Friday, July 29, 2011

How we got here

Over at NRO's The Corner, Arthur Herman succinctly describes exactly how we got here; lies.
On a chilly morning in March 1788, Louis XVI’s finance minister sat down and drew up what was the first entirely truthful budget of the French monarchy — which almost turned out to be its last. It revealed that some 500 millions of revenue were offset by 629 millions in expenses, of which more than 50 percent went for service on the royal debt — a debt largely racked up, ironically enough, by Louis’s support for the American war for independence. For the first time, it was apparent that the system created to rule France since the days of Louis XIV could no longer continue. It was on that day, not the fall of the Bastille more than a year later, that the ancien régime ended.

Something similar is happening with the current debt-limit imbroglio. Some people compare our current political turn, including the growth of the Tea Party, to the American Revolution. A far better comparison is with the French Revolution. Our ancien régime is tax-and-spend Washington, which Franklin D Roosevelt, Lyndon Johnson, and a host of lesser Sun Kings built and which the current dauphin Barack Obama wants to sustain. A corrupt bloated French monarchy sustained itself on the lie of divine right of kings, which made the king’s will law. Our Versailles sustains itself on a lie called baseline budgeting.
... and where did that lie start? Simple - with the worst Congress of the last 100 years that we have discussed here and Midrats - the 93rd Congress.
Created in 1974 by the same Democratic congressional majority that handed over South Vietnam to the Communists and gave us the CAFE standards that ruined the American auto industry, baseline budgeting forced the Office of Management Budget for the first time to consider growing government as the fiscal norm, and reduced spending as an aberration. Even reducing the rate of spending was redefined as subtracting money, not adding money by a slightly lower amount. This has created a system which today’s Congressional Budget Office would score a freeze on all government spending as a $9 trillion cut, even though there’s no reduction in spending at all.

The root of the dilemma we face is not political or fiscal, but moral. Until Congress overturns an accounting system that deliberately distorts empirical reality, we will never escape the corruption it entails — or the catastrophe that’s coming.
There is nothing we can do about it with the Senate and President we have. Lean in hard - and vote in 2012. Put this at the top of the list of things to fix.

57 comments:

John said...

AMEN!

Throw the bums out who have spent us into this mess and demand that their replacements end the baseline budget gimmicks and turn to on making actual cuts.  Not dainty snippy around the margins or clipping Irish pennants, but massive slashing of entire departments and programs.

If not done in the next year or so, the inevitable soaring interest rates will destroy us all, individually as well as the nation.

This is not a drill!  We all must be active (as far as the law allows) in election politics for the next two years.

MCPO said...

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We need to get out of the business of being the world's police...Europe has become very comfortable that the USA will bare the burden of preserving democracy and freedoms. The USA has spent itself into debt by investing in countries that have been fighting over the same 2 camels for thousands of years and would rather kill us than change.  The money spent in Iraq and Afghanistan would have been better spent on regaining economic superiority from China, which is the huge elephant in the room that is currently suffocating all American's livelihood (coupled with a robust socialist "Change" agenda). The spread of democracy has been circumvented by the spread of "Made in China" and the growing Islam/Mexican immigration to the USA. In short….WE ARE F*#Ked.  Let's stop sugar coating it! 

Jeff Gauch said...

Yes, let's pull behind our coastal fastness and allow the rest of the world to go hang.  Because that worked out so well for the Romans in the 4th century, the Chinese in the 17th century, and the Japanese in the 18th century.

"Made in China" isn't a cause of our economic troubles.  It is a symptom of an irresistable economic reformation that is returning unskilled factory labor to the lower class.  There is nothing we can do to stop it, though eventually the labels will start reading "Made in Vietnam".

Playing "world police" is expensive.  But it's a damn sight cheaper than letting China or Russia influence the international structure to suit their ends.

Grandpa Bluewater. said...

Irresistable economic reformation, not quite.  Doctrinal free trade without understanding the facts and utterly counterproductive tax policy, rather.

NAFTA and the rest of the "unequal treaties", to borrow a time worn phrase, encourage and reward a race to the bottom hourly wage nation state by international corporations while maintaining huge de facto protective tariffs by those nations.

Stupid policy damaging to the national interest is not irresistable. 
Just stupid.

MR T's Haircut said...

I sincerely hope we are not destined to repeat the French Revolution with the "Safety Committee's" that gave rise to a Napoleon...

just sayin

Andrew said...

<span>"...There is nothing we can do about it with the Communist and Traitorous Senate and President we have..."</span>

There Sal I fixed it for you.

ewok40k said...

but the Chinese have now cash to influence OUR officials as WE had cash to influence THEIR/JAPANESE ones in 1860s...

Grandpa Bluewater. said...

Germany had the wherewithal to influence Mussolini big time, but it didn't do Clara Petracci any good in the long run.

Think about where you might wind up hanging out when it's all over.

Historical observation, not prescriptive, or necessarily predictive. Sometimes History Is Traumatic, it happens. If the powerful put their personal interest over their duty.

ewok40k said...

I guess it will take something amounting to US version of Meiji reform to make government effective again... Strong economy makes strong army and navy.  Otherwise I see descent into boxers rebellions, revolutions, warlords and end at Maoism...

ewok40k said...

Actually Napoleon put an end to the excesses of terror and set the standards for meritocracy - amongst his marshalls were commoners and aristocrats alike. From the Jacobin's point of view he was a counerrevolutionary!

ewok40k said...

How many industries were nationalised under those supposedly communist powers? They might be corrupt, inefficient and sometimes plain stupid, but communist they aren't. For comparison, visit Pyongyang.

Jing said...

I think you have misplaced faith in the democratic process. America's present woes are due to the scylla and charybdis of the Welfare/Warfare state. There are many vested interests whose billions depend on this structure who will oppose any changes to the status quo tooth and nail with the best lobbyists and shills government money can buy. America's future woes are sadly even more entrenched, having swallowed the Great Lie of the proposition nation, America has become historically detached from its past. America is no longer a nation, it is a multi-ethnic empire ruled by a Bolshevik/Menshavik duopoly (You can choose which party is which) intent on perpetual global revolution, beginning at home.

A nation is more than just the state that encompasses it, its is a people bound by kinship. A lesson of the 20th century that most Americans have forgotten. With less than 50% of America's future now non-hispanic white, you will soon be forced to relearn the lessons of the past. That ideas and ideology make for meager glue compared to the pull of blood and brotherhood.

Andrew said...

Good question Ewok. Public Education, farming (Agriculture), heavy industry (labor unions that are basically adjuncts of the Democrat Party) and parts of the automobile industry (GM, Chrysler). Not to mention higher education and housing loans through Pell grants, FAFSA, and Fannie and Freddie. Need I continue?

Andrew said...

That sounded good right up until you brought skin color into it. You must realize true Americans JUST DON'T CARE what you look like, it's how you act and what you do that matters. As a great man once said, we "dream of a world where our children are judged not by the color of their skin, but the content of their character." That's why we hate the diversity fascists so much.

UltimaRatioRegis said...

I second that emotion.  Skin color doesn't matter worth a damn.  If you had said unwillingness to assimilate, then you would have a point.  Americans don't expect immigrants (which almost all of us are) to abandon all language and tradition of the old country when our shores are reached.  But we do reasonably expect that people here will learn English, and American ways and customs.  We are bothered when some refuse, and try to subsume our culture in theirs. 

Such as Germans who belonged to the Bund and had Nazi rallies in the 30s.  And Muslims who wish Sharia and Islam to be the way of this land.

UltimaRatioRegis said...

Soon to be health care. 

Jing said...

I'm sorry to say but even conservatives today cannot break the Gramscian conditioning that the Marxists have inculcated into the American populace. It's almost as if mere hint of a thought crime lights up the klaxons and a pavlovian response barks from otherwise reasonable men's lips. Stalin could only have dreamt of such control. Race doesn't matter, exclaim Americans. Except for when it comes to where you live, whom you marry, where your children go to school, how you vote, who you associate with, welfare dependency rates, incarceration rates, wages, household sizes, birth rates, etc. The government collects mountains of data dealing with issues regarding race and spends mountains of money more attempting, and failing, to make what apparenlty doesn't matter actually not matter. Yet it still does. There is such a thing called declared preference and revealed preference. It is the difference between what people say and what people do. There are few nations outside of America more obsessed with something that doesn't matter, those being polities deeply divided along lines which don't matter engaged in the eternal struggle of Who, Whom.

QMC(SW)(ret) said...

<span>"This has created a system which today’s Congressional Budget Office would score a freeze on all government spending as a $9 trillion cut, even though there’s no reduction in spending at all."</span>

----------------------------------------

If this isn't the definition of insanity, what is?

ewok40k said...

last time I saw the pharmaceutical companies were booming with prospects of even more money for them to gobble. Yes, education should be public and uniform unless you want creationists run your bio-security and followers of flat earth run your space travel. Oh and medressas spring in every black hood, financed by Saudis. Farming? Ever heard of Sovkhoz? - that is the real communist farming. State-owned farms. GM and Chrysler?  For God's sake, tell that to the shareholders!

Jeff Gauch said...

Have you ever read an economics textbook?  Free trade makes everyone wealthier.  Yes, unskilled wages race to the bottom, but that makes products cheaper and frees up capital for investment into other ventures.  If you want a high-paying job, develop a skill or product that cannot be provided by a uneducated peasant.  Now, there are externalities that have to be taken into account.  I, for one, wouldn't be opposed to a tarrif on imports from countries that didn't have reasonable environmental and worker protection laws.

You seem to think that the 30 years where the US industrial base rebuilt the industrialized world are the natural state of the world and not some aberration.  The fact of the matter is it is cheaper to make something in Asia and ship it to the West than to make that thing in situ.  You can resist that cost differential, but it's going to make you poorer.

UltimaRatioRegis said...

Ewok,

You swing and miss.  Boston Scientific just announced plans to lay off 1500 workers, and behind closed doors, the reason was that the Government control of health care would increase costly regulation, artificially suppress prices, and drive up R&D prices. 

Education was not federalized until 1979. It has been a steady and rapid downhill since.

Yeah, ask the bonded shareholders of Chrysler and GM.  Not the UAW, but the bonded shareholders.  Ask them.

ewok40k said...

there is always good reason to lay off workers, especially when there is a big unemplyment wave - you can make the rest work more for less...
how is suppressing the prices hurting people that buy pharmaceuticals? yep thats you and me, and my elderly mother... oh you mind  those highly profitable managers at the pharma companies? no worry , they will lay off some workers to keep their bonuses fat!
re: GM shareholders - you would prefer all of them owning bunch of papers for bankrupted enterprise? or worse, in a truly communist way, nationalized without repayment, and be lucky if not decapitated as class enemy...

ewok40k said...

But some things need to have capability to be built here, just in case Asia suddenly turns hostile... especially things needed for warmaking effort on, apprioprately named, industrial scale...
We can import everything and specialize in cotton, southern states, 1850s.

Anonymous said...

Couldn't be a drop in demand from a crappy economy, better to just blame Democrats... well at least easier for the simple minded.

MCPO said...

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Have I read any economic textbooks????  Are we going to compare degrees? Sure...I have read an economic textbook and I have an MBA from the Univ. of Seattle and I also understand the emerging markets throughout the world.  The problem is as you put it..."<span>If you want a high-paying job, develop a skill or product that cannot be provided by a uneducated peasant, produces the socialist lifestyle (welfare) that the "uneducated peasants" of America.</span>

Sure...the cost to make products in Asia and ship back to the USA is cheaper...However, 90% of the products we buy are made in Asia and also are imported without a tariff (or very little)...So at what cost to the American people are the products cheaper?  Take a look at Brazil...they import VERY little and export more than what is imported...a computer made in Asia will cost you double what it cost in the USA.  Eat at a restaurant and flip the fork over...it says “Made in Brazil” Take a look in your house...find what is “Made in America.”  It will be hard...these products you do have marked “Made in America” represent the work of the <span>"uneducated peasants" of America as you so eloquently put it. </span>

UltimaRatioRegis said...

ewok, you are sounding like a bolshevik labor organizer now.  The US government violated our own finance laws to pay unbonded shareholders (the UAW holders) more than was paid to bonded shareholders.  Patently illegal, but then again, bonded shareholders don't vote Democrat. 

I would prefer the US Government does not choose winners and losers.  Period.  End of story.  The role of government is to govern.  This is mutually exclusive of choosing favorites.  That is what I prefer.

UltimaRatioRegis said...

Guest, you haven't seen the football since kickoff.

Jeff Gauch said...

You have your causal relationship backward.  Our welfare state is what disiincentivizes unskilled US workers from becoming price competitive with unskilled Asian workers.

I'm afraid I don't understand how I'm not better off than my Brazilian doppleganger.  If he buys a computer for $1000 I can get the exact same computer for $500.  We have the same computer, but I have $500 that I can use to buy something else.  Brazil seems to be benefitting its manufacturers at the expense of its consumers.  Since everybody is a consumer, but few of them are manufacturers this doesn't strike me as a moral choice.

MCPO said...

The point is if it is imported, the price is typically double in Brazil...Americans think it is a right to have a 50" plasma, iPhone, iPad, Laptop, new car, etc, etc....If the prices were double on these imports maybe people would think twice before buying them....especailly if the same product was produced by American workers.  50" Plasma made in the USA $1000 or a 50" Plasma made in anywhere else $2000.    

UltimaRatioRegis said...

MCPO,

The idea, as you allude to, is not to make US consumers "pay more" but to offset intentionally suppressed labor costs, currency manipulation, and massive government subsidy on the part of countries that target US markets with an eye toward running US industries out of business.

So also think: steel, machine parts, electric motors, bearings, heavy finished goods.  Industries where their own unions played a major role in putting them out of business or driving them overseas.

MR T's Haircut said...

Actually Ewok, Napoleon was created because the Civilians were afraid of him and kept giving him power.  He wasted the youth of Europe and decimated the treasuries of Europe for Generations and his actions were causitive to the troubles of Europe into the 20th Century.

The French Revolution was a tragic result of a debtor country out of touch with the citizens who chose the likes of Bonaparte over the ruling elite...  

This would be devasting in the US to have a similiar revolution...

JAV said...

<p>I always find it interesting that career military officers who never had a civilian job before their retirement can claim that all unions are evil. Ever been in one? Even know anyone who belongs to a union? I don't imagine you spend much time around the blue collar types at your defense contractor jobs.
</p><p> 
</p><p>Union wages are not what drove theose jobs overseas. Our minimum hourly wage is higher than the daily wage of people doing those jobs overseas. We can't compete with that. As for developing a skill, tell that to all the engineers who have found their jobs shipped to India.
</p>

UltimaRatioRegis said...

I always find it interesting when someone tells me what I know and what I have done, and what I haven't. 

Jeff Gauch said...

I don't know anyone who thinks they have a right to have a 50" plasma (I wish, I've only got a 40" LCD).  I do know plenty of people who think they have the right to buy what they want for the cheapest price they can get.

You keep throwing out numbers that make no sense.  Let's say a US-made TV can be sold at a profit for $1000.  An Asian-made TV will cost less (otherwise we wouldn't be having this argument), say $800.  If we put a 100% import tarriff on TV's an Asian TV will cost $1600.  Congratulations, you've just kicked everyone who could pay $800-999 out of the TV market and made every remaining TV consumer in the US $200 poorer.  And that's assuming there's enough domestic production to keep the price from rising toward the import price.  And for what?  A TV factory in the US that is inefficient in using its resources?  What Brazil is doing is nothing more than mercantilist corporate welfare.  Mercantilism works only slightly better than Socialism.

There seems to be a common misconception that manufacturing is the only "true" economic activity.  Wealth isn't created in factories alone.  Pretty much any time money willfully changes hands wealth is created.

Anonymous said...

Football analogies, also easier than thinking. Grab a Bud, complain about Democrats.

ewok40k said...

History check, MrT... He was specifically requested to help bring down the terror of Robespierre - and he did set up the standard for clearing streets from angry (not yet muslim) mobs by employing well placed grapeshot. His warfare was mostly fuelled by the England's incessant efforts to create next coalition against him. If for nothing else, we should remeber him for a new food conservation method, called at the time Appertization, by the name of the inventor. It consist of boiling food locked in airtight container, and is now known by the name of , coincidentally another French guy that did discover why it works, namely Pasteur...

ewok40k said...

Plus, might I add, it is no longer only unskilled labor siphoning out workplaces... you can have a good programmer anywhere in the world where is net connection that would do the work of SoCal geek at half the price. Ask the Indians and Eastern Europe.

UltimaRatioRegis said...

Which is not to say, however, that the welfare state has not disincentivized massive numbers of US workers.   Because it has.  Making a bad situation infinitely worse. 

Like complaining that you cut the board twice and it is still too short.  So your plan, like Obama's, is to cut it again.

UltimaRatioRegis said...

Guest,

Why don't you go visit skippy, and you and he can discuss why the solution to runaway government spending is more government spending.  Then, you can produce charts and graphs of dubious relevance and quote Paul Krugman and Thomas Friedman and convince yourselves of the infallibility of Harry Reid, Barack Obama, Nancy Pelosi, and other similar giants of economic theory.

MR T's Haircut said...

Ewok,
I have a pretty good grasp of historonics regarding Napoleon thank you. 
His expeditions in Egypt against the British were e result of his success at Toulon where the civilians were scared to death he would rise to power.  It was hoped with the most highest anticipation that he would become a victim of Nelson, disease, or even himself.  He succeeded (or not considering he left his men and expedition to ROT in North Africa) and rose to even higher power.
I recommend you read  "Bonaparte - Alan Schom"

Jeff Gauch said...

I use the term "wealth" where you use the term "value".  I use the term "value" for the personal opinion of what something is worth.  Thus the wealth created in a transaction is value minus price.  It's a personal lexicon.

As I said before, I'm not opposed to using tarriffs to counter other countries' distortoins of the market.  I just don't think such distortions are terribly common.  At least not the willfull ones you allude to.  Primarily because whenever this debate comes up the pro-tarriff faction doesn't talk about unfair competition, they talk about jobs going overseas.  At least until someone points out that keeping manufacturing jobs here necessarily makes everyone poorer.

The big problem I see (which is by no means insurmountable) is that various countries have different standards.  If we put a high import tarriff on Chinese goods because of their lax environmental laws the EU may put a high import tarriff on our goods because we don't have CO2 regulations.

UltimaRatioRegis said...

Value is the delta between the cost of raw materials and labor (and other costs such as overhead) and the price of the finished product. 

"<span>I just don't think such distortions are terribly common."</span>

Among our biggest competitors, those distortions are by far the rule rather than the exception.  Not only China, but South Korea, Japan, and increasingly, Vietnam.

UltimaRatioRegis said...

Steve,

Should class warfare come, may the bodies of bolshevik subversives like you be the very first to swing from the lamp posts.  And perhaps, the last.

Anonymous said...

Wow, direct threats. Stay classy SanDiego.

UltimaRatioRegis said...

Come off it, guest.  Not a threat anywhere.  Just a hope that, if he wishes the tragedy of domestic upheaval to the point of civil war, that he suffers first. 

If he doesn't?  Well, he has no worries.

Grandpa Bluewater. said...

A few passing remarks as one works their way down the page.

I have worked since I was 16.  Entry level non union and, gradually, better. Union generally pays better. I joined the Navy to pay for college, and worked every break. Spare me the BS about officers and first job evah upon retirement.  I worked union and non union after retiring.  Union pays better, has better benefits. One's job is more secure. There is a retirement, health care, dental. Non union, mmm, varies. So spare me the BS about never got my hands dirty.
Got 'em dirty in high school, college, in the boats, on the surface ships, as an inspector, when in command.  Cozy staff duty, don't know, never had any. Ever. Closest was teaching, and teaching, mon ami, is work.

Unless there are no tariffs, open, hidden or otherwise there is no free trade.  Any place with a value added tax has a hidden tariff.
Basically, there is no free trade, just suckers who think there is.

China works convict labor for exports. Should we? China manipulates the hell out of its currency. Should we (we are)?

We manipulate the hell out of the tax code.  We reward closing our industry and going overseas, creating unemployment. That TV is cheaper, and we have no steel industry, TV industry, textiles, furniture, small electrics,  and have lost huge market share across the board.

Grandpa Bluewater. said...

<p>Big industries contract with little industries, job shops, tool and die,
</p><p>service. Jobs, pensions, health care, dental.  Big industry goes overseas the TV costs less and the unemployed can't buy it.  Flipping burgers.  Raw materials, mining, farming, chemicals, petroleum is regulated until they die, inside our borders. Overseas cartels control the raw materials, because we wrote the law so they could.  Why?  Graft.
</p><p> 
</p><p>How about the cheaper toys that poison the kids? Cheaper foodstuffs from unsanitary sources?  Huge amounts of fiat money, unbacked, printed. Huge borrowing. Go to LA. Look at the ships unloading containers, everything under the sun in them. What's in the containers on ships sailing?  Usually, NOTHING. Dead heading trans pacific for another load.  What do we export? Food, timber, oil from Alaska, used clothing, used vehicles. and limited very high quality industrial goods. You've had fun telling it to the Marine, don't try it on me. I've worked the waterfront, as a civilian, in, and out of a union job.
</p><p> 
</p><p>Here's the key. It can't go on. There is a limit. We're screwing ourselves, and we're screwing our kids, and we're screwing our soldiers and sailors.  It does HAVE to stop, it is going to stop. 
</p><p> 
</p><p>Endgame, unsupportable, out of gas.  Avoidable? Not for much longer.  Keep it up and it is going to get ugly. Run the numbers, read the new laws. Do your homework, mon ami.
</p><p> 
</p><p>The libs should all go by Trilby.  Amy Winestien passionately believed a lot things.  They weren't true. She's dead. 
</p><p> 
</p><p>Marxism isn't true, Rad Lib BS isn't true. They'll both kill you. No matter how much you want it to be true.
</p><p> 
</p><p>Think.  Don't feel, and follow charismatic folk who tell you what you want to hear.
</p><p> 
</p><p>I've got no time for your theories. I've busted blisters and bones, working the reality.
</p>

UltimaRatioRegis said...

What would Kipling know?  He wasn't even on Facebook. 

Anonymous said...

It's ok, we're used to your personal threats, cough I mean leadership.

UltimaRatioRegis said...

Guest, this mythical "we" you invoke?  It is just you.  Your incessant whining and oh-so-cleverly worded insults speak volumes. 

Anonymous said...

The other people that read your personal threats.  It does appear that there are others here, or is it just you under a variety of names?  That could explain the group think though.  hmmm.

UltimaRatioRegis said...

Yet, you come back, despite the danger.  I do applaud your raw courage.

Aubrey said...

Oh, there are definitely others. URR is tall and thin (from what I've heard). I, on the other hand, am a short, big, one-eyed bastard with a real short temper.

I don't always agree with him (or Byron, or Lt B, or DB, etc...), but I do agree with a damn sight more than I agree with stinking Trolls

Aubrey said...

URR, point, set and match.....

Hey Liberal-bunnies, your arguments would be far more persuasive if you would invest in a touch of reality first!

Aubrey said...

I really wished I differ. No, I mean that I REALLY wished I disagreed.

Unforuntaty I don't.

The older and wiser I have become, the more I have understood the wisdom of tarriffs and import duties.

Unions are liberal. I don't like liberals. That being said, I think unions (private sector, anyway) are FAR FAR better for this country than he current environment.

OK, unions

Aubrey said...

(OK Sal, I hate this comment system!)

To finish my thought:

I think unions AND ope shops are what make all the difference.

Closed shops are evil, socialist inventions to put an unqualified community-organizer in office. Open shops are smart, effective tools to help everyone grow

Aubrey said...

Mr T....

Unfortunately. I think we are closely following the paths of the French Revolution. When Barry starts to lose in 2012 do you REALLY think he will not declare an emergency?

Do you really think he will not find a way to start committees of local community activists to judge the "worthiness" of voters?!?!?!

I wish I did not, but I seriously doubt the ability of the current crew to willingly surrender power.