Friday, December 16, 2011

Newt is Right: Throw the Bums Out

Newt has brought up an issue inviting the expected attacks from the left, but surprisingly these attacks have been supported by several prominent conservatives. Newt has given voice to the idea that the legislative branch of government should fight back against activist judges. Whether his recommended procedures to do this are the right ones might be questioned, but the idea of fighting is refreshing and much needed if we are to reset the direction of this ship of state.

Michael Mukasey and Alberto Gonzales, each a former Republican Attorney General of the United States, and former Judge Andrew Napolitano, a strict constitutionalist and contributor to Fox News, have called Newts ideas unprecedented, crazy, radical, and warned that his plan would violate the separation of powers in the government. They couldn't be more wrong. First they should read some history. There is nothing new about complaints of overreach and attempts to remedy it by other branches of government. In recent decades the separation of powers have been breached in a broad organized way by the very judges these men want to protect, and Newt's ideas would only help reestablish proper boundaries.

The legislative, executive and judicial branches are theoretically coequal branches of government. Although equality in the real world is an impossibility (Jefferson thought the judicial branch would be the weakest of the three) it is important that to the extent possible, they be kept separate branches of government. The legislative branch creates and passes laws, the executive branch executes them, and the judicial branch mediates disputes and insures that the laws passed and the methods of executing them do not run afoul of the constitution.

That last part, the job of the judiciary, is the key to understanding this. Starting with Woodrow Wilson, and expanded by Franklin Roosevelt (both repeatedly expressed disdain for the constitution because it got in the way of their "enlightened" agenda), a theory developed reasoning that since the framers of the constitution could never have anticipated changes that have occurred in today's society, it is the duty of judges to interpret the constitution in a manner different than the original intent, and more in a manner consistent with modernity. At first blush this seems reasonable. But on closer examination its fails any test of reasonableness. I would argue that this very idea, this philosophy, is a violation of the constitution itself, and therefore disqualifies anyone adopting it from holding judicial office.

The fallacy in the living constitution theory is that although society has changed in ways the framers could never have anticipated, it is irrelevant. The inherent assumption that the framers were thinking about society is incorrect. They were dealing with human nature, and as much as society has changed, I would argue human nature has not, not in 200 years, not in 2000 years.

Think about the effect of a living constitution as liberals advocate. Without fixed laws and fixed principles a court could interpret anything in any way. No one would know in advance whether what he was doing was lawful or not. There is always going to be problems with cases that fall on the line of a law or legal principle, ones that can be reasonably argued from both sides. These things are uncomfortable, but they occur. We can only deal with them in as fair a way as possible.

But under the banner of a living constitution, there are no limits to what a judge might rule. See Roe vs Wade for details. No matter what you beliefs on abortion are, the legal reasoning, and I use reasoning advisedly, is totally arbitrary and irrational. The majority ruled the federal government had the right to make a judgment on an issue not enumerated among the powers of the federal government. The court then used a non existent right to privacy (arguably implied in the constitution but not stated), and contorted that into a woman's right to abort a fetus. Even legal scholars who are pro choice admit this was an incoherent ruling.

When rulings like that are made, what has happened? The judiciary has usurped the responsibility and power of the legislature. State legislatures have the right to decide whether abortion is legal (most people agree the state has a legitimate interest in murder, so the abortion debate revolves around if abortion is murder.) A judge has no such right, and to the extent he believes he does (as it appears most living constitution advocates do), then he is acting beyond his charge. The other branches should fight back. If the president declared that taxes would go up by 20%, something only congress has the authority to do, shouldn't congress fight him with everything they have? If a president were permitted to do this we would have a dictatorship. Allowing judges to interpret the constitution without regard to intent is equally dangerous, except this results in an oligarchy instead of a dictatorship.

Our success as a nation, our very freedom, is because we are a nation of laws, not men. The framers of the constitution realized their work might contain mistakes. Democracy was a new, noble experiment. Men ruled democratically might not behave in the way they anticipated. So they provided for changes, or amendments. If living constitution supporters thinks change is needed, they are free to try to bring enough people into agreement with them, and if they succeed, then, and only then, can they change the constitution. Letting a judge wander away from the original intent into wherever his ideology might lead him, making wholesale, random changes, is illegal and should be challenged and struck down by any and all supporters of the rule of law, whatever else their ideology. 

Monday, December 12, 2011

Why Newt? Life is a Series of Percentage Bets

Newt is ethically challenged for sure, temperamental and given to self grandiose flights of fancy, absolutely. But if you think about it, most presidents have had many similar failings. Kennedy was a philanderer. Johnson and Nixon were given to intense bouts of anger and bullying. Carter's was the most radical president in history before the present occupant of 1600 Pennsylvania Ave. His lies were pretty much the same as most presidents, but they stood out given his holier than thou attitude. Clinton may have been well liked, but his personal failings are well documented. Obama sat in Reverend Wright's pews listening to anti American, anti semitic racist garbage and tacitly supported it by virtue of his continuing presence and deafening silence. The terrorist Bill Ayers, radical Islamist sympathizers, Communists and socialists were all counted among his mentors and friends. Certainly he is a deeply flawed human being.

Whatever a presidents personal failures were, they all had one thing in common. They hid them. Democrats are routinely assisted in this effort by the press, while Republicans have to deal with exaggerations of their failings. Hiding them is more difficult.

Yes, both are flawed. Isn't that part of the human condition? Nobody should defend Newt on personal issues. His supporters should acknowledge them, and express hope that he has changed. Neither should they try to dismiss his shortcomings with the liberal whitewash of, everybody does it. Everyone does do it to some degree or another, but that doesn't make it right, or even more forgivable. What supporters should do is hope he does not defend them, but rather asks the public to search their soul and see if they can forgive him.

I have written about his changing positions and his scary ideas. But as Donald Rumsfeld said, we go to war with the weapons we have, not the ones we wish we had. A year ago I said this nomination was Jim DeMint's for the asking. Unfortunately, he either didn't hear or didn't care.

He would have been a better weapon, but that is irrelevant. The best weapon we have now is Newt. He has a track record. His auditory record leaves much to be desired, but the things he actually did are as good and as important as any politician since Ronald Reagan. He had a major role in taking the majority for the first time in over 40 years, in welfare reform, NAFTA, lowering of the capital gains tax, highlighting several issues like the unfairness of the inheritance tax, and many more. As a legislator he was faithful to both social and fiscal conservatives.

The non Newt, Romney, has a failed auditory record and although a few things he did as governor of Massachusetts were good, they were trivial when compared with Newt's accomplishments. Add to that his signature effort as governor, health care, something he continues to defend even though it is a total abomination, and the choice becomes clear. Even his tax plan shows an ignorance of the economy (raising taxes on anyone earning over $200,000), or else he is pandering in spite of the fact that such a plan would be highly destructive.

Romney is a big government Republican. Newt may be one too, and many things he said in the past indicate he is, but the legislation he navigated through congress says otherwise. I can't be sure. I doubt anyone can. As the article title says, life is a series of percentage bets. We can only vote for the candidate most likely to put this great country back on course. That would be Newt.

Wednesday, December 7, 2011

Euro Crisis

 When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against may know that your society is doomed. - Ayn Rand

Two and a half years ago I told you that contrary to the Democrats exculpatory fantasy that predatory lending ((laughable) and greedy investment bankers were responsible for the financial crisis (they amounted to little more than a footnote so far as the real cause goes), Fannie Mae and Freddie Mac and their political overlords were the real culprits. Now we have a European sovereign debt problem, and the same forces that destroyed our banking are responsible here. For those of you who don't understand what the crisis in Europe is about and why it occurred I will give you a brief explanation.

The first reason is that countries simply spent and borrowed so much money that their debt grew to the point where it exceeded their ability to repay. Still, the first question is even if they defaulted on this debt, what would it be so catastrophic? Other countries defaulted (Argentina) and within a few years bounced back to become vibrant again. Why is Europe different?

Secondly, who is owed the money, and how did they allow these nations to go this far. Japan has a debt problem, and in their case they promoted lending to the government in such a way that most of the money came from domestic savings. That means the people were duped. The United States has a serious problem, but the dollar is a reserve currency (used in many international transactions) which allows a certain flexibility, and the economy is so large that countries doing business with the US (China) have a vested interest in keeping the dollar strong and keeping us solvent, which they have done by lending massive amounts of money to us. We too are on an unsustainable course, but the imminent economic tsunami is farther down the road than Europe.

Europe is in real trouble, and now. If they default on their debt they will bankrupt most of their banks. It is those banks who loaned the governments staggering amounts of the money (Ireland being the exception where the government foolishly kept insolvent banks afloat by borrowing money to "invest" in them.) Why? Didn't anyone recognize the risk the borrowers/ governments presented? Well, here is how one part of the scam worked. The governments passed laws dictating how much in reserves a bank must hold requiring different reserve amounts on different types of loans. Business loans needed a 6% reserve, mortgages needed 4%, and sovereign debt, well that required zero reserves. So for each dollar of depositor money a bank loaned to a business, it needed 6 cents of its own in equity, but a dollar loaned to Portugal, Greece or any European sovereign required nothing. Guess what happened. The banks loaned as much as they could to the various countries. Now, if the governments default, the banks will fail and the institutions and people who funded them will lose massive amounts of money, not to mention the failure of the banking infrastructure needed to conduct normal business transactions. It will be a colossal mess.

Imagine a world where the government simply adjudicated disputes, monitored businesses for truthfulness,  made sure they had the reserves they claimed, earned the amount of money they reported, and generally conducted business in a forthright manner. Depositors would be able to make their own choices. A bank with large reserves would be able to borrow cheaper than a less well endowed institution. If the public were allowed to make informed choices, it wouldn't eliminate bubbles and collapses, but there would be fewer and less severe ones. Instead we have a system controlled by bureaucrats and politicians, and it should come as no surprise that they manipulate things for their own personal gain without regard to the rest of us.

Tuesday, November 15, 2011

Dangerous Fools

A couple of recent statements show how out of touch our political class is. Tom Friedman (author, NYTs columnist, socialist) said that if Mayor Michael Bloomberg (socialist, mayor of NY, aka the trans-fat mayor) ran for president on a third party ticket he would start out with 40% of the vote. He couldn't win NY, much less get 40%. A more accurate estimate might be 2%.

Speaking of Bloomberg, he recently said he didn't want to run for president, he only wanted to be remembered as the best mayor New York ever had. First let me recognize his heartwarming humility. I just wonder what he can do in the short time remaining in his shamefully acquired third term that will lift his signature accomplishments, the smoking and transfat bans, above historical giants like DeWitt Clinton (read some NY history and learn about this amazing political figure), Fiorello LaGuardia who broke the back of the entrenched corrupt Tammany Hall, and Rudy Giuliani, who changed NY from a sanctuary for organized crime, white collar crime, drug crime and youth crime (not to mention criminal levels of political overspending) back to the greatest city in the world. .

Barack Obama (US President, Democrat/ socialist) recently said that Americans have gotten lazy. Really? I suppose our having the longest work week in the industrial world and the highest productivity gives proof positive we are lazy. Luckily, we have the intelligentsia like him to point these well disguised trends out. After all, the bulk of his career was spent as a community organizer. For those of you who don't understand what exactly that is, think Zucotti Park demonstrator/ hustler/ freeloader. Of course this is the president who said that when times get tough people cling to their guns and religion. Foolishly, I thought religion was practiced every day every year, and second amendment rights were the just as important in good times as bad. More stupidity to follow.

Thursday, October 27, 2011

Retire Romney

Romney may win the nomination, but make no mistake, he is not the best general election candidate. Like the last election where any Democrat would have beaten McCain, (Hillary by much more than Obama,) any Republican would beat Obama in a landslide if the election were held today. Of course things can change a lot in this year before the election, so nothing is certain.

The question is, what candidate will garner the largest number of votes. The answer; not Romney. He has no core values, and that is clear to anyone who looks. His change in position on abortion and gay marriage along with his incoherent explanation why Romneycare is different than Obamacare are well known. Less known is his endorsement of the climate frauding crowd, and his slanderous ah hominid attacks on those who disagree. His 59 point economic plan (the sheer number of points should make you suspicious,) in which he demonstrates a profound ignorance of basic economics by lowering tax rates only on those earning less than $200,000. This betrays the same fundamentally flawed gene most liberals have, that being the idea that government's consistent failure is the result of poor design (as opposed to simply being incapable,) and if we just implement the "right" program, government will become the solution, not the problem. Once someone thinks that way, they are hopelessly lost.

If you think about it, Romney has found an enormous amount of common ground with Obama. They agree on healthcare, taxes, climate change and the roll of government.In an earlier blog I said that evangelicals would not vote for him in the same numbers they would vote for another candidate. But the dirty little secret is that neither will independents. Even if I were wrong and he did have the best chance of winning the general, would you rather be certain of his victory and unsure how he would govern, or be certain of how someone would govern at the risk of being uncertain of victory. There are already enough John McCains and Lindsey Grahams in positions of power. Don't allow this election to be a Pyrrhic victory.

Wednesday, October 19, 2011

The Hope For War With Iran

It is very possible that Obama will attack Iran's nuclear development facility in the next year. I agree it should be done, but it might seem unlikely given this is the President who had an opportunity to side with the Green Revolution in 2009 chose instead to sit things out (tacitly supporting the regime), the President who pulled defensive missiles out of Poland and Czechoslovakia rather than confront Putin, and the President who sided in Honduras with the Communist leader Zaleya (a Castro and Chavez disciple) rather than the democratic government. In short this President has no stomach to fight a battle today even if it will prevent a catastrophe tomorrow.

But if that battle will help preserve his personal power, well that's another story. As it becomes clearer that the 2012 election is slipping from his grasp, he might realize something radical is needed, and an attack on Iran could shake things up enough to get him re elected. Let us hope he does. He will lose the election anyway, but the public will interpert the decision to attack as prudent and bipartisan.

Monday, September 5, 2011

On Being Governed By Scientific Frauds

There are certain papers which capture the essence of long debated issues. The following does just that, and also exposes the pathologies that allow may fictions to be debated and even gain credibility. It is an insightful and excellent American Thinker submission.

September 5, 2011

On Being Governed By Scientific Frauds

By James Lewis
The news leaked out a while ago that Al Gore scored a D in natural science at Harvard.  That would be the science introduction for Other Majors, not difficult chemistry or calculus.  So Nobel Laureate Al Gore got a D in Science for Dummies.
But don't worry.  Anybody can blow a college course and still bounce back.  A lot of us get it wrong the first time.  Unfortunately, Al Gore didn't fix his failure.  He made it much worse by peddling monstrous pseudo-science and getting even richer from it.  As well as repulsively fat -- a walking metaphor for his politics.
The more I think about it, the more it looks like global warming is a deliberate attack by the postmodern (anti-science) left on science.  Global Frauding attacks all the core scientific values -- of truth-telling, empirical discipline, and skepticism.  Our bulging Goracle gets a lifetime grade of F for setting real science back by decades.
My guess is that during the Clinton years, Al Gore planted his ideological allies in NASA and NOAA.  It could have been done through his campaign to Make Government More Efficient.  After all, he was saving the planet.  Gore deserved his Nobel Prize just as much as Obama did for winning while black.
Phony science has a long and terrifying history on the left.  Barack Obama was also officially credited by his Harvard Law professor Larry Tribe for inventing the Einstein Theory of the U.S. Constitution.  Really.  You can look it up.  This is so bizarre it isn't even funny.
Nothing is as toxic as a really bad idea.  Hundreds of millions of dollars are still being spent in "scientific" pursuit of disaster scenarios about the earth, fiddling with infinitely variable computer models.  This isn't science; the burden of proof has flipped to the skeptics, which does not happen in real science.  Albert Einstein had to predict observable outcomes before his ideas were accepted.  Watson and Crick had to prove the helical structure of DNA before anybody took them seriously.  But in Global Frauding it's the skeptics who are supposed to prove that the latest computer model is not true.  If they manage that, the crooks just make up a new computer model.  It's a sort of card sharper trick.  A con artist can always move faster than the suckers.
No real scientist makes a deal with Al Gore and the New York Times to get rich by peddling end-of-the-world stories.  No scientist is then allowed to call those planted lies "scientific truths" until somebody can prove they're wrong.  If science worked like that, Galileo would still be a pariah and the Vatican would be telling us about Ptolemaic astronomy.  In real science the burden of proof is on the proposer.  There are good reasons for that standard.
Three decades ago, MIT Professor Edward Lorenz became famous for his discovery of "chaotic dynamics" in weather data.  Scientific theorists are still building on that breakthrough.  Complex systems like the earth's atmosphere have inherent unpredictability.  They are not like Newton's theory of the solar system, which allows for precise predictions.  The solar system is simple because everything rotates around the biggest center of gravity, the sun.  Strip out the sun, and all the planets would dance around each other like a chaotic system.
As aeronautics engineer Burt Rutan has pointed out, so-called "climate modeling" is a computer game with too many unknowns.  Real scientists keep discovering unexpected climate factors; but if you don't even know your biggest variables, how can you build a model at all?  It's playing Hamlet without the Prince of Denmark.
Global warming racketeers end up doing science by press release.  Their models are rigged, and any time they turn out wrong, they change the model.  Then they send out more press releases to equally corrupt jourNOlists, who phone in more scary headlines to the New York Times.  Millions of suckered voters end up believing that the sky is falling, and they vote for socialist politicians like Obama to Save the Planet.  Obama's election would "stop the rising of the seas."
The super-corrupt left keeps funneling billions in taxpayer dollars to the modeling racketeers who crank out more press releases for even scarier headlines.  Human gullibility is the only known perpetual motion machine in existence.  It's what liberals are always looking for: an infinitely renewable source of energy.
Global Frauding works like a huge criminal racket, and it should be subject to criminal prosecution, like Bernie Madoff.  No wonder George Soros keeps funding the left out of the goodness of his heart.  For him it has to be a big profit center.  According to Center for Media Research, Soros has spent 48 million dollars funding media.  Similar amounts of Soros money are funding all the usual fronts for the radical left, from to The Nation.  This is going on while the major media like the New York Times are staggering toward bankruptcy.  Soros and friends are buying influence on a huge scale.
For a hedge fund manipulator, that means immense clout to make and break news stories.  It's a dirt-cheap investment for huge potential returns.  Is Soros using his tame regiments of lefties to make more money?  Do bunny rabbits make babies in the woods? 
Bad ideas are toxic.  It took decades for 19th-century doctors to start washing their hands, because they couldn't believe that microscopic germs might be passing on disease.  It was normal for women to die in childbirth.  It had been that way for centuries.  Washing your hands with soap and boiled water was so laughable it wasn't worth trying.  Those doctors might have had humane intentions, but they were fixated on false ideas.  Any half-decent scientist knows dozens of cases like that. 
Arthur C. Clarke pointed out that major scientific advances are often disputed by world-famous scientists just a few years before they are proven to be right.  Wrong ideas are common among honest scientists, but it takes a very nasty mind to peddle science fraud on purpose.
Global Frauding is an assault by the postmodern left on modern science, one of the crown jewels of Western civilization.  The po-mo left attacks all Western values -- which is why our museums are proud to feature works of "art" like Piss Christ.
Most of all, the postmodern left has assaulted the very concept of truth, the foremost value in science.  Without honest science we would not have useful technology, and without 200 years of accumulated technology our lives would still be nasty, brutish, and short.
Global Frauding isn't science; it belongs in the long history of human folly and delusion.  The Great South Sea Bubble, Florida swampland, Bernie Madoff, animal magnetism, global warming.  They're all popular delusions stoked by greedy demagogues.
Scientists are not immune to greed and corruption. 
The prequel to Global Frauding was yet another gift from the delusional left: Jozef Stalin's phony genetics.  Led by science fraud Trofim Lysenko, Uncle Joe ordered millions of peasants to force potatoes to get bigger.  Once a generation of potatoes was forced to be bigger, the mad notion was that the next generation of potatoes would inherit the genes for bigness.  It was forcible labor for plants, a green version of the Siberian labor camps.
The Soviet Union lost the Cold War because it became an ant heap of lies.  Everybody had to lie to survive, and the ruling class never knew who was telling the truth.  Ever try to run a lemonade stand that way?  How about an auto factory?
Lenin and Stalin (and Mao and all the rest) tried the same "Great Leap Forward" fantasy on human beings.  Early on, the "New Soviet Man" program tried Pavlovian conditioning to transform millions of ordinary people into Heroes of Soviet Labor.  And to their everlasting shame, the Western left celebrated those miraculous achievements.
The left is still delusional.  Satellite photos just revealed the size of North Korean concentration camps, estimated at 200,000 prisoners.  Even NPR says they are set up to work prisoners to death.  So how long does it take NPR to figure out that they've been on the wrong side for all these years?
Obama's greatest intellectual flaw is his failure to  understand that the radical left always leads to the abuse of force.  In the process of ratcheting up statist control, human beings will start to rebel.  The left keeps grasping for more and more power, and the whole story of 100 million innocent victims of Marxism has nothing to do with them.
And yet, the evidence is there, right in front of their eyes.  This is not irrelevant to science, because all good science begins and ends with the truth.  That's the whole point.  Those who cannot face the plain truth of their own historic criminality also want to torpedo honest science.  Facing the truth is the last thing the left wants to do.  It would crumble of its own inner contradictions, like the Soviet Union.
Marxism itself was supposed to be "scientific."  But all of its predictions turned out wrong.  Normal people might learn from that experience, but the left never learns.  Today, Marxism is again a slyly celebrated subject on college campuses.  It makes kids and professors feel grandiose and historic.
Thomas Jefferson, Ben Franklin, and Benjamin Rush were world-class scientific minds.  Franklin made important strides in the study of electricity.  Benjamin Rush was a pioneer in scientific medicine.  Jefferson was an all-round innovator and inventor.  Can any politician today stand up in that company?  The United States has become the world superpower, but the quality of our leaders hasn't kept up.
Obama's attempt to revive Keynesian economics is another case of the same intellectual blind spots.  Keynes himself concluded that massive deficit spending failed to cure the Great Depression.  It made the hunger and poverty last longer.
On the best evidence we have, socialism failed in the post-colonial world, which is why Russia, China, and India are now following some version of capitalism.  Obama's Dreams from My Father is therefore a cruel charade.  Obama Sr. got things seriously wrong in Kenya, and denying that plain fact can lead only to more failures.
In ordinary science any remaining debates would be based on those facts.  It's only in pseudo-science that you keep repeating a terrible idea over and over, in the face of the evidence.
The goal of science is to discover truth and to get rid of bad ideas.  From that point of view, global warming is on par with the bloody tyranny of North Korea, because they are both based on well-known falsehoods.  They are different degrees of corruption and malignancy, but they are both driven by socially accepted lies.
Sigmund Freud taught that reality testing was the greatest sign of sanity; all neuroses distort reality.  So yes, the left is scientific in one respect -- if your science studies human delusions.
Harvard University fired President Larry Summers for daring to say that boys might have a genetic edge in pure math.  Historically more than 90 percent of math geniuses have been young males.  They often seem to be mildly autistic; maybe those are the lonely kids who spend their waking hours thinking about pure mathematics instead of playing baseball.
The National Science Foundation is now investing millions of dollars in large-scale experiments on little girls, to make them better at higher math.  Nobody seems to be wondering if their normal sociability might be harmed as a result.  Whom are those little girls going to talk to?  Math whizzes devote thousands of hours to numbers and topology.  Does it occur to anybody how lonely those math whizzes often are?
A century ago, left-handed kids were forced to switch to their right hands for writing.  It never worked, and that nutty craze ended up with thousands of self-hating adults, who felt there was something terribly wrong with them.  Just a decade ago Latino kids were forced to learn in bilingual classes in California -- when parents know that it's hard enough to learn the three Rs in only one language.  Today Hispanic kids are running statistically behind the others, maybe because millions of them had to start with a handicap.  It's always "idealistic" adults who inflict their nutty fixations on helpless children.
Two centuries after Jefferson, Franklin, and Benjamin Rush, we are now governed by science frauds.  Just let that little fact bubble in your mind -- and then do something about it, please.  If we don't do anything, nobody will.  There's far too much money in scientific fraud for it to go away by itself.

Friday, September 2, 2011

Another Case For Perry

The pundits should get another job. A survey of Democratic and Republican "insiders" concluded that Romney has a better chance than Perry to win the general election. Forgetting the fact that Perry would govern as a conservative, whereas Romney is at best an unknown (given his mixed record,) the conclusion is ridiculous. I gave several reasons why it is wrong in my last post, but let me add to them.

This election as most Presidential elections will be a referendum on the incumbent. That's good news no matter who runs. It doesn't mean a good candidate won't do better than a poor one, but the overwhelming tide will be driven by the view people have of Obama.

The premise most of the Romney people start with is that the Tea Party "extremists" that ran in Nevada, Colorado and Delaware lost because of their "extreme" conservative views. Nonsense! They were poor candidates, poor spokesmen, and some had past baggage to contend with. Does anyone seriously think Christine O'Donnell or Sharon Angle would have won if they were "moderate?" If this were true, how did so many other Tea Party candidates win?

A voters passion about an issue drives their votes, not casual likes and dislikes. For decades the Left couldn't figure out why they always lost ground on the abortion issue. Until recently the pro choice voters outnumbered the pro life by as high as 70% to 30% (today that number is about even.) Passion is the difference. Only 1% of choice voters would completely rule out a candidate who supported life, whereas 10% of life voters would never vote for a choice candidate. That means the right lost 7/10 of  1% of all voters (1% times 70%,) and the Left lost 3% of all voters (10% times 30%.) Judge Jeanine Pirro once asked me how I liked her campaign (during that short period when she opposed Hillary for the New York Senate seat.) She had been running an ad saying Hillary would not complete her term because she would run for President. I said to Pirro she was wasting her money. She answered that they had polled it and 80% of voters wanted Hillary to finish if she won. I suppose that was correct, but NONE of that 80% would change their vote on the issue, and winning or changing votes is what wins elections.

This is a long winded way of saying that moderation (Romney) might show better numerical support on certain trivial issues, but on the things that people really care about and vote on Perry wins hands down. A winning candidate supports issues that people care passionately about, and Perry has done that for 25 years. Romney is maybe, maybe just now finding his way.

I question the argument that Romney's business success will resonate with voters more than Perry's record. Romney and his record at Bain Capital is impressive, as is the job he did running the Winter Olympics. But when compared with Perry's record on jobs, taxes, tort reform, and his fantastic campaign skills (see Kay Bailey for details,) Romney runs a distant second. Worse for Romney is Romney care. Do you think anyone cares about his ridiculous defense of it (claiming it is different from Obama care in that the state has a right to impose it and the federal government doesn't?) Will Perry get more votes trashing it, or Romney by defending his plan (which is contrary to all free enterprise principles) while saying he would repeal Obama care?

Perry is better on the issues that count, on articulating them, and has a record to prove it. Anyone who thinks Romney's chances are better than Perry's better brush up on political history and political science.    

Monday, August 29, 2011

Perry vs Romney

It is amazing how many "experts," who make their living prognosticating on political events, are clueless.  A year ago they said it is near impossible to beat a sitting President. Well, simply put, that is nonsense. In my lifetime 5 sitting Presidents were re elected, Eisenhower, Nixon, Reagan, Clinton and Bush II, three lost, Ford, Carter and Bush I, and two didn't run because they knew they would lose, Truman and Johnson.

Now the accepted wisdom is that Mitt Romney would do better against Obama than Rick Perry. Rich Lowry and Pat Buchanan both expressed this on Sunday and with certainty. The logic they apply is that since Romney is closer to the center politically, he will garner more support from independents. I believe they are wrong on this point alone, and very wrong on the conclusion they draw even if they are right here.

The "independent" voters are made up of Republican and Democratic independents, and independent independents. I choose to ignore the former group because they consistently vote 80% to 90% with the party they identify with. Given that independents average around 28% of the electorate, a swing of 10% one way or another among that subgroup becomes inconsequential. However, the independent independents can all go either way and therefore do count. I believe they will be attracted to a consistent, principled politician over one who has been on both sides of far too many issues.

But suppose I am wrong. Suppose Romney does attract more of them. Before concluding he is the more viable candidate, we also must look at a much larger voting bloc, evangelical and born again Christians (about 26% of the electorate.) How will they vote? I doubt there is a lot of negativity about Romney's being a Mormon, but there will be some. More important is the fact that evangelicals love, absolutely love Perry, and this will bring him far more votes than he could ever lose among independents.

Evangelicals vote primarily for Republicans, but enough vote Democratic that they can hardly be taken for granted. To illustrate how important their vote is think about this. In 1992 when Bush the elder lost the election, he was up against Bill Clinton, arguably the best politician in our lifetimes. He was coming out of an economic downturn that was being felt by most of the electorate. Ross Perot ran as a third party candidate taking 19% of the popular vote, most of it consisting of Republicans. With all this going against him, if Bush had gotten the same percentage of evangelical voters he got in 1988, he would have won the election.  Breaking his "No new taxes" pledge so offended them, many either switched parties or sat home on election day.

Ronald Reagan taught a lesson to politicians that most today seem to have missed. The principled is also the political. Every time Reagan did something significant the press went apoplectic. When he fired the Air Traffic Controllers, when he called the Soviet Union the evil empire, when he said "Mr. Gorbachev, tear down this wall," and when he walked out of the Strategic Arms Limitation Treaty talks the press was aghast, calling him stupid, a cowboy, and the worst President in American history. Of course after the hysteria died down the public loved him for it, and proved so with their votes. I don't want to suggest Romney is unprincipled, but if being consistent is the measure of integrity we apply, Perry beats him hands down.

Monday, August 22, 2011

Perry: A Palin Who Can Win

The chattering classes are at it again wringing their hands over the possibility of Rick Perry getting the nomination. All the usual suspects are working against him. Karl Rove, Peggy Noonan, Dana Perino and others suffering from delusional myopia suggest we need a more centrist candidate. Sure we do....perhaps like McCain or Romney, or maybe Bob Dole. Guys like these are less likely to win than a real conservative, and if they do win they would govern like Obama lite. Romney has been on both sides of abortion, both sides of gay marriage, defends his disastrous Romney care, and has supported carbon controls. McCain voted against the Bush tax cuts 3 times, opposed Guantanamo and enhanced interrogation, and championed Campaign Finance Reform. Newt Gingrich once called Bob Dole the "tax collector for the welfare state." The only reason George W Bush won was he presented himself as a true conservative. Of course, steel tariffs, No Child Left Behind, Campaign Finance Reform, the Prescription Drug Benefit and unbridled spending and regulation put that notion to rest. In fairness he did appoint two excellent Supreme Court justices, defended the homeland with distinction, and lowered taxes getting at least one boot heel off the neck of the economy. But anyone who believes in conservative ideas and values can not possibly support a political/ policy dyslexic like Romney.

Bill Kristol, who was one of the first pundits to suggest Sarah Palin as McCain's vice presidential running mate, has echoed the same dissatisfaction with Perry by suggesting that Paul Ryan run. Ryan is a great young man. He has acquitted himself well in the budget debate and with entitlement reform. But that is it. He is an unproven campaigner, fundraiser, with a very small list of legislative accomplishments. He may someday be ready, but now is certainly not the time.  The strange thing is that Perry is philosophically like Sarah Palin (she has all the right ideas too) but one that can win. Why are Kristol and the others so distressed?

Rick Perry has a list of conservative accomplishments a mile long. He believes what he says. He believes in America, free enterprise (he has a copy of Hayek's "The Road to Serfdom" on his desk), individual rights and responsibilities, small government and God. We are known by our friends and our enemies (too bad no one looked at Obama's radical friends before they voted for him.) Rick Perry has a list of enemies any conservative would be proud of. The Trial Lawyers because he  passed tort reform in Texas, and it is working like a charm. Texas is a right to work state so the unions are in high gear. His other enemies are in a dither and confused trying to decide just how to attack him. They say his spectacular jobs record is meaningless because most are low paying jobs. Others say credit for his success belongs to Obama's stimulus and an increase in government jobs. Are there low paying government jobs? Still others say it is because of energy sector growth. Obama has been a real help with energy jobs. He pretends to create green jobs, and kills real oil and gas jobs. Of course much of the criticism is mutually exclusive, but if I know the left they will see which charge resonates and then all get in line repeating it.  There will be the most massive attacks on him since Reagan, and for good reason. He is cut from the same cloth as Reagan. Certainly this guy must be doing something right if he so offends so many liberals.

This is for all the fallen Democrats who realize that liberalism really is a mental disorder, but can't quite get behind some of the conservative ideas and policies because they have been successfully demonized by the Left. For example the charge that Perry is some kind of Bible pounding born again lunatic. First, I find it commendable that he is a man of faith (would you rather live next door to or vote for an atheist?) Politically, the support of evangelicals is an absolute necessity for any Republican to win. They represent 26% of the voting public, and they love Rick Perry. For those independents and Jews who might see evangelicals from the perspective of the Main Stream Media, suggesting they are something to be feared, I can only say that they support the same values you do. A very few might work to convert you (the doctrine of most faiths proscribe the same thing), but unlike the Muslim faith, using force (including the force of law) is not even a consideration. Jews in particular should remember; there are no greater supporters of religious freedom and no greater supporters of the state of Israel on this earth than evangelicals.

Please...get with it. We are lucky enough to have someone running who represents in whole or in part all the things we have dreamed of since Reagan left office, and even better, he has an excellent chance of winning. In fact, I believe he will win. I promise. No conservative, no one believing in freedom or in American exceptionalism, will be disappointed.         

Saturday, August 20, 2011

Rick Perry's Answer

Rick Perry was asked to explain his skeptical position on global warming by a new Hampshire Democrat yesterday. The political requirement that all answers be brief created an obstacle he navigated poorly, even though his skepticism is well founded. Here is my suggestion on what he should say if asked again.

The test of any scientific theory is how accurately it predicts future events. Global warming theorists have been off by large margins with every prediction they ever made. They predicted rise in temperatures, sea levels and other "catastrophic" events, all of which have been dramatically scaled back (by 90%) as each one failed to materialize. This alone is enough to discard the theory. But add to that the continuing deception by its advocates, and one wonders why we discuss this any more than we do the Lost City of Atlantis.. For years the "hockey stick" was offered as proof of temperature increases, until it was peer reviewed and it was learned the analysis and data werer simply incorrect. East Anglican University, the source of the data used in modeling climate change, had emails revealed where they were sharing information on how to fudge data, and how to avoid giving out the data on which their work was based. This hardly serves the scientific peer review process. Now we find the highly publicized report predicting the death of the polar bear population was a fiction (its authors are being investigated by their peers). Most recently data was aquired showing heat loss from the atmosphere into space is so much higher than the assumption used in climate change modeling that it renders every prediction they ever made useless. GIGO... garbage in garbage out.

OK. So it wasn't short. But maybe Perry can figure a way to distill this into a couple of soundbites.     

Tuesday, August 16, 2011

Buffett Is At It Again

Warren Buffett, legendary stock investor, penned an op-ed in the New Your Times in August once again illustrating how brilliance in one field not only does not translate into another, but may actually be an obstacle to understanding anything else. Maybe the bubble created by the yes men surrounding wealthy individuals contributes to it, or possibly it is because of the blinding ego success often creates. Whatever it is, this guy is way out there.

Buffett's first notable "contribution" to tax reform ideas was during his short tenure as the top financial adviser to Arnold Schwarzenegger's first gubernatorial campaign. Buffet advocated raising property taxes in California, reasoning that his house in Malibu (worth 20 million dollars) had a much lower tax rate (as a percentage of the home's value) than his $500,000 home in Nebraska. Think about what he said. The disparity in tax rates should automatically be adjusted in favor of the higher one, not the lower. Why? I don't know. Secondly, if anyone cared to look at the overall tax burden in California versus Nebraska they would find California tremendously higher, even though this one particular tax was lower. Apparently he thinks the disparity should be greater. Of course that exchange with the press ended Buffets career as a political financial adviser. Let's hope his role with Obama ends just as abruptly.

Here he is weighing in on federal tax rates. He objects to the 15% capital gains and dividend tax rate, proposing high income people pay a higher rate. He has made silly arguments in the past about this (claiming his secretary pays a higher rate than he does.) To address this and his foolishness in the NYT  I will give you some simple facts and common sense. Most of the revenue paid to the government is redistributive, not productive, whereas most money invested by wealthy individuals is very productive (wealth creation and jobs.)  A zero capital gains rate would produce more wealth for every level of society than even the present 15% rate. Taxes generated from more jobs and increased economic activity would more than make up for the revenue "loss" from zeroing out cap gains, although that gives rise to the question of if more government revenue/ power is a good thing. These increases occurred every time capital gains taxes were lowered, even under Democratic presidents like Kennedy and Clinton. Capital formation and risk taking is an absolute necessity for wealth creation, and a zero cap gains tax rate would encourage more of it.

In the article Buffett says his blended average tax rate (total taxes paid divided by total income) was 17%, and that his employees paid tax rates of up to 33%. But he is comparing their top rate (much higher than their blended average) with his blended average. His 17% rate is because so much of his income comes from capital gains (15% rate,) but he ignores the fact that his gains had already paid a 35% corporate tax rate, so in effect he paid 50%. He also fails to point out that half of Americans pay no taxes, that the top 5% of American earners pay 38% of the taxes, the top 20% pay over 80% of the taxes, and far more important, every time taxes were lowered on the rich (and everyone), revenue to the government went up, and the rich paid a higher percentage of total revenue.

Successful investing promotes social benefits even more than charity. Capitalism is a purely democratic process. If a business does not provide you with what you want at a better value than it's competitors it ceases to exist. It can only survive by meeting your needs, and you get to vote daily with your dollars. We need a legal framework for business to operate freely, but we should not have government in the business of business. The social good that Buffett's business's have done is being undermined by his donations to the Gates Foundation, a leftist charity with all the wrong ideas. I am not suggesting that everything they do is bad, in fact most of it is very good. But if history is any guide, a charity like this, founded on failed ideas, eventually does tremendous harm to the social fabric (see Pew and Ford Foundations for details.)

There is one school of thought that says Buffet advocates only for Buffet. The cry for higher cap gain and dividend taxes would hardly affect him at all. He has about $500 million in a portfolio from which he draws money to live. Higher taxes would affect this, but this represents just two percent of his wealth. The other 98 percent, about $50 billion, is in Berkshire stock and he never sells a share of that. So with all his grandiose proclamations, he is volunteering yo increase his taxes by an infinitesimal amount.   

Is it possible that people like Buffet, New York Mayor Michael Bloomberg, General Electrics Jeffery Immelt, and other limousine liberals know that since conservatives respect private property,  none of their property is at risk from the right, but since liberals seem to thrive on confiscating other peoples wealth, these wealthy liberals are intimidated into supporting failed policy ideas? I can't believe they are so foolish as to believe what they advocate is good for anyone, and neither do I believe they are a party to some grand evil conspiracy. Perhaps I will just have to accept the mystery.


Friday, August 12, 2011

Question for Mitt

The test we should apply to any politician is whether philosophically, problems are better solved by the private sector or government. I believe Mitt Romney is a closet big government supporter. Here is one reason why.

Romney refuses to say Romney care was a mistake. He says that although there were things he wishes were different, for the most part it has been a success. Last night he said the individual mandate is consistent with the Massachusetts constitution, but not the federal constitution. The federal government has no right to impose its version of Romney care on the states, and as President he would do away with Obama care. If I were a moderator last night, I would have said, "The Massachusetts healthcare bill promised to insure the uninsured, yet after more than 5 years there are thousands of uninsured. It promised to reduce the lines and use at emergency rooms, yet there has been a dramatic increase in ER use with longer waiting periods for that and other medical services. It promised to bring costs down, but costs have skyrocketed far faster than the national average, requiring federal dollars to bail the state out. Mr. Romney, if this is success, what does failure look like?"

Tuesday, August 9, 2011

They Just Don't get It

I'm not sure why. Perhaps the liberal press has successfully infected the minds of conservatives, or perhaps those fallen Democrat conservatives can't quite give up some fictional liberal assumptions. Two days in a row on "The Five," a Fox News opinion program at 5 o'clock, 4 conservatives and one liberal agreed on the desirability of government programs which are in direct contradiction to conservative philosophy.

The first was a bill introduced in congress which would pay employers $2,400 to hire veterans. This was to "remedy" the fact that unemployment among returning veterans is 13%, versus 9% among all workers. The next day a "remedy" to the nations employment problems, proposed by one of the hosts and endorsed by all 5 of them, was to allow companies with money overseas (money they earned overseas and paid jurisdictional taxes there) to repatriate the money tax free, provided they spent 25% of it on job creation. Current tax law requires they pay a corporate tax (35% max) if they bring the money back.

So let me get it straight. Veteran employment can be controlled by government intervention. Ummm... I think we tried that and the results were not so good. Obviously everyone wants to find jobs for vets. Obviously all Americans owe them a huge debt of gratitude. But if they have not been rewarded enough (count me among those that think they have been vastly underpaid and under appreciated), then take that $2,400 and use it to pay them more. Don't interfere in the free market. Government should never be in that business. The results of such interference (aka targeted results) always has unintended consequences, most of which are bad. If it is OK to interfere with the market place when it benefits one of my causes, then it is OK when it promotes liberal ones.

The same applies with the corporate tax holiday. Let the companies bring the money back tax free, period. That is a tax reduction consistent with conservative philosophy. But to attach a requirement that the government mandate certain uses is right from the liberal playbook. The hubris that central planners can allocate resources better than the market is shocking, especially when advocated by conservatives. No battleground success will win the war until the troops understand what they are fighting for.    

Friday, August 5, 2011

A Question on Debt and The Press

Why haven't the pundits and press ascribed the market losses to congress's failure to cut spending? They said the five day losing streak the week before was because congress didn't raise the debt ceiling. They said the market would crash if it were not raised. So it was raised, and the market crashed anyway, leading to the conclusion that the failure to raise the debt ceiling had nothing to do with the earlier decline. Ahh, but what about our insane spending and the failure to address it? That continues. In spite of the lefts portrayal of the cuts as draconian, it appears the market is saying too little, and maybe too late. Another question; Is the press too stupid to understand this, or do they understand but have an agenda, as in re electing Obama? 

Wednesday, June 1, 2011

Newt the Liberal?

Newt Gingrich did a spectacular job engineering the 1994 Republican takeover of the House of Representatives. He can articulate conservative ideas and the failure of liberalism better than anyone in the Republican party. His track record as Speaker was great, from welfare reform to NAFTA to a capital gains tax cut.

But who is he? What does he really believe? Is he, as Bob Kerry said about Bill Clinton, simply "an unusually good liar"? Personally, I have had real problems with him even before his marital history became public. We all are human. We all fall short of the ideal. But shouldn't we try to reach higher, and how many times can voters turn their back on such vulgar behavior as his treatment of two spouses?

But my earlier problem was with his continuous references to the greatness of FDR. FDR was a lot of things, and mostly a socialist. No president did more to change the course of the US, from his New Deal (resulting in an unprecedented expansion of taxes, spending and government,) to his willful blind eye to the plight of the Jews in Europe, to an administration that employed and defended vigorously large numbers of communist spies. Roosevelt destroyed much of what makes America great, and should not be an idol of any conservative.

About 5 years ago Newt showed his failings once again. He is an absolute opportunist. Who knows what he really believes? Remember, David Brock, Arianna Huffington and Davis Souter all claimed for years to be conservative, at least until opportunity presented itself on the other side of the aisle. A few years ago Newt Made a commercial with Nancy Pelosi, certainly an arch villain by any standards, supporting the need for climate change legislation. I will assume you know man made climate change is a complete fraud. The theory would not stand for one second under any measure of scientific scrutiny, and Newt knows it. It is a Trojan Horse seeking to form a world socialist government. Watching him sit there with Pelosi advocating for this was jaw dropping. It extinguished any shred of hope I had for the man. .

His recent reference to the Ryan budget and Medicare reform as radical just confirms for me I had drawn the right conclusion earlier. I won't yield to the temptation to try to explain why he would do this. Besides, I'm not licensed to practice armchair psychology. It is enough to know he is not the right spokesman for conservative ideals.

Wednesday, May 4, 2011

Weakness Has Consequences

Once again we are catering to the dictates of terrorists while undermining our core values. Defense Secretary Gates and Secretary of State Clinton oppose releasing photographs of Bin Laden because it might inflame the Muslim world. First of all the terrorists are doing everything the possibly can to hurt us as it is. They can't top 100%. Secondly, the failure to release the photos, something that would be a given if any group but Muslims were involved, shows weakness, and weakness is provocative. The terrorists rightly believe that they are calling the shots, they are dictating our policy.

In my last blog I pointed out that the absence of moderate Muslim voices speaking out against terrorism should be considered in the light of our own failure to confront the terrorists, particularly when the danger to Muslims speaking out is far greater than to us. When our leadership cowers under threats by the enemy, they embolden them, and discourage allies from stepping forward. 

Sunday, April 24, 2011

Muslim Critics

Conservatives ask where are the spokesmen for Islam condemning the wanton violence conducted in Islam's name. The fact that there are so few seems to support the idea that Islam itself constructively encourages violence. Of course there is evidence apart from this failure. Examples are the joyous reactions in Arab section of western nations and Arab states alike after 9/11, polling among Muslims, and the text of the Koran itself. But before we add the failure to speak out to this list we should examine the possibility that our own cowardice towards Islam is part of the reason.

Islamic threats of violence have caused complete capitulation by one western institution after another. Sharia is in direct conflict with bedrock western principles, yet many countries and institutions keep yielding in every debate about it. Yale University Press removed cartoons from a book about to be published depicting Mohammad wearing a turban in the shape of a bomb for fear of inciting violence. We constantly hear proposals to institute at least part of Sharia law into western law, and such nonsense has even succeeded in Great Britain. Do you think prisoners at the maximum security facility at Marion Illinois are in control of what they are fed, when they pray, or how guards treat anything related to their faith? They are at Guantanamo. Newspapers throughout Europe and the US often refuse to publish cartoons, books or anything deemed to be offensive to Islam. Yet Robert Mapplethorpe, and "sculptures" using Christian symbols joined with vulgarities like the "piss Christ" are celebrated by the same crowd as examples of artistic freedom (freedom of expression/ speech.)

Freedom of expression is a core western value, and so it should also be extended to the critics of Islam, whether what is said is accurate, bigoted, right, wrong or offensive. Recently Terry Moore burned a Koran and was criticized by the right and left alike. Should not freedom of expression exist for Terry Moore? The reason no such freedom is championed for him is we are afraid.

If fear of reprisals makes Christians and Jews afraid to speak out in support of our most fundamental values, how can we expect Muslims to? They live in a community that makes threats an order of magnitude greater than to non Muslims. Until we stand up and treat Islam like every other institution and stop deferring to it's extreme demands, ones that would be summarily dismissed absent the threat of violence, we will never know how many Muslims agree with us. We are asking of them exponentially more courage than we can muster ourselves. It is about time we lead by example. When we do we can pull back the veil and see who really does share our values.       

Wednesday, March 30, 2011

The Multiplier Myth Revisited

The citizens of the united States live better today than at any time in history. The country is cleaner, all sectors of the population are richer, and live longer. Things seem to have improved in direct proportion to our economic growth, and I would argue it happened because of that economic growth. The shortest life spans and the dirtiest environments in the world are in the least industrialized and poorest countries. Therefore, it is incumbent on us as a nation to decide what course we should take to best continue and accelerate that growth. Simply put, we must decide what works.

There has been an ongoing debate between two almost polar opposite schools of thought on a basic economic theory, one being Keynesian economics and the other supply-side theory. Democrats subscribe to the Keynesian theory (JFK being an exception), and their policy decisions have been guided by it. Republican policies are based on supply-side theory. The choice between the two is vital and will determine whether the country continues on the road to prosperity, or if it becomes another failed grab at a Utopian dream.

In 1936 John Maynard Keynes published The General Theory of Employment, Interest and Money, which proposes that if the government stokes the demand side of the demand supply chain through increased spending, there is a stimulative effect on the economy. The idea is that the direct recipients of the increased spending will themselves spend more, as will the recipients of their spending etc. This sort of government induced momentum creates a "multiplier effect" (the term he used to describe the process), increasing economic activity, creating jobs and creating wealth. The whole idea rests on notion that if by any means consumption is increased, the economy will grow in a sustained way.

Keynes thought government should intervene during a recession with large direct expenditures, priming the economic pump regardless of where the money is spent. This idea was stated in the extreme when he said that if the government paid to have dirt moved from one hole to another, the resulting "multiplier effect" would build economic activity to a point where the money expended would be unimportant when measured against the increase in economic activity. Think about what he is saying. The mere expenditure of money will in itself create wealth.

This theory is embraced by all liberal economists. It is the basis on which Hoover and Roosevelt made most economic decisions trying to get us out of the depression, the theory which Japan has been employing for more than 30 years, and the theory on which the current administration is basing their entire economic policy. They have been trying to spin straw into gold. It won't happen. 

Instead of talking about supply and demand, let's talk about what really is going on; wealth creation and wealth destruction, aka consumption. Wealth creation is the process whereby work, investment, imagination and perhaps a little luck come together to create something of utility that did not exist before. It is this wealth creation and the cycle that follow which few really understand. Unlike the physical universe where matter and energy can neither be created nor destroyed, wealth is continuously created and destroyed (consumed). Work in the form of labor is one ingredient, as is ingenuity and creativity. The last component is investment, which putting capital at risk (often pooled capital) in the hopes of creating wealth.

Consumption is no more than the destruction of wealth. Of course that is the purpose of wealth creation, to consume. At a minimum it is necessary to survive. This idea is not pejorative. It is simply a fact. We eat food and it is gone. We drive a car, and after a few years it no longer works. Clothing and housing have finite lifespans and must continuously be replaced.

Poker is a zero sum game. Every dollar won is lost by someone else. Total losses and gains are always equal. The economy is not a zero sum game, but rather an expanding universe. The most difficult concept to grasp about wealth creation (even though it occurs every day right in front of our noses) is that it really is creation. Something is truly created from nothing. This phenomenon explains how it is possible that many economic transactions profit all the participants, owners, employees, customers and even people on their periphery. Through work, or investment, or both, wealth is continuously created in every way imaginable, from the creation of new products, to new applications of existing products, to simply improving those existing products. Unlike poker, wealth creation allows for infinitely more winners than losers.

The relationship between work and wealth creation is simple. A tree has a certain value. If work is invested and it is harvested and delivered to a mill, because it has more utility than it did as a tree, its value goes up. When the sawmill strips the bark and cuts it into manageable pieces, it too increases the value. And when a carpenter forms those pieces into a chair, once again he has created/ added more value. The retailer who brings the product to his area and gives customers choices of what to buy, has added value (what good would a finished chair be sitting in a mill without buyers being aware). The advertising of the chair, the money provided by the bank to finance all the operations listed above, along many other components are all invested so as to create value.

The information age that developed in the last 40 years is a prime example of enormous wealth creation. When compared with the present day, communications devices hardly existed 100 years ago. Those that did were crude by today's standards. Modern devices have created untold trillions in wealth. Mankind has taken grains of sand and created silicon chips, on which inconceivable amounts of information are stored and accessed by millions. Calculations that were unimaginable 20 years ago are done in milliseconds. Exponentially more information is available in seconds on your cell phone than was available 20 years ago in all the libraries in the world combined. Voice communications go around the world, cost pennies, and do it with an ease that nobody thought possible until recently. The benefits of this extend into almost every facet of business and our personal lives. New drugs, new airplane designs, and much more can be modeled on computers which allow development to take place in a fraction of the time, at a fraction of the cost, and far more safely than just a few years ago.

Throughout history society has learned more and more about this process, and the rate of wealth creation has increased far faster than society's ability to consume it. Advances in one field allow for others to piggy back on the new found knowledge and accelerate their own advancement. This has yielded exponential growth, and it continues accelerating today at a record pace. Over 25% of the goods and services that have been created in the history of the world have been created in the last decade. Many scientists claim that scientific information, which oftentimes translates into wealth, is doubling every decade (I'm not sure how one measures scientific information). Think of that. In the next 10 years we will learn twice what was known in all of science from 2000 to 2010, 4 times what was known between 1990 and 2000, and 8 times what was known between 1980 and 1990. All of it serves as a spring board to better longer more bountiful lives, at least in a material sense.

To understand the effects of wealth creation think of Microsoft. Bill Gates and his employees made vast amounts of money for themselves and their shareholders. In addition his products enabled businesses (his customers) to provide new and better products and services thus creating far greater wealth than they ever could have without Microsoft. Everyone profited. Think about Walmart. It is the largest most profitable retailer in the world. A family of four earning $60,000 per year that lives near a Walmart will save about $2,500 per year when compared to a similar family not having one of their stores available. Walmart's efficiencies and expertise create wealth for everyone, shareholders, employees and their customers. Contrary to liberal economic thinking, Henry Ford had it right when he said that a man gets rich thinking how much he can give for a dollar, not how little. That is what Walmart does (much to the chagrin of many liberals). The point is that these companies successes were successes for everyone. The money that shareholders and employees at Microsoft and Walmart made is minuscule when compared to the wealth that other businesses and the public enjoyed because of them. And that is the magic of capitalism.

Keynes and his multiplier effect suggest the economy is some kind of perpetual motion machine. There is plenty of heat and light given off from a bulb so long as the electricity is on. But turn it off, and the heat and light stop. Similarly, when the government spends it increases economic activity, but contrary to Keynes's idea, the moment that spending stops the activity stops. History (and common sense) proves it. He seem to be saying that once the economy is turned on, it will run forever. But we know that without a continuing power supply closed systems fail. Consumption (wealth destruction) is a closed system, a zero sum game. Wealth creation is not. It is the energy that allows consumption to exist. Can consumption exist without wealth? Never. Can wealth be created without it's being consumed? Of course.

I would argue that government spending not only does not stimulate growth, but actually retards it.
The government creates no wealth. It simply redistributes it and a consumes great deal in the process. The money the government spends can only come from two places, taxing or borrowing from the private sector. The same dollar can't be spent twice. Either way Keynes's imagined "multiplier effect" created by that tax dollar is the same. There is however, one notable difference. Although a dollar in the governments hands only gets consumed, in the private sector that dollar will be partly consumed, and partly invested in an attempt to create more wealth. I submit that an invested dollar has a dramatically different and positive effect on the economy than does a consumed dollar, and investment is the only source of the goods and services needed for consumption.

Growth in a society requires security, protection of private property, a court system, roads, etc. Those and certain other government functions are the infrastructure that allows wealth creation to occur, and in a broad sense they can be conceived of as wealth creation. However, as necessary and valuable as they are, they make up only a tiny percentage of overall government expenditures. Welfare, Medicare, Social Security, and the EPA, are all agencies designed to consume. I am not being critical if as a society we choose to spend money on them, although I would point out the government cost of doing them is far greater than if they were done by the private sector. The debate here is not what government should or should not provide, but whether those expenditures or additional government spending has a positive effect on the economy. 

Individual invest savings to create wealth, companies invest retained earnings (corporate savings) or money raised from investors. This pooling of money is absolutely necessary to the wealth creation process. A project may be attractive, but no one individual would expose himself the the magnitude of loss that large projects risk. No large projects would ever happen without a pool of capital that meets its demands. My point is that pooling of wealth and individual investment get stifled whenever money is  drained through taxes and government borrowing.

Of course many attempts at wealth creation fail and end up becoming wealth destruction. Investments often turn sour and become worthless. But history has shown that the value of the successes dwarfs the combined losses from the failures. Suppose there were a million failed attempts at designing a hammer before one succeeded? Wouldn't that single success have created millions even trillions more times the wealth than the total of the failed attempts destroyed? There are few if any changes in science, commercial development or anything that have not been built on the knowledge gained from many previous failures. Still, immeasurably more wealth gets created than all the losses combined.

Since taxes are the main source of revenue for increased government spending, particularly stimulus spending, one must ask what the effect of higher taxes is on corporations and individuals. Lower taxes and lower spending leave more money in the private sector, just as higher taxes and spending leave less money there.  Ironically, if we supply-siders are correct, (more wealth is created with lower taxes,) in the long run that economic growth provides greater revenue for the government (lower tax rates but higher profits to tax.) One third of a sixteen inch pie is larger than one half of an eight inch pie.

Think about this. The wealthy only have three things they can do with their money. They can consume it, invest it, or donate it to charity. I would argue that although charity is wonderful and often helpful, it can be an inefficient use of money, and worse, it can be a destructive force (see Ford Foundation and The Pew Foundation for details.) But that discussion is for another day. For my purposes here, I have limited the discussion to two choices, consuming and investing. The truly wealthy in America could not consume all their wealth if they tried. No matter how ostentatious they may be, they simply have too much money to spend it all. Because of this, they must invest, and that is a blessing to us all.

The liberal argument is that saving is neither consumption nor investment, and that it creates no economic activity. They couldn't be more wrong. Unless savings are in the form of putting one's money under a mattress, ultimately all savings get invested in an attempt to create wealth. Trace the "safest" of savings devices, US government insured savings accounts. If one deposits money in a bank, the bank adds about ten percent of its own cash to the amount deposited, and lends that entire amount out at a higher interest rate than it is paying to the depositor. That is how it makes money. Some borrowers use the money for consumption, but most use it to finance business and investment, aka create wealth. The point is that even money in pass book savings accounts finds its way into investment.

Keynesian's argue that the rich can afford more taxes and must "pay their fair share," as if this is an ethics debate. They say there is too much income disparity, and that the rich should "give back." I would argue that it may be true that the rich can afford increased taxes, but it is the middle and lower classes that can not afford to have the rich taxed more. No one can afford stripping these job and wealth creators of much needed capital, one of the building blocks of wealth creation. Neither can we afford to strip them of incentives. Some people are willing to work for nothing, but I wouldn't want to bet everyone's economic future on it.

This whole notion of fairness is dangerous and destructive. It undermines the very goals we all seek to achieve. What is fair about bringing income levels closer together if doing so demands that everyone, especially the poor and middle class, lower their standard of living? JFK said he was cutting taxes on the rich because, "A rising tide raises all ships." He was right. No one disagrees that helping the poor is a laudable goal. But if they are to be helped, the rich will get richer. There are only two choices. The rich get richer and the poor get richer, or everyone goes down hill together. History teaches us there is no third way, and there never was one.

In the US every time taxes were reduced total tax revenues to the government increased. This happened under Coolidge, Kennedy, Reagan and Bush. Every time taxes on the rich were reduced, the rich paid more total tax dollars, and they paid a higher percentage of the total tax revenue. Which is better; having higher taxes with fewer jobs and less money coming into the government, or increasing jobs and revenue with lower taxes? Which is better; having the government tax and borrow money, distributing a small portion of the receipts while eating up the rest in the bureaucracy, or using that money to let the job creators and producers do what they do best?

I can not find one historical example where government spending helped any economy. It has been tried in the US, Europe and Japan, and and there is no creditable case when an economy grew as a result. After the Japanese market crash in the late '80s (the market lost 75% of its value), the country tried stimulus..and they tried again..and they tried again..and is still being tried today. Yet the economy has not grown, there has been no job creation and no increase in wages. The only discernible change is what always happens when stimulus is tried. They ran up the national debt to 240% of GDP.

Supporters of Keynes's theory generally credit the highest government spending in US history, that which resulted from World War II, with the post war expansion (1945- 1973) and our emergence from the Great Depression. The commonly accepted story of this and the depression are seriously at odds with the facts surrounding them.

The Cliff Notes version of the depression starts with a near depression in 1920. In 1917 President Woodrow Wilson entered WWI (30 days after being re-elected on a promise to keep us out of the war). He immediately passed massive income tax increases. When the 16th amendment was passed in 1913 (authorizing the federal government to collect income tax) politicians said the top tax rate would never go above 7 percent.  By the end of Wilson's term 7 years later it was at 77 percent. These and other redistributive, anti business policies led to a near depression in 1920. When Wilson left office the economy had shrunk by 25 percent, government debt had skyrocketed (in part due to WWI, but not all), and unemployment was at 20 percent.

In 1920 President Harding (and then Vice President Coolidge who assumed the Presidency when Harding died shortly after taking office) lowered government spending by 50 percent over 8 years. Think about that when today's politicians tell us that one percent cuts would be draconian. Coolidge began a series of tax reductions unprecedented in US history. In 1928 when he left office, he had lowered the top rate from 77 to 20 percent, but more impressive is that the top rate was paid by only 2% of Americans. Let me repeat that. Only 2 percent of Americans paid the top 20% rate. When he left office unemployment was the lowest in American history, one half of one percent. It had averaged 3.3 percent during his eight years, dropping from 20 percent when he entered the office. After unwinding much of the pro union legislation, real wages went up at an unprecedented rate across the board. Revenue to the government skyrocketed and the national debt was reduced by one third. Needless to say economic growth was record setting. The nominal growth may not have looked very impressive, but that is because there was so little inflation. Real growth (nominal growth minus inflation) was spectacular.

The real depression story is that the Hoover's and then Roosevelt's attempts to bring us out of what would probably have been no more than a severe economic downturn, actually exacerbated the problems created by the1929 stock market crash and turned a recession into a the great depression. The country mired in it for over a decade. Many people believe the '29 crash occurred because of central banks around the world providing easy money, known in the US as an accommodative fed policy. That along with a market bubble created by the euphoria of the exceptionally strong economy were both to blame. In those days bank policy allowed 10 times leverage on stock purchases. Investors needed $100 to buy $1,000 worth of stock.. People were betting 10 times their entire worth on the market. When stock prices declined, this leverage forced massive selling, which in turn drove the market down farther, causing even more severe price declines. In a free market bubbles occur, and they burst. But if policy makers leave the economy to its own devices, it always heals itself and grow beyond the last high point it achieved. It never fails however that when politicians intervene the healing process is extended well beyond what it otherwise might have been.

After the crash unemployment jumped from near zero to 15%, and the economy began to shrink quickly. It took a little over a year for the first legislation designed to "help" the economy to get passed. During that year, the pre-legislation period, when things were able to heal on their own with no "help" from the government, the economy began to grow and unemployment came down to 9%. When the "help" from the Hoover administration arrived, (for example The Smoot Hawley Act which imposed tariffs on imports sparking a world wide trade war) everything went to pieces with unemployment jumping past 20% and the economy shrinking. The policies of first Hoover and then Roosevelt in 1932 (higher taxes, more spending, protectionism) kept a boot heel on the neck of the economy, preventing any type of resuscitation until after WWII.

Stimulus was tried repeatedly between 1929 and 1940 and it failed miserably. Henry Morgenthau, Roosevelt's Treasury Secretary, famously said, “We have tried spending money. We are spending more than we have ever spent before and it does not work. After eight years of this administration we have just as much unemployment as when we started, and an enormous debt to boot!” Those who believe in Keynes theory also fail to acknowledge large tax and spending cuts along with massive deregulation in 1946 and 1948, which we supply-siders would argue was the real engine of growth. The forces propelling our emergence from the depression were congressional rejection of Truman's spending/ stimulus plan and replacing it with what we now call supply-side incentives; lower taxes, lower regulation and lower government spending.

Keynes supporters and liberal economists often point to Bill Clinton's tax increases in 1993 and the following economic expansion as a successful example of applied liberal economic theory (spell that tax increases and spending increases.) I would argue that the income tax increases probably hurt the economy, but they were dwarfed by other positive factors introduced under Clinton. He signed a capital gains tax cut into law, a far more important tax on investment than the earned income tax that went up. He signed the North American Free Trade Agreement into law, creating a massive increase in trade. Along with congress he cut government spending (not increases as Keynes might have liked) eventually balancing the budget. And lest we forget one of the largest wealth creation events in history, the internet explosion which is the bridge that is taking us from the industrial age to the information age, fundamentally transforming the entire world's economy. The tax increase impact was minuscule compared to these accomplishments.

Another argument liberal economists make is that tax cuts will "blow a hole in the budget." Their claim is that the permanent extension of the Bush tax cuts would cost the government 3.7 trillion dollars over 10 years. This is wrong on so many fronts it's hard to decide where to begin.

First, the CBO (Congressional Budget Office) made this $3.7 trillion determination through legislatively mandated methods of calculation. They are required to use a patently false premise; that people don't change their behavior with changing tax rates. It assumes we will all make the same investments, take profits and losses at the same time, and act in the same manner no matter whether rates are 20% or 70%. An example of this delusional thinking is the luxury boat tax in 1990. It imposed a 10% tax on all boats costing over $100,000. The CBO projected a huge tax revenue increase based on 10% of the prior years boat sales. They were 180 degrees off the mark. People simply stopped buying boats. When the dust settled, the government collected tens of millions less than the CBO estimate, 100 boat manufactures went out of business (about 75% of them), 25,000 boat industry jobs were lost, and an additional 75,000 other jobs were estimated to have been lost as a result of the industry decline. The CBO has become a political tool by which politicians can make ridiculous statements and then use something "official" and nonpartisan to support them.

The language used in the debate favors the Keynesians because we supply-siders often fail to point out the false assumptions embedded in many of the oppositions assertions. Words like stakeholders imply that the consumer is somehow a part of the production process, and has rights because of it. They have the right to expect truthfulness about the product, product safety, and that environmental and other laws be complied with. But they are not entitled to make business decisions for the company or co-opt the wealth the company creates. All manner of wealth transfers occur under the compassionate sounding euphemism of "social justice," moving money from producers to consumers. Real social justice, something that really benefits the everyone, is real respect for private property, the oxygen that allows capitalism to provide the most bountiful material harvests known to mankind.

It has been demonstrated 1000 times over that if you want less of something, tax it. More taxes mean less wealth for everyone, including those receiving benefits. When the Democrats say that Republicans want tax cuts for the rich, and rich corporations that would "punch a hole in the budget," the Republicans should answer yes they certainly do want the cuts. They want them because the economy will expand, increasing tax revenue. They want lower taxes because they want more jobs and higher wages, and lower taxes (especially for the rich) mean people will invest money doing exactly that. Government money simply determines which non producers should consume the fruits borne of some real producers efforts.  Not surprisingly, the recipients of this largess are usually groups that benefit political decision makers.

The Keynesians and their followers (main stream media for one) love to assert that "everyone agrees" that cutting spending during a recession is a recipe for disaster. No, everyone does not agree. In fact I would argue that among the people who have no political interests to serve, the overwhelming majority disagree. Margret Thacher cut spending to the bone during one of the worst recessions Great Britain ever endured, and when the dust settled the country enjoyed the greatest economic expansion in their history. There are numerous other examples. History shows that over time, reduced government spending may initially reduce economic activity, but shortly after it has the effect of increasing economic activity, jobs, and wealth.

Up until now I have tried to contain at least some of my considerable bias. But I really think that Keynes theory has as much validity and makes about as much sense as a perpetual motion machine. It reminds me of the joke (this describes the theory exactly) about a businessman who would buy watermelons for three dollars and sell them for two, but figured he could make up for the loss with increased volume. I am also reminded of Winston Churchill who said, "We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." Isn't that exactly what Keynes has proposed? He is saying the more we consume, no matter how wasteful, the more wealth we will have to consume. This is bizarre at best. Yet in the face of repeated and consistent failures, our politicians continue to appropriate money for just such folly.

John F Kennedy was a committed supply-sider. One of his signature achievements has all but been written out of the history books (academics are generally liberal and since the facts here contradict their economic theories/ bias they simply ignore them.) About a month after his death the tax plan he had promoted for months, got enacted. It rapidly produced jobs and wealth just as he predicted. Here are a couple of his numerous quotes on the subject. 

"In short, it is a paradoxical truth that ... the soundest way to raise the revenues in the long run is to cut the (tax) rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
– John F. Kennedy, Nov. 20, 1962, news conference

"The largest single barrier to full employment of our manpower and resources and to a higher rate of economic growth is the unrealistically heavy drag of federal income taxes on private purchasing power, initiative and incentive."
– John F. Kennedy, Jan. 24, 1963, special message to Congress on tax reduction and reform

Of course Keynes is not alone in developing crackpot economic theories. One seemingly everlasting fiction is that minimum wage increases help people earn more. Not only does it make no sense (if it had merit we should raise everyone's wages to $1,000 per hour, or better yet, $10,000 per hour), but the history of implementing minimum wages has always resulted in the loss of jobs, productivity, and thus wealth. Another continuously repeated foolishness is the hubris that government can control inflation with wage and price controls. Nixon and Carter were the most recent American presidents to employ this nonsense. It resulted in an entire dislocation of economic forces giving us some of the highest inflation in our history and one of the severest recessions. Our current president is trying the same failed approach in the recently passed health care bill with government imposed prices and regulations, and the financial regulation bill, determining what banks can and can not charge. I can't be sure exactly how this will play out, but it will be ugly. It always is. Who would have thought than the ethanol bill mandating that 10 percent ethanol be mixed with gasoline would inflate world food prices faster than any time since 1976. But it did.

Some results of government tampering are easily predictable. What makes it frightening is that often times failure is obvious to everyone except those making the decisions. For anyone who doesn't realize that taking away someone's incentive to work will result in their not working, we now have almost 50 years of history proving it. In this land of plenty there are 5th generation welfare recipients. If your mother and grandmother were on welfare, if that was the universe you were exposed to, what chance would you have of finding gainful employment? Welfare does not serve the poor. It is a maximum security economic and spiritual prison from which few ever escape.

Congress gave money to homeowners who are underwater with their mortgage in an attempt to bail them out. The result after spending billions; most re-defaulted. The worse part is that until a bottom to the housing market is reached, no new construction/ job creation/ wealth creation in that industry can begin. In their infinite wisdom congress has delayed that market from reaching bottom, and thus delayed the recovery. It was clear to anyone paying attention that this would happen, but congress proceeded anyway.

Politicians were positively giddy at the "success" of the "Cash For Clunkers" program. They congratulated one another claiming the success was beyond their wildest dreams. What happened? The government said that if you owned an old junk car, and if you traded it in on a new car, they would buy it from you at somewhere between two and twenty times its market value. No surprise, people took them up on it. Inducing people into selling their car for much more than it is worth seems like a no brainer to me, but in Washington it is called an astonishing success. Oh, for the record, car sales slumped as soon as the program ended. Congress succeeded in two things. They moved car sales forward in time without increasing total sales at all, and they gave away billions of taxpayer money.

At the beginning of this I said you would decide. It is now time. If I have been convincing, don't allow someone's scholarly credentials or someone's false assertions to sway you. For decades academia has been singing the praises of their false god, Keynes. Everyone has an agenda, everyone has a bias, myself included. Therefore, your best defense against being misled is to apply your life's experiences and a good dose of common sense to the facts, and then decide. Ronald Reagan said most of the answers are simple, they're just not easy. Knowing what will work is clear, but having the courage and political will to actually do it is something very different.