Video clip of the day

Obama critics Olby, Tingles, Ed Schultz, James Carville and some other dude we don't recognize explained by the ramblings of noted phrenologist, Janeane Garofalo.

Summer time reading

The 10th and final installment of Walter Russell Mead's essay: "The Top Ten Things We Learned From the Global Economic Meltdown".

10. The politicization of economic governance is dangerous business.


The economic system we’ve built depends heavily on a small number of global financial firms who necessarily enjoy close links to national governments. Because of their power and their wealth (and also because they are sometimes ‘too big to fail’), these firms can potentially control the laws that govern their behavior and the regulators who enforce them. In the United States there has been a lot of attention paid to the close relations between current and former executives at Goldman Sachs and the Clinton, Bush and Obama administrations. The finance-government nexus in the US has its counterparts in other countries as well. These close connections, and the obvious danger of conflict of interest, have gotten a lot of attention — as well they should.

But the problem of regulatory capture is much greater and more deeply entwined with our current economic structure than this one case. The rise in the economic importance of the state during the twentieth century–however necessary and in many ways benign this role may have been at various points along the way–inevitably brings politicized governance and regulation in its wake in ways that make bubbles, panics and crashes both more destructive and more likely.

To take one important example, when government workers make up a substantial portion of the electorate, they can influence their own wages and pensions by voting as a bloc. They can — and they do. California, Illinois and Greece have a lot in common.

But even this is just the tip of the iceberg. The increased economic role of the state naturally and inevitably multiplies conflicts of interest and creates moral hazard. American housing policy, widely and correctly blamed as a major contributing factor to the crisis of 2008, was an outstanding example. The combination of interest groups — consumers who wanted cheap loans and rising house prices, banks who wanted a safe and profitable business model, contractors and other businesses with a stake in the home-building industry, cities and towns whose tax bases increase with rapid growth, advocates for the poor who wanted to improve the access of marginalized groups to the Great American Wealth Machine of home ownership — put them all together and there was an irresistible political force driving the United States real estate market and the financial system into more and more dangerous territory. The housing bubble wasn’t an accident; it was the result of decades of national policy and we worked very hard and spent lots of money to make that bubble as big and as dangerous as it turned out to be.

“Vote yourself a farm!” was a slogan of those who campaigned for the Homestead Act that gave free farmland in the west to anyone willing to settle it. Farm subsidies from the Homestead Act through price supports helped cause the Dust Bowl catastrophe and the great agricultural depression of the 1930s by encouraging over-investment in farming and the creation of marginal farmsteads. The crash was more brutal because government support had inflated the bubble past what would otherwise have been its ‘natural’ size.

“Vote yourself a home!” has been our national motto for the last fifty years and today Americans are as addicted to the home mortgage deduction (and the even less justifiable deductions for second mortgages and home equity loans) as Greeks are to early retirement and government employment. Political popularity makes the policies harder to change — but no less damaging and destructive.

There is no easy way out of these problems. Global markets need sophisticated firms and large firms can manage risks and survive shocks that smaller ones can’t. Civil servants do not and should not lose the right to vote when they take government jobs. The decision to favor home ownership on social and political grounds is one that politicians can properly make, and there is a lot to be said for policies that have helped millions of American families acquire substantial equity over the years.

Yet it is clear that the mix of democracy and capitalism is a dangerous if necessary brew; after decades in which we failed to think the costs and risks through, we are now suffering the consequences of policies that create dangerously perverse incentives in both political and economic spheres. Reducing damaging but popular forms of state intervention in the economy while ensuring the state retains the authority and the ability to provide the effective legal and regulatory frameworks without which no modern economy can flourish is the fiendishly difficult and delicate task which Europeans and Americans alike must now undertake.

(italics, ours)

Don't count on this Wall St. reform bill to come anywhere close to striking that fine balance. We hate to look like Know Nothings but really... what more do you need to know about this particular piece of legislation than the fact it was written by Chris Dodd and Barney Frank?

Look for crony capitalism and "corporatism" once hated by that near-extinct animal known as "liberal" to become further entrenched by this bill.

Our blog buddy, Harrison, has a nice round-up of quotes and goings ons from Frank and Dodd that will only prove our point, here.

P.S. The image we have been using for this series is an allegorical painting by Hendrik Gerritsz Pot circa 1940 depicting Tulip Mania which many believe to be the first speculative bubble.

Maybe it won't be all that bad

On the brighter side of ObamaCare...

It used to be that the question of whether your butt is too big was between you, your bathroom mirror and your significant other. Now, some say government has an interest in how snugly your jeans fit.

Your weight is the government's business, those who believe in nanny government say, because it's a public health issue. Overweight people cost more in health care expenses, so government is justified in using the power of the state to tax and regulate food production, marketing and consumption.

Besides, it's for your own good. Behind every proposal to place a special tax on Twinkies or ban soda on school grounds is this assumption: Average Americans aren't smart enough to make good choices about what they eat. For decisions of that kind, you need a specially educated bureaucrat.

Despite our goofing, the advent of ObamaCare does indeed usher in a new age of collective interest. We're no longer just concerned with the size of our own ass but other's as well.

Being a scold as to one's diet and resulting girth will no longer be considered a breach of etiquette but that of civic responsibility.

As such, those bumper stickers that will soon be adorning our hoopdie are not a result of crude misogyny but rather a spirit of unity, oneness and patriotism.

No Fat Chicks: It's the Law

Radio KBwD is on the air

OK, so consider this more than just a novelty as despite the crappy audio these guys do a pretty good turn.

Ladies and Gentlemen, from Japan, it's The Ma'am performing the Flying Burrito Brothers "Hot Burrito #1"





H/T: Dude from the Riviera Club

All your health care are belong to us

For those of you who continue to insist that ObamaCare will not intercede in the relationship between the physician and the patient nor will it entail the rationing of services, we bring you some more quotes from the man who will be running Medicare and Medicaid, the effective ObamaCare Czar, Dr. Donald Berwick:

"I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do."

"You cap your health care budget, and you make the political and economic choices you need to make to keep affordability within reach."

"Please don't put your faith in market forces. It's a popular idea: that Adam Smith's invisible hand would do a better job of designing care than leaders with plans can."

"Indeed, the Holy Grail of universal coverage in the United States may remain out of reach unless, through rational collective action overriding some individual self-interest, we can reduce per capita costs."

(italics, ours)

Translation: You are too damn stupid to figure out this stuff for yourself. In fact, only people like me should be calling the shots with respect to you and your family's health care. Your silly notions of free markets and individual choice are completely irrelevant under this regime. Get used to it - I think you'll learn to like it.

We try to stay away from formerly-incendiary language that is now warmed-over and meaningless but how can you read those quotes and not come to the conclusion that the guy is a stinking fascist pig? The icing on the cake is the fact that this guy is a recess appointment... not even subject to an up or down vote by the Senate. Fitting, no?

So, again, where are the good-government liberals? Where are our pro-choice friends who used to march around in "Keep your laws off my body" t-shirts and declare any intervention into the physician-patient relationship by the government as an evil to be avoided at all costs? Did you all really mean it or was it just a highly selective ideology and battle cry reserved expressly for the unfettered right to abort the unborn?

The silence is deafening.

More to follow.

Political cartoon of the day

Considering the state of the nation between the economy, unemployment, the handling of the Gulf oil spill and foreign affairs, we wonder if it will occur to Mr. Luckovich just how ironic his cartoon is.

Memo to old rich people...

If you're going to die, get on with it or else.

Else: the death tax after a one-year hiatus kicks in Jan. 1, 2011 at 55%.

Linked article talks about how the Steinbrenner family likely avoided having to sell the New York Yankees because of the timing of George Steinbrenner's death who passed away just a couple of days ago. Had The Boss the good fortune of living past this year, his family would've been stuck with trying to come up with $500 million based on the value of the Yankee franchise. (ed.: We believe Steinbrenner's wife is still alive so we're not sure if this even applies but play along any way for the larger point)

And here's how the author describes the situation:

Only two percent of the population, or about 64,000 estates, makes enough to be subject to the tax, according to the Center on Budget and Policy Priorities. The repeal of the tax is sapping about $55 billion in revenue from the federal government. This year, about 4,500 families with very large estates will be receiving as much in annual tax reductions as 140 million taxpayers, according to the Washington-based nonprofit.

(italics, ours)

Charmed, we're sure. Commenters nearly unanimously take the author to task for her choice of wording, as if the Steinbrenners are somehow cheating the government out of what is rightly theirs.

But back to the estate tax. The estate tax is amoral, plain and simple. We are 99.99% sure we will never have to worry about it, but we absolutely hate it just the same. This death tax is a levy against money that has been taxed once already but the part that cheeses us off the most is the fact that there is not any financial transaction involved. The Steinbrenners did not sell the team whereby they could be taxed on the sale of the franchise. Instead, they would've been taxed on the assessed value of the franchise. In a perverse sense, then, the Steinbrenners would've been forced to sell the franchise anyway just to cover the feds cut of the assumed value of the franchise. The Steinbrenners would've lost the franchise, of which they have had at least minority ownership in for 37 years, simply because George passed away at date beyond December 31st, 2010. How is that just? How is that fair?

We do have some personal animosity towards this death tax speaking as life-long Los Angeles Dodgers fans. It was because of this god-forsaken death tax that forced the sale of the Dodgers back in 1997 when Peter O'Malley passed away. The O'Malleys had owned the Dodgers for decades going back to their days in Brooklyn in the 1950s and had created one of the most stable and successful sports franchises in America. Since that time there have been two different owners and success on the field that could only be described as mixed (and it looks like with the divorce of the current owners, Frank and Jamie McCourt, we're headed for owner #3 since the O'Malleys).

So, yeah, with us this death tax is rather personal but it should be hated and struggled against with passion on principle alone.

Summer time reading

Onward with excerpting Walter Russell Mead's essay, "The Top Ten Lessons of the Global Economic Meltdown":

9. Culture matters.

The economic crisis has further dispelled the illusion that the post-World War Two western world had achieved a permanently prosperous, permanently stable social democratic wonderland. The idea that liberal capitalism would produce a stable and secure world of low risk, rising living standards and increased economic equality has been proved wrong — at least for the time being. Propelled by global competition and rapid technological change the west is shifting into a world of higher risk, faster change, less stability and more inequality. This will be a difficult transition for all countries and cultures; for some it will be more wrenching than others. The fragile social peace in some European countries will be tested by the continued erosion of the old social model. The countries (in Europe and around the world) who are able to spend their energies exploiting the new possibilities of the new capitalist era will grow more rapidly than those who waste their energies fighting a rearguard action against it. Ultimately the fast changers will become more prosperous and more powerful than the slow changers. Historically, the English-speaking world has been a world of fast-changers; this is one reason English speaking countries have prospered so greatly in the capitalist era. In the post-2008 world, the ability to roll with the punches and change with the times has become more important than ever. Understanding the risks and rewards of investment and the future trends of world power and prosperity is increasingly linked to an understanding of the cultural forces in each country that make it easier for some and harder for others to take advantage of the emerging world system.

Mead is rather dismissive of paragraphs, no?

Prior to 9-11 we recall the term "End of History" where Europe, after centuries of warfare and having most recently witnessed the vanquishing of the Soviet empire, were going to ride off into the sunset of a comfortable existence informed by the non-confrontational ways of social democracy. History, of course, had other plans.

As Mead alludes, we (Americans) are a resilient lot but with respect to our ability to adapt and roll with the punches, it's not the American citizen we're as much worried about as the newly minted and as yet pending regulatory regime imposed upon us that will hamper this very ability to innovate and be agile enough to better work our way out of these cyclical recessionary binds.

Lacking

So, how are LeBron James and the President alike. We think you might be surprised by the answer.

B-Daddy has more, here.


P.S. To clarify - we have no problem with LeBron leaving Cleveland. He was perfectly within his right to do so. What irked us was the shameless and over-wrought manner in which he chose to do it. Last week, Kevin Durant of the Oklahoma City Thunder quietly signed a 5-year extension to stay with that team. Granted, Durant does not have the image and iconic stature does James to even warrant an hour-long special on ESPN, himself. However, Durant and James do share in lacking one thing that puts them on par with the majority of every other player in the NBA. This.

Terrorism: Exposed!

If the adage holds true where the charge of racism signifies you are losing the debate, then this can't be good news.

In an interview earlier today with the South African Broadcasting Corporation to air in a few hours, President Obama disparaged al Qaeda and affiliated groups' willingness to kill Africans in a manner that White House aides say was an argument that the terrorist groups are racist.

Speaking about the Uganda bombings, the president said, "What you've seen in some of the statements that have been made by these terrorist organizations is that they do not regard African life as valuable in and of itself. They see it as a potential place where you can carry out ideological battles that kill innocents without regard to long-term consequences for their short-term tactical gains."

(italics, ours)

Then again, perhaps this means this administration is getting serious about the threat and will soon have that miserable hack that runs the Justice Department on the case. Don't you feel so much safer?

Taking the forgiveness path

From "Living Like a Liberal: it's hard work politicizing your whole life":

When we get there, I quickly unrack the bikes, and we tear off down the trail before anyone can stop us. There are signs everywhere warning park vehicles to slow for turtles. The river below is thick with spatterdock and pickerelweed. Our bikes slalom through trails lined with Green Ash, Red Maple, and Swamp Magnolia, while the skies overhead are patrolled by red-tail hawks, ospreys, and even the occasional bald eagle.

We have a fine time of it. But when we return, and I start re-racking the bikes, as sure as the sun rises, a park employee comes shuffling across the parking lot. “For future reference,” she says, “there’s no biking here. We are a sanctuary.”

“Really?” I say. “You allow vehicles to go through. There’s no sign saying ‘no biking.’ ”

“Well,” she says, “we have one on our website.”

I thank her for her attention, telling her we just finished biking, so we won’t be needing to anymore today. Back in the car, the kids are puzzled. “Man,” says Luke. “Isn’t it annoying when people try to ruin our walks and rides? They don’t let us do anything. They don’t allow dogs. They don’t allow bikes. They only allow turtles.”

“Yes,” I say, trying to share my values. “But we learned an important lesson.”

“Don’t bike there?” asks Dean.

No, I say, trying to bring it home. I explain to them that my assignment is to live liberally, and that classic liberalism was all about fighting for freedoms to do things (for voting rights, for civil rights, etc.). But that modern liberalism is mostly about people telling you what you can’t do—no smoking, no sodas in schools, no trans fats, no biking in parks.

“Some people tell you to question authority,” I explain, “But if you never ask authority for permission in the first place, they can’t tell you no.”

The boys nod their heads in unison, both of them wearing conspiratorial smiles. Sharing values can be rewarding. Let’s just hope they don’t tell their mother.

Remember this summer to be ungovernable and to experience life, liberty and the pursuit of happiness subversively and completely irresponsibly.