Ruminations - 3oct13 (updated 6oct13)

George Rebane

Dr Tyler Cowen is professor of monetary theory, financial economics, and welfare economics at George Mason University and Mercatus Center .  He joins a growing list of academics and authors (cf Charles Murray’s Coming Apart) who have now concluded that systemic unemployment and permanent class divisions all will become entrenched features of our future.  To some of us such a future has been apparent for some years now as reported here.

The thesis of Cowen’s recently published Average is Over is “that America is dividing itself in two. At the top will be 10% to 15% of high achievers, the "Tiger Mother" kids if you like, whose self-motivation and mastery of technology will allow them to roar away into the future. Then there will be everyone else, slouching into an underfunded future of lower economic expectations, shantytowns and an endless diet of beans. I'm not kidding about the beans.” according to reviewer Philip Broughton (here).

Dr Cowen concludes that “we will move from a society based on the pretense that everyone is given an okay standard of living to a society in which people are expected to fend for themselves much more than they do now."  In that future, the top 10% will continue to enjoy what we have come to call the ‘American dream’, the middle will continue to muddle on with stagnant or shrinking wages taking their comfort from “cheap education and cheap fun”.  But “the rest (Murray’s bottom 30%) will fall by the wayside, with government less and less able to take care of them.”

President Obama is deftly guiding the nation into default.  He will accept no alternative solution other than his diktat that the Republicans fold any remaining negotiating stance to save the nation from fiscal, monetary, and regulatory disaster.  Bolstered by Reid and Pelosi, the Dems have repeatedly refused to even consider any counter proposals that deviate from their ‘clean’ demands for continuing our country’s wreckless course.

The strongest evidence of this is the Left’s strong and constant opposition to passing the McClintock-Toomey ‘Full Faith and Credit Act’ that would guarantee that the US would never default on its debt obligation that Obama now threatens the world with multiple times a day.  “The McClintock-Toomey bill replicates the guarantees that state constitutions have had for hundreds of years to strengthen investor confidence. It gives the Treasury Secretary discretion to prioritize among other federal obligations until the political deadlock ends, tempers cool and the parties can reach a deal. But it makes his first priority to protect the full faith and credit of the U.S.”  While screaming about the dangers of default, the Dems have repeatedly killed this prudent measure, most recently as it was again included in the latest continuing resolution the House sent to the Senate last week.  (more here)

‘Obamacare wrecks the work ethic’, so argues Casey Mulligan (here), professor of economics at the University of Chicago.  Of the many horrors of this ‘affordable(sic) care act’ as it staggers toward single payer healthcare, possibly its worst consequence is “a reduction in the reward for working”.  The secret lies in what it will do to marginal tax rates (figure) –  “The health-care law, starting Jan. 1, will begin driving up marginal tax rates—well above 50% for many.”   Perhaps more than anything else, this will encourage increased effort and ingenuity expended to switch from being a maker to joining the ever-growing ranks of the takers.

Administrivia – Now TypePad has quit sending comment notification emails to its bloggers (at least this one).  This will require more work on my part to keep up with RR’s commenters.  A little slack will be appreciated while I am actively seeking to move the blog to WordPress as already suggested by several readers.  I have been woefully remiss.

[4oct13 update]  Reports are now pouring in of federeal facilities and recreational sites being patrolled by platoons of guards and other public employees to keep people from accessing them.  What is insulting to me as a citizen is that these same locations had no such security personnel on duty before the 'shutdown'.  This sleazebag administration sets new records daily in lying and its practice of naked autocracy.  I find it hard to identify with people who either don't care/know about this, or worse, they condone it and see nothing wrong in the practice.  (More on Barry Pruett's Nevada County Introspective.)

Oh yes, and the other lying claptrap coming out of the WH is Obama's positioning budget and debt limit negotiations as somehow an immoral or underhanded attempt by Republicans to introduce a new dimension into American governance.  Nothing, absolutely nothing, could be further from the truth as noted here before.  A piece today by Hassett and McCloskey (here) makes clear that "Congresses run by both parties have used the borrowing limit as political leverage with a president."

[5oct13 update]  A liberal commenter here argues persuasively that the reason the Dems don’t accept any of the Repub passed House bills to refund the government is that they contain proposals and actions which the Dems don’t like – well no s&!t Red Ryder!  However, the brain blinders are strapped on immediately by these same members of the National Association of Naifs when the Repubs argue similarly about adopting the Dem demands to forward with a “clean CR” for the President’s signature.

Obama’s overture to America, painting the Repubs as immoral (‘terrorists’?) and obtuse since they refuse his offer to negotiate AFTER they give him a clean CR and raise the debt limit, is the epitome of calling his constituents double dummies.  This he does that several times a day now; and he’s spot on since the double dummies are not throwing this argument back in his face.

Most of us learned in kindergarten that differences are settled by compromise – each party participates in a ‘give and take’.  What the double dummies have forgotten is that if the Repubs give up their opposition to an unconditional continuing resolution and debt limit increase, then they have nothing left to give that Team Obama values when the parties enter subsequent negotiations.  It’s like being invited to a gunfight with the proviso that first you leave your six-gun at home.  Negotiating such instruments of funding government was written into the very fabric of the Constitution and has been practiced for decades.  (There is an excellent and extensive graphic on pA4 of the 5oct13 WSJ print edition detailing the last 20-year history of debt limit negotiations and increases showing who dominated Congress and the WH, and the major points negotiated.  Apologies for not being able to find it online.)

However, given the generations of government educated masses since the Great Society (aka the above cited double dummies), such knowledge in America is as arcane as the contents of the Dead Sea Scrolls.  Truth to these people is only that which is recent, repeated, vocal, and preferably on an up volume video.  And truths no longer have to be remembered or recalled, since they will be supplied as needed with new ones tomorrow.

(As long argued here, those who know will understand that debt, and more importantly debt service, is the real threat to the country.  The rest is a sideshow as Niall Ferguson argues here in the 5oct13 WSJ.)

[6oct13 update]  Check out Russ Steele's new blog Sierra Foothills Commentary.  In the latest edition Russ posts and important piece from The Daily Beast titled 'California’s New Feudalism Benefits a Few at the Expense of the Multitude' which makes the case that "once famous as a land of opportunity, the Golden State is now awash in inequality, growing poverty, and downward mobility that’s practically medieval,"  Everyone knows of California's downfall, it is not limited to the intelligentsia, or to the US, but is common knowledge around the developed world.  People ascribe different reasons for our downfall, but the accepted wisdom is that California is in the toilet both economically and socially.

Comments

[Gregory]

"I'm really scratching my had over this since if Obama is truely the radical Lefty you describe why is he not supported by that group?"

They wanted more than they got.

[Paul Emery]

So Gregory he's kinda of a Lefty light not the radical lefty George describes.

[fish]

So Gregory he's kinda of a Lefty light not the radical lefty George describes.

I imagine our coddled "Transformational President" is a whole lot more radical than he admits publicly (hey, it's how you "make your bones" in those circles) .....presently he is about as "lefty" as the system will permit.

Why the nitpicking over terminology?

[Gregory]

No, Paul. His presidency is as left as it can be without something of a revolt from the Congress that leaves him with vetoes that get overridden. Not to mention pissed voters who really might have dumped him for even a flawed candidate like "Mitt".

He was further to the left than about 85% of the Senate until he ran for President, then he was to the left of 99% of the Senate. Now the entire healthcare industry is on a path to nationalization with even Paul Emery's medical records on a Federal database, and we have a national curriculum being put in place for K-12 education, with electronic testing and children's educational records in a Federal database.

Just how much of an IngSoc Big Bro do you want?

[fish]

Just how much of an IngSoc Big Bro do you want?

I didn't see him comment on this yesterday...so vigorously was he trying to portray both himself and our "Lightworker" chief executive as middle of the roaders.

Paul....you cool with an organization controlled by a cabinet level appointee directing his underlings to behave in this manner?

http://reason.com/blog/2013/10/09/shutdown-shows-a-government-based-on-fea

[George Rebane]

PaulE 932am - To be a true blue socialist, Obama does not have to be a book-end collectivist. There will be people to the left of him who still support his direction and policies for getting there. Their criticisms of Obama provide a constructive tension toward more collectivism, and contribute to convince folks like you that Obama might not be a leftwinger after all. Chomsky and Goodman are not being deceived and know what they are doing.

[Paul Emery]

Gregory

Would you say he's to the left or right of Nixon who started the EPA and proposed a guaranteed annual income and was a big supporter of the Equal Rights Ammendment? Also Eisenhower who presided over the greatest increase in entitlement expansion in out history.

[Gregory]

Paul, you're boxing again. Thinking is better.

The guaranteed annual income was the flat tax with a negative income tax scheme proposed by the libertarian Milton Friedman as the lesser of multiple evils and it was also promoted by George McGovern. The basic feature was that anyone who needed help could get it quickly and seamlessly, and unlike the welfare of then and now, any amount they earned would result in having more money, not less. One's subsidy would be reduced in line with one's income, not yanked out when one was merely threatening to become self sufficient.

It would have made a fine replacement for the current IRS and HHS, but the vested interests grafted it on top of the current system and so it was given a legislative coup de grâce.

[Paul Emery]

Gregory

Do you think a guaranteed annual income idea is something that should be revisited? The bureaucrats would hate it just like they oppose ending the war on drugs.

[Gregory]

I think Friedman's proposal has enduring merit. The time to pull it out is when the country is finally ready to fire most of its welfare and IRS staffers to implement a flat tax (varying the deductible to account for special needs, disability, etc) with integral income support.

Looking at Athens when they began withdrawing the public jobs cookie jar, it wouldn't be pretty. I'd expect blood to be spilled.

[Gerry Fedor]

Paul it you consider that the "war on drugs" currently costs the USA @25,000,000,000 (yes $25 billion dollars per year based upon the costs in 2010, which undoubtedly have gone way up in 2013, consider that our county have spent well over $1.25 million on their nuisance ordinance) and if you took the $3 Billion dollars that Dr. Rebane has quoted (that it will cost over the next 10 years) you could then pay for 10 years of the OBAMACARE program in 5.5 days....

Now have a good business sense what would you prefer? 5.5 days or more monkey business on a war that we lost a long time ago?

Interesting idea!

[Gerry Fedor]

That's per year, sorry for the confusion.....

[Gerry Fedor]

OK, I gotta start wearing my glasses, as it looks like Dr. Rebane said Trillion which changes this greatly... Sorry for the confusion and I'll promise to try to do better (and find my glasses before I comment again!!! LOL!!!)

[Walt]

I'm surprised Hy.20 is still passable with all the FED land it crosses.
The Government must still love us. The Interstate FED freeway system
is still up and running. What gives?

[Gregory]

Where's Roseanne Roseannadanna when you need her?

Ah, damn, dead of ovarian cancer, just like Lilli von Stupp and all the other characters played by Gilda Radner and Madeline Kahn.

Nevermind...

[Walt]

Another bad omen for the Left. They have lost John Daily as a propagandist.
He is now the only Leftist "news" source ( LIB news polls say so.)that taking
the Donkey by it's sack on this 17% shut down. He's asking the questions the likes of CNN and MSLSD just won't do. He's calling it like it is.(for a change)
From machine gun nests at the war memorial, to snipers taking out a rouge tourist attempting to take a picture of Mt.Rushmore.
He has got high ranking Lefties on in recent days and has skewered them well
on this shut down.
I do believe he even had a comment for Harry Reid in his role in all this.
I think it was along the line of "BEEEP you".....

A Lefty I can grow to like.