Friday, September 9, 2011

The President's "Let's-continue-the-depression" speech

We arrived in the USA at about 1 p.m. Thursday, got through customs, picked up our van, and navigated the traffic through New York and finally reached our hotel in Bethlehem, Pennsylvania, at about 5. By then, we were very tired, our body clocks telling us it was midnight.

We ate supper and then went to bed before 8 p.m. and woke up at 5:30 this morning. Now, why do I include such seemingly irrelevant details when I am writing about President Obama's speech? I say it because I did a very useful thing when Obama was giving his supposed "epic" address: sleeping soundly.

No, I did not hear a word Obama said, and I will admit that even had I been awake, I either would have had the TV off (which is more likely, given that we are not television watchers), or might have watched something entertaining, or even semi-educational, like the Ice Truckers.

Since I knew that the New York Times and Paul Krugman were on the job, I would have all that I need for commentary today and I must say that these folks did not disappoint. When I read words like "bold" and "passionately" and "authoritative," I knew that I had come to a place that was just one step below the White House PR room.

Hey, Obama might be presiding over the destruction of the U.S. economy, its currency, and its social fabric, but they still love him at the NYT and Princeton. So, let us deconstruct a bit what Obama has said, along with the commentary from the Expensive Seats at the NYT. (I will deal directly with Krugman's "Setting their hair on fire" column in a later post.)

Before taking a brief look at Obama's proposals, however, let me first deal with something the editors declared, which tells me that this whole thing is a religious exercise with these very secular folks:
Though he went on too long, he was authoritative in demanding that Congress pass his plan quickly and in laying out its benefits for average Americans. He directly, even mockingly, challenged the increasingly nihilistic Republican view that government’s very presence is noxious. Just as Lincoln helped start the transcontinental railroad and land-grant colleges, he said, the two parties must together push the country past its economic crisis. Waiting for the next election will waste valuable time, he said. (Emphasis mine)
I decided to look up the meaning of "nihilism" and found that it is a negation of the very meaning of life or "that life is without objective meaning, purpose, or intrinsic value." So, according to these supposedly secular people, government itself is the meaning of life, and even to question the role of the state in our lives is to engage in "nihilism."

To be honest, that tells me that the editors are arguing this whole issue from a religious viewpoint. It is not enough that something needs to be done to end this whole downturn, but it MUST BE DONE through the mechanisms of the State, or else such action will be meaningless.

That point cannot be ignored. The U.S. economy suffers from a dearth of new private capital investment in large part because we have a government full of people that are hostile to private capital investment, or at least private capital investment that does not coincide with the State's various schemes of "green energy" or some other aspect of Crony Capitalism. The editors of the NYT, who are part of the Political Class in this country, simply cannot stand the very idea of people acting in a way that both creates wealth and does it without letting members of that odious class "wet their beaks."

Thus, what we get are various schemes in which the government tries to pull yet another rabbit out of the hat. For all the talk of "boldness," we get more of the same: more money to state governments to prop up state employee unions for another year, more "infrastructure" schemes to build roads and tunnels to nowhere and to prop up (What else?) more labor unions, and short-term tax and credit schemes that might make it less expensive to currently hire employees, but do absolutely nothing to promote the very long-term capital investment that we need.

This last point is most instructive, because what the NYT and the Political Classes are demanding are nothing less than a bunch of short-term "fixes" that over time will "fix" less and less. There is no use trying to explain to these people what an economy really is because, frankly, they already have the answer: a machine that ultimately funnels money and power to the Political Classes. Anything else is unacceptable, and when we see the Mouthpiece of the Political Classes, the NYT, declare that even to question the role of the State is to question Meaning Itself, then we can be assured that Washington and those who believe that the nation's capital is as much a symbol of Religious Faith as Mecca is to the Moslems or Jerusalem to Judaism, then there really is nothing more to discuss.

As for the speech, as I said before, Obama is demanding that the Depression continue. He clearly is not interested in doing anything to improve the economy that actually might require that he and his cronies get themselves out of the picture.

No, Obama on Thursday night declared that his administration is about short-term schemes to continue the bogus magic show that has become the White House, Congress, and the rest of Washington. In the end, it is not about the economy at all; it is about the very people who have been dragging down the hopes and dreams of others continuing to make sure that they are on the lifeboats when the Titanic sinks.

26 comments:

AP Lerner said...

"No, I did not hear a word Obama said"

You're going to criticize a speech you never heard. Kind of like your criticisms of the General Theory, that you have never read?

"Before taking a brief look at Obama's proposals"

Thanks for the brief look. Thoughtful.

"So, according to these supposedly secular people, government itself is the meaning of life"

Sometimes I wonder if you understand the English language.

"To be honest"

Still waiting for that day.

"more money to state governments "

Which is then used to pay your salary. Support your ideology, and do Frostburg and the taxpayers of MD a favor and move on to a private sector think tank where people will praise you for the nonsense you preach.

"trying to explain to these people what an economy really is"

When will you learn the basics of the economy and how a free floating, non convertible monetary system operates?

"As for the speech, as I said before, Obama is demanding that the Depression continue"

How do you know? You already admitted you never watched the speech?

"He clearly is not interested in doing anything to improve the economy that actually might require that he and his cronies get themselves out of the picture"

How do you know? You already admitted you never watched the speech?

"No, Obama on Thursday night declared that his administration is about short-term schemes to continue the bogus magic show that has become the White House, Congress, and the rest of Washington"

How do you know? You already admitted you never watched the speech?

Lord Keynes said...

"Hey, Obama might be presiding over the destruction of the U.S. economy, its currency, and its social fabric, but they still love him at the NYT and Princeton."

That's priceless - coming from someone who like you who would have demanded a "liquidationist" solution in 2008.

"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate"

That's your solution. Something very close to that was tried in Weimar Germany 1931-1932. Worked a treat too.

"So, according to these supposedly secular people, government itself is the meaning of life, and even to question the role of the state in our lives is to engage in "nihilism."

= straw man.

Anonymous said...

C'mon guys, 14 million willing and able people unable to find work is progress!

Bob Roddis said...

Obviously, Keynesians and MMTers believe in the magical nature of government SWAT teams which apparently gives meaning to their lives. And which is the only thing that gives meaning to their lives.

As Bob Wenzel pointed out, Obama proposed setting up a nutty tug of war program, creating incentives for people to stay out of work and simultaneously creating a program for employers to attempt to hire them. His plan extends unemployment benefits while giving a $4,000 tax credit to employers who hire people who have been out of work for more than six months. So, employers can just fire their present employees, hunt for the best of the long term unemployed and hire them (unless they like their benefits better). If you’ve just been laid off, too bad. You don’t count for the tax credit.

http://www.economicpolicyjournal.com/2011/09/obamas-tug-of-war-jobs-program-and.html

Even if we borrow the money to “pay for it”, we really don’t have to “pay for it” because the government can just click some keystrokes. It’s not revenue constrained!

http://mikenormaneconomics.blogspot.com/2011/09/howre-we-gonna-pay-it-back.html

Ultimately, the psychological basis for the Keynesian mentality is infantile neurotic insecurity coupled with a hatred of average people and a manic drive to control their every move by their “betters”, the Keynesian intellectualoids. Anything less would be nihilistic, right?

Bob Roddis said...

For the record, I always count the weak-minded rantings of AP "Hut Tax" Lerner and His Lordship Lord Keynes as wins for the good guys. Those guys are all that the dark side has. Nada.

nimrod said...

The American economy is 70% consumer based, which is currently not confident about spending or investing.

One political side has complete faith that Obama is destroying America.

The other political side has complete faith that modern conservatism is destroying America.

The result: an ideological tug-of-war for perpetual economic timidity.

Time for facts, folks.

alaskaman said...

And the award for broken record goes to Roddis. Don't you get tired of posting how people just don't get "Austrian principles" or your equivalency of taxation with SWAT teams. Your mind leaves no room for the possibility that people just don't agree with you - it must be their ignorance of the clear reality that you see.

I am constantly amazed at how awful the writing on this blog is. First, did you really have to look up the word "nihilism?!"

And again, this post has very little to do with the economics of Obama's (or Krugman's) proposals. Instead you go on a tirade against the NYT editorial page and whether they are religiously arguing or not.

But, nihilism is not the same thing as nihilistic or to be precise "increasingly nihilistic." But then again subtlety is lost on Austrians (Government = Tyranny; Anarchy=Freedom).

"The U.S. economy suffers from a dearth of new private capital investment in large part because we have a government full of people that are hostile to private capital investment"

Another statement that you frequently make without any justification. Recently we had an argument about Sweden, which you claimed was more hospitable to private investment. I then proceeded to show you that the US according to the right-leaning Heritage still stands in the top 5 countries for business investment, while Sweden was 40th!

So what is your solution? Do away with the state? Social Darwinism? Liquidation, liquidation, liquidation? The fringe is indeed a comforting mistress.

Mike Cheel said...

@alaskaman

"So what is your solution? Do away with the state? Social Darwinism? Liquidation, liquidation, liquidation? The fringe is indeed a comforting mistress."

Why don't you enlighten us with your solution? Wait, let me get some popcorn first.

Flame away!

nimrod said...

The most beloved Founding Father Freedom Fighter, George Washington, himself turned the first spadeful of earth on the public works project which (experts believe) brought great prosperity and growth to Philadelphia.

We don't do these things anymore because they're "inefficient"?

alaskaman said...

@ Nimrod

See, Austrians believe that they "could have" been produced more efficiently by the free market. Never mind that they weren't, since Austrians think that is a logical fallacy. Their whole worldview rests on impossible to sustain counterfactuals.

@ Mike Cheel - that is another typical non-answer from you. My argument about this blog post has nothing to do with what I would ideally do to get the economy growing. It is just an "i know you are but what am I" response.

American Patriot said...

I see that the Krugman army is out in force today.
Nevermind the recent Harvard and Stanford studies or the European economists who concluded for the nth time that G only destroys I past a point on Rahm curve, which is probably between 15-20% of gdp at the most, can you guys answer me this one question?

As Keynesians who are stuck on aggregate demand, how do you explain that consumer spending (PCE)is back to pre recession levels while business inventories and excess capacity are within normal ranges (actually excess capacity is slightly higher than its post 2003 levels) and yet there is no job creation to speak of despite the stimulus, fed policies, and at least four years of boosted government spending?

If demand drives job creation, where are the jobs? Inventories, and C are not the problem. G is not the problem since we are deficit spending to the tune of 1.5 trillion per year.

Why the idle resources?
I'd like to hear your side.

My claim is that none of that matters unless the business environment is favorable. Capital seeks productive use but if government, through regulations, is risking that C, you will get none of it (as we are experiencing)

Bob Roddis said...

What do you say to people who don't understand that government is SWAT teams?

If someone says, "Please, pretty please, pay us some tax money. If you don't want to, that’s cool too”, that’s not government action. It becomes government action when the government threatens you with prison if you don’t do what they say. Even a fine becomes prison if you refuse to pay the fine. If you refuse to surrender for prison and hide in your basement, they send a SWAT team for you.

I use the SWAT team example because statists are too infantile and incoherent to recognize that this is the ultimate objective of their plans. It shouldn’t be this hard to understand. But apparently it is.

And I also insist that the statist has a HUGE burden of proof to show that employing SWAT teams is both beneficial and necessary to solve the problems that they must also prove exist in the voluntary world of private property, contracts and due process of law. These alleged problems are usually the result of prior wars and other statist abominations which the statist doesn’t want to even think about. And so he doesn’t.

And because we insist upon the non-aggression principle and insist upon peace and respect for our fellow humans, we’re the nuts.

nimrod said...

yet there is no job creation to speak of despite the stimulus, fed policies, and at least four years of boosted government spending?

This has been going on since the dot-com bust. Private jobs under Bush declined while government jobs increased. Under Obama, it's decline in public and stabilization of private. The “job creation” has merely been stabilization of the decline.

In a time when every job not nailed down is globally up for grabs, and automation is accelerating, what can the all-knowing Austrians recommend to us wee folks?

nimrod said...

My claim is that none of that matters unless the business environment is favorable.

Why is it that The Job Creators, inspired by government, will blow up crazily cocky bubbles which eventually pop, yet, they'll hide in timidity when government is “unfavorable” to them?

Are the supposedly bold and ambitious movers and shakers of America, actually a bunch of silly and sheepish children?

nimrod said...

I use the SWAT team example because statists are too infantile and incoherent to recognize that this is the ultimate objective of their plans. It shouldn’t be this hard to understand. But apparently it is.

Meaning that Austrians are too infantile and incoherent to recognize the freedom robbing potential of monopolistic corporate robber baronies which own their government cronies?

What ever happened to moderation in checks and balances? The successful sociopaths I know will gravitate towards any concentration of power which benefits them regardless of the consequences to anybody else.

Bob Roddis said...

Meaning that Austrians are too infantile and incoherent to recognize the freedom robbing potential of monopolistic corporate robber baronies which own their government cronies?

Good grief. Corporate capture of the government has been the MAJOR focus of libertarian thinking for decades.

http://www.lewrockwell.com/rothbard/rothbard66.html

I was directed to Kolko's "Triumph of Conservatism" back in 1973:

http://tinyurl.com/3o6vq89

No book details the historical relationship between big business and the Federal government better than this one. Though confined merely to the so-called Progressive Era in American history (1901-1914), Kolko manages to overturn all the misconceptions about the formation of government regulation in America. Instead of accepting the standard view that federal regulation of business was inspired by the Progressive intellectuals and activist political leaders eager to put a check on the rising power of big business, Kolko shows that it was really inspired by the drive of businessman to limit competition and bring "stability" into the market. The result is what Kolko calls, appropriately enough, "political capitalism." Some earlier reviews have attempted to draw an ideological lesson from this book. This is a mistake. If there is a lesson to be drawn from Kolko's work, it is the failure of all ideologies (whether from the right, left, or center) to adequately explain the rise of political capitalism in America. Both the right and the left share the common assumption that government regulation hurts big business. Kolko proves that this isn't the case, that Big Business is in favor of regulation and the throttling of competition. Kolko's book is a must read for anyone who wants to understand what capitalism and politics is really all about.

And Kolko is a leftie. It's been the establishment media and academia that has vigorously suppressed these truths.

And you don't know what you are talking about.

zackA89 said...

Austrians tend to support complete separation of state and private business. When big business colludes with government in order to get special privileges that benefit them at the expense of others that isn’t “free market” it’s a government intervention, and it constitutes “crony capitalism,” something Austrians are vehemently against.

A true free market has internal checks and balances that prevent the concentration of power and prevents large firms from gaining monopolistic power. Only through government protectionism can firms gain the monopolistic power you speak of. Only through government intervention can the market’s internal checks and balances that normally prevent such concentrations of power be hampered and undermined.

The real “freedom robbing” takes place by the government SWAT teams, not the free market.
Problem is, because the government is so heavily involved, we really don’t have anything close to a free market. Unfortunately.


Basically, dont blame the free market for problems that are caused by government intervention.

Bob Roddis said...

Kolko was considered a leading historian of the early New Left, joining William Appleman Williams and James Weinstein in advancing the corporate liberalism idea whereby the old Progressive historiography of the "interests" versus the "people" was reinterpreted as a collaboration of interests aiming towards stabilizing competition [Novick, 439]. According to Grob and Billias, "Kolko believed that large-scale units turned to government regulation precisely because of their inefficiency" and that the "Progressive movement - far from being antibusiness - was actually a movement that defined the general welfare in terms of the well-being of business" [Grob and Billias, 38]. Kolko, in particular, broke new ground with his critical history of the Progressive Era. He suggested that free enterprise and competition were vibrant and expanding during the first two decades of the twentieth century; meanwhile, corporations reacted to the free market by turning to government to protect their inherent inefficiency from the discipline of market conditions. In other words, "the corporate elite—the House of Morgan, for example—turned to government intervention when it realized in the waning 19th century that competition was too unruly to guarantee market share."[3] This behavior is known as corporatism, but Kolko dubbed it "political capitalism." Kolko's thesis "that businessmen favored government regulation because they feared competition and desired to forge a government-business coalition" is one that is echoed by many observers today [Grob and Billias, 39]. Former Harvard professor Paul H. Weaver uncovered the same inefficient and bureaucratic behavior from corporations during his stint at Ford Motor Corporation (see Weaver's The Suicidal Corporation [1988]

http://en.wikipedia.org/wiki/Gabriel_Kolko

We have thought of this kind of thing before, smart guy.

Anonymous said...

In order for monopolistic corporate robber baronies to own government cronies, there have to be government cronies to own in the first place.

Bob Roddis said...

In order for monopolistic corporate robber baronies to own government cronies, there have to be government cronies to own in the first place.

Exactly. To my Austrian homies: Why can't statists EVER grasp these simple concepts?

How can someone come onto this blog to comment without knowing that our critique of the Federal Reserve starts as a critique of a rich clique capturing the government to loot the rest of us? How many times do we have to say this?

http://mises.org/daily/3823

Bob Roddis said...

This is an amazing post by Jakub Bożydar Wiśniewski:

They are the fallacies rooted in the denial of the existence of the logical structure of human action, and the consequent negation of economic laws. They are the sophisms that lead people to believe that with sufficient determination and coercive power, one can eliminate the constraints of scarcity.

http://jakubw.blogspot.com/2011/09/fixing-upside-down-world.html

ekeyra said...

Bob,

This is how far through the looking glass we are.

http://jonathanturley.org/2011/02/06/j-p-morgan-and-the-reverse-bailout-that-saved-the-u-s/

The last two sentences are mindblowing. Trust me

William L. Anderson said...

Robert Higgs has an excellent answer to Krugman's insistence that "regime uncertainty" is nothing more than a "confidence fairy."

http://blog.independent.org/2011/08/03/the-confidence-fairy-versus-the-animal-spirits-not-really-a-fair-fight/

I think I will do a future post on this.

Bob Roddis said...

The Higgs article reminds me of a theme I've been directing at His Lordship Lord Keynes. On his blog, LK constantly attacks the alleged ephemeral nature of various Austrian concepts. However, as Rothbard explained, the basic Austrian idea of ignorant acting man is based upon undeniable and solid empirical evidence as are the logical conclusions that follow. Heck, even LK seems to admit these concepts are true:

[M]ost of the basic Austrian axioms, like the human action axiom, require no “refutation “. They are trivial truths that could be held as true even by Marxists without contradiction.

http://consultingbyrpm.com/blog/2011/09/krugman-has-been-onto-us-for-years.html#comment-24092

The gist of the Austrian axioms is the precise description of the LACK OF KNOWLEDGE of human beings. They could be refuted IF someone could demonstrate that:

a) the knowledge of human beings is not, in fact, as limited as claimed; and/or

b) the logical consequences of such limited knowledge are not as the Austrians claim they are.

This type of analysis is NEVER attempted by Austrian critics and is avoided by them like the plague.

On the other hand, Keynesian “concepts” have no basis in fact or logic. Where’s the evidence that there is this alternative universe of “macro”. Further, those promoting the basic Keynesian programs of money dilution and government spending/debt fail to warn their mush-brained sophomore students that these concepts completely obliterate centuries-old concepts of private property, due process of law and English common law. The authors of these concepts were either undisciplined or knew exactly what they were doing in setting up a Milgram Experiment where the obliteration of the old protections could be justified as “scientifically” based and morally neutral and the victims intimidated to go along by the men in white jackets. People who recognize Keynesianism as the vicious attack on basic western institutions of freedom that it is are being perfectly rational in their “regime uncertainty”.

The difference between “animal spirits” and “economic calculation” is fundamental. “Animal spirits” suggests that average people are hysterical emotional fools who must be guided by their betters running the SWAT teams. “Economic calculation” suggests that average people are fully capable of running their own economic lives unless their decision system has been impaired by the evil Keynesians. Keynesians simply despise average people and their entire “system” is devised and intended to blur and eradicate the very concepts of privacy, private property, contract, due process of law and human freedom.

nimrod said...

All Bob Roddis has said:

...is that Austrians own the quality of the checks and balances against concentrations of power, and the rule-of-law arguments, because he says so.

But where’s the evidence of this high-minded integrity outside of this blog?

Sorry Bob, but when the Canucks lost the Stanley, I supported the Vancouver police in their effort to keep the rioting limited. Did you believe in the rioters ability as "average people" to handle things themselves?

You're confused.

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