Friday, June 10, 2011

Professor disaster
Bam's theories killing economy
Posted: 10:23 PM, June 8, 2011
Michael A. Walsh -- New York Post

No billions or trillions needed -- here's the simplest num ber to describe the dismal state of the US economy:


With the departure of chief economic adviser Austan Goolsbee, that's the number of members from the original Obama economic team still working for the administration, not quite three years into the first term.

Rats, say goodbye to the ship of state: Gone are Christina Romer, Larry Summers, Peter Orszag. Headed out is Goolsbee, who abruptly announced his resignation Monday to return to teaching at the University of Chicago.

With the water lapping over the gunwales, the lone holdout is Treasury Secretary Tim Geithner, the former tax cheat, who sails grimly on.

The government racked up $5.3 trillion in new fiscal obligations last year alone -- bringing the current unfunded tab for future expenses on things like Medicare, Social Security and military medical and retirement programs to a whopping $61.6 trillion, or $534,000 per American household.

Then there's today's bills: We're borrowing $125 billion a month that we have no hope of ever paying back on our current course.

The growth in GDP declined to a measly 1.8 percent in the first quarter of 2011 as consumers hung desperately onto their wallets. Job growth has completely collapsed. Fully 60 percent of the electorate thinks the country is on the wrong track. No wonder the daily economic briefing, once on a par with the intelligence briefing, has vanished from President Obama's schedule.

Heckuva job, guys.

And now Obama says he's not worried about a double-dip recession. Easy for him to say: For Americans not feeding at the government trough, the first recession never ended.

We are witnessing the total failure of academic Keynesian economics, with its heavy emphasis on high taxes and exorbitant government spending. Yet Obama sails blithely on, already in full campaign mode and still blaming George W. Bush and the Republicans (admittedly no models of fiscal restraint or responsibility) for everything.

Worse, the what-me-worry president continues to insist that the ongoing hard times are just a "bump in the road" -- that if we can just get the "fortunate" rich to "pay a little more" everything will be just fine.

Never mind that most of the "rich" got their own money by inventing a product or providing a service in the private sector. That they invested an enormous amount of their own capital and sweat equity before it paid off. That they did it for the most part without any help from Obama or his friends in academe.

And never mind that if you tax the rich at 100 percent of their wealth, the country will still go bankrupt.

Bump in the road to what, Mr. President? The road to perdition?

The truth is, the only jobs the government can "create" are more government jobs. That's why real-estate values in DC are booming even as they've plunged everywhere else.

As Obama seeks Goolsbee's rePlacement, he might try looking toward the real world, where businesses are born.

In the faculty lounge inhabited by the president and his credentialed playmates, the economy is a controlled experiment, with manufacturers and consumers mere lab rats who cheerfully respond to the prodding of their ivory-tower betters, no matter how many taxes and regulations are piled onto their backs.


What's needed now is a radical re-thinking of economic theory and the tax structure. Until the economy is addressed, we can't make rational, realistic decisions about anything else, including foreign policy.

In other words, private-sector jobs are Job One.

Of course, Obama's aiming to make the 2012 election a re-run of '08, with the same hope-and-change shtick. He and his campaign gurus understand that their only hope is to give the electorate the old razzle-dazzzle and hope nobody notices the foreclosure signs sprouting across the land.

How will we know when things are finally starting to go in the right direction? When the US is back on the right track and when hope -- real hope -- once more springs eternal? When the number of Obama holdovers in the next administration is zero.

Tuesday, June 07, 2011

Thomas Sowell Rocks

If I was stranded on a desert island and could only bring two books, one would be one of Thomas Sowell's.

Different Decisions
Thomas Sowell  

Two unrelated news stories on the same day show the contrast between government decisions and private decisions.

Under the headline "Foreclosed Homes Sell at Big Discounts," USA Today reported that banks were selling the homes they foreclosed on, at discounts of 38 percent in Tennessee to 41 percent in Illinois and Ohio.

Banks in general try to get rid of the homes they acquire by foreclosure, by selling them quickly for whatever they can get. Why? Because banks are forced by economic realities to realize that they are not real estate companies.

No matter how much expertise bank officials may have in financial transactions, that is very different from knowing the best ways to maintain and market empty houses.

Meanwhile, there was a story on the Fox News Channel about schools that are using their time to indoctrinate kindergartners and fourth graders with politically correct attitudes about sex.

Anyone familiar with the low standards and mushy notions in the schools and departments of education that turn out our public school teachers might think that these teachers would have all they can do to make American children competent in reading, writing and math.

Anyone familiar with how our children stack up with children from other countries in basic education would be painfully aware that American children lag behind children in countries that spend far less per pupil than we do.

In other words, teachers and schools that are failing to provide the basics of education are branching out into all sorts of other areas, where they have even less competence.

Why are teachers so bold when banks are so cautious? The banks pay a price for being wrong. Teachers don't.

If banks try to act like they are real estate companies and hold on to a huge inventory of foreclosed homes, they are likely to lose money big time, as those homes deteriorate and cannot compete with homes marketed by real estate companies with far more experience and expertise in this field.

But if teachers fail to educate children, they don't lose one dime, no matter how much those children and the country lose by their failure. If the schools waste precious time indoctrinating children, instead of educating them, that's the children's problem and the country's problem, but not the teachers' problem.

Sex indoctrination is just one of innumerable "exciting" and "innovative" self-indulgences of the schools. There is no bottom line test of what these boondoggles cost the children or the country.

Incidentally, conservatives who think that schools should be teaching "abstinence" miss the point completely. The schools have no expertise to be teaching sex at all. We should be happy if they ever develop the competence to teach math and English, so that our children can hold their own in international tests given to children in other countries.

Schools are just one government institution that take on tasks for which they have no expertise or even competence.

Congress is the most egregious example. In the course of any given year, Congress votes on taxes, medical care, military spending, foreign aid, agriculture, labor, international trade, airlines, housing, insurance, courts, natural resources, and much more.

There are professionals who have spent their entire adult lives specializing in just one of these fields. They idea that Congress can be competent in all these areas simultaneously is staggering. Yet, far from pulling back-- as banks or other private enterprises must, if they don't want to be ruined financially by operating beyond the range of their competence-- Congress is constantly expanding further into more fields.

Having spent years ruining the housing markets with their interference, leading to a housing meltdown that has taken the whole economy down with it, politicians have now moved on into micro-managing automobile companies and medical care.

They are not going to stop unless they get stopped. And that is not going to happen until the voters recognize the fact that political rhetoric is no substitute for competence.


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