free-market grassroots group Americans for Prosperity (AFP) today launched its Colorado state chapter, saying that its first goal would be to educate and mobilize grassroots taxpayers in support the removal of artificial, government-imposed barriers to energy development, which will help lower prices for cash-strapped citizens.

“From unnecessarily limiting the supply of energy to proposed cap-and-trade carbon taxes and regulatory schemes, many state and federal government policies are threatening to put a major dent in Coloradans’ quality of life,” said AFP President Tim Phillips. “Current and proposed energy policies largely amount to higher taxes, lost jobs and less freedom, and the Colorado chapter of Americans for Prosperity is going to educate and mobilize taxpayers on this and other issues, and we’re going to make sure their voices are heard loud and clear in Denver and in Washington.”

The group has named veteran Colorado grassroots leader Jim Pfaff as its state director. Pfaff formerly served as President and CEO of the Colorado Family Institute and Colorado Family Action and since 1998 has also served as President and CEO of IRDS, Inc., a public relations and political consulting company that specializes in grassroots mobilization, public policy consulting and polling.

“Americans for Prosperity has been fighting the good fight in other states and in the nation’s capital and getting results through taxpayer involvement,” said Pfaff. “With such an outstanding, effective organization looking out for citizens’ interests, we are going to have a major impact on Colorado.

“Colorado has a strong energy economy, but many politicians and special interests are putting Colorado families in peril because of environmental alarmism,” said Pfaff. “Recent calls for oil shale development are a good example here. We are sitting on one of the largest oil fields in the world, yet Mark Udall, Ken Salazar and Bill Ritter are fanning the flames of environmental fears. Instead of pushing for reasonable oil shale policy which can help reduce energy costs and gas prices in the long run, they are stirring up fears of environmental disaster which are just not true.”

Americans for Prosperity now has 21 state chapters around the country. In 2006, the group was active in fighting to reform Colorado’s costly Public Employees’ Retirement Association (PERA,) and will now work toward educating and training grassroots taxpayers in every corner of the Rocky Mountain State in support of increased responsible energy production and other pro-taxpayer issues, such as protecting the Taxpayers’ Bill of Rights, making government spending more transparent and ending forced unionism.

AFP has also become a national grassroots leader in the fight against pork-barrel earmarks and global warming alarmism. In 2006 the group traveled over 10,000 miles to 37 states and 50 pork-barrel earmarks on the Ending Earmarks Express road tour of federal earmarks. The group is currently in the midst of a nationwide Hot Air Tour, which is exposing the high economic costs of so-called “solutions” to global warming.

According to the American Council on Capital Formation, Colorado stands to lose between 20,000 and 31,000 jobs by 2020 if proposed cap-and-trade global warming tax hikes are approved by Congress. Moreover, the group estimates that the price of gasoline would skyrocket another 74 – 140 percent by 2030 and the cost of electricity would increase by 96% to 133%.