Topic: Government and Politics

Labor’s Waxing Political Influence

It has long been recognized that many capitalists are the greatest enemies of capitalism.  They want free enterprise for others, not themselves.

Unfortunately, organized labor tends to be even more statist in orientation.  Unions now routinely lobby for government to give them what they cannot get in the marketplace.

Labor influence is greatest in the public sector.  And as government’s power has expanded during the current economic crisis, so has the influence of unions.  Observes Steve Malanga in the Wall Street Journal:

Across the private sector, workers are swallowing hard as their employers freeze salaries, cancel bonuses, and institute longer work days. America’s employees can see for themselves how steeply business has fallen off, which is why many are accepting cost-saving measures with equanimity – especially compared to workers in France, where riots and plant takeovers have become regular news.

But then there is the U.S. public sector, where the mood seems very European these days. In New Jersey, which faces a $3.3 billion budget deficit, angry state workers have demonstrated in Trenton and taken Gov. Jon Corzine to court over his plan to require unpaid furloughs for public employees. In New York, public-sector unions have hit the airwaves with caustic ads denouncing Gov. David Paterson’s promise to lay off state workers if they continue refusing to forgo wage hikes as part of an effort to close a $17.7 billion deficit. In Los Angeles County, where the schools face a budget deficit of nearly $600 million, school employees have balked at a salary freeze and vowed to oppose any layoffs that the board of education says it will have to pursue if workers don’t agree to concessions.

Call it a tale of two economies. Private-sector workers – unionized and nonunion alike – can largely see that without compromises they may be forced to join unemployment lines. Not so in the public sector.

Government unions used their influence this winter in Washington to ensure that a healthy chunk of the federal stimulus package was sent to states and cities to preserve public jobs. Now they are fighting tenacious and largely successful local battles to safeguard salaries and benefits. Their gains, of course, can only come at the expense of taxpayers, which is one reason why states and cities are approving tens of billions of dollars in tax increases.

The government’s increased power over the economy also gives organized labor a new hook to lobby for more special interest privileges.  For instance, the AFL-CIO is arguing that the federal bailout of the auto industry should bar the companies from moving factories overseas.

Explains the union federation:

The pundits and politicians inside the Washington Beltway don’t get: If the United States continues to send its manufacturing jobs [1] overseas—as [2] General Motors and Chrysler are now proposing—the result will be more low-income U.S. families.

So today, workers, economists, academics and business and union leaders, fresh from the “[3] Keep It Made in America” bus tour through the nation’s heartland, brought that message to the policymakers’ doorstep as part of a teach-in on Capitol Hill.

The 11-day, 34-city bus tour showcased the ripple effect on communities of the lost jobs in manufacturing. ([4] See video.) Today, during the teach-in, those who took part brought the stories they heard along the tour and presented principles for revitalizing the auto industry to members of Congress and the press. 

Labor officials have been making similar arguments about bank lending.  If you got bailed out by Washington, then you have an obligation to keep funding bankrupt concerns.  Never mind getting paid back, and paying back the taxpayers.

Markets are resilient, but can survive only so much political interference.  If the American people aren’t careful, they might eventually find themselves living in an economy more appropriate for Latin America than North America.

Rush Limbaugh Is Not the Problem

Brink Lindsey’s post, triggered by Jerry Taylor’s controversial critique of conservative talk radio at National Review online,  is part of a much-needed debate about the changes needed to create more fertile soil for limited-government – a task that is especially difficult given the GOP’s decade-long embrace of statist economic policy.

But in the spirit of friendly disagreement, the problem is not Rush Limbaugh and Sean Hannity. Talk radio, after all, existed when Republicans were riding high and promoting small government in the 1990s.

The real problem is that today’s GOP politicians are unwilling to even pretend that they believe in limited government. In such an environment, it is hardly a surprise that anti-tax and anti-spending voters decide that talk show hosts are de facto national leaders.

This does not mean that Rush Limbaugh is always right or that Sean Hannity never engages in demagoguery. But I suspect if any of us had to be live on the air three hours every day and support our families by attracting an audience, our efforts to be entertaining might result in an occasional mistake - either factually or rhetorically. Heck, when I had to be on the air for just one hour each day in the mid-1990s for the fledgling conservative television network created by the late Paul Weyrich, I’m sure I had more than my share of errors.

This being said, I agree with Brink’s main points about conservatism being adrift. How come there were no tea parties when Bush was expanding the burden of government? Why didn’t conservative think tanks rebel when Bush increased the power of the federal government? Where were the supposedly conservative members of the House and Senate when Bush was pushing through pork-filled transportation bills, corrupt farm bills, a no-bureaucrat-left-behind education bill, and a massive entitlement expansion?

I sometimes wonder if the re-emergence of another Reagan would make a difference, but Brink (and Posner, et al) offer compelling reasons to believe that the problems are much deeper.

Bailout Nation

The four top business headlines in the Washington Post the other day were:

More Homeowners Getting Aid, but Demand Keeps Rising

AIG Could Repay U.S. in 3 to 5 Years, Chief Tells Congress

Treasury Clarifying Rules for Bailed-Out Firms

Small Auto Suppliers Seek Help in Wake of Giants’ Woes

It’s certainly true, as BBC and other journalists have noted, that the center of American business and finance is now Washington, not New York.  The headlines above (in the paper edition, but some of them can be found here) indicate that all sorts of businesses and individuals are looking to the Obama administration for bailouts and loans and “capital injections.” And one could find similar stories about federal money for states, cities, big insurance companies, and more. Money and credit were once allocated by owners of capital, who stood to gain or lose on the strength of their decisions. Now capital is being allocated by politicians and bureaucrats, who have none of their own money at risk and who may well see their own power enhanced by an economy that remains slow.

Back in September, as the bailout of Fannie Mae and Freddie Mac ushered in a new era of federal help for failing companies, I wrote a blog post titled “Bailout Nation.” I didn’t know the half of it; still to come were the AIG bailout, TARP, federal subsidies to banks and automobile companies, and more. But I warned then:

Capitalism is a system of profit and loss. It works because each person and each company, in seeking its own interest, is led “as if by an invisible hand” to supply goods and services that others want. Companies that satisfy consumers prosper. Companies that can’t produce goods that consumers want–like Chrysler, repeatedly–suffer and sometimes go out of business. The failures are often painful. But as Dwight Lee and Richard McKenzie wrote in their book Failure and Progress (or at least in this column based on the book), “Economic failure is to the economy what physical pain is to the body. No one enjoys pain, but without it the body would lack the information needed to maintain its health.” Government subsidies to prevent business failure simply keep pouring money into businesses that are relatively unsuccessful at satisfying consumer desires. They are, among other things, censorship of vitally needed information. Employees, entrepreneurs, and investors need to know where their money and talent are most valuable. Profits and losses are key indicators of that.

Turns out that David Ignatius had warned of a “Bailout Nation” in a column a few months before that:

As every parent knows, the danger of cutting a special break for one child is that all the other children will demand the same thing. “It’s not fair,” goes the inevitable refrain. “You said Susie could eat ice cream and watch TV until midnight, so why can’t I?” The parents start caving, and family discipline is shot.

We’re now in a comparable cycle of bestowing special economic favors on members of the national family who have been hurt by the credit market crisis. “It’s not fair,” argue the housing interests and consumer advocacy groups. “Bear Stearns got a financial bailout, so why shouldn’t we?” And they’re right, by the simplest schoolyard definition of fairness.

So the line grows of people demanding breaks on financial obligations they can’t afford.

Neither of us is very happy about being so prescient. And what no one seems to discuss is, Where is all this bailout money coming from? Much of it is just being created on the balance sheets of the Federal Reserve, which portends rising inflation. Certainly it’s too much to be paid for in taxes, even in the fondest dreams of Barack Obama and Nancy Pelosi.  Is Bernie Madoff advising the Treasury these days?

How much money is it? CNNMoney estimates that the federal government has now committed $10.5 trillion. Christopher Barker at the Motley Fool concludes that ”the combined total of existing, announced, and potential outlays from the Federal Reserve and U.S. government agencies that are directly attributable to the financial crisis will breach $13 trillion!”

This is nuts. Would Paulson and Bernanke have acted differently last April if they’d known where we would be in a year? They’d have known if they’d read David Ignatius’s column. Or if they’d read some history; when governments start handing out money to troubled institutions, there will be no limit to the number of troubled institutions. And in barely a year, you get small auto parts companies coming to Washington saying that if automakers and large suppliers are getting government help, they should too. President Bush and his Treasury secretary started this process, but Obama and the Democrats own it now. Do they have a plan that doesn’t end in inflation and bankruptcy?

The Closing of the Conservative Mind

If you’re unclear what’s wrong with conservatism these days, I urge you to check out the tragicomic dustup accidentally provoked last week by my colleague Jerry Taylor at National Review Online’s “The Corner” blog.

I don’t want to give a blow-by-blow recount of the fracas, but happily a convenient compendium of the relevant links is provided here. Go read the whole thing; you’ll be entertained, that’s for sure. For present purposes, suffice it to say that Jerry made two basic points: (1) talk radio hosts Rush Limbaugh and Sean Hannity are not popular outside the conservative movement; and (2) the two have a habit of making “dodgy” arguments even when their positions are sound. He might have added that the sky is blue and A comes before Z. For his effrontery Jerry was verbally beaten to a pulp by his fellow Cornerites.

The whole thing seems like an updated version of the Emperor’s New Clothes, except this time the crowd turns on the truth-telling kid and gives him the Rodney King treatment. And that response to Jerry’s innocent and obvious points captures the essence of what has gone wrong with the conservative movement. That the flagship publication of the movement will brook no criticism of demagogic blowhards like Limbaugh and Hannity says it all:  A movement founded on the premise that “ideas have consequences” has suffered a calamitous decline in intellectual standards.

Richard Posner agrees. In a recent blog post, he offered this withering assessment of the state of the conservative mind:

My theme is the intellectual decline of conservatism, and it is notable that the policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. That the policies are weak in conception, have largely failed in execution, and are political flops is therefore unsurprising. The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of managment and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.

By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.

I don’t endorse every detail of Posner’s bill of indictment, but the broad thrust is correct. Movement conservatism has regressed to something like the days before National Review was founded – back when Lionel Trilling could say that conservatism consisted of nothing but “irritable mental gestures which seek to resemble ideas.” And as Jerry’s trip to the woodshed demonstrates, those gestures can be very irritable indeed! Conservatism today has degenerated into a species of especially unattractive populism, pandering to the pro-torture-and-wiretapping, anti-gay-and-Mexican prejudices of a dwindling, increasingly sectarian, increasingly regional “base.”

Some who sympathize with libertarian and free-market causes are cheered by the anti-government rhetoric and Tea Party theatrics now increasingly in evidence on the right. Perhaps, they think, the old Goldwater-Reagan conservatism is making a comeback. Sorry, but I seriously doubt it. On the contrary, I worry that good free-market ideas are going to get tainted by association with an increasingly brutish identity politics for angry white guys and the women who love them.

In order to make gains for the cause of limited government, we need to convince smart people that we are right. We need to win the battle of ideas in the intellectual realm by making better arguments than our opponents, and we need to educate the public so that it is less susceptible over time to “rational irrationality.” None of this can be accomplished by consorting with and apologizing for merchants of intellectual junk food, or by making common cause with some of the ugliest cultural attitudes in contemporary America. Greater economic freedom will not come with pitchforks and torches; it will come, as it has in the past, by reshaping the elite consensus.

Dick Cheney: Obama’s Enabler

That’s the theme of my Washington Examiner column this week:

Dick Cheney’s “Shut Up and Listen” tour continued last week on CBS’s “Face the Nation.” There, the former veep reiterated his favorite theme: Obama is putting America at risk by “taking down a lot of those policies we put in place that kept the nation safe.”
 
What in the world is Cheney talking about? Granted, Obama’s anti-terror policies are clouded by rhetorical “Hope” and euphemism, and the new administration is less given to chest-thumping than its predecessor. Otherwise, Obama’s approach to terrorism is virtually identical to Bush/Cheney’s.

 Harvard Law prof and former Bush OLC head Jack Goldsmith makes a similar point in a New Republic piece out today, though Professor Goldsmith is happier about the continuity than I am.   For more, see Glenn Greenwald.

Congress “Helps” Credit Card Customers

One of the best laugh lines always has been “I’m from the government and I’m here to help you.”  Certainly that’s true when it comes to consumer protection.

In the name of saving customers from the evil, rapacious credit card companies Congress plans on limiting access to credit.  It also is working to hike costs for people with good credit.

Reports the New York Times:

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

This makes a lot of sense.  We’re worried about bad debt, bad mortgages, and bad loans.  So Congress is going to penalize people with good credit who carefully manage their financial affairs.  Of course!

It has long been evident that Congress has the reverse Midas touch.  Everything congressmen touch turns to, well, this is a family-oriented blog.  You can fill in the blank.

If Congress wants to help consumers, the best thing it could do is take an extended recess.

Irony! Get Your Red-Hot Health-Care Irony!

Someone forwarded me an email update from our friends at the Center for American Progress Action Fund (motto: “Disagree with us? Then you hate progress.”).

In one blurb, CAPAF’s crack team of spin-disclosers chides Republicans for discussing health care reform using the language recommended by pollster Frank Luntz, who “advised Republicans to fearmonger” Obama’s proposals to death!  Or something.

The same email had another blurb titled, “INSURANCE COMPANIES AT THE TABLE?” There, CAPAF’s crack team of spin-disclosers describe how “health insurance companies and lobbying groups” stood beside President Obama last week to announce their support for reducing spending growth.  The blurb continues:

However, days later, the insurance companies tried to walk back their promises, saying Obama had overstated their commitments. Richard Umbdenstock, the president of the American Hospital Association, wrote to his company’s state and local affiliates to “clarify” that “[t]he groups did not support reducing the rate of health spending by 1.5 percentage points annually.” However, the letter to Obama signed by Umbdenstock and the other insurance leaders specifically pledged…

Umbdenstock and the other insurance leaders”??  Since when do we classify hospitals as insurance companies?  And if “the insurance companies…sa[y] Obama had overstated their commitments,” why not quote the insurance companies?  Could they not find such a quote?

It’s as if CAPAF’s crack team of spin-disclosers has decided to blame every development that might threaten a – ahem – government take-over of health care on the insurance companies.  Now why might they want to do that?  Could it be because insurance companies are less popular than hospitals?

And how would CAPAF’s crack team of spin-disclosers know that?  By listening to a … pollster?