Commentary Magazine


Posts For: June 8, 2011

Another Depression? Confidence Collapses

Oh. My. Goodness.

According to the latest CNN/Opinion Research poll, almost half of those surveyed – 48 percent – believe another Great Depression is likely in the next 12 months. Only 51 percent say they don’t expect it. More than 80 percent believe the economic conditions today are poor; only 19 percent say they are good. And the issues the public says are extremely important to them in their vote for president — the economy, unemployment, health care, gas prices, and the federal deficit — are ones Mr. Obama is most vulnerable on.

Confidence in the American economy is collapsing. And based on the latest economic data, that is a perfectly understandable reaction. We have entering roiling and dangerous economic waters.

Oh. My. Goodness.

According to the latest CNN/Opinion Research poll, almost half of those surveyed – 48 percent – believe another Great Depression is likely in the next 12 months. Only 51 percent say they don’t expect it. More than 80 percent believe the economic conditions today are poor; only 19 percent say they are good. And the issues the public says are extremely important to them in their vote for president — the economy, unemployment, health care, gas prices, and the federal deficit — are ones Mr. Obama is most vulnerable on.

Confidence in the American economy is collapsing. And based on the latest economic data, that is a perfectly understandable reaction. We have entering roiling and dangerous economic waters.

Read Less

Late Spring Political Predictions

Predictions are notoriously dangerous things to make – but just for the fun of it, here are several ones related to American politics:

1. Newt Gingrich will withdraw from the presidential race before the summer is over, and quite possibly before the summer begins.

2. Anthony Weiner will not be on the ballot – any ballot – in 2012.

3. Jon Huntsman will continue to impress pundits and reporters. But he won’t impress GOP primary voters. And he won’t have a significant impact on the GOP race.

4. Sarah Palin will not run for president. Michelle Bachmann will. She’ll finish second or third in Iowa. And after Ed Rollins leaves her campaign, he’ll have negative things to say about her.

5. No Senate seat currently held by a Republican will be lost in 2012 (Dean Heller and Scott Brown are the most vulnerable, while Olympia Snowe may face a stiff primary challenge). When the smoke clears, Republicans will have won at least 52 seats and control both branches of Congress.

6. Barack Obama’s re-election campaign will jettison the strategy of defending his record for a simple reason: it is indefensible. He has amassed fewer impressive achievements than even Jimmy Carter. As a result, Obama will unleash the most sustained, negative campaign by any incumbent in modern American history. The president knows it will be ugly. He also knows it will be his only hope.

Predictions are notoriously dangerous things to make – but just for the fun of it, here are several ones related to American politics:

1. Newt Gingrich will withdraw from the presidential race before the summer is over, and quite possibly before the summer begins.

2. Anthony Weiner will not be on the ballot – any ballot – in 2012.

3. Jon Huntsman will continue to impress pundits and reporters. But he won’t impress GOP primary voters. And he won’t have a significant impact on the GOP race.

4. Sarah Palin will not run for president. Michelle Bachmann will. She’ll finish second or third in Iowa. And after Ed Rollins leaves her campaign, he’ll have negative things to say about her.

5. No Senate seat currently held by a Republican will be lost in 2012 (Dean Heller and Scott Brown are the most vulnerable, while Olympia Snowe may face a stiff primary challenge). When the smoke clears, Republicans will have won at least 52 seats and control both branches of Congress.

6. Barack Obama’s re-election campaign will jettison the strategy of defending his record for a simple reason: it is indefensible. He has amassed fewer impressive achievements than even Jimmy Carter. As a result, Obama will unleash the most sustained, negative campaign by any incumbent in modern American history. The president knows it will be ugly. He also knows it will be his only hope.

Read Less

Giuliani Entering the Race?

So says Bill Kristol. Having learned, Bill says, from the disastrous mistakes of 2007, he will recalibrate his strategy and go all out for New Hampshire this time, with the thought that if he can knock off Mitt Romney he will have the momentum he needs in climes more hospitable to him. It is, as Bill notes, implausible that Giuliani can be the nominee given how poorly he performed despite his star power last time, “but it’s an implausible year.” More to the point, his interest in the race seems more suggestive of something else—that the field is far from fixed and that if you combine Barack Obama’s cloudy future with the general sense that Republicans are looking hungrily for another option or two, he won’t be the last guy to get in. Remember that Fred Thompson got in the race toward the end of the summer in 2007, and it seemed like the clouds had parted for a minute and the sun had at last begun to shine on a dreary contest—until it became clear that Thompson didn’t really seem fully committed to the effort and, with the exception of a brilliant debate performance, never caught on. But the Thompson approach could work for somebody else…

So says Bill Kristol. Having learned, Bill says, from the disastrous mistakes of 2007, he will recalibrate his strategy and go all out for New Hampshire this time, with the thought that if he can knock off Mitt Romney he will have the momentum he needs in climes more hospitable to him. It is, as Bill notes, implausible that Giuliani can be the nominee given how poorly he performed despite his star power last time, “but it’s an implausible year.” More to the point, his interest in the race seems more suggestive of something else—that the field is far from fixed and that if you combine Barack Obama’s cloudy future with the general sense that Republicans are looking hungrily for another option or two, he won’t be the last guy to get in. Remember that Fred Thompson got in the race toward the end of the summer in 2007, and it seemed like the clouds had parted for a minute and the sun had at last begun to shine on a dreary contest—until it became clear that Thompson didn’t really seem fully committed to the effort and, with the exception of a brilliant debate performance, never caught on. But the Thompson approach could work for somebody else…

Read Less

On Neuroscience, Free Will, and Morality

Fifteen years ago, when I was traveling to a conference in Seattle, I read an article by Tom Wolfe which caused me to begin thinking seriously about matters of neuroscience, free will, and morality. Wolfe wrote about brain imaging and what he called “the hottest field in the academic world, neuroscience.”

According to Wolfe:

Neuroscientists … will tell you that there is not even any one place in the brain where consciousness or self–consciousness (Cogito ergo sum) is located. This is merely an illusion created by a medley of neurological systems acting in concert. The young generation takes this yet one step further. Since consciousness and thought are entirely physical products of your brain and nervous system—and since your brain arrived fully imprinted at birth—what makes you think you have free will? Where is it going to come from? What “ghost,” what “mind,” what “self,” what “soul,” what anything that will not be immediately grabbed by those scornful quotation marks, is going to bubble up your brain stem to give it to you? I have heard neuroscientists theorize that, given computers of sufficient power and sophistication, it would be possible to predict the course of any human being’s life moment by moment, including the fact that the poor devil was about to shake his head over the very idea. I doubt that any Calvinist of the sixteenth century ever believed so completely in predestination as these, the hottest and most intensely rational young scientists in the United States at the end of the twentieth century.

This sudden switch from a belief in Nurture, in the form of social conditioning, to Nature, in the form of genetics and brain physiology, was according to Wolfe the “great intellectual event, to borrow Nietzsche’s term, of the late twentieth century.” He added, “Thereupon, in the year 2006 or 2026, some new Nietzsche will step forward to announce: ‘The self is dead’—except that being prone to the poetic, like Nietzsche I, he will probably say: ‘The soul is dead.’ He will say that he is merely bringing the news, the news of the greatest event of the millennium: ‘The soul, that last refuge of values, is dead, because educated people no longer believe it exists.’”

Which brings us to the here and now. Read More

Fifteen years ago, when I was traveling to a conference in Seattle, I read an article by Tom Wolfe which caused me to begin thinking seriously about matters of neuroscience, free will, and morality. Wolfe wrote about brain imaging and what he called “the hottest field in the academic world, neuroscience.”

According to Wolfe:

Neuroscientists … will tell you that there is not even any one place in the brain where consciousness or self–consciousness (Cogito ergo sum) is located. This is merely an illusion created by a medley of neurological systems acting in concert. The young generation takes this yet one step further. Since consciousness and thought are entirely physical products of your brain and nervous system—and since your brain arrived fully imprinted at birth—what makes you think you have free will? Where is it going to come from? What “ghost,” what “mind,” what “self,” what “soul,” what anything that will not be immediately grabbed by those scornful quotation marks, is going to bubble up your brain stem to give it to you? I have heard neuroscientists theorize that, given computers of sufficient power and sophistication, it would be possible to predict the course of any human being’s life moment by moment, including the fact that the poor devil was about to shake his head over the very idea. I doubt that any Calvinist of the sixteenth century ever believed so completely in predestination as these, the hottest and most intensely rational young scientists in the United States at the end of the twentieth century.

This sudden switch from a belief in Nurture, in the form of social conditioning, to Nature, in the form of genetics and brain physiology, was according to Wolfe the “great intellectual event, to borrow Nietzsche’s term, of the late twentieth century.” He added, “Thereupon, in the year 2006 or 2026, some new Nietzsche will step forward to announce: ‘The self is dead’—except that being prone to the poetic, like Nietzsche I, he will probably say: ‘The soul is dead.’ He will say that he is merely bringing the news, the news of the greatest event of the millennium: ‘The soul, that last refuge of values, is dead, because educated people no longer believe it exists.’”

Which brings us to the here and now.

Sam Harris, an influential atheist who received a Ph.D. in neuroscience from UCLA, has written a book, The Moral Landscape, excerpts from which appear on his blog. Two recent entries [here and here] put forward these propositions: (a) brain science has spoken and the conclusion is inescapable: the concept of free will is a myth; and (b) this understanding, while it might alter our view of morality in some respects, doesn’t destroy the distinction between right and wrong, or good and evil. We can have morality without free will.

Harris puts it this way:

You spot your best friend standing on the street corner looking strangely disheveled. You recognize that she is crying and frantically dialing her cell phone. Was she involved in a car accident? Did someone assault her? You rush to her side, feeling an acute desire to help. Your “self” seems to stand at the intersection of these lines of input and output. From this point of view, you tend to feel that you are the source of your own thoughts and actions. You decide what to do and not to do. You seem to be an agent acting of your own free will. The problem, however, is that this point of view cannot be reconciled with what we know about the human brain. All of our behavior can be traced to biological events about which we have no conscious knowledge: this has always suggested that free will is an illusion. [emphasis added]

But from what I can discern, the evidence is far less conclusive and far more complicated than what Harris suggests. For example, Roy F. Baumeister, a Professor of Psychology at Florida StateUniversity, and his colleagues reviewed several studies on whether conscious thoughts cause behavior. They found, “The evidence for conscious causation of behavior is profound, extensive, adaptive, multifaceted, and empirically strong. However, conscious causation is often indirect and delayed, and it depends on interplay with unconscious processes … It is plausible that almost every human behavior comes from a mixture of conscious and unconscious processing.”

The interaction between the conscious and unconscious mind is enormously intricate and still shrouded in mystery. There appears to be a complicated push and pull between free will and how we are hard-wired, between our moral commitments and our impulses.

In his marvelous book The Social Animal, David Brooks, having culled the data and consulted with experts, writes that unconscious emotions have “supremacy but not dictatorship.” We in fact exercise some control over our decisions. Moral sentiments can be refined and improved. Conscious decisions can influence our behavior, and changing our behavior can (to some degree) rewire the way we think.

The ancient Greeks and the Jewish and Christian traditions hold that character is, at least in part, the product of habits, which are the result of a series of choices we make. These choices, taken together and over time, determine whether we are people of integrity. The way we become just and brave is by committing just and brave acts, Aristotle put it.

To be sure, advances in neuroscience have made us in some respects a more compassionate people. It would be wrong, even cruel, not to take into account the influence that, say, mental disorders have in determining how people behave. People imprisoned in a dark world not of their own making deserve sympathy and support. But the danger we face is that we come to believe that free will is a fable, something Wolfe warned about and people like Sam Harris are now championing.

Try as he might, Sam Harris cannot explain how morality is possible without free will. If every action is the result of biological inputs over which we have no control, moral accountability becomes impossible. Mao Tse Tung and George Washington may have acted in different ways, but neither one can be held responsible for his actions, over which they had no control.

If what Harris argues were true, our conception of morality would be smashed to pieces. If there is no free will, human beings are mere automatons, robots programmed to act (and not act) in certain ways. We cannot be held responsible for what we have no control over. C.S. Lewis dealt with this matter in Mere Christianity, where he wrote, “However much you improve the man’s raw material, you have still got something else: the real, free choice of the man, on the material presented to him, either to put his own advantage first or to put it last. And this free choice is the only thing that morality is concerned with.”

Pace Sam Harris, then, free will isn’t an illusion. Our souls aren’t dead. And the new Nietzsches are as misguided as the old one. For all that, I might add, we can thank God.

Read Less

Obama Needs Spin Class

Barack Obama has a new problem: credibility. Where he was once the unbound ideologue and then the flatfooted amateur, he has become the transparently talentless spinner. It is a uniquely damaging role for a president.

“[O]ne of the most misleading collections of assertions we have seen in a short presidential speech,” writes Washington Post fact checker Glenn Kessler about Obama’s Saturday address on the auto-industry bailout. “Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.”

Kessler is right. The president is selling lemons. Last year’s “Recovery Summer” wasn’t a reality. It was a sales drive, intended to shove the Obama economy down American throats in time for midterm elections. In stagnant 2010, it was pathetic. In sliding 2011, it is surreal. Today, in a speech at Northern Virginia Community College, Obama claimed that his “Skills for America’s Future” program will get half a million community college students prepared for manufacturing jobs. But in reality, employment in the manufacturing sector fell by 5,000 jobs in May. Why throw public money into a well-trained army of the jobless? In Virginia, Obama touted the benefits of federal stimulus while even the stimulus’s advocates are now reconciling themselves to the “surprising” longevity of our economic doldrums.

When the president tries to explain the nuances of our mission in Libya, he sounds like Anthony Weiner on the refinements of digital crotch portraiture and cybercrime. No one in the country is clear on the administration’s rationale for war.

Read More

Barack Obama has a new problem: credibility. Where he was once the unbound ideologue and then the flatfooted amateur, he has become the transparently talentless spinner. It is a uniquely damaging role for a president.

“[O]ne of the most misleading collections of assertions we have seen in a short presidential speech,” writes Washington Post fact checker Glenn Kessler about Obama’s Saturday address on the auto-industry bailout. “Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.”

Kessler is right. The president is selling lemons. Last year’s “Recovery Summer” wasn’t a reality. It was a sales drive, intended to shove the Obama economy down American throats in time for midterm elections. In stagnant 2010, it was pathetic. In sliding 2011, it is surreal. Today, in a speech at Northern Virginia Community College, Obama claimed that his “Skills for America’s Future” program will get half a million community college students prepared for manufacturing jobs. But in reality, employment in the manufacturing sector fell by 5,000 jobs in May. Why throw public money into a well-trained army of the jobless? In Virginia, Obama touted the benefits of federal stimulus while even the stimulus’s advocates are now reconciling themselves to the “surprising” longevity of our economic doldrums.

When the president tries to explain the nuances of our mission in Libya, he sounds like Anthony Weiner on the refinements of digital crotch portraiture and cybercrime. No one in the country is clear on the administration’s rationale for war.

We half-heartedly followed a noble coalition into a murky humanitarian effort, but we can’t leave until we’re done “supporting” the accidental killing of the head of state. It’s no wonder Obama is fearful of the War Powers Resolution. His fetish for internationalism and American humility has left him incapable of selling the worthwhile Libyan war to Congress.

One could go on. ObamaCare, Israel, leaving Iraq, drawing down in Afghanistan, green-energy “innovation”—you name it. Wherever there’s progress, the president is looking for exits. Where there’s folly or disaster, he’s doubling down. And for each experiment in the absurd he’s got to make a sales pitch to a country that’s not buying.

Obama is inept at spin because it never occurred to him that he’d have failures in need of spinning. He took the rightness of liberal policy prescriptions as articles of faith. He didn’t even need to know what was in the ObamaCare bill. It would work because liberalism, given its day in the sun, was prophesized to succeed.

His initiatives and modifications are based on notions that were nurtured in the hot houses of academia and the activist circuit. Obama never had to defend his ideas before, let alone his policies. A less visionary paladin could roll up his sleeves and artfully push a few lemons off the lot. Instead, our president has no means with which to take on an incredulous consumer public—one demanding that everything must go.

Read Less

Weiner Apologizes for His Behavior to … Bill Clinton?

You really can’t make this up. Politico reports that shortly after Rep. Anthony Weiner’s press conference, the disgraced congressman called up former President Bill Clinton to apologize for his infidelity:

Rep. Anthony Weiner explained himself and apologized for his conduct to Bill Clinton, who officiated his wedding to wife Huma Abedin, sources familiar with the call said. …

It wasn’t immediately clear what was said on the call, but sources said that the Clintons – who are deeply loyal to Abedin – are distressed by the “sexting” scandal that Weiner immersed his wife in.

It’s not really clear what moral standing Clinton has to accept such an apology, but the former president and his family have a very close relationship with Weiner’s wife (and top Hillary aide) Huma Abedin. Clinton even officiated at the couple’s wedding.

What the article notably doesn’t say is whether the former president accepted Weiner’s apology. Top Democrats are already calling for the congressman to step down, and Clinton obviously has the ability to use his considerable clout to influence the party’s actions.

The article also reminds us of the one person who has been absent from the ongoing controversy — Weiner’s wife. Not only did she neglect to attend Weiner’s painfully awkward press conference the other day, but she also left the country on a global diplomacy trip today, amidst the implosion of her husband’s political career.

Some criticized Hillary Clinton for “standing by her man” after the Monica Lewinsky controversy, but her behavior has actually been imitated by other scorned political wives after their husbands’ sex scandals. It’s noteworthy that Hillary’s closest aide, Abedin, has so far rejected this concept. And she’s already gaining some strong admiration for doing so. It remains to be seen whether the days of political wives standing by their men may be over.

You really can’t make this up. Politico reports that shortly after Rep. Anthony Weiner’s press conference, the disgraced congressman called up former President Bill Clinton to apologize for his infidelity:

Rep. Anthony Weiner explained himself and apologized for his conduct to Bill Clinton, who officiated his wedding to wife Huma Abedin, sources familiar with the call said. …

It wasn’t immediately clear what was said on the call, but sources said that the Clintons – who are deeply loyal to Abedin – are distressed by the “sexting” scandal that Weiner immersed his wife in.

It’s not really clear what moral standing Clinton has to accept such an apology, but the former president and his family have a very close relationship with Weiner’s wife (and top Hillary aide) Huma Abedin. Clinton even officiated at the couple’s wedding.

What the article notably doesn’t say is whether the former president accepted Weiner’s apology. Top Democrats are already calling for the congressman to step down, and Clinton obviously has the ability to use his considerable clout to influence the party’s actions.

The article also reminds us of the one person who has been absent from the ongoing controversy — Weiner’s wife. Not only did she neglect to attend Weiner’s painfully awkward press conference the other day, but she also left the country on a global diplomacy trip today, amidst the implosion of her husband’s political career.

Some criticized Hillary Clinton for “standing by her man” after the Monica Lewinsky controversy, but her behavior has actually been imitated by other scorned political wives after their husbands’ sex scandals. It’s noteworthy that Hillary’s closest aide, Abedin, has so far rejected this concept. And she’s already gaining some strong admiration for doing so. It remains to be seen whether the days of political wives standing by their men may be over.

Read Less

Youth Dissatisfied with Economy, Washington Leadership

Young people are not satisfied with the current Washington leadership and President Obama’s handling of youth unemployment, according to a new poll conducted by the polling company, inc./womantrend on behalf of a nonprofit youth mobilization organization called Generation Opportunity.

The poll, which has not yet been reported on, found that 69 percent of Americans between the ages of 18 and 29 say that the current leadership in Washington fails to serve the younger generation. In addition, only 31 percent approve of the president’s handling of youth unemployment.

It also found that there is widespread frustration over economic issues among young adults. 77 percent indicated that they would delay a major economic purchase, such as buying a home, paying off student loans, starting a family, or going back to school.

This dissatisfaction with the economy may also be translating into dissatisfaction with the federal government. 76 percent of respondents indicated that they’d like to see federal government reduced in size. And 69 percent say the federal government should start making spending sacrifices.

“These are Americans who are looking for jobs, they want to get on with their lives, and they’re impatient … the frustration is palpable.” Paul T. Conway, the president of Generation Opportunity and former chief of staff for the U.S. Department of Labor, told me during a phone interview this morning.

And that frustration may have political implications in 2012. The poll found that 57 percent say they’ll be looking more closely at the policy positions of the candidates during the 2012 election than they did in 2008. And 61 percent say that a candidate’s position on issues and record in office will be the most important consideration before they cast their vote.

Does that mean the Republicans may have a chance to gain ground with the youth vote if they focus on presenting viable economic solutions? According to Conway, this may not be as far-fetched as some on the left believe. “This demographic is not owned by either political party,” he told me. “And the presumption that this demographic will go in lock step for one candidate or another is flawed.”

Generation Opportunity will be rolling out the results of their poll over the coming weeks, and it’s sure to include more interesting data on the mindset of younger voters.

Young people are not satisfied with the current Washington leadership and President Obama’s handling of youth unemployment, according to a new poll conducted by the polling company, inc./womantrend on behalf of a nonprofit youth mobilization organization called Generation Opportunity.

The poll, which has not yet been reported on, found that 69 percent of Americans between the ages of 18 and 29 say that the current leadership in Washington fails to serve the younger generation. In addition, only 31 percent approve of the president’s handling of youth unemployment.

It also found that there is widespread frustration over economic issues among young adults. 77 percent indicated that they would delay a major economic purchase, such as buying a home, paying off student loans, starting a family, or going back to school.

This dissatisfaction with the economy may also be translating into dissatisfaction with the federal government. 76 percent of respondents indicated that they’d like to see federal government reduced in size. And 69 percent say the federal government should start making spending sacrifices.

“These are Americans who are looking for jobs, they want to get on with their lives, and they’re impatient … the frustration is palpable.” Paul T. Conway, the president of Generation Opportunity and former chief of staff for the U.S. Department of Labor, told me during a phone interview this morning.

And that frustration may have political implications in 2012. The poll found that 57 percent say they’ll be looking more closely at the policy positions of the candidates during the 2012 election than they did in 2008. And 61 percent say that a candidate’s position on issues and record in office will be the most important consideration before they cast their vote.

Does that mean the Republicans may have a chance to gain ground with the youth vote if they focus on presenting viable economic solutions? According to Conway, this may not be as far-fetched as some on the left believe. “This demographic is not owned by either political party,” he told me. “And the presumption that this demographic will go in lock step for one candidate or another is flawed.”

Generation Opportunity will be rolling out the results of their poll over the coming weeks, and it’s sure to include more interesting data on the mindset of younger voters.

Read Less

The Stimulus Was…Too Small? Seriously?

By now it is clear to everyone that the Obama administration bungled the 2009 stimulus package. The dispute now is over the reasons for its failure. The conventional wisdom is coalescing around a view crystallized in a column by Mr. Conventional Wisdom himself, Charlie Cook of the National Journal: “The administration’s initial response, the much-maligned economic-stimulus package, was far too modest and unfocused.”

Cook is a rational analyst, so it is striking that he is able to advance an argument that is, on its face, nothing short of demented. The idea that the 2009 stimulus, which cost $840 billion, could have been less “modest” and more “focused” does violence to the facts of very recent American history and to the arugments made for the stimulus by its advocates at the time.

Even at its “far too modest” size, the stimulus was, by leagues, the costliest such effort in American history. Its astounding price tag was justified during the debate over its passage by the fact that there was a genuine economic emergency that had to be addressed. And the mere fact of addressing it with enormous public resources was, we were told, enough to do the trick almost on its own. The central point of taking emergency measures, we were told, was precisely not to focus them but to cause them to wash over the economy as a whole.

How many times during that emergency were we reminded of the supposed wisdom of John Maynard Keynes, who wrote in 1930 that it was enough to employ a man to perform any task at hand to create the conditions for macroeconomic growth? Simply “to dig holes in the ground,” Keynes wrote, “paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services.” This is the famous “multiplier effect” we also heard so much about, according to which $1 in government spending would blossom into $3 of value for the entire economy. In effect, we were told by the most enthusiastic believers in the magic of the multiplier effect, that for $840 billion in spending, we’d get more than $2 trillion in economic activity.

It’s also important to remember that the stimulus wasn’t the first bite at the apple. It followed the $700 billion Troubled Assets Relief Program, itself a proposal of unprecedented size and scope, which was brought into being in September 2008. TARP’s managers did what they thought was necessary to save the American and world economies from collapse, but the dishonesty in the execution—using the money for purposes other than the removal of the “troubled assets” for which the program was named—had created an unprecedented level of grassroots distrust of Washington’s economic policies, and not only within the GOP. Leftist populists like Matt Taibbi of Rolling Stone made the most violent possible cases against the crony capitalism that seemed to be on display with Treasury Secretary Hank Paulson favoring his own former firm, Goldman Sachs, above all others as the crisis progressed.

The point here is that in the reckoning of the public, $700 billion in taxpayer dollars had already been spent to right the economy. The notion that Congress could have passed a stimulus bill twice the size of the one that did—Paul Krugman’s idea—was then and is now preposterous. Obama’s stimulus was as large as it could possibly have been, and the parlous results indicate it was vastly larger than it should have been.

The growing consensus is that Obama’s economic policies have failed, and precisely in the ways that those skeptical of the stimulus predicted. The most expensive government intervention into the economy in this country’s history proved to have negligible macroeconomic impact. (UPDATE: A friend points out that if one adds together all the efforts taken by the administration to stimulate the economy directly, the number is not $840 billion but something like $2.1 trillion.)  This fact should force supporters of the stimulus to acknowledge that the problem was not with the stimulus as it was implemented, but with the very idea of stimulus itself. And they just can’t.

By now it is clear to everyone that the Obama administration bungled the 2009 stimulus package. The dispute now is over the reasons for its failure. The conventional wisdom is coalescing around a view crystallized in a column by Mr. Conventional Wisdom himself, Charlie Cook of the National Journal: “The administration’s initial response, the much-maligned economic-stimulus package, was far too modest and unfocused.”

Cook is a rational analyst, so it is striking that he is able to advance an argument that is, on its face, nothing short of demented. The idea that the 2009 stimulus, which cost $840 billion, could have been less “modest” and more “focused” does violence to the facts of very recent American history and to the arugments made for the stimulus by its advocates at the time.

Even at its “far too modest” size, the stimulus was, by leagues, the costliest such effort in American history. Its astounding price tag was justified during the debate over its passage by the fact that there was a genuine economic emergency that had to be addressed. And the mere fact of addressing it with enormous public resources was, we were told, enough to do the trick almost on its own. The central point of taking emergency measures, we were told, was precisely not to focus them but to cause them to wash over the economy as a whole.

How many times during that emergency were we reminded of the supposed wisdom of John Maynard Keynes, who wrote in 1930 that it was enough to employ a man to perform any task at hand to create the conditions for macroeconomic growth? Simply “to dig holes in the ground,” Keynes wrote, “paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services.” This is the famous “multiplier effect” we also heard so much about, according to which $1 in government spending would blossom into $3 of value for the entire economy. In effect, we were told by the most enthusiastic believers in the magic of the multiplier effect, that for $840 billion in spending, we’d get more than $2 trillion in economic activity.

It’s also important to remember that the stimulus wasn’t the first bite at the apple. It followed the $700 billion Troubled Assets Relief Program, itself a proposal of unprecedented size and scope, which was brought into being in September 2008. TARP’s managers did what they thought was necessary to save the American and world economies from collapse, but the dishonesty in the execution—using the money for purposes other than the removal of the “troubled assets” for which the program was named—had created an unprecedented level of grassroots distrust of Washington’s economic policies, and not only within the GOP. Leftist populists like Matt Taibbi of Rolling Stone made the most violent possible cases against the crony capitalism that seemed to be on display with Treasury Secretary Hank Paulson favoring his own former firm, Goldman Sachs, above all others as the crisis progressed.

The point here is that in the reckoning of the public, $700 billion in taxpayer dollars had already been spent to right the economy. The notion that Congress could have passed a stimulus bill twice the size of the one that did—Paul Krugman’s idea—was then and is now preposterous. Obama’s stimulus was as large as it could possibly have been, and the parlous results indicate it was vastly larger than it should have been.

The growing consensus is that Obama’s economic policies have failed, and precisely in the ways that those skeptical of the stimulus predicted. The most expensive government intervention into the economy in this country’s history proved to have negligible macroeconomic impact. (UPDATE: A friend points out that if one adds together all the efforts taken by the administration to stimulate the economy directly, the number is not $840 billion but something like $2.1 trillion.)  This fact should force supporters of the stimulus to acknowledge that the problem was not with the stimulus as it was implemented, but with the very idea of stimulus itself. And they just can’t.

Read Less

RE: Pawlenty Targets Fiscal Conservative Vote

I haven’t had a chance to read (or see) Tim Pawlenty’s speech, but I’ve been impressed with the reported details: sharp cuts in government expenditures, sharply lower tax rates on corporations, greatly simplified personal income tax, with only two rates, 10 and 25 percent, and most deductions eliminated. This is an aggressive pro-growth agenda not just a fiscal root canal, balance-the-budget-and-forget-everything-else agenda. Ronald Reagan would be proud. Whoever the Republican candidate is, he or she should be inserting the word growth into every sentence he utters.

But Pawlenty also called for eliminating taxes on capital gains and dividends. In economic theory this is a good idea. Taxing capital gains discourages seeking capital gains, which is wealth creation. And dividends are paid out of corporate profits, which are already taxed at the corporate level, and so taxing them amounts to double taxation.

But these ideas are politically toxic because they are so easily demogogued. Just consider: Henry Bigbucks has never done a lick of work in his life, unless you count running his money-losing racing stable and seeking the America’s Cup work. Because his grandfather founded National Widget Corporation and left him ten million shares of its stock, he’ll never have to work. And yet under Pawlenty’s tax proposal, he’ll never pay a dime in taxes. How would Pawlenty handle that when Obama brings it up in one of the debates in the fall of 2012?  Not well, I bet.

In a perfect world, the corporate income tax would be abolished. (It was only suggested by President Taft as a stop-gap measure until the personal income tax amendment could be ratified, which came to pass in 1913.) Instead the tax obligation on corporate profits should simply flow through to the stockholders. So that if National Widget had a profit of $5.00 a share, Henry Bigbucks would owe the taxes on his $50,000,000 share of the profits. The corporation would send him the equivalent of a Form 1099, saying, in effect, “you earned $50,000,000 in profits last year and we have withheld $12,500,000 to pay the taxes.” Mr. Bigbucks would then file a tax return like the rest of us. This scheme would have the enormous additional virtue of making corporations concerned only with pre-tax profits, which are a measure of wealth creation, not with after-tax profits, which are largely a matter of lobbying success in Washington. K Street would be deserted.

As for capital gains, indexing them for inflation would make sure that the tax on them applies only to real capital gains, not the illusion of them caused by a depreciating dollar. And not taxing capital gains that are reinvested in other securities (i.e. exactly what happens now inside a 401K account) would also be a good idea. Henry Bigbucks would then only owe capital gains when he sold some shares of National Widget in order to buy a new yacht in his unending quest to bring the America’s Cup back home to the New York Yacht Club.

I haven’t had a chance to read (or see) Tim Pawlenty’s speech, but I’ve been impressed with the reported details: sharp cuts in government expenditures, sharply lower tax rates on corporations, greatly simplified personal income tax, with only two rates, 10 and 25 percent, and most deductions eliminated. This is an aggressive pro-growth agenda not just a fiscal root canal, balance-the-budget-and-forget-everything-else agenda. Ronald Reagan would be proud. Whoever the Republican candidate is, he or she should be inserting the word growth into every sentence he utters.

But Pawlenty also called for eliminating taxes on capital gains and dividends. In economic theory this is a good idea. Taxing capital gains discourages seeking capital gains, which is wealth creation. And dividends are paid out of corporate profits, which are already taxed at the corporate level, and so taxing them amounts to double taxation.

But these ideas are politically toxic because they are so easily demogogued. Just consider: Henry Bigbucks has never done a lick of work in his life, unless you count running his money-losing racing stable and seeking the America’s Cup work. Because his grandfather founded National Widget Corporation and left him ten million shares of its stock, he’ll never have to work. And yet under Pawlenty’s tax proposal, he’ll never pay a dime in taxes. How would Pawlenty handle that when Obama brings it up in one of the debates in the fall of 2012?  Not well, I bet.

In a perfect world, the corporate income tax would be abolished. (It was only suggested by President Taft as a stop-gap measure until the personal income tax amendment could be ratified, which came to pass in 1913.) Instead the tax obligation on corporate profits should simply flow through to the stockholders. So that if National Widget had a profit of $5.00 a share, Henry Bigbucks would owe the taxes on his $50,000,000 share of the profits. The corporation would send him the equivalent of a Form 1099, saying, in effect, “you earned $50,000,000 in profits last year and we have withheld $12,500,000 to pay the taxes.” Mr. Bigbucks would then file a tax return like the rest of us. This scheme would have the enormous additional virtue of making corporations concerned only with pre-tax profits, which are a measure of wealth creation, not with after-tax profits, which are largely a matter of lobbying success in Washington. K Street would be deserted.

As for capital gains, indexing them for inflation would make sure that the tax on them applies only to real capital gains, not the illusion of them caused by a depreciating dollar. And not taxing capital gains that are reinvested in other securities (i.e. exactly what happens now inside a 401K account) would also be a good idea. Henry Bigbucks would then only owe capital gains when he sold some shares of National Widget in order to buy a new yacht in his unending quest to bring the America’s Cup back home to the New York Yacht Club.

Read Less

What’s the Deal with Airline Announcements?

I spend way too much time in airports, and usually log around 150,000 miles in the air per year. Certainly, airports have become symbols of government misdirection. The most discussed issue, of course, is security. I know some TSA agents by name, and they know me with more familiarity than I would like. While public outrage focuses on intimate TSA pat downs and obsession over too-large toothpaste tubes, American security is more theater than terrorism prevention. Officials conduct intellectual somersaults to avoid profiling. If a young Arab male with a suicide vest stands next to a blue-haired grandmother, odds are the TSA would single the grandmother out for an enhanced search. It’s hard to take official statements that they screen passengers based on behavior when, every time I’ve been asked the routine questions about who packed my bag, the security official didn’t bother to look at my face to see signs of deception.

It’s the in-flight announcements, however, which drive me nuts. In the 1970s and 1980s, air travel was special. People dressed up. Legs had space. Today, flights are routine. I doubt I’m on many domestic flights which have first-time travelers flying alone and, despite what the government believes, even these travelers are able to figure out how their seat belts work. And if oxygen masks drop, most everyone understands that it’s advisable to breathe. Yet, some government bureaucrat has determined that airlines must delay each flight by several minutes in order to demonstrate the obvious. Read More

I spend way too much time in airports, and usually log around 150,000 miles in the air per year. Certainly, airports have become symbols of government misdirection. The most discussed issue, of course, is security. I know some TSA agents by name, and they know me with more familiarity than I would like. While public outrage focuses on intimate TSA pat downs and obsession over too-large toothpaste tubes, American security is more theater than terrorism prevention. Officials conduct intellectual somersaults to avoid profiling. If a young Arab male with a suicide vest stands next to a blue-haired grandmother, odds are the TSA would single the grandmother out for an enhanced search. It’s hard to take official statements that they screen passengers based on behavior when, every time I’ve been asked the routine questions about who packed my bag, the security official didn’t bother to look at my face to see signs of deception.

It’s the in-flight announcements, however, which drive me nuts. In the 1970s and 1980s, air travel was special. People dressed up. Legs had space. Today, flights are routine. I doubt I’m on many domestic flights which have first-time travelers flying alone and, despite what the government believes, even these travelers are able to figure out how their seat belts work. And if oxygen masks drop, most everyone understands that it’s advisable to breathe. Yet, some government bureaucrat has determined that airlines must delay each flight by several minutes in order to demonstrate the obvious.

When I get catapulted off aircraft carriers, there are a few seconds when I experience multiple G forces. Based on those experiences, if ever I was on a crashing plane, I understand what would be going through my mind: Not much. When the plane finally lands, I can assure any government bureaucrat that I know exactly where the exits are without lengthy instructions.

When I first started flying, I remember the frustration of requesting a non-smoking seat, only to find myself in the last row of the non-smoking section, with smokers directly behind me. It’s been decades, however, since smoking was allowed on a flight. If someone is stupid enough to light up despite the no-smoking signs, or disable lavatory smoke detectors on a domestic flight, let them feel the full force of the law.

Now, I admit I am bitter. This past weekend, I passed through airports in Virginia, North Carolina, Georgia, Illinois, and Michigan to help some deploying American military units. Twice, the time it took stewardesses to demonstrate seat belts and warn us about smoking was the time it took the approaching thunderstorms to roll in and delay successive flights by a couple of hours each. Stewards and stewardesses check all seatbelts anyway, so they can help anyone that doesn’t understand without wasting any more time. Airlines say the FAA requires these announcements, but droning announcements don’t make anyone safer, and I can’t remember I really saw anyone do more than pretend to pay attention. Even off-duty airline workers bumming a flight don’t glance up from their books or magazines.  Rather, the announcements simply symbolize nanny-state condescension, the difficulty of undoing regulations once they become outdated, and the ever-present encroachment of the federal government on daily life.

Read Less

Pawlenty Targets Fiscal Conservative Vote

With fiscal hawks like Club for Growth and FreedomWorks launching outright attacks at Mitt Romney, Gov. Tim Pawlenty is trying to position himself as the economic conservative in the race. As Jonathan noted yesterday, his major economic address delivered at the University of Chicago borrowed heavily from fiscal conservative favorites like Ronald Reagan, Paul Ryan and Wisconsin Governor Scott Walker.

The speech had echoes of the Ryan budget, with his call for substantial tax cuts: “We should cut the business tax rate by more than half. I propose reducing the current rate from 35% to 15%,” Pawlenty will say. He will also proposed two flat individual rates, at 10 percent for households making under $100,000 a year, and 25 percent for households making over $100,000 a year (with households that pay no income tax still paying nothing).

Pawlenty also said he was tough on unions as governor of Minnesota, which may have reminded conservatives of the similar ongoing controversy under Gov. Scott Walker: “It took a government shutdown.  And a long government union strike. But we got it done,” he will say. “We didn’t close our schools. Or empty out our prisons. We cut spending where it needed to be cut. We can do the same thing in Washington.

He additionally set a goal of a 5 percent growth rate, saying that this occurred under President Ronald Reagan and during the Clinton years with a Republican-controlled congress.

Pawlenty also set out some interesting policy proposals, suggesting something called the “Google test” to decide what products the government should be producing.

“If you can find a good or service on the Internet.     Then the federal government probably doesn’t need to be doing it,” he will say. “The post office — the government printing office — Amtrak — Fannie and Freddie were all built for a different time in our country.      When the private sector did not adequately provide those services. That’s no longer the case.”

That idea might be a little over-the-top, but it will definitely get him fans in the Tea Party. And while the American Spectator says that Pawlenty is overly optimistic that these policies will usher in a 5 percent growth rate, his speech was heavy enough on policy to satisfy the number-crunchers who will be analyzing his claims. Regardless of whether his hopes are realistic, the address was certainly bold, which fits in with Pawlenty’s “tell the truth” campaign theme. But will it be the catalyst that gets fiscal conservatives lining up behind him? That remains to be seen.

With fiscal hawks like Club for Growth and FreedomWorks launching outright attacks at Mitt Romney, Gov. Tim Pawlenty is trying to position himself as the economic conservative in the race. As Jonathan noted yesterday, his major economic address delivered at the University of Chicago borrowed heavily from fiscal conservative favorites like Ronald Reagan, Paul Ryan and Wisconsin Governor Scott Walker.

The speech had echoes of the Ryan budget, with his call for substantial tax cuts: “We should cut the business tax rate by more than half. I propose reducing the current rate from 35% to 15%,” Pawlenty will say. He will also proposed two flat individual rates, at 10 percent for households making under $100,000 a year, and 25 percent for households making over $100,000 a year (with households that pay no income tax still paying nothing).

Pawlenty also said he was tough on unions as governor of Minnesota, which may have reminded conservatives of the similar ongoing controversy under Gov. Scott Walker: “It took a government shutdown.  And a long government union strike. But we got it done,” he will say. “We didn’t close our schools. Or empty out our prisons. We cut spending where it needed to be cut. We can do the same thing in Washington.

He additionally set a goal of a 5 percent growth rate, saying that this occurred under President Ronald Reagan and during the Clinton years with a Republican-controlled congress.

Pawlenty also set out some interesting policy proposals, suggesting something called the “Google test” to decide what products the government should be producing.

“If you can find a good or service on the Internet.     Then the federal government probably doesn’t need to be doing it,” he will say. “The post office — the government printing office — Amtrak — Fannie and Freddie were all built for a different time in our country.      When the private sector did not adequately provide those services. That’s no longer the case.”

That idea might be a little over-the-top, but it will definitely get him fans in the Tea Party. And while the American Spectator says that Pawlenty is overly optimistic that these policies will usher in a 5 percent growth rate, his speech was heavy enough on policy to satisfy the number-crunchers who will be analyzing his claims. Regardless of whether his hopes are realistic, the address was certainly bold, which fits in with Pawlenty’s “tell the truth” campaign theme. But will it be the catalyst that gets fiscal conservatives lining up behind him? That remains to be seen.

Read Less