Obama's No Lincoln, Plus a Quick Economics Lesson

Hailed as America’s first truly cosmopolitan president, Mr. Obama seems to have learned nothing from his youthful years on the international scene. It's no exaggeration to say that the typical Army Sergeant has more real-life experience than this elitist metrosexual poser.

He’s not like Lincoln because he’s shown no humility...

"I have been driven many times upon my knees by the overwhelming conviction that I had no where else to go. My own wisdom and that of all about me insufficient for that day."
  -- Abraham Lincoln

Lincoln had seen success and failure in his life,and he understood all too well our flawed and fallen nature. He had a deep humility borne of this knowledge.

It is impossible to imagine Obama saying something like that.  Instead, he and his wife lecture us on how stupid we are.  Obama juts his chin in the air and fills it with flowery words that have no basis in real-world experience. He’s an inexperienced, unlearned man, but this does not stop him from loudly calling out enemies and lecturing us on how to eat, how to live, how to sneeze and how to spend our money.

To comprehend economics, avoid Paul Krugman, read Greg Mankiw

Harvard Economics professor Greg Mankiw has a gift for explaining the dismal science. Here he explains how economic transactions in a free market are not a zero sum game, but rather, they are win-win situations:

… let’s start with a basic economic transaction. You have a driveway covered in snow and would be willing to pay $40 to have it shoveled. The boy next door can do it in two hours, or he can spend that time playing on his Xbox, an activity he values at $20. The solution is obvious: You offer him $30 to shovel your drive, and he happily agrees.

The key here is that everyone gains from trade. By buying something for $30 that you value at $40, you get $10 of what economists call “consumer surplus.” Similarly, your young neighbor gets $10 of “producer surplus,” because he earns $30 of income by incurring only $20 of cost. Unlike a sports contest, which by necessity has a winner and a loser, a voluntary economic transaction between consenting consumers and producers typically benefits both parties. (Greg Mankiw - Emerging Markets)

This also explains why trade deficits are not always bad. Think about it: Your household runs a permanent trade deficit with the grocer and the utility company. If they were simply vacuuming money out of your pocket this would be a bad thing, but it is not because you get a product back (food, heat) for the money you hand over. In turn, those products enable you to continue widening the trade surplus with your employer.

Finally, this is why I think, on balance Wikileaks helps more than hurts...

China has us by the balls:

An October 2008 cable, released by WikiLeaks, showed a senior Chinese official linking questions about much-needed Chinese investment to sensitive military sales to Taiwan.

His comments came days after the Pentagon notified Congress it was poised to sell $6.5 billion worth of arms to China's arch rival Taiwan.

The much-delayed package was eventually sold, but did not include requested F-16 jets. (AP - Breitbart)

A Shrinking Middle Class?

Sicko libtards are gleefully clicking their heels over data showing America’s middle class may be shrinking

Reality Zone (not a libtard) is the rare liberal blog that has some rationality to it some of the time. He featured an article from lefty website Business Insider that seeks to prove that the middle class is being wiped out of existence.

It is lefty skewed, and there are a few statistical tricks in there, but its factual foundation is fairly sound. Typical of the genre, it offers no solutions, other than to punish businesses for moving overseas.

It is also rife with trite talking points...

"The truth is that most Americans are absolutely dependent on someone else giving them a job."

Since Jefferson's passing, when has this ever not been true?

China can't keep  its workers down forever
The article asks how we can compete with low wage countries. Well, we do! US Manufacturing has grown for the 13th straight month.  Daniel Ikeson at CATO has the details.  We have better infrastructure and more educated workers. As these third-world labor pools become more educated and developed, their labor costs go up, and their competitive advantage, like ours, must come from efficiency.

Another thought occurred to me as I was scrolling through the slide show. These Americans who have saved nothing and live paycheck to paycheck, etc... are the same ones who have been on an unprecedented 30 year spending binge, gorging themselves on big cars, bigger houses, XBoxes, you name it. These are people who use a credit card to pay for a vacation instead of saving up for it.

It also strikes me that Keynesian liberals think the solution is for us to spend more, when that is what got us here in the first place, on a personal and a government level.

They also schizophrenically lament the fact that home prices are too high while simultaneously funding programs that keep the bubble inflated. Keeping homeowners from going underwater and making housing more affordable are mutually exclusive goals, proving again that government has no business manipulating markets.

Once home prices find their bottom, more people will be able to afford them, inventory will go down, and prices will rise. All without the nanny state cajoling it along.

Do you want a jobs program, or do you want a jobs economy?

As for the middle class, we need jobs, and only a booming economy can provide that. Here’s a quick story about Milton Friedman’s visit to an Asian country's job site where they were building a canal:

He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: "You don't understand. This is a jobs program." To which Milton replied: "Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels." (Moore - WSJ)

Free Markets: Dispatches from Left Blogistan

As you all know, I frequently travel the twisted and slippery trails of Left Blogistan, trying my damnedest to bring enlightenment to the ignorant. Fredd sez I'm wasting my time, and he's probably right.

There's an overabundance of economic ignorance on the left, and that is where I end up fighting most of my battles (the "blame Bush for everything" blather is so incoherent it's not even worthy of arguing).

The left seems particularly enraged over free markets and the fact that Uncle Sam can't hold down greedy employers and force them to pay exorbitant wages and benefits that totally ignore market forces.

Here's the crown jewel of progressive ignorance quote:

As for sleazy, scumbag, anti-American "Right to Work" states stealing work from northern states, well, I say there shouldn't be sleazy, scumbag, anti-American "Right to Work" laws in the first place, so for me it's a moot point.

This kind of thinking is what led to fascism in Europe

Ein volk! Ein Reich! Ein Union!

In a free market, businesses and people are free to go where they want. Progressives would put them under the boot heel of the state and their crony crapitalist-syndicalist lackeys.

The unions priced themselves out of the market while the business owners got fat and lazy. They blew it and now they are seeing the consequences.

Progressivism is Anti-American
My liberal interlocutor went on to declare “Right to Work” laws unconstitutional, and that goes to the heart of modern-day progressivism:

Dragooning free people into labor unions “for their own good,” is perfectly legitimate. But declaring we all have a right to work without joining The Peoples’ Auxiliary of the Democratic Party is unconstitutional.

They are nuts, folks. They’ve come unhinged...

Michael Savage is right. Liberalism is a Mental Disorder

Jobs: What Comes Around Goes Around

“The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. -- Joan Robinson, Cambridge Economist

“Are the American People Obsolete?”
Michael Lind in Salon Magazine asks, “Are the American People Obsolete?” It’s an interesting question.

The offshoring of industrial production means that many American investors and corporate managers no longer need an American workforce in order to prosper. They can enjoy their stream of profits from factories in China while shutting down factories in the U.S.

He raises some legitimate concerns about globalism, but he comes unglued talking about “privatized armies” and America’s elite “shutting down every factory in the United States.” Despite such broad brush hysterics, I still recommend my conservative and libertarian friends read it all to see the world through the eyes of the fevered left. 

As a bonus, this economic naif unwittingly answered his own worries about labor, wages, and worker displacing worker:

"And if Chinese workers have the impertinence to demand higher wages, American corporations can find low-wage labor in other countries."

Precisely! Well, almost... Supply and demand works in the job market as well. But low wages isn’t the whole story. There are other factors like productivity, technical skills of the workforce, infrastructure and taxes and regulations.  If wages were the only factor, unemployment would be over 60% in the developed world as every last shred of production moved to China and Bangladesh. .

China has problems of its own

"They seem less willing to “eat bitterness”, as the Chinese put it, without complaint."

Suicides, pollution, ageing workforce, social unrest, and workers demanding a bigger share of the economic pie are bringing changes to China, reports The Economist. As the workforce become more efficient and skilled, wages must rise, turning the Chinese into a consumer economy achieving par with the “developed” world, and that’s a good thing all around.

Bye Bye Cheap Chinese Labor

As China advances, the global economy will benefit:

Higher Chinese wages will have a similar effect to the stronger exchange rate that America has been calling for, shrinking China’s trade surplus and boosting its spending. This will help foreign companies and the workers they have idled. A 20% rise in Chinese consumption might well lead to an extra $25 billion of American exports. That could create over 200,000 American jobs.

China will have to increase its supply of skilled workers. That will require a stable workforce, which stays with its employers long enough to be worth investing in.(The Economist)

Put another way, employers cannot exploit their workers if they want to reap profits. By the same token, nations cannot exploit their companies; CEOs will simply pack up and head for greener pastures. Progressive dreams of punishing outsourcing corporations or holding them down and making them submit to burdensome taxes and regulations are a fervid mirage. Just ask California or Michigan.

Liberals Flunk Econ 101

There ain't no such thing as a free lunch.
-- Milton Friedman

The worldwide collapse of welfare states and government ponzi schemes prove Friedman's point.  A simple glance at Michigan or California should sway liberals off of their stubborn belief in free stuff for everybody, but it doesn't...

Our capitalist economy came crashing down as well.  No surprise.  Government-sanctioned cronyism fails everywhere it is tried.  It encourages corruption and distorts markets, chasing away honest money.  The upside is that capitalism, being a coherent and self-sustaining system, contains the seeds of its own renewal; liberal welfare states do not.

Life it tough, but it's tougher when you're stupid  -- John Wayne



Daniel B. Klein explains why liberals stubbornly wallow in such irrational beliefs.  They are economically ignorant:

According to a Zogby International survey that I write about in the May issue of Econ Journal Watch [...],  The left flunks Econ 101.

Liberals believe such fallacies as:

$ Rent control makes apartments more plentiful and restrictions on housing development make home buying more affordable (It's just the opposite.  Scarcity drives up prices.  My kids knew that in grade school.)

$ Our standard of living is lower than it was 30 years ago.  (why are liberals so eager to think ill of our country and our people?)

$ Minimum wage and other employment laws do not increase unemployment (Yes they do.  Look at France)

White House Rejects Friedman for Marx
The economic ignorance extends to the White House.  Senior White House communists like Valerie Jarrett can't understand why the oil companies won't just sit there and suck up a half-million dollars per rig per day cost during the six month moratorium.  They're going to haul their equipment somewhere else where they can make money!

These rigs cost about $500,000 a day for oil companies. [...] the oil companies are going to move them, while they have them under contract, to foreign leases they own in order to seek oil.

The American Petroleum Institute (API) estimates that the moratorium will cost us 130,000 barrels of oil a day by 2011 and up to 500,000 a day by 2013. And it could put up to 46,200 jobs at risk short-term and as many as 120,000 over the long term.

Cover the Incompetence with Lies

Even Senior White House Communist Carol Browner couldn't spin this one:  That panel of experts selected by the National Academy of Engineering DID NOT endorse the six month moratorium:

The seven experts who advised President Obama on how to deal with offshore drilling safety after the Deepwater Horizon explosion are accusing his administration of misrepresenting their views to make it appear that they supported a six-month drilling moratorium -- something they actually oppose.

Elect a klatch of leftist pseudo-intellectuals and this is what you get...

Paul Krugman is an Intellectually Dishonest Crapweasel

Krugman Distorts, Stossel Clarifies

Nobody is better at distorting economic data for political purposes than liberal Nobel Laureate Paul Krugman.  When Mark Twain spoke his famous "lies, damned lies, and statistics" quote, he anticipated Krugman by 100 years.

Nobody is better at cutting through the BS than John Stossel, and he does it in a brief burst of brilliance,  Krugman Misleads On Greece

How does Krugman mislead?  By dazzling us with a chart comparing deficits as a percentage of GDP.  He soothes us with data showing Obama and the Pelosicrats' spending really isn't that bad and we are not destined to suffer the fate of Greece.

Stossel points out that Debt as a Percentage of GDP is where the danger lies, since it is cumulative.  And he uses Krugman's data to produce a chart that damns to liars' hell Obama, the Democrats, and chief economic propagandist Krugman.  By even the rosiest predictions, we will be where Greece is at by 2020.

Go read Stossel's piece.  It is very short but quite instructive on how liberals will distort data to trick people and avoid facing reality.

Why The Stimulus Isn't Working

Because it's not a stimulus

Keynesian stimulus has never worked.  That includes World War II.  Yes, wartime production brought us out of the depression, but government didn't create consumer demand, it was the demander.  And it demanded tools of war because our existence was threatened.  We needed the materiel that our industry produced, and we used it to a good end.

What our government is doing now has stimulated nothing.  Government can throw some confiscated money to those barely treading water, but that is not stimulus; it is a palliative.

Political payoffs to failed state and local governments border on the criminal, allowing them to dodge the consequences of their financial malfeasance for a few more years. 

Weatherization, windmills and cash for clunkers misallocate resources and distort the market.  They cause inefficiencies and delay the creative destruction that ushers in economic recovery. If you want a 21st century economy, you've got to allow the market to prune the 20th century branches.

If Government must get involved...
Building a hundred nuclear power plants would come the closest to a government "investment." (For a contrary view, see John Stossel's blog.)  It would put people to work for 5-10 years building something we need. Once built, we would reap the benefits of bountiful home-grown electricity. Unfortunately, we're going the Don Quixote route.


Eat Yourself Thin
Economics professor Mark Hendrickson has written the best summary on why Keynesian stimulators (Krugman, Stiglitz, et al) and the Central Planners at the White House are all wrong.

The massive deficit spending of Franklin Roosevelt in the 1930s didn't stop the Great Depression. In fact, despite FDR spending more money in his first five years in office than all 31 prior presidents combined. 

His Secretary of the Treasury Henry Morgenthau stated in 1939 that "[w]e are spending more than we have ever spent before and it does not work. ... I say after eight [sic] years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"

He also mentions Japan's failed Keynesian decades and reminds us that economic history did not start in the 1930s. We had crashes and panics before FDR came along, and we got out of them without government intervention.  Cato has a very short example Here. 

Read these informative articles and do your part to push back against the liberal fairy tales.  "Spend your way to prosperity" makes as much sense as "Eat yourself thin."