Monthly Archives: April 2010

Compulsory Reading for Oliver Stone

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It is no secret that Hollywood loves the Cuban Dictator Fidel Castro and his fellow socialist dictators such as Hugo Chavez and Manuel Zelaya. Hollywood pillars like Sean Penn, Michael Moore, and Oliver Stone gush over the humid paradises these dictators have built. Perhaps they should hear the story of Juan Hernández Nodar who spent over thirteen years as the political prisoner of Castro. As reported in the Wall Street Journal, Hernández Nodar was convicted of trying to free Cuban baseball players from Cuba to play in the US.

Hernández Nodar was essentially accused of stealing the property of Cuba in the form of its best baseball players. The mere fact that Cuba has such a law proves that it is a prison and all of its inhabitants are effectively slaves. How shameful of Misters Penn, Moore, and Stone to align themselves with such a criminal as Castro.

Hollywood might claim that Hernández Nodar knew that visiting Cuba for the purpose of recruiting baseball players was illegal. Hernández Nodar knew the risk, but his supposed greed entangled him in a crime for which he was convicted. Well, no. Although often misrepresented, the rights discussed in the Constitution are natural rights owned by every person on the planet, not just US citizens. The Constitution does not grant rights, it states that the Government may not take them away. Mr. Hernández Nodar had the natural right to transact with the Cuban baseball players, and they had the natural right to leave Cuba for better prospects. The criminal was Castro for stealing the rights of his subjects.

Even ignoring the fact that Castro runs his island like a prison, the fact that Hernández Nodar spent thirteen years in hell points to political oppression. Thirteen years for simply meeting with people to introduce them to better employment abroad? No, the true crime was undermining Castro’s dictatorship and power. Every successful athlete or businessperson who escapes Cuba is a black eye to Castro and his sham socialist paradise.

Amazingly, Hernández Nodar appears unbroken in his interview. He has returned to recruiting Cubans, albeit from the Dominican Republic, and his will to help Cubans achieve their potential remains strong.

So, the next time Penn, Moore, or Stone puts out an anti-US screed that paints businessmen as evil, the US Military as terrorists, and capitalism as modern slavery, consider what these men offer as an alternative. Hollywood may idolize Castro but his works tell another story: an island prison where a political prisoner suffered for over thirteen years for the crime of encouraging baseball players to achieve their dreams.

Why Are Billionaires So Nice?

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Every so often the media gushes over a billionaire who supports higher taxes on the so called rich. ‘How wise, how generous, how progressive, how unexpected’ they rave at the likes of Warren Buffet or George Soros. Why do these businesspeople so often support higher taxes on ‘the rich?’ Some may guess that these billionaires have gone soft or feel guilty about their success. Maybe instead, billionaires have plenty of selfish incentives to support higher taxes.

First off, for the most part the Government does not tax the rich, it taxes high earners. Mr. Buffet is already rich, so higher taxes will do nothing to take his money away. To accumulate a million dollars requires earning about two million dollars, but once accumulated, the million dollars can sit around for free. Higher taxes do not make it harder to be rich; they make it harder to become rich.

Also, high taxes do not impact the lifestyle of extremely high earners. A successful family earning, say $250K (Pres. Obama’s definition of rich) still has to worry about procuring luxuries like private schools, a home in a good neighborhood, and saving for retirement. On the other hand, someone earning tens of millions per year is well beyond such concerns, regardless of taxes. Higher taxes may hurt the balance sheet of extremely high earners, but not enough to force them out of their country clubs; in other words, the pain of higher taxes recedes as wealth increases.

Billionaires do not continue to work simply to earn money. Rationally they should retire, relax, and enjoy the fruits of their hard work. Still, billionaires continue to produce because their hyper competitive natures drive them to dominate – wealth is like a score card in their game of life. Since absolute wealth is not important beyond some high net worth, high taxes give billionaires a competitive advantage. The world is filled with countless ambitious entrepreneurs who may someday challenge the current set of billionaires, so punitively taxing the upstarts maintains the established order.

Indeed, as Ayn Rand realized, socialism is really about keeping things the same. Somehow socialism never achieves the equality in conditions to which it aspires, but it does cement the powerful class’s status by reducing the innovation and change that constantly seek to elevate newcomers. From that point of view, high taxes on ‘the rich’ are a means of maintaining the elite’s dominance in the face of competition. In the US, most millionaires are self-made, but if taxes are made high enough, that would necessarily change.

Finally, one must consider the company billionaires keep. Billionaires like to rub shoulders with elites and Hollywood types – far more enticing company than the grimy entrepreneurs and mere millionaires from where they came. If high taxes are no real penalty to the super wealthy, even an advantage, why not subscribe to the politics of the beautiful people?

George Soros made billions by founding a hedge fund that used derivative bets on currency exchange rates. He embodies the greed, naked derivative bets, and market manipulation that Democrats allege caused the financial meltdown of 2008. He truly has nothing to do with the far left, high tax politics he supports. Given the benefits to his class from high taxes, perhaps Mr. Soros is using apparent altruism to raise the competitive stakes in the game of billionaires. Perhaps billionaires don’t change their stripes and they are actually playing a skillful endgame at the expense of economic growth, fairness, and opportunity.

RIP GOP?

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Contrary to mainstream media reports, the Tea Party movement has caught the imagination of a large body of the US. Reporters routinely underreport the attendance at these rallies, perhaps because they cannot believe that Tea Partiers are far more relevant and vibrant than their familiar subjects – peace protestors, anti- traders, and environmentalists. The big question is whether the Tea Party movement will become a permanent political force or a flash in the pan. Will the Tea Parties be coopted by canny politicians and die off or will they become the new dominant political party in the US? Will the Tea Party be another Reform Party or will it be the next Republican Party?

More often than dissolving, parties reform along new lines of division in times of distress. The GOP was reformed by Sen. Goldwater and Pres. Reagan into a Christian – conservative alliance, away from Sen. P. Bush – V.P. Rockefeller milquetoast party irrelevance. The Dems were reformed into a union – minority – leftist alliance after the implosion of the Dems’ policies of Black oppression in the South (although segregationist Democrat Senators like Thurmond and Byrd changed with the times). By contrast, for a party to completely collapse, the Nation must be in an incurable crisis.

The latest incurable national crisis was the War Between the States in the 1860′s. In the decades leading up to the War, the dominant parties were the Democrats and the Whigs. Pres. Lincoln’s Democrat predecessors, Presidents Pierce and Buchanan were willing to compromise on the slavery issue, continuing the institution, but containing it. Republican Lincoln, not willing to compromise with the South, accelerated the secession movement touched off by his election by effectively outlawing the South’s commerce with England. Without trade with England, secession became the only way of maintaining the South’s slave based cotton economy. As the Union collapsed under the weight of this powerful division, it was not the largely pro-slavery Democrats that imploded, but the largely northern Whigs that paid the price. The Republicans stepped into the political void left by the Whig’s indifference to abolition and formed an abolitionist – northern industrialist alliance.

Sadly, the US faces another incurable national crisis. Even without Obamacare, the size of the US’s Government and its debt has become untenable. The US must pay nearly $50 trillion in real benefits to retirees over the next few decades, that in addition to about $12 trillion in nominal debt that must be serviced and refinanced. The US probably cannot manage this, as its entitlement obligations cannot be inflated away like nominal debt. As with Slavery 150 years ago, it is abundantly clear that something must change in a fundamental way. As the Dems were the party of slavery, they are now the party of excess spending, debt, and taxes. As the Whigs were complicit in slavery, the Republicans now give lip service to limited government, but they are actually complicit in the waste and corruption. If the Whig’s demise is an indication, the Tea Partiers’ anger will be expressed by the destruction of the Republican Party.

The Dems’ left wing base will not abandon their party because of outrage over Government spending, but the GOP’s base will dissolve if a new party is sincere about shrinking government. Ironic but true, Obama’s obscene excesses may trigger the end of the Republican Party. Of course the GOP is imperfect at best and hardly deserves any sympathy. If the Tea Party becomes a vessel of power for the cause of limited Constitution based government, nobody will miss the GOP’s sleazy legacy of back room dealing, pork, and creeping statism.

It may only be a few years of trillion dollar deficits before US treasury yields approach those of Greece, touching off a liquidity crisis like no other. With the Dem power base shrinking and the GOP without answers or resolve, the time could be right for a new political party. The new party could draw from libertarians lost in the two parties, minorities who have no policy attachment to the Dems, and a growing body of deficit hawks from both parties. The social conservative overlay of Reagan might dissolve and split along their other issue alignments. As in the election of 1860, it all could take place very quickly.

Political parties form in the power vacuum of major national crises. While ignoring the Tea Party may cause the Dems to lose a number of seats this November, the real threat is directed toward the GOP. If the GOP ignores or marginalizes the Tea Party, they may well be wiped off the political map. If the GOP wishes to survive, it needs to take its professed principles of limited Constitutional government and free market capitalism seriously for the first time in twenty years.