And so it begins

I've actually been rather looking forward to today.

Not so much because I've been running low on wispy promises of hope. I do have plenty of that lying around as it is. But more because I have for a few weeks sensed that George Bush was done, that he had done all he could do, and that frankly as he sought to leave town with his head held as high as the last eight years of partisan whippings would allow, he wanted to be done as well.

And who could blame him? We live in tumultuous times and his has been a momentous presidency. There remains ample time for post-mortem analysis of the last eight years; in summary let's say for now that on the two biggest issues he faced--war and the fundamental role of government in a free society--he gets a passing grade on one, no matter the howls of the moveon.org jackals.

Apparently the least sensible 51% of our nation's electorate deplore George Bush, everything he has done or hasn't done, and everyone who has voted for him. Since leftists have no manners--is it still impolite to discuss politics or religion in mixed company, or does that only apply to conservatives?--one feels bombarded by the noise, the shouts of treason! lies!, the contentious acrimony of our political landscape, everywhere one goes. It's tiresome enough that like an exasperated parent, I'm willing to give the tyrant child their way just so as to have a bit of peace. And because Republicans tend to be older and less petulant than the Youth Movement, not to mention better employed, there tends to be far less preposterous and unhinged braying from the opposition party when the donkeys are in power. So the donkeys' collectively grotesque overreaction to the last eight years is about to be improperly rewarded by catapulting them to power with a relatively compliant--at least lucid--opposition party.

I have managed to remain neither impressed nor horrified by the new president's transition to power since the election, the neutrality of which sentiment I suppose is far superior to the likeliest alternative. I have heard a few pronouncements from our handsome new ruler that acknowledge the difficulty of real decisions made by grownups with real responsibility--buckling on closing Guantanamo comes to mind as merely the most obvious--which one might regard as a good thing in fair comparison to the juvenile and duplicitous (but deliciously persuasive) assurances he offered during the campaign that there Are No Hard Choices. My reassurance at hearing his modestly more responsible post-election remarks was tempered by my parental instinct to punish the child who lies and certainly not to reward such bad behavior, which after all only encourages its repetition. The last thing we should do is collectively encourage our political betters to lie to us with the assurance that it lies which are sufficiently comely will not be closely examined, yet here we are.

I think, as we embark upon what may be a long period of leftist ascendancy, that this analogy of the petulant and ill-disciplined child neatly encapsulates my thinking on the matter. Leftists today are, to a great extent, leftists because they lack the courage to make hard choices. They have used their ferociously superior intellectual prowess to convince themselves that the path of least resistance always coincides with the path of virtue--which is convenient enough to discover, once you've stipulated that the only path you'll consider is the path of least resistance. There's a childlike naivete to the whole thing which would be charming if it weren't so pernicious. I don't mean the courage to speak truth to power by writing snotty letters to the editor of the New York Times about how the teh Evil Chimpy McBushHitler has shredded the bill of rights (or at least the portions thereof receiving of leftist approbation).

Why is it the leftists are never the ones willing to stand up for our nation's heritage if that might offend some foreigner? Or support any war, over any principle, without pusillanimous cries that War is Never the Answer? If you can't think of any principle that would be worth fighting a war over, it's a sad little existence you have on your little planet. The idea of owning a gun to defend yourself? Deploying Pershing missiles in Germany to stare down the Soviets? Developing missile defense systems? (The word "defense" is right there in the phrase itself! Yet this is aggressive warmongering.)

Taking responsibility for the consequences of your own actions and bad decisions? How about acknowledging that the government can't actually tax and spend our way to national prosperity and that one must learn to compete in a scary world where--shudder--one might not succeed.

Why was it sexy in the 1980s and 1990s to wear Free Tibet t-shirts and flaunt the cynical and undemocratic realpolitik which supposedly prized stability over democracy and human rights, but when faced with an actual opportunity to remove an actual real-life brutal dictator from power, leftists immediately shat out Quagmire! No Blood for Oil! I suspect that the moment supporting freedom and human rights against dictators and all that stopped being sexy was when George Bush had the stones to actually do it, as the least worst option available, and the inconvenient and damnable unpleasantness of actually fighting for a principle instead of simply waxing philosophic about it promptly made it too much for the infantile Left to bear.

No, it's pretty obvious that any political position requiring a little steel in the spine will likely be exactly the opposite of what the donkey wants. My biggest hope for our new benevolent ruler is that his ambition to succeed tempers his ideological predisposition to genuflect before Nancy Pelosi and Ron Gettelfinger and the Sierra Club. If it does, there is a hope that only some, and not necessarily the worst, of our fears will be realized.

Blitzkreig

Just a quick hit today:

The always trenchant Victor Davis Hanson has a new essay up today which, as usual, is essential reading. Mr Hanson touches on BHO's adoption of much of the reviled George Bush's policy stances, at least as far as foreign policy is concerned, and wonders whether the enthusiasm with which his impending ascension is viewed in, eg., the middle east, is because the Islamists think he will be a better partner or because they think his naivete will permit the Islamists' agendas to advance. I wonder.

If, like me, you can scarcely get enough Victor Davis Hanson, you should not fail to visit his own Private Papers collection of online writings, and visit it often.

Last year I read his startlingly good account of the the Pelopponesian War, entitled simply A War Like No Other. For all the nuanced talk among our university elites since the beginning of the Iraq war in 2003 about the Americans being like the "evil," militaristic Spartans, I actually found much of his description of Athenian public debate to be not terribly dissimilar from the destructively self-indulgent flavor of much of our own internal debates. If anything, I found the Spartan singularity of purpose and desperate sense of self-preservation to be utterly beyond what our country is presently capable of, since we feel so securely unthreatened that we feel we can safely indulge ourselves a little bit with the pretty, subtle sophistry of our presidential campaigns and senate debates.

Also, if you are the least bit interested in the notion of assymetrical warfare, Mr Hanson captures the essential struggle between a nation with an unparalleled army and another with a supreme navy, what happens when huge infantry forces are confronted with tiny mobile cavalry forces, the mixture between light and heavy infantry on the battlefield, and honor and morale in combat. It's doubtless the best military history I've read, and I recommend it if you have any interest in either the Pelopponesian War or assymetric warfare in general.

The Effs of Texas are upon you.

Eff eff eff eff eff. Eff. EFF. Effin eff eff eff. EFF all of the effin effers. Eff. Eff eff eff eff eff eff eff eff. Effity effin effs.

I wish I could say something positive, but all I'm coming up with is Eff. Strangely, in a game I expected the Bucks to lose badly, one which I rather bravely dismissed as nearly unwinnable but remained hopeful they'd just make the final respectable, this particular three point loss was the most galling outcome I've seen since...I don't know. Florida '06? Michigan '96? USC three months ago?

Words fail. Eff.

Farewell the Trumpets, as the Brits would say

There's a fascinating article in the Journal from earlier this week called "Russian Professor Predicts End of US." It's written by a Russian fellow called Igor Panarin. I'll let the article's author, Andrew Osborn, introduce Mr Panarin and his theory:

MOSCOW -- For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument -- that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. -- very seriously. Now he's found an eager audience: Russian state media.

In recent weeks, he's been interviewed as much as twice a day about his predictions. "It's a record," says Prof. Panarin. "But I think the attention is going to grow even
stronger."

Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry's academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

This whole concept intrigues me and has done for years.

It's easy to dismiss anyone who warns of Dire Things to Come as a nutjob, crackpot, Nostradomus wannabe, black-helicopter-Michigan-Militia type. And more often than not, this dismissal is probably appropriate. But a theme I have touched on repeatedly in my previous essays is the fundamental and profound unseriousness with which this country of ours conducts its affairs. I've been using Social Security as my favorite Most Pressing Issue in this regard since early 2005, when it became apparent that George Bush's fellow Republicans in the Congress were content to kick Social Security reform down the road to a future administration to deal with.

Surely we all recall the halcyon days of early 2005, no? The win in the bitter election season had produced some alleged political capital to the returning president, some of which he intended to spend on reforming the great hulking albatross of Social Security which hangs round our collective necks. By June 2005 this initiative was dead. While there's surely little point in rehashing the battles of two Congresses ago, the failure to either fix or kill Social Security when the president made it his top domestic agenda item is symptomatic of a large and unattractive feature of modern political discourse in the US (and Europe): a connection to reality that is tenuous and occasional at best.

The details of the Social Security budget aren't that essential for the current discussion, so allow me to summarize: at some point the number of workers paying into the system at present tax rates will be insufficient to support the projected number of retirees drawing from the system at present benefit levels. (Poof! Complex issues made simple.) At present we are (and even in 2005, we were) running some pretty considerable budget deficits even when Social Security was a net contributor to the federal budget, and it is to be supposed that the budget deficits would become unacceptably large at such time as Social Security becomes a net drain on the federal budget. (Leaving aside for a moment the fact that the Congress and our fearless and handsome president-elect appear prepared to regard even staggeringly, unfathomably large deficits with total insouciance.) There are a number of solutions, none of which is terribly complex:

1. Reduce future benefits in some way.

2. Increase future tax receipts in some way.

3. Some combination of 1 and 2.

4. Recognize that the system has become unwieldy for our current economic and demographic climate, and fundamentally restructure it.

5. Decide that all the above are politically undesireable in some way and defer the decision until the budgetary crisis is of sufficient gravity that politicians will be rewarded for taking "brave and decisive" steps to address it.

There are probably other approaches, but I'm pretty sure most of them are just a flavor variant away from being one of the above five.

Naturally our illustrious betters in the federal Congress (which was under nominal Republican control at the time) chose option number 5. In 2008 the foreclosure epidemic, with its effect on the credit markets, and the frozen credit markets' effect on the stock markets, and so forth created a sort of perfect storm where action was unavoidable. It will take a similar crisis in Social Security to achieve action there; I have observed through this that decisions taken at 2AM on a Sunday so as to be able to calm jittery markets before their Monday opening tend not always to be duly thought out. Has anyone really noticed that we've spent half the TARP money to no noticeable effect and with little accountability? That is, after all, $350 billion--mostly wasted because our political betters won't act on anything save perpetuating their own political careers, until God's own hammer comes down wreaking sweet vengeful justice on the wicked and innocent alike.

So how does this ressurection of a four-year old political non-event factor into our good Mr Panarin's forecast?

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces -- with Alaska reverting to Russian control.

[...]

He based the forecast on classified data supplied to him by FAPSI analysts, he says. He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.

California will form the nucleus of what he calls "The Californian Republic," and will be part of China or under Chinese influence. Texas will be the heart of "The Texas Republic," a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an "Atlantic America" that may join the European Union. Canada will grab a group of Northern states Prof. Panarin calls "The Central North American Republic." Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will be subsumed into Russia.

[...]

Interest in his forecast revived this fall when he published an article in Izvestia, one of Russia's biggest national dailies. In it, he reiterated his theory, called U.S. foreign debt "a pyramid scheme," and predicted China and Russia would usurp Washington's role as a global financial regulator.

Let's assume for the sake of discussion that he's wrong on the particulars, especially the date, and instead give consideration to the underlying question. This first step in the evaluation process is the one which normally is skipped--to talk like this about the United States after all seems more than a little ridiculous. So much easier to skip to the conclusion: nutjob. Impossible. But this skipping about over the hard parts of analysis strikes a bit as evidencing intellectual laziness, and it's here that we will find the seed of our fair republic's eventual undoing (never mind that our foreign debt is, in fact, fundamentally a pyramid scheme).

Let's start with what ought to be an uncontroversial proposition: the days of the United States being the world's sole military superpower, and its foremost economic power, will eventually come to an end at some point in the far reaches of future events--yes? Rome was once the world's mightiest empire and its capital and its reaches were referred to as "Eternal Rome." Now it's merely the 7th largest economy in GDP terms, which certainly isn't bad given that it comes mainly on the backs of Ferrari and Beretta, but it's a rather distant 7th at less than one-sixth that of the US. And less than a hundred years ago, Britain was the greatest empire in history in its geographic span and its military and economic prowess, and it is today similarly reduced in stature. And, for added relevance, the Victorian Empire came to an end as the result of a war which Britain won but which saddled them with insurmountable foreign debt and insufficient exports to actually satisfy their overseas financial obligations (does this sound familiar?). So: empires end. Yes?

Let's continue with what ought again to be uncontroversial: the world is an unfriendly (often hostile) and competitive place. Our own perpetual dominance of the world economy is by no means a certainty. China, with its >1B population and slave labor, may well overtake us one day. India, a nuclear-armed democracy with a population far greater than our own, may do so as well. What can keep us the world Number One is a lot of hard work, continued innovation, etc--basically the same instincts and attitudes that got us where we are to begin with. But so much of our ruling class has become totally divorced from the basic human condition--that of a medium-sized hairless mammal trying to ensure survival in a dangerous and difficult world--that we have become willing to tie our own hands competitively, simply assuming that our rightful place in the universe of nations will be ever unchanged and unchallenged.

Let's consider the accomplishments of the 110th federal Congress.

The current Congress will most likely be remembered for a $700 billion bailout lawmakers passed in October, in response to turmoil in financial markets. The bill allows the Treasury Department to buy troubled mortgages from financial institutions and stock in financial firms to limit the global economic fallout from drops in home prices and increases in foreclosures.

Top lawmakers quickly wrote the legislation in a series of round-the-clock negotiations with the White House over several days in late September. However, House lawmakers balked at being perceived as bailing out Wall Street and caught leadership by surprise by rejecting the initial measure — a move that sent stock prices plummeting.

A few days later, the bailout measure was approved by both chambers, but only after lawmakers added new oversight provisions for managing the $700 billion. Also, “sweeteners” were tacked onto the measure, including bipartisan mental health parity legislation and extensions for a package of popular tax breaks.

So even when faced with a genuine SHTF crisis, we confess ourselves unable to pay attention long enough to simply deal with the present crisis, at least without LOOK! A SQUIRREL!! funding special pet projects totally unrelated to dealing with the matter at hand. Exhibit A.

In 2007, lawmakers also passed an energy bill that that will raise fuel-efficiency standards for vehicles for the first time since 1975. Additionally, the measure would set new requirements for developing renewable fuels and contains numerous provisions to promote energy efficiency.

“This legislation is a historical turning point in American environmental policy,” House Majority Leader Steny Hoyer (D-Md.) said.

Exhibit B. The congress clearly has satisfied itself that we don't actually have to compete in the messy, fussy world of automotive manufacture. Evidently, we can instead focus our efforts on writing laws about how many miles per gallon to get, and that all cars be equipped with traction control, and the like--both measures have to make a congressman (or -woman, let's not be sexist by failing to recognize the contributions of women toward realizing these deleterious accomplishments) feel good about his work for the day. But it just raised the cost of every car sold in this country, and lowered the standard of living for every person who now has to pay more for a car. But our standard of living is so high, it won't matter if we shave just a little bit off of it so the congress can feel good about itself.

GOP lawmakers said Congress’ most significant action on energy came this fall when leaders opted not to renew a long-standing federal ban on offshore oil drilling.

True. But it failed to repeal the still-continuing ban on ANWR oil exploration despite what at the time was $4.50 gasoline. The Congress, evidently including even Republicans, has satisfied itself that we don't need to utilize resources that we already own here on US soil if it harms the delicate sensibilities of the greener members of the congress. Even if ANWR was only capable of making a small difference in the price of fuel, the clear choice was (and is) between (a) let's make a small difference in the price of fuel, and create a bunch of construction jobs in the process, or (b) let's leave ANWR pristine for the caribou and not create a bunch of jobs in the process. The slight degradation to the standard of living of everyone in this country who buys fuel won't matter much since our standard of living is really high anyway, and not creating the thousands of jobs the project implies is also appropriate since we have so many jobs laying around unused as it is.

Also, it's worth observing that the most positive accomplishment by the last congress was an act of omission, rather than comission, which kind of says it all.

Other key legislation that passed included [a] five-year, nearly $300 billion farm bill authorizing federal agriculture and nutrition programs, despite a White House veto.

Once we've run up the price of corn to astronomical levels thanks to ethanol mandates, which also increases the price of any products with corn as ingredients, or any animal products (eg., beef and milk) fed with corn, we should be looking for ways out of giving subsidies to farmers since their products are certainly priced quite generously at present. Instead we decided to give them $300B, which even by federal government standards is a reasonably large wad of cash. Our craven but otherwise excellent political overlords have determined that they don't want to ask farmers to sacrifice the subsidies they've grown accustomed to, especially given that the farmers might then make some of the politicians unemployed, so naturally asking them (the farmers--and, come to think of it, the politicians) to compete on a level field without subsidies is out of the question. Even though this reduces the average taxpayer's standard of living slightly (both because of the taxing which must be done in order to, ahem, redistribute the $300B and by inflating the price of most of our foodstuffs) this won't matter much because our own standard of living is teh awesome already.

It would be possible to continue--really, it would--but this ought really to summarize the flavor. Every time you hear a mandate issued by the government, you should wonder if a hungry competitor in China bears the same burden, and if we can simply assume repeatedly that our standard of living is just so awesome that we can afford to sacrifice little slices and bits of it at every turn for measures which make our elected betters feel warm and titilated inside. Our hungry competitors operate under no such compunctions, and the day may well come that our self-indulgence and intellectual laziness catches up with us.

Will that day be in summer of 2010 like Mr Panarin predicts? Probably not. He's probably just a nutjob. After all, the idea that a fractured United States would come under foreign influence is a bit implausible (especially the idea that the heavily armed part which includes Texas and Florida would come under the sway of Mexico; individual Texans are probably better armed collectively than the Mexican army, to say nothing of the Texas national guard; on balance, I'd say the Republic of Texas attacking Mexico is far likelier). And Canada absorbing the north-central states seems equally a bit ridiculous; no matter how goofy Michiganders are, something like 80% of them are rifle-toting deer hunters who would probably respond rather vigourously if the Mounties started streaming across the Ambassador Bridge.

America's day in the sun will likely end eventually. But I would much prefer it if most of its wounds were not self-inflicted by the capricious self-indulgence of our political classes and the pie-eyed democrats who elect them to rule benevolently over us.

George Lucas, military genius

A couple weeks ago the first Star Wars was on Spike or something and I couldn't help but watch it. I'm talking about episode IV, "A New Hope," naturally, not the JarJar abomination.

I've seen this movie countless times. I don't remember whether I saw it in the theater, and I would have been about seven or something when it came out, so I probably wouldn't remember it anyway. But I remember it was a weird Tulip Craze type of obsession to talk about how many times one had seen it, and people would claim the most outrageous and financially unlikely things, like "I've seen it in the theater six thousand seventeen times," etc. My main recollection of it was that it aired on television in 1983 during the buildup toward what at the time was called Revenge of the Jedi (which I still call it to this day, since that was how I was introduced to it and it stuck).

So we recorded it on VHS from over-the-air, antenna-received broadcast, awesome commercials and all (I remember one particularly stupid one of a Mercury Cougar following people around for no clear reason but to remind them how Awesome it would be if they would buy a Mercury Cougar, and a bunch of Diet Pepsi ads where they basically refused to actually show the people doing the talking). My brother and I watched our VHS tape on a solid steel VCR which was almost as big as the 19" TV we were watching on, almost every day after school for about a year, just so we could increase our watch count. It was a preposterous waste of time, but fun nonetheless, and I grew up convinced that Star Wars was among the greatest cinematic achievements of all time (after the Indiana Jones movies, of course).

The general and acknowledged awesomeness of the movie notwithstanding, we always sort of winced at a lot of the dogfight-in-the-trench scene at the end, despite being kids and all. Among the reasons:

1. Gold Leader seemed really pompous and amused by his own dialog, in a Max Headroom kind of way. We always hated Gold Leader.

2. Gold Five sounded really dorky when he kept flatly insisting, in his angry monotone that Gold Leader "stay on target," prompting even the notorious tightass Gold Leader to tell him to "loosen up."

3. Gold Two just looked like a dork. His lips were like really fat and stuff. I had a hard time buying into him as a fighter pilot.

4. Y-wing fighters were also like really gay overall.

5. When Luke Skywalker switches off his targeting computer, his ground commander says "Luke, you switched off your targeting computer. What's wrong?" and Luke replies "Nothing, I'm all right," and no one decides that that non-explanation warrants any follow-up questions when some cornshucking sucker of a rookie pilot decides I'M GOIN' TO MANUAL right before an all-or-nothing weapons launch.

There were other reasons, but Indiana Jones flying in out of the sun and blowing the crap out of everyone with his lasers went a long way toward making up for the rest of this nonsense as far as my 1983 VHS-watching bad self was concerned.

What struck me when I watched this last week was how stupid all this scene was. They managed to get two three-fighter groups into the trench at different times, and both attempts played out mostly the same: one guy appointed as the only one who would take the shot, and the other two guys fly around behind him offering helpful suggestions ("stay on target") and getting shot down by tie fighters that got on their six, while attempting no evasive maneuvers of any kind. When Red Two gets hit and Luke instructs him "get out of there, you can't do any more good back there," I must say I have no idea what good he supposedly was doing before he got his dumb self hit. And Red Leader sounded altogether surprised when he said "they came at us from behind!" Do tell. And really, Indiana Jones is the only one who has his act together in this scene, flying in from above and catching Darth Vader too busy using the Force to even bother to check his instruments and notice a slow-moving freighter bearing down on him from above.

Then I noticed that the fat guy's name was actually "Porkins." You read that right. Good times.

I resumed making fun of the whole Gold Squadron of doofuses and suddenly became curious if any of these yahoos had ever acted again, or if the horrible weight of their collective sordid history as Gold Squadron had ruined their acting careers. Turns out Gold Leader was played buy a guy named Angus MacInnes, who has five dozen movie credits to his name after Star Wars and owns a pizza shop in Edinborough. Had I known that in 2005 when I was in Edinborough you can bet your sweet britches I would have popped in for a pie and reminded him to "stay on target."

Speaking of "stay on target," Gold Five (Graham Ashley) had already been dead four years when I started making fun of him. I feel kinda bad about that in retrospect, but kids can be so terrible. Gold Two (Jeremy Sinden) died in 1996, which also is sad and made me regret making fun of his character as a kid. Red Leader (Drewe Henley) more or less never acted again (one could argue the same is mostly true of Red Five). Porkins himself (William Hootkins) passed away in 2005, though not before becoming better known to Freebird as a character called U.S. Translator in the 2004 episode "Impact Winter" of the greatest television program (nay, the greatest fictional creation) since the days of Sophocles.

Not only did George Lucas create a movie with a climactic scene so militarily implausible as to invite doubt on the part of a 12-year old, but it seems like he singlehandedly ruined a bunch of careers too. The moral here, if there is one, is probably that it's not a good idea to become obsessed with an entertainment program, be it Star Wars or West Wing, because then you'll either waste all your money on boxed DVD sets of a crap television program or you'll waste all your time finding links to the personal back story of incidental characters on the sadly obsessive wookipedia.org just so you can populate your blog with them as you write three-decade-late critiques of thinly veiled francophilic explorations of the noblesse resiste during the Nazi occupation instead of doing honest work. Either way, it's just kinda sad.

Also, don't make fun of people, or you might one day regret it.

Tomorrow! The auto bailout? Or Al Gore's new pantaloons? Either way, you'll not want to miss it.

And the answer is...

The two worst Amendments to our otherwise excellent Constitution came rapidfire under the deranged tutelage of Woodrow Wilson and WH Taft, no matter how much I'd rather blame the whole thing on Wilson. These are the 16th and 17th: the 17th rendered the Federal government immune from influence by the states, and the 16th gave them so much money that this immunity was certain to be abused. And, a century later, Ted "Chappaquidick" Kennedy remains a senator and his relative--I don't know and can't be bothered to look up what the relation is, as if it matters--Caroline, is about to become a deserving recipient of Hillary's old seat. And so it goes.

And, it must be admitted, both these ingenious (and disingenuous) naked power grabs came with solid Republican majorities in the senate, so the party of small government was as prone to flipping out back then as it has been the last eight years.

The third worst one I selected sort of for fun and was the 18th. I selected it mainly because I like booze and the idea of outlawing it by writing such a ban into the Constitution (which, think about it, we don't do now even for really bad stuff like heroin or tofu or Al Gore blowup dolls) strikes me as both utterly mad and also as a perfect example of what happens when democrats take sole posession of Congress and decide to write amendments.

Effin booze-hating democrats. And now they hate tobacco just as much, but are too drunk on the power and money which its taxes convey to actually have the courage (not to say honesty or integrity) to outright ban the stuff. And the party which has a crush on the idea of letting everyone smoke pot all the time (sorry, just for rigorously regulated and controlled "medical" use) thinks smoking pot is great but smoking cigarettes make you the devil--or just a devilishly handsome and wicked smart democrat president-elect, I guess.

I kid.

Mmm, card check. I got yer card check right here.

So some rabble rousers at a North Carolina meat packing plant have finally succeeded in imposing their will on their co-workers and their employer.

The United Food and Commercial Workers, which had lost unionization elections at the 5,000-worker plant in 1994 and 1997, announced late Thursday that it had finally won. The victory was significant in a region known for hostility toward organized labor.

That the unionizing idea was voted down in 1994 and again in 1997 and was even being voted on again shows that unions never take no for an answer. Imagine the implications for this point under a card check regime, which we'll return to shortly.

The vote was one of the biggest private-sector union successes in years, and officials from the United Food and Commercial Workers said it was the largest in that union’s history.

Congratulations, now you can get in line behind General Motors in driving your employer into the ground as the price of your product rises due to higher labor costs and restrictive work rules, with no commensurate increase in product quality. As a consumer, I sure can't wait to pay more than I'm accustomed to for the same quality product I've always enjoyed from Smithfield. As a consumer, what's in it for me to pay more for a product that's of no higher quality?

Smithfield's competitors are probably celebrating as much as the pro-union thugs are today.

“It feels great,” said Ms. Blue, who makes $11.90 an hour and has worked at Smithfield for five years. “It’s like how Obama felt when he won. We made history.”

“I favored the union because of respect,” said Ms. Blue, who is black. “We deserve more respect than we’re getting. When we were hurt or sick, we weren’t getting treated like we should.”

Sigh. The "respect" canard. Pass.

Many unions are pushing Congress to pass legislation that would enable unions to organize workers by having them sign pro-union cards. “I would say in this case, it shows that the union can win without a card check,” [company spokesman Dennis] Pittman said.

But [union thug Joe] Hansen said the 15-year unionization fight showed how hard it was to win under the normal system.

I'd say the 15-year unionization fight shows that pro-union agitants are something of a cancer to a workforce insofar as they never can really be cleared out, no matter how many votes against unionizing you record.

Imagine the glorious world that awaits us if card check passes. If the first round of canvassing for signatures indicates any support whatsoever, union petitioners (not to say thugs) will be able to simply revisit all those who had previously turned them down and ask again for a signature.

And again. And again. And yet again, with more, ah, "feeling." And again in the parking lot at night on the way to your car. And perhaps again at your house some quiet evening at home. Why not? What's their incentive not to do this?

So congratulations to the union agitants at Smithfield. If there's one thing union propaganda teaches us, it's that even if the economy is crumbling around us, anti-competitive measures to effectively outlaw layoffs can still guarantee our jobs, salaries and rich benefits. Until the company dies.

Happy poll funtime hour

I whimsically suggested that the 17th Amendment was one of my three least favorite amendments in my last post, and invited my three readers to try to guess what the other two were. Freebird pegged one of them (the evil 16th Amendment). Let's have a fun poll trying to guess the other. See above and keep on smilin'!

Go Blago!

Rod Blagojavich is [pause while searching for a precise, delicious word and coming up with...] an idiot.

The fact that another Illinois politician has proven to be fantastically, willfully corrupt is really no surprise, though having the balls to try to sell an open senate seat while the media is still in Illinois covering (not to say celebrating) the ongoing BHO transition (not to say ascension) is pretty dumb. It's even dumb if you assume that Illinois is so corrupt and the media to infatuated, like a bunch of 7th-grade girls who think that pretty boy down the hall is just dreamy, to notice, since there was a grand jury investigation underway into corruption in the governor's office when he indulged in this tawdry shenaniganry.

I was reminded throughout this simply delicious episode that being in the opposition, as I now am, and finding oneself blissfully relieved of the constant grim obligation to defend the indefensible things that government is usually doing, has its moments of relief. Or comic relief.

Let me be the first to simply say, suck it Blago. You and Elliot Spitzer can go hang out and play canasta with Ted Stevens for a decade or so and stay the hell out of my wallet.

Is this what life was like for everyone before the advent of the cursed 17th Amendment to the Constitution (the third-worst amendment ever; see if you can guess the other two!), or just in the Workers' Republic of Illinois? Recall that in the halcyon days before Woodrow Wilson, state legislators directly appointed all US Senators, leaving half the Federal government directly accountable and beholden to the state governments. So it was similar to virtually every other Amendment to the Constitution and every significant Supreme Court decision, all of which have evolved our tender Federal government in one direction only: toward the constant accumulation of power at the expense of state governments and the people collectively (DC v. Heller being the exception that proves the rule). This modern and more democratic measure of popular election of US Senators is less than a hundred years old. It seems odd or even blasphemous for me to cast about in an unabashadly undemocratic fashion calling this transfer of power from the political elite to the people a major contributor to the evils facing the country. But it is.

Reread your Federalist Papers, especially #45-46, authored by James Madison. There was a time in America when it was possible to venture the following argument about the balance of power between the federal government and the state governments:

The State governments may be regarded as constituent and essential parts of the federal government; whilst the latter is nowise essential to the operation or organization of the former. Without the intervention of the State legislatures, the President of the United States cannot be elected at all. They must in all cases have a great share in his appointment, and will, perhaps, in most cases, of themselves determine it. The Senate will be elected absolutely and exclusively by the State legislatures. ... Thus, each of the principal branches of the federal government will owe its existence more or less to the favor of the State governments, and must consequently feel a dependence, which is much more likely to beget a disposition too obsequious than too overbearing towards them. On the other side, the component parts of the State governments will in no instance be indebted for their appointment to the direct agency of the federal government, and very little, if at all, to the local influence of its members. (Federalist 45)

But ambitious encroachments of the federal government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole. The same combinations, in short, would result from an apprehension of the federal, as was produced by the dread of a foreign, yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to a trial of force would be made in the one case as was made in the other. But what degree of madness could ever drive the federal government to such an extremity.
(Federalist 46)

What degree of madness indeed. Voila, in less than a hundred years, the gift that is the 17th Amendment keeps on giving, and has given us demagogues for senators, elected by a large enough body of people that they can be known by essentially none of their own constituents and must fail astonishingly before they can really be held accountable. I put it to you that the Federal government we have today, which has reduced the states to mere administrative entities in all but name, could never have achieved such total dominance over the states without the Senate having first gotten off the hook of having to report directly to the state legislatures for appointment.

It's hardly surprising that pre-17th Amendment Senatorial appointments were allegedly frequently tainted by backroom deals among the state legislatures. But is that really any worse than we apparently have now, with Blago going shopping in Illinois and an omnipotent and unapproachable federal government getting ready to give my hard-earned tax dollars away to those among us who made the worst decisions on home financing, and to companies that have made such a hash of relations with their employees that they have managed to burn through $18 billion in cash in the last 3 months.

Anyone who thinks the bailout passing Congress today will be a good investment for taxpayers hasn't been paying much attention. A bankruptcy makes so much sense on every level that only a bunch of politicians could fail to notice. For any company that made a crap product using labor that was twice as costly as their foreign-branded competition and tried to do so while shouldering decades of legacy labor costs into what's looking like a major recession, a bankruptcy would be a great opportunity for a do-over: unless, of course, the doubly-priced and under-efficient labor group is a major constituency of the majority party in Congress and the White House. Usually the democrats want judges to be deciding policy for everyone (I really don't need to cite an example here, do I?) because they know their scattershot social mumbyjack wouldn't fly in open elections. Why not allow a bankruptcy judge to decide what contracts GM can and cannot afford to keep without modifications?

Raise your hand if you think that GM's political charade of a plan will succeed in any serious way. Not the feel-good way of liberal official Washington, but the hard steely-eyed marketplace reality that all these "green" cars are either less desirable, or more expensive, or both, compared to what GM has been making already for years--or, presumably, GM would already have been making these highly desirable and highly profitable green small cars all along, no? They've designed a business rescue plan around what will please our anointed betters in Congress with their Haight-Ashbury sensibilities about environmentalism (I'm looking at you, Pelosi) or their UAW obsequiousness (Levin, Voinovich) or their desire to simply be able to touch and bless every individual dollar ever spent on anything in this country before it can be actually spent (gosh, so many examples, but Chris Dodd and the evil Barney Frank will suffice). They've done all this at the expense of any real and serious discussion of how this magical infusion of cash and happiness and grooviness is going to actually make money. As one who's about to become an owner of GM (thanks, Barney) I have some interest in knowing whether they'll actually be able to become profitable, and I fear I must confess to not seeing it.

So either (a) GM discovers a magical way to make small green cars profitably, without major overhauls to their union labor contracts, which they've never done before; or (b) they essentially burn through the $34B they're about to be given, transferring it to generally democrat union laborers as payments above-market-rate for their labor to produce cars no one really wants now that gas hit $1.49 today. In the former case you get to leave snotty messages at my blog saying "told you so," and I'll stand humbly corrected. In the latter case GM will be back for another $50 billion in six months, and once we've firmly established that they are too big, and the economy too fragile, for them to be allowed to fail, they'll get that second installment too.

Care to offer odds as to which is likelier?

DEATH TO THE BLUE RAT

It's Michigan Week.

Contrary to past form, I've managed to remain substantially productive at work this week, but not because I think the game is automatic or anything. I'm old enough to remember John Cooper's Reign of Terror and have no illusions about the actual inevitability of any supposedly inevitable wins by The Ohio State University over the wicked, cheating scoundrels from Meatchicken. And literally everything in the world (apart from Meatchicken's obvious and terrific awfulness) points to scUM pulling the upset this week.

First-year coach at TSUN, not one of whom has ever lost their first game against Ohio State: check.

Ohio State never having ever, ever beaten Michigan five straight times: check.

Wildly overconfident tOSU fans with no sense of historical perspective on the rivalry and possibly infecting the mental composition of the actual Ohio State players who after all are only 20 years old and themselves have no sense of historical perspective on the rivalry: check again.

To remind myself to actively hate Michigan every day and with every fiber of my core, I will be watching ESPN Classic's rebroadcast of the 1995 and 1997 Ohio State self-immolations against TSUN when they are on this week. As a diehard Buckeye from way back in the day before all this "spread offense" business was all the rage with the kids, I must say I find Ohio State's 1996 loss to Michigan the most painful and inexplicable of the many stunning examples of John Cooper finding a comical and improbable way to lose to an inferior team from a cold and rat-infested northern climate. Since I'm really trying hard this week to get my anger up, allow me to ask rhetorically: why does ESPN never rebroadcast that 1996 loss, or the stunning shutout loss in 1993? The 1995 and 1997 losses are on all the time. Why not the 1988, 1989, 1990, 1991, 1999 or 2000 losses, which were no less bitter for being less surprising?

Yes, this makes me sort of a connessour of the many flavors of defeat, which was a dish annually served to us Buckeyes in barely differing vintages for thirteen long and desperate years beginning the same month the first George Bush got elected. (And, this being a political blog, I can't help but observe that we'll be getting a different but similarly rancid flavor of defeat for at least four years beginning the month that BHO was elected. See if you can guess what I'm referring to! End political aside.) I use this angle to remind myself never to let down my guard against the treacherous heathen from Ann Arbor--because that's just what they would want us to do.

Never stop hating Michigan just because they momentarily appear laughable and hapless. It's all a show and a clever ruse. If the Buckeyes fall for it and allow the improbable 20-point spread go to their heads, the northern rodents will ply their sneaky rodent wares on us all and rise up from their totally feigned ineptitude to stab our Godfearing Buckeye hearts with a plastic spoon melted down into a pointy prisonyard stabbing implement. Never trust a Michigan rodent. DEATH TO THE BLUE RAT.

More on GM from WSJ

There's a great (subscription) editorial in the Journal today entitled Why Bankruptcy is the Best Option for GM, penned by Michael E Levine. Naturally this makes me feel just unsufferably smart for pointing some of this out a few days ago, and it's worth excerpting in areas I didn't explore:

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month.

I hadn't really forgotten the Jobs Bank, which is probably the most egregious example imaginable of union excess. Many former employees who were laid off report to the Jobs Bank office daily to "earn" eight hours' pay by playing cards and drinking coffee. Exactly what GM thought they were getting by offering this concession is hard to imagine.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.

So I'm not the only one who thinks throwing money at a failing company without reforming it first is a dumb idea. As a voting taxpayer, I kind of do have an interest in whether that money (mine, after all) is thrown about with reckless stupidity.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won't be able to carry the weight of GM's past.

Amen. It's gratifying to see that the grownups have joined the conversation.

Bailouts 'R' U.S.

The $700B was naturally just the beginning.

Now that we've established in the public's mind that virtually every company in this grand old republic of ours is "too big to fail," there will be no end of requests. This week's pleas from General Motors (which the Michigan public naturally supports) and the good Mr Paulson's new and randomly-evolving strategy to now use the money to directly bail out consumers are a taste of what we're getting into here, where the general assumption is that the federal government can simply write checks to cure all ills.

BHO and Nancy Pelosi have chipped in with their helpful suggestions that we solve the nation's problems by extending unemployment benefits and increasing spending on food stamps, and also hire a bunch of workers to upgrade roads and other "crumbling infrastructure." This overlooks that unemployment insurance already runs for three months, and there is evidence suggesting that increasing the length of time a person can receive a check for not working may sometimes--surprise!--increase the duration of unemployment, but nevermind. And Nancy wants a(nother) $25B handout to GM.

Thankfully, the good news this week is that congressional Republicans have already started to regroup after the past several years of spineless and unprincipled opportunism have cost them two elections by wide margins. The Republicans in the first half of Bill Clinton's first term were a disciplined and (relatively) principled group; nothing quite lends focus to an operation like being the last line of defense against an ascendant liberal doctrine determined to shower the masses with taxpayer-funded hugs and rainbows and lollipops and soothing assertions that the scariest elements of competition and bad consequences can simply be legislated from existence.

John Boehner, from my temporarily blue state of Ohio, has come forth to lead Republican opposition to democrats' intentions to throw good money after bad by allocating some of the $700B financial system bailout to General Motors. Boehner observes that spending "billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy." [Applause--Ed.]

This makes sense on a lot of levels; the whole $700B spending spree by the government should be an alarming prospect of impending Soviet-style nationalisation to anyone who believes our economic freedom is part of the great tradition of personal liberty in the United States, or who believes that the innovations of free enterprise are the cause of our unprecedented economic hegemony among the other participants in the world economy, as I do.

The massive bailout made sense only in the context of avoiding something much, much worse, and the failure and resultant bankruptcy of any particular company doesn't elevate to that level. The only thing that elevates to the level of requiring an unprecedented nationalisation of private companies and the expenditure of that much money would be something truly horrifying that would rain down sweet justice on the innocent and guilty alike--such as the total failure of the banking system. The $700B we're talking about the government handing out to essentially whomever they think needs the cash is a staggering amount--more than the total cost of the entire Iraq war--and is the equivalent of a financial nuclear option. A hammer this big shouldn't be used against anything other than an existential threat, and the democrats have predictably cheapened the argument by (equally predictably) drifting toward turning the whole program into a broad giveaway to everyone and anyone who supported democrat campaigns.

The real issue here is whether we are willing, amid a severe economic challenge, to act like serious grownups for a little while and choose accordingly. The appropriate level of seriousness which this discussion requires is contrary to the norm in Washington, but not everything reduces to the cartoonish moral simplicity of the arguments offered by Chris Dodd and Nancy Pelosi--that we can give (another) $25B to GM and that the only measures we need take to ensure that we're not merely increasing the cost of the eventual bankruptcy is to place "severe limits" on executive compensation. This is a favorite bugaboo of the left, and is offered as the sole product of their supposedly serious review of GM's cost structure, and what needs to happen to ensure its longterm viability. It doesn't work.

Let's take a look. If we're going to do this honestly, now would be a good time for everyone to go download their very own copy of General Motors' 2007 annual report, so we can argue from facts instead of parroting talking points. There's a lot of typical glossy corporate propaganda in the report, but skip past about the first 40 pages and we can get to the meat of the financial statements.

According to the consolidated statement of operations (page 49), GM lost $38.7B last year. That's a truly awesome failure on many levels and approaches federal government levels of fruitless expenditure, but soak in the sheer awfulness of the number for a moment: a single company lost $38,732,000,000 in one year. And it would have been worse except for having sold a major component of the company during 2007 (the Allison Transmission business) and recording a gain of almost $4.6B on this. The number which should grab your attention here is Loss from Continuing Operations: $43.3B.

Against this monumental loss, Nancy Pelosi proposes "strict limits to executive compensation" as a magic bullet. Individual executives' compensation is public record, and can be found, among other places, here. How much do they make?

Including salary, stock awards, stock options, incentive and all other forms of compensation, they make a lot by the standards you and I are used to living on. Rick Wagoner, CEO and Chairman, makes $14M, which is obviously a lot. If you add up the total compensation of Wagoner, Fritz Henderson (CFO), Bob Lutz (Vice Chairman) and the two other group vice presidents named in the table, you get $38.9M, coincidentally contributing almost exactly 0.1% of GM's loss for the year. So if Nancy's "strict limits to executive compensation" could convince them to volunteer their time and work for free, GM's loss for 2007 would still be 99.9% of what it actually was. So while there may or may not be a playground issue of fairness going on, this executive compensation is not really where the money is.

Much of the money is in note 15 to the financial statements, Pensions and Other Postretirement Benefits, which is the grand legacy of decades of UAW extortion. Take a look at the table of benefit payments on page 107 of the annual report. In 2008 GM plans to write $7.6B in checks to its US pensioners; when you figure in non-US pensioners and other postretirement benefits (eg., free health insurance) the total balloons to $13.5B, so we've stumbled onto an apparently major component of it. The legacy of being under the thumb of the union for decades is the annual expenditure of more than thirteen billion dollars of checks written to people who no longer are productive contributors to the company.

[Technical note to other accountants: yes, this oversimplifies things, and the payments are technically from the Plan, not the Company, and yes, the Plan earns a non-trivial amount of interest on its assets so only a portion of this must be funded annually by cash contributions by the company. But the contributions cumulatively made by the company to the plan over the years represent foregone modernizations, capital improvements, R&D, etc; and the company and probably even the union wish at least some of that cash was still presently on hand to pay salaries.]

Page 50 of your GM annual report tells us that GM sold 9,370,000 cars worldwide in 2007. The $13.5B in postretirement benefits amounts therefore to $1,441 per car sold. This is how much a GM buyer pays to the union every time they buy a GM product, just for the union's former workers.

So what ultimately is the point of all this? That the UAW contributes more to GM's long term uncompetitiveness than do much maligned executive compensation packages. The union has been so successful for so long in its negotiations with management that it has finally actually bankrupted the company. I struggle to comprehend how a workforce can negotiate thirteen billion dollars a year out of its employer just for its retirees.

I recognize the issue of equitability at stake in renegotiating any of this, since real individual people who have reached retirement age and have planned their finances carefully around what their union promised them are not in a position to adapt to change very well after their working careers are over (leaving aside the hale healthy 50-year olds retired on pensions equalling their full pay and indexed for inflation, who I can't really feel sorry for despite my best efforts). It's not just that it was a bad deal for the company, though it was; it was so bad a deal for the company that it's going to kill the company outright.

Now. What do we do about this? If a federal bailout is to be made, it must be done with fundamental changes to GM's cost structure that make it viable. To do otherwise is simply to throw taxpayer money down the drain. None of GM's competitors (even Ford and Chrysler, to say nothing of the much more relevant Toyota) have this huge legacy of costs built into it. If GM is to be competitive, it's insufficient to simply say that executives should be paid less. The real question is whether GM can afford to continue to pay UAW wages and benefits when Toyota and Honda plants in this country largely don't. I don't think anyone should think it a good thing that reducing pay and benefits to union workers is the likeliest outcome, but if we're honest about the analysis, it is pretty clearly a necessary thing.

And, incidentally, if the company enters bankruptcy it will suddenly gain the legal right to negotiate alterations to many of the contracts which provided for these legacy costs. So for GM itself (though not its present shareholders), bankruptcy would actually have some salutary consequences. And contrary to the doom-and-gloom forecasts of millions of jobs lost, it's worth observing that when a company that size enters bankruptcy, it doesn't simply close its doors and sell off its remaining equipment. Worldcom, to name but a single example which occurs to me offhand, went into bankruptcy in 2003 and came back stronger than ever. The new GM would likely do the same.

Ultimately this entire issue, from union benefits to bailouts and the discussions about it in Washington all feature one prominent defect: a willingness to embrace wishful thinking and avoid hard choices. It would be great if union retirees could really quit at 50 on full salary and benefits for the rest of their comfortable lives (or accountant retirees, for that matter). But it is not affordable. Insisting that it is, or should be, or gosh-that's-what-we-were-promised doesn't change the fact that there's no such thing as a free lunch, however much we would want it to. Bailing out everyone in the country who's made a bad decision in real estate by conjuring money from thin air doesn't make everyone rich either. You can't legislate prosperity or argue that only the fatcat executives are to blame or should have to pay to fix the mess, because the money just isn't there. And if a federal stimulus could really fix this thing, let's stop messing around with a paltry $300 per person and let's really fix this thing.

If GM goes bankrupt and forcibly imposes some reality onto the discussion, that wouldn't necessarily be an entirely bad thing.

The big one

For all the fuss about government-provided health care, bailouts to AIG, &c, a phenomenon approaches which I think probably demands more attention due to the sheer awfulness of the idea. We approach a tipping point at which more than half the voting public pays zero income taxes to the federal government.

When that point is reached, there is no recovering from what will prove an endless exercise in trying to squeeze more money from fewer people, in order to provide more services at greater cost to more people. Once a voting bloc gains the power to tax a minority without restraint, the largesse-addicted majority loses the incentive to work since raising someone else's taxes is simply so much easier; and, incidentally, the working and taxpaying minority loses the incentive to work as well since the return on incremental hours worked or capital risked will diminish rapidly.

An example of this principle in action can be observed at the level of state governments wrestling with the implications of falling tax receipts. During the halcyon days of the late 1990s, virtually every level of government everywhere ran a budget surplus, and most of them rather lazily allowed spending to increase far in excess of either inflation or population growth. When the economy tanked after the dot-com bust, state and local governments had managed to get their constituents used to certain levels of services and government spending, which they could no longer conveniently afford to provide. This phenomenon is one of the problems Michigan and Ohio have had, and they're still picking up the pieces. When I was in school up at Eastern Michigan, we spent a fair amount of time in my government accounting class discussing this process, and it was an instructive exercise.

One constant which you will notice as you listen to the budget debates in Michigan is that it is considered politically expedient to raise the cigarette tax repeatedly. In 2001, from a budget amounting to $35B, cigarette taxes amounted to $596M (1.7% of total state revenues from all sources). By 2007, the budget had increased to $39B despite the flagging Michigan economy, and cigarette taxes had roughly doubled to $1.1B (2.8% of total revenues). Since only 21.1% of Michiganders smoke, it's a politically low-cost proposition to raise cigarette taxes every time a budget crunch presents itself--certainly easier than proposing meaningful spending cuts no matter how badly the economy is doing.

Now it may be supposed that raising cigarette taxes is good in that it encourages people to quit since it's more expensive (though I haven't noticed a tremendous amount of success behind this concept in the usage of illegal narcotics, which suggests that some people will find the black market to be more appealing than forgoing cigarette consumption). To the extent this is true, it is certainly for the good, but there's more to it at work than just that. The 79% of Michiganders who don't smoke have increasingly turned to simply raising taxes on a minority to fund their perpetually expanding expectations of spending by the government. It's easy, it's cost-free, and it happens with little or no political opposition most every year in Michigan.

Soon, we who pay income tax to the federal government will become our own minority. When that happens, we will discover abruptly that we have no political power to oppose the ravenous calls of the largesse-receiving majority for us to furnish them with ever more shiny pretty government-funded baubles, and the noble wealthy liberals among us will be surprised to discover that by then it cannot be stopped.

Mark Steyn has an excellent essay out today on this subject, which as always is worth a read.

So where are we now?

Quite the eventful week. A few quick takes on the election: mostly bad of course, since it's no secret I think elevating BHO to the presidency will have untoward consequences for the nation, and that I also regret what this outcome says about our nation and its priorities. But! Ever the optimist, there are a few silver linings to be had if one but pauses to look for them.

The bad:
I'll refrain from even talking about policy here, since frankly that's been exercised over and over for the past three months or so and there's nothing really to add, and it's obviously too late even if I had something new to contribute. But there's two things I think are especially unfortunate.

1. This outcome rewards past bad actions and therefore encourages future occurances of same.

What bad actions? The frenzied, paranoid, repulsive wallowing in a simmering broth of incoherent hate which has represented so much of Democratic opposition policy the past eight years. The years-long campaign at the expense of governing. The Machiavellian disregard for laws (eg. campaign finance) and civility, and the variously successful attempts to suppress free speech which the BHO campaign and its apologists and sycophants in the press have so enthusiastically embraced.

Leaving aside any actual policy outcomes, it would be preferable in a healthy and mature republic to have had repudiated all these bad actions. Is it even conceivable that Democrats will suddenly and unprovokedly abandon all these wildly successful strategies in future elections, or are we more or less permanently to be subjected to this?

2. What the outcome says about us.

I'm tempted to simply overlook the pedestrian observation that the average American doesn't pay much attention, as has been evidenced in countless Jay Leno man-in-the-street type interviews where a staggering number of people can't name the vice-president, etc. But, at the risk of piling on, I'll simply point out that if a Democratic congress has a lower approval rating than George Bush, the logic which was employed to justify sending more Democrats to power in congress simply eludes me. I rather suspect that a non-trivial proportion of actual voters are entirely unaware that Democrats have been running both houses of congress for the past two years.

Also, I must confess that I simply can't grasp how Democrats are given higher marks for how they would handle the economy (and that BHO was probably carried to victory substantially on the expectation that he would solve our current economic woes). Sure, they care more than Republicans. But what are the major business-related planks of Democratic policy? Higher taxes on rich people and corporations. Higher taxes on capital gains, even if that results in a reduction of taxes paid to the treasury, as a matter of fairness. "Ending tax breaks for corporations that ship jobs overseas." Protectionism.

All of these are gut-level reactions which utterly fail when put into practice, at least if their intent is to create jobs and economic growth. I'm sure I'll have ample leisure over the next four-to-eight years to go on about this at length, but for now I'll simply summarize that anti-growth policies do not help to create jobs or wealth, no matter how much we want them to.

The advent of the BHO presidency suggests that we've become totally unmoored and unserious, and we are collectively willing to overlook the fact that wishing things in great and profound earnestness doesn't make them so.

The good:
For a variety of reasons, having a black president will be good for the country. I would rather our first black president have been Condoleezza Rice (which I would have enthusiastically supported), because I think her policy instincts are vastly preferable to those of BHO. But the outcome of the election will at least serve to prove that America isn't just a great seething maze of racism, as some [coughJesseJacksoncough] racialist opportunists [coughAlSharptoncough] have made careers by insisting. Anything that marginalizes Sharpton et al, or at least quiets their rantings, does serve some practical good.

Further along those lines, now that we've demonstrated America's non-racist bona fides, perhaps we can all start to come to agreement that any form of race-based discrimination is bad, and we can start to see affirmative action relegated to the pantheon of those noble programs which have succeeded so thoroughly as to have therefore outlived their usefulness.

One other thing: the Democrats will now have to actually govern instead of simply trying to sabotage every element of public policy whose success might have tangentally afforded some credit to George Bush. Transforming the Democrats in Washington from a bunch of shrill bleating children advocating ridiculously bad policy at every turn and confident in their minority status preventing them from absorbing any actual responsibility, into a bunch of shrill bleating children with bad policy ideas who can now scarcely avoid responsibility for the actions of government, may sober them up just a little. Not much, in all likelihood, but perhaps enough to avoid the most pernicious of their own ideas.

Lastly, the Republicans may now understand that the last two elections are, more than just bad timing from having an economic meltdown in the eighth year of an administration, also a referendum on a party which failed to adhere to many of its own principles. Small government, fiscal responsibility, and the ability to treat the economy seriously and in a grownup fashion are not characteristics of George Bush's administration nor of the Republicans in congress in recent years.

The United States has survived worse than this, and will survive BHO as well, no matter how foolish and ill-considered his policies will likely be. Such good as can come of this should be embraced and advanced at every opportunity. So smile, be brave, and be well.

Where have I been?

Hello...hellooo...

Is this thing on?

I apparently slept through an entire presidential administration since my last post (over at mu.nu) was the day after Indecision '04 as I recall. And here I am again.

Water under the bridge? Check. An incoming administration overflowing of exciting new ideas in spendthrift chicanery? Check again. Finally getting to play the role of dissatisfied opposition party instead of constantly fighting a grim rearguard action against the lies of the Kos Kids? Check check check. It's gonna be a thrilling ride the next four to eight years, and we'll break it all down right here at the newly improved Electronic Countermeasures.

I've gone over the wall.

Check out the new and possibly improved home of Electronic Countermeasures at http://countermeasures.mu.nu.

See you there.

JKS.

BLAH
Thank merciful heaven April 15 has come and gone (well, not for a few hours technically, for you last-minuters out there). I found a happy surprise when I did my taxes that I had a refund coming to me (which, yes, means I paid too damn much over the course of the rest of the year, I know). And part of the happy surprise was that the Bush tax cuts ended up with me having a lower overall tax bill this year, for which I for one am happy. Not everyone I've spoken to is.

Some individuals I know are actually angry at having received a refund this year based on the reduced tax rates and increased child tax credits permitted this year. Since for the first six months of the year everyone's withholding was calculated at the higher rate, almost everyone should have received a refund this year unless they were shrewd enough to trick their company's payroll department into withholding during the last six months of the year at a lower than normal rate.

I for one am pleased to keep more of the money that I work to earn, instead of less, but for those who find their refund check nothing more than a troubling reminder that George Bush has raped and pillaged the Treasury and singlehandedly wrecked the economy such that all posterity will curse his name, I direct you to the third column of page 60 on your Federal 1040 instruction book:

How Do You Make a Gift To Reduce the Public Debt?
If you wish to do so, make a check payable to "Bureau of the Public Debt." You can send it to: Bureau of the Public Debt, Department G, PO Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you file.

I offer this as a helpful suggestion to those magnanimous liberals out there who feel angry because they paid too little tax. Just pay whatever extra you think makes up your fair share, and don't ruin it for the rest of us. If you're really the utterly selfless bunch John Kerry seems to suggest you are, the coffers should be full in no time.

And! Remember this helpful tip for those considering making such a gift:

TIP You may be able to deduct this gift on your 2004 tax return.

The mystery majesty of government at work.

JKS.

I don’t think I was quite precise enough in my last article.

Econopundit posted a few remarks on it, and pointed out a helpful paper published by the Bureau of Labor Statistics discussing the different series and their methodologies and reasons why they produce different measurements. Econopundit summarized his analysis as follows:

Viewed just as a series, differences between the two surveys are actually vanishing on a long-term basis, with a possible interruption in this trend following the last recession. The current uptick is sharp, to be sure, but we've seen at least one downtick (roughly '64-70) apparently just as sharp, and similar but smaller upticks following other recessions.

In short: neither data nor method seem questionable. If the two surveys correlated perfectly it would be a waste of tax dollars to collect them both. These are two useful and perfectly valid methods of measuring the same thing. Neither is "right." Neither is "wrong." The complement and validate each other.

This is true, but ignores the fact that there is also a derivative data series which is politically at play, which is not so much the absolute number of jobs, as the change in employment year-over-year (or administration-over-administration). The manner in which the separation between the two surveys series has recently increased (with the two data series heading in opposite directions) is not irrelevant.

Mathematically speaking: the two main data series (employment in the households survey, and employment in the payrolls survey) over time are themselves closely positively correlated with each other. A look at the graph which Econopundit posted over the weekend (and which I referred to yesterday) suggests something like a +0.8 correlation (just estimating by eye), which of course is quite high. The separation between them has sometimes increased, and sometimes decreased, but the two series have generally moved in the same direction and are highly positively correlated.

But recently the separation between them is increasing because one derivative series (year-over-year change in employment measured by the households survey) is positive, while the other derivative series (year-over-year change in the payrolls survey) is negative. This means that for the politically sensitive derivative measure of year-over-year change in employment, there is negative correlation between the two series. And although it is true that there have been sharp upticks in the separation between the other two series before, it is not quite accurate to say that those previous periods (eg, 1980-1985) are similar: while the separation between the surveys was increasing then, both series were increasing so the derivative series remained positively correlated. I maintain that the recent four-year period 2000-2003 has been unique due to the negative correlation of the two derivative data series, and that this shows some new and fundamental developments in the way work gets done and people get hired.

I actually agree with Econopundit’s last paragraph entirely. My main point in all this is not that the payrolls survey is wrong or should be ignored, but that the overall employment situation has evolved in some subtle ways not entirely or even closely summarized by merely quoting only the payrolls survey. It continues to be a disappointment that the drop in employment from the payrolls survey is all one hears about in the mainstream press—which, after all, is where the main body of voters will get their information when assessing George Bush’s performance in office. The households survey suggests other conclusions than the payrolls survey, and both need to be considered, which politicians don’t seem to be doing to any real extent.

I've spent a bit of time looking around for someone else commenting on this business of net job creation during the Bush presidency, and I haven't found much of it. I have occasionally found a mention that acknowledges the increase in the employment figures reported by the household survey, but generally there is a pooh-poohing that it's not really proper to say that one data series is better than the other. This, generally, is true; as I pointed out in the last article, it's wrong to ignore one in favor of the other when one needs to consider both of them to gain a comprehensive perspective. But there's something a bit unusual going on in the economy right now that is illustrated only by the household survey of employment.

There is a neat graph in an article posted over the weekend over at Econopundit, which shows a graph over time of three data series: the payrolls survey; the household survey; and a Yale model which is a predictor of total employment. All three give different numbers, which isn't really the point. Econopundit picks up on one of the key points shown on the graph, but misses on another.

First, as Econopundit points out, the Yale model gives different absolute numbers than measured by either survey series, but as his graph shows, it does track very closely and has a highly positive correlation with actual employment. When the model says employment should go up or down, it generally does, and generally in proportion to the quantity predicted. And right now, under current tax policy, the Yale model predicts 10 million new jobs over the next four years. It probably isn't a coincidence that John Kerry has positioned himself to take credit for this development, by promising minor tinkering with the tax code which, he says, will create--ahem--10 million new jobs over the next four years.

The other point which I think is key is that, as Econopundit's graph shows, while the spread between the payroll and household surveys has evolved over time, nowhere else on the graph but presently do we see the two data series moving in completely opposite directions for a four-year period such as 2000-2003. The mere fact that such an unprecedented divergence of the two series has been going on for so long demands our attention, and points to some highly unusual employment market developments.

Employers right now, buoyed by consistent productivity gains, simply don't want to hire new people even though business has picked up. Overtime and temporary labor and outsourcing to independent contractors has supplied the difference. This has been good for the companies in question, who retain far greater flexibility in staffing and manpower levels; it has also been good for the independent contractors themselves, who now find themselves working for wages and profits, not just wages. It's a rather new trend, which deserves much more consideration and discussion than it has generally received. Demagoguing over jobs lost when measured by just one data series does not serve the country or the economy very well.

Since the election of the Leader of the Free World will evidently hinge primarily on whether the nation has more or fewer jobs come November 2004 than it had under Bill Clinton, a close examination of the surrounding facts is in order.

Economic analysis isn't the easiest thing in the world, and it requires one to pay attention for an extended period to some subtle concepts, which much of the American public isn't necessarily good at. But in this case the stakes are sufficiently high in the coming election that we should try really hard to have an informed national debate on the subject. Soundbyte politics is easy; substance is hard. This is more technical than most of what I post, but for serious discussion of the facts this simply can't be avoided. I will be happy to elaborate on anything which I've not sufficiently explained; just leave a comment or send an email. This is my opening contribution to the serious national debate about economics which we truly need to have.

The Democrats will have us believe that the economy is really bad right now. The Republicans point to fantastic GDP growth, low interest rates, and low inflation and say that things are pretty swell. The Democrats counter that for those out of work, low prices and high GDP don't matter, and that there are too many of this sort out there. And that the economy is really, really bad unless you are a fat cat who works for Halliburton.

It's apparently all about jobs. Jobs, jobs, jobs. I keep hearing ceaselessly about jobs, and in particular the absolute number of jobs gained or lost under George Bush, as if that single number represents a competent referendum on his performance as President. The obsession with this particular data series strikes me as being a new and somewhat unusual target of economic fixation; during the "it's the economy, stupid" run-up to the 1992 election, for example, it was the unemployment rate that was the important number. During the 1970s, truly a dark economic time in America, the misery index, gained by adding the unemployment rate to the inflation rate, was frequently the main subject of complaint.

Now it's the absolute number of jobs gained or lost, presumably because the opposition party doesn't really think that complaints based on the unemployment rate or the misery index will stick. And they're probably right: the unemployment rate in January 2004 was 5.6% (compared to 7.3% at the time of the 1992 election), which is pretty close to the 5.0% unemployment rate which is traditionally considered "full employment." The misery index in January 2004 was a mere 7.5% (5.6% for unemployment, plus the 1.9% increase in CPI from January 2003 to January 2004; this figure compares to the 20.1% misery index in October 1980, at the end of Jimmy Carter's Reign of Terror). So, using the various historical shorthand forms, present conditions look reasonably good despite John Kerry's rather fatuous bellowing of the worst economic performance since Herbert Hoover.

Now this business of absolute numbers of jobs is a shifty target. We have been hearing for months of the mythical "2.2 million jobs lost under This President," which is presumably the numerical basis for the Herbert Hoover comparison (though naturally this disregards the fantastically larger overlying civilian workforce in 2001-2004, so that 2.2 million jobs lost under Hoover would have represented a far larger portion of the workforce suddenly out of work). At the same time we are told of a near-apocalyptic number of jobs being shipped overseas, which complaint we've heard over and over at least since NAFTA and presumably before. It's nothing new, but it's tempting to draw a correlation between the mythical 2.2 million jobs lost and this international outsourcing and blame the latter, for which protectionist policies are the natural solution.

So, before we go looking for the culprits of the problem, let's first examine what the numbers themselves specifically are and determine whether the mythical 2.2 million jobs lost is mythical after all, or real. Now would be a good time for you to run off to get the actual numbers in front of you, so we can all argue from the facts. Virtually all the numbers we'll use from here out are conveniently summarized in a document called Economic Indicators January 2004. This document is published monthly by the Government Printing Office and is a compilation of economic statistics gathered into one handy spot from various government sources.

Job growth (as reported by the Department of Labor's payroll survey) has, in fact, lately been disappointing. This is the data series Kerry has focused on, and it's here that he gets his claim of 2.2 million jobs lost. The number series, in summary, looks like this: (this is the table at the bottom of page 14 in the Economic Indicators. Job counts are given in thousands of jobs, and are yearlong averages.)

Table 1.
        Nonagricultural
Year      Employment
2000        131,785
2001        131,826
2002        130,341
2003        129,932

So this data series shows a loss of roughly 1.85 million jobs between the average for 2000 and the average for 2003. What if we look at the actual yearend number for 2000, just days before Bush took office (instead of the yearlong average) and compare it to the actual latest month, January 2004?

Table 2.
            Nonagricultural
Year          Employment
Dec 2000        131,953
Jan 2004        130,155

Still about 1.8 million jobs lost according to this figuring of the data. But the lowest monthly figure for 2003 (according to Economic Indicators January 2004) was 129,789 in August; this number actually reflects a decrease in the number of jobs of 2.16 million, compared to the December 2000 figure above, so at least we can confirm Kerry's 2.2 million jobs claim and we know how his numbers were derived. And even according to the data series Kerry evidently is referring to, it now would be more correct to speak of a decrease of 1.8 million jobs, not 2.2 million, which still seems to be the number I keep hearing.

Such monolithic reliance on a single data series is something that the astute listener should regard with some distrust. There is no such thing as a perfectly designed or totally comprehensive data series, and this one (Nonagricultural Employment) is no exception. The important thing is that whatever each series' shortcomings are, they are repeated each month and their values are therefore comparable over time. But the Department of Labor collects other data series as well, such as the Unemployment Rate, to provide collectively a more comprehensive treatment of our employment situation. The other data series we will consider in detail is Status of the Labor Force, and this is presented on page 11 of Economic Indicators January 2004.

The same time period considered above, 2000-2003, looks rather different in the Status of the Labor Force report, summarized as follows:

Table 3.
        Total Civilian
Year      Employment
2000        136,891
2001        136,933
2002        136,485
2003        137,736

This series shows, rather surprisingly, an increase in total civilian employment of 845,000 jobs from 2000 to 2003. Where does the difference between the two series come from?

It helps to know a bit about the methodology of the two series. The Nonagricultural Employment report comes from an employers' survey. Companies with employees and payrolls are the only contributors to this number. The Status of the Labor Force report comes from a households survey, where respondants are asked to characterize themselves as "working" or "not working." So what's the difference?

Footnote 1 on page 14 of our January 2004 report spells out what John Kerry's data series doesn't consider:

Excludes proprietors, self-employed persons, unpaid family workers, and private household workers. Data from the household survey [Status of the Labor Force] shown on p. 11 include those workers and also count persons as employed when they are not at work because of industrial disputes, bad weather, etc., even if they are not paid for the time off. In the series shown here [Nonagricultural Employment], persons who work at more than one job are counted each time they appear on a payroll, in contrast to the series shown on p. 11 where persons are counted only once--as employed, unemployed, or not in the labor force.

So anyone who quits, or is laid off, and then finds identical or other work as a self-employed independent contractor is counted as unemployed in John Kerry's data, even if they are in fact working and even if they are earning more than previously since they are working for profits and not wages. And, according to the household survey, more people themselves say they are working now than in Bill Clinton's last year in office.

So where have all those 2.2 million jobs (really 1.8 million) gone? Nowhere. They're mainly just working for themselves as proprietors now instead of for a corporate employer. It's just a different type of employment arrangement. It's worth stating again, since you hear so little of it:

More people are working now than were before George Bush took office. We have numbers to prove it.

Yes, yes, I hear John Kerry harrumphing, but those people now are uninsured and don't have unemployment insurance, and aren't fully protected by Workers' Compensation, etc. Maybe so. But sole proprietors can pay for unemployment insurance for themselves if they choose to pay for it (at least in Ohio, the laws of which I'm familiar with). They should pay into the Workers' Compensation fund for themselves, for their own protection, though they aren't legally required to. And as a small business owner myself, I know that it is possible to buy health insurance for a small company, though it can be expensive. It's a riskier way to make a living than by showing up for a wage-paying position with a company, but the returns tend to have more upside potential since the proprietor keeps all the profits (after tax, of course) and these tend to be higher than the wage value of a job.

How does all this play out in balance? According to the Department of Commerce's National Income report (top of page 4 in Economic Indicators January 2004), two components of national income--wages and nonfarm proprietors' income--summarize as follows: (all figures are in Billions of nominal dollars)

Table 4.
                      Nonfarm
                    Proprietor's
Year     Wages        Income         Total Income
2000    $5,782.7      $705.7           $6,488.4
2001     5,940.4       745.6            6,686.0
2002     6,019.1       783.4            6,802.5
2003     6,185.6       827.2            7,012.8

So wages are up, proprietors' income is up, and obviously total income earned by wage earners and proprietors combined (the group identified as "working" in the Status of the Labor Force report) is up during Bush's term. This is in nominal dollars, however, so we need to adjust for inflation, and report everything in "2000 dollars," which is simply an acknowledgement that the same dollar earned today has less purchasing power than one earned in a prior year. The baseline year can be any that is convenient, and we will adjust our 2001-2003 figures downward to use values equal to the value of a dollar in the year 2000. There are a large number of inflation measures available, reaching their results in different ways and giving (not incidentally) somewhat different answers.

It is my opinion that, as a measure of inflation, the Implicit GDP Deflator is much superior to the Consumer Price Index (though I'll give results according to both so it won't be supposed that I'm cherry picking only the favorable measures). The Personal Consumption GDP Deflator, applied to the income figures above, is as follows: (Nominal income is in Billions of current-year dollars; real income is in Billions of 2000 dollars.)

Table 5.
        Nominal      GDP         Real
Year    Income     Deflator     Income
2000   $6,488.4    100.000     $6,488.4
2001    6,686.0    102.038      6,552.5
2002    6,802.5    103.429      6,577.0
2003    7,012.8    105.298      6,660.0

Notes to Table 5:
1. Nominal Income is as calculated in Table 4 of this document.
2. GDP deflator figures come from the table Implicit Price Deflators for Gross Domestic Product on page 2 of Economic Indicators January 2004; the column used is for Total Personal Consumption Expenditures.
3. Real income is calculated as Nominal income divided by the GDP Deflator x 100.
4. The CPI index figures, where the years 1982-84=100.0, are as follows for the above period: 2000=172.2; 2001=177.1; 2002=179.9; 2003=184.0. Refer to the Bureau of Labor Statistics CPI reports, check the first box for US All Items, 1982-84=100 and press Retrieve Data.
5. Real income for the above years, in 2000 dollars deflated by CPI instead of the GDP deflator, is: 2000=$6,488.4; 2001=$6,501.0; 2002=$6,511.3; 2003=$6,563.1.

So even adjusted for inflation we are earning more income among our workers and proprietors now than before George Bush took office. The last question is to consider whether, when this increased income is divided among more people who report that they are working, all workers collectively are better or worse off now compared to 2000. (Income figures are in Billions of 2000 dollars; Civilian employment is in thousands of workers.)

Table 6.
         Real       Civilian       Real Income per
Year    Income     Employment      Employed Person
2000   $6,488.4     136,891            $47,398
2001    6,552.5     136,933             47,852
2002    6,577.0     136,485             48,188
2003    6,660.0     137,736             48,353

Notes to Table 6:
1. Real income is as calculated in Table 5 of this document.
2. Civilian employment is from Table 3 of this document.
3. Real income per employed person is real income divided by the number in total civilian employment. Note that, as Real Income (RI) is in $Billions and Civilian Employment (CE) is in thousands, it is necessary to take (RI/CE) x 1000000 to find Real Income per Employed Person.
4. For those interested in deflating nominal income by CPI, Real Income per Employed Person would be as follows: 2000=$47,398; 2001=$47,476; 2002=$47,707; 2003=$47,650.

You read it here first: more people are now working, and on average each of them is now earning more real income than before Bush took office.

I think it should be obvious that our true economic situation is far too complex for John Kerry's soundbytes about 2.2 million jobs lost and the worst performance against that measure since Herbert Hoover. I further posit that a close analysis of the numbers reveals that our economy now is, at minimum, no worse than before Bush took office--though I'd want to see the unemployment rate drop from 5.6% to the statistically "full employment" level of 5.0% before I suggested that everything was just swimmingly grand. But when John Kerry suggests unusual, European-sounding measures to halt a putative loss of jobs, an astute listener should be aware that the employment situation is by no means so simple or so bleak as Kerry claims.