Commentary Magazine


Topic: Wal-Mart

Economics 101 for Bob Beckel

Bob Beckel, the liberal voice on Fox News Channel’s extremely successful The Five, likes to go off on rants regarding Wal-Mart. On Friday he was in rare form, damning the world’s largest retailer (and this country’s largest employer) for having caused more rival businesses to close than any other in history, and for buying most of its merchandise abroad. On other occasions he has complained that Wal-Mart doesn’t pay its employees a “living wage.”

Beckel’s first claim is probably true and the second certainly is. The third claim, however, is economic sophistry.

Wal-Mart is a profit-seeking corporation. It is, in other words, a wealth-creation machine, nothing more, nothing less. Its management, therefore, has a fiduciary duty to the stockholders to maximize the return on their invested capital. It does that in the following three ways.

First, by paying the lowest wages that will supply the company with a satisfactory work force. If Wal-Mart can get a satisfactory worker for a given job at $7.25 an hour, why should it pay more? Bob Beckel never pays more than he has to in order to get what he needs; why should Wal-Mart? Wal-Mart employees are not indentured. They’re perfectly free to search for a job that pays better than the one they have. If they don’t, it’s because they have the best job around for their skill set and particular circumstances. If market forces do not produce a “living wage,”—about as subjective a term as you can find, right up there with “fair”—then it is government’s function to make up the difference through the Earned Income Tax Credit or other mechanism. Corporations are not WPA projects and shouldn’t be used as such by government fiat.

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Bob Beckel, the liberal voice on Fox News Channel’s extremely successful The Five, likes to go off on rants regarding Wal-Mart. On Friday he was in rare form, damning the world’s largest retailer (and this country’s largest employer) for having caused more rival businesses to close than any other in history, and for buying most of its merchandise abroad. On other occasions he has complained that Wal-Mart doesn’t pay its employees a “living wage.”

Beckel’s first claim is probably true and the second certainly is. The third claim, however, is economic sophistry.

Wal-Mart is a profit-seeking corporation. It is, in other words, a wealth-creation machine, nothing more, nothing less. Its management, therefore, has a fiduciary duty to the stockholders to maximize the return on their invested capital. It does that in the following three ways.

First, by paying the lowest wages that will supply the company with a satisfactory work force. If Wal-Mart can get a satisfactory worker for a given job at $7.25 an hour, why should it pay more? Bob Beckel never pays more than he has to in order to get what he needs; why should Wal-Mart? Wal-Mart employees are not indentured. They’re perfectly free to search for a job that pays better than the one they have. If they don’t, it’s because they have the best job around for their skill set and particular circumstances. If market forces do not produce a “living wage,”—about as subjective a term as you can find, right up there with “fair”—then it is government’s function to make up the difference through the Earned Income Tax Credit or other mechanism. Corporations are not WPA projects and shouldn’t be used as such by government fiat.

Second, by paying the lowest amounts for merchandise of satisfactory quality. In a globalized world, that often means buying goods manufactured abroad. The high-wage American economy cannot compete with low-wage third-world countries when it comes to low-tech manufacturing. Most of the cost of a T-shirt or a pair of socks, after all, is the labor. With transportation costs now very low, thanks to containerization, and tariffs at the lowest point in history—a policy pursued by both Democratic and Republican administrations over the last 70 years—buying abroad is the only option for most of the merchandise sold at Wal-Mart. Does Bob Beckel think it’s a good idea for Wal-Mart to buy domestically if that means T-shirts that cost $20 each?

Third, by offering better prices, better quality, and more choices to its customers. Thousands, perhaps tens of thousands, of mom-and-pop, Main-Street retail operations have gone out of business because of Wal-Mart. That is because the customers of those concerns found that they got better deals at Wal-Mart and started shopping there, instead of on Main Street. That was tough, no doubt, on mom and pop, but that’s the “creative destruction” that is an ineluctable aspect of capitalism. Without old-fashion businesses adapting or dying, the economy stagnates and innovation disappears. Just ask anyone who has lived in a socialist economy.

And while it was tough on tens of thousands of moms and pops, it was great for Wal-Mart’s tens of millions of customers, whose standard of living has been raised by Wal-Mart’s low prices, high quality, and convenience.

If Bob Beckel were to have his way—and he won’t—the American standard of living and the size of the American GDP would both decline sharply as prices rose and quality declined. That, of course, would mean fewer total jobs. As with so many liberals, Bob Beckel’s heart is in the right place. But the heart is an organ very ill-suited to economic analysis.

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Open Minds Open Wallets

The AP has a story about how American businesses are now looking to market products to Muslim consumers:

The worldwide market for Islamically permitted goods, called halal, has grown to more than half a billion dollars annually. Ritually slaughtered meat is a mainstay, but the halal industry is much broader, including foods and seasoning that omit alcohol, pork products and other forbidden ingredients, along with cosmetics, finance and clothing.

Corporations have been courting immigrant Muslim communities in Europe for several years. Nestle, for example, has about 20 factories in Europe with halal-certified production lines and advertises to Western Muslims through its marketing campaign called “Taste of Home.” Nestle plans to increase its ethnic and halal offerings in Europe in coming years.

In the United States, iconic American companies such as McDonald’s (which already has a popular halal menu overseas) and Wal-Mart have entered the halal arena. In August, the natural grocery giant Whole Foods began selling its first nationally distributed halal food product — frozen Indian entrees called Saffron Road.

There is no reason to think that Muslims, in themselves, represent a uniquely promising niche market. What’s happening here is subtler. It’s about branding, not selling. Companies want to be seen by all potential consumers as being socially aware, on the side of the good guys, and behind fashionable causes. Four years ago, with An Inconvenient Truth dominating the culture, this meant offering bottles with 20 percent less plastic or toilet paper made from 100 percent recycled paper. But the market is turbulent and with the increased discrediting of global-warming alarmism, the popularity of green brands has taken a measurable hit.  Today, with cover stories apologizing for American Islamophobia, being a compassionate corporation means offering halal frozen dinners and Islamic themed fabric patterns. In case it escapes the average consumer that these companies are brave and compassionate beyond measure, the AP story is peppered with ridiculous allusions to the “risks” these right-thinking businesses are incurring. It goes without saying that the planet was no more doomed to heat up than American Muslims are threatened by their neighbors. Under the guise of the great American tradition of equality, these companies are capitalizing on the great American tradition of PR. They got this story out of it, didn’t they?

The AP has a story about how American businesses are now looking to market products to Muslim consumers:

The worldwide market for Islamically permitted goods, called halal, has grown to more than half a billion dollars annually. Ritually slaughtered meat is a mainstay, but the halal industry is much broader, including foods and seasoning that omit alcohol, pork products and other forbidden ingredients, along with cosmetics, finance and clothing.

Corporations have been courting immigrant Muslim communities in Europe for several years. Nestle, for example, has about 20 factories in Europe with halal-certified production lines and advertises to Western Muslims through its marketing campaign called “Taste of Home.” Nestle plans to increase its ethnic and halal offerings in Europe in coming years.

In the United States, iconic American companies such as McDonald’s (which already has a popular halal menu overseas) and Wal-Mart have entered the halal arena. In August, the natural grocery giant Whole Foods began selling its first nationally distributed halal food product — frozen Indian entrees called Saffron Road.

There is no reason to think that Muslims, in themselves, represent a uniquely promising niche market. What’s happening here is subtler. It’s about branding, not selling. Companies want to be seen by all potential consumers as being socially aware, on the side of the good guys, and behind fashionable causes. Four years ago, with An Inconvenient Truth dominating the culture, this meant offering bottles with 20 percent less plastic or toilet paper made from 100 percent recycled paper. But the market is turbulent and with the increased discrediting of global-warming alarmism, the popularity of green brands has taken a measurable hit.  Today, with cover stories apologizing for American Islamophobia, being a compassionate corporation means offering halal frozen dinners and Islamic themed fabric patterns. In case it escapes the average consumer that these companies are brave and compassionate beyond measure, the AP story is peppered with ridiculous allusions to the “risks” these right-thinking businesses are incurring. It goes without saying that the planet was no more doomed to heat up than American Muslims are threatened by their neighbors. Under the guise of the great American tradition of equality, these companies are capitalizing on the great American tradition of PR. They got this story out of it, didn’t they?

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Back to the Future

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world. Read More

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world.

He writes:

Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.

This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.

The Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

Where do I begin? The depression that began in 1929 came out of a severe depression in American agriculture, caused by a revival in European agriculture and falling food prices owing to land once devoted to fodder crops for horses and mules being turned over to production of human food as the internal combustion engine took over the transportation and farm-equipment sectors. It did not come out of excess personal debt and a real estate bubble.

They didn’t know in 1929 that you could avoid immediate financial calamity by flooding the economy with money? Here’s what Benjamin Strong, governor of the New York Federal Reserve and effectively head of the Fed, wrote in 1928. “The very existence of the Federal Reserve System is a safeguard against anything like a calamity growing out of money rates. … We have the power to deal with such an emergency instantly by flooding the Street with money.” The problem was that the Federal Reserve didn’t flood the economy with money after the crash in 1929 (Ben Strong died in late 1928) but kept interest rates high. An ordinary stock market crash and economic depression were turned into the Great Depression by horrendous government mistakes, of which the Fed’s was only one.

And if the New Deal was the way back to full recovery, why did it take 10 years (and suddenly vast orders for war materiél) to achieve it? Robert Reich should read Amity Shlaes’s The Forgotten Man: A New History of the Great Depression, which pretty well demolishes the now ancient notions about the New Deal that liberals cling to, sort of like the way people in fly-over country cling to guns and religion.

He writes,

In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes.

Ah, the good old days of 91 percent tax rates on those rascally rich guys! Of course, those were mere nominal rates, the rich didn’t pay anything like that much, because deductions and other tax fiddles were nearly limitless in those days. All interest rates were deductible, for instance, allowing someone in the 91 percent bracket to borrow money and have Uncle Sam pay 91 percent of the interest costs.

I could go on, but you get the picture.

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Western Culture and the Mosque

Ayaan Hirsi Ali makes a profound point at the Wall Street Journal today: that the Park 51 mosque controversy, although framed in most of our public discussions as a narrow question of religious tolerance, is actually a battleground in the broader “clash of civilizations” outlined by Samuel Huntington. I’ve been thinking about this a great deal. I would approach her point with the following framework: that the central question for New Yorkers, as for Americans and the West, is what religious tolerance means at the border between civilizations.

The West has had real trouble answering this question. What we are finding is that the default attitudes of the 20th century are inadequate to preserving a sustainable balance of religious and other philosophical influences in communal life. Western Christians and Jews have grown complacent about the protection of their religious freedoms in an increasingly secular culture. Indeed, our society has grown complacent about all freedom of conscience, routinely ignoring the dangers posed by the assaults of absolutist ideologies and our flirtations with creating thought crimes.

As Ali points out, however, “Our civilization is not indestructible. It needs to be actively defended.” She is right. The question for the West is how to tolerate Islam – which is culturally prescriptive and preemptive to a greater degree than either of the major Western religions – and yet retain what matters in our civilization.

I wrote last week about the differing levels of zeal for “religious rights” displayed by the New York City authorities in their approach to Christian, Jewish, and Muslim religious arrangements. Their unaccommodating posture with Christians and Jews is emblematic of a steadily more reflexive prejudice in our American civic consciousness (and in the letter of our law as well). This imbalance of favor has consequences – and not just for religion but also for intellectual freedom of all kinds.

But taking the long view, we must see that addressing this problem solely with the blunt instruments of majoritarian politics and demagogic suasion is not enough.  We need to reexamine some of our modern attitudes. Certainly, we ought to elect new public officials who are wiser about respecting the competing claims of the people. But the issue is deeper than that. Sharing the public square is fundamental for Western civilization; for Islam, it is not. The reactionary political debate over the Park 51 mosque will leave us without the thing we need most of all: a way to live with Islam, one in which Islam accommodates our culture even as we seek to be respectful of Islam.

We won’t get to that solution by continuing on the path of lazy complacency about the survival of our culture. Europe shows us where that path leads: to urban neighborhoods where women aren’t safe unveiled and Jews aren’t safe at all. Muslims have demonstrated that they can live peacefully in the culture of the West, but where Islam rules the culture, the freedoms that we prize disappear. The truth is that we must privilege and defend our practices if we want to keep our freedoms. One such practice – one to which Christians and Jews have regularly been subjected, along with Wal-Mart, shopping malls, and adult video stores – is the veto of local majorities over their plans for construction and operation on specific sites.

Rights and cultural conditions don’t defend themselves:  we have to teach them to our children and be vigilant about their application and privilege. We have nothing to apologize for in doing that. And it’s essential to establish that our purpose is not to defeat or drive out Islam, but to live with it. Perhaps the outcome in the case at hand will be the Park 51 mosque. But we have been very clear that living with Christianity and Judaism does not mean that the public must accommodate everything their faithful want to do – nor does it mean driving them out of civic life. It means, rather, respect and compromise from everyone. Those are the club rules.

Ayaan Hirsi Ali makes a profound point at the Wall Street Journal today: that the Park 51 mosque controversy, although framed in most of our public discussions as a narrow question of religious tolerance, is actually a battleground in the broader “clash of civilizations” outlined by Samuel Huntington. I’ve been thinking about this a great deal. I would approach her point with the following framework: that the central question for New Yorkers, as for Americans and the West, is what religious tolerance means at the border between civilizations.

The West has had real trouble answering this question. What we are finding is that the default attitudes of the 20th century are inadequate to preserving a sustainable balance of religious and other philosophical influences in communal life. Western Christians and Jews have grown complacent about the protection of their religious freedoms in an increasingly secular culture. Indeed, our society has grown complacent about all freedom of conscience, routinely ignoring the dangers posed by the assaults of absolutist ideologies and our flirtations with creating thought crimes.

As Ali points out, however, “Our civilization is not indestructible. It needs to be actively defended.” She is right. The question for the West is how to tolerate Islam – which is culturally prescriptive and preemptive to a greater degree than either of the major Western religions – and yet retain what matters in our civilization.

I wrote last week about the differing levels of zeal for “religious rights” displayed by the New York City authorities in their approach to Christian, Jewish, and Muslim religious arrangements. Their unaccommodating posture with Christians and Jews is emblematic of a steadily more reflexive prejudice in our American civic consciousness (and in the letter of our law as well). This imbalance of favor has consequences – and not just for religion but also for intellectual freedom of all kinds.

But taking the long view, we must see that addressing this problem solely with the blunt instruments of majoritarian politics and demagogic suasion is not enough.  We need to reexamine some of our modern attitudes. Certainly, we ought to elect new public officials who are wiser about respecting the competing claims of the people. But the issue is deeper than that. Sharing the public square is fundamental for Western civilization; for Islam, it is not. The reactionary political debate over the Park 51 mosque will leave us without the thing we need most of all: a way to live with Islam, one in which Islam accommodates our culture even as we seek to be respectful of Islam.

We won’t get to that solution by continuing on the path of lazy complacency about the survival of our culture. Europe shows us where that path leads: to urban neighborhoods where women aren’t safe unveiled and Jews aren’t safe at all. Muslims have demonstrated that they can live peacefully in the culture of the West, but where Islam rules the culture, the freedoms that we prize disappear. The truth is that we must privilege and defend our practices if we want to keep our freedoms. One such practice – one to which Christians and Jews have regularly been subjected, along with Wal-Mart, shopping malls, and adult video stores – is the veto of local majorities over their plans for construction and operation on specific sites.

Rights and cultural conditions don’t defend themselves:  we have to teach them to our children and be vigilant about their application and privilege. We have nothing to apologize for in doing that. And it’s essential to establish that our purpose is not to defeat or drive out Islam, but to live with it. Perhaps the outcome in the case at hand will be the Park 51 mosque. But we have been very clear that living with Christianity and Judaism does not mean that the public must accommodate everything their faithful want to do – nor does it mean driving them out of civic life. It means, rather, respect and compromise from everyone. Those are the club rules.

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Flotsam and Jetsam

Obama may not be good for America, but he’s been a gold mine for conservative humor.

You will keep your insurance and your doctor! Remember that promise from Obama? Apparently, he was just kidding: “As the Obama administration begins to enact the new national health care law, the country’s biggest insurers are promoting affordable plans with reduced premiums that require participants to use a narrower selection of doctors or hospitals.” We did try this before back in the “H.M.O. days,” but “[t]he concept was largely abandoned after the consumer backlash persuaded both employers and health plans that Americans were simply not willing to sacrifice choice.” I’m sure it’ll be totally different this time.

I don’t think Dan Balz meant to be funny. But this certainly is: “White House and House officials see a path for holding the House, unless the wave of reaction against the president’s policies and unrest over the economy swamps even the smartest and best prepared of embattled incumbents — which is what happened in 1994.” Yeah, like what are the chances of that?

No joke — for a mere $30,400, you can attend a Democratic Senate Campaign Committee fundraising retreat. Do you think they throw in free breakfasts? But Obama assures us that the Republicans are the party of the rich.

Many Virginians are giddy over the prospect of privatizing state liquor stores: “For the drinking-age public, a privatized system could mean many more liquor stores, a much wider variety of libations and lower prices. Like beer and wine, liquor could be sold in grocery stores, big-box stores such as Wal-Mart or anywhere else a licensed dealer chooses to locate. … For the state’s ailing transportation network, it would mean a jolt of fresh cash that [Gov. Bob] McDonnell (R) urgently needs as part of his plan to fix roads. … And for McDonnell, who opposes government-run liquor stores on free-market principles, bringing Democrats and Republicans together on a major issue would show that he can deliver on his promises and be the kind of bipartisan leader he has pledged to be.” Naturally, many Democrats oppose the plan.

This is no laughing matter: “Canadians may have achieved what Americans still long for, a turn up in the national mood, and a job machine that hums. In fact, Canada’s job creation engine is on a tear, last month producing 10,000 more jobs than the U.S. This despite having a population and stimulus program roughly one-tenth the size of the U.S. … ‘Canada is coming back better than the U.S.,’ says labor economist Alan Blinder of Princeton University. ‘I’m losing a bit of the confidence I previously had.’” In the Obama era, it doesn’t pay to be a starry-eyed optimist.

This advice from Matthew Dowd probably sounds silly to the Obami: “[T]he administration should get off the partisan campaign trail (when your job-approval rating is in the 40s, being there isn’t helping anyone anyway), focus on what the president can do to change the tone in Washington and begin to speak to his own mistakes in adding to the political fighting.” Right advice, wrong president.

Hysterical: From one of the Beagle Blogger’s minions: “Can anyone think of other times of where one side of a debate projects their own preferences upon their opponents?” I would think reading his own blog would be part of the job.

Obama may not be good for America, but he’s been a gold mine for conservative humor.

You will keep your insurance and your doctor! Remember that promise from Obama? Apparently, he was just kidding: “As the Obama administration begins to enact the new national health care law, the country’s biggest insurers are promoting affordable plans with reduced premiums that require participants to use a narrower selection of doctors or hospitals.” We did try this before back in the “H.M.O. days,” but “[t]he concept was largely abandoned after the consumer backlash persuaded both employers and health plans that Americans were simply not willing to sacrifice choice.” I’m sure it’ll be totally different this time.

I don’t think Dan Balz meant to be funny. But this certainly is: “White House and House officials see a path for holding the House, unless the wave of reaction against the president’s policies and unrest over the economy swamps even the smartest and best prepared of embattled incumbents — which is what happened in 1994.” Yeah, like what are the chances of that?

No joke — for a mere $30,400, you can attend a Democratic Senate Campaign Committee fundraising retreat. Do you think they throw in free breakfasts? But Obama assures us that the Republicans are the party of the rich.

Many Virginians are giddy over the prospect of privatizing state liquor stores: “For the drinking-age public, a privatized system could mean many more liquor stores, a much wider variety of libations and lower prices. Like beer and wine, liquor could be sold in grocery stores, big-box stores such as Wal-Mart or anywhere else a licensed dealer chooses to locate. … For the state’s ailing transportation network, it would mean a jolt of fresh cash that [Gov. Bob] McDonnell (R) urgently needs as part of his plan to fix roads. … And for McDonnell, who opposes government-run liquor stores on free-market principles, bringing Democrats and Republicans together on a major issue would show that he can deliver on his promises and be the kind of bipartisan leader he has pledged to be.” Naturally, many Democrats oppose the plan.

This is no laughing matter: “Canadians may have achieved what Americans still long for, a turn up in the national mood, and a job machine that hums. In fact, Canada’s job creation engine is on a tear, last month producing 10,000 more jobs than the U.S. This despite having a population and stimulus program roughly one-tenth the size of the U.S. … ‘Canada is coming back better than the U.S.,’ says labor economist Alan Blinder of Princeton University. ‘I’m losing a bit of the confidence I previously had.’” In the Obama era, it doesn’t pay to be a starry-eyed optimist.

This advice from Matthew Dowd probably sounds silly to the Obami: “[T]he administration should get off the partisan campaign trail (when your job-approval rating is in the 40s, being there isn’t helping anyone anyway), focus on what the president can do to change the tone in Washington and begin to speak to his own mistakes in adding to the political fighting.” Right advice, wrong president.

Hysterical: From one of the Beagle Blogger’s minions: “Can anyone think of other times of where one side of a debate projects their own preferences upon their opponents?” I would think reading his own blog would be part of the job.

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Flotsam and Jetsam

Jane Hamsher or Bill Kristol? “This bill will mandate that millions of people who are currently uninsured purchase insurance from private companies, or the IRS will collect up to 2% of their annual income in penalties. … The bill was written so that most Wal-Mart employees will qualify for subsidies, and taxpayers will pick up a large portion of the cost of their coverage. … In 2009, health care costs were 17.3% of GDP [but] in 2019 [under the] Senate bill [they'll be] 20.9% of GDP. … This bill does not bring down costs.”

The end of the Blue Dogs: “The party made a concerted effort in 2006 and 2008 to recruit candidates that could win moderate or GOP-leaning districts. That’s a key reason why Democrats won such big congressional majorities. But after forging a big-tent caucus, Speaker Pelosi has not governed that way. Instead, she pushed Blue Dog and other moderate Democrats to vote as if they represented her San Francisco district.” When the Republicans did this, I think the media narrative was that the party was risking majority support for ideological extremism.

Quin Hillyer channels the anti–Bart Stupak anger: “And if he thinks he will be ever live it down or be allowed to forget it, well, maybe he doesn’t think very well.”

How incompetent is NPR to get duped by a fake AIPAC release saying the group favors a settlement freeze? Doesn’t public radio know anything about AIPAC? Your tax dollars at work.

Marco Rubio is crushing potential opponents: “Former Florida House Speaker Marco Rubio for now runs well ahead in a three-way race for the U.S. Senate in Florida, should Governor Charlie Crist decide to run as an independent. The first Rasmussen Repots telephone survey of a potential three-candidate Senate race finds Rubio earning 42% support from likely voters in the state. Democrat Kendrick Meek picks up 25%, and Crist runs third with 22%. Eleven percent (11%) are undecided.”

Gov. Bob McDonnell on ObamaCare: “[T]his massive and complex piece of legislation allows the federal government to exercise control over one-sixth of the United States economy. … Most disconcerting is the provision mandating that every American must purchase health insurance or face a monetary penalty. … Just a few days ago I approved a bill, passed on a bipartisan basis, which prohibits mandatory insurance purchases for Virginians. Virginia’s Attorney General has rightly chosen to challenge the constitutionality of the federal mandate. I anticipate that he will be joined by a number of other states.” It now becomes an issue in every state race.

Yuval Levin on the latest regarding the Cornhusker Kickback: “That kickback was of course offered as an enticement to win the vote of Senator Ben Nelson, and to help him forget about his pro-life principles. Well lo and behold, Nelson has now announced that he opposes the reconciliation bill and will vote against it. Apparently it taxes and spends too much. It really renews your faith in politicians, doesn’t it?”

Not just a headache or fodder but potential grounds for prosecution: “The formidable Patrick Fitzgerald is leading a probe of Guantanamo Bay defense lawyers whom the CIA accused of giving detainees photos of CIA agents in an attempt to identify interrogators. … The investigation could be a headache for the Justice Department, and fodder for the attacks from Liz Cheney and others on the Guantanamo Bay lawyers.”

Perhaps Obama picked a fight on the wrong issue. Most Israelis think Bibi Netanyahu was aware of the decision to approve additional housing units in Jerusalem, but “most of those asked by the survey supported the view that construction in east Jerusalem should be treated like construction in Tel Aviv, despite the harsh criticism launched at the government over the recent diplomatic dispute with the US. Only a quarter of those polled believe the construction project should not have been approved, with 41% saying that only the timing was wrong. The number of people supportive of the construction in Ramat Shlomo neighborhood is twice that of its objectors.”

ABC staffers are grumbling over the hiring of Christiane Amanpour for This Week. Well, if it’s any consolation to the eminently qualified Jake Tapper, the criterion used was apparently “celebrity.” It certainly wasn’t objectivity. Or accuracy. Remember this one.

Jane Hamsher or Bill Kristol? “This bill will mandate that millions of people who are currently uninsured purchase insurance from private companies, or the IRS will collect up to 2% of their annual income in penalties. … The bill was written so that most Wal-Mart employees will qualify for subsidies, and taxpayers will pick up a large portion of the cost of their coverage. … In 2009, health care costs were 17.3% of GDP [but] in 2019 [under the] Senate bill [they'll be] 20.9% of GDP. … This bill does not bring down costs.”

The end of the Blue Dogs: “The party made a concerted effort in 2006 and 2008 to recruit candidates that could win moderate or GOP-leaning districts. That’s a key reason why Democrats won such big congressional majorities. But after forging a big-tent caucus, Speaker Pelosi has not governed that way. Instead, she pushed Blue Dog and other moderate Democrats to vote as if they represented her San Francisco district.” When the Republicans did this, I think the media narrative was that the party was risking majority support for ideological extremism.

Quin Hillyer channels the anti–Bart Stupak anger: “And if he thinks he will be ever live it down or be allowed to forget it, well, maybe he doesn’t think very well.”

How incompetent is NPR to get duped by a fake AIPAC release saying the group favors a settlement freeze? Doesn’t public radio know anything about AIPAC? Your tax dollars at work.

Marco Rubio is crushing potential opponents: “Former Florida House Speaker Marco Rubio for now runs well ahead in a three-way race for the U.S. Senate in Florida, should Governor Charlie Crist decide to run as an independent. The first Rasmussen Repots telephone survey of a potential three-candidate Senate race finds Rubio earning 42% support from likely voters in the state. Democrat Kendrick Meek picks up 25%, and Crist runs third with 22%. Eleven percent (11%) are undecided.”

Gov. Bob McDonnell on ObamaCare: “[T]his massive and complex piece of legislation allows the federal government to exercise control over one-sixth of the United States economy. … Most disconcerting is the provision mandating that every American must purchase health insurance or face a monetary penalty. … Just a few days ago I approved a bill, passed on a bipartisan basis, which prohibits mandatory insurance purchases for Virginians. Virginia’s Attorney General has rightly chosen to challenge the constitutionality of the federal mandate. I anticipate that he will be joined by a number of other states.” It now becomes an issue in every state race.

Yuval Levin on the latest regarding the Cornhusker Kickback: “That kickback was of course offered as an enticement to win the vote of Senator Ben Nelson, and to help him forget about his pro-life principles. Well lo and behold, Nelson has now announced that he opposes the reconciliation bill and will vote against it. Apparently it taxes and spends too much. It really renews your faith in politicians, doesn’t it?”

Not just a headache or fodder but potential grounds for prosecution: “The formidable Patrick Fitzgerald is leading a probe of Guantanamo Bay defense lawyers whom the CIA accused of giving detainees photos of CIA agents in an attempt to identify interrogators. … The investigation could be a headache for the Justice Department, and fodder for the attacks from Liz Cheney and others on the Guantanamo Bay lawyers.”

Perhaps Obama picked a fight on the wrong issue. Most Israelis think Bibi Netanyahu was aware of the decision to approve additional housing units in Jerusalem, but “most of those asked by the survey supported the view that construction in east Jerusalem should be treated like construction in Tel Aviv, despite the harsh criticism launched at the government over the recent diplomatic dispute with the US. Only a quarter of those polled believe the construction project should not have been approved, with 41% saying that only the timing was wrong. The number of people supportive of the construction in Ramat Shlomo neighborhood is twice that of its objectors.”

ABC staffers are grumbling over the hiring of Christiane Amanpour for This Week. Well, if it’s any consolation to the eminently qualified Jake Tapper, the criterion used was apparently “celebrity.” It certainly wasn’t objectivity. Or accuracy. Remember this one.

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Flotsam and Jetsam

The leg tingler who says Sarah Palin doesn’t know anything turns out not to know anything: “There is nothing, and I mean nothing, like watching Chris Matthews get his a– demolished on Celebrity Jeopardy. … Do I smell a Wolf Blitzer repeat? If you aren’t watching tonight, how else would you learn that the Rocky Mountains actually run through California? Christo is on fire!”

The latest in the Fort Jackson food poisoning investigation is here. A new wrinkle: it is not clear whether the suspects were U.S. citizens or part of an outreach program to non-citizens who can speak “fluent Arabic, Dari, Pashto, or some other needed language.”

Par for the course for Chicago pols: “Rep. Joe Sestak (D., Pa.) said yesterday that the White House offered him a federal job in an effort to dissuade him from challenging Sen. Arlen Specter in the state’s Democratic primary.” You kind of see why Blago thinks “everyone” trades jobs and public offices.

It’s not hard to figure out why Obama “seems incapable of speaking to Muslims without slyly suggesting he is one of them.” (We saw that “in his Cairo address, he basically so bloated up the early relations between Morocco and America that his version amounted to a virtual falsehood … [and] he still thinks his speech to the university in Cairo was historic.” ) Answer: Obama has a bloated view of his own importance and has adopted the Left’s Third Worldism, in which the “Muslim World” — another fiction! – is oppressed by the West. (Recall that he also told us Palestinians are like enslaved African Americans.)

Martin Feldstein on Obama’s deficit blame-mongering: “The administration’s projected $18.5 trillion debt in 2020 would be more than double the size of the debt when Mr. Obama took office. The annual interest on that debt would exceed $800 billion, requiring a 36% rise in the personal income tax just to pay that interest.  Mr. Obama complains about the problems he ‘inherited.’ But the key to shrinking the nearer term deficits is to avoid his costly new initiatives.’ Feldstein complains that instead Obama is focused on tax hikes which “would hurt incentives, hurt the recovery, and hurt the economy’s long-term growth.”

Andy McCarthy, prosecutor and critic of the Obama-Holder criminal-justice approach to terrorism, does the impossible: he gets treated fairly in the New York Times. Yes, read the whole thing.

Charlie Cook says that “if I had a choice of the Republican Party’s problems right now or the Democratic Party’s problems, I think you could triple the Republican Party’s problems and I’d still rather have their problems than the problems facing Democrats.” It’s that kind of year.

Minority Whip Eric Cantor says that if Obama is going to jam through ObamaCare with reconciliation, then forget the “bipartisan” health-care summit. He seems to have a point — the hamhanded Democrats shouldn’t have rolled out their “we’ll do it anyway” plan before the summit. What were they thinking?

Yuval Levin thinks it’s crazy talk: “The apparent decision to push Obamacare through reconciliation gives new meaning to the term political suicide. It will almost certainly fail, for one thing. And it will persuade rank and file Democrats in Congress that their leaders have lost their minds, and so will badly divide the Democratic caucus and make for a very difficult year to come for them.”

I’m not the only one who noticed that Tim Pawlenty has an authenticity problem.”When I read that the governor ‘appealed to the tea-party movement, calling its critics a ‘brie-eating’ elite from ‘Ivy League schools’ who don’t like ‘Sam’s Club Republicans’ who ‘actually like shopping at places like Wal-Mart,′ I thought just one thing: The guy’s a phony. And patronizing, too. Good grief.” Yeah, but it’s only 2010.

The leg tingler who says Sarah Palin doesn’t know anything turns out not to know anything: “There is nothing, and I mean nothing, like watching Chris Matthews get his a– demolished on Celebrity Jeopardy. … Do I smell a Wolf Blitzer repeat? If you aren’t watching tonight, how else would you learn that the Rocky Mountains actually run through California? Christo is on fire!”

The latest in the Fort Jackson food poisoning investigation is here. A new wrinkle: it is not clear whether the suspects were U.S. citizens or part of an outreach program to non-citizens who can speak “fluent Arabic, Dari, Pashto, or some other needed language.”

Par for the course for Chicago pols: “Rep. Joe Sestak (D., Pa.) said yesterday that the White House offered him a federal job in an effort to dissuade him from challenging Sen. Arlen Specter in the state’s Democratic primary.” You kind of see why Blago thinks “everyone” trades jobs and public offices.

It’s not hard to figure out why Obama “seems incapable of speaking to Muslims without slyly suggesting he is one of them.” (We saw that “in his Cairo address, he basically so bloated up the early relations between Morocco and America that his version amounted to a virtual falsehood … [and] he still thinks his speech to the university in Cairo was historic.” ) Answer: Obama has a bloated view of his own importance and has adopted the Left’s Third Worldism, in which the “Muslim World” — another fiction! – is oppressed by the West. (Recall that he also told us Palestinians are like enslaved African Americans.)

Martin Feldstein on Obama’s deficit blame-mongering: “The administration’s projected $18.5 trillion debt in 2020 would be more than double the size of the debt when Mr. Obama took office. The annual interest on that debt would exceed $800 billion, requiring a 36% rise in the personal income tax just to pay that interest.  Mr. Obama complains about the problems he ‘inherited.’ But the key to shrinking the nearer term deficits is to avoid his costly new initiatives.’ Feldstein complains that instead Obama is focused on tax hikes which “would hurt incentives, hurt the recovery, and hurt the economy’s long-term growth.”

Andy McCarthy, prosecutor and critic of the Obama-Holder criminal-justice approach to terrorism, does the impossible: he gets treated fairly in the New York Times. Yes, read the whole thing.

Charlie Cook says that “if I had a choice of the Republican Party’s problems right now or the Democratic Party’s problems, I think you could triple the Republican Party’s problems and I’d still rather have their problems than the problems facing Democrats.” It’s that kind of year.

Minority Whip Eric Cantor says that if Obama is going to jam through ObamaCare with reconciliation, then forget the “bipartisan” health-care summit. He seems to have a point — the hamhanded Democrats shouldn’t have rolled out their “we’ll do it anyway” plan before the summit. What were they thinking?

Yuval Levin thinks it’s crazy talk: “The apparent decision to push Obamacare through reconciliation gives new meaning to the term political suicide. It will almost certainly fail, for one thing. And it will persuade rank and file Democrats in Congress that their leaders have lost their minds, and so will badly divide the Democratic caucus and make for a very difficult year to come for them.”

I’m not the only one who noticed that Tim Pawlenty has an authenticity problem.”When I read that the governor ‘appealed to the tea-party movement, calling its critics a ‘brie-eating’ elite from ‘Ivy League schools’ who don’t like ‘Sam’s Club Republicans’ who ‘actually like shopping at places like Wal-Mart,′ I thought just one thing: The guy’s a phony. And patronizing, too. Good grief.” Yeah, but it’s only 2010.

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Getting What You Pay For

This week we have a beautiful illustration of what has been driving our consumer prices steadily upward for the last 50 years. Debt-driven inflation accounts for only some of the increase in the prices of many consumer goods since 1960; the rest is due to the growing burden of regulation. Efficiencies from technology, innovation, and outsourcing have only partly offset the upward climb of consumer prices.

Now the Consumer Product Safety Commission, with voluntary compliance from the Window Covering Safety Council (yes, there is one), is recalling 50 million roll-up window coverings, including blinds and Roman shades. Eight children have reportedly died in the past 10 years from getting their necks wrapped up in cords related to blinds and shades.

Presumably the Window Covering Safety Council (WCSC) is doing this because it figures that a recall is cheaper than a flood of lawsuits, and at least some of its industry members will survive the hit, even in a bad economy. Large-scale manufacturers may be in a position to do so. But this move could be a death blow for some smaller manufacturers, as well as for the low-margin window-covering retailers who are struggling to remain in business throughout the recession. Wal-Mart will hardly notice having empty shelves, at least for a few weeks, where the roll-up window coverings used to be. But suppose department-store retailers decide to offer refunds or exchanges on “unsafe” blinds and shades. Trying to follow suit would represent a business-killing cash hemorrhage for many specialty retailers.

The WCSC helpfully advises consumers to improve their window-covering safety posture by installing “only cordless window coverings in homes with young children.” We are informed that blinds and shades manufactured after 2001 are safer than those made before 2001; but as one whose home is fitted with nothing but window coverings manufactured after 2001, I can assure you that these newer items still have cords all over them. There are, of course, cordless blinds and shades on the market, but they cost substantially more than their serviceable and attractive cord-operated counterparts.

And that is precisely my point. Perhaps public demand for cheap blinds will restore the standard cord-infested ones to the shelves after the echoes of this recall have faded. The public may not respond to the recall in great numbers anyway. But to the extent that retailers choose to make only more expensive blinds available, and to the extent that fewer manufacturers and retailers are able to remain in business through a recall that imposes unrecoverable costs, the price of window coverings will go up for all consumers while choice will go down. This seems like a small thing – until we realize that every industry we buy from is affected by the same regulatory zeal. It all adds up; it makes it harder for businesses to remain viable; and you are paying the freight.

This week we have a beautiful illustration of what has been driving our consumer prices steadily upward for the last 50 years. Debt-driven inflation accounts for only some of the increase in the prices of many consumer goods since 1960; the rest is due to the growing burden of regulation. Efficiencies from technology, innovation, and outsourcing have only partly offset the upward climb of consumer prices.

Now the Consumer Product Safety Commission, with voluntary compliance from the Window Covering Safety Council (yes, there is one), is recalling 50 million roll-up window coverings, including blinds and Roman shades. Eight children have reportedly died in the past 10 years from getting their necks wrapped up in cords related to blinds and shades.

Presumably the Window Covering Safety Council (WCSC) is doing this because it figures that a recall is cheaper than a flood of lawsuits, and at least some of its industry members will survive the hit, even in a bad economy. Large-scale manufacturers may be in a position to do so. But this move could be a death blow for some smaller manufacturers, as well as for the low-margin window-covering retailers who are struggling to remain in business throughout the recession. Wal-Mart will hardly notice having empty shelves, at least for a few weeks, where the roll-up window coverings used to be. But suppose department-store retailers decide to offer refunds or exchanges on “unsafe” blinds and shades. Trying to follow suit would represent a business-killing cash hemorrhage for many specialty retailers.

The WCSC helpfully advises consumers to improve their window-covering safety posture by installing “only cordless window coverings in homes with young children.” We are informed that blinds and shades manufactured after 2001 are safer than those made before 2001; but as one whose home is fitted with nothing but window coverings manufactured after 2001, I can assure you that these newer items still have cords all over them. There are, of course, cordless blinds and shades on the market, but they cost substantially more than their serviceable and attractive cord-operated counterparts.

And that is precisely my point. Perhaps public demand for cheap blinds will restore the standard cord-infested ones to the shelves after the echoes of this recall have faded. The public may not respond to the recall in great numbers anyway. But to the extent that retailers choose to make only more expensive blinds available, and to the extent that fewer manufacturers and retailers are able to remain in business through a recall that imposes unrecoverable costs, the price of window coverings will go up for all consumers while choice will go down. This seems like a small thing – until we realize that every industry we buy from is affected by the same regulatory zeal. It all adds up; it makes it harder for businesses to remain viable; and you are paying the freight.

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Andrew Young’s Mouth

Last week, Andrew Young, former Atlanta Mayor and Jimmy Carter’s ambassador to the United Nations, had this to say about why he was endorsing Hillary Clinton over Barack Obama:

“To put a brother in there by himself is to set him up for crucifixion,” he said. But he could not resist adding a kicker. “Bill [Clinton] is every bit as black as Barack—he’s probably gone with more black women than Barack.”

Irrespective of the latter part of this statement’s validity, the contention that Bill Clinton is “every bit as black as Barack” has a long genealogy, dating back to Toni Morrison, who stated that Clinton was indeed the country’s “first black president.” How could this white man from Arkansas be African-American? Simple. Clinton “displays almost every trope of blackness: single-parent household, born poor, working-class, saxophone-playing, McDonald’s-and-junk-food-loving boy from Arkansas.” Clinton’s metaphorical hue was, of course, “white skin notwithstanding.”

This is not the first time Young’s mouth has gotten him in trouble. He was fired from his perch at the United Nations after he broke State Department protocol by meeting with representatives of the PLO. This was too much even for Jimmy Carter. And last year Young was forced to resign from an organization created by Wal-Mart to drum up support for it in minority communities after he defended the corporation from claims that it forced “mom and pop” stores to close because such establishments were owned by:

people who have been overcharging us selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they’ve ripped off our communities enough. First it was Jews, then it was Koreans, and now it’s Arabs; very few black people own these stores.

Ultimately, however, Obama need not worry about losing Young’s endorsement; having won Zbigniew Brzezinski’s, he’s doing quite well in the race for washed-up Carter administration officials.

Last week, Andrew Young, former Atlanta Mayor and Jimmy Carter’s ambassador to the United Nations, had this to say about why he was endorsing Hillary Clinton over Barack Obama:

“To put a brother in there by himself is to set him up for crucifixion,” he said. But he could not resist adding a kicker. “Bill [Clinton] is every bit as black as Barack—he’s probably gone with more black women than Barack.”

Irrespective of the latter part of this statement’s validity, the contention that Bill Clinton is “every bit as black as Barack” has a long genealogy, dating back to Toni Morrison, who stated that Clinton was indeed the country’s “first black president.” How could this white man from Arkansas be African-American? Simple. Clinton “displays almost every trope of blackness: single-parent household, born poor, working-class, saxophone-playing, McDonald’s-and-junk-food-loving boy from Arkansas.” Clinton’s metaphorical hue was, of course, “white skin notwithstanding.”

This is not the first time Young’s mouth has gotten him in trouble. He was fired from his perch at the United Nations after he broke State Department protocol by meeting with representatives of the PLO. This was too much even for Jimmy Carter. And last year Young was forced to resign from an organization created by Wal-Mart to drum up support for it in minority communities after he defended the corporation from claims that it forced “mom and pop” stores to close because such establishments were owned by:

people who have been overcharging us selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they’ve ripped off our communities enough. First it was Jews, then it was Koreans, and now it’s Arabs; very few black people own these stores.

Ultimately, however, Obama need not worry about losing Young’s endorsement; having won Zbigniew Brzezinski’s, he’s doing quite well in the race for washed-up Carter administration officials.

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A Warning for Paulson

Treasury Secretary Henry Paulson, traveling yesterday in Africa, acknowledged the support of the G-20 nations for a “best practices” code for sovereign wealth funds. There could now be as much as $3 trillion in such vehicles, which are capital pools accumulated by foreign governments for investment abroad. The amount might be five times larger in half a decade.

“How do we actually deal with funds in state hands?” asks German Chancellor Angela Merkel. Her government is already drawing up plans to restrict investments from other countries. Paulson, on the other hand, has adopted a different approach. “I’d like nothing more than to get more of that money,” he said recently.

Do we really want to encourage what amounts to the “cross-border nationalization” of America’s private enterprises? Norway has a sovereign wealth fund thanks to its oil and gas revenues, but nobody is concerned about Oslo’s $350 billion because of its model management practices. Yet even the Norwegians have allowed political views to affect their investment decisions. They did not like Wal-Mart’s union and other labor practices, so the government divested its stock in the gigantic retailer. They did not try to influence Washington by buying up more of the shares so that they could use the Arkansas-based company to promote its views on, say, the war in Iraq.

Hugo Chavez hasn’t gone quite that far. But he has employed Citgo Petroleum to further his ideological goals. Beginning in 2005, the company, acquired by Venezuela two decades ago, has provided tens of millions of gallons of home heating oil at subsidized prices for poor families in several Northeast states as a stunt to embarrass the United States, and especially the Bush administration. Moreover, he has been gutting Citgo’s operations in the United States to support his “oil socialism” policies at home. As the Wall Street Journal reported on Friday, political decisions made in Caracas are ruining the company’s business here. That’s a potential problem because Citgo, which is now run like a police state, owns 5 percent of our nation’s refining capacity. Chavez, should he want to, could throw the American oil market into turmoil merely by turning off the switch.

Our open investment policies are based on the notion that America will prosper as foreign parties participate in the economy. Yet Chavez is beginning to undermine this fundamental assumption, and he is giving no indication that Paulson’s best practices code will deter him. When despots control trillions of dollars in funds, prohibiting investments from autocrats is not protectionist—it’s plain common sense.

Treasury Secretary Henry Paulson, traveling yesterday in Africa, acknowledged the support of the G-20 nations for a “best practices” code for sovereign wealth funds. There could now be as much as $3 trillion in such vehicles, which are capital pools accumulated by foreign governments for investment abroad. The amount might be five times larger in half a decade.

“How do we actually deal with funds in state hands?” asks German Chancellor Angela Merkel. Her government is already drawing up plans to restrict investments from other countries. Paulson, on the other hand, has adopted a different approach. “I’d like nothing more than to get more of that money,” he said recently.

Do we really want to encourage what amounts to the “cross-border nationalization” of America’s private enterprises? Norway has a sovereign wealth fund thanks to its oil and gas revenues, but nobody is concerned about Oslo’s $350 billion because of its model management practices. Yet even the Norwegians have allowed political views to affect their investment decisions. They did not like Wal-Mart’s union and other labor practices, so the government divested its stock in the gigantic retailer. They did not try to influence Washington by buying up more of the shares so that they could use the Arkansas-based company to promote its views on, say, the war in Iraq.

Hugo Chavez hasn’t gone quite that far. But he has employed Citgo Petroleum to further his ideological goals. Beginning in 2005, the company, acquired by Venezuela two decades ago, has provided tens of millions of gallons of home heating oil at subsidized prices for poor families in several Northeast states as a stunt to embarrass the United States, and especially the Bush administration. Moreover, he has been gutting Citgo’s operations in the United States to support his “oil socialism” policies at home. As the Wall Street Journal reported on Friday, political decisions made in Caracas are ruining the company’s business here. That’s a potential problem because Citgo, which is now run like a police state, owns 5 percent of our nation’s refining capacity. Chavez, should he want to, could throw the American oil market into turmoil merely by turning off the switch.

Our open investment policies are based on the notion that America will prosper as foreign parties participate in the economy. Yet Chavez is beginning to undermine this fundamental assumption, and he is giving no indication that Paulson’s best practices code will deter him. When despots control trillions of dollars in funds, prohibiting investments from autocrats is not protectionist—it’s plain common sense.

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Shopping for Iraq

President Bush has garnered much derision for telling Americans who wanted to know how to respond to the 9/11 attacks to go shopping to bolster the economy. That was hardly the kind of ringing call to service and self-sacrifice that might have been expected under the circumstances. But now it seems there is a way in which Americans can help us achieve a vital national objective by opening their wallets and their shopping bags.

Josh White reports in the Washington Post that efforts by the Pentagon to revive the Iraqi economy are faltering because few American firms are stepping forward to buy goods being produced by Iraqi factories. J.C. Penney and Wal-Mart have backed away from possible deals to buy clothes made in Iraq. But so far there is one exception.

Mike Longo, president of Memphis-based Shelmar Inc., said he has signed a contract to buy about $10,000 worth of boys’ shirts and jogging suits for his 51 stores in seven Southeastern states—the only U.S. contract of its kind so far. Longo, a West Point graduate and an infantry officer for nine years, said he will put most of the clothes on the shelves of his unbranded stores this fall, but will not emphasize their Iraqi origins.

It is hardly surprising that Long has an Army background, which suggests that he is doing business in Iraq for motives that are at least as much about patriotism as profits. It is a shame that other American firms aren’t joining in to do their small bit to help create employment in Iraq, which might give young men an alternative to joining militias or setting off IED’s. Given how many Americans say they “support the troops,” there should be money to be made marketing Iraqi clothing, perhaps with an “Operation Iraqi Freedom” label. This might be our 21st century version of the “liberty bonds,” which involved Americans on the home front in the larger struggle during World War II.

President Bush has garnered much derision for telling Americans who wanted to know how to respond to the 9/11 attacks to go shopping to bolster the economy. That was hardly the kind of ringing call to service and self-sacrifice that might have been expected under the circumstances. But now it seems there is a way in which Americans can help us achieve a vital national objective by opening their wallets and their shopping bags.

Josh White reports in the Washington Post that efforts by the Pentagon to revive the Iraqi economy are faltering because few American firms are stepping forward to buy goods being produced by Iraqi factories. J.C. Penney and Wal-Mart have backed away from possible deals to buy clothes made in Iraq. But so far there is one exception.

Mike Longo, president of Memphis-based Shelmar Inc., said he has signed a contract to buy about $10,000 worth of boys’ shirts and jogging suits for his 51 stores in seven Southeastern states—the only U.S. contract of its kind so far. Longo, a West Point graduate and an infantry officer for nine years, said he will put most of the clothes on the shelves of his unbranded stores this fall, but will not emphasize their Iraqi origins.

It is hardly surprising that Long has an Army background, which suggests that he is doing business in Iraq for motives that are at least as much about patriotism as profits. It is a shame that other American firms aren’t joining in to do their small bit to help create employment in Iraq, which might give young men an alternative to joining militias or setting off IED’s. Given how many Americans say they “support the troops,” there should be money to be made marketing Iraqi clothing, perhaps with an “Operation Iraqi Freedom” label. This might be our 21st century version of the “liberty bonds,” which involved Americans on the home front in the larger struggle during World War II.

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Gross Misconduct

The battle over Thomas Eakins’s The Gross Clinic (1875) has ended happily. Last November, Philadelphia’s Thomas Jefferson University sold the painting for $68 million—the highest price ever paid for an American work of art—to the National Gallery of Art in Washington, D.C. and the newly established Crystal Bridges Museum of American Art. (Founded by Alice Walton, the Wal-Mart heiress, the Crystal Bridges Museum is being built in Bentonville, Arkansas.) In deference to local sensibilities, however, Jefferson offered the work to Philadelphia institutions if they could match the purchase price within 45 days. In a cliffhanger of the sort not common in the art world, the Philadelphia Art Museum and the Pennsylvania Academy of Fine Arts, working together, just made the December 26 deadline, having raised about half of the purchase price and borrowing the rest.

Today recognized as the summit of American realism, The Gross Clinic was once viewed as indecent. In 1876 the Centennial Exhibition rejected it as too brutal for public display, and it was relegated to the U.S. Army Hospital exhibition. Its subject is indeed brutal: Samuel D. Gross, Jefferson University’s brilliant surgeon, removes a diseased bone from a young eye and pauses dramatically in mid-action, bloody scalpel in hand. As his assembled students observe with forensic detachment, the boy’s mother cringes beside Gross, in palpable torment. Here is the most forceful depiction imaginable of the intellectual culture of Philadelphia, whose tradition of artistic and scientific empiricism reaches back to its Quaker foundation. For this reason alone, it is deeply satisfying that the painting remain in its native city.

Still, nagging questions remain. One is the involvement of the National Gallery, which might be expected to defend the cause of American art as a whole, and not to act as a predatory corporation, aggrandizing itself at the cost of the cultural patrimony of another city. Another is the increasing tendency of private institutions to sell their cultural assets, declaring them, on the basis of narrowly formulated mission statements, to be “outside the scope of our central mission.” Such was the case two years ago when the New York Public Library sold Asher Durand’s Kindred Spirits (1849), the iconic Hudson River School landscape, to the Crystal Bridges Museum. And finally, there is the Philadelphia Art Museum itself, which has eloquently defended the idea that the physical location of a work of art has much to do with its aesthetic force and social significance; it is striking that this is the same museum that has worked so assiduously to pry the collection of the Barnes Foundation from the building and site that have given it its meaning for three quarters of a century.

Such are the lingering qualms, but they should not prevent one from marveling at The Gross Clinic, now on display at the Philadelphia Museum of Art until March 4.

The battle over Thomas Eakins’s The Gross Clinic (1875) has ended happily. Last November, Philadelphia’s Thomas Jefferson University sold the painting for $68 million—the highest price ever paid for an American work of art—to the National Gallery of Art in Washington, D.C. and the newly established Crystal Bridges Museum of American Art. (Founded by Alice Walton, the Wal-Mart heiress, the Crystal Bridges Museum is being built in Bentonville, Arkansas.) In deference to local sensibilities, however, Jefferson offered the work to Philadelphia institutions if they could match the purchase price within 45 days. In a cliffhanger of the sort not common in the art world, the Philadelphia Art Museum and the Pennsylvania Academy of Fine Arts, working together, just made the December 26 deadline, having raised about half of the purchase price and borrowing the rest.

Today recognized as the summit of American realism, The Gross Clinic was once viewed as indecent. In 1876 the Centennial Exhibition rejected it as too brutal for public display, and it was relegated to the U.S. Army Hospital exhibition. Its subject is indeed brutal: Samuel D. Gross, Jefferson University’s brilliant surgeon, removes a diseased bone from a young eye and pauses dramatically in mid-action, bloody scalpel in hand. As his assembled students observe with forensic detachment, the boy’s mother cringes beside Gross, in palpable torment. Here is the most forceful depiction imaginable of the intellectual culture of Philadelphia, whose tradition of artistic and scientific empiricism reaches back to its Quaker foundation. For this reason alone, it is deeply satisfying that the painting remain in its native city.

Still, nagging questions remain. One is the involvement of the National Gallery, which might be expected to defend the cause of American art as a whole, and not to act as a predatory corporation, aggrandizing itself at the cost of the cultural patrimony of another city. Another is the increasing tendency of private institutions to sell their cultural assets, declaring them, on the basis of narrowly formulated mission statements, to be “outside the scope of our central mission.” Such was the case two years ago when the New York Public Library sold Asher Durand’s Kindred Spirits (1849), the iconic Hudson River School landscape, to the Crystal Bridges Museum. And finally, there is the Philadelphia Art Museum itself, which has eloquently defended the idea that the physical location of a work of art has much to do with its aesthetic force and social significance; it is striking that this is the same museum that has worked so assiduously to pry the collection of the Barnes Foundation from the building and site that have given it its meaning for three quarters of a century.

Such are the lingering qualms, but they should not prevent one from marveling at The Gross Clinic, now on display at the Philadelphia Museum of Art until March 4.

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