Seen & Unseen

I didn't watch the President's speech last night. I had to walk my dog. And, I haven't yet had time to read his speech, so I can't comment directly. But STEVE HORWITZ watched it, well he apparently watched as long as he could take it:

"It is quite clear after listening to Obama's talk tonight that he, and those who applauded him wildly, have no clue as to this fundamental point in political economy. Not once in all of his talk of what government would do did he ever even come close to acknowledging that what government spends on the one hand must be taken from the private spending stream on the other. In fact, at one point he touted his 'transparency' plan by saying that it would enable 'taxpayers to see how government money is being spent helping other taxpayers.' Maybe so, but he glosses over the fact that the money being spent came from those same taxpayers and would have been spent on other things, without the waste of the transfer, were it not for government's intervention. Robbing Peter to 'help' Paul only damages both in the process, and certainly stimulates no economic activity."

This Crisis & Sowell Clarity

TOM SOWELL:

"From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us.

What was lacking in the housing market, they say, was government regulation of the market's 'greed.' That makes great moral melodrama, but it turns the facts upside down.

It was precisely government intervention which turned a thriving industry into a basket case.

An economist specializing in financial markets gave a glimpse of the history of housing markets when he said: 'Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century.'

That was what the market was like before the government intervened. Like many government interventions, it began small and later grew."

If you want insight, then you really should read the whole thing.

On the other hand, if you choose either rational ignorance or irrationality, then you want to stay far, far away from Tom Sowell.

Presidential Confidence?

I've recently heard quite a number of talking heads discussing what has happened with the stock market indexes since the election of President Obama. I found this chart in A WSJ COMMENTARY today. Perhaps this suggests a lack of confidence in the new President. Then again, it could also reflect a lack of confidence in a Congress which already seems adamantly partisan and Democrat.

In any case, it seems the more Washington says it will fix the economy and this recession, the more it looks like the recession will continue. It seems to me that an increasingly interventionist Washington is making matters worse, not better.

Reflections in the Times of Hysteria

VICTOR DAVIS HANSON'S insights on post-modern poverty in this time of recession:

"And for the less fortunate? Here is southern Fresno County, at ground zero of the illegal immigration explosion, where unemployment reaches 14%, agriculture is in the doldrums and construction and manufacturing fare worse, the depression among the poor is still ambiguous, at least in historical terms.

I went into the local Food 4-Less again the other day, a cut-rate, bulk-buy chain food store. The parking lot was full of late model trucks and cars—not the sort I prefer, but those V-8 monsters, loaded up with high-priced rims, wide tires, custom paint, tinted windows, oversized trailer hitches, the whole American shebang so to speak that tops out at around $40,000. The customers may have been out of work, but I counted nine, just nine, of some 100 (this was a research trip for this blog posting), who did not have one of the following four appurtencies visible—cell phone, Bluetooth, blackberry-like device, I-pod. On the way out of the parking lot, the car radio was blaring with three sorts of ads: get out of credit card debt, get out of mortgage debt, get out of back IRS payments—now! Easy! Little cash upfront! This is not Bleak House as we are led to believe.

We are hurting, but not in 1933 fashion, due both to expanded government entitlements; Chinese-made cheap consumer goods; the fumes of past easy credit; black market, untaxed temporary cash and carry jobs (a vastly underestimated source of enormous income); and a culture that absolves one of the shame of reneging on debt (or perhaps even admires the possibility of a phoenix-like resurgence from loser to winner, and has a grudging admiration for the machinations involved in such rebirth).

I’m not sure this is even the 1979-83 recession where finally we got 10%-plus unemployment, 18% interest, and 12% inflation—a topic I once devoted a book to, Fields Without Dreams. Then I remember seeing Cryolite bags go up 10% every six months. I remember raisin prices going down from $1400 a ton to about $450. I remember vineyard prices falling from $15,000 an acre to $3500. I remember taking out Federal Land Bank loans at 13%, and short-term Bank of America crop loans at 15%. And I remember pickers getting 22 cents a grape tray in 1980—and 11 cents in 1983. I bought a used Pontiac Grand Prix (a fixer-upper that had been totaled) for 12% interest. So, I am sorry. This is not quite yet the early eighties recession, and I am not yet convinced that the baby-boomer generation that has come of age cannot ride this out without adopting European-socialism as a cure."

Let's certainly hope there is enough good sense left in this republic to steer clear of European-socialism, because if not, our past prosperity will become a remembrance rather than a prelude to our future prosperity.

But, alas, the recent election of a President-as-savior for so many, combined with the rationally ignorant and the rationally irrational, may well mean there is not enough good sense left in this republic.

National Debt History

JOHN STEELE GORDON:

"Still, it's the trend that is worrisome, to put it mildly. There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.

It is hard to escape the idea that this happened only because Democrats and Republicans alike never said no to any significant interest group. Despite a genuine economic emergency, the stimulus bill is more about dispensing goodies to Democratic interest groups than stimulating the economy. Even Sen. Charles Schumer (D., N.Y.) -- no deficit hawk when his party is in the majority -- called it 'porky.'"

Our political economy is again beginning to show symptoms of the sclerosis Mancur Olson studied in THE RISE AND DECLINE OF NATIONS.

Free vs. Big

You might want to CHECK THIS OUT.

Perverse Incentives

PETER BOETTKE:

"Barney Frank was on Face the Nation this morning talking about the problems of perverse incentives created by the current policies. These guys, he said, can make risky decisions and make great profits, but if the turn out to be wrong decisions they don't have to worry about all the loss. Congressman Frank argues that we need to change this. REALLY???

It would have been nice if he knew that basic lesson of economics before he pushed for a lowering of lending standards over a decade ago. But while he might have learned something in the process about incentives decision makers face, he hasn't learned that the current set of rule changes being advocated are simply augmenting the perversity rather than countering it."

Well put!

1st Amendment Economic Liberties

ED MORRISSEY:

"It’s an easy question. Does this administration believe in free speech or government censorship? Their sudden inability to provide a clear answer, when they had no problem giving such assurances eight months ago, does not bode well for the answer.

I’d like to say I told you so to all of those who accused us of paranoia, but the window on that ability to do so on the airwaves looks like it’s about to expire — like all of Obama’s campaign promises."

Check it out. An expiration date on the President's campaign promises, eh? Rational ignorance comes up again.

The policies falling under the idea of the "fairness doctrine" pose threats not just to speech and press liberties. The idea is going to be for government to force the owners of radio stations to make business choices with respect to their programming that they would otherwise not choose to make. So, economic liberties are going to be threatened as well.

Such threats to economic liberty seem to be part of this President's vision for the future of America, because we also have seen since his inauguration that he intends to cap pay for business executives and he is going to have a AUTO INDUSTRY COUNCIL that will restructure this US industry.

Hey, remember the song lyric "the future's so bright I gotta wear shades"? It's beginning to look like we can throw those shades away.

Politics, Ain't It Grand

ROGER KIMBALL WRITES, "now they tell us:"

"They haven’t even extracted the money yet and already they’re telling us poor suckers “not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually.”

. . . . White House spokesman Robert Gibbs today said that “the economy is going to get worse before it gets better.”

And what about the 3.5 million jobs the current President of the United States said his spending orgy would “save or create.” (Save or create? What does that mean? How would you measure the saved jobs?))

Oops, now it’s 2.5 million by the end of 2010."

Didn't the President say he would create 4 million new jobs? It seems the choices of our fearless leaders in Washington depend heavily on assuming voters are rationally ignorant. But, isn't this past week just a bit too much, as in: "Oh, my, the sky is falling. . . .We must do something. . . .Let's spend, spend, spend so we can save/create jobs. . . .But, never mind, now that our legislation has passed, don't hold you breath, because, you see, we really don't think our spending can change the direction of the economy any way."

Remember hope and change? I hope the change to a larger government in Washington doesn't continue, but there are still many months until mid-term Congressional elections.