Goolsbee's Daft Obamacare Apologia

I have always warned on this blog of academic economists commenting on developments in markets and business, because the results are usually pretty awful (see here, here and here).  Today is no exception as former Obama economic adviser Austan Goolsbee takes to the pages of the WSJ with a positively daft analysis of markets in the wake of John Robert's switched vote on Obamacare.  Here is Goolsbee's main point and the big laugher:

Of all the public reactions to last Thursday's surprise ruling from the Supreme Court on the Affordable Care Act, one of the most interesting came from the markets: Nothing happened.

That probably disappointed those who spent the past two years saying that the costs from increased regulation and fear of the health plan explain why U.S. companies have not hired faster and have accumulated huge amounts of cash on their balance sheets. If that were so, the court ruling should have had a big impact on expected future profits. Stocks should have tumbled.

Um, no.  This is typical of how academic economists have no clue how markets and business work.  ObamaCare was the law of the land on Wednesday June 27th and on Thursday June 28th, after Roberts announced his 4-4-1 decision, Obamacare was...the law of the land.  With no material change in the policy environment, one would expect markets to do precisely nothing. 

Goolsbee goes on with a lame attempt to say that damaging effects of Obamacare are non-existent because there is no data saying companies with more than 50 employees are doing worse than companies with less than 50 employees. Huh?  The law isn't fully implemented yet, so there is no ability to make these distinctions now.  Goolsbee's argument is a chimera.  What is real however is the numerous and constant criticism of the law and description of its chilling effects by businesses and business groups. And I (along with Nobel-prize winning economists) have laid it all out for my readers as to why the recovery is non-existent. 

I have discussed here many times how businesses are hoarding cash and shrinking rather than expanding.  I know because 1) I am not an academic economist who believes crazy sh*t that isn't remotely sensible and 2) I actually talk to business leaders all the time.  Goolsbee mentions briefly that businesses have been hoarding cash, glossing over how integral this effective boycott has been to the anemia of the recovery, and dismisses this as a factor because it's been happening for a long time.

What about the companies that have hoarded so much cash? It turns out that the hoarding began years before the Obama administration even took office. Researchers with the National Bureau of Economic Research have documented a major rise in cash holdings as a share of assets beginning in the 1990s.

Yes, cash accumulation has been going on since the 1990s, mostly because of terrible tax policy that incentivizes companies to keep cash from foreign profits parked abroad.  However the cash hoarding in the wake of ObamaCare and the many other policy depredations of the Obama administration has been pronounced and well-documented as stemming from the uncertainty at best and hostility at worst coming out of the White House.   Furthermore, much of the cash hoarding has come in the form of balance sheet shrinking that wouldn't show up in Goolsbee's cited data.  I doubt Goolsbee talks much to CEOs and businessmen and women, which is probably why he doesn't know what is actually happening on the ground. Hell, even Democrat businessmen have been decrying Obama's terrible economic policy.

The rest of the article is not worth fisking because there is nothing substantial or even sensible offered.  Goolsbee says that everybody hoards cash, George Bush was bad and something about Cass Sunstein.  That's it.  This guy is putatively a rising star in the academic economics world.  I've never understood why and this effort makes my see it even less.

The truth is had John Roberts stuck with his original, law-based, opinion and ObamaCare was struck down, the stock market would have rocketed up.  As it is, the events of June 28th have changed nothing and markets yawned because there was no reason to get excited, so they put their gaze back on Europe for a few months before they focus on the main event for the future of the US economy, the November election.

Socialist Drivel Gussied Up As Real Economics in the NY Times

Greg Mankiw gives note to a NY Times op-ed by Cornell economist Robert Frank. Like another economist who writes for the NYT, Frank must have did something at some point in his career to merit a certain level of respect, but he is now well known as an inveterate socialist that is impervious to anything but his own collectivist worldview (I noted before that he doesn't like this whole freedom of movement thing we have going on here in the US). Anyhow, Frank offers an argument for national healthcare that is so simplistic and biased and lacking in economic logic that it lives up to Krugmanesque standards of economic opinion and reflects poorly on Mankiw for including it. Forgive the length of this post but such is the requirement of the task, Frank cannot be merely rebutted rather than fisked. So here we go...

"In his State of the Union address, President Bush proposed tax cuts to make health insurance more affordable for the uninsured. The next day, Stephen Colbert had this to say on his show on Comedy Central: “It’s so simple. Most people who can’t afford health insurance also are too poor to owe taxes. But if you give them a deduction from the taxes they don’t owe, they can use the money they’re not getting back from what they haven’t given to buy the health care they can’t afford.”

"Just so. As health economists have long known, market incentives induce private insurers to spend vast sums to avoid people who may actually require health care. "

Here Frank makes the typical error of assuming that the current state of affairs is a properly functioning market rather than a market that has been distorted by government policy so much that it reflects perverse incentives. Yes indeed, if you are horribly sick today, insurance companies will avoid you because all you are is guaranteed costs. Nobody, nowhere argues that a free market healthcare solution can help such people. Even the most ardent free marketers claim that a government role is necessary to address the chronically sick. But that is only for people who are sick today. If you are not sick today but might be one day, insurance companies have no incentive to avoid you if they are allowed to price your risk properly. If you are an overweight, chain-smoking couch potato, insurance companies have no incentive to avoid you so long as they can price you differently from an active, health-conscious person. But they are not allowed to do so today due to policies like "guaranteed issue" which Frank conveniently makes no mention of. Fortunately the population of people who are terribly sick today is small and the government can handle the costs. The problem starts when we tell the vast majority of the country, the people who are currently not sick, that their future healthcare obligations are not their responsibility. What incentive is there to quit smoking or eat right or exercise if you know you can fob off all the costs on your fellow taxpayers? Frank in fact likes the idea of fobbing off your costs on fellow citizens....

"This problem is mitigated (though not eliminated) by employer-provided group policies. "

The whole point of employee-based healthcare is that it 1) benefits from a tax break, and 2) allows insurance companies to spread the costs of the unhealthy over a large base of people, most of whom are healthy. So people who need alot of healthcare are supported by people who need very little. The impetus for the subsidy comes only from the fact that these people work at the same company. So what we have is something akin to "from everyone at IBM according to their health, to each at IBM according to their sickness." The reason that this only mitigates sick people from getting insurance is that the risk pools are limited to the composition of large company labor forces. Since the chronically sick are not fully represented in the large company labor force, Frank is unsatisfied with the extent of the cost sharing.

Because Mr. Bush’s proposal would steer people toward individual policies, it would actually strengthen the incentive to shun unhealthy people.

As we have stated, people who are unhealthy today are a special category. But for the vast majority who are healthy, individual policies that were free from the requirement to insure high risk people the same as low risk people would not result in shunning anybody. Insurance companies want to insure people, but they don't want to take your likely liabilities for the fun of it. This is basic.

"Such people can now keep their insurance by not changing jobs. But no private company would want them as individual policyholders at a price anyone could afford. "

So, if you are sick or likely to be sick don't even think about expanding your employment horizons, stick with where you are. We wouldn't want you to have the freedom to move to another job. Who is to say what an insurance company will want? What if you left IBM and could shed all the specific healthcare provisions that IBM has so caringly negotiated for you and contract for just those healtcare provisions you want. Let's say IBM's coverage was hyper generous to single mothers because it was a corporate goal to attract single mothers to IBM, but you are a middle-aged childless man. Why would we assume that you are unattractive to an insurance company. Why on earth couldn't the insurance company offer you coverage at least as good as what it offered single-mom heavy IBM? It is pure assumption on Frank's part. He is onlt speculating based on a biased view of healthcare insurance companies.

“That Mr. Bush’s proposal will not shrink the ranks of the uninsured is not its most serious problem."

The “uninsured” is the catch-all hobgoblin that has come to be code for the poor and/or sick. The unthinking assumption is that these people are uninsured, they must be in circumstances beyond their control and they need help. The facts are that most uninsured today are uninsured because they are between jobs or they just want to use the money for other things. Some 30% of the uninsured make over $50,000. This is not rich but it is not poor either and insurance in most states is affordable at that level, but it is not deemed valuable.

“Far more troubling is its embrace of a system under which we spend more than twice as much on health care, on average, as the 21 countries in which life expectancy exceeds ours. American costs are so high in part because the reliance on private insurance multiplies administrative expenses, currently about 31 percent of total outlays.
Most health economists agree that government-financed reimbursement is the only practical way to control these expenses, many of them stemming from insurers’ efforts to identify and avoid unhealthy people. Canada’s single-payer health system, which covers everyone, spends less than 17 percent on administrative expenses. “

Here again Frank pays no mind to source of the administrative excesses – overregulation at the state level and the distorted system whereby insurance is not insurance but prepaid spending. Insurance companies have to comply with different regulations and mandates for every state in which they do business. Getting rid of the regulatory patchwork would cut a lot of administration cost but that doesn’t require government-financed reimbursement, it could be achieved just the same by creating a federal market for health insurance, which is why most health economists do not agree the government reimbursement is the only practical solution. Only those economists that Frank wishes to acknowledge feel that way.

"Annual health spending in the United States currently exceeds $2 trillion. A single-payer system that did nothing more than reduce administrative expenses to the levels of other countries would save roughly $300 billion annually. Some critics worry that expensive but ineffective medical interventions may proliferate if health care becomes a federal responsibility. But Victor Fuchs, a respected health economist at Stanford University, and Dr. Ezekiel Emanuel, chairman of the department of clinical bioethics at the National Institutes of Health, have outlined a single-payer plan that would limit such interventions far more effectively than the current system. (A copy of their plan is on the links page of my Web site, www.robert-h-frank.com.)
If the single-payer system embraced by virtually all other developed countries is clearly the best solution, why doesn’t the United States adopt it? Some analysts concede its merits, but characterize it as either unaffordable or politically unrealistic. But why should a policy that promises better results for less money be considered a nonstarter?"

Here Frank just makes bald assertions and assumes that the single-payer system is better based on efficiency over a multi-third party payer system. Either way, you have a third-party payer, which has been proven to encourage overconsumption of healthcare and create a rigid system of micromanagement that leads to dissatisfaction among patients. Why you would expect better outcomes from a government bureaucrat reviewing claims and cutting checks than from an insurance company bureaucrat doing likewise goes unexplained. In addition, Frank conveniently ignores that a government system would just be a centralized version of the bureaucracy that the insurance companies now represent and assumes that government can do better, although there is no reason to expect that that government can do anything more efficiently than the private sector. History and experience tell us otherwise. Furthermore, other countries spend less because they brutally ration healthcare consumption through wait times while we encourage over-consumption through a third party payer system – our system is guaranteed to induce more spending while, for example, Canada’s is guaranteed to rein it in. The comparison is apples to oranges and neither level of consumption should be assumed to be the appropriate level, but Frank assumes that the level of care that prevails in countries where it is rationed by wait times is the benchmark level.

"There are two obstacles, which could both be overcome by intelligent political leadership. One is that the single-payer system would require additional tax revenue. In the current climate, that’s a tough political hurdle, to be sure. Yet how complicated would it be to explain to voters that because the single-payer plan would reduce costs substantially, every additional tax dollar would be offset by an even larger reduction in private insurance spending? Given that such a system is so much cheaper over all, calling it unaffordable makes no sense. "

Again, just an assumption that the government will bring efficiency to the system when there is no basis or precedent of government’s efficiency.

"The second obstacle is opposition from private insurers, who would be understandably reluctant to abandon multibillion-dollar annual profit streams. Those who stand to lose from policy changes always battle harder than those who stand to gain — an asymmetry that is exaggerated when losses would be concentrated and gains diffuse. So, yes, the insurance industry would bitterly resist. "

Yes insurance companies would be upset if the government usurped their role full stop, but insurance companies are dying to actually be insurance companies and not payment agencies. If they were free to underwrite health risks and not administer payments they would glad switch to a new business model and give up the bad business of micromanaging your healthcare.

"But intelligent leadership could overcome that resistance. Whenever a pie gets bigger, everyone can get a larger slice than before. Because moving to a single-payer system would make the economic pie bigger, it should be possible for everyone, including the insurance industry, to come out ahead."

This totally ignores a little thing called supply and demand. Why is the size of “the pie”, a government supervised pie, a starting point for available healthcare. Demand is bottom up and cares not what Washington defines as “the pie”.

"The first step is to acknowledge that insurance companies are not evil, that they invested in good faith under tax laws that favored employer-provided private health insurance. To put them out of business with an overnight switch would be unjust. Even so, they are not entitled to a permanent license to operate a system that has become economically unsustainable. The move to a single-payer plan would save far more than enough to compensate insurance companies for lost profits. Compensation for losses could start at 100 percent, then be gradually phased out as companies shifted investments elsewhere. "

The notion of “lost profits” is highly elastic and all this scheme does is create another opportunity to game the system and encourage economic rent-seeking. We should not fret over insurance company profits, but break down the system of rules that are the foundation of the unsustainability. Let’s focus on a sustainable system and insurance companies will adjust and find new ways to insure people. What is sustainable? Medicare? Social Security? These are the models for what Frank is proposing. Are these what are supposed to believe are sustainable?

"Selling this argument in an era of 15-second sound bites would be challenging, but hardly impossible. Indeed, forceful advocacy of the single-payer approach offers a golden opportunity for any serious presidential candidate. Voters are fed up with rising insurance costs and dwindling coverage. "

Voters are also fed up with lack of options and rules that impede them getting what they want.

"On the merits, single-payer coverage is an unassailable solution to both problems. Its rationale is simple enough to articulate clearly during a long campaign. And if the proposal were devised so that everyone stood to win, corporate interests would have little reason to attack it."

Yes, if you believe that government solutions are always better, then the idea is unassailable. If you believe that government has a poor track record, often results in waste, inefficiency, and ultimately worsens the problem due to unintended consequences, then no, the idea is incredibly assailable.

"Critics of the single-payer plan have long railed against the specter of socialized medicine, suggesting that it means being treated by government functionaries. Yet people who have experienced single-payer coverage firsthand seem unconcerned. "

Does "the unconcerned" include Canadians who come to the US for cutting edge medical treatment or Canadians who sue their government to escape the government run system?

"When one of my sons needed surgery for a broken arm during a sabbatical in Paris, for example, the medical system we encountered was just as professional as the American one and far less bureaucratic. And in France, which spends half as much on health care as the United States and has more doctors and hospital beds per capita, everyone is covered."

Fine. I won’t worry about breaking my arm in France, but would Frank send his wife to France for a triple bypass? Can they do a vitrectomy in Montreal? Would Frank be comfortable if his daughter gave birth six weeks prematurely in Britain? Maybe, maybe not, but he sure wants to make those decisions for you and me. He wants to give you the system of healthcare that he wants, not let the extent and nature of demand for medical care bubble up from the desires of you and me and let us choose among a multitude of options as we see fit.

"We live in challenging times. Does a candidate who couldn’t persuade voters to embrace the single-payer approach deserve to be president?"

What a weird formulation. If you are somehow opposed to collectivism in a major sector of the economy, you don’t deserve to be President. Wow.

For an alternative vision of healthcare, see here, here and here.

Why the Stampede to Buy Guns?

Victor Davis Hanson has written a superb article, ostensibly about skyrocketing firearm sales but that hardly mentions firearms.  Instead he brilliantly catalogs the subtle sense of foreboding and incipient dread that liberty-loving Americans feel right now and that is driving them to purchase firearms at an astonishing rate. 

I've had enough conversations with people that range from hating guns to just being slightly skeptical of them to have heard the reductio to which most debates arrive, which is, "it can't happen here".  While most rabid anti-2Aers will insist that the second amendment was drafted solely for citizen militias to wield muskets against the forces of monarchical Britain and nothing more, these are mostly a small number of hard-core lefties.  Most people with a good sense of the political philosophy of the Founding era, the motivations of the Founding fathers, and the purpose and design of the US Constitution understand that the second amendment is the generalized free citizen's bulwark against a generalized governmental tyranny.  So most people who want to maintain their skeptical view of firearms but yet have to be intellectually honest about the 2A, arrive at the "it can't happen here" argument, which is the short version, I guess, of saying that America's democratic institutions are so strong that the risk of tyranny is remote.  They may well be right, but it's worth seeing history clearly for what it is and my stock rejoinder is that "seventy years ago, in the very heart of Western Civilization, armed agents of the government went door to door to round up people to send them to their deaths, by the millions."  That's the nitty-gritty of the Holocaust.  It's not just 'Oh, Hitler was bad and Jews died.'  The reality is 1) disarmed population, 2) armed government agents, 3) door to door searches 4) death camps.  In the land of Goethe, Kant, Hegel and Schelling.  Hell, it's not as if we haven't rounded up citizens en masse here in the US before.  So my basic point is, it can happen anywhere.

Now, stop and think of what Americans are seeing and hearing every day.  First, their government just concluded a massive and contentious, but ultimately successful, effort to demand that they buy a product which many do not want and/or cannot afford.  This is on top of thousands of smaller petty tyrannies, such what lightbulbs one can use, how much water a toilet or washing machine may use, or what processing must be done to the milk you buy.  Then Americans look to some of the policy ideas that get put forth here and there, such as forcing the installation of tracking devices in all automobiles ostensibly so that government can tax you by the mile (good heavens, no, never to track your movements) or taking your retirement nest egg in return for a government provided annuity.  These are serious proposals put forth by credentialed people with access to those in power.  Furthermore, just look at the musings of similarly situated credentialed people.  These are just some the notions that appear ingrained in the credentialed professoriate:
- Global Warming skeptics are akin to war criminals and should be treated as such
- the entire economy should be under government direction
- the US Constitution should be abandoned
These are not idle musings.

Finally, we see our elected representatives passing laws that no one has read let alone analyzed carefully.  Sometimes they do this in contravention of the rules and sometimes even with a sickening pride in bypassing the rules.  We have other officials suggesting the suspension of elections and there are countless examples were those in power don't seem to want or tolerate the rules applying to them, so we are increasingly living under a set of rules that the elites have exempted themselves from.  And I haven't even mentioned what to many is an obviously bloody-minded statist President who no one would ever accuse of valuing modesty in the exercise of power.

This is what Americans see (and not just the denizens of the Tea Partying Jesusland fever swamps).  This is what is swirling around us.  In the aggregate, it is hardly subtle.  Thus, more and more Americans are not believing the "it can't happen here" line, if they ever believed it.  Americans see dark clouds.  Thus the stampede.

ADDITIONAL:  Yale Law School prof Stephen L. Carter: “Support for stricter U.S. gun laws hasn’t jumped as fast or as far in recent weeks as many liberals had hoped and expected. If you’re wondering why, maybe the reason is the shakiness of the public’s trust in government itself. . . . We are now approaching four years since the U.S. Senate enacted a budget. The last was in April 2009. And bear in mind that federal law requires an annual budget. Imagine the ire of the senators toward a private firm that treated legal requirements so casually. Amid such ineptitude, ‘Trust us, we’ll protect you,’ isn’t a very persuasive case to make to the tens of millions of Americans who have guns — often very powerful ones — in their homes. And directing fury at gun owners for their lack of trust isn’t likely to increase their faith in government.”

Oklahoma Thrill Kill

Barack Obama would not have had a son that looked like this kid, so nothing to see here...

...although, if you are interested, the details here are truly appalling compared to the Travesty Martin spectacle.

Also, I see that some Aussies are lamenting the role of guns here.  This is not a gun issue, this is an issue of a decrepit and amoral youth underclass.

UPDATE:  Yup.

UPPDATE:  The WSJ weighs in with exactly the right analysis - the story here is what is NOT happening.

There was no saturation cable TV coverage, no press conference featuring Al Sharpton or Jesse Jackson, and no statement from the Oval Office. The death of Christopher Lane, while as troubling as that of Trayvon Martin, will not become a national touchstone of racial and cultural debate or reflection.

Plus, there is the gun.  Here is the hard to swallow truth - it is easy to blame the gun, but it is difficult, painfully so, to confront a generation completely drained of any moral bearing.

...it would almost be a relief if we could blame such a murder on guns. Then we wouldn't have to focus on a culture that produces teenagers for whom the prospect of shooting an innocent man in the back on a Friday evening apparently raised not a scintilla of conscience. That is the deeper tragedy, and the real scandal, of too much of American life.

Difficult truths are hard to admit and easy answers are always more appealing.

Resurrecting the Democrat Calculus: How Much Pain Will the Party Take for Obama?

As readers know, I predicted a Lightworker re-election loss and was proven wrong.  (I along with Michael Barone and many other respected political prognosticators.)  In pondering this though, I think I was correct directionally but wrong electorally.  I claimed Obama was essentially a spent force, his initial intoxicating effect now irreparably diluted and anemic throughout the nation.

And I think this is true in terms of leadership, it just wasn't true electorally.  The Lightworker touched enough low information voters and Mitt Romney didn't inspire much enthusiasm, thus four more years of Obama.  But, it's four more years of Obama in office, not necessarily four more years of traveling Obama's path for America.  Yes, we will continue to give the Islamist threat short shrift and continue to be unprepared (or just lie about it);  yes, we will spend more and more taxpayers dollars on utopian bullshit, and yes we will have a feckless foreign policy that sacrifices our ideals and friends at the expense of courting rogues and liberal totems.  BUT, we will not feel the inexorable pull to the transformed America of Obama's inner vision (I say inner because nothing about where he wants to take us is ever revealed to the public).  I claimed Obama was done and wouldn't be President.  He is President but that doesn't mean he isn't done.  So, I'm salvaging a bit of analytical victory in this whole affair.

Indeed many in the press are (perhaps prematurely) entertaining the possibility of Obama 2.0 as one very long lame duck period, and the recent tsunami of scandals (real scandals that the press will be hardpressed to ignore unlike the myriad petty scandals which have been coming fast and furious (see what I did there?) since the day Dear Leader took office) is just the latest.  The press was coming around to this view after Obama's failure on the sequester and gun control.  But the key analytical framework for evaluating Obama's prospects for a successful second term is how the party leadership reacts.  I outlined the calculus that the Dem poobahs must be contemplating during Obama 1.0.

So in looking at the entire string of events from Virginia, New Jersey, and Scott Brown to what is shaping up to be a very bad Nov 2nd, what will Dem party poobahs conclude? Will they conclude that Obama is damaging to the party? Maybe, maybe not, but it is hard to draw any other conclusion. And what if they conclude he is? How will this affect the spending of resources and ability to attract competent individuals to the administration? As I state here, it will be difficult, making a turnaround very unlikely. This will be gut-wrenching for Dems, they are likely facing an intra-party debate on the fundamental question of whether to go all in for Obama and resurrect his presidency or pull the plug entirely on Hopeandchange and, as they so famously put it, "move on."

The calculus is still the same, and in fact, much more pressing as the emergent wave of scandals will resurrect the conversation in the smoke-filled rooms again and party poobahs will be assessing how much Obama is ruining the Democrat brand morphing it from champion of the downtrodden to thuggish would-be tyrants.  The answer will be critical to whether Obama 2.0 becomes the Guinness Book of Records Longest Lame Duck Presidency or something closer to what fanboy Obamabot nation had hoped for.

UPDATE:  Way back in 2009 I posited the theory that the stock market would rise on Obama's stumbles and sustain an upward trajectory as Obama's political power waned (see here and here).  So I present without comment this chart of the S&P 500 Index.  OK, here is the comment: note the pronounced slump right around early November and the sharp recovery that has gained momentum as Obama's 2.0 troubles have mounted.

W&M President: I Stand For All That Is Right and Good, So They Fired Me

My alma mater has canned its President, Gene Nichol. Rather than serve out his term he has wisely resigned. In his farewell letter, he sets himself up as a martyr to the forces of illiberalism and a heroic bribe refuser. He faults certain elements of the W&M community for not having as expansive an interpretation of the doctrine of separation of church and state as he does, making no mention that he ran roughshod over 300+ years of history to remake W&M in his own image. He also faults same for viewing a sex worker art troupe's production as not necessary for the preservation of students' First Amendment rights and not worthy of a serious academic setting. Finally, he posits that he made W&M better because he invited more poor students on campus and hired more persons of color to the faculty. It may well be true that W&M is better off for such things, but it doesn't necessarily follow. Are these poor students objectively of similar caliber and aptitude as the broader W&M student body regardless of their economic status; and, do these new diverse faculty members meet the same standard of qualification as previous, presumably non-diverse faculty hires had to meet? Indeed they could. But no evidence is offered because Nichol worships so fervently at the alter of diversity that the notion of objective standards and colorblind and classblind criteria are not worthy of consideration. On offer is only the presumption that these are intrinsic virtues. Intrinsically, faculty of color are good. Intrinsically poor students are good. This is the prevailing orthodoxy across American academia, and W&M must fall in line thinks Nichol. No matter that W&M has never had a strong history of wanting to emulate the prevailing academic orthodoxies.

Nichol showed little concern for the broader W&M community who have a stake in W&M being seen as an institution upholding standards of excellence that are not solely defined by socio-economic class, skin color or ethnic background. The world outside of insular academic communities has not plunged headlong into subjectivism and abandoned long standing notions of merit. The world outside of academia does not require stomping out tradition in order to demonstrate tolerance. The world outside of academic communities still believes that we ought not to confer respect to the superficial without an assessment of the substance as well. This world wants W&M to be excellent by its standards as well as those that emanate from within the academy. This large component of the W&M community wanted a seat at the table, but Gene Nichol would have none of it. He claimed to act in the name of tolerance, he just couldn't tolerate the W&M that he encountered on Day 1 of his tenure, a W&M that centuries of students, faculty, staff, alumni and administration had fashioned. This episode was about who W&M belongs to. Does it belong to the W&M community or does it belong to American academia in the person of Gene Nichol? That, more than Nichol's putative championing of enlightened principle, is why he lost his job. The broader W&M community reclaimed W&M from the orthodoxies of modern higher education. Perhaps the next President of the "College of Knowlege" will give all of those who love W&M a seat at the table in determining what definition of excellence W&M will strive to meet. Here's hoping and Go Tribe!

UPDATE: Of course, the mind of a twenty year old can't grasp any more nuance than right wing versus left wing. UPPDATE: Here is another view that is divergent from mine. I don't know if this guy is another young grasshopper of 20 short years, but I'd say the probability is high given the ability to procure a "Dirty Fucking Hippie" sticker from the site. UPPPDATE: In most press accounts you here that Nichol was wildly popular among students and that his firing has roiled students. Somebody didn't tell that to the students who write the campus newspaper though. UPPPPDATE: More.

The text of President Nichol's email to faculty and staff:
Dear Members of the William & Mary Community:
I was informed by the Rector on Sunday, after our Charter Day celebrations, that my contract will not be renewed in July. Appropriately, serving the College in the wake of such a decision is beyond my imagining. Accordingly, I have advised the Rector, and announce today, effective immediately, my resignation as president of the College of William & Mary. I return to the faculty of the school of law to resume teaching and writing.
I have made four decisions, or sets of decisions, during my tenure that have stirred ample controversy.
First, as is widely known, I altered the way a Christian cross was displayed in a public facility, on a public university campus, in a chapel used regularly for secular College events -- both voluntary and mandatory -- in order to help Jewish, Muslim, Hindu, and other religious minorities feel more meaningfully included as members of our broad community. The decision was likely required by any effective notion of separation of church and state. And it was certainly motivated by the desire to extend the College's welcome more generously to all. We are charged, as state actors, to respect and accommodate all religions, and to endorse none. The decision did no more.
Second, I have refused, now on two occasions, to ban from the campus a program funded by our student-fee-based, and student-governed, speaker series. To stop the production because I found it offensive, or unappealing, would have violated both the First Amendment and the traditions of openness and inquiry that sustain great universities. It would have been a knowing, intentional denial of the constitutional rights of our students. It is perhaps worth recalling that my very first act as president of the College was to swear on oath not to do so.
Third, in my early months here, recognizing that we likely had fewer poor, or Pell eligible, students than any public university in America, and that our record was getting worse, I introduced an aggressive Gateway scholarship program for Virginians demonstrating the strongest financial need. Under its terms, resident students from families earning $40,000 a year or less have 100% of their need met, without loans. Gateway has increased our Pell eligible students by 20% in the past two years.
Fourth, from the outset of my presidency, I have made it clear that if the College is to reach its aspirations of leadership, it is essential that it become a more diverse, less homogeneous institution. In the past two and half years we have proceeded, with surprising success, to assure that is so. Our last two entering classes have been, by good measure, the most diverse in the College's history. We have, in the past two and a half years, more than doubled our number of faculty members of color. And we have more effectively integrated the administrative leadership of William & Mary. It is no longer the case, as it was when I arrived, that we could host a leadership retreat inviting the 35 senior administrators of the College and see, around the table, no persons of color.
As the result of these decisions, the last sixteen months have been challenging ones for me and my family. A committed, relentless, frequently untruthful and vicious campaign -- on the internet and in the press -- has been waged against me, my wife and my daughters. It has been joined, occasionally, by members of the Virginia House of Delegates -- including last week's steps by the Privileges and Elections Committee to effectively threaten Board appointees if I were not fired over decisions concerning the Wren Cross and the Sex Workers' Art Show. That campaign has now been rendered successful. And those same voices will no doubt claim victory today.
It is fair to say that, over the course of the past year, I have, more than once, considered either resigning my post or abandoning the positions I have taken on these matters -- which I believe crucial to the College's future. But as I did so, I thought of other persons as well.
I thought of those students, staff, faculty, and alumni, not of the religious majority, who have told me of the power of even small steps, like the decision over display of the Wren Cross, to recognize that they, too, are full members of this inspiring community.
I have thought of those students, faculty, and staff who, in the past three years, have joined us with explicit hopes and assurances that the College could become more effectively opened to those of different races, backgrounds, and economic circumstances -- and I have thought of my own unwillingness to voluntarily abandon their efforts, and their prospects, in mid-stream.
I have thought of faculty and staff members here who have, for decades, believed that the College has, unlike many of its competitors, failed to place the challenge of becoming an effectively diverse institution center stage -- and who, as a result, have been strongly encouraged by the progress of the last two years.
I have thought of the students who define and personify the College's belief in community, in service, in openness, in idealism -- those who make William & Mary a unique repository of the American promise. And I have believed it unworthy, regardless of burden, to break our bonds of partnership.
And I have thought, perhaps most acutely, of my wife and three remarkable daughters. I've believed it vital to understand, with them, that though defeat may at times come, it is crucial not to surrender to the loud and the vitriolic and the angry -- just because they are loud and vitriolic and angry. Recalling the old Methodist hymn that commands us "not to be afraid to defend the weak because of the anger of the strong," nor "afraid to defend the poor because of the anger of the rich." So I have sought not to yield. The Board's decision, of course, changes that.
To my faculty colleagues, who have here created a distinctive culture of engaged, student-centered teaching and research, I will remember your strong and steadfast support until the end of my days.
To those staff members and alumni of this accomplished and heartening community, who have struggled to make the William & Mary of the future worthy of its distinctive past, I regret that I will no longer be part of that uplifting cause. But I have little doubt where the course of history lies.
And, finally, to the life-changing and soul-inspiring students of the College, the largest surprise of my professional life, those who have created in me a surpassing faith not only in an institution, but in a generation, I have not words to touch my affections. My belief in your promise has been the central and defining focus of my presidency. The too-quick ending of our work together is among the most profound and wrenching disappointments in my life. Your support, particularly of the past few weeks and days, will remain the strongest balm I've known. I am confident of the triumphs and contributions the future holds for women and men of such power and commitment.
I add only that, on Sunday, the Board of Visitors offered both my wife and me substantial economic incentives if we would agree "not to characterize [the non-renewal decision] as based on ideological grounds" or make any other statement about my departure without their approval. Some members may have intended this as a gesture of generosity to ease my transition. But the stipulation of censorship made it seem like something else entirely. We, of course, rejected the offer. It would have required that I make statements I believe to be untrue and that I believe most would find non-credible. I've said before that the values of the College are not for sale. Neither are ours.
Mine, to be sure, has not been a perfect presidency. I have sometimes moved too swiftly, and perhaps paid insufficient attention to the processes and practices of a strong and complex university. A wiser leader would likely have done otherwise. But I have believed, and attempted to explain, from even before my arrival on the campus, that an emboldened future for the College of William & Mary requires wider horizons, more fully opened doors, a broader membership, and a more engaging clash of perspectives than the sometimes narrowed gauges of the past have allowed. I step down today believing it still.
I have also hoped that this noble College might one day claim not only Thomas Jefferson's pedigree, but his political philosophy as well. It was Jefferson who argued for a "wall of separation between church and state" -- putting all religious sects "on an equal footing." He expressly rejected the claim that speech should be suppressed because "it might influence others to do evil," insisting instead that "we have nothing to fear from the demoralizing reasonings of some if others are left free to demonstrate their errors." And he averred powerfully that "worth and genius" should "be sought from every condition" of society.
The College of William & Mary is a singular place of invention, rigor, commitment, character, and heart. I have been proud that even in a short term we have engaged a marvelous new Chancellor, successfully concluded a hugely-promising capital campaign, secured surprising support for a cutting-edge school of education and other essential physical facilities, seen the most vibrant applicant pools in our history, fostered path-breaking achievements in undergraduate research, more potently internationalized our programs and opportunities, led the nation in an explosion of civic engagement, invigorated the fruitful marriage of athletics and academics, lifted the salaries of our lowest-paid employees, and even hosted a queen. None of this compares, though, to the magic and the inspiration of the people -- young and older -- who Glenn and I have come to know here. You will remain always and forever at the center of our hearts.
Go Tribe. And hark upon the gale.
Gene Nichol

"Austerity" Was Not on the Ballot In Europe

Of course, nearly every media outfit is covering the European elections as a defeat for "austerity."  Nauseating.  Let's strike a blow for truth by using words based on their true meaning.  So, I must revive this post:

"Austerity" Is Nothing of the Sort

The most enlightening essay you will ever read if you want to understand politics and become a more educated and sophisticated voter/citizen is George Orwell's "Politics and the English Language." It remains the gold standard in demonstrating how words shape (read: distort) the substantive debate.

Today's sovereign debt crisis in Europe is a great case study. Europeans in general, and the ideological allies of the social democratic welfare state in particular, complain about the "austerity" being either contemplated or imposed on certain European nations. Greece, of course, is the poster child here. Yet, no reasonable, economically literate person would characterize the move from how the Greeks have managed their economy to how they should manage their economy - expressed principally by the German government - as "austerity." Any reasonable analysis would call it moving from "profligacy" to "normalcy". Spending what you can afford is definitionally "normal." Spending more than you can reasonably afford is definitionally "profligate." Spending modestly, less than you can afford, is "austere." Germany may be advocating that Greece be "more austere" in relative terms, but it is by no means proposing "austerity." Greece has an enormously unproductive and inconsequential economy, and yet they have pretended for years to have the living standards of much more prosperous and productive neighbors. They did this by creating needless work for tens of thousands of people and paying them compensation well beyond their competitive worth, and borrowed ungodly sums to pay for it all. Greek civil servants earn 14 months of salary for 12 months work and there are about 30% more of them on the government payroll than needed. Ceasing this fantasy is not "austerity" as a true description of their state of affairs. What is being asked of Greece is a return to normalcy, and only austere relative to its former profligacy.

Yet the likes of the Greeks, the Portugese, the Italians, the Spanish, and all their ideological allies are crying a river over what "austerity" will do to their economies when what they mean is what having to abandon profligacy will do to their economies. They may be right in terms of what the shift will do - I suspect they are wrong, see here - but they are being dishonest over the terms of the debate. Do you really think they'd win their terms by moaning over what "abandoning profligacy" will do to them? They have to shield the reality of the debate by manipulating language - the difference between "more austere" with no reference to starting point and "austerity" as an absolute state of being simply must get lost in the shuffle to serve their political goals.

The same is going on here in America. We hear the same arguments about budget cuts. Over-stretched government entities talk about cutting "necessary" services, when close to 50% of what government spends its money on is completely superfluous. This is what must happen to win in politics, the superfluous must become the necessary, normalcy must be austerity.

So they next time you hear that austerity is killing Europe, understand it for the socialist nonsense dressed up in Keynesian jargon that it is.

:Austerity" was not on the ballot.  What was on the ballot across Europe this past weekend was Continued Severe Profligacy vs. Slightly Reduced Profligacy.  Continued Severe Profligacy won.  Thus the markets will no have to rebuke the voters and attempt to pressure the newly elected to go back on their campaign promises. Otherwise, the voters will have voted for bankruptcy, as bankruptcy always succeeds profligacy that is unchecked.  Monsieur Hollande will not prove much of a socialist if he is to prevent a total collapse of France's economy.

Did Frank Bruni Write the NYT's Daftest (Most Daft?) Gun Column Yet?

I think so.  See for yourself.  There is so much stupidity combined with elitist New York presumption to unpack here it's makes my brain hurt.

First off, the column a classic of the genre where elitist libs go shooting for the fist time so that they can then feel qualified to propound to the rest of us their wisdom of all things firearms.  The device is typically infuriating to the knowledgable until such time as it inevitably results in comedy.  Bruni's piece is chock-a-block with such inadvertent comedy.  There's this:

...and it would be maybe 20 feet away when one of us took our shot, which wasn’t a single bullet but rather — Advantage No. 53 — a scattering of pellets.

Does Bruni have even a basic understanding of real world physics?  No hunter or shooter in the history of hunting and shooting - not even Chris Kyle - could hit a bird in flight with a "single bullet" except through sheer blind luck.  It's impossible, it's a waste of time to even think about it let alone endeavor to do it.  Of course, this is why human beings invented something called a "shotgun," which was specially designed to give humans a chance to hit and harvest birds in flight.  Further comedy emanates from the hoary old lament that hunting isn't fair.   "Advantage No. 53" is part of Bruni's column-long device making this lament.  (I am struggling to resist admonishing Bruni the way I admonish my 7 year old, "Who said life is fair?")  Yes, in the shotgun we have an advantage over our winged prey (unless you suck at shooting that is).  The anaconda has advantages over the field mouse.  The toad's forked, lightning fast, sticky tongue is an advantage over the fly.  There are innumerable unfair fights to which, in aggregate, we have given the name "the food chain" and humans are at the top for a reason.  More basic science that Bruni seems to be either unaware of or uncomfortable with.

More comedy.   Bruni is bewildered over why the safety button on his gun is so small and doesn't travel a greater distance between its on and off states.  Well Frank, for the same reason that the brake pedal in your car is smaller than your foot and you need only touch it to slow down significantly - safety devices on the modern machines in our world have been honed to be exactly where and what they need to be, no more no less, and proper experience and training lead to a second nature understanding of where safety buttons are and how to actuate them.

Next up, after Bruni gets through telling us how unpopular, or less popular, hunting actually is, he informs us of the proliferation of hunting preserves (over 300 in Pennsylvania alone!) that charge alot of money for what seems to the author a rather lame hunting experience.  So, hunting is unpopular but these preserves seem to be so numerous...?  Bruni clearly went to the Fox Butterfield School of Economics.  Of course the reason that these preserves have proliferated is because hunting is increasingly popular (and the reason they seem to be expensive, is because they can rip off ignorant city folk who don't know any better).

Bruni's column is a classic of the genre in another sense in that it attempts to advance a gun control agenda through the focus on hunting.  Lefties consistently try to use hunting as the basis for their argument even though the Second Amendment has nothing to do with hunting and the Founding Fathers never said anything like "No hunter shall be debarred the use of arms to bag a chukar."  Politically, as well, civilian disarmers consistently attempt to peel off hunters from the rest of the gun rights community.  So, even as an admitted novice, Bruni declares Colorado's recently passed gun control laws "totally reasonable."  To whom?  By what standard?  Well, to him naturally, and his fancy-pants chef friend.  If that isn't absolute moral authority, I don't know what is.  The good news is that Bruni intends to go hunting again someday.  Who knows, perhaps he'll go wild boar hunting and give us his first-timer impressions of felling a 300 lbs. sow with an AR-15 and declare the Second Amendment a manifestation of a racist, patriarchal fear of the Other.  Can't wait.

Anyway, such are the results when you let your restaurant critic take on social/political issues.  Did the Frank Rich experiment go so well that the poo-bahs at the NYT had to bring yet another lifestyle columnist to the Op-Ed pages?

"Austerity" Is Nothing of the Sort

The most enlightening essay you will ever read if you want to understand politics and become a more educated and sophisticated voter/citizen is George Orwell's "Politics and the English Language." It remains the gold standard in demonstrating how words shape (read: distort) the substantive debate.

Today's sovereign debt crisis in Europe is a great case study. Europeans in general, and the idealogical allies of the social democratic welfare state in particular, complain about the "austerity" being either contemplated or imposed on certain European nations. Greece, of course, is the poster child here. Yet, no reasonable, economically literate person would characterize the move from how the Greeks have managed their economy to how they should manage their economy - expressed principally by the German government - as "austerity." Any reasonable analysis would call it moving from "profligacy" to "normalcy". Spending what you can afford is definitionally "normal." Spending more than you can reasonably afford is definitionally "profligate." Spending modestly, less than you can afford, is "austere." Germany may be advocating that Greece be "more austere" in relative terms, but it is by no means proposing "austerity." Greece has an enormously unproductive and inconsequential economy, and yet they have pretended for years to have the living standards of much more prosperous and productive neighbors. They did this by creating needless work for tens of thousands of people and paying them compensation well beyond their competitive worth, and borrowed ungodly sums to pay for it all. Greek civil servants earn 14 months of salary for 12 months work and there are about 30% more of them on the government payroll than needed. Ceasing this fantasy is not "austerity" as a true description of their state of affairs. What is being asked of Greece is a return to normalcy, and only austere relative to its former profligacy.

Yet the likes of the Greeks, the Portugese, the Italians, the Spanish, and all their idealogical allies are crying a river over what "austerity" will do to their economies when what they mean is what having to abandon profligacy will do to their economies. They may be right in terms of what the shift will do - I suspect they are wrong, see here - but they are being dishonest over the terms of the debate. Do you really think they'd win their terms by moaning over what "abandoning profligacy" will do to them? They have to shield the reality of the debate by manipulating language - the difference between "more austere" with no reference to starting point and "austerity" as an absolute state of being simply must get lost in the shuffle to serve their political goals.

The same is going on here in America. We hear the same arguments about budget cuts. Over-stretched government entities talk about cutting "necessary" services, when close to 50% of what government spends its money on is completely superfluous. This is what must happen to win in politics, the superfluous must become the necessary, normalcy must be austerity.

So they next time you hear that austerity is killing Europe, understand it for the socialist nonsense dressed up in Keynesian jargon that it is.

Bloomberg Embarasses Stumping for Obama...Again

Once again, Bloomberg News entirely misses the point about what markets are saying about Obama's economic policy leadership.  They've done this before (see here and here) because it's all part of the mission to re-elect the Lightworker.  Here's the latest gibberish:

Mitt Romney has suggested that President Barack Obama has done a worse job managing the economy than Jimmy Carter. Investors disagree.

The Standard & Poor’s 500 Index of stock prices has surged 70 percent under Obama, more than three times the 19 percent increase seen during President Carter’s first 3-1/2 years in office starting in 1977. The corporate and government bond markets also have outperformed, with yields falling rather than rising. And the dollar has fared better, dropping about 4 percent against major currencies since Obama took over, compared with an almost 20 percent decline under Carter at a similar time in his tenure.

Let's take these in order.  First the stock market is up by virtue of recovering from a once-in-a-couple-decades financial panic.  Furthermore the stock market has been up almost in direct inverse proportion to Obama's approval ratings tanking and his power eroded by virtue of the November 2010 elections.  Second, the government bond market is doing well because of two factors, Europe is falling apart and there is almost no expectation of healthy growth here in the U.S.  Corporate bonds have done well because companies are hoarding cash due to the uncertainty and hostile environment that prevail today by virtue of Obama's rhetorical and regulatory assaults, thus balance sheets are in great shape.  So, it has been pessimism that has driven bonds higher in the era of Obama.  Finally, the dollar.  Is Bloomberg serious?  The greenback is at an all-time low in terms of purchasing power, a major leg down coming since 2009.

Finally, these are just markets and markets are not the same thing as the economy.  The real economy is in pretty miserable shape, especially for small business and most of the responsibility lies at the feet of the Obamacrats for putting a boot on the throat of business coming out of the panic of 2007/08.  Today's job numbers emphasize the anemia that has gripped the Obama economy.  (In my opinion this dissatisfaction is showing up in the form of campaign fundraising prowess of the blah, unimpressive, uninspiring yadayada Mitt Romney.  Ask yourself, if the guy is such a nothing, why is his campaign raking it in?) Bloomberg is all wet in interpreting markets' political preferences.

UPDATE:  Wow, as I write this, they're doing it again.

"If investors expect President Barack Obama’s health-care reform law to freeze the American economy, they’re not showing it in the stock market."

More gibberish.  The three day rally of which Bloomberg refers to is universally attributed to this.  I don't know anyone in this business who would claim otherwise, except Al Hunt & Co. (but they really aren't in this business, they are MSM scribblers from central casting).

UPPDATE:  Here's a tidbit from today's jobs report:

"About one-third of the jobs gained in June were in temporary services."

Um, did someone say something about the Robert Half Economy?  Um, yes someone did (and did again).  This data about temporary employment in the context of my analysis does not reflect well upon the state of our economy and its economic leadership.

UPPPDATE:  This says it all doesn't it:

More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.

The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration.

The disability ranks have outpaced job growth throughout President Obama's economic recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits.

Or maybe this says it all...jeez!

Is the Market In for a "One Term Rally"?

Savvy political observers in the blogospere like me (and even some actual paid journalists in the MSM) all knew that Obama's Bus Tour would flop and that it seemed decidedly ill-thought out given the recent downgrade of the US's sovereign debt rating. Likewise, the decision to cap it off with the simply disastrous Martha's Vineyard vacation which has the double distinction of showcasing an actual lack of leadership as well as having terrible optics - an example of Obama's tendency to find, in Walter Russell Mead's characterization, the "sour spot". Well, the effects of Obama's terrible August are starting to show up in the polling, and the results are unambiguous. Take a look at this RCP chart. Polls that include recent periods show massive declines in the Lightworker's approval rating. The less severe declines don't capture the entire month of August. I think the polling averages will continue to get bleaker for the Smartest President Ever as the averages reflect mid to late August polling.

Looking at the RCP data, I am struck by two things. First, except for two small periods, Obama's approval trajectory has been nothing but one way, down. It is almost as if this guy's incapacity to lead in a way that pleases voters had become obvious from day one. (Actually, it was to some of us, but you certainly didn't here or read about it.) The second thing that struck me was the two brief instances of inflection that Dear Leader experienced, one around the start of the year and the other after the bin Laden killing. The former was almost entirely a media conjuring. The MSM puffed up lame duck "victories" into some sort of unassailable comeback. I chronicled and debunked that mirage rather thoroughly here, here and here. I also came out fairly clearly on the "bin Laden bounce will fade" side.

So, what is my point? My basic conclusion is this - the mega-trend, or the "big idea", is that Americans have always known deep in their bones that Obama was a gamble and they are now 90% convinced that they have lost that gamble. There is almost nothing that can stop this trend from playing out. Look at the two things that had any effect in reversing the big trend, one was a media-created mirage and the other was a "Black Swan," neither of which stuck. The MSM is increasingly less inclined to devote the energy to conjuring up a pro-Obama illusion (note I said less inclined, as opposed to not inclined), so I wouldn't be counting on a game-changing performance out of the MSM. That leaves a Black Swan development that will have to outdo even the monumental significance of killing bin Laden. That is a long shot, a very long shot.

Finally, why should we all care? I don't know why you should care but I'll tell you why I care. First and foremost, I think this is good for my individual liberty and for the country broadly. Secondarily, I think this is good for the stock market. The economy will muddle through for the remainder of this year and into next, but the further Obama slides and the lower his chances at reelection get, I think we will see an inversely proportional growth in economic optimism. The more it looks like Obama is a goner, the more American business leaders will feel like a giant weight is being lifted, the more entrepreneurs will feel like the sky is clearing. I predict a rough inverse correlation from here on in between Obama's poll numbers and the stock market - call it the "one term rally."

Is Piketty's "Capital" Another "Arming America"?

Well, the weekend brought a crazy turn of events in regards to the leftist IT-girl of the moment, Thomas Piketty.  The Financial Times has done some ciphering and is saying that Piketty's empirical work is suspect (wonkspeak for "facts are wrong").  The story is gathering steam and here is the raw take at this point.

The FT Isn't Just Saying Piketty Made A Mistake — It's Saying He Manipulated Data

aka He made shit up.

WOW.  This could blow up into a world-class intellectual scandal, completely discredit all of Piketty's work, and set leftist economics back decades after they put so much of their reputations on the line in ballyhooing Piketty.  This could be Michael Bellesiles all over again.  

Or it could all be covered up by the media, much in the opposite way that it stirred up controversy over Rogoff and Reinhart last year because their ballyhooed work didn't fit the narrative.  Piketty's work is the Mother of All Narrative-Fitting Things, so nothing to see here...

It is worth noting that after Bellesiles was exposed as an academic fraud and his thesis was debunked, the Supreme Court went on to strengthen, in the Heller and MacDonald rulings, the individual right interpretation of the 2nd Amendment, precisely what Bellesiles's book sought to undermine.  The Arming America controversy brought alot of material and legal argument up to the surface just in time for the SCOTUS to issue those landmark rulings.

If only the incipient Piketty hubbub were to progress in such a fashion, we might get a window of a decade or two safe from the prospect of a massively redistributive taxes, until the tyrants can regroup and/or incubate a new generation of redistributionists.

Tax Lessons...Again

A while back I discussed a small group of countries that seem to want (or don't seem to know any better) to crush their own stock markets. China had been hinting at it. Well, now they've come through and Chinese stocks took a beating today, down 6.8%. How many of these episodes do we have to see before we realize just how destructive and just what a bad idea it is to let the 2003 dividend and capital gains tax cuts expire?

Oh, and here is another story about the twists and contortions that businesses will go through in order to keep their hard earned dollars out of the taxman's hands. Given that Europe is lowering its corporate tax rates below US levels (see here), we'll see alot more of this. Just a few years back, US corporations repatriated billions of overseas profits to take advantage of a one-time low tax rate that was part of the 2003 tax cut legislation. Although the tax rate was low, 5% I believe, it created large tax receipts for the Treasury that would not have happened. Now that the opportunity is past, we see this type of transaction with IBM where the Treasury gets nothing. Simple, low, predictable tax levies bring more revenue than the beast of a tax code that the Great Sausage Factory has created.

Media Head-Scratching: Why Are There So Many Fergusons in America?

Let me start this post off by saying that, despite my criticisms of the folks of Ferguson, MO, I am firmly in sympathy with them over the militarized takeover of their community.  As a conservo-libertarian Randpublican, I am deeply suspicious of the militarization of local police forces and federal agencies that has been gathering apace over several years.  Seeing this tyrannical apparatus in action should give Americans pause.  First, we saw it shut down the city of Boston and surrounding areas in the pursuit of the Tsarnaev goofballs, and now we see it taking over Ferguson (the looting didn't help, but...).

Now on to my point.  This is typical of the media's teeth gnashing over the segregation that places like Ferguson represent and bring so uncomfortably to the fore again.

St. Louis is a region of division: The depopulated, deindustrialized city (mostly African American) is legally divided from the far more prosperous (mostly white) county, with the city ardently seeking a reunion that the county vehemently spurns. North St. Louis city (largely African American) is estranged from south St. Louis city (mostly white) in a city that is now 48% African American. The maze of suburbs that make up north St. Louis county, where Ferguson is, is mostly African American and estranged from the maze of suburbs that make up south and west St. Louis counties, which are mostly white.

'Why Oh Why?', seemingly is the media's lament over this overt racial balkanization.  The answer, of course, is quite simple albeit quite uncomfortable.    Blacks and whites want different things from government (of course this is generalizing, but generalizing fits the reality), and each tend to get what they want.  The result is racial balkanization because you can't have these things exist in the same locales.  Whites repeatedly vote for business-friendly/law and order politicians and blacks repeatedly vote for the regulatory state and redistributionist economics (they do this in concert with a coalition of white liberals).  The heavy hand of government is what blacks have said over and over is what they want.  For good or ill, whites have, by and large, said 'you may have it' and left places like Detroit, Cleveland, Newark, and ... north St. Louis to their own devices.  The predictable results have been the markers of racial division - a dividing line like 8 Mile, the suburban office parks west of Newark, and the difference between Ferguson and, say, Clayton, MO. 

This is the unfriendly truth and, of course, lefties will see this dripping with racism, but it has nothing to do with race, per se, but rather politics.  The politics that have guided places like Detroit, Cleveland, St. Louis, Newark (soon we will add LA, Chicago and Philly to this list) simply do not work, and people, who turn out to be mostly white, don't stick around to see it play out.

I lament this situation, but I don't pretend - like the media does - that the answer is painfully elusive.  It is painfully obvious.

UPDATE:  Kevin Williamson says much the same thing here, but, obviously, it's longer and more nuanced.  For example, there is this nuanced truth...

This is sometimes known as “white flight,” but that is a misnomer: In Detroit, the white middle class got out as quickly as it could — and the black middle class was hot on its heels. Upwardly mobile people and those who expect to be — i.e., those with an investment in the future — care a great deal about schools, economic opportunity, and safety. And they know where the city limits are.

 Indeed, white flight was hardly confined to whites.

Reap. Sow. All That.

Check this out. Companies are laying off workers and buying back shares - exactly what I predicted years ago (2009).

But this take is all wrong:

“Here we have all these companies obsessed, basically with keeping their stock prices up, and saying the best thing that they can do with their money is spend billions of dollars on stock. And my view of that is, any company that says that they have nothing to better do with their money, the CEO should be fired.”

A CEO's ultimate responsibility is delivering acceptable risk-weighted returns to shareholders by way of widget-making. If acceptable returns cannot be achieved through widget-making, a responsible CEO and BoD ought to return excess capital to shareholders for them to do with as they see fit. It is not the responsibility of CEOs to deploy capital at all times and in ever-increasing amounts, but to survey the opportunity set and deploy capital against reasonably attractive opportunities. Sometimes the opportunities aren't there at all, sometimes the opportunities are too risky for a company to undertake, like, for example, when a President sits in office that: is unrelentingly hostile to business; is prone to thuggish behavior towards business; is hyperactively expanding regulations on business; raises the cost of capital to business; makes unreasonable demands of business that he has no authority to make...

When faced with a too risky environment, the CORRECT thing to do is NOTHING and return capital that you don't need. These businesses are acting rationally and correctly. Let's not demonize them for responding correctly to the terrible environment that has been engineered by our policymakers and leaders. You want to crap all over risk-takers, then don't bitch when they choose to not take risks.

Fisking Sisk

While I am crafting a thoughtful, respectful response to Bishop Sisk it is worth pointing out some of the glaring flaws or curious assumptions in this message as starting points for those who wish to reflect upon it. The best methodology I can think of to achieve this right now is what it known in the blogosphere as "fisking."

On Friday, October 21, I visited Zuccotti Park, the site - at least until last night - of the Occupy Wall Street protest. Whatever happens next in Lower Manhattan (and as I write, on the morning of November 15, things are moving fast, with the outcome unclear), there can be no doubt that this protest has struck a chord, and given birth to a movement that appears, in spite of everything, to be gaining momentum.

Is it truly gaining momentum? How is this measured? There are many measures by which we can conclude the opposite.

For some, this chord seems to have sounded like a long awaited trumpet call to action; for others - who have not been shy to express their disdain - it is decidedly discordant.

So, it's black or white, you disdain it or welcome it as a trumpet call? How about something else? Is it not possible to be benignly indifferent to it, to not disdain it and yet not be inspired by it?

Back in October, it was not always easy to distinguish those who were "tourists" - people who swung by to see what was going on out of simple curiosity - from those who were active participants in the protest itself. But what was clear was that this was not some tiny cell of extremists. Those present represented what was, to me, a surprisingly wide swath of the American people. Some, young and not so young, gave the appearance of being seasoned protesters. Others, again both young and not so young, seemed to be first timers: folks who held their banners and slogans with a slight aura of awkwardness.

Again, is this true or is this romanticizing? I too visited Zocotti Park. It appeared to me to represent a narrow sliver of American society rather than a wide swath. Again, how do we measure this?

It is true that it was not easy at Zucotti Park to sort out the substance from the theatre. The media have offered little help, with their focus, unsurprisingly, on the most colorful and extreme expressions of protest. They have highlighted slogans that call for the jailing of bankers, while ignoring placards like the one I saw that said "99% + 1% = ONE" - which I interpreted as intending to highlight our common interests and essential unity as a people.

Is unity a salient, defining principle of this movement? Could the media have been highlighting what was representative of the movement rather than filtering?

Nor, sadly, have those in public leadership often commented helpfully-and they are certainly disingenuous when they point to the protestors' lack of a plan as evidence of a lack of seriousness, when apparently they have no plan themselves.

There is no disingenuousness. The plan is either the status quo or the status quo plus minor refinements, which is grounded in a belief that our society is largely just and moral, or least more so than available alternatives. That too is a legitimate stance, no?

Indeed, all too often the opposing voices that we hear are shrilly dismissive-their aggressive, trivializing tone hinting, to me, at a deep, largely unconscious, level of anxiety. It cannot be lost on many that all this is taking place with the background noise of the Arab Spring ringing in our ears.

I detect in this a presumed equivalency between protesting political opppression and income inequality. Is that the church's stance?

Whatever happens next in Downtown Manhattan, it is terribly important that the core energy behind this protest not be lost behind a blizzard of slogans and rhetoric.

Energy is evocative of emotion, zeal, passion. Slogans and rhetoric are evocative of words, of expressing ideas and endeavoring to persuade. Are Christians to be governed by passion over reason? Is that what is meant here?

The particular motivations of those protesting are, undoubtedly, as mixed as the American people itself. One dominant thread, however, is an (admittedly inchoate) critique of unfettered capitalism.

Is our brand of capitalism really "unfettered"? Many believe it is significantly fettered, and therein lies not only a flaw, but perhaps a great evil.

But the fundamental issue is not that the laws of capitalism are flawed; the fundamental issue is that we are flawed in our attitude to them.

There can be little doubt that capitalism is a productive way to order economic life. But we need to remember, as the protestors have reminded us, that that is all that it is - an economic system based on the entirely reasonable propositions that capital has value, and that supply and demand are the most efficient way to set prices. Capitalism is of no help at all in determining what is morally good - that is something that must instead be determined by the community's wider values.

Capitalism doesn't lay claim to determining moral goods. Are moral goods really determined by a community's values, and thus mutable? I was taught that morality is grounded in the Word of God and is immutable. Earthly arrangements reflect our response to the will of God, but they have no bearing on it.

And there should be no question that when an economic system fails to reflect those communal values, it should be modified and governed until it does.

Many believe our system does reflect shared values - freedom, opportunity, industriousness among others.

To say, as some do, that any attempt to control or guide our economic system is neither wise nor possible is to admit that an economic system has decisive control of our lives. For a Christian, such an admission would be nothing less than to yield to idolatry. (Though I do not claim deep knowledge of other religious traditions, I suspect that this is true for them as well.)

To say such is not to admit to lack of control over our lives. It is flawed to anthropomorphize an economic system. What is at the root of how we organize our society is our humans desires and needs. To say that changes to how we organize society are unwise are reflective of our understanding of who we are, not slavery to some false idol.

God alone is the One, and the only One, to whom we can concede such ultimate authority. For the non-theist to make the argument that the laws of economics are immutable is to concede that we have no power of ourselves to help ourselves.

Is anybody saying that the laws of economics are such that they have led us away from what God asks of us? I'm pretty sure that is not what skeptics of the OWS movement think.

That is the same argument that those in the grip of various kinds of addiction make: "I am not in control, my addiction made me do it."

As the OWS protestors point out, wealth in our country is increasingly concentrated in the hands of a few, the real income of the broad middle class has not increased in more than a generation, and the ranks of the poorest among us each year become ever more solidified. These are the facts - and the reality behind them is, quite simply, morally wrong.

Respectfully, these are not the facts. Income inequality is a highly nuanced, contentious subject within the field of economics. It is not sufficiently clear how imbalanced the distribution of resources is, nor is it clear how the relative balance equates to individual well-being or even social well-being.

Ultimately, left unchecked, that reality is deeply dangerous. It is at odds with our vision of ourselves, and as Americans we ignore it at the peril of our most cherished national ideals.

Again, what are our most cherished national ideals? Income equality was never a principle enshrined in our founding arrangements. We didn't fight a civil war over income inequality. We didn't act upon the world stage in the 20th century in the name of income inequality. That is no implicit condemnation of the notion, but let's not afford it a status it doesn't have.

As Christians, we ignore it at the peril of our souls.

Really? I was never taught that the fate of my soul depended on how much earthly riches I had relative to others. I was taught the love in my heart for my fellow man, God's love, mattered regardless of whether I had more or less than my neighbor.

The way forward is not simple. In spite of what some in the public square would have us think, there are no obvious and easy solutions for complex problems. But what we must strive for is clear. We must - and I believe that this is what lies at the core of the OWS protests - rein in the imbalances that have caused our economic house to careen off course as though it is a self-perpetuating, self-governing good.

Why do you elevate the relative distribution of wealth as what Christians must strive for? Does God keep score in monetary units? What about love, faith, virtue? These are the things I hear about on Sundays. I've read too of societies that focus nearly exclusively on the former and exhibit none of the latter. Again, what is it really that we should be striving for?

The solution that we find will not be perfect, just as human beings are not perfect; but to surrender to forces as though we are helpless before them is not an answer, but an excuse.

We can do better. We are not helpless. We can, by working together, build a better, more just, society: a society founded on the American ideal of a nation in which there are "certain unalienable Rights," including those to "Life, Liberty and the pursuit of Happiness."

How does income inequality follow from these three attributes? Why do we define "just" in terms of monetary values?

We can look to the heart of who we are as a people and draw upon our better lights to seek the common good.

Is a perpetual argument over who has more, who has less and who is worthy based on what they do or don't have in the interests of the common good?

That is our challenge as a nation. As followers of Jesus, we know that our calling now and always is to seek the welfare of the people, the children of God.

As a follower of Jesus I am tasked with reflecting his love and his sacrifice for us out into the world and to use the gifts he has given me for good. The welfare of the people may flow from that, but I'm pretty sure my explicit calling is not to address monetary imbalances here on Earth.

Finally, does God love "communities" or "societies"? I don't think so. God loves us - me, you...actual people. Does God exhort us to arrange our affairs for a proscribed amount and particular notion of justice? Maybe, but that's not what I've learned over a lifetime as a Christian. God exhorts us each to be just. Does God act on a collective basis? Again maybe, but I was taught that God acts upon the hearts of each of us. Jesus did not exhort his followers to build things in his name or achieve explicit societal goals in his name, he exhorts his follows to be "fishers of men" to act upon the individual, to secure hearts to his name. Sounds like Bishop Sisk is more a disciple of John Rawls than of Jesus Christ.