The Victor Belongs To The Spoils

It's hard to watch or listen to the news lately without wondering why anyone would want to be President. It's not just the global economic meltdown, but other events as well that have a way of imposing themselves on us without our consent. For many of us, these global events seem to have little affect on our day to day lives. For others, such as the President-elect, these events loom quite a bit larger.

I'm not quite sure that it is correct to say that the average American should be less concerned with what is happening in Gaza than Barack Obama. It seems like that should be the case, but perhaps that is the problem. Perhaps we should be aware and engaged when it comes to events across the globe. It is clear, however, that most Americans are no longer either willing or able to do the work that it takes to be informed and have thoughtful positions on a wide range of issues. This is a fact that has consequences each time American voters return to the polls to choose their leaders.

Without a width and breadth of knowledge regarding world and national events and conditions it is unlikely that voters can choose leaders that are equipped to face the challenges of their terms. In fact, it may be the case that voters are perpetually choosing candidates based on their ability to deal with events in the recent past, rather than those they are likely to face in the near future. This is analogous to the way many investors buy stocks that have risen recently and sell those that have fallen. There is no quicker way to insure ruin in your portfolio then buying high and selling low.

Regardless of how the George W. Bush presidency turned out, can anyone honestly say they voted for him in 2000 because of his ability to confront the threat of global Islamic fundamentalist terrorism? Of course not. Wasn't W the candidate that couldn't come up with Pakistani President Pervez Musharraf's name in an interview during the campaign?

By the same token, many Americans may have voted for Barack Obama based on what they thought was his ability to deal with greed on Wall St., decay in Detroit, and gridlock in Washington. Recent events though may replace these challenges with war in Gaza, massacre in Mumbai, and Russian aggression in Georgia.

During what is undoubtedly a long and tiring Presidential campaign, just what is it that the candidates believe they are vying for? The title of this post is not a typographical error or the result of tortured syntax (though no doubt there is no small portion of that in this blog). Rather it is a comment on what it means to own or be owned and serves as the epigraph of a Fitzgerald novel. A version of it has been making the rounds in the wake of the financial crisis namely that if you owe the bank $100 that is your problem. But if you owe the bank $100 million, that is the bank's problem.

While I certainly did not vote for Mr. Obama, I can only hope that his abilities serve him well over the next four years and that he is able to take ownership of his circumstances rather than have his circumstances own him, and, by extension, us.

New Uniforms for the Team of Rivals

It appears the announcement that Barack Obama will be sworn in as President on a Bible first used at the swearing in of President Abraham Lincoln was only the beginning of a series of Obama-Lincoln parallels. Obama has also announced that he will arrive in Washington by tracing the train route that Lincoln also took. But this week the office of the President-Elect announced new policies that will serve to reinforce the Obama-Lincoln parallels to their fullest extent.

First, all incoming members of the Cabinet will be required to attend a week long team-building exercise in southern Illinois beginning January 12th. Over the course of three days members of the administration will take turns standing in for Stephen Douglas in a reenactment of the Lincoln-Douglas debates from the 1858 Senate campaign, with Obama playing Lincoln's part. The debate periods will alternate with rounds of rail-splitting to build physical strength.

Additionally, in a much more visible effort, Obama has
instituted a dress code for all Cabinet meetings which will require the donning of a Lincoln style beard. When entertaining visiting dignitaries and on official state visits overseas, the beard will be augmented with the wearing of a stovepipe hat.

A spokesman for the Obama transition told reporters, "Barack understands the importance of the Lincoln administration and intends to use the similarities to his own presidency to their full effect." He went on to point out that even Fox News has gotten in on the act of comparing Obama and Lincoln saying, "if Fox News is making these comparisons, there is no reason the President-Elect should shy away from embracing the Lincoln parallel."

Reached for comment, Labor Secretary-designate Hilda Solis said, "the rail-splitting seems like a great way to work off those added holiday pounds, but the beards seem like they will be kinda scratchy."

So far, Republican reaction to the announcement has been rather muted out of fear of seeming to denigrate Lincoln, one of America's favorite Presidents.

When Obama announced Hillary Clinton as his choice for Secretary of State it was widely predicted theirs would be a turbulent relationship. Up until now this has not been the case. Implementation of Obama's dress code could change all of that as many in Clinton's camp, including the Senator herself, are said to be fuming over the announcement.

Speaking on the condition of anonymity, a senior Clinton aide said, "doesn't he [Obama] know there hasn't been a pantsuit designed yet to complement a stovepipe hat?" They went on to say, "after the Sarah Palin clothes flap, there is just no way Hillary can go out and buy a whole new wardrobe just to accommodate this mandate."

There is one argument that may allow Mrs. Clinton to avoid the dress requirements while still allowing all parties to avoid public humiliation. Some people close to Mrs. Clinton have begun floating the notion that the stovepipe hat could be a hindrance to diplomatic relations, especially in Asia. Since the traditional Asian greeting includes a bow, there is a fear that when bending over the hat could actually tumble off of one's head with the potential to strike the person being greeted. Another Clinton aide, who asked not to be named put it this way:

Imagine we finally thaw relations with North Korea and Hillary travels to Pyongyang. As she is on the tarmac greeting the delegation, her hat falls off and hits Kim Jong Il, flattening his pompadour. It could compromise US national security with regards to our attempts to curb North Korean nuclear ambitions.

Other Lincoln parallels remain to be worked out by the President-elect and his transition team. During the campaign there was some talk that Senator Joe Biden was chosen as vice-president after he bragged that he was born in a log cabin he built with his own hands. This turned out to be nothing more than a "rhetorical flourish," but Obama kept him on the ticket anyway.

No word yet on the fate of Tom Daschle's glasses. There have been rumors that he will be forced to change the style of his eyeglass frames to one more closely resembling the glasses of Benjamin Franklin, or possibly Harry Truman. Daschle's current choice of eyewear made news when comments by Obama were accidentally picked up on an open mic at a healthcare policy forum. A CNN sound man captured Obama chiding Daschle saying, "Tom, what's up with the specs? You look like Sally Jesse Raphael."

Moose v. Lobster

It was inevitable now that Caroline Kennedy is actively campaigning to replace Hillary Clinton as the junior senator from New York that a parallel would be drawn between her and Sara Palin.

Those on the right complain that simply because she is a Kennedy, Caroline doesn't have to endure the same type of scrutiny that Palin did, particularly regarding qualification for office. This is an utterly predictable complaint, but I am not sure that it makes it any less valid.

The facts in this case tend toward supporting the existence of a double standard and arguments against such a standard made by those on the left are accordingly weaker. Check out this post by BooMan which breezily dismisses Palin's service as mayor and governor while arguing that Kennedy is qualified on the basis of her ability to write a term paper on any public policy issue.

Given this astounding ability, I'm thinking Kennedy is a lock for the Foreign Relations committee. I mean, think about it, if Iranian President Ahmadinejad's kid needs a term paper on Western Imperialism for his senior project at the madrasah Kennedy could crank it out in exchange for concessions on Iranian nuclear weapons.

Forget the comparisons with Palin. Unless touch football at the compound and drinks with Boston's elite make you qualified for the senate, Caroline is not. Of course, this may be how other members of the Kennedy clan entered public life.

I think the real problem here is that a sense of entitlement exists among many in the senate and many aspiring to join that body. This is a strictly bipartisan phenomenon, as it exists among democrats and republicans alike. Every six years they come back home, hold some rallies, whip up the party faithful and return to Washington, again and again and again.

Some republicans have already paid a price for this attitude and no doubt some democrats will suffer the same fate, since some type of legislative overreach is a very real possibility under the Pelosi/Reed regime.

If they were to come back today, I'm not sure the earlier generation of Progressives who fought for direct election of Senators would recognize that body as one serving the interests of the people. The way it is constituted today, I'm not sure that that it can.

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OK Palin-haters, and I know you are out there, leave a comment and tell me why I am wrong and Kennedy is perfectly qualified to serve in the Senate and Palin wasn't qualified to serve as VP.

And We'll Have Funds, Funds, Funds........

Thus far my blogging style has tended toward the long form post and I have tried to include a healthy dose of my own style and opinion, not to do so would seem to negate the reason for having a blog in the first place.

In reality, there are a lot of blogs out there in which the entries consist almost entirely of quotations of news articles or posts from other blogs garnished with an original sentence or two. But like the eerily green parsley served along side every every cut or chop at your local steakhouse, these appended thoughts are rarely digested, if even considered at all.

I note this here, of course, because this post is a plate of parsley. Though hopefully with a slight steak garnish.

The news yesterday included the banner headline noting that the Federal Reserve lowered their target interest rate to a range of 0-.25%. Ever wonder what exactly this means? Read this post over at Mises.org.

Remember, the interest rate that is always covered in the news is the federal funds Rate. This is the rate banks charge each other on very short term loans. Since this is a rate determined between banks, the Fed doesn't actually set this rate, they set a target. They try to hit that target through open market operations. Just read the (6) short paragraphs under the heading "How the Fed "Sets" Interest Rates". Then go out and impress your friends with your knowledge of the innermost workings of our Central Bank.

I'm reasonably sure that Ron Paul doesn't read this blog, but trust me, if he did he would click on the link and read the article.

For those of you with stronger constitutions, I urge you to continue on through the next heading, "Austrian Business Cycle Theory". You see, Mises.org is the website of an institute dedicated to Austrian School Economics. And no, the Austrian School is not where Arnold Schwarzenegger matriculated.

With the Fed Funds rate at zero, you will begin to hear how we have run out of monetary policy tools to repair our economy. The next line of defense will be the massive spending prescribed by the Keynesian economists, who seem to be quite literally coming out of the woodwork these days. If a year or eighteen months from now nothing has changed or things have actually gotten worse, we may have to turn to the prescriptions advocated by the Austrians.

So think of this as the opportunity to get in on the ground floor of what could be the next hot economic school of thought! So bone up on your Alpine geography, don your lederhosen, and pass the schnitzel, we just might have a group of Austrians to rival the Von Trapps. Just remember you heard it here first.

To B(uick) Or Not To B(uick)

This is a public service announcement for everyone planning to make small talk, chit-chat, or even semi-serious conversation about the bailout of the US automakers. Whether at the coffee shop, water cooler, or holiday dinner table, do not make another pronouncement, utterance, or even broach the subject until you read this article in the NY Times by David Leonhardt (just click on the words in red).

In this short article (it can't be more than 50 sentences) Mr. Leonhardt manages to explain the difference in labor costs between the Big Three and Japanese automakers operating plants in the US. As you would expect, workers at the Japanese plants earn less in wages and benefits than their counterparts from Detroit. But he goes beyond this simple finding and then the real fun begins. In his simple piece he manages to capture the truly schizophrenic nature of the situation. Reading this, it appears to me that the debate over the automaker bailout is really just the debate about the response to the overall economic crisis in microcosm.

As noted, wages & benefits for workers of US automakers are higher than workers at Japanese firms, but the real difference is in the cost of pension and health care for retirees. With no discernible sense of irony, Mr. Leonhardt notes that:

The Big Three and the U.A.W. had the bad luck of helping to create the middle class in a country where individual companies — as opposed to all of society — must shoulder much of the burden of paying for retirement.

Couldn't the heads of the Big Three make a plausible case that alleviating these legacy costs would go a long way to keeping them solvent? Call it universal coverage with European style pension plans (or godless socialism, depending on your point of view) through the back door, or I guess in this case, the hatchback.

Then the article takes something of a U-turn.

The author goes on to point out that even if the government offered to take over the retiree commitments, the cost of producing a car would only go down a few hundred dollars. Labor costs, Mr. Leonhardt reveals, "make up only about 10 percent of the cost of making a vehicle."

The real reason that Detroit is in trouble according to the article is that no one wants to buy its cars.

No one wanted Fannie's or Freddie's mortgage backed securities, so we bailed them out. No one wanted AIG's credit default swaps, so we bailed them out. Bear Sterns, same thing. All of these were done regardless of the level of compensation of the employees, or, despite all of the talk, the compensation of the executives.

The lesson any reasonable person could take away from these bailouts is that if you are a producer of worthless pieces of paper, your check is in the mail. But if you make cars & trucks (you know, tangible goods with some value even in this extremely depressed market) sorry, there's nothing here for you. Is it possible that refusal to bail out the automakers is really just an expression of regret over the initial financial bailout?

And so the debate continues. If in your discussions you happen to run across someone that make sense out of these seeming contradictory positions be sure to take heed - and try to find out what make of car they drive too.

Three Quick Hits

Editorial note: I generally try and not let my real life bleed over into my blog life, but everyone at my house has been sick except me. I had to answer in the affirmative when a friend from work recently asked me if it was like a regular barf-o-rama a la Stand By Me(click the link if you dare). Between that and snow removal, I just haven't had time for much else, blogging or otherwise. With that in mind I offer one quick toot of my own horn and two quick introductions.

First, In Which I Try Not To Break My Arm Patting Myself On The Back

Last time, I argued that Obama's attempt to cut waste in medical spending was counterproductive if his goal is to stimulate the economy with spending. I argued the case for the guy who makes all the red tape, but today on NPR, Uwe Reinhardt, professor of economics and public affairs at Princeton University also stated that trying to cut wasteful spending at this time would not be a good idea. Listen to the interview here, his take on wasteful spending comes at 2:06. No doubt the professor's analysis was based on years of thoughtful analysis and carefully collected data and not just a smart alec jab at Obama's vision for our healthcare system.

Next, Mr. Keynes, meet Governor Blagojevich

As you all know by now, our Friendly Illinois Brother ("fib" to those of us in WI, yes I know the other version, I am trying to keep this blog rated G) Governor Blagojevich was arrested for trying to sell Mr. Obama's Senate seat. He may not have known the value of a good haircut, a comb, hairspray, or even basic grooming skills, but he knew a Senate seat was worth something.

He also knew that government infrastructure contracts were worth something. According to the Chicago Tribune.com:

Days before Gov. Rod Blagojevich announced a $1.8 billion tollway construction program on Oct. 16, he privately tipped a fundraiser to the plan and said he expected a major highway contractor to raise $500,000 for his campaign fund, according to a FBI recording.

I fear that this is a taste of the future. Massive new spending in infrastructure means massive new opportunities for corruption and waste of our tax dollars. This is why I am not sold on federal government checks as a way out of this mess.

And Finally, Governor Blagojevich, this is William Jennings Bryan

A while back there was an AZ legislator (I can't remember if she was a state or national representative) who argued for a return to US Senators being elected by state legislatures (and being subject to recall by them.) The direct election of Senators was one of the reforms of the Progressive era, and was one of the causes that Bryan was associated with.

When I see one of the 50 statehouses occupied by someone like a Blagojevich, I can't help but wonder if voters have any ability to pick leaders. Maybe it is just too difficult, people are too lazy, information is too scattered and filtered through only a handful of media outlets. I mean, the guy was elected to the state legislature, the US Congress, and as governor....twice! Yet he still couldn't stop from trying to auction off a Senate seat when he knew that he was already under investigation. This is so stupid as to approach the level of criminality and it ought to be added to the current indictment.

Of course, letting state legislators pick Senators is no safeguard against corruption either as many have proven over the years.

Adios.

I'm Spent!

All indications from President-Elect Obama and congressional Democrats are that the government stands ready to spend massive amounts of money in an effort to revive the economy. Descriptions of this strategy of spending to overcome our economic woes often refer to this as a Keynesian approach after the economist John Maynard Keynes.

I don't know that if he were alive today he would blog for the Huffington Post or appear on Crossfire, but Keynes was an early version of the celebrity pundit that has flourished in the age of cable television. (Admittedly, Keynes was far more intelligent and better educated than your average talking-head of the early 21st century.)

Keynes saw demand as the important factor in a healthy economy and he was generally willing to let the private sector to do the demanding. He thought, however, that it was possible for the private sector to demand too little to maintain economic health and that government spending could be used to compensate for the low level of demand. Furthermore, he advocated that both fiscal (taxes and budgets) and monetary (interest rates) policies should be enacted to try and soften the ups and downs of the business cycle. In these cases the government actually intervenes in markets and attempts to fine-tune the economy.

At least since Reagan's election in 1980, this sort of direct government tinkering has been out of favor (at least in word if not in deed). Thus Keynes has been in something of a hibernation of late. These days though, he is back with a vengeance as government spending seems to be the only response that is even being considered to the current economic crisis.

Senator Charles Schumer (D-NY) has pegged the number of the stimulus package at $500-$700 billion. On her website, House Speaker Nancy Pelosi has been promoting House legislation passed in September for additional spending on energy and infrastructure.

In his radio address yesterday Mr. Obama began to outline his approach to attacking the economy. He indicates his plan has several parts, these include spending to make public buildings more energy efficient, spending on national infrastructure, and spending to modernize school buildings. The fact that all of these different "parts" are really just spending on various types of goods demonstrates just how fully the Keynesian approach has been embraced.

Later in the address though, Mr. Obama includes this passage (emphasis added):

That is why the economic recovery plan I'm proposing will help modernize our health care system - and that won't just save jobs, it will save lives. We will make sure that every doctor's office and hospital in this country is using cutting edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes, and help save billions of dollars each year.

Talk about a mixed message. After outlining several areas where the government is going to increase spending in an effort to stimulate the economy, Mr. Obama goes on to tell us how the government is going to act to save money. Why? If Keynes is right and keeping up demand is what we need to do, why would we take steps to cut any spending in our economy. I mean, doesn't the guy at the red tape factory need his job too?

Perhaps this is just the sort of meaningless chatter that characterizes so much of the public pronouncements of our politicians. If so that would be sad, but not overly troubling.

Perhaps though, this reveals something of a weakness in the Keynesian approach, at least with regards to spending. One might argue that we shouldn't just spend heedlessly, but we should do it in a smart way. If it is the case that what we need is not just any spending, but a certain type of spending in order to return our economy to health, how do we know what to spend on?

Maybe I am wrong, but I am not convinced that the government will be able to implement new spending programs in a way that achieves economic growth with minimal waste. This is goes for a government run by either of the major parties. This headlong rush back to Keynes could help to improve our economic fortunes but could just as easily result in a proliferation of bridges to nowhere.

Media to US: We're done forming a more perfect union

One of the characteristics of online communication seems to be a tendency to discard many of the restraints that exist during the normal course of other types of interactions. Be they in-person or over the telephone, more traditional forms of communication are marked by a general willingness to act in a courteous and non-offensive manner, often resulting in some degree of self-censorship. In the virtual world, however, restraints are often abandoned entirely. This results in some rather extreme rhetoric which may be entertaining at times, but is often nothing more. Given this, I generally try to eschew going overboard both in what I type in this space and in what I consume as a reader of online material.

The words tend to get particularly extreme in online discussions of the main stream media (MSM). I'm sure if you took the time you could find online resources blaming the MSM for just about everything from kidnapping the Lindbergh baby to lunar eclipses to tooth decay. Because of this, I always try to take online criticism of the MSM with a very large grain of salt.

Pause here for your own grain of salt. If your doctor has advised you to limit your salt intake, please reach for the salt substitute of your choice.

I recently came across two items from major media outlets that had me shaking my head.

The first item is from NBC's website and it listed as being "From NBC’s Pete Williams". Pete is the NBC Justice correspondent. To be fair to Pete, the article has someone else's byline so maybe listing him at the top is just name-dropping.

Regardless, the article discusses the possibility that the Supreme Court of the United States will hear any of the cases involving challenges to Barak Obama's qualification to be President. The allegation being that Obama is not a natural born citizen, and is therefore ineligible for the office of president. No doubt that for some readers of this blog, this is the first you will have heard of the issue. That in itself may be a critique of the media, but I digress. This post is not about whether or not Obama is constitutionally qualified to be President. If you are curious, you can check on that here, here, or here.

Here is Mr. Williams handicapping the chances that the cases will actually come before the Court (emphasis added):

The justices are unlikely to take up these cases for a host of reasons, not the least of which is the invitation to overturn the results of an election in which more than 66 million Americans voted for Obama. An equally high hurdle is the issue of whether Berg or Donofrio have the legal right to sue claiming a violation of the Constitution.

When explaining why the Court will not hear the cases Mr. Williams gives primacy of place to the fact that 66 million Americans voted for Obama. The history of jurisprudence has witnessed some wild legal defenses, but has a lawyer ever resorted to arguing that 66 million people can't be wrong before the Supreme Court?

I can only hope that this is just sloppy writing and that Williams is simply injecting his own thinking in the report. The fact that a reporter who covers justice issues for a living thinks nothing of setting aside the founding document of the nation just because of how Americans voted (even millions of Americans) would be laughable if it wasn't so scary.

Discarding the prescriptions set forth in our Constitution simply because popular sentiment dictates otherwise is a horrible idea. It is more than that, it is the end of the republic. (How's that for overheated rhetoric?)

He does tack a plausible legal argument on to his argument. Even though he calls it an "equally high hurdle" it comes off as more of an afterthought. Reinforcing that the real reason this allegation shouldn't be taken seriously is that a lot of people already voted for Obama.

Next we come to New York Times columnist Tom Friedman discussing how to respond to our current economic conditions in his November 22nd column:

If I had my druthers right now we would convene a special session of Congress, amend the Constitution and move up the inauguration from Jan. 20 to Thanksgiving Day. Forget the inaugural balls; we can’t afford them. Forget the grandstands; we don’t need them. Just get me a Supreme Court justice and a Bible, and let’s swear in Barack Obama right now — by choice — with the same haste we did — by necessity — with L.B.J. in the back of Air Force One.

Now George W. Bush may be the lamest of lame ducks, but he is not dead. Moving inauguration day in response to a financial disaster of our own making seems incredibly foolish. I guess this suggestion should not be surprising since inauguration day was moved up to its current date in response to the Great Depression and much of the response to the current crisis espoused by those in Washington involves aping the movements of FDR's administration.

Alas, amending the constitution is not a realistic option. Friedman continues:

Unfortunately, it would take too long for a majority of states to ratify such an amendment. What we can do now, though, said the Congressional scholar Norman Ornstein, co-author of “The Broken Branch,” is “ask President Bush to appoint Tim Geithner, Barack Obama’s proposed Treasury secretary, immediately.” Make him a Bush appointment and let him take over next week. This is not a knock on Hank Paulson. It’s simply that we can’t afford two months of transition where the markets don’t know who is in charge or where we’re going. At the same time, Congress should remain in permanent session to pass any needed legislation.

It is bad enough that we have a President that has almost become invisible, one that we can no longer affect through our vote, but turning our economic well-being to an unelected bureaucrat could in no way be described as democratic. Never mind the fact that Mr. Geithner has been deeply involved in the government's response to the economic crisis thus far from his position as head of the New York Federal Reserve Bank. Mr. Friedman seems to suggest that ascending to Secretary of the Treasury will make all of his decision making better.

I wonder if it dawned on Mr. Friedman that there might be a reason why the Constitution can't be amended overnight? Maybe those Founding Fathers were on to something there.

The fact that neither of these members of the Washington media seem the slightest bit interested in deferring to our national charter, or even stopping to consider what it says, is a chilling example of just how muddled our nation's thinking has become.

I realize this is no ordinary time, that things are tough and economic insecurity is widespread and unsettling. We would be better served though, to let our Constitution protect us intact, covering a hole in our leaky roof rather than shredding it just to build a fire. The problem with fire is that it may dwindle and extinguish without ever providing any warmth or it could spread uncontrolled, engulfing and ultimately destroying a shelter that has served us well.