American Brain Fart, Parts 1 And 2

The following is a running commentary I did by request on an article e-mailed to me last summer by a friend. It’s kinda dated, but I thought I’d put it up anyway. I am posting this in its entirety save for some light editing as I was playing it a little “fast and loose” when I wrote it. In case it is not clear, I am being intentionally cynical and boorish when I use phrases like “little brown people” and “the dogs below”; for the record, I am one of those “little brown people” as well as one of the working “dogs” that is made to eat the crumbs that “trickle down” (or fall down, I guess) from the capitalists. The text of the article I am commenting on is in black. For a link to the original article, you can click here.

The number of Obama supporters seems inversely related to his time in office. Many wonder what happened to “The One We Are Waiting For.” Obama assumed office in difficult economic times. After a couple of years of excuses — which included “the problems were worse than we knew” and the generic, all-purpose “it’s Bush’s fault” — Obama now owns the original problems and new ones of his own doing. An incomplete report card on his “accomplishments” would include the following:

• the economy worsened

• discretionary military efforts (“kinetic” if you prefer) increased

• an unpopular, flawed health care plan was forced on the public

• inflation increased, especially in critical goods like food and gasoline

• job prospects decreased

• the stimulus failed miserably

• “transparency in government” became a laugh-line for late night TV

• corruption in government accelerated to Chicago-style warp speed

• Housing worsened and shows no sign of bottoming soon

• Government debt and spending spun out of control

• Wall Street was bailed out and continues to enrich themselves

• Main Street was ignored and becomes poorer as bankruptcies and foreclosures mount

• race relations appear to have worsened

Somewhat correct, though I would not blame the race relations issue on Obama. I also would not use the word “accelerated” to describe corruption under the Obama administration, but rather to be increasing at basically the same rate it was increasing under Bush. It definitely has not halted or even slowed, however. Also I see problems 3,4, 9, 10, 11, 12 as inevitable problems that would have happened regardless of whose presidency (McCain or Obama) it was; i.e. they are not problems “distinctive” of Obama’s policies.

There are a plethora of other problems that could be attributed to Obama. In short, it is difficult to ascertain what, if anything, has improved other than the demise of Osama bin Laden.

Two hypotheses are often cited to explain why things have gotten so much worse:

1. Obama is incompetent.

2. Obama knows what he is doing and is deliberately destroying the country.

False dichotomy: I propose an option # 3. Obama somewhat knows what he is doing and does not place the country’s welfare as a priority but rather how the interest groups backing him fare. If the country does well, he would be happy I think, but it is not a priority.

These hypotheses are not mutually exclusive. Evidence is consistent with either or a combination of both. The remainder of this article deals only with the first. Readers should not assume that the second is unimportant, inoperable, or impossible.

Dr. Thomas Sowell wrote about “seductive beliefs” in a two-part article (second part here).  He touched on some of the incorrect beliefs guiding President Obama. In short, Obama is an ideologue, narrowly (and poorly) educated. As a result, he is ignorant in the ways of the world.

Economics versus Morality

Sowell’s analysis provides perspective on Obama’s behavior. Obama has virtually no understanding of basic economics. Exploitation ideology is the basis for his world- and economic view. This ideology sees the world as a zero-sum game. In essence a fixed pie is divided. If one person gets more, others necessarily get less.

Another partial falsehood. The world IS currently working towards a zero-sum game system, and largely functions that way. The fact that it doesn’t HAVE TO is irrelevant. Also, “zero-sum game” is a generality. I don’t think any sane person denies for example that a slave during the feudal period or early mercantile period was not as “well-off” than a slave during the later mercantile/early capitalist period. Our current system, with its constant state intervention on behalf of the capitalist class distorts both the pricing and production structure for the purpose of protecting profits. This results in “choice architecture” for the working class as well as a greater scarcity of goods and resources than would otherwise exist. Thomas Sowell operates on the assumption that we have a “free” market system. We don’t. There ain’t no such thing.

A country becomes successful by taking advantage of other countries.

This is actually true. It is only false in the theoretical world of Dr. Thomas Sowell where a fantasy called “free trade” exists. I could name numerous examples showing free trade is impossible in our current world, but I’ll give you a very obvious one: CURRENCY. Different countries depreciate their currency at different rates, which distorts exchange values, and therefore prices. This provides artificial incentives to either buy or not buy certain foreign goods.

This naive view, based on the long-discredited concept of mercantilism, sees success as exploitation. Freedom, markets, institutions, incentives, and voluntary trade have no place in Obama’s world. Success or failure is determined by one variable — whether you are the exploiter or the exploited.

There is nothing naive about this. Mercantilism never died, it simply morphed into capitalism when the ruling/parasitic/owning class realized they could integrate some free market principles into their current practice to increase their wealth. Furthermore, mercantilist practices intentionally experienced a partial resurrection in the first half of the 20th century due to the influence of the economist John Maynard Keynes. One does not have to be a Keynesian to adopt these principles as they have permeated pretty much every school of economics that is considered “orthodox” today.

Those are my comments for the moment. I will finish the article later and comment some more.

(CONTINUED…)

Exploitation theory does not comport with economic theory, history, or reality. As Sowell points out:

It is hard to reconcile “exploitation” theories with the facts. While there have been conquered peoples made poorer by their conquerors, especially by Spanish conquerors in the Western Hemisphere, in general most poor countries were poor for reasons that existed before the conquerors arrived. Some Third World countries are poorer today than they were when they were ruled by Western countries, generations ago.

I doubt Obama really believes in any kind of consistent theory of exploitation, but rather he, like most good democrats believe that capitalism will work more efficiently if more “crumbs” are thrown to the poor. In a sense that is true, which is why the U.S. has the lack of armed revolution found in other countries. I once read an article on Yahoo Finance by economist Charles Wheelan back in 2007 about income inequality in Brazil compared to that in the U.S. and other countries. My political beliefs were very different at the time I first read this, but I never forgot the article. The economist is presenting the capitalism of other industrialized nations as more “humane” than that of Brazil and that is supposed to be great and wonderful, but that is not the way I take it today. These days I realize that the U.S. has a fairly effective “pressure relief valve” for capitalism that other countries lack: when the oppression becomes too great, concessions are made in order to placate the poor. Furthermore, there is much more opportunity for a poor person to “climb the hierarchy” and become one of the exploiters…it is basically a “lottery” that functions much like a carrot on a stick in front of a donkey to keep him working hard. Anyway, enough about Obama/democrats for the moment…

Slight improvements in the living standards of 3rd world does not disprove exploitation. Exploitation is what it is due to the exercise of POWER by some people over others, imposing themselves as an illegitimate authority over said people. When a third party invades an area rich in natural resources and takes them, it is only natural that some “crumbs will fall off the table to the dogs below”. I am not impressed. Whoever wrote this does not understand what exploitation is. Exploitation is like someone invading the home of an eldery couple in order to turn it into a crackhouse; the fact that they then give that couple a few vials of free crack every week does not change the fact it is exploitation.

Obama’s ideology blinds him to relevant variables. Incentives, institutional frameworks, profit and loss, individual initiative, saving and investment, hard work, etc. have no role in his simplistic world.

It is this author’s “world” I find “simplistic.” What if the “work ethic” (or “hard work”) isn’t ethical? Who created the “incentives” and what gave them this right? Institutional FRAMEWORKS– what happened to FREE markets? If you gained your “profits” due to having patents, copyrights, licensing, business permits, subsidies, etc who decides this framework and by what right? Who is being “simplistic” again?

He is a political creation with no experience in relevant matters. He does not understand markets, business, meeting a payroll, or managing an organization. This vacuum in knowledge produces failed economic results because policies do not consider the relevant variables for economic success.

True, but who in power does? From a realistic standpoint, i.e a McCain presidency, I don’t think there would have been significant differences. Until we went to Lybia, I would have cited more war and death under McCain, but I have to take back even that now.

In Obama’s world, success and failure are moral rather than economic outcomes. Success is a marker for evil. Failure is due to someone else’s success rather than personal shortcomings. Failure represents passivity, the choice to not exploit others. Proper moral behavior produces failure.

For Obama, economics itself is inconsistent with morality. Hence economics itself must be evil. This view of the world is both simple and ignorant. No, it is beyond that. It is a sign of stupidity! Recognition of this stupidity is the key to understanding Obama’s behavior and policies.

Some professing Marxists (not all) have expressed these beliefs to me regarding economics, but Obama is a Keynesian who last year added a Rubinist (think: Bill Clinton) to his advisory staff, so he is neither a radical nor a Marxist in any sense of the word. This paragraph is anti-Obama propaganda parading around as an objective evaluation. Obama simply follows a different economic school. The fact that it has been ineffective has nothing to do with whether Obama “believes in economics”. Another thing to note is that ALL economists insert some type of moral/ethical/legal presuppositions into their economics which is why we don’t have economic policy suggestions regarding armed robbery and murder to take the possessions of others for example.

An Interpretation of Some Obama Policies

The key to understanding much of Obama’s behavior is the notion that economics itself is necessarily evil and must be constrained or even remedied.

Sigh. See above.

Successful allies (think Israel and Great Britain among others) are morally inferior to unsuccessful, backward nations who only are so as a result of exploitation. Third-world nations require restitution for the evils imposed by successful nations. That some of these are enemies of the US makes them even more deserving. The US, heretofore the greatest success, therefore represents the greatest evil. Obama’s world-apology tours and treatment of allies can be understood in light of such convoluted beliefs.

Don’t even get me started on foreign policy. You already know what I think here. If you read Henry Kissinger’s book “Diplomacy” there is a chapter explaining the foreign policy differences between Democrat Woodrow Wilson and Republican Teddy Roosevelt, which, in a way are still operating today. Basically Republicans believe America is special and righteous in such a way as to give the government the right to unilaterally enter countries and blow up little brown people. On the other hand, Democrats, being much more “civilized”, see America along with western Europe as an elite group of nations that has a right to rule the world because they are so democratic and wonderful and everything. The major difference between these two foreign policy models is that under the Democratic model, America needs to bribe France and Germany before blowing up the little brown people.

Moral judgments also drive domestic policy. Individual success is simply a microcosm of national success. It too is achieved by exploiting others. That explains Obama’s “Joe the Plumber” moment. If the pie is fixed in size, the rich make others poor. That is the fallacy underlying Obama’s belief that people are entitled to only so much income or wealth.

In his mind, he has a right, probably a moral obligation, to confiscate and redistribute wealth. The rich and successful must be punished at some level of success. Their success causes the poor their pain.

I’ve already covered this, but I will add a few comments specific to these paragraphs, or rather the last two sentences. I don’t have words to express what bullshit this is. To accuse Obama of “redistributing wealth” is a level of hypocrisy that is incomprehensible beyond belief. THIS ENTIRE ECONOMY FUNCTIONS ON THE REDISTRIBUTION OF WEALTH. It’s funny (or perhaps enraging) that people only seem to worry about wealth redistribution when it’s being taken from the rich and given to the poor. I actually believe more wealth redistribution happens in the other direction. How so? Well, to give one example out of many possible ones, let me start with a drum I beat frequently: the monetary/credit system. If you were to take the aggregate of all the dollars in circulation in the year 2007 let’s say, physical cash would only be about 10% of the money supply, maybe less. Where does the rest of the money come from? A large portion of it is what is called “checkbook” money, which is money that is “created” by private banks when money is deposited by one party, used to pay another party, then withdrawn and deposited again by other parties. This results in many more dollars in circulation than actually exist as cash. The corresponding increase in the money supply distorts prices and raises prices over the long term. Working class people who have little or no access to credit, along with salaried employees, and people on fixed incomes essentially have the purchasing power of the dollar stolen from them. Is this not “income redistribution”? It greatly multiplies the banks’ profits as they can make interest off of money they don’t even have. It also makes loans very cheap for those who already have lots of money. Let me give you an example. Extremely low interest rates can help a company like Starbucks flood the so-called “market” with coffee shops during an economic boom to the point to where Starbucks locations are basically competing with themselves. Smaller competitors who do not have as much access to credit, are simply unable to compete, and close down. A recession then hits, which causes Starbucks to close down many of its superfluous locations, but it doesn’t matter; many of its competitors are already gone, and maybe even a few more fell because of the recession. What do you think will happen to the wages of coffee shop workers when they have a much smaller pool of employers to choose from? What will happen to their benefits or their chances of having benefits in the future? If this is not “income redistribution”, what would you call it?

Other examples abound. What about your food? I’m sure you know farming in the United States is subsidized. Taxpayer money goes to make corn artificially cheap in order to keep foreign sugar sales down (“free” trade anyone?), make ethanol for cars so that the oil companies can get richer (did you think they made their money off of “rugged individualism” and “hard work”?), flood the market with corn syrup based products to make us fat (and sell more diet products!), and ship the subsidized corn into Mexico so that rural population lose their farms since they can’t compete with artificial prices, be forced to move to the city to work crazy hours for pennies a day, and risk grinding their fingers off in some machine with no safety features so that the American corporation who moved their factory there can save a few bucks. The remaining Mexicans who couldn’t get a job in the city then head north since all the city jobs are taken and see if they can get a slightly less shitty job in America. Working class Americans, completely oblivious to the fact that their tax dollars are essentially causing an imbalance in the natural flow of migrants into the United States are subjected to a “one-two punch” of so-called “free trade” causing a flow of cheap human capital into Mexican cities due to the displacement of Mexican farmers, and the corresponding flow hyper-stimulating a migration of American factories to Mexico causing job losses here in the United States. Fox News then tells our American working class friends that this is to be blamed on the “damned illegals” taking “our” jobs and that the solution is stopping random brown people on the streets of Arizona to hassle them for their papers. Let’s tally the score:

American working class = LOSE
Mexican rural population and working class = LOSE
Corporate Fat-cats = WIN!!!!! 1UP1UP1UP
No sir, mercantilism is dead, I promise!(wink, wink)

Talent, hard work, ingenuity, risk-taking, etc. are not relevant in Obama’s third-grade level of economic understanding. As expressed by Tom Sowell, “[w]hether at home or abroad, Obama’s ideology is an ideology of envy, resentment and payback.”

Blah, blah, blah….