Recommended: Pity the Postmodern Cultural Elite

Victor David Hanson has written another of his crusty but largely accurate assessments of today's world in his recent article Pity the Postmodern Cultural Elite. I fully agree with his opening line:

I think most of our problems transcend politics, which is increasingly a reflection of an elite, insider culture that is completely at odds with the majority of the country that it oversees.

This is not a new phenomena - nations and cultures have always been led by small and powerful elites who reward themselves generously and look out for their own first. And these elites usually come to live in a small insular world of their own kind, largely isolated from the lives of the average people around them. And as a result, they eventually evolve a world view dissociated from the realities of the real world around them. Today in America is no different.

So Hanson's argument that our current severe problems aren't really rooted in the politics of red and blue states, but rather in the unrealistic world views of our ruling elites, largely shared across the political spectrum, seems to me spot on.

How else to explain Democratic leaders who blithely commit trillions of dollars (not their dollars, of course) in the face of a truly monstrous national debt to programs that most citizens don't even want? How else to explain Republican leaders who are so woefully ignorant, or even disdainful, of scientific evidence that they continue to deny that climate change is occurring even in the midst of record-breaking heat waves? How else to explain a Congress that pretends to pass financial regulation reform when everyone can see that under pressure from the financial industry they removed almost all the real teeth from the bill first? How else to explain a series of administrations, Republican and Democratic alike, who keep us mired in two distant wars, neither of which are winnable?

The Lessons That Guided The Nation’s Founders

The founders of our nation were wise and well-read in world history. They came from Europe and were well aware of the historical problems with the sort of strong, autocratic central governments that had ruled nations like England, Spain, Russia and France, and older empires like the Roman Empire and the Ottoman Empire. They were well aware that powerful autocratic central governments tended to become corrupt, self-serving, and out of touch with the people they ruled. They crafted for our new nation a highly decentralized system, with three independent branches of government to provide checks and balances on abuses of power, and reserved most powers to the independent states as another check on the growth of excessive power.

Over the past 200 years we have steadily eroded these protections, and have grown a huge, widely expensive, intrusive, ineffective and highly corrupt central government – the very thing they feared.

Huge? The on-budget federal population, the one reported in the budget, is about 2.4 million people, In 2006 (the last date for which I can find reliable figures) the true federal government workforce stood at between 14.6 million and 17 million people, including the “off budget” population that the government budgets generally try to hide. This includes all the civil servants, postal workers, military personnel, contractors, and grantees, and the uncertainly in the size reflects the fact that even the government itself isn’t quite sure how big it is. There are over 1,300 official federal facilities, and tens of thousands more leased private facilities.

Wildy expensive? The current federal government arrogates to itself between 17% and 20% of the entire economy, and the percentage is currently projected to rise toward 30% over the next few decades. This is largely to support the huge federal bureaucracy and the massive entitlement programs, as well as the swelling interest payment on the national debt.

Intrusive? The federal government now routinely listens in to domestic email and telephone conversations (thank the misnamed “Patriot Act” for that), and will soon regulate exactly what services your private or employer health insurance company can offer you (thank the recently-passed and also misnamed “Health Care Reform Act” for that) The current federal government even requires that a homeowner keeping a few hens for eggs register them with the federal government using a 15-digit number on Radio Frequency Identification Tags, (RFID). Sound outlandish? Read Another intrusive government regulation by Bill Horne.

Ineffective? Think Katrina. Think Gulf oil spill. Both disasters in which an efficient government might have made a big difference, but which in fact were marred by confusion, slow response, agency infighting, unclear lines of authority, and any number of other inefficiencies. Think about the recent report that there are now over 3,100 federal contractors and agencies involved in national intelligence and counter-terrorism, so many that many are duplicating each other’s work, and no one can manage to read or coordinate all the reports that they are issuing.

Highly corrupt? Well, it’s true we don’t seem to have much of the outright bribery that prevails in many nations, but in fact positions and favorable policies are routinely bought by large corporations, unions, and well-funded interest groups in their financial support, or lack of support, for expensive political campaigns. And of course we have all known for years of the extensive Washington “revolving door”, wherein government officials conveniently retire to lucrative positions in the very private industries to whom they used to direct multi-million dollar contracts. It may not be outright bribery, but it certainly is corruption.

Can this be reversed? I doubt it. Will it ultimately be fatal to our nation? Probably. It is exactly the same path of over-reach and over-spending that previous empires and great nations have followed, always with disastrous results at the end. It is instructive that at the very time when the European Union is finally facing up to the problem and beginning to cut government spending to avoid financial ruin, our own government is massively INCREASING spending.

Too bad our current leaders don’t know their history. Too bad our current leaders don’t understand what a gift the founders of our nation gave us in our original small, balanced, decentralized government.

Recommended: What 7 Republicans Could Do

Thomas Friedman had a good Op Ed piece in last Sunday's New York Times: What 7 Republicans Could Do. While the Democrats on the left are blindly spending us into insolvency, the Republicans on the right are just as blindly refusing to get real about climate change. Friedman argues that surely there must be at least seven Republican Senators who are neither blinded by their right-wing ideology nor so self-serving politically that they can't see their way to doing what so clearly needs to be done. I'm not so sure.

According to NASA, 2010 is on course to be the planet's hottest year since records started in 1880. The current top 10, in descending order, are: 2005, 2007, 2009, 1998, 2002, 2003, 2006, 2004, 2001 and 2008. David Leonhardt, in his Op Ed piece Overcome by Heat and Inertia the same day in the New York Times, pointed out

"This city (Washington) just endured its hottest June since records began in 1872, according to the National Oceanic and Atmospheric Administration. So did Miami. Atlanta suffered its second-hottest June, and Dallas had its third hottest.

"In New York, the weather was relatively pleasant: only the fourth-hottest June since 1872. Then again, New York is on pace for its hottest July on record."

As the old saying goes, "There are none so blind as those who WILL NOT see".

Rearranging the deck chairs......

Sometimes it feels like a Greek tragedy - the audience can see the inevitable bad outcome coming all through the play, but the protagonists proceed blindly on their way to their ruin.............

WASHINGTON (The Associated Press)– New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.

WASHINGTON (CNN) - A hotly contested bill restoring unemployment benefits to 2.8 million jobless Americans was approved by the House of Representatives Thursday. The $34 billion measure, which cleared the Senate Wednesday, now moves to President Barack Obama's desk to be signed into law.

It’s the economy, stupid!

There are times when academic theorists are simply too arcane for their own good. While the politicians and think tanks in Washington debate the complexities of fiscal reform, additional stimulus, and the desirability of expanding this or that entitlement program, ordinary folk can see some very clear principles that the politicians and theorists seems to be missing:

1. Nothing is possible without a healthy economy. Without a healthy economy, the nation simply can’t afford a strong military, good schools, expensive entitlement programs, up-to-date roads and water systems and electric grids, etc. etc. Everything depends on a strong economy, and any government worth its name would be spending ALL its energies right now getting the economy healthy again.

2. The economy can’t be healthy when we spend more than we make. The Federal government spends about twice what it takes in, borrowing the rest. Any sixth-grader understands that this simply can’t go on forever. There comes a day when we either have to pay back the loan or we have to default on the loan. (Allowing inflation to reduce the loan is just a way of defaulting on the loan.)

3. There are only two ways to balance our budget – cut spending or increase taxes. There are no other ways. There are no miracles, or rich uncles who can die and leave us a fortune, or Powerball lotteries that can pay off the national debt. Cutting spending and/or raising taxes are the only two options – it’s as simple as that.

4. Taxes are a drag on the economy. That doesn’t mean we don’t need taxes to pay for necessary things, like police and fire protection, but taxes are an added cost on a business, reducing its competitiveness, and taxes on individuals reduce their disposable income, and so reduce their purchases in the economy. Any middle-school student could understand that. Clearly one wants to keep taxes as low as possible if one wants as strong an economy as possible.

5. That means spending cuts are the better way to balance the budget. Of course spending cuts mean eliminating someone’s subsidy, and they will scream like a stuck pig. It also means Congress forgoing the opportunity to buy votes with taxpayer money, a longstanding practice. Still, it doesn’t take a PhD in economics to see that spending cuts are necessary anyway.

Is any of this complex? No. Does any of this take an advanced degree to understand? No. Could your 10 year old child or grandchild understand this? Yes. So why can’t Washington?

Recommended: Faith Matters - for those in peril on the sea

Walter Russel Mead has posted another of his insightful articles, Faith Matters: For Those In Peril On The Sea. Well worth reading and thinking about.

As he points, government simply can't remove all the hazards from our lives, even if the devout liberals believe it can. Hazard has always been part of life, and it always will be. The problem isn't that hazards exist; it is that we Americans in our comfortable 21st century technological cocoon are poorly prepared for the realities of the real world, in which bad things (tsunamis, earthquakes financial collapses, wars, famine, epidemics, etc, etc.) happen, and happen frequently.

The second stimulus debate

Seldom is there such a clear-cut ideological difference in economics as we are currently witnessing in the current “second stimulus” debate.

The question is simply whether or not the government ought to do a second round of economic stimulus. Put aside the issue of whether the first round was effective enough. Is the economy flagging enough –and in enough danger of a “double dip” recession – to warrant another trillion dollars or so in a second stimulus package?

The Keynesians, led by Paul Krugman, argue that we need a second stimulus package to keep us from falling back into recession as the first stimulus payments end. They acknowledge that it piles yet more debt on the nation, but argue that in the long run a faster return to productivity and economic health, and the increased tax revenues that would come with it, will more than offset the cost.

The opposition, led by Thomas Friedman, argue that we are already way too far in debt as a nation, with red ink projected as far as the eye can see. The worry is that at some point the financial world will suddenly see us as a nation as economically sick as, say, Greece or Spain, and will suddenly begin to demand a hefty risk premium to lend us more money. A huge new stimulus package (it would have to be huge to have any effect) might well hasten that day, as we plunge ever deeper into debt.

I would offer a third point of view – that even if a second stimulus were desirable, recent history gives no assurance that Congress will appropriate the money wisely. The first stimulus bill was loaded with Congressional sops to special interests, which seriously diluted its effectiveness. It also phased the money in far too slowly (most of it wasn’t actually scheduled to be spent until the second or third year). Why would one expect the same Congress to behave any differently with a second stimulus package?

Clearly the current political winds are against a second stimulus package, especially with mid-term elections coming up and the Democrats already on the defensive because of the massive spending bills they already pushed through. But that doesn’t mean the Keynesians are necessarily wrong. Nor does it mean that the financial markets may not still decide to push up our borrowing rates sometime soon, whatever policy we follow.

As I have noted before, previous empires (British, French, Spanish, etc) began to crumble when they let their domestic finances get out of hand. Ours are now right on the verge of just that point, with entitlement programs due to bankrupt the nation in just a few years. And there is no evidence that our political leaders in either party are up to the difficult task of handling this problem.

As the Chinese curse says: “May you live in interesting times”. These are certainly interesting times.