What Hayek Said About Benghazi / IRS / AP

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The blathering classes often feast on the foibles of second term administrations, and Pres. Obama’s comeuppance is now. Some suspect Obama had a direct hand in the various scandals given that they all served his reelection interests. Maybe, but the safer bet is on a Chicago-style culture of intimidation and dirty politics that Obama and his friends brought to the White House in 2009. In any event, Obama is in the soup, and the disillusioned want to know why. F.A. Hayek’s The Road to Serfdom offers an explanation – a system where people give up rights and responsibilities to a central power attracts and breeds corruption.

Since Hayek was a famous economist and Keynes’s nemesis, readers might be surprised that Road was a political piece. Written at the height of WWII, when the best minds were either apologists or supporters of Stalin, Hayek showed that Hitler and Stalin were the same beast. Hitler, Stalin, and later Mao, and Pol Pot were the predictable outcomes of people abdicating their rights and responsibilities. Socialism might breed economic stagnation, but it also opens the door to corruption and tyranny.

As Thomas Sowell said, these people were “replacing what worked with what sounded good.” Nothing sounds as good as fairness and taking care of people, which is why everyone from Marx to FDR to Obama used the same rhetoric of social justice. Taking care of people and being taken care of sounds nice, but the ultimate price of centralizing power is corruption or worse.

The fact that the Obama administration engaged in corruption with a whiff of political motivation is not unusual. Every time an administration is caught abusing its powers, people seem surprised, but about half of recent presidents have used the IRS to attack their enemies. The surprise should be that anyone remains surprised.

The nation that cast off the chattels of royal power has now allowed itself to become subject to a permanent class of rulers operating outside of their rights. Since Solomon, people responded to abuses of power by hoping for a good king, a rare blessing. The US’s Founders, however, realized the solution was to have no king at all. When Obama, like many presidents before him, was caught abusing his power, the press called for a good king when the answer was to reduce king’s power. If the IRS is a tool of abuse, eliminate it, do not reform it.

The primary task of tyrannical governments is to convince their subjects of their necessity. Not surprisingly, the IRS focused its wrath on those who challenged its necessity. In Washington, maintaining power is a goal by itself. With each new scandal or failure, the scope of government is increased, not cut. Punishing individuals for corruption cannot cure what Hayek realized is a system designed for abuse.

Scientists and Relevance

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Children like dinosaurs. Actually, lots of people like dinosaurs; they are the epitome of exotic creatures with their size and diversity. Also, they died out some 65 million years ago, likely the victims of a large meteor that fell onto modern day Mexico. The Alvarez Hypothesis is an fascinating story, but altogether irrelevant to day to day life. If a planet-threatening meteor or comet has not hit Earth in 65 million years, mankind can take its chances. Most people dismiss the lessons of the past century, so nearly everyone dismisses lessons from the K-T Boundary. Do not tell that to Scott Sampson, the star of the children’s dinosaur program Dinosaur Train and Chief Curator at the Denver Museum of Nature and Science.

On NPR, Sampson reasons that an interest in extinct species is essential to preserving today’s Earth. Children who do not take an interest in dinosaurs and such spend less time outdoors, and children who stay indoors will not appreciate the outdoors enough to save it from manmade disaster. So, obviously dinosaur programs for children protect the environment. Sampson’s need for relevance must be compensation for the fact that his subject matter has turned to stone, because his logic is painfully tortured. Sorry, Dr. Sampson, your profession, while interesting, is irrelevant to all aspects of the modern world.

Sampson’s ridiculous theory about dinosaurs and environmentalism is insightful as an example of why scientists poke their noses where they are not needed or welcome. Without any question, many sciences are the bedrock of technological advances that improve every human life. Physics lead to semi-conductors. Genetics lead to the green revolution that saved billions of lives around the world. But, for every serious scientific discipline, there is a faddish one with no practical purpose. Social sciences are cute, but Mao said “Political power grows out of the barrel of a gun.” Gender studies are remarkable if only for the fact they exist. If it does not move an electron around, it is probably worthless.

Paleontologists are no doubt quite smart, but their work is largely irrelevant. Knowing one’s life work is little more than a source of amusement for children must be grating, hence Sampson’s contorted theory. A few decades ago, climatologists were weathermen with PhDs, laughably irrelevant. Of course, Global Warming changed that. V.P. Al Gore may have pocked $200 million from this scam, but thousands of climatologists got what smart people truly crave – respect. From this filter, the 1970′s global cooling scare and the 2000′s global warming scare make equal sense.

Why would a white man pretend to be an Indian, and protest Columbus’s voyages from 500 years’ ago (Ward Churchill)? Perhaps the need for relevance in a field nearly everyone considers settled history. Why do so many professors pine for anarchy, socialism, and communism when those social systems are antithetical to the existence of professors? Perhaps studying systems found on the ash heap of history is not as rewarding as helping to reinstate them.

Nobody wants to be irrelevant, but scientists should resist pumping-up their studies to create relevance where none is warranted. Science is a powerful attractor of politicians who would use it as a canard to control their subjects. Even as the various AGW nightmarish predictions fail to come true, and each successive model predicts less of a disaster than the one before, politicians continue to hammer away at what should be a lost cause. The general population is not particularly concerned about AGW, but that does not slow the special interests tied to AGW alarmism. Likewise, most Americans think communism is long dead, but not to professors whose only hope for relevance is to brainwash annual crops of poli-sci graduates. To these ‘scientists:’ please just enjoy your tenure, benefits, and comfortable work schedule. Don’t ruin everything by trying to be relevant.

Twinkie The Kid Fires A Shot Across Obama’s Bow

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Today’s fun story is the return of Twinkies, due in stores this summer. Less fun for Pres. Obama’s labor agenda is that Hostess’s new owner is not hiring union labor to bake and deliver its products. Because the former Hostess liquidated in bankruptcy several months ago, no labor contracts exist between Hostess and powerful unions such as the Teamsters. The steady decline of private sector unions is nothing new, but the Hostess restructuring is a test case for unions and Obama’s ability to repay them for their support.

Pres. Obama’s latest nemesis –Twinkie The Kid

Obama is a union man, and there is hardly a sliver of daylight between his agenda and the unions’ (the Keystone XL pipeline is a notable exception). During his reign, SEIU’s Andy Stern was the most frequent White House visitor – during a time Obama was reported to be restoring the US economy, closing Gitmo, and ending two wars. AFL-CIO’s Richard Trumka brags about having Obama on speed-dial. Obama knows that while Black and environmentalist voters are his base of enthusiasm and good PR, unions are his base of money. The decline of private sector union power is a serious threat to Obama’s and Democrats’ power. Obama has made union organizing easier by redefining entire industries’ regulatory structures (e.g. FedEx) and by illegally appointing union activists to the NLRB. Obama has made union organizing faster by eliminating most of the time companies would have to state their case for open shops. Obama is paying back decades of union support.

The unions’ and Obama’s problem is that most workers do not want union jobs. Union jobs are in decline, so anyone who wants job stability steers clear. Further, union hostility toward free markets and the GOP must irritate at least some working class families. In any event, manufacturing is growing in the US, but not in union shops. Obama and V.P. Biden may claim to have saved the auto industry, but the non-union auto factories in the South never needed saving.

The unanswered question of unionism is whether current union members would like to continue to pay dues earmarked for Democrat politicians. Once union, a shop rarely goes back. The union system ostracizes anyone who does not toe the line, which means union halls shutter only when companies shut down too.

Hostess offers a test case as to whether union members really appreciate their unions. The new Hostess will reopen previously union factories, including one in Illinois. Almost certainly some workers will be rehired, albeit without union representation, and they will be free to organize. No doubt, the unions that represented the old Hostess’s various trades will seek to organize the new Hostess. Look for complaints before the NLRB, picket lines, and a little help from Obama and the Old Media. Expect the New York Times to report that Hostess has cut worker pay, benefits, and rights, ignoring that the old system drove Hostess to liquidation.

Given the high visibility of Twinkie The Kid returning to gas stations around the US, the failure to unionize Hostess would be a major blow to unions and Obama’s credibility with them. The new Hostess is a clear-cut experiment as to whether workers and communities really want unions. Do workers see unions as allies or the fools who cost them their jobs in the first place? The labor flacks at Obama’s White House are surely working overtime to prevent a disaster in their money base.

Why Does The Old Media Protect Islam?

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The Boston terror attack allows one easy conclusion – the Old Media is not afraid to jump the gun on its reporting. The AP could have checked its facts before incorrectly reporting that a bomber was in custody last week; a simple phone call to the police or FBI would have cleared up any confusion. Probably in a race against its competition, the OM did not check its facts and endangered Bostonians who may have thought the threat was over. Other news sources ran the AP’s error, but with a caveat that they could not confirm its accuracy. The OM is quick on the trigger, but not in implicating Islam.

NPR this week fell over itself to avoid implicating Islam in this terror bombing. Even after the suspects were known to be Muslim, NPR constantly guarded itself by reminding listeners there was no reason to believe radical Islam was at work. As it turned out, the terrorists fit the classic mold. They were rich and well educated, as are most Islamic terrorists, including the 9/11 hijackers. They fell under the influence of a radical Imam with connections to terrorist organizations (in this case the Muslim Brotherhood). One of them travelled abroad for terrorist training. While a pathetic writer for Salon may have wished for a white right-wing terrorist, the Tsarnaevs were more of the same from western civilization’s persistent enemy. Even today, the New York Times is clinging to the notion the Tsarnaevs acted alone, as if young men spontaneously build bombs out of pressure cookers and conceal them in trash cans.

The OM reported falsehoods that it could have easily checked, but it did not report that every sign pointed toward radical Islam. The OM does not want to offend Muslims, especially the ones who behead reporters, but also it does not want to engender bias in the public against Islam. The OM is protecting the public from itself through such circumspection. The OM knows that the streets of Jakarta are filled with Muslims who want to lead peaceful lives and raise their nation from poverty. The vast majority of Muslims are without doubt peaceful, but even so, millions of them want to kill Americans indiscriminately.

The OM should ask itself why it wants to protect Islam’s image. The OM is filled with progressives who embrace dismantling the establishment to build a better world. Islam is anti-progressive; it is a set of laws that can never be changed or broken down. Contrary to its position on Islam, the OM hates Christian faiths and goes out of its way to report every Christian’s failures. NPR, for example, reported that Olympic bomber Eric Rudolph was a “Christian Identity extremist,” but in fact he is agnostic. NPR, however will not call the Ft. Hood terrorist, Nidal Malik Hasan, an Islamic terrorist or extremist even though he is one beyond doubt.

The OM should also know that reporters are the first people rounded up by totalitarians. The Sean Penns and Oliver Stones of the world will also find their sympathy for radicals poorly rewarded. Terrorist groups like the Muslim Brotherhood probably have little tolerance for their purported allies like Lewis Farrakhan. These useful idiots should stop running flack for the very people who would imprison them.

The story of Boston is that Islam has a problem. Imams with terrorist ties such as Boston’s Basyouny Nehela are a serious threat. The OM does a disservice to public safety by failing to expose these radicals, but it is also failing Islam. Islam needs more reasons to purge Imams who would radicalize young men and make them terrorists. As long as the OM deludes the public into thinking radical Islam is not a problem and the Tsarnaevs are aberrations, the attacks will continue.

Gold Gone Cold

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The week’s financial news is the collapse of the price of Gold. As of this article’s publication, the highly volatile commodity had fallen below $1375 per ounce from a high of nearly $1900 in September 2011. Gold is most often traded in highly levered securities such as futures or the equity of mining corporations, so such a drop in the actual, or spot price of the metal is big news. So, why is gold falling?

Some reports cite a slowing demand from China as well as Cyprus’s plan to sell $500 million in bullion as reasons for the collapse. However, one must remember that the market for gold is as liquid and robust as any commodity. Cyprus’s move is meaningless to such a market, and even China cannot influence gold, especially by buying spot. There are larger and more fundamental forces causing the collapse.

Not to belabor the obvious, but gold is not a productive asset – with a few industrial exceptions, it serves no purpose. Indeed its shininess is a byproduct of its inert nature. However, for some reason deep in the human psyche, gold has always been money and its real value has never changed. Therefore, gold is negatively correlated with the expected value of fiat currency (i.e. Gold goes up with expected inflation).

Since gold’s price reflects expectations of inflation, the 2011 rally implied an expected inflation rate of about 6% per year for around ten years. Given the Fed’s unending monetary expansion, such a market prediction was aggressive but not beyond reason. In theory, such easy money should result in inflation, but so far there has been no repeat of the 1970s’ monetary disaster.

According to most macro-economic theories, monetary expansion enables capital investment, which stimulates the economy, which can then unleash inflation. However, the US is in the middle of a non-recovery, or a mini-depression. Recessions are usually a period of balance sheet healing – bad assets are written off, and resources are redirected to more productive purposes. When bank and corporate balance sheets are rationalized, a boom in growth usually follows. The 1980′s were a textbook example of writing off bad assets and repurposing resources. What followed was an economic boom that lasted 20 years. Recessions are where dishonest balance sheets are restored to economic reality so that rational investment decisions can fuel new growth.

The government’s policies since the economic collapse of 2008 have all discouraged the normal process by which a recession becomes a boom. The government discouraged labor participation by extending unemployment and other safety net entitlements. More people have permanently left the workforce than in any modern time. The government spent nearly a trillion dollars on stimulus, which directed resources to non-productive purposes that stymied wealth creation. TARP and the Fed’s QE programs have prevented banks from writing off bad debts and returning those assets to market value. The Fed pays large banks to not make new loans by offering an attractive spread on reserve funds. By buying questionable mortgage bonds, real estate prices have returned to their bubble highs, yet construction remains below the rate required to replace aging homes and accommodate population growth.

The government’s efforts to prevent an economic reset have resulted in a low-growth, jobless recovery. The pattern closely resembles the results of FDR’s stabilization and economic control policies – the flat line deflationary non-recovery of the Great Depression. The current pattern also resembles the lost 15 years of Japan’s non-recovery. Pres. Obama, like Japan and FDR, is manipulating capital markets and government spending to stabilize big economic players. By dropping money into shoring up failed bank, corporate, and union balance sheets, Obama’s policies are creating a liquidity trap similar to FDR’s and Japan’s.

Gold’s price reflects a new realization that the global economy is nowhere near healing. China missed its growth forecast, which means global demand for manufactured goods is not healthy. Japan has initiated a currency war of currency devaluation, and while the US has warned Japan, the Fed continues to pump cash into its own liquidity trap.

The answer is uncomplicated and proven: follow the Volker model of the 1980′s. Shut off the currency pump. Quit bailing out banks by paying them a guaranteed spread for not lending money. Explicitly deny further bailouts, and allow corporate, bank, and union balance sheets to reflect economic reality. The result will likely be the same as in 1982, a sharp recession followed by unprecedented wealth creation. Gold prices are a symptom of the market’s expectation of a global depression, but as with FDR, depressions are unnatural creations of government policies. The great tragedy is that Obama is following FDR’s prescription for another depression.

Roger Ebert – Last Of A Long Lost Breed

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Last week famed film critic, Roger Ebert, passed away, having long suffered from cancer. Vitriol against the dead is unseemly, and Shout Bits does not want to lower itself to the leftists who inevitably will denigrate the late PM Margaret Thatcher, one of the true greats of the 20th Century. Still, Ebert’s story cannot be told without understanding his rabid partisan leftism. Especially after he was robbed of the ability to speak, Ebert was famous for his anti-Republican and anti-capitalist screeds. As with Walter Cronkite, Ebert’s role has been supplanted by a more egalitarian system that far better serves the public.

Ebert and his partner Gene Siskel were famous for their PBS program where they gave thumbs ‘up’ or ‘down’ to movies. This was clever for many reasons – a movie goer can only choose to go or not to go to a movie, so a binary review made sense. Also, Siskel and Ebert often disagreed with their thumbs and would hash out their differences. Movie goers thereby got a sense of why the critics felt as they did. A single review was unreliable and often reflected the critic’s snobbery and bias. Two reviews offered more perspective, which made Siskel and Ebert the tops of their profession.

Siskel was the intellectual with a taste for drama while Ebert was lustier with a taste for action. However both of them, along with most Old Media were snobs who thought patriotism or faith was for hacks. Ebert’s review of Atlas Shrugged I, for example, spends the first paragraph insulting Ayn Rand and her followers. Only after that irrelevant snark did he dissect the movie. Ebert was a leftist who could never give Shrugged a review on its own terms, and he trashed it. Yes, the production values were not Scorseseian, and the plot was dull, but any Rand fan would expect that. Ebert and the OM in general were incapable of speaking to the people who were considering actually seeing the movie. Telling leftists, elitists, and popcorn flick aficionados not to see Shrugged was hardly a vital public service.

Enter the internet and Rotten Tomatoes. Just as the internet turned ordinary Joes into pundits (guilty as charged), anybody with an opinion became a movie critic. Rotten Tomatoes reports that 11% of OM critics liked Shrugged while 72% of amateur critics recommended it. The difference is that the OM is trained to reject ideas outside of Columbia University’s leftist circles. Rotten Tomatoes lets people consider opinions from critics like themselves, who are usually critics not friendly with Weather Underground terrorists.

While citizen journalists largely supplement OM reporting by exposing bias and lies, citizen film critics have completely eclipsed the OM’s influence. Very few trustworthy OM reviewers remain, and they certainly are outnumbered by the tagline whores who praise Hollywood’s most terrible hacks. Instead, movie goers get quicker, better, and more targeted reviews from their peers.

So, RIP Mr. Ebert; you had a tough life with suffering nobody would take lightly. You were misguided with regard to your Chicago-style extreme leftism, but you were hardly the most powerful man to confuse Marx with liberty. You were clever and likeable in your reviews, but the march of progress has rendered your profession irrelevant.

Mid-West No Longer Exists

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AP-Washington
April 1, 2013

As Brigadoon settled back into the mist, so has the “Mid-West” again disappeared. AP reporters, searching their archives, know of this area of the North American Continent. Reports of its land and peoples appear approximately every four years in the records, however no credible reporter employed today can confirm them.

When flying from the Eastern US States to the West, AP reporters have noticed a long delay between the regions, and on a clear day they could see barren land below. Other indications come from the sports network ESPN which reported the unexpected entries in their records of teams named the Rangers and the Thunder. However, no coverage of such entities exists today.

Other bodies are more optimistic that these territories still exist. NY Mayor Bloomberg has sent missionaries to a region he refers to as “Colorado.” Bloomberg claims that his “Coloradans” lacked the basics of civil life – gun bans, cigarette bans, soda bans, baby formula bans, and other essentials to modern life. The AP cannot confirm his claims.

Since travel to the “Mid-West” and the other lost territories is impractical, involving something modern Sherpas refer to as a “connection,” the AP is not prepared to comment or report on any activities that may occur there. Official AP Presidential candidate Sec. Hillary Clinton is rumored to be planning a voyage to a village called “Ames.” If the rumors are true, the AP will follow her dutifully and also attempt to report briefly on the “Iowans” that may live there.

Until such time as the “Mid-West” and other lost territories reappear, the AP will retain its focus on the proven areas adjacent to the Atlantic and Pacific Oceans. The AP is confident that the news and opinions of these areas reflect that of the US Nation and probably the lost territories as well.