“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, January 28, 2011

Egypt In Crisis: Wonderboy's Big Op

Well, we've heard all about Wonderboy's special relationship with the world. How he's declared the US a Muslim nation.

How he's going to show everyone that he knows how to conduct foreign policy so much better than, say, his predecessor, George W. Bush.

Where is he on the Egyptian crisis? Has he called Hosni Mubarak, as one Muslim-educated guy to another? Apparently not.

Where's the unique, proactive Wonderboy handling of the situation?

Where's the decisiveness? Support the American-friendly dictator, or the populist, freedom-oriented movement that could result in a Muslim, anti-American Egypt? C'mon, smart guy- show us your stuff.

He's an empty suit and fraud on this dimension, as well as domestic policy.

Fred Siegel's History of Public Unions

Fred Siegel of St. Francis College and the Manhattan Institute wrote a fairly comprehensive history of the public sector union movement in a recent editorial in the Wall Street Journal. Some salient passages included these,

"The first to seize on the political potential of government workers was New York City Mayor Robert F. Wagner. The mayor's father, a prominent New Deal senator, had authored the landmark 1935 Wagner Act, which imposed on private employers the legal duty to bargain collectively with the properly elected union representatives of their employees. Mayor Wagner, prodded by Jerry Wurf of the American Federation of State, County and Municipal Employees (Afscme), gave city workers the right to bargain collectively in 1958.

Running for re-election in 1961, Mayor Wagner was opposed by the old-line party bosses of all five boroughs. He turned to a new force, the public-sector unions, as his political machine. His re-election resonated at the Kennedy White House, which had won office by only the narrowest of margins in 1960.

Ten weeks after Wagner's victory, Kennedy looked to mobilize public-sector workers as a new source of Democratic Party political support. In mid-January 1962, he issued Executive Order 10988, which gave federal workers the right to organize in unions."

This is something which I believe the average citizen simply does not know. This unholy bargain did several things. First, it provided an added payoff to public sector workers who already received job security. Second, because Democrats initiated this, and championed unions generally, it tilted elected officials toward bigger government via more unionized employees. A built-in bias was created which most voters didn't understand.

As to FDR's worries about public sector strikes, Siegel writes,
"On July 1, 1975, New York sanitation workers walked off the job, allowing garbage to pile up in the streets of a Gotham already in the throes of fiscal crisis. In short order, cops objecting to furloughs imposed by the city's liberal Democratic Mayor Abe Beame shut down the Manhattan side of the Brooklyn Bridge, with marchers carrying signs that read "Cops Out, Crime In" and "Burn City Burn."

On that same July 1, 76,000 Pennsylvania state workers went on strike against liberal Democratic Gov. Milton Shapp's austerity measures. Afscme's leader in Pennsylvania, Gerald McEntee, told his members "Let's go out and close down this God-damned state." And in Seattle, the fireman's union initiated a recall ballot on July 1 directed against the one-time union favorite, Mayor Wes Uhlman, who held back pay hikes in the midst of rising deficits.

Mr. Uhlman narrowly survived and he, like Beame and Shapp, calmed the situation by largely caving in to the striker's demands. But a line had been crossed: With New York's near-bankruptcy a visible marker, the peril posed by public-sector unionism became a problem for Democrats as well as Republicans."

 It's not the sort of thing which are Framers had in mind, is it? A permanent, unionized public sector workforce which could hold the citizenry hostage.

Why on earth, after these experiences didn't Republicans man up, expose this farce and begin to reverse course, out-sourcing everything via private contracts? That's the obvious solution. State and local governments could easily outsource fire and education employees and provisioning. Police could be handled differently, but, even then, distinguish between field officers and desk employees.

Siegel concludes his editorial by contending,

"Restraining the immense clout that government-employee unions have accumulated over the past half-century will be difficult, but not impossible. Civil rights for African-Americans and women was a fulfillment of the universalist American promise as expressed in the Declaration of Independence. Collective bargaining by public employees was not rooted in deep-seated American tradition.

Instead, the decision to grant this privilege was a political decision designed to enhance the power of a pressure group whose interests, even many liberals assumed, would be at odds with those of the general public. Political decisions can be reversed."

I think he's correct in his observations. Public sector unions aren't a longstanding American value or desire. It's a stealthy accident of recent history which can, and probably now will be, reversed.

Thursday, January 27, 2011

When Is Government Spending Really "Investment"?

Remember when the vaunted near-trillion dollar stimulus bill of 2009 was pitched as government "investment?" "Shovel-ready" and all that?

We now know that it didn't work at all. It didn't create jobs, apparently increased GDP growth tepidly, and, in retrospect, was found to mostly transfer money from the federal government to various social spending programs in the states.

Infrastructure wasn't really affected to any large degree, aside from all those normally-occurring highway repairs with their prominent signage telling you that your share of federal debt increased in order to fund the guy holding the sign.

Wonderboy's trying it again. He's called for more spending in his recent State of the Union address, but, once again, called it "investment."

Yesterday, on CNBC, Alice Rivlin sounded positively surreal as she denied that fellow guest Andy Stern, former head of SEIU, was a socialist. She went on to insist that the new order required government partnership in 'investing' in various sectors. Honestly, it looked like she was on drugs, she was so out of touch with reality.

So, when is government spending really "investment," and when is that moniker just a ploy for unnecessarily larger government?

I've been giving this a lot of thought recently. It seems to me that there is really only one clear-cut instance in which government must or should spend in lieu of the private sector- defense. Defense goods don't have a market use, per se, so it's not reasonable to expect some private party to buy and use military equipment.

Other than that, honestly, I can't think of a single commercial effort which couldn't and shouldn't be privately funded, or at least done by state-level government cooperation with private parties. The usual examples to the contrary are, of course, New Deal projects like the TVA, Eisenhower's interstate highway system, and the space program. Modern examples are touted as alternative energy technologies and railways.

Let's examine them in turn to see if federal 'investment' was really the only, or best, way to have accomplished the tasks.

First, it's important to begin with the principle that projects which aren't commercially profitable in the first place should not be attempted, even by government.

The TVA was billed as bringing electrification benefits to rural Americans. Fine. But why did the federal government need to borrow and spend on something which only benefited several states? If the benefits were compelling, why didn't the affected states cooperate on obtaining the necessary easements, land, etc., then let bids to private power companies to invest in said electrification? Why should all Americans have had to pay for the benefits accruing to a few states and their residents?

This was likely a first example of federal intrusion into commerce, albeit 'interstate,' which was unconstitutional. Former judge Andrew Napolitano, a Fox News contributor, has repeatedly noted that, prior to the income tax, the federal government didn't have direct relationships with each citizen. Nor was it meant to have had one.

Thus, the states bordering or through which the Tennessee river flowed would and should have been completely able, on their own, to affect that regional power project.

Next is the interstate highway system.

On one hand, it was formally proposed as a defense project. If so, then federal funding was reasonable. But maintenance, given the overwhelming commercial and private usage, would not be. Nor would much of the second-generation bypass loops and much more discretionary construction.

So I'd say that an initial build-out of the major interstate routes was acceptable as federal spending, but should have been capitalized, depreciated and treated as a wasting asset to be maintained. Subsequent additions to the network should have been by individual states and municipalities, with code requirements in order to connect to the federal roads. That way, again, each city, state and/or region could choose to take advantage of the existing road net, add to it when it was seen as commercially profitable, and finance that construction locally. States could sell the rights as tollways, as the Illinois-Wisconsin-Indiana Tri-State toll road was financed. Or the Garden State Parkway in New Jersey. Or a state could choose to borrow to build a road, taxing all citizens to pay for the presumed benefits. More likely, though, collecting tolls from commercial and private traffic would more reasonably place costs with those enjoying the benefits. Failing to have done this, and leaving it as a federal debt, merely disguises making everyone pay for the benefits a few enjoy seemingly for free but, in reality, simply for less cost than is fair.

The space program, too, was initially positioned as a defense initiative. As Wonderboy recalled in his address, the Sputnik moment ignited American interest in science, technology, engineering and space exploration. Fair enough. Initially, the space program didn't have a commercial value, per se, so government funded it to maintain defense parity with the Russians.

By now, however, it's reasonable to expect that Air Force interests can fund their own space activity. Other than that, NASA should have been spun off and made commercially self-sustaining. Medium-term debt could have accompanied it, along with equity, the former to be replaced by private bond financing as government debt matured.

Much as I appreciate America's space exploration successes and the associated technology's benefits to society, we have to clearly identify why we are funding the program with taxpayer dollars. If it's merely for technological advancement, then a private concern could do that, too. If it's defense, then it's too broadly positioned now.

Now we are told we must use taxpayer dollars for new energy sources and rail projects. What nonsense.

Did anyone federally subsidize whaling, initial oil, natural gas or coal exploration? Of course not! These were energy sources either already understood, or foreseen by entrepreneurs to be able to create value in the marketplace.

I don't want government hacks making choices with taxpayer dollars to reward favored private entities in favored energy fields. Rather, at best, let the federal government offer to buy defined amounts of power by type, at defined prices, declining over time. Against this demand curve, private enterprise can choose to deploy capital to meet these requirements and, thus, use the initial demand to make the technologies competitive in the rest of the marketplace. But this doesn't require federal 'investment' dollars, only the offering of a level of demand for the products.

Railways are another version of the TVA or interstate highway system. If we have a defense-based need for new railways, so be it. I haven't heard of any yet. Most troop deployments are by air, or over the highways already built with federal dollars.

The railways projects are being foisted on us as more efficient means of transport. But several states' incoming governors have cancelled them for reasons of being too expensive for their proposed benefits.

Once again, there's no reason to believe federally-directed commuter rail spending, called 'investment,' will be profitable. Wouldn't it make more sense for the localities involved to decide that the expected benefits for the projects merit their local governments providing regulatory easements, then letting private companies bid to build and operate the projects? Assuming the projects will be commercially viable, there will be bidders. If not, then they won't attract interest. But you can be sure that private capital won't try to build railways that don't have viable business cases. Such as the one in California which continues to experience rising construction projections, falling ridership and rising fare levels.

No, investment is an activity involving using savings via borrowing, to build long-lived assets which are presumed to have net positive economic value. As such, there will be private sector parties willing to step in and build and/or operate such projects. Government can assist by simplifying regulatory-related aspects, to reduce uncertainty of success.

But rather than debate whether the federal government should, in the current debt and deficit crisis, borrow more money for so-called 'investments,' we should be moving such projects down to regional, state and local levels, to be financed, constructed and operated by private sector entities. Otherwise, without such explicit profit motives, scarce economic resources, such as tax dollars, will be wasted on uneconomically valuable projects simply due to political preferencees.

Wednesday, January 26, 2011

State of the Union Addresses

Last night was, of course, State of the Union night.

Wonderboy delivered what was described as a typical, boring, long-winded hour and a half monologue. I wasn't about to subject myself to such torture. His henchwoman, political operative Valerie Jarrett, pre-announced that he'd be talking about more spending, disguised as "investment."

Post-speech punditry this morning clearly identified the First Rookie's attempt to move to the center, pre-empt House Republicans on cutting spending, and generally aim for a Clintonesque triangulation for 2012 re-election.

No surprises there.

Here's Paul Ryan's official GOP response to Wonderboy's speech.

Ryan exhibits in this clip why he's considered an eventual potential Presidential candidate. Considering Bobby Jindahl's disastrous appearance last year, and rumors of Chris Christie's declining an invitation to be this year's respondent, the Wisconsin Congressman's consent might be considered an act of bravery.

That said, I think he does an excellent job concisely expressing the new, frugal message of Congressional Republicans.

Pros and Cons of A Federal Law Allowing State Bankruptcies

The Wall Street Journal has recently printed two diametrically opposed viewpoints on the subject of passing a federal law allowing states to declare bankruptcy.

David Skeel, a University of Pennsylvania law professor, took the 'pro' side of the question, whereas E.J. McMahon of the Manhattan Institute took the 'con side.

Skeel's piece appeared first, and I found it quite convincing. He focused on the use of such a law to place problematic state and municipal union contracts into a court's jurisdiction, in order that they could be set aside. Skeel claims that unions have the power to block renegotiation of such contracts, which is why a court-supervised bankruptcy is useful.

McMahon, on the other hand, contends that a single judge shouldn't be doing what a governor is already in a position to effect. Specifically, he suggests that governors already can take steps to curb union powers and limit their collective bargaining powers, and that tossing the problem to the courts will simply alleviate pressure on unions by elected officials. Further, he questions the legality of a state bankruptcy law on teacher, police and firefighters unions whose members work for municipalities. He goes on to suggest, without empirical evidence,

"More than half of all state expenditures go to Medicaid, K-12 public school aid and other transfer payments. These are the areas that have been the prime source of unsustainable and unaffordable spending growth in state budgets."

I frankly don't believe these contentions. Yet, absent those arguments, the rest of McMahon's case actually makes sense.

Reading both editorials, I find now find myself wary of Skeel's position. But the real danger seems that, without a state bankruptcy option, many citizens worry that the federal government will simply bail out problem states. That's clearly not a good idea. If the only way that can be precluded is by way of state bankruptcies, so be it.

That is, I believe, really where Skeel and McMahon would disagree, were they debating in person. McMahon feels that there's sufficient power in state governments now to cut spending, while Skeel feels that many states will still resist those cuts, and appeal for federal bailouts.

As I've written in several prior posts, I don't think even the constitutionally-protected public pensions can ultimately survive the coming state and local budget and public sector union benefits crisis. It may take amendments to some states' constitutions, but I really believe the entire concept of public unions and their lush benefit packages, with minimal employee input, have to be revised and drastically cut, or our nation will sink into a mire of unmanageable, unpayable pension obligations in the near future.

Tuesday, January 25, 2011

A Retrospective on Irving Kristol's Neo-Conservatism

I recently came across James Q. Wilson's review, in the Wall Street Journal, of The Neoconservative Persuasion: Selected Essays, 1942-2009 by the late Irving Kristol, edited by his widow, Gertrude Himmelfarb (Basic, 390 pages, $29.95). Wilson provides a nice overview of Kristol's contribution with these passages,

"Neoconservatism, as the title of this collection suggests, is a "persuasion," not an ideology. The word comes from Marvin Meyers's book "The Jacksonian Persuasion" (1957), in which Meyers defines a persuasion as a "half-formulated moral perspective involving emotional commitment." Kristol liked "tendency," "impulse" and "cast of mind" as well. As a long-time contributor to the Public Interest, I think any of these words is right. How else can you bring together into a happy working relationship, as Kristol did, Daniel Bell (a democratic socialist), Pat Moynihan (a lifelong Democrat), Martin Feldstein (a conservative economist) and Robert Solow (a liberal one)?

What such figures had in common was a belief that it is a good idea to know more about proposed or enacted policies than can be inferred from an ideology or extracted from journalism. Such a belief amounted to an argument for social science, or at least for the kind of social science that tries to understand the facts that seem to demand action, the alternatives to government action, and the chances that a policy will have benefits that exceed its costs."

Put that way, it hardly even seems that the movement has a partisan component, so much as a rigorous analytical one. Wilson continued with these passages,

"Perhaps the best place to start reading "The Neoconservative Persuasion" is one of its last articles, "An Autobiographical Memoir." Published in 1995, it is Kristol's summary of the people and events that shaped him. Two in particular stand out: the literary critic Lionel Trilling (whom Kristol calls a skeptical liberal) and the political philosopher and legendary teacher Leo Strauss (whom he calls a skeptical conservative). Trilling explained in "The Liberal Imagination" (1950) that the great modern writers (T.S. Eliot, William Butler Yeats, Franz Kafka, William Faulkner) portrayed human behavior in ways that refuted the claims of socialists that we could all become brothers. Strauss restored the importance of ancient thinkers as a way of understanding ourselves.

Trilling thought that great novelists and poets understood people better than social scientists, while Strauss refused to accept the Enlightenment view that "the truth will make you free." Strauss believed, Kristol emphasizes, that the truth would make some people free but enslave others if that truth were not anchored in prudence and natural law. As Kristol reminds us, Strauss, contrary to the caricature that has emerged in recent years, was not a right-wing ideologue. As a student in two of his classes, I can attest that Strauss never uttered a word in support of or in opposition to any public policy."

I liked the reference to Trilling and his thoughts about novelists, as well as Strauss' that allowing truth to be a fluid concept can leave it abused in the hands of tyrants, enslaving others.

Wilson made this interesting observation on Kristol's departure from what was a narrower base of conservative thinking prior to his conversion,

"Kristol decided that the success of neoconservatism arose from its having enlarged "the conservative vision to include moral philosophy, political philosophy, and even religious thought," thereby making this persuasion "more politically sensible as well as politically appealing." Perhaps, he added, this has helped make the Republican Party more interested "in the pursuit of happiness by ordinary folk" rather than just in the success of the business community."

This last passage reminds me of something Glenn Beck says repeatedly which I believe his detractors confuse as mere religiosity. Beck notes that American Progressives talk and act as if our rights come from government. Thus, when they establish new 'rights,' such as FDR's prospective additional 'bill of rights,' or health care, these Progressives attempt to make the source of the rights to be the federal government.

Beck notes that the fundamental belief of our Founders was that rights to "life, liberty and the pursuit of happiness" were "endowed by our Creator." Specifically, the Declaration of Independence states,

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed...."

Kristol, too, before Beck, seemed to realize instinctively that a sterile, economic brand of conservatism wasn't ever going to fire the passions and imagination of the broad American political middle. Instead, arousing passions by appealing to concerns that other men will style themselves the creators of rights and, thus, the arbiters of how those rights are granted, and to whom, has made the conservative movement far more accessible.

For example, the Tea Party movement is at least as much about protecting individual liberties as it is about the federal- and state and local- government spending within its means, and restraining itself from excessive taxation. Something Kristol would not doubt have understood.

Monday, January 24, 2011

Limbaugh on Nobel Peace Prize Laurates & Irony

Rush Limbaugh, as quoted in the Wall Street Journal,

"The moral code, the moral compass of the state-controlled media is something to behold. Now, some of you may not know the 2009 Nobel Peace Prize winner hosted a state dinner last night for Hu Jintao of China. Hu Jintao is holding the 2010 Nobel Peace Prize winner in prison in China. Not making it up. The 2009 Nobel Peace Prize winner hosted a dinner for the guy holding the 2010 Nobel Peace Prize winner in prison, and the media does not get the irony of this at all. They're too busy running around chasing Sarah Palin and radio talk show hosts over "civility." "

Yes, and one wonders if Barbra Streisand knew, too, that she was attending a state dinner in honor of the imprisoner of a Nobel Peace Prize winner. Or that the host was in denial about this, as well.