Sunday, July 13, 2008
Audacity, Hope, Etc. (Chapter 5)
This chapter is titled “Opportunity.”
Yay. A sixty page chapter on class warfare. That’s one-sixth of the book, right there.
I had to resist the urge to Fisk the whole thing. I’m sure it would be a bizarre mixture of enraging and fun, but really, we’ve heard most of this, and the rebuttals, before. On the other hand, this is where he starts to get very specific about his policy proposals, and I can’t help but respond a little.
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The chapter begins with a nice long passage giving the liberal version of the Great Depression and events since then. A point-by-point rebuttal would be a distraction, so filling this spot with the usual liberal tripe and the usual reality-based counterpoints is an exercise that will be left to the reader. The only interesting parts here are an admission that Reagan did some necessary trimming of the Federal government, though the valiant opposition of the Democrats prevented him from going too far. Then after getting slapped around on the health care issue, Clinton went to on further Reagan’s legacy with welfare reform, balancing the budget, etc.
I have to admit, I’d never heard quite that spin put on it before – Clinton carrying Reagan’s legacy to it’s natural conclusion.
Then of course, Bush comes along and screws it all up with “even lower taxes, even fewer regulations, and an even smaller safety net.” I don’t even have any idea what he’s referring to when talking about a smaller safety net under Bush.
The overarching theme of the whole discussion is that “we don’t have to choose between an oppressive, government-run economy and a chaotic unforgiving capitalism.” The idea is that through proper government management of the economy, people don’t have to be affected by economic upheavals in the ways they have in the past. Government can make those upheavals less severe, and help people to weather them when they do happen.
The problem is – his rhetoric both in the book and on the campaign trail seem to point to isolationism as a solution to preventing economic upheaval. He points out very bluntly that globalism has changed our economy dramatically, and those mean CEOs looking out for profits rather than for communities won’t let people unionize and prevent their jobs from being cut.
Now, I sympathize with those who are forced to change their way of life because of economic changes. I understand – it sucks. But lets think about this for a minute. If the kind of government intervention he’s talking about results in actively preventing companies from becoming more efficient and competing in the global marketplace (or worse, cutting off that global marketplace via isolationist policies), that hurts everyone, including the people the policies are intended to help.
Look at farmers. Something like 1% of the population is involved in agriculture today. Not all that long ago, that number was 50% or more. If someone like Obama had come along and said “we can’t let our farmers be displaced because of changing economic conditions”, we’re basically looking at three different possibilities. One, we can force farmers to maintain primitive farming practices so that more people can be employed. Everyone loses, since productivity is wasted by decree. Two, we can subsidize farmers to give them further incentive to stay in the profession when there is no other economic reason to do so. Everyone but the farmers lose, since this is a raw wealth transfer program. And here too, productivity is wasted. Three, we can isolate ourselves from global trade, so as to prevent our products from being undercut by more efficient overseas companies. Everyone but the farmers lose, since everyone is paying more for the products of the farmers. In essence, this is the same as case two, since external fiat allows farmers to sell their products for more than the true market price, while everyone else is forced to buy those products for more than the market price. It’s wealth transfer without the government as a direct intermediary.
The exact same options are available in every other sector. Forced inefficiency, subsidization, or isolation. Unions, which Obama wholeheartedly supports, push for any and sometimes all of these policies, knowing very well that they are screwing over the rest of the population for their own benefit. Adopting these policies to ease the pain of people being displaced by a changing economy makes as little sense as forcing farmers to continue working with horses rather than tractors – sure, more of them would be employed as farmers, but they would be poorer and so would the rest of us.
Is it really worth hurting everyone in rather substantial ways to ease the pain of the few? In some cases, yes. In the case of a changing economy, where the economy is going to continue to evolve no matter how much we try to protect people from it, our choices are to evolve and adapt, or drag our feet, hurt everyone in the process, and inevitably reach the same point anyway. However, it makes for great campaign fodder in a rural town when a manufacturing plant closes. People don’t want to have to learn something new. Yeah, too bad. Stuff happens, and except in extreme circumstances, people are not entitled to harm everyone else for their own benefit. Yet, that is the crux of Obama’s populist message to the masses.
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Obama’s proposals for government’s place in the economy is that it should be making investments in three sectors – education, science and technology, and energy independence.
He begins talking about education via an anecdote about his 2005 visit to Thornton Township High School, a mostly black school in the south suburbs of Chicago. He says the kids took a poll to decide what issues were most important to them. The top of the list? The school district was short of funds, so everyone was sent home at 1:30 every day, depriving them of the opportunity for “science lab and foreign language courses.” Of course, this is evidence of the poor people of America being screwed, and it is evidence that we need to throw more money at education.
This story smells fishy to me. Aren’t school districts required to meet minimum hours in a classroom in order for kids to graduate? If they are actually cutting below those hours, foreign language courses and science lab are not the biggest worry these kids have. If they are not cutting below those hours, what the heck are they doing with their time? Something doesn’t smell right. I googled around a bit, but nothing clarified this anecdote.
Obama’s specific fixes for elementary and secondary education:
A more challenging and rigorous curriculum with emphasis on math
Longer school hours and school years
Early childhood education for every kid
Performance based assessments of students
Recruiting and training of “transformative principals and more effective teachers”
Simpler certification processes for non-teachers to become teachers
Pairing new recruit teachers with experienced mentors
Higher teacher pay paired with additional accountability
I’m not going to pick this apart. We all know what the problems with the educational system are. Some of his ideas are good, the simpler certification processes, for example. But that, without fixing the fundamental flaws of the system, is virtually meaningless. Obama’s fix for education is the same one we’ve heard for years – more money, more control, more of the same.
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I’m sure you’ll be shocked to hear - the main thing wrong with education at the college level is that we don’t give people enough money to go.
Other specific higher education proposals:
Double federal funding of basic research in the next 5 years
Train 100,000 new engineers and scientists in the next 4 years
Provide new research grants to “the most outstanding early-career researchers in the country”
I spent a couple years at one of the top research universities in the country. I spent a few months at a NASA installation. One thing I can tell you for sure – more money is not what they need. Not when it costs $80 in overhead for me to order $2 worth of bolts. Seriously.
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The energy part was some blah blah blah about alternative energy sources. Typical liberal stuff: spend money, a miracle occurs, puppies and rainbows result. Yawn.
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Obama on Free Trade:
I ended up voting against [the Central American Free Trade Agreement], which passed the senate by a vote of 55 to 45. My vote gave me no satisfaction, but I felt it was the only way to register a protest against what I considered to be the White House’s inattention to the losers from free trade. Like Bob Rubin, I am optimistic about the long-term prospects for the US economy and the ability of US workers to compete in a free trade environment – but only if we distribute the costs and benefits of globalization more fairly across the population.
Translation:
He’s in favor of free trade, as long as US workers are insulated from any hardship that may result. Meaning, he’s not really in favor of free trade at all.
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I’m not going to go into detail, but suffice it to say that Obama has completely bought into the fixed-pie theory of economics. Meaning that if I have a bigger slice of pie, yours in necessarily smaller. We don’t grow wealth, we can only distribute it more equitably. Not a surprise, but it makes this extremely frustrating to read.
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Minimum wage: raise it. He even explicitly acknowledges that it will cause jobs to be lost. And in the very next sentence states “when the minimum wage hasn’t been changed in nine years… such arguments carry less force.” Huh?
Other proposals:
More unemployment insurance
Wage insurance, which pays if you are forced to take a job that pays less than your old one
“Flexible education accounts that workers can use to retrain” - I have no idea what that means
Last but not least, strengthen unions because “since the 1980s, unions have been steadily losing ground”. Good. Let’s continue that trend, and maybe the auto and airline industries will have a chance to recover and survive.
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There are some words in here about Social Security, but I’ll be damned if I can figure out what he actually intends to do. I think we are going to “start with a commitment to preserve Social Security’s essential character and shore up it’s solvency”, and then use the word “globalization” several times.
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And now, my personal pet peeve, health care. I’m going to try to gloss over this, so as to avoid the near inevitable fit of rage.
Obama’s health care plan, or at least “one example of what a serious health-care reform plan would look like”, from his perspective:
1) “We have the National Academy of Science’s Institute of Medicine (IOM) determine what a basic, high-quality health-care plan should look like and how much it should cost.” Along with this, we “make sure patients control their diets or take their medicines regularly… and save the system a great deal of money.”
Wow. He didn’t even wait to step two to get into the authoritarian stuff. Step one is fridge raids.
2) We set up public insurance pools in every state that people can buy in to. Private insurers now have to compete with this public plan, but even the private plans would be required to “meet the criteria for high quality and cost controls set forth by the IOM.”
If you want to get some idea of how absolutely horrible this idea is, take a look at Florida where they are doing this RIGHT NOW with homeowners insurance. National Review had a couple articles about it recently, I think. (I think I may have even written a post about it, once upon a time.) The people running public insurance plans have every incentive to use them for populist purposes rather than actually running a tight ship. Who do you think people are going to listen to – the mean old actuary telling them that using their insurance policy like an ATM is going to make their rates go up, or that empathetic politician who feels their economic pain?
3) Everyone who touches Medicare and Medicaid claims will be required to have electronic claims, electronic records, and up-to-date patient reporting systems. This is going to save us 10% off the top, “with some experts pointing to even greater savings.”
Let’s just say that I know something about this, and “some experts” are full of crap.
4) With this 10% savings, we provide a subsidy to low-income families so they can join the state insurance pools, and then mandate coverage for all uninsured kids.
Voila! It’s like magic. Health care for everyone!
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Obama’s tax policy:
Raise taxes on dividends and capital gains
Leave the estate tax in place
Repeal the Bush tax cuts
Increase the amount and scope of the Earned Income Tax Credit, because 40% of the population not paying taxes just isn’t enough.
I won’t even dignify this with a response.
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Phew. Made it through that chapter alive. I’m hoping the rest of the book is fluff. I don’t know if my blood pressure could take another economics and policy chapter.
Comments
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Obama is an American Tony Blair. This proposal is the “Third Way” mixed economy and if you want to see where it leads then look no further than the dissolving Un-united Kingdom.
A Brit | 7/21/2008 07:54 PM CDT -
sorry to be so late to the party ... drove from Michigan to east Texas on “vacation” (if visiting relatives really qualifies, LOL). Currently (for 10 years now) living in Michigan, after most of a lifetime in Alberta ... I see the huge “benefit” of unions daily. Pure, utter, ruthless communism with union membership being the “elites”. Everything for them, always at a cost to everyone else. Anyone supporting more unions automatically loses any respect from me.
Health Care ... well, having lived under it for a great many years, I know a little bit. It can be ok, and it can be damned deadly. Lost a wife as a result of one-payer health care. And now we have grass roots efforts here to have it shoved down our throats. A group in our county is trying to get a millage put on the next ballot to provide health care for the “working poor”. GAAAH.
When do I get to stop being responsible for the stupid choices others make?
Although I have little to no use for the man, vote McCain. Anything else is asking for more power to drive the Titanic to the ocean floor even faster.
pete in Midland | 7/22/2008 08:53 AM CDT
