It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.
Adam Smith, An Inquiry into the Nature & Causes of the Wealth of Nations, Vol 1, 1776
Adam Smith was the father of modern economics and the first proponent of free market, laissez-faire capitalism. He promoted free trade as the world, then experiencing its first massive expansion in wealth as a result of global trade, began to move from mercantilism towards something approaching his vision. So what does that have to do with my supper?
I just had a quite filling repast -- fresh green beans and a bit of diced sweet onion cooked with a slice of bacon, marinated in the bacon fat, then spiced with cayenne pepper, paprika, salt, and black pepper, all washed down with a cup of tea flavored with lime juice and heather honey. Delicious, filling, and . . . only possible because of globalism, capitalism and trade.
The only thing local was the sweet onion. From whence did all else come?
Green beans - shipped fresh from somewhere in Central America
Bacon - probably Virginia
Cayenne Pepper - probably Mexico
Black Pepper - probably India
Paprika - probably south central Europe or perhaps Turkey
Salt - probably Minnesota, with its huge salt mines
Green Tea - China
Lime Juice - Florida
Heather Honey - Scotland
All of the above came in containers made variously of glass, plastic, cardboard and metals from all over the world.
All came to a store near me by transport using fossil fuels.
All of that allowed me to make a meal that probably cost me about $1.25 to make. And the thing of it is, the price could have been far cheaper were not our band of capitalism still stunted by cronyism, protectionism and over regulation.
All of the people involved in bringing the supper to my table tonight did so out of their own enlightened self interest. And I bought all of the things that went into my supper not out of any feeling of benevolence towards the sellers, but out of my own self interest and with trust in the quality of goods from each supplier / producer.
Aren't global trade and capitalism wonderful things? As Ayn Rand once wrote:
Capitalism has been called a system of greed — yet it is the system that raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of.
So tonight, as I enjoy a simple, cheap and fine supper, I wonder what the masses are having in the socialist bastion of Venezuela? Or for that matter, what the deeply misguided and hypocritical Occupy protest veterans are dining on?
For anyone who needs a refresher in capitalism, there is no finer reference than Thomas Sowell's Basic Economics. If you haven't read it, do yourself a favor and purchase a copy.
In his essay below, Victor Davis Hanson quotes the ancient historian Thucydides famous judgment of the state of the world two and a half millenia ago. "The strong do as they will, the weak suffer as they must." The world Thucydides described was a world with no policeman and no external limitations upon the ruling class beyond calculations of raw power. It is a reality kept at bay in the modern world since World War II by American engagement. But as that changes, Victor Davis Hanson, in a bleak essay, sees us returning to a world Thucydides would recognize.
This from Mr. Hanson, writing at the NY Post:
RUSSIA invades Georgia. China jails dissidents. China and India pollute at unimaginable levels. Gulf monar chies make trillions from jacked-up oil prices. Islamic terrorists keep car bombing. Meanwhile, Europe offers moral lectures, while Japan and South Korea shrug and watch - all in a globalized world that tunes into the Olympics each night from Beijing.
"Citizens of the world" were supposed to share, in relative harmony, our new "Planet Earth," which was to have followed from a system of free trade, electronic communications, diplomacy and shared consumer capitalism.
But was that ever quite true? In reality, to the extent globalism worked, it followed from three unspoken assumptions:
First, the US economy would keep importing goods from abroad to drive international economic growth.
Second, the US military would keep the sea-lanes open, and trade and travel protected. The Americans, as global sheriff, would deal with the occasional menace, like a Moammar al-Khadafy, Slobodan Milosevic, Osama bin Laden, Saddam Hussein, Kim Jong-il or the Taliban.
Third, America would ignore ankle-biting allies and remain engaged with the world - like a nurturing mom who at times must put up with the petulance of dependent teenagers.
But there've been a number of signs recently that globalization may soon lose its US parent.
The United States may be the most free, stable and meritocratic nation, but its resources and patience are not unlimited. It pays more than a half trillion dollars a year to import $115-a-barrel oil that's often pumped at a cost of about $5.
The Chinese, Japanese and Europeans hold trillions of dollars in US bonds - the result of massive trade deficits. The American dollar is at historic lows. We are piling up staggering national debt. Over 12 million live here illegally and freely transfer more than $50 billion annually to Mexico and Latin America.
Our military, after deposing Milosevic, the Taliban and Saddam, is tired. And Americans are increasingly becoming more sensitive to the cheap criticism of global moralists. But as America turns ever so slightly inward, the new globalized world will revert to a far poorer (and more dangerous) place.
Liberals like Barack Obama speak out against new free-trade agreements and want existing accords like NAFTA readjusted. . . .
Meanwhile, the hypocrisy becomes harder to take. After all, it is easy for self-appointed moralists to complain that terrorists don't enjoy Miranda rights at Guantanamo, but it'd be hard to do much about the Russian military invading Georgia's democracy and bombing its cities.
Al Gore crisscrosses the country, pontificating about Americans' carbon footprints. But he could do far better to fly to China to convince them not to open 500 new coal-burning power plants.
. . . So, what a richer but more critical world has forgotten is that in large part America was the model, not the villain - and that postwar globalization was always a form of engaged Americanization that enriched and protected billions.
Yet globalization, in all its manifestations, will run out of steam the moment we tire of fueling it, as the world returns instead to the mindset of the 1930s - with protectionist tariffs; weak, disarmed democracies; an isolationist America; predatory dictatorships; and a demoralized gloom-and-doom Western elite.
If America adopts the protectionist trade policies of Japan or China, global profits plummet. If our armed forces follow the European lead of demilitarization and inaction, rogue states advance. If we were to treat the environment as do China and India, the world would become quickly a lost cause
If we flee Iraq and call off the War on Terror, jihadists will regroup, not disband. When the Russians attack the next democracy, they won't listen to the United Nations, the European Union or Michael Moore.
We may be on our way back to an old world, where the strong do as they will, and the weak suffer as they must
Read the entire article. I have long thought that we are a nation at a cross-roads. In the short term, our nation will survive. But if we follow down the post modern road, then sooner rather than later, we as a nation will suffer horrendously. The choices really could not be any more stark, nor the forseeable consequences more costly.
I have long thought that the conservative values of the Republican party are much more closely aligned with the non-ideological component of the Democratic base - i.e., the working class. Democrats claim to fight for the "working class" but it is becoming ever more apparent that Dem's rely on the blue collar vote while pursuing avant garde policies that only help narrow special interests. At the same time, these policies actually harm the working class portion of their base. You can see it in every aspect of Democratic politics, from the massive payoff to Big Labor with the Employee Free Choice Act to protectionism and the war on free trade. But nowhere is it more apparent than in regards as to energy. Obama and his far left ideologues embrace $4 a gallon gas as a means to force conservation and a switch to unproven alternative fuels, irrespective of cost. No thought is given to the incredible impact this has on every aspect of life for the average person.
The key to success for the Democrats has been to keep the scales over the eyes of this portion of their base for decades. Those scales are starting to fall off. And as it happens, it presents an ever clearer opportunity for the GOP to capture these voters in a new coalition that is much more of a fundamental and permanent shift than the ad hoc movement of "Reagan democrats." Patrick Ruffini blogs at The Next Right on this opportunity:
Ross Douthat and Reihan Salam's Ross Douthat and Reihan Salam's Grand New Party contemplates a future GOP coalition anchored around the working class. In the past, I've been a bit skeptical of this idea. But with #dontgo, Drill Now, and the current economic situation, I'm starting to think that activating such a coalition may be possible -- and in a way that doesn't require the Republican Party to expand government.
Those seeking a coherent narrative of the two parties can find it in something deceptively simple: the politics of price. Republicans want the things you pay for everyday to cost less. Democrats would make them cost more.
Want cheaper energy? Drill now, expand refinery capacity, go nuclear, and diversify into renewables. Republicans want energy sources that are cheap, reliable, and abundant. Democrats want higher prices to force us off fossil fuels to address environmental concerns first, and affordability concerns last.
Want cheaper consumer products? Fight protectionism and forced unionism.
Want cheaper food? Get rid of ethanol subsidies.
Want cheaper health insurance? Get rid of irrational regulations and frivolous lawsuits, and let people buy health insurance across state lines. The left scoffs at more affordable plans that make sense for cost-conscious Gen Y Obama supporters.
Want cheaper government? Cut spending.
Want cheaper tax bills? This is self-explanatory.
Most of this is not new. However, Republicans have largely been unable to capitalize on wanting things to cost less because the country was relatively prosperous and inflation has not been a real concern for a generation. With the country now facing tangible inflation in the food and fuel sectors, an affordability agenda for the working class is now much more salient.
. . . If we can get out from under the dead weight that is 28% Presidential approval, the economic issue environment can be turned against the progressives. Liberalism is built around sacrificing lower prices for social goods like the environment, health care, or economic equality. . . This is the underpinning of their hatred of low-cost Wal-Mart, their thinly-veiled sense of satisfaction with high energy prices, and their consistent opposition to lower taxes.
A gold-plated agenda that might seem semi-plausible in good times appears laughable in leaner ones, particularly with public attention to prices high as it is.
This is why the reaction to something like domestic oil drilling has been unexpectly strong. The public wants to do something, anything to bring down the price at the pump. This is also why every other ad on the Olympics is about hybrid cars or other kinds of green technology. It's not that the public is greener per se. It's that oil is getting to be so darned expensive that people are looking for alternatives. Hybrids or electric cars will take off once they are demonstrably cheaper than their CO2-spewing counterparts, not when the public has some altruistic environmental epiphany. Why do people buy CFL bulbs? Not because of the environmental benefits (which have always been there) but because of the advertised savings. The American people will not willingly pay for things that cost more.
Read the entire post. The opportunity is there. The question is whether our current crop of Republican leadership can see it and exploit it. To be frank, this probably requires more foresight and leadership than our current crop of leaders possess.
Some time ago, McCain admitted that his weakness was economics. At the start of the semester / campaign season, he was pushing an economy busting cap and trade plan and refusing to allow drilling even in the face of our energy crisis. Today, cap and trade is dead, taxes are to be lowered, the dollar to be made stronger, and McCain has a sensible energy plan. Even Larry Kudlow's giving him a gold star. The Danes don't even think we need an election, from their viewpoint. I fully concur with their logic. _________________________________________________________
On Monday at a town hall in Denver, John McCain laid out his "Jobs for America" plan that you can find here. You can also find an online briefing detailing the plan here. Then there is this from Larry Kudlow writing at NRO:
After writing favorably about Sen. McCain’s recent economics speeches, where he clearly shifted toward the supply-side both on tax cuts and producing more energy, I went back last evening and carefully read his 15-page policy pamphlet called “Jobs for America.” Here’s what I found:
There is no mention of cap-and-trade. None. Nada. There is a section about “Cheap, Clean, Secure Energy for America: The Lexington Project.” But that talks about expanded domestic production of oil and gas, as well as the need for more nuclear power and coal along with alternative sources. Then it has the $300 million battery and flex-fuel cars. But nope, no cap-and-trade. So I picked up the phone and dialed a senior McCain official to make sure these old eyes hadn’t missed it. Sure enough, on deep background, this senior McCain advisor told me I was correct: no cap-and-trade. In other words, this central-planning, regulatory, tax-and-spend disaster, which did not appear in Mac’s two recent speeches, has been eradicated entirely — even from the detailed policy document that hardly anybody will ever read. So then I asked this senior official if the campaign has taken cap-and-trade out behind the barn and shot it dead once and for all — buried it in history’s dustbin of bad ideas. The answer came back that they are interested in jobs right now — jobs for new energy production and jobs from lower taxes. At that point I became satisfied. . . .
. . . I might add that in this lengthy policy document there’s a strong statement about appreciating the value of the dollar. “John McCain’s policies will increase the value of the dollar and thus reduce the price of oil.”This is good. It’s not perfect. Neither is McCain’s tax plan and new energy plan. But it is excellent progress.
Read the entire post. (H/T Classical Values.) Now it would seem time for Econ 102.
This is all quite good news. Though even without these big strides, the worst McCain could do is far less than the far left who seem prepared to sing the requiem for capitalism and enact socialism in one fell swoop, shades of Britain in 1946.
Not surprisingly, there is a tremendous amount of interest in the U.S. general election overseas, though there is also some confusion as shown in this e-mail from some individuals in Denmark:
We in Denmark cannot figure out why you are even bothering to hold an election.
On one side, you have a bitch who is a lawyer, married to a lawyer, and a lawyer who is married to a bitch who is a lawyer.
On the other side, you have a true war hero married to a woman with a huge chest who owns a beer distributorship.
Is there a contest here?.
This joke cribbed, with great appreciation, from fellow Watcher's Council member The Colossus of Rhodey, with a hat tip to Soccer Dad.
Two things of note occurred in 1776. Adam Smith wrote the seminal treatise of the era on capitalism, "The Wealth of Nations." The basic precepts that he espoused in that book are the foundation of America's wealth today. And 1776, we had the American Revolution. If the famous patriot of that era, Paul Revere, were alive today, he would no doubt be making another midnight ride to warn of the impending existential danger to our nation crossing over the horizon. Today, that threat is internal, from those who wish to dispense with the capitalist system that has made America the wealthiest nation on earth - top to bottom the wealthiest - and put in its place a system of socialism where, as the saying goes, the misery can be shared equally by all. Leading the call today is E.J. Dionne, who sees the economic cycle of capitalism as a reason to dispense with it. _________________________________________________________
This from Mr. Dionne, a man sorely in need of a lesson in economic history:
The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.
Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.
You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism."
The old script is in rewrite. "We are in a worldwide crisis now because of excessive deregulation," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview.
He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation." This helped create the subprime mortgage mess and the cascading calamity in banking.
While Frank is a liberal, the same cannot be said of Ben Bernanke, the chairman of the Federal Reserve. Yet in a speech on Tuesday, Bernanke sounded like a born-again New Dealer in calling for "a more robust framework for the prudential supervision of investment banks and other large securities dealers."
Bernanke said the Fed needed more authority to get inside "the structure and workings of financial markets" because "recent experience has clearly illustrated the importance, for the purpose of promoting financial stability, of having detailed information about money markets and the activities of borrowers and lenders in those markets." Sure sounds like Big Government to me.
This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early '80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What's becoming the Panic of 2008 will mean an end to the latest Capital Rules era.
What's striking is that conservatives who revere capitalism are offering their own criticisms of the way the system is working. Irwin Stelzer, director of the Center for Economic Policy Studies at the Hudson Institute, says the subprime crisis arose in part because lenders quickly sold their mortgages to others and bore no risk if the loans went bad.
"You have to have the person who's writing the risk bearing the risk," he says. "That means a whole host of regulations. There's no way around that."
While some conservatives now worry about the social and economic impact of growing inequalities, Stelzer isn't one of them. But he is highly critical of "the process that produces inequality."
"I don't like three of your friends on a board voting you a zillion dollars," Stelzer, who is also a business consultant, told me. "A cozy boardroom back-scratching operation offends me." He argues that "the preservation of the capitalist system" requires finding new ways of "linking compensation to performance."
Frank takes a similar view, arguing that CEOs "benefit substantially if the risks they take pay off" but "pay no penalty" if their risks lead to losses or even catastrophe -- another sign that capitalism, in its current form, isn't living by its own rules.
Frank also calls for new thinking on the impact of free trade. He argues it can no longer be denied that globalization "is a contributor to the stagnation of wages and it has produced large pools of highly mobile capital." Mobile capital and the threat of moving a plant abroad give employers a huge advantage in negotiations with employees. "If you're dealing with someone and you can pick up and leave and he can't, you have the advantage."
"Free trade has increased wealth, but it's been monopolized by a very small number of people," Frank said. The coming debate will focus not on shutting globalization down but rather on managing its effects with an eye toward the interests of "the most vulnerable people in the country."
In the campaign so far, John McCain has been clinging to the old economic orthodoxy while Barack Obama has proposed a modestly more active role for government. But the economic assumptions are changing faster than the rhetoric of the campaign. "Reality has broken in," says Frank. And none too soon.
Read the entire article. The fact that we are in a place today where such idiocy is can be spoken in polite discourse shows the grave danger to our way of life and the inroads made by the far left into becoming accepted as mainstream in America. The day they take power, you can mark your calendar as the start of the decline of America.
The obstruction of the Colombia Free Trade Agreement by Democratic leaders and the Dem presidential nominees is every bit as pathologically partisan as their stand on Iraq and Homeland Security issues, such as whether to grant immunity to the telecom industry. In none of these cases are the best interests of the U.S. and its allies considered. The carefully staked out far left positions are designed to pander to special interests and are aimed at gathering power. You can begin to realize how transparent these detestable people really are when those on the left with some degree of intellectual integrity become highly critical of their actions, as does Nicholas Kristof today on the issue of obstructing the Colombia Free Trade Agreement. __________________________________________________________
This from Mr. Kristof writing in the op-ed pages of the NYT:
For seven years, Democrats have rightfully complained that President Bush has gratuitously antagonized the world, exasperating our allies and eroding America’s standing and influence.
But now the Democrats are doing the same thing on trade. In Latin America, it is Barack Obama and Hillary Clinton who are seen as the go-it-alone cowboys, by opposing the United States’ free-trade agreement with Colombia.
. . . Colombian cities like Medellín were the most dangerous cities in the world in the 1980s and ’90s, but now they are thriving and homicide rates are well below those of some American cities.
One reason is those bouquets you buy, entering duty-free from Colombia. These days Colombia is the world’s second-largest exporter of flowers after the Netherlands, and almost 200,000 people work in the flower industry. Up to 28 cargo planes a day carry flowers from Colombia to the U.S.
Better carnations than cocaine, no?
Critics of the free-trade pact worry that it would hurt American workers. But Colombian goods already enter the U.S. duty-free; what would change is that American exporters would get access to the Colombian market.
(Colombia is pushing hard for the pact not because of any immediate trade benefit but because its duty-free access to the U.S. must be regularly renewed. Businesses are reluctant to invest in flower farms or garment factories unless they know that they will be able to export to the U.S. for many years to come.)
Some Democrats point out that Colombia’s government has been tied to paramilitary units that kill union members. It was important for Democrats to raise these concerns — forcing the Colombian government to crack down on paramilitaries and prosecute those who murder unionists.
But Colombia’s progress has been immense. Assassinations of union members, while still a problem, have fallen 80 percent since 2002. Last year, the murder rate for union members was 4 per 100,000, reaching levels far below the homicide rate for the general public.
. . . The last few years have seen enormous gains in security and the quality of life in Colombia — and that’s why President Álvaro Uribe has an 85 percent approval rating.
I asked President Uribe on Monday if there was concern among Latin leaders that Democrats in Congress are tugging the U.S. away from its historic commitment to free trade. He said bluntly: "I don’t want to imagine this scenario. It would be devastating for the good relationship between the United States and our region." To their credit, a large group of prominent Democrats from previous administrations have strongly endorsed the trade accord, declaring that it is "in both our vital national security and economic interests." But the presidential candidates aren’t listening.
Democrats instinctively criticize Mr. Bush when he harms America’s standing in the world. That’s easy. But a test of intellectual honesty is your willingness to hold your own side to the same standard and to point out pandering in those politicians you normally admire. . . .
Art: The Muses Clio, Euterpe and Thalia, Eustach Le Sueur, 1655
Spc. Monica Lin Brown, 19 years old from Lake Jackson, Texas, 4th Squadron, 73rd Cav, has done something only a very few female soldiers in American history have ever done. She’s been awarded the Silver Star.
From Consul at Arms quoting VDH on the suicidal canard of multiculturalism: "So ingrained is the notion among our elite that there are no absolute standards of ethics and morality, that we have lost the ability to apply abstract moral judgment without exception." And to see multiculturalism’s conjoined twin in all of its destructiveness, one need only turn to the surreal world of modern Britain.
Of course, things can get pretty damn surreal over here amongst our holier than thou lefties – like librarians refusing to notify authorities about visitors downloading kiddie porn over concern for their First Amendment rights.
The question now is, what did Obama know and when did he know it? Remember Obama saying two days ago he had never heard Rev. Wright light into his racist vitriol at any time during his 20 years of attending Trinity United? Documentary evidence to the contrary is starting to roll in. And the video of Obama heaping praise on Rev. Wright has been scrubbed from YouTube, but not from the Jawa Report.
The top 9 Obama campaign slogans suggested by Rev. Jerimah Wright. Heh. My favorite: Defeat racism; kill a cracker. And Rev. Wright will soon be bringing his social gospel into children’s programming. His initial work will be to tell the biblical story of "institutional racism in housing policy, when there was ‘no room at the inn.’"
Fact checking – it is not Reuters’ strongsuit. Far easier just to repeat the anti-gun accusations.
The Paris Book Fair this year is honoring several Israeli writers. Muslim authors have called for a boycott, and wholly unsurprisingly, there has been a bomb threat. For a psychological perspective on suicide bombers, go here. Meanwhile, some very bad things are happening to those who have filed official complaints against a radical Salafi Imam in Canada.
Time to break out the ham sandwiches and run the bath, we have a new guest at the Caribbean retreat. Heh. Meanwhile, what should we do with those guests guilty of plotting 9-11? Off with their heads? Nah, only the Saudis do that, such as for the crime of writing that other religions should not be considered "unbelievers." Apostacy.
Today's interesting news, below the fold Here is a bit more on the company Obama keeps. Obama’s rhetoric is soring, but the few things I can see undergirding it are disturbing – to me and others. About the only thing I like about Obama – and its one of the things I like about McCain – is his stand on trade. I thought Obama had at least one vote wrapped up. I was wrong.
Classical Values endorses McCain and does so for all the right reasons. Much could be riding on McCain’s choice for VP. Confederate Yankee is thinking that if McCain chooses Fred Thompson, that would go far to ameliorating Conservatives. Meanwhile, American Digest ponders MDS – McCain Derangement Syndrome. As I wrote here, I am not infected with that dementia.
This is incredibly troubling. Sharia law arbitration agreements now being recognized in Texas. And see here and here. True, parties can choose whatever law they wish to govern their private agreements. But we also have a long legal tradition that we will not enforce laws that contravene public policy – and much about Sharia law is antithetical to public policy in the West. One example of how antithetical it can be is demonstrated in this story of how "kumbaya gets t-boned by reality" in Ridyah.
Lionheart has up a fascinating post on the narcojihadism in Luton and Britain at large, as well as explaining why he has decided to seek asylum in the United States.
What is the value of Human Rights Commissions when they are being used to stifle freedom of speech and force secular left values on people who object to the same, in this case on Christian grounds?
The problem, Georgia’s incredible growth and below average rainfall has left the state with a severe water problem. The proposed solution – annex Tennessee, or at least that part of it with significant water resources. One wonders how many wars have been motivated on similar grounds since time immemorial. At any rate, break out the battle flags and muskets, and let Civil War redux commence.
Hook-handed hate cleric Abu Hamza is appealing his extradition to the U.S. where he will be tried on terrorism charges. His lawyer is concerned. "There are grave concerns about what might happen if the extradition goes ahead. The Americans have said he will not face the death penalty or be sent to the Guantanamo Bay detention camp - but how can we be sure? "I also fear that if he was sent to America he would become a victim of torture." The thing of it is, between British and EU Courts, I actually wonder if his appeal might not work. (H/T Sheik Yer Mami)
Taqiyya, the revered Muslim practice of fooling the Kafir and others, is explained. And you can see taqiyya in action here.
A 34-year-old Italian man who had sex with a 13-year-old girl has had his sentence cut by a two-thirds because a court decided there was "real love" between the pair.
I am not the only person worried about the economically illiterate, anti-capitalist and anti-free trade statements of she who would be President - a topic on which I posted here. It seems that Hillary Clinton's sophmoric musings have also disturbed Peter Mandelson, the EU trade commissioner, who sees in her words a serious danger to the world economy. This today from the Telegraph:
Peter Mandelson, the EU trade commissioner, has warned Democratic candidate Hillary Clinton, that she risks stirring up a hornets nest by inflaming protectionist sentiment in the United States.
"The things she's been saying reverberate around the world," he said. "This is the last year the Doha trade round can survive. There is little chance of a breakthrough after this president leaves office. People in the current administration tell me the US is turning into a protectionsist country. It is a serious concern."
Mr Mandelson, the ex-architect of New Labour, once had close ties to the Democratic Party. But his duties as defender of the EU trade system now put him starkly at odds with his former allies and soulmates.
"The Democratic Party is not where it was in the free trade heyday of Bill Clinton, but I don't think it is irretrievable," he said.
Hillary Clinton has vowed to "review" America's main trade treaties, including the North American NAFTA pact signed by her husband. She has called for measures to "shelter" US companies from foreign investors.
Her arguments appear to go beyond campaign rhetoric. She now argues that "free trade" doctrines have been overtaken by the rise of cheap labour rivals in Asia, forcing the US to adopt a radically different strategy. "We just can't keep doing what we did in the twentieth century. We have to drive a tougher bargain," she said. . .
Read the article here. If Hillary Clinton believes half of what she has said about economics in America, she is tuly an economic illiterate and poses a danger to our economy and the world's economy if elected.
Several months ago, columnist Charles Krauthammer opined that he could live with a Hillary Clinton presidency. As he said of Hillary, "She has no principles. Her liberalism is redeemed by her ambition; her ideology subordinate to her political needs." While I agree with his assessment generally, I do not agree with his conclusion.
Hillary's economic ideology is different in both substance and degree from her husband’s. She clearly does not share her husband’s affinity for business and trade. Hillary's economic views appear socialist if not marxist, and they, in many ways. seem superficial and sophmoric. That notwithstanding, Hillary gives every indication that she intends to push the government into the center of America’s economy if elected as President.
Ms. Clinton has clearly stated her economic philosophy over the years. For example, in a 1996 interview with C-SPAN’s Brian Lamb, Hillary was asked about a quote she had included in her book, "It Takes a Village," that expressed severe criticism of free market economics. The exchange and response were:
LAMB: There's a quote here. I want to ask you if you agree with this. This is from Alan Arenhault, author of "The Lost City" -- you put it in your book. "The unfettered free market has been the most radically disruptive force in American life in the last generation."
CLINTON: I believe that. That's why I put it in the book. . . .
That is an incredibly strong statement. And to the best of my knowledge, it is not one she has ever retracted, either in deed or substance. Further, during the same interview, Hillary discussed her appreciation for the socialist policies of Europe – and I assume here that they are many of the same one’s Sarkozy is today trying to strip from France so that his country can compete economically. As she states:
CLINTON: Well, I am a fan of a lot of the social policies that you find in Europe, . . .
"Other developed countries, including some of our fiercest competitors, are more committed to social stability than we have been, and they tailor their economic policies to maintain it."
The NRO reports a 1995 conversation with Dennis Hastert on Social Security in which Hillary argued against personal accounts saying, "We can’t afford to have that money go to the private sector. The money has to go to the federal government because the federal government will spend that money better than the private sector will spend it."
In 2004, Clinton, speaking to an assembly in San Francisco, stated "We're going to take things away from you on behalf of the common good."
All of the above constitute merely antecdotal evidence. But Hillary's specific economic proposals are fully in keeping with this antecdotal evidence. For example, it was not long ago that Hillary proposed to strip American oil companies of their profits so that she can fund R&D for new sources of energy.
She really needs to take a course in basic economics. The oil industry has been the subject of recent investigations – several of them actually – to look into price gouging, price fixing and profits. In no case was anything found to be wrong. And furthermore, the reality is that the majority of their profits were being reinvested into finding and exploiting new sources of energy. I hate to begin to contemplate what damage an unchained Hillary could do to the energy sector, energy supplies and energy prices in the U.S. were she to attempt something so utterly ludicrous as what she has suggested here. (And as an aside, if we wish to achieve energy independance, the first things that we need to do are remove the impediments to exploiting our domestic resources - and Hillary is a major part of that impediment.)
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19.
A government enforced control such as this would severly distort the market. As the writers at Fortune magazine see it:
. . . such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages.
"It certainly would not speed the recovery of the housing market," says Doug Duncan, chief economist of the Mortgage Bankers Association. "The problem now is that investors are already worried about what the risks are, and (a rate freeze) would only widen risk premiums more."
Do you see a pattern here? Hillary, for all her intelligence, has woeful economic ideas and an anti-business animus that could truly injure our nation’s economy. And, if elected, she fully intends to use the power of government to manipulate the economy.
As she said in the NYT just yesterday, she does not trust "market forces." Rather she believes that the government should "play an active role" to correct "the excesses of the market and of the Bush administration." Compared to her husband, "she has long been more skeptical about the benefits of freer trade and other aspects of a free-market economy." Read the entire article.
I think the only way to characterize Ms. Clinton is as a strongly committed socialist, bordering on being a marxist. Yes, it is possible that she is simply blowing populist smoke at the nation with her incredibly sophmoric suggestions for massive taxation of oil company profits and imposing a five year mortgage interest rate freeze. But I will never vote for someone on the hope that they are lying to me about their intentions. And even if Hillary is more economically sophisticated than her pronouncements suggest, I think that she is sincere when she says that she wants to use the power of government to manipulate the economy. And I beleive she is sincere in her expressions of dislike for free trade or free markets. And lastly, she has convinced me that her knee-jerk reaction will be to intervene with the heavy hand of government in response to any perceived inequities or downturns in the market.
To put this in perspective, we are now facing some rather dismal economic news for which the President and Congress must take responsibility. President Bush’s economic policies have been, I would say, poor. Although we have had good growth and a relatively strong economy under Bush, in the long term, it was not sustainable under his policies. His "weak dollar" policy threatens havoc to the world economy so long as it stays dollar based and he has done nothing to rein in out-of-control spending by Congress. Arguably, the fed held interest rates too low for too long which has had a significant hand in causing the current sub-prime crisis. But indications are that the market is already correcting for these discrepancies, and that we should be able to weather this downturn without too much pain so long as our government does not act irrationally. Some ineffectual intervention – such as the one now being considered by President Bush - is necessary politically because the nation demands the appearance of action. To the extent that intervention is minimized, so much the better.
The next President will inherit the world’s strongest economy – and one that has already weathered or is about to come out of a recession and market correction. We have the world’s largest economy by far because of free market capitalism and free trade - though arguably with far too much existing regulation. That notwithstanding, there has not been a socialist nation yet that can even begin to compete with the U.S. economically. What the next President needs to do to keep our economy strong is, first and foremost, do no harm. Beyond that, the economy would benefit were the next President to pursue more free trade agreements and act to improve the business environment in America by repealing Sarbanes Oxley and by reducing the corporate tax rates that are so high as to be approaching non-competitive. Further, the next President would do well indeed to strengthen the dollar and get spending under control.
Hillary Clinton would seem to be the last person to undertake any of these tasks. Indeed, taking her at her word, she would clearly lead the nation in the opposite direction. The few economic ideas she has posited would be laughable if not for being so utterly dangerous to the economy. And her desire to manage the economy and adopt a socialist economic structure portend only ill. Thus, I am nowhere near as sanguine about a Hillary Clinton presidency as Charles Krauthammer seems to be.
Update: I am not the only person concerned with Hillary's apparent economic illiteracy. She has the EU Trade Commissioner concerned also.
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