Torpedos In The Water

It is the contention of this man, this individual, this tax payer, this citizen that MY nation, OUR nation, THE nation, the United States of America, the greatest force for good and honest procurer of wealth the world has ever seen, is set on a course to cannibalize its' own dollar and plunge her citizens into a decade or more of economic darkness by embracing the worst of EuroSocialsim.

The approaches to our "free market" being either considered or enacted by our elected leaders would have been dismissed as unthinkable less then a decade ago. We would have chuckled as third world tin pot despots engaged in such moves as nationalizing "bad" mortgages, the auto industry and lending banks. We would have laughed at the Chavez's of the world whom would then appoint "Czars" or "ministers" to over see them. "Sad little men", we would have uttered, attempting to enact what has proven to fail throughout the 20th century, time and time again. "When will they learn?", we would of quipped as we clucked our tongue at them. "Free markets!", Capitalism! we would have shouted. "That is the answer!" Yet ... yet here we are.

"We are all Keynesian's now", Pat Buchanan once said disparagingly of President George W. Bush and his eventual successor. Was he wrong? We have the $700 billion Bush bank bailout, the $700 billion "stimulus package" Obama wants by inauguration to "jolt this economy back into shape", and the $800 billion fund Hank Paulson created to get consumers borrowing and buying again. These come on top of Bush $455 billion deficit, the $29 billion bailout of Bear Stearns, the $105 billion in pork to grease the $700 billion bailout, the $100 billion to $200 billion to keep Fannie and Freddie afloat, the $140-billion, and counting, for AIG, the $25 billion for the greening of GM, Ford and Chrysler, the $25 -$135 billion more to save the Detroit Three and the $20 billion for CitiGroup.

Does any one pause to note that a deficit of $1.4 trillion would be 10 percent of gross domestic product, dwarfing the postwar record 6 percent run by Ronald Reagan in the Jimmy Carter recession? Correct me if I'm wrong but hasn't the bewailing of the "Reagan deficits" been a staple of Democratic arguments against "Ronnie the Great" since I was in short pants?

Consider what we are about to do. Bush, in 2008, spent 21 percent of GDP. States, counties and cities spent another 12 percent. Thus, one third of GDP is spent by government at all levels. Obama proposes to raise that by another 10 percent of GDP. We may soon be above 40 percent of gross domestic product controlled and spent by government.

That is socialism. There is no other way to describe it. Well ... Obama would claim we are simply being "our brothers keeper." But if I may further contort the Biblical quote, keeping him where?

And just where will we get the money? The only nation with the kind of cash on hand we need now - if we don't print the money and invite another gigantic value bubble - is China, with its $2 trillion in foreign exchange reserves. Can anyone tell me with a straight face that it is sound economic or national security policy for the world's last remaining superpower to borrow so heavily from the worlds last remaining, functioning, Communist Party?

Have we not learned from history? Despite belonging to opposing Parties both Obama and George W. Bush seemed to have come away from the 1929 crash with similar conclusions. The United States needs a second, or "new" New Deal. And however correctly or incorrectly they have interpreted those economic years, the answer is the same: government acting dramatically to find public solutions to private woes. And the centerpiece of "acting dramatically" in the new administration's "plan" can be summed up in three (despite Joe Biden's claims to two) words: "jobs, jobs, jobs." The problem they will impose on the rest of us is that economists at Princeton, Brown, Columbia, Stanford, the University of Chicago, University of Virginia, University of California (Berkeley) and other universities, none of which are hot beds of conservative activism, are presenting mounting evidence that double digit unemployment was prolonged by FDR's own New Deal policies. At its height the Depression saw 25% unemployment. In 1939, the height of full implementation of New Deal economic policies, it was still a staggering 17%.

Robert Bartley, who edited the Wall Street Journal for three decades and is now a commentator, has called for a fresh debate about the New Deal. Newspaper publisher Conrad Black, author of Franklin Delano Roosevelt, Champion of Freedom, responded by claiming that if "workfare" recipients were included among the "employed," then New Deal unemployment rates were lower than the U.S. Department of Labor has reported for decades. Those tempted to agree with Black might listen to jazz great Louis Armstrong's 1940 tune "The WPA" -referring to FDR's biggest "workfare" program, the Works Progress Administration. Among the memorable lines: "Sleep while you work, rest while you play, lean on your shovel to pass the time away, at the WPA."

There's a fascinating split between economists and political historians about the New Deal. "The idea that FDR cured double-digit unemployment", wrote conservative author and commentator Thomas Sowell in a recent column, "was never pervasive among economists"; and even J.M. Keynes - a liberal icon - criticized some of FDR's policies as, "hindering recovery." Far too many for far too long have steered the discussion over the depression into more FDR friendly territory focusing on the personalities, elections, speeches, "Fireside Chats" and other aspects of Roosevelts undeniable charisma and magnetic personality, disregarding evidence about the economic consequences of New Deal policies.

Robert J. Samuelson, in his work, The Great Depression. The Concise Encyclopedia of Economics, produced a 1995 survey of economic historians which asked: "Taken as a whole, did government policies of the New Deal serve to lengthen and deepen the Great Depression?" Of those in economics departments 27% agreed, 22% agreed 'with provisos' (what provisos the survey does not state) and 51% disagreed. Of those in history departments, 27% agreed and 73% disagreed. It occurs to even the casual observer that the sentimental cache that FDR carries in the history department is at conflict with nearly half of their colleagues down the hall teaching economics.

Lowell E. Gallaway and Richard K. Vedder argue in their book: Out of Work: Unemployment and Government in Twentieth-Century America, New York University Press; Updated edition (July 1997), that "the Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs." They suggest that without Social Security, work relief, unemployment insurance, mandatory minimum wages, and without government granted privileges for labor unions, business would have hired more workers and the unemployment rate during the New Deal years would have been 6.7% instead of 17.2%. The New Deal tripled federal taxes between 1933 and 1940 - excise taxes, personal income taxes, inheritance taxes, corporate income taxes, dividend taxes, excess profits taxes all went up, and FDR introduced an undistributed profits tax. A number of New Deal laws, including some 700 industrial cartel codes, made it more expensive for employers to hire people, and this discouraged hiring. Frequent changes in the tax laws and even FDR's anti-business rhetoric ("economic royalists") discouraged people from making investments essential for growth and jobs. New Deal securities laws made it harder for employers to raise capital. FDR issued antitrust lawsuits against some 150 employers and companies, making it harder for them to focus on business. FDR signed a law ordering the break-up of America's strongest banks, with the lowest failure rates. New Deal farm policies destroyed food - 10 million acres of crops and 6 million farm animals - thereby wiping out farm jobs and forcing food prices above market levels for 100 million American consumers.

And in another major work putting forth compelling evidence about the economic consequences of the New Deal, by Stanford University political historian David M. Kennedy in his 1999 book Freedom From Fear, winner of a Pulitzer Prize, he wrote: "Whatever it was, the New Deal was not a recovery program."

Yet here we are, about to not only double but quadruple down on the same approach FDR started and Johnson vaunted - government as the solution. But this federal incursion into the private sector will be blatantly socialist, for they will quite literally control the means of production in many critical, high profile industries and use record setting amounts our money (not to mention defecits) to do it in a way that would have made even FDR gasp in their breadth. And the most insidious aspect of all this is we face nothing approaching the very real economic crisis of FDR's administration or social crisis of Johnson's. This is madness incarnate. We have only 2 options - borrow the money from China or print more. Either choice evokes the powerful images of German workmen wheel barreling their paychecks home in useless Wiemar Republic currency.

And all of it, all of it, is for a single purpose: to make the case that your elected official is doing "something", "anything" to save YOU! Save a handful of congressmen and women in the House of Representatives the short term is the only terms under which these elected officials will negotiate or consider. What is next? The G-20 (or whatever God forsaken number they are up to now) decides that the only "safe" play is to introduce a single world-wide currency, boiling the most successful nations in the world down to the lowest common denominator of the Rupee or latest Swahili exchange?

The bottom line my fellow Americans is the more and more our government reduces your exposure to risk under the guise of doing "something" to ensure nary an economic downturn occurs, the more they limit the potential reward your hard work and skills can offer. There are always going to be economic down turns in a "free" society. They must come, they are a necessary evil so that real, reliable bottoms and prices in the market can be set. And each and every time we attempt to set a false bottom, allowing the government to draw an economic line saying, "here, and no farther shall we slide", the greater the velocity of that slide. We must occasionally allow the economy to tie an American company or industry to a tree and shoot it. Clearing the battlefield of uncompetitive and ill run business is a necessary thing. Should we have propped up the phonograph makers? Injected the South's currency with Northern dollars as the war turned so as to ease their economic downturn? Should American employees at Toyota or Nissan plants in the US have their tax dollars spent to prop up their competition? This entire foray is counter intuitive to not only the most basic business sense, but the human spirit's sense of hard work and fair play. Mr. Hyde is administering serum to Dr. Jekyll, and the town's people seem to be encouraged by the news!

Who among our leaders will stand up against such madness and have a real, connective dialogue with the American electorate about the fate we seem eager to seal? I see no one on the horizon. As if I am in a bad movie and am forced to watch to the bitter end. Find me an honest broker with the power of voice and determination of thought to combat this, I beg of you. A man once said: "The politician looks to the next election. The statesmen looks to the next generation."

Where are our statesman now? Are they too leaning on their shovels? Drunk from indulging in the overflowing federal trough at their feet? It would seem so ...