Reforging American Greatness

We’ve spoken of the things we do here many times, and it’s nice to have another voice. David L. Hunter raises his voice in The American Spectator. He makes his case well, and I agree with his diagnoses. While I see merit in his remedies, they are indeed far better than what we are doing, they are, to me at least, much too government-centric. In my opinion, we need to unleash the beast that built this country, devil take the hindmost, not simply give it a longer leash. The leash itself is a large part of the root problem. Still, this is very worthwhile.

Politically, what’s the definition of insanity? Electing the same types of people doing the same things, but expecting a different outcome.  (Thus, perhaps the main reason Donald Trump was elected president, in 2016, is neatly explained.)  More to the point, on an economic level, what’s the definition of insanity—other than doubling-down on what has been done previously? Thanks to President Trump, and the promise of Republican tax cuts, the tide—superficially—has started to turn. However, a record-setting Wall Street is not the same thing as a booming Main Street. After all, Wall Street is based upon the return on investment by stockholders. That’s rather far removed from real-life factors like creating homegrown American businesses, generating highly skilled domestic jobs or providing Americans opportunities to advance up the socioeconomic ladder. So, the true test of a strong economy is an expanding, upwardly mobile middle class. Yet, this all-important demographic has been declining for more than 40 years:

“After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number [read: statistically equivalent to] by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.”

It’s true, we have many more so-called upper class (based on income) people about, and many more what we call working class, as well. The middle has been hollowed out, and it works to our detriment. Why?

 

[…] What’s also apparent is that generally speaking, American companies are being outcompeted by their international counterparts for the world’s largest market share.
How is that happening?  It’s because U.S. businesses rely upon financial shell games designed to generate profits on their balance sheets. This has the superficially positive effect of artificially buoying the stock price (benefiting executives’ salaries and stockholders’ investments), while inversely gutting the real-world ability of a company to compete in the global marketplace. If that is not the case, why do American corporations widely participate in cost-slashing measures like corporate inversion, using inferior components in U.S. products (read: bailed out GM’sIgnition Switch Scandal) and outsourcing jobs?
Contrast that mindset with fundamentally producing products and services that excel at satisfying one or more customer needs for a true competitive advantage in the worldwide market. Instead, U.S. companies engage in modern-day finance-based parasitic behavior: absorbing weaker firms, often stripping them of their employees and selling off divisions for quick infusions of cash to elevate the “almighty” stock price. In popular culture, this dynamic was immortalized by the contentious exchange between corporate raider Edward Lewis (Richard Gere), and embattled “old-time” business owner Jim Morse (Ralph Bellamy) in “Pretty Woman” (1990):
Morse: “Mr. Lewis, if you were to get control—and I don’t think you will—but if you did, what do you plan to do with the company?”
Lewis: “Break it up and sell off the pieces.”
Morse: “I’m sure you’ll understand I’m not thrilled at the idea of your turning years of my work into your garage sale.”
Lewis: “At the price I’m paying for this stock, Mr. Morse, you are going to be a very rich man.”
Morse: “I’m rich enough. I just want to head my shipyard.”
We’ve touched often on this before, from the viewpoint of one inside the machine. Many are, and can see what needs to be done, but can’t because it might impact the quarterly bottom line. Eventually, it’s going to kill any business with the infection, and almost all big businesses, and many mid-size and small ones have it. What to do about it? Mr. Hunter thinks this is the answer.
How does one achieve this elusive key to lasting success? For that answer, one must look to Ronald Reagan’s Commission on Industrial Competitiveness, circa 1985. Remarkably, this forward-thinking president was troubled by the overt financialization of the U.S. economy, and specifically, its adverse impact on American competitiveness. In response, Reagan launched a then-classified initiative known as the Socrates Project with the mission of transitioning the U.S. back to technology-based planning—and away from the type of financial shenanigans mentioned above.  It was so astonishingly effective that it far surpassed what countries like Russia, Japan and China were executing or could execute in the foreseeable future.
In turn, the Socrates Project developed the Automated Innovation System. Today, it can map global technology—high-tech, low-tech, “no”-tech –in real time. In function, it operates like a digital four-dimensional chessboard showing foreign organizations’ and countries’ plans for exploiting worldwide technology.  Specifically, it details the full range of present and future technology opportunities, and constraints, that can be exploited by U.S. public and private organizations for the essential competitive advantage to bring true and lasting economic prosperity back to America.
He may be right, at least to a point but I’m as always leery of panaceas, and this rather smells like one. More expert systems telling experts what to do strikes me as mostly more elite bullshit. Better than what we do now, but hardly the answer.
In truth, I do not think there is an answer. In the singular, that is. This a big diverse country, it works best when it has a goal and everybody leaves it alone and lets it see what it can accomplish.
Bigness is often an advantage, but just as often a disadvantage, the ability to marshal large amounts of money and groups of people offset by the elephantine measures necessary to manage such a group, rather than lead it.
And that is the answer, and where we are failing, leadership. The kind of leadership that can see an opportunity, and come hell or high water or even Washington bureaucrats and Wall Street idiots, drive on to success. Where are they? I don’t know, maybe school and college drove that spirit out of them, but I doubt it, they’re out there, thinking of better ways to do better things, and wondering how they can get from here to there.
A  good start would be to simply get the government back in its place, you know what Jemmy Madison said,
[…] to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.
That’s government’s job, and nothing else, anything else the government does is done to the detriment of some citizen, usually many citizens. Prosperity is something we are required to do for ourselves.
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The Week: This Year in Jerusalem Edition

Welp, that time again, lots going on so let’s dive into the swamp.

Al Franken thinks we need to have a ‘National Conversation’ about sexual harrassment, I don’t see why, as far as I can see it only needs a short statement from such vermin’s employers. For instance, “You’re fired.” Perhaps followed with the suggestion that they don’t use us as a reference, ever. Sorry, but I’ve found that only the incompetent make excuses.

Will the second edition be titled, “Giant Jerk of the Senate”?

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The Colossus of Freedom

Real Socialism

I need one of these!

Then there is this guy

My kind of lawn mower

And, of course

As usual, most (but not all) from PowerLine and Bookworm.

The System IS the Scam

I grew up watching Chicago television, and the obvious and ongoing corruption was not so much normal as a cost of doing business, like the flames shooting out of the blast furnaces at US Steel. It just was, always had been, and likely always would. As somebody at Second City Cop said recently, the last time Chicago Aldercreatures were honest was sometime before early 1837. But it was honest corruption, in a sense. You could get things done, it just cost a ridiculous amount, and often wasn’t done all that well. But not too many people died, and the pols got rich, so…

But, this, even by that standard is ridiculous. From The American Spectator.

The best rackets are legitimate.

A century ago, the people accepted flagrant public corruption. Dim cynicism the popular spirit, it’s likely they’d still be so disposed today. But the politicians and their swarms of supplicants have acquired subtlety and subterfuge. Why press their luck?

We still have the graft and boodle that Lincoln Steffens chronicled in The Shame of the Cities, but now it’s all above-board. The best schemes are almost indistinguishable from the regular function of government. Almost. In the back rooms, somebody puts in a word for somebody, somebody threatens somebody, but that’s the part we don’t hear about.

It’s the bad luck of Terry McAuliffe, the Clinton barnacle-turned-Democratic governor of Virginia and a rumored presidential candidate in 2020, that his wheedling and arm-twisting inside the federal bureaucracy is now a matter of public record. He got sued last week, along with Hillary Clinton’s brother Anthony Rodham, accused of running “a $120 million scam” to defraud Chinese immigrants.

Did McAuliffe break the law? That’s almost beside the point. The essence of modern graft is crony capitalism — you don’t break the law, you make the law work for you.

The game: set up an obstacle, then offer a way past it for a price. We usually think of crony capitalism as tilting the field in favor of one company or one industry through preferential regulation, but McAuliffe’s arrangement was an even purer form. After all, what is the nature of government? It is to forbid, to restrict, to alter affairs from their natural course. Government creates problems and then pretends to offer a solution.

The EB-5 investor visa program is one long chain of government-created problems and solutions.

Foreign direct investment is of course an unalloyed good for the U.S. economy, but immigration law stands in the way of many potential investors. The laissez-faire thing to do would be to make visas freely available and get out of the way, but that would be too simple.

Much better to complicate it with all sorts of rules and red tape, that can’t all be complied with so the only solution is to buy yourself some interest (otherwise known as pull).

McAuliffe was one of the guys who ran GreenTech, a company whose business model was designed to fit even more government regulations and incentives: GreenTech made electric cars, little Neighborhood Electric Vehicles that go 25 mph, and cost $16,000. You’ll notice I said “made,” and not “sold,” as there has been zero consumer interest in a pricey golf cart that can’t even hold golf clubs. […]

That had a lot to do with why the state of Virginia had refused to get involved with the project, despite McAuliffe’s pull there. In 2009, the state’s veteran economic development director told colleagues, “(I) still can’t get my head around this being anything other than a visa-for-sale scheme with potential national security implications.”

When an economic development official, whose business is crony capitalism, finds your model suspect, I think you’re due some congratulations. That’s like making Louis C.K. blush.

Eventually, McAuliffe set up shop in Mississippi, thanks to $8 million in land, grants, and other incentives. The state is now in litigation to claw back $6.4 million from the company.

It’s true when the influence peddlers think your scheme is too blatant a fraud, well maybe your scheme is, uh fraudulent.

The real problem, the more general problem, is that the government is in any position to be assessing the viability of a commercial venture, one that’s bent out of shape from the start thanks to political dictates.

If we’re going to do investor visas, they ought to be straightforward, and useful for any type of legitimate investment in American business. Allowing unapproved start-ups, of course, could open the door to different sorts of scams — a fake business goes belly-up and slips the cash back to its “investors.”

But that is a different problem, one with reasonably straightforward solutions, if one wants to solve problems, rather than create new ones to solve, for a price. Usually a very high price.

A Taxing Subject

So we have a tax cut, at long last, I guess. I haven’t read into it deeply, to me, tax language is about the fifth circle of Hell, and that day is coming soon enough, so why volunteer. But from what I’ve read there is some pretty good stuff in it, and some bad, no doubt. Well, that’s how legislating goes, and frankly, what we are trying to undo would have better never been started. Bookworm at Watchers of Weasels has some thoughts about some of the good stuff in it.

I’m not an economist, but I was blessed with a fair amount of common sense. Despite Democrat hysteria, it’s obvious that “the little people” will fare better under the proposed tax bill than they do now — and for a reason the Republicans ought to be speaking about a lot but, because they’re bozos, they are not.

That last sentence may be the most self-evident piece of truth ever written. They are indeed bozos, who wouldn’t know a good policy if it bit them on the ass. But we both digress.

Currently, America ostensibly does not have a “Regressive” tax system. This is a lie. America’s tax code is highly regressive. This is because we have the highest corporate tax rate in the Western world. Yay, say Lefties. Let’s stick it to the corporations. That sentiment proves that Lefties are either stupid or uninformed.

The reality is that corporations don’t pay taxes. This is because the buck doesn’t stop with the corporation, meaning that corporate shareholders will take whatever steps are necessary to ensure that their return on investment is not affected by the tax. After all, once that money goes into their pockets, it will again be subject to a tax.

To avoid double taxation on corporate dollars, corporations do two things: they place a cap on employee wages and — here comes the regressive part — they pass the costs on to the consumers. The higher the tax imposed on corporations, the higher the cost of consumer goods and services.

A widget that would sell for $10 under a lower tax code is priced at $20 to offset taxes while still showing a profit. This kind of price mark-up is bad all around. It makes the product less desirable, which can hurt corporate sales and, potentially, drive the corporation out of business. It also places on poor people a disproportionate burden connected to buying the item. For Jeff Bezos, that extra $10 is as insignificant as a microscopic speck of dust falling on a $100 bill when he opens his wallet to pay. For the guy who mows my lawn, that $10 means that he cannot buy the product, even if he needs it, or that, if he must buy the product, his available money is substantially decreased.

That is why this article is here, she just gave the best description I’ve read of why the corporate income tax is not only counterproductive but downright evil. It disproportionately hurts the poor, by raising the price of literally everything you buy, even if you buy things that allow you to make the things you need yourself. Literally, everything you use or buy from birth to death is subject to this hidden tax, and that doesn’t even mention the (perhaps many) things you simply cannot buy (indeed that you may never have dreamed could exist) because the corporations could not make enough on them to market them.

It’s pretty obvious that it also increases unemployment. Why? Because while to employ somebody, they have to make enough to cover the costs involved in employing them, and that includes the overhead of the tax one pays on their labor. Actually to be accurate the amount of tax that the customer is willing to underwrite for whatever they do, which is a different, higher number.

And yes, the corporate tax rate really should be 0.00%. It is an iniquitous fraud perpetrated by the government on those not paying enough attention to what the government is doing. Sadly, that’s us, almost all of us.

 

Net Neutrality? Really?

I suspect you’ve been hearing a bit about ‘Net Neutrality’, I surely have. Mostly from those who think regulation is a pretty good thing. Well, there’s another view, and I think it the correct one. Robert Tracinski in The Federalist lays it out.

But there’s a deeper ignorance of history involved, one that I discussed a while back with technology entrepreneur Bill Frezza. Bill has lived this history, starting as an engineer with Bell Labs straight out of the Massachusetts Institute of Technology in 1978, because “if you wanted to be a telecom engineer the only legal place to work was in the Bell System at Bell Labs.”

The story he has to tell is that the Internet as we know it was born out of the breakup of the AT&T monopoly in 1982. Specifically, the Internet grew out of rejecting the very policies that are the backbone of “net neutrality.”

AT&T gained its monopoly, ironically, from a settlement called the Kingsbury Commitment that headed off an antitrust prosecution. In effect, the government agreed that instead of breaking up AT&T, it would give the government’s backing to its monopoly. In exchange, AT&T agreed to become a regulated utility.

The cornerstones of that deal were universal service—a telephone for everyone, no matter where he lived—and equality. As Frezza puts it, the commitment was, “People will be equal before the telephone. Not only will the guy way out there on a farm in Idaho get a phone, he’s going to pay the same prices as a city slicker, even though the city slicker lives in a 100-unit apartment building across the street from the central office.”

Sound familiar? This same promise of equality is the central principle of net neutrality. Not only will everyone have access to the Internet, but they will all have the same Internet. No “fast lanes,” no conditions, no playing favorites. Sounds great, right?

There was a point to it, without it that farmer in Idaho would never have gotten a landline phone. I grew up in the rural electric coops, and our REA loans had the same deal, we had to serve everyone, and every residential customer equally. Well, when those policies were implemented, in the 20s for telephone, and the 30s for electricity, there was no alternative method. So it may have been justified. That is no longer true, and Mr. Tracinsky is correct.

And further he is also correct that it stifles competition. Surely technology must have improved in electric power distribution since my engineering guides were published just after World War II, yet they are still current, somehow that is not true for my radio guides, I rarely use a 6W6 tube anymore.

Frezza describes how this held back the development of an Internet-style data transmission system. “If it has to be available on every pair of copper wires, including the five-mile loop with the load coils going out to the farmer—well, you can’t push more than 9600 baud through.” For those who don’t remember this antiquated terminology, 9600 baud is 9600 bits per second, which is not just a dial-up connection but a particularly slow dial-up connection. Today, we talk about download speeds in MBPS—that is, millions of bits per second, more than a thousand times faster. But all of that became possible because new capabilities didn’t have to be rolled out all at once to everyone, universally and equally.

That is the great fault with forced equality in anything, it stifles innovation, not always because it means to, although sometimes it does because the costs of doing something for everyone is simply insurmountable. And sometimes innovation doesn’t work. We all chide Microsoft because they have a habit of using us as ‘beta-testers’, but I wonder, would we still be running DOS without them doing that.

As Frezza sums it up:

Progress requires inequality. If you don’t give entrepreneurs the ability to become unequal—not just get rich themselves, but they have to make their customers unequal, they’ve got to give their customers commercial advantage or life advantage. That’s what drives progress. If you take that out of the equation, if you say all traffic has to be treated equal, all customers have to be treated equal—first of all, capital investment in the network is going to go down. We’ve already seen some of that. But so is innovation. Why would you want to give that up?

The exotic, exorbitantly expensive new technologies of a few years ago eventually become the cheap and ubiquitous technologies of today.

This is such a commonplace experience that it’s really astonishing that anyone in the tech industry has let themselves be bamboozled by the notion that we’d all be much better off with the business model of a sclerotic, highly regulated public utility.

“It’s a tragedy,” Frezza says, “to see people using the same arguments that were used back in 1913 to try to re-regulate the Internet.” If we don’t learn from telecom history, we will be doomed to repeat it.

Yep, it is. Don’t be one of those guys.

Beobachte den Osten; the German Outlook

FILE PHOTO: REUTERS/Philippe Wojazer/File Photo

Yesterday, we talked about the British, through the eyes of Katie Hopkins, one of the best spokespeople for the people like us amongst the cousins. But what about the Germans? They are an even bigger economy and the mainstay of the EU, yet Mütti Merkel cannot seem to form a government, in fact, her problems parallel those of Mrs. May, and speak to why Hillary! failed so badly. All three countries (and France, as well) have specific problems but there are also commonalities. Much of this comes from PowerLine but also from where Steve sourced his: The New York Review of Books. Timothy Garton Ash writes in It’s the Kultur, Stupid this…

[L]ike all contemporary populisms, the German version exhibits both generic and specific features. In common with other populisms, it denounces the current elites (Alteliten in AfD-speak) and established parties (Altparteien) while speaking in the name of the Volk, a word that, with its double meaning of people and ethno-culturally defined nation, actually best captures what Trump and Le Pen mean when they say “the people.” In Angst für Deutschland, her vividly reported book about the party, Melanie Amann, a journalist at the weekly news magazine Der Spiegel, notes how some of its activists have appropriated the slogan of the East German protests against Communist rule in 1989: Wir sind das Volk—We are the people. Like other populists, Germany’s attack the mainstream media (Lügenpresse, the “lying press”) while making effective use of social media. On the eve of the election, the Alternative had some 362,000 Facebook followers, compared with the Social Democrats’ 169,000 and just 154,000 for Merkel’s Christian Democratic Union (CDU).

Its criticism of globalization is familiar, as is its angry and self-congratulatory denunciation of political correctness. Typical of all European populisms is a negative attitude toward the EU in general and the euro in particular. The Alternative started life in 2013 as an anti-euro party. Although overall German support for the EU is still very strong, a poll conducted for the Bertelsmann foundation in the summer of 2017 found that 50 percent of those respondents who identified themselves as on the “right” (carefully distinguished from the “center-right”) would vote for Germany to leave the EU, if Germans were offered a Brexit-style in-or-out referendum. This is a remarkable finding. Unlike Brexit, Germexit would be the end of the European Union.

Yep, that is remarkable, 50% of the right in Germany would vote to exit the EU. But I don’t think that is the main takeaway here. I think the main takeaway here is that so many of its supporters come from the former GDR, the old Deutschedemokratischerepublik, or East Germany. Like the Poles, the Czechs, and the other east Europeans, they know how socialism works (or doesn’t) and they aren’t buying into it again. We Americans have always fought off the worst effects, and the British some of them, but the east ended up with the very worst, subject to the Soviet Union and they haven’t forgotten. I’m guessing that in Germany like the rest, the kids simply can’t (or won’t) believe what their parents and grandparents tell them, but it is all true, in all its grim majesty.

In Germany, I think it worse because teaching much of any real history about the Nazi era is mostly verboten, much as if we didn’t teach FDR’s presidency.

Unlike in Britain and America, economic factors play only a small part here. It’s not just that Germany as a whole is doing well economically. In a 2016 poll, four out of five AfD voters described their personal economic situation as “good” or “very good.” This is not a party of the economically “left behind.” It gathers the discontented from every walk of life, but those who predominate in its ranks are educated, middle-class men. A leading CDU politician told me that the angry protest letters he gets from defectors to the Alternative will typically be from a doctor, businessman, lawyer, or professor. This strong presence of the educated upper middle class distinguishes German populism from many other populisms.

Among the leaders of the party, they are visibly represented by its other designated “leading candidate,” Alexander Gauland, a seventy-six-year-old former CDUfunctionary who almost invariably wears a check-patterned tweedy jacket and dark green tie. He is one of those elderly conservative gents who look so English that you know they must be German. Then there is Beatrix von Storch, a shrill and tiresome minor aristocrat with neoliberal, Hayekian intellectual pretensions. (Her maternal grandfather was Hitler’s finance minister—but we are not responsible for our grandfathers.) As for Alice Weidel: this former Goldman Sachs and Allianz asset manager, white, blonde, always neatly turned out in business attire, lives just across the border in Switzerland, in a same-sex relationship with a Swiss filmmaker of Sinhalese heritage and two adopted sons. These are not the German equivalent of the American rust belt manual worker, or of what is known in England, with liberal condescension, as “white van man.” (The van is white as well as the man.)

Here he is blinded by his own prejudices. In my experience, neither the rust belt manual worker nor ‘the white van man’ is typical, the support for Brexit and Trump extends far beyond these illiberal stereotypes, and the blindness of our so-called ‘betters’ is one of the main reasons they are losing. In fact, I find that they are exactly parallel, the most productive parts of society are the ones most frustrated by the dangerous silliness of the elites, who have rarely had a real-world job.

In any case, an interesting pair of articles. And something rare, an encouraging report from the continent.

Once again, America, partnering with England, shows Europe what freedom looks like and how to achieve it. Perhaps we will be able to say, with William Pitt the Younger:

[B]ut Europe is not to be saved by any single man. England has saved herself by her exertions, and will, as I trust, save Europe by her example.

Beobachte den Osten

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