Samuelson Looks At The Budget

The federal government's budget deficit is often a topic of public debate. Economist Robert Samuelson has a commentary that looks like a primer:

"First, budget deficits are not automatically an economic calamity. Their effects depend on their timing, their size and other economic conditions. During recessions, deficits may prop up the economy. In a boom, they may drain money from productive investments. Similarly, deficits are only one influence on interest rates; others include inflation, the demand to borrow, the supply of savings and Federal Reserve policy. At present the effect of deficits is modest; otherwise, rates would be higher than they are (about 5 percent on 10-year Treasury bonds).

What truly matters is government spending. If it rises, then future taxes or deficits must follow. There's no escaping that logic. The spending that dominates the budget is for retirees. Social Security, Medicare (health insurance for those 65 and over) and Medicaid (partial insurance for nursing homes) already exceed 40 percent of federal spending. As baby boomers retire, these costs will explode. Unless they're curbed, they'll require tax increases of 30 percent to 50 percent over the next 25 years."

We should pay attention to this. Note that spending on those retired from the labor force already exceeds 40% of the budget, and this spending will soon "explode."

Oh, here is another interesting tidbit from Samuelson:

"I have reserved my harshest scorn for Republicans, who are (after all) in power. But Democrats aren't much better. The nub of the matter is spending. When Republicans passed the Medicare drug benefit -- the biggest new program in decades -- Democrats actually advocated a more costly version. Whenever anyone suggests curbing spending, Democrats screech: Spare Social Security and Medicare. But Social Security and Medicare are the problem.

Just as Republicans now say their policies have cut deficits, Democrats contend their policies produced budget surpluses from 1998 to 2001. Nonsense. Those surpluses resulted mainly from the end of the Cold War (which lowered defense spending) and the economic boom (which created an unpredicted surge of taxes). In a $13 trillion economy, much of what happens has little to do with the White House's economic policies. The bipartisan reflex is to claim credit where little is due."

It seems to me neither political party offers the leaders we need to face the real issues concerning the federal budget.

Peggy Noonan On Science & Politics

Peggy Noonan:

"During the past week's heat wave--it hit 100 degrees in New York City Monday--I got thinking, again, of how sad and frustrating it is that the world's greatest scientists cannot gather, discuss the question of global warming, pore over all the data from every angle, study meteorological patterns and temperature histories, and come to a believable conclusion on these questions: Is global warming real or not? If it is real, is it necessarily dangerous? What exactly are the dangers? Is global warming as dangerous as, say, global cooling would be? Are we better off with an Earth that is getting hotter or, what with the modern realities of heating homes and offices, and the world energy crisis, and the need to conserve, does global heating have, in fact, some potential side benefits, and can those benefits be broadened and deepened? Also, if global warning is real, what must--must--the inhabitants of the Earth do to meet its challenges? And then what should they do to meet them?

You would think the world's greatest scientists could do this, in good faith and with complete honesty and a rigorous desire to discover the truth. And yet they can't. Because science too, like other great institutions, is poisoned by politics. Scientists have ideologies. They are politicized.

All too many of them could be expected to enter this work not as seekers for truth but agents for a point of view who are eager to use whatever data can be agreed upon to buttress their point of view.

And so, in the end, every report from every group of scientists is treated as a political document. And no one knows what to believe. So no consensus on what to do can emerge.

If global warming is real, and if it is new, and if it is caused not by nature and her cycles but man and his rapacity, and if it in fact endangers mankind, scientists will probably one day blame The People for doing nothing.

But I think The People will have a greater claim to blame the scientists, for refusing to be honest, for operating in cliques and holding to ideologies. For failing to be trustworthy."

I think there is some wisdom in this. I've certainly noted before that when science and politics mix, politics wins.

More Sowell

TOM SOWELL ON peace in the middle east:

"One of the many failings of our educational system is that it sends out into the world people who cannot tell rhetoric from reality. They have learned no systematic way to analyze ideas, derive their implications and test those implications against hard facts.

'Peace' movements are among those who take advantage of this widespread inability to see beyond rhetoric to realities. Few people even seem interested in the actual track record of so-called 'peace' movements -- that is, whether such movements actually produce peace or war.

Take the Middle East. People are calling for a cease-fire in the interests of peace. But there have been more cease-fires in the Middle East than anywhere else. If cease-fires actually promoted peace, the Middle East would be the most peaceful region on the face of the earth instead of the most violent."

I guess he offers commentary on our education system as well.

Sowell on Middle East

Clear thinking by Thomas Sowell:

"There is no concession that will bring lasting peace to the Middle East because the terrorists and their supporters are not going to be satisfied by concessions. The only thing that will satisfy them is the destruction of Israel.

Pending that, they will inflict as much destruction and bloodshed on the Israelis as they can get away with at any given time. This brutal reality is not going to vanish through verbal sleight of hand.

The terrorists have spoken in words and in deeds, including suicide bombers. They have what Churchill once described in the Nazis as 'currents of hatred so intense as to sear the souls of those who swim upon them.'

We saw that on 9/11 -- or should have seen it. But many, especially among the intelligentsia, are determined not to see it.

Of all the Western democracies, only two have no choice but to depend on their own military forces for their survival -- the United States and Israel. The rest have for more than half a century had the luxury of depending on American military forces in general and the American nuclear deterrent in particular.

People who have long been sheltered from mortal dangers can indulge themselves in the belief that there are no mortal dangers. Nuclear weapons in the hands of Iran or North Korea -- and, through them, in the hands of hate-filled terrorists -- may be all that will finally wake up such people. But that may be tragically too late.

Those who keep calling for an end to the 'cycle of violence' are what make such violence more likely. 'World opinion' in general and the United Nations in particular can always be counted on to counsel 'restraint' in response to attacks and 'negotiations' in response to lethal threats.

What that means is that those who start trouble will have a lower price to pay than if those they attacked were free to go all out in their counter-attack. Lowering the price to be paid by aggressors virtually guarantees more aggression."

TR's Monopolies

Time Magazine's cover is a picture of Teddy Roosevelt. Time's story is about how "Teddy" invented modern America. Tom Sowell offers a more critical look:

"Monopolies are much harder to find in the real world than in the world of political rhetoric. Monopolies raise prices but, in the big industries supposedly dominated by monopolies -- oil, steel, railroads -- prices were falling for years before Theodore Roosevelt entered the White House and started saving the country from 'monopoly.'

The average price of steel rails fell from $68 to $32 before TR became president. Standard Oil, the most hated of the 'monopolies,' had in fact innumerable competitors and its oil prices were not only lower than those of most of its competitors, but was also falling over the years. It was much the same story in other industries called 'monopolies.'

The anti-trust laws which Theodore Roosevelt so fiercely applied did not protect consumers from high prices. They protected high-cost producers from being driven out of business by lower cost producers. That has largely remained true in the many years since TR was president."

We Hold These Truths To Be Self Evident

Today we remember and we celebrate July 4, 1776:

WHEN in the Course of human Events, it becomes necessary for one People to dissolve the Political Bands which have connected them with another, and to assume among the Powers of the Earth, the separate and equal Station to which the Laws of Nature and of Nature's God entitle them, a decent Respect to the Opinions of Mankind requires that they should declare the causes which impel them to the Separation.

WE hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that amoung these are Life, Liberty, and the Pursuit of Happiness--That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed . . . . .

[ . . . . ]

We, therefore, the Representives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the World for the Rectitude of our Intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly Publish and Declare, That these United Colonies are, and of Right ought to be, Free and Independent States; that they are absolved from all Allegiance to the British Crown, and that all political Connection between them and the State of Great-Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. --And for the support of this Declaration, with a firm Reliance on the Protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.

I wonder, today, how many in this country still hold these truths to be self-evident? How many understand government to be created to secure certain unalienable rights? I do hold these truths as self-evident, and I too understand this to be the primary (perhaps only) purpose of government.

Some 56 political leaders signed this Declaration of Independence and pledged "to each other our Lives, our Fortunes, and our sacred Honor." How many of our political leaders today would be able to make such a pledge with respect to the words in this Declaration? How many in the Legislative Branch of government? How many in the Executive Branch of government? How many in the Judicial Branch of government? I'm afraid I think relatively few would, today, pledge their lives and their honor (not to mention sacred honor) to the principles of government that form the foundation of this Declaration of Independence.

I'm not suggesting that many, perhaps most, would not pledge themselves to our system of government today. Certainly many would, and many have because they have served as members of our Armed Forces. Instead, I am suggesting that a great many of our leaders have a far different view of the purposes of government than did those 56 leaders who signed the Declaration of Independence.

Winning the Iraq Wars

Victor Davis Hanason on Winning the Iraq Wars:

For all the propaganda of al Jazeera, the wounded pride of the Arab Street, or the vitriol of the Western Left, years from now the truth will remain that our soldiers did not come to plunder or colonize, but were willing to die for others’ freedom when few others would. Neither Michael Moore nor Noam Chomsky can change that, because it is not opinion, but truth — something that the Greeks rightly defined as “not forgetting” or “something that cannot be forgotten ” (alêtheia).

I think VDH is right on. Our American volunteers fight for our freedom as well as the freedom of others. It is a shame that such a small part of our public debate seems to accept this.

I think VDH is also right on target with the rest of his commentary:

Finally, we are witnessing a larger existential war, in which Iraq is the central, but not the only, theater. Put simply: will the spreading affluence and liberality of Westernization undermine the 8th-century mentality of the Islamists more quickly than their terrorists, armed with Western weapons, prey on the ennui of a postmodern Europe and America — with our large gullible populations that either don’t believe we are in a real war, or think that we should not be?

Americans know exactly the creed of the Islamists and what they have in store for us nonbelievers. Yet if we are not infidels, can we at least be fideles? That is, can we any longer articulate what we believe in, and whether it is worth defending?

The problem is not that the majority of Americans have voiced doubts about the future of Iraq — arguments over self-interest and values happen in every long war when the battlefield does not daily bring back good news.

Instead, the worry is that too many have misdirected their anger at the very culture that produced and nourished them. Sen. Kennedy could have objected to Abu Ghraib — so far the subject of nine government inquiries — without comparing the incident to the mass murdering of Saddam Hussein.

Sen. Durbin might have had doubts about Guantanamo — the constant site of Red Cross and congressional visits — but there was no need to tie it to the fiendish regimes of Stalin, Hitler, and Pol Pot.

Cindy Sheehan could have recanted her initial favorable remarks after meeting George Bush without later labeling him the world’s greatest terrorist.

The New York Times might have editorialized about the dangers of stealthy government security measures without publishing sensitive, leaked material in a time of war. It is precisely this escalation from criticism of the war to furor at our elected government and civilian-controlled military that is so worrisome — and so welcomed by the enemy, as we see when it cleverly regurgitates our own self criticism as its own.

The military is doing its part. It defeated Saddam Hussein, and prevented a plethora of terrorists from destroying a fragile democracy abroad and the contemporary world’s oldest here at home. Despite the caricature and venom, the original belief of the 2002 Congress that there were at least 23 reasons to topple Saddam remains valid and is reaffirmed daily, especially as we learn more of the ties between al Qaeda and Iraqi Baathist intelligence and slowly trace down the footprints of a once vast WMDs arsenal. And the effort to ensure a democratic denouement to the war, both in and beyond Iraq , is the only solution to wider Middle East pathology.

No, our problem lies in two more abstract but just as important struggles over Iraq . Either we did not communicate well the noble purposes of sacrifices abroad, or, after Vietnam , an influential elite has made it impossible for any president to do so.

We can correct that first lapse, but I am not so sure about the second.

The State of Higher Education?

Washington Times:

"It is impossible to know when exactly a student learns about the Constitution and the basic workings of the three branches of the federal government. But surely it has to be some time before a student earns her doctorate, especially in political science.

But considering Mrs. Roberts' Monday op-ed in the Charlotte Observer on the flag-burning amendment (which was recently defeated in the Senate) that might not be the case.

Following the Supreme Court's 1989 decision upholding one's right to burn the flag, she writes, 'Congress passed the Flag Protection Act just months after the ruling. Wasting no time, the Supreme Court ruled that the Flag Protection Act was inconsistent with First Amendment freedoms and thus unconstitutional.'
Then she says, 'It seems unlikely that the Supreme Court would now uphold an amendment prohibiting flag burning, even with the change in the court's composition.'

For those who don't have a junior high degree, the Supreme Court can't overturn constitutional amendments. Mind you, 'Dr.' Roberts is an associate professor of political science at Davidson College — arguably one of the top liberal arts colleges in the country.

I used to think such a story would be hard to believe. Not any more.

Why China Stagnated

Cafe Hayek: Why China Stagnated:

In his compelling lead article in the Spring 2006 issue of the Journal of Economic Perspectives, economic historian David Landes wonders why the industrial revolution didn't happen first in China. His answer is unequivocal: although it had lots of genius, China had neither the institutions nor the culture to transform this genius into widespread prosperity.

Almost every element usually regarded by historians as a major contributory cause to the Industrial Revolution in north-western Europe was also present in China [some 500 years before the wealth explosion that began in Europe in the 18th century].

So why, specifically, was there no industrial revolution in China?

Why indeed? Sinologists have put forward several partial explanations. Those that I find most persuasive are the following:

First, China lacked a free market and institutionalized property rights. The Chinese state was always stepping in to interere with private enterprise -- to take over certain activities, to prohibit and inhibit others, to manipulate prices, to exact bribes [p. 6]."

Liberty.

Church & State

Michael J. Totten interviews a northern Iraqi:

"'Qutb was wrong,' he said, parting ways with Osama bin Laden on the most elementary level. “Compare Islam and Christianity. In the Middle Ages, Christians were burning scientists. Then Muslims had a great civilization. The Christians were theocratic then. Muslims were not. We do not believe in a theocratic government that rules the people in the name of Allah. Power should come from the people. Christianity wasn’t weakened because it was separate from the state. Christianity was weakened when it supported oppressive states. The same thing is happening in Iran. Iranians are turning against the religion itself along with the theocratic oppressive state.'"

Simple, yet insightful, eh? It seems to me that for a person's religious faith to be authentic it must be chosen freely. It also seems to me that government is inherently coercive. Therefore, theocratic government can't be good for religion, and it can't make for a good government.