The dangers of inequality

As a matter of human nature, the ruling elites always arrange to take care of themselves first. Even in a democracy, "we are all equal, but some are more equal than others" (from George Orwell's Animal Farm). This certainly seems to fit the overpaid CEOs and Hedge Fund managers we have been hearing about.

But as a matter of self-interest, those at the top need to be sure the inequality doesn't get too bad, or the natives will revolt, as has happened repeatedly throughout history, including recently in the Middle East. And when the natives revolt, things usually aren't very pretty.

So the rising anger we are seeing in our own country, with the Wall Street protests as just one visible symptom, is a warning to those at the top of the heap that the pyramid of inequality has gotten close to the point where things become unstable. If they were wise they would pay attention to this.

Recommended: Biden’s Fourth-Grade Economics

Mark Steyn has a wonderful piece in today's National Review Online: Biden's Fourth-Grade Economics. Vice-President Biden apparently gave an impromptu economics lesson to some fourth-graders on York, Pennsylvania recently. What he said would be hilarious and worthy of a Monty Python satire if it weren't that liberals like him, who unfortunately currently lead the country, really believe the fictions -- either that or they are telling us outright lies.

Dilemmas and unintended consequences

Whoever occupies the White House after the next election will face a difficult dilemma. On the one hand, there is absolutely no way the government can continue to spend almost twice as much as it takes in, borrowing the rest. On the other hand, to reduce the government back to a size that matches its income will involve putting millions of people out of work. And these won't just be government bureaucrats who are "declared redundant". It will probably involve an even larger number of people in the private sector -- all the people who clean their offices, run their cafeterias, maintain their buildings, provide their office supplies, service their fleet cars, etc, etc etc. Not to mention the millions of private sector contractors who will have to be laid off when their government contracts disappear.

So this "small government" movement has some difficult unintended consequences.

The same is true of the plan to reduce our defense expenditures. Clearly we spend way too much on defense - about as much this year as the whole rest of the world put together. We could spend half of what we currently spend and still have the most formidable military on the planet (if we spent the remainder wisely). BUT reducing defense spending by half would put millions more people out of work. And again, it wouldn't just be military people, it would include an even larger number of contractors and suppliers from the private sector.

So once again, reducing federal spending is a two-edge sword, especially in these times of already-high unemployment.

Enlightened Self-Interest

It is no surprise that the wealthy and powerful work hard to keep themselves at the top of the pyramid, and to maintain their wealth and the privileges that go with it. In fact, it is simply human nature. So we see this same theme everywhere in the world and all through history, in nations ruled by oligarchies or dictators and in nations like ours that are supposedly "democratic". In good times it is not so apparent, because everyone feels they are doing well. But in bad times like these it is painfully obvious that the ruling elite takes care of its own first.

What ought to be obvious to the ruling elite, but apparently isn't, is that their continued wealth and prosperity depends upon a strong and healthy economy, with lots of well-off consumers who can buy the products that their companies make and provide the profits that feed their wealth. Henry Ford was wise enough to see that he had to pay his workers well enough that they could buy the cars he was making.

This is an elementary observation about economics. Even slave owners know that one needs to keep feeding the slaves so they can keep working. But apparently today's ruling elite hasn't yet understood this simple principle, or they would be a lot more worried that they appear to be about the precipitous decline of consumer purchasing power and the high unemployment rate.

Recommended: The Ugliness Started With Bork

Joe Nocera makes a point in today's New York Times that I have made often: The Ugliness Started With Bork. It was the bitterness, and essential unfairness, of the liberal battle to prevent Robert Bork from being appointed to the Supreme Court in 1964 that started the civil war between the Democrats and the Republicans in Congress.

As Nocera says:

I bring up Bork not only because Sunday is a convenient anniversary. His nomination battle is also a reminder that our poisoned politics is not just about Republicans behaving badly, as many Democrats and their liberal allies have convinced themselves. Democrats can be — and have been — every bit as obstructionist, mean-spirited and unfair.

I’ll take it one step further. The Bork fight, in some ways, was the beginning of the end of civil discourse in politics. For years afterward, conservatives seethed at the “systematic demonization” of Bork, recalls Clint Bolick, a longtime conservative legal activist. The Atlanta Journal-Constitution coined the angry verb “to bork,” which meant to destroy a nominee by whatever means necessary. When Republicans borked the Democratic House Speaker Jim Wright less than two years later, there wasn’t a trace of remorse, not after what the Democrats had done to Bork. The anger between Democrats and Republicans, the unwillingness to work together, the profound mistrust — the line from Bork to today’s ugly politics is a straight one.

It is not that the liberals opposed his nomination - that was understandable. It was that they were willing to use any means available, fair or unfair, truthful or not, to destroy him. So they should not be surprised that the same tactics are now used against themselves.

Recommended: The World As It Is: Dispatches on the Myth of Human Progress

Chris Hedges was a foreign correspondent for the New York Times for over twenty years, covering most of the major and minor wars of that period. He is also a Pulitzer Prize winner. His experiences, especially close-up and personal in wars, have given him a distinctly non-mainstream view of the world. A committed socialist and follower of people like Noam Chomsky, who have been railing against “the system” for years, he is outraged about American policy, and deeply worried about the future of America.

I have generally found the ranting of people like Chomsky neither convincing nor interesting, but I have to say that Hedges makes a persuasive argument in this collection of articles that our problems in America are far more fundamental, and far more dangerous, than most of us have assumed. It is worth reading this book and pondering whether our ”mainstream” views are really incorrect, and whether perhaps we really have been brainwashed by the media and the political elite, and whether perhaps the emperor really doesn’t have any clothes.

Certainly watching politicians in both America and Europe try to cope with the financial crisis, one is struck by how they seem to be taking care of the ruling elite first (Wall Street, the senior management of big corporations, powerful unions, other in-group politicians, and all the media hangers-on).

This is not a comfortable book to read, It challenges a lot of our "conventional wisdom" and common world views. For that reason alone it is important. We should never cease to listen to, and seriously consider, other views that challenge our own comfort zones.

The Israeli trade

I don't understand why people never seem to learn that paying ransoms just encourages more kidnapping! Israel just agreed to release 1000 Palistinain prisoners -- many mass murderers and terrorists - to get back one kidnapped Israeli soldier. Can you think of any action more likely to encourage more kidnapping by Hamas? What will they trade for the next kidnapped Israeli?

Recommended: Congress, Governors Nix Obama's High-Speed Trains

Sometimes sanity does eventually prevail, even in Washington. As I have noted in previous posts, high-speed passenger trains are not economically viable in America. Actually, they are not economically viable in most places, any more than the supersonic Concord was ever economically viable. But among some of the Washington elite, who may be politically savvy but are naive about the realities of engineering and economics, high speed rail has had a persistent appeal.

As Michael Barone notes in his piece today Congress, Governors Nix Obama's High-Speed Trains, most Governors have been smart enough to see that accepting federal grants to begin to build high-speed rail lines would encumber their states with huge long-term subsidies, and Congress has finally cooled on the idea of wasting any more money down this rat hole.

Recommended: The Way Forward

Nouriel Roubini, known as Dr Doom before the recession because he kept predicting (accurately) the coming crisis, has co-authored a new paper by the new America Foundation: "The Way Forward: Moving from the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness."

The authors argue that nothing proposed thus far by either the Democrats or the Republicans is adequate to deal with the current fiscal crisis, and propose the sort of long-term massive infrastructure rebuilding program that might be needed to restore the nation's economic health. And by the way, they don't believe deficit reduction at this point makes any sense either.

This paper is somewhat academic in tone, but very important and well worth reading anyway. The nation is clearly in a serious financial crisis, and we need our best minds to help us figure out how to get out of it. These three authors are among our best minds on this topic.

Taxing miilionaires

President Obama would like to levy a tax on millionaires to pay for his jobs bill. It certainly sounds reasonable, considering all the Wall Street types and CEOs who have been taking home obscene salaries and bonuses even while their companies fail and their actions bring on a recession.

Still, I do have to wonder why he insists on looking for new revenue instead of cutting government spending to find the money for his bill. Nothing has changed recently -- we still borrow almost half the money the government spends each year and a tax on the rich will make almost no difference to that situation. We still need to cut something like $1.5 TRILLION per year from the government budget just to balance the budget, let alone begin to pay back our debts. Some $450 billion in millionaires taxes is a drop in the bucket compared to the $1.5 TRILLION that needs to be cut.

But then, it has been obvious for some time now that this president has no intention of tackling that problem, any more than his proposed job bill does much of anything effective for the current high unemployment figures.

More on the Jobs Bill

As a follow -on to the last post, note this news item:

Senate Democrats buck Obama on jobs proposal by changing 'pay-fors'
By Alexander Bolton - The Hill, 10/04/11 08:35 PM ET

Senate Majority Leader Harry Reid (Nev.) on Tuesday further distanced his Democratic Conference from President Obama by nixing a major component of the White House’s jobs plan.

Reid said he would revise parts of the proposal that some Senate Democrats have found unpalatable. The Nevada Democrat announced his new strategy on the same day he blocked a Republican effort to force a vote on Obama’s jobs bill.

-------------------------

Reid told his Democratic colleagues Tuesday that he would put together a new plan to pay for the package after rank-and-file colleagues balked at proposals to limit tax deductions for the wealthy and raise taxes on oil and gas companies.

So it's not just the Republicans who won't support the president's jobs bill.

Political theater

An amusing, if pathetic, little piece of political theater this afternoon revealed just how meaningless are President Obama's repeated attempts over the past few weeks to paint the Republicans as the obstacle to a workable job bill. Minority Leader Mitch McConnell (R-Ky.) attempted this afternoon call up President Obama’s jobs plan for an immediate vote in the Senate. The attempt was blocked procedurally by Senate Majority Leader Harry Reid (D-Nev.)

McConnell admits the move was made just to embarrass the Democrats, because what McConnell and Raid both know is that there are not enough Democratic votes in the Senate to pass the President's bill, even though the Democrats have a majority in the Senate. It is not just the Republicans who won't support higher taxes; it is also a lot of Democratic Senators who are up for re-election next year and want no part of being associated with President' Obama's higher-taxes plan.

So the dirty little secret exposed by this political theater is that it is not just Republican opposition that is blocking his plan -- it is strong opposition from his own party. More than that, President Obama is perfectly well aware that his plan is a non-starter with his own party; moreover he was aware of this even before he proposed the plan, because the Congressional leadership of his own party told him so in no uncertain terms.

That means that he never expected his plan to pass, so pushing it is nothing more than a pre-election maneuver, not a serious attempt to deal with the unemployment problem. For this descent into Chicago-style political gamesmanship in the face of such a serious national problem he has now finally lost my vote for good, whomever the Republicans nominate.

Recommended: Making Movies

Sidney Lumet, director of such successful movies as Serpico (1973) Dog Day Afternoon (1975) and Q & A (1990) , has written a wonderful insiders book about movie –making., This is not an exposé of the lives of famous actors, but rather a discussion of what goes into the making of a movie from the director’s point of view. Fascination for those of us who have watched movie-making from the outside.

See the book list in the sidebar for details. This book was published in 1996, and so will be found among the 1996 books in that list.

Recommended: Packing for Mars: The Curious Science of Life in the Void

Surviving in space for long periods, as will be required for a trip to Mars, is difficult. But we have already been preparing with our near-earth space station, the shuttle flights, and the Apollo moon flights. And it isn’t all that glamorous, seen up close. Mary Roach, whose previous books are Stiff: The Curious Lives of Human Cadavers, Spook: Science Tackles the Afterlife, and Bonk: The Curious Coupling of Science and Sex, has a wonderful talent for entering a field and describing it with wit and humor, as she does in this book. Ever think about the problem of defecating in zero gravity? Ever wonder what the astronauts eat (and whether they like it)? Ever wonder why airline passengers don’t have parachutes? This is the book that will explain it. A wonderful, entertaining but highly educational read.

Recommended: Finally, The Cognoscenti Ask: What Could We Be Thinking?

Mark Steyn isn't one of President Obama's supporters, but having said that, his new piece on Investors.com: Finally, The Cognoscenti Ask: What Could We Be Thinking? is worth reading.

Lots of us drank the Cool-Aid in the last presidential election (myself included) and bought the "New Hope" and "Change in Washington" message. As Mark says:

You handed a multitrillion-dollar economy to a community organizer and you're surprised that it led to more taxes, more bureaucracy, more regulation, more barnacles on an already rusting hulk?

Well, the results aren't impressive. Nancy Pelosi kept Congressional politics at its usual civil-war, let's-screw-the-other-party-while-we-can level (and the Republicans are reciprocating now). The economy is going nowhere (except perhaps into a second dip), the federal deficit continues to climb with no plan or proposal from the President to do anything effective about the problem.

Perhaps we, the voters, should have been a little more savvy than to expect a junior Senator who never ran a business, never met a payroll, never governed a state to be able to run a nation the size of ours, especially during a recession. It would be a difficult job even for an experienced governor or legislator; we were naive to think an inexperienced person could do the job. Eloquence (which Obama certainty does have) is no substitute for experience.

In the end, as Aristotle said: "Every country gets the government it deserves". We wanted Obama, so we got him. Now we have to live with the consequences of our decision.