My Beauty Best Teacher

Following up on my earlier post about The Horror of Disbelieving in Global Warming and Signs of the Times, Signs of Times to Come, I have to direct you to check out this speech by Vaclav Klaus, President of the Czech Republic and current head of the EU. His speech is mainly about efforts to expand and strengthen the authority of the European Union- but it is also about larger issues of freedom, responsibility, liberty, choices, and the best way to build a prosperous future. Klaus grew up in a communist society, fought against these forces, and now sees these very forces growing in our midst. Thanks to Belmont Club for pointing me to this speech.

The issue of Europe and of its future has stayed with me since the fall of communism in spite of other topical issues. It is not surprising. The undergoing weakening of democracy and of free markets on the European continent, connected with the European unification process, is a threatening phenomenon especially for someone who spent most of his life in a very authoritative and oppressive communist regime. I consider, therefore, the marching towards an ever-closer Europe (which is one of the crucial tenets of Europeism) a mistaken project. The gradual shift from liberalizing and removing all kinds of barriers towards a massive introduction of regulation and harmonization from above, the ever-expanding, overgenerous welfare system, the innovative, and more sophisticated forms of protectionism, the continuously growing legal and regulatory burdens on business, the markets undermining quasicompetition policies, the Single Currency arrangements, are all very real. They weaken and restrain freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competitiveness.

Having said that, let me turn to two other issues I consider significant. I see another big problem in environmentalism and in its currently most aggressive form – global warming alarmism. This ideology has gradually turned into the most efficient vehicle for advocating extensive government intervention into all fields of life and for suppressing human freedom and economic prosperity. I am frustrated that this ideology has not been sufficiently challenged both inside and outside of climatology. We keep hearing one-sided propaganda, but do not hear serious counter-arguments.

The third issue, I would like to mention here today, is the current financial and economic crisis. I recently spent three full days discussing this topic at the World Economic Forum in Davos and my feeling is that the rationality and the economic science have been suppressed or forgotten. The very unpleasant, day by day deeper economic crisis should be accepted as a standard economic phenomenon, as an unavoidable consequence and hence a “just” price we have to pay for the long-term playing with the market by the politicians. Their attempts to blame the market, instead of themselves, are unacceptable and should be resolutely rejected. Their activities, aiming at “reforming” the economic system, are all very doubtful and I as said in Davos: I am getting more afraid of these reforms than of the crisis itself.

Aggregate demand needs strengthening. One traditional way to do this is to increase government spending, mostly on public infrastructure projects, on condition these are available. It would be much more helpful, however, to initiate a radical reduction of all kinds of restrictions on private initiatives introduced in the last half a century during the era of the brave new world of the “social and ecological market economy”. The best thing to do right now would be to temporarily weaken, if not permanently repeal, various labour, environmental, social, health and other “standards”, because they block human activity more than anything else. In the moment of the fall of communism, almost 20 years ago, I did not expect to experience such a degree of government intervention into my own life as I face now. I am, therefore, convinced that fighting for freedom and free markets remains the task of the day. We may be, some of us, oversensitive in this respect but I am sure it is – in principle – not about our personal oversensitivity. It is about the real dangers we see around us.

Often on Facebook and in comment sections of news articles and through conversations with friends I hear people say "What could President Obama done differently?" To answer that question, we would need some sort of insider view on what options Obama was presented with and to hear exactly what his decision making process was. We'd need some memo's or something that would detail all the paths not taken by President Obama, paths that might have led our nation back to prosperity or prevented the massive deficits that will destroy our children's futures or would have helped encourage businesses to grow and invest.

Such memo's, showing all the options that were there, together with some insider analysis, would be invaluable to answering the question "What could President Obama done differently?" Thankfully for us, that information exists, and has been looked at by The New Yorker's Ryan Issa. Americans for Prosperity sums up what just exactly goes down in the Obama White House and the decision-making of soon-to-be-one-termer President Obama:

Recently, the New Yorker’s Ryan Lizza released White House memos showing President Obama’s advisers contemplated multiple options for the original so-called stimulus package. The President’s advisers, including economists Larry Summers and Christina Romer, argued that multiple areas of the economy needed federal stimulus. Despite the advisers’ agreement that the President should engage in some type of big government intervention, the economists and the President differed greatly in their approach to dealing with the economic crisis. The memos reveal that the centralized planning inherent in big government stimulus is not quite the rational process that the Left would like us to believe, but rather a messy amalgam of competing political interests from individual planners.

Decision makers in Washington DC, like President Obama and his advisors, believe government planners can spend money more wisely than the private sector by finding specific areas in the economy where injecting federal funds can presumably improve economic prospects. They draw this so-called “targeted, temporary, and timely stimulus” from the economic philosophy of John Maynard Keynes. Instead of waiting for the free market to sort out economic problems, Keynesians believe that the government must intervene.

However, as economist F.A. Hayek observed, the knowledge required to direct the economy is too vast for any individual (or collection of individuals) to acquire. Hayek diagnosed presumptuous bureaucrats as suffering from “The Fatal Conceit”: they implement programs on the assumption that they know just what they were doing and exactly how the economy would respond. This self-deception is clearly observed in the White House’s plan for the stimulus.

During the planning and negotiations in 2009, President Obama proposed building a national so-called “smart grid” which would allow energy to flow more efficiently. It was, as Ryan Lizza puts it, Obama’s version of the Hoover Dam. But Obama’s advisers disagreed with the President’s “moon-shot initiative,” which they felt would only look good in headlines but lacked economic sense.

Lizza explained that advisers like Christina Romer had to have a “frank” conversation with the President: the smart grid was too expensive and not likely to produce short term economic benefits. Besides, Romer and Summers had plans of their own. Both proposed granting billions of stimulus dollars to states who were dealing with their own budget crises. Even these advisers, however, differed on how they thought the remaining stimulus funds should be spent. Summers preferred a more limited package with targeted spending in different areas of government. Romer, on the other hand, requested an even larger package with a different vision for the stimulus.

And yet, President Obama persisted with his politically-popular moon-shots. The President proposed a project for high-speed trains; a plan favored by Congressional Democrats. But the President’s advisers pushed back with the same argument: bailouts for struggling states were a better alternative for the economy. The President also differed with his advisers over the stimulus package’s price tag. In as attempt to control the costs of the runaway package, the President had to make a choice: give Congress high-speed trains and add in about $40 billion in Congressional “pork-barrel” spending, or cut $60 billion in stimulus that his advisers said would be more effective (the aid to states). The President showed how politics destroys the so-called virtue of government planning by choosing to give Congress its requested $60 billion in pet projects, including the high-speed trains – a direct example of how the stimulus package wasted (at least) $60 billion in taxpayer dollars.

Lizza’s stimulus memos expose the inherent flaws in any centralized planning effort. Hayek’s argument against centralized planning was not simply that it was an unfavorable method of governing, but that it was logically unworkable. Even though brilliant people worked on the stimulus package, people like Christina Romer who has a Ph.D. from MIT, none of them could possibly complete the impossible task gathering the necessary information to direct the economy. The economy is just too complex for government to direct. Their plans were pitched to the American people as objective solutions, but they really represented the individual (and in the President’s case, politicized) interests of the planners at the table.

The result? A stimulus package that failed to achieve the goals that even its own creators set out for it.

The President made bad decisions. He's on the ballot in 2012. Michigan and many other swing states will decide his fate. Vote the right way.

Last week I wrote in my post Lessons from Economic Recessions- Introduction and Great Depression:

History teaches lessons- it allows those of us in the present to see how results in the past worked. Economic recessions are a great teaching tool for policy makers and average citizens, because they teach us how the recession may have happened and how to emerge from the recession and therefore inform us as to the policy actions that we must take and those that we as citizens must support.

In that post, I talked about the lessons from the Great Depression. The lessons that I drew from the Great Depression are based though not on just data from that event, but from other recessions that our nation has entered and exited. Most liberals simply say 'government spending got us out of the Great Depression', but when I ask them about all of the other recessions that the United States entered, they have a blank look, as they do not have any knowledge of other recessions or how we emerged from them as a nation.

One of my friends in the media should try this sometime- ask a liberal policy maker- President Barack Obama, or Nancy Pelosi, or Carl Levin, or Debbie Stabenow, or Gary Peters- ask them what lessons they have personally learned from the Great Depression. I am sure they will roll off some long-winded answer that sounds educated and learned but basically boils down to 'spend more money.' Follow-up that question with a question on what lessons they learned from the Depression of 1920-21, or The Panic of 1907, or the Long Depression of 1873–79, and you'll be sure to get blank looks from these policy makers, as they don't have any knowledge about those recessions and have learned no lessons from them. They might even snap back some response to you about how unimportant it is to learn about other recessions- but they are wrong, because if you only draw your lessons on economic policy from one recession, the Great Depression, and your lessons are wrong at that, than you are sure to be wrong about very big and important policy decisions that have real effects on our nation.

Of course, my blog should not be the source for your education- I would advise you to spend some real time studying some real economists- but at least the knowledge that I display here and the lessons that I draw here are likely more educated than those of the above policy-makers, including our Harvard-trained President of the United States. So let's discuss today the The Forgotten Depression of 1920.

The Depression of 1920–21, which was an extremely sharp deflationary recession in the United States that lasted from January 1920 to July 1921, which at 18 months in duration is longer than any of the recessions after WWII, and which saw a GDP decrease of anywhere from 3% to 7%. The recession of 1920–21 was characterized by extreme deflation- anywhere from 13% to 18% — the largest one-year percentage decline in around 140 years of data. Unemployment jumped anywhere from 4 to 6% in one year, the AT&T Index of Industrial Productivity showed a decline of 29.4%, and stocks fell dramatically during the recession. It was a very bad recession that led many in society to question the stability and future of the American system of capitalism.

At the time, Secretary of Commerce Herbert Hoover — later President Hoover- urged President Harding to consider an array of interventions to turn the economy around. Hoover, as we all know now, was a progressive Republican who believed that active government response by government officials who were smarter than the rest of us could shorten a recession and led to economic growth. Hoover advocated the same policy responses in 1920 that he implemented in 1929- increased spending by the government, increased taxes especially on the evil rich, increased regulation of businesses, bailouts for banks and 'too big to fail' companies, continued support to labor unions, and more government agencies and boards to organize and improve our existing economic system.

As you can see, the responses that Hoover advocated in 1920 and implemented in 1929 are very nearly the same policies that President Obama implemented in 2009. The results of these policies are seen today and were seen in 1929- but not in 1920 because President Warren Harding ignored Hoover and did the exact opposite as what he recommended. Whereas Hoover pushed for more government spending, Harding decreased it; when Hoover wanted more regulation, Harding put in place less; for every board of smart elites that Hoover proposed to control human action, Harding cut boards and agencies so that the common man could be more free; and Harding ignored demands to raise taxes and instead slashed taxes.

The result of Harding's more conservative approach to the severe recession of 1920-1921? The recession ended quickly and ushered in an amazing period of robust economic activity the continued throughout the 1920's as Harding and Coolidge continued conservative policies. It is no surprise that the limited government, balanced budget, low taxes, low regulation, and unleashing of human freedom led to the Roaring Twenties, an amazing period in American history of social, artistic, and economic dynamism, while the active government, increased taxes, massive government spending, and more regulation of the progressive Hoover and liberal Roosevelt led to the Great Depression.

Thomas E. Woods (author of The Politically Incorrect Guide to American History, Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, and Rollback: Repealing Big Government Before the Coming Fiscal Collapse) recently wrote a great post on this subject called The Forgotten Recession- I advise you to read the whole article, but here are several important pieces of it:

...It is hardly necessary to point out that Harding's counsel — delivered in the context of a speech to a political convention, no less — is the opposite of what the alleged experts urge upon us today. Inflation, increased government spending, and assaults on private savings combined with calls for consumer profligacy: such is the program for "recovery" in the 21st century.

Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that "government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed."...

...There was nothing at all unusual about the pattern of American wealth in the 1920s. Far greater disparities have existed in countless times and places without any resulting disruption.

In fact, the Great Depression actually came in the midst of a dramatic upward trend in the share of national income devoted to wages and salaries in the United States — and a downward trend in the share going to interest, dividends, and entrepreneurial income. We do not in fact need the violent expropriation of any American in order to achieve prosperity, thank goodness...

...Harding's inchoate understanding of what was happening to the economy and why grandiose interventionist plans would only delay recovery is an extreme rarity among 20th-century American presidents. That he has been the subject of ceaseless ridicule at the hands of historians, to the point that anyone speaking a word in his favor would be dismissed out of hand, speaks volumes about our historians' capabilities outside of their own discipline.

The experience of 1920–1921 reinforces the contention of genuine free-market economists that government intervention is a hindrance to economic recovery. It is not in spite of the absence of fiscal and monetary stimulus that the economy recovered from the 1920–1921 depression. It is because those things were avoided that recovery came. The next time we are solemnly warned to recall the lessons of history lest our economy deteriorate still further, we ought to refer to this episode — and observe how hastily our interrogators try to change the subject....

Read the whole article- the logic, the understanding, the theories, and the explanation are all in there, and go into economic terms and theories that I am only beginning to gain an understanding of.

The lessons that I drew regarding the Great Depression are supported by the lessons that one can learn from the Recession of 1920-1921- that economic recessions are worsened and lengthened by a government that takes away human liberty, treats people as numbers to manage, takes wealth and property from those who have earned it, and that in every other way violates the Founding Principles of our nation (limited government, federalism, and separation of power). It is up to policy makers to learn those lessons and to vote accordingly on future legislation facing our nation.

Keep reading my blog regularly for future posts on this subject, and I continue becoming educated and drawing lessons from other past economic recessions that our nation faced and overcome.

A recent report underscores the need for economic freedom, it states that it "... is the key to peace as well as to prosperity: "When measures of both economic freedom and democracy are included in a statistical study, economic freedom is about 50 times more effective than democracy in diminishing violent conflict. The impact of economic freedom on whether states fight or have a military dispute is highly significant, while democracy is not a statistically significant predictor of conflict."..."
Via Globalization Institute

Democrat President Barack Obama's economic programs can be best called "The Inside Deal." There is a long history of 'deals' in our nation, where the government expands unconstitutionally into areas where it is not supposed to be and crowds out human freedom and industry. These deals all have cool names- Square Deal, New Deal, Fair Deal, Great Society- and as Obama and his Democratic allies in Congress have jammed through considerable changes in our nation over the last year, it is appropriate that we give a name to Obama's economic policies. I hearby submit to the world that we call Obama's economic programs "The Inside Deal."

The Inside Deal is Democratic President Barack Obama's domestic economic program and is characterized by extensive government spending for politically connected groups within American society. It is aimed to reward those groups that supported Obama's campaign for the Presidency in 2010, such as labor unions, public employee unions, teachers unions, environmentalists, anti-war protesters, Wall Street, and big businesses. Some of the programs that were passed by the Democratic Congress at the time to reward these groups include the stimulus bill, the healthcare bill, and massive annual budgets.

Increasingly during the height of the Inside Deal, there is a link between who receives taxpayer money from the federal government and their political connections. Called by some crony capitalism, it is increasingly unpopular, and in the face of continuing recession in spite of (or because of) the massive deficits that marked the Inside Deal, this program was largely overturned by Republican Congressional majorities and Presidents from 2010-2020 (hopefully).

Hopefully someone will soon create a wikipedia article on this, describing Obama's Inside Deal in more depth.

The first 'deal' that was made between government and America where citizens traded their rights and liberties for the promise of 'progress' was the Square Deal. The Square Deal was Republican President Theodore Roosevelt's domestic program formed upon three basic ideas: conservation of natural resources, control of corporations, and consumer protection. Thus, it aimed at helping middle class citizens and involved attacking the plutocracy and trusts through rhetoric and expansions of federal power while at the same time protecting business from the extreme demands of the rising communists.

Democrat President Franklin Delano Roosevelt had The New Deal. This was a series of economic programs passed by Congress from 1933 to his reelection in 1936. The programs were responses to the Great Depression, and focused on what historians call the "3 Rs": relief, recovery and reform. That is, relief for the unemployed and poor; recovery of the economy to normal levels; and reform of the financial system to prevent a repeat depression. To see a list of some of the programs that comprise FDR's New Deal, see my post 1930's Are Root of All That is Wrong.

The next 'deal' was offered by Democrat President Harry Truman, who presented a 21 point program of domestic legislation outlining a series of proposed actions in the fields of economic development and social welfare, including the call for universal health care. But in the face of peace and rising prosperity, the country decided that it didn't want to accept this deal, and the boom times of the 1950's and 1960's followed.

But Democrat Lyndon Johnson was inspired by the Fair Deal, and when he became President, he tried once again to make a deal between government and society whereby people would trade their individual rights and freedoms and liberties for some sense of 'fairness' in society. He called his 'deal' the Great Society. Two main goals of the Great Society social reforms were the elimination of poverty and racial injustice. New major spending programs that addressed education, medical care, urban problems, and transportation were launched during this period. The federal government has since spent trillions of dollars on these issues, and education, healthcare, urban areas, and transportation systems are now much worse today then they would have been if the federal government would not have stuck its nose into those areas and let human ingenuity and freedom and industry work unchained and untaxed.

Obama's Inside Deal represents then just the latest in a long line of usurpation's that have the goal of reducing our rights to life, liberty, and protection of property. Like our forefathers before, it is up to us to fight and overturn these injustices, least we be reduced to a state of tyranny.

A couple weeks ago I read an interesting article in the Telegraph- in it, longtime journalist Janet Daley suggests that the best thing that the British government can do to improve the economy and make people more wealthy and happy and free is to work really hard and be very productive in DOING LESS. The truth of the matter is that politicians have to have real guts and strength to simply say 'no, I will not spend taxpayer money trying to control people and the market,' but that may be exactly the kind of strength and guts we need today- politicians who promise to do more of less. From her article A daring idea to fix the economy: try doing less:

...the myth of government activism – the idea that intervention by the state is the answer to every economic and social problem – had been definitively routed. Apparently not: Mr Osborne and, we must assume, his boss still seem to believe that any unacceptable national situation must require direct action from them.

Or maybe they don’t believe that at all. Perhaps they just lack the political courage to admit that, in our present crisis, the best thing that the Government can do is to get out of the business of running (or subsidising, or initiating, or incentivising) things altogether – not just in the interests of saving money, but because the effects of such interference are counter-productive. What the economy is suffering from is not an insufficiency of overweening, fussy, bureaucratic initiatives that inevitably unleash an avalanche of unintended consequences, but a lack of cash in the hands of people who might spend it in ways that would actually create wealth and stimulate (in the proper sense of the word) economic growth.

If ever there was a time for radical proposals by a governing party, this is it. Rather than the imitative, mealy-mouthed shuffling of dollops of money from one departmental scheme to another, in what will inevitably look like panic in the face of rising youth unemployment and disappointing growth figures, what we need is a display of real insight and nerve...

...There is an urgent need now to rethink the whole relationship between government and populace while there is still the possibility of discussion. In Britain, Europe and America, the questions are remarkably similar. Can a free-market economy support an infinitely growing state? We will have to choose, quite soon, between liberty and the “security” of a society in which government controls the levers of economic life. Washington politicians are getting a terrible drubbing for failing to resolve their implacable differences over the size of the state (to the extent that they are unable to agree a federal budget). The US national debate may seem rough and ready to European ears – but at least they are engaging in the real argument.

She is right- the argument has been joined, and today via memeorandum I read in the Wall Street Journal an article that echo's the very ideas of Ms. Daley. From former Florida Governor Jeb Bush's article Capitalism and the Right to Rise:

...Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand "Do something . . . anything."

As Florida's governor for eight years, I was asked to "do something" almost every day. Many times I resisted through vetoes but many times I succumbed. And I wasn't alone. Mayors, county chairs, governors and presidents never think their laws will harm the free market. But cumulatively, they do, and we have now imperiled the right to rise....

....We either can go down the road we are on, a road where the individual is allowed to succeed only so much before being punished with ruinous taxation, where commerce ignores government action at its own peril, and where the state decides how a massive share of the economy's resources should be spent.

Or we can return to the road we once knew and which has served us well: a road where individuals acting freely and with little restraint are able to pursue fortune and prosperity as they see fit, a road where the government's role is not to shape the marketplace but to help prepare its citizens to prosper from it.

In short, we must choose between the straight line promised by the statists and the jagged line of economic freedom. The straight line of gradual and controlled growth is what the statists promise but can never deliver. The jagged line offers no guarantees but has a powerful record of delivering the most prosperity and the most opportunity to the most people. We cannot possibly know in advance what freedom promises for 312 million individuals. But unless we are willing to explore the jagged line of freedom, we will be stuck with the straight line. And the straight line, it turns out, is a flat line.

What Governor Bush is talking about is the same kind of thing that I personally observed during my time as a policy adviser in the state's capital. I remember distinctly one time when a young Republican 'conservative' staffer came in to work one day, upset that the car that she had recently bought turned out to have been a bad purchase. She set about writing a law that would force the state to regulate and control all sellers of automobiles in the state and then tried to convince legislators to sponsor this piece of legislation- she wanted the state to immediately do something, to step in and spend lots of money and time and effort controlling thousands of people's individual decisions just to protect several people from their own stupidity. She proposal was met with great hostility towards me, and I countered her proposal by suggesting that rather than the state doing something about used car dealers, it instead loosen regulations and fees and taxes on all car dealers, making the market more free, so that more fools like her could be separated from their money, as the hand of God in its infinite wisdom is wont to do. I wasn't joking though.

The real courage and intelligent thing to do to create a more vibrant, free market by cutting back government regulations and fees and enabling people to be people, in all their glorious faults and warts, because only by doing so can we also unleash the amazing potential for great and good things that humans contain in them. The safe, stately downward path of state control is not the path for me and is not the path that successful, free, and prosperous people- no, we choose the jagged and uneven and unpredictable path that is the path of less government regulation, taxes, fees, and supervision- that is the only true path for better protection and encouragement of life, liberty, and property.

Via The Daily Caller:

Former Minnesota governor Tim Pawlenty turned out a blockbuster economic growth plan this past week, including deep cuts in taxes, spending, and regulations. It’s really the first Reaganesque supply-side growth plan from any of the GOP presidential contenders. And he caps it all off with a defense of optimism as he charges ahead with a national economic growth goal of 5 percent.

That’s right: 5 percent.

Pawlenty calls this target aspirational. Okay, fine. But deeper down, he’s basically saying no to the declinists and pessimists who seem to populate the economic landscape these days. Big government doesn’t work. Let’s try something different.

Ronald Reagan always believed that America is exceptional. By removing obstacles to growth, the Gipper held that economic policies could unleash a massive outpouring of risk-taking, creativity, and entrepreneurship. He was right, and his policies launched a two-decade-long boom.

Actually, the first couple years of the Reagan recovery came in at over 7 percent. And as Pawlenty noted in his speech at the University of Chicago this week, between 1983 and 1987, the economy grew at 4.9 percent annually. I note that President John F. Kennedy also had a 5 percent growth target, a response to Ike’s three recessions.

...those on the left criticize Pawlenty...

Whether Pawlenty's goal is realistic or not is not the point- rather it is the Democratic liberal establishment's response to it. Rather than hope and change and pushing back the tide and restoring America's prosperity and believing in and pushing for and working for jobs and a great economy, liberals and Democrats, whether they are in Congress or in the White House or in the media, now simply laugh at and scoff and ridicule anyone who believes such things.

IS THIS WHAT YOU VOTED FOR? A party that's first and biggest and lasting impression of someone saying that our economy can grow again is to laugh, scoff, deny, and offer reason after reason why you won't get a job, why you won't get a raise, why your children will owe more in debts, why America will get weaker, etc- the new normal of Obama and the Democrats will be a lesser nation, one that you better get used to and expect won't improve.

The very possibility that America could rise again after the destruction that the Democrats and Obama has driven into the very foundations of America inspired the White House to reply:

With regards to 5 percent growth, we couldn’t agree more; that would be very beneficial to the economy. We think providing expansive tax cuts to the wealthy — which we did in the last term and added tremendously to our debt and resulted in this President inheriting a massive deficit and debt in 2009 — probably not the best approach.

This comment filled with snark and sarcasm and divisiveness and bitterness is what we all can now expect from Obama and an Executive Branch controlled by the Democrats. He didn't say 'That's great, how can we work together and find common ground to achieve not only 5% growth but 6% growth', but rather the reply was mocking, empty rhetoric on class warfare, and transferring blame.

Firedoglake, which Obama reads and quotes from and believes in, called Pawlenty's plan a "Unicorn and Pony Economic Plan", and suggested that it is now a 'fantasy' for America to grow again at 5% and that merely suggesting that America can be a prosperous, free, and strong nation is ridiculous.

Michael Ettlinger of the liberal Center for American Progress said, "It's patently ridiculous... it's not worth serious discussion. ... No one serious thinks that's possible."

This quote illustrates the difference between the right (conservatives, tea partiers, libertarians, moderates) and the left (liberals, communists, socialists, fascists)- the right still thinks that unleashing human liberty and freedom through private property protection, limited government, rule of law, and a love of human life will lead our nation to high GDP growth rates, and the left does not. The left believes that it is no longer even possible for America to grow, and that the ruling classes need to lock in social and economic classes through regulation, government control, and excessive taxes so that the rich can grow richer and the poor can grow poorer.

It is shocking that Obama and the Democrats believe that it isn't even possible for the United States to have a 5% GDP growth rate. According to the CIA, many nations grew faster than 5% last year- Qatar grew at 16.272%, Paraguay at 15.270, Singapore at 14.471, India at 10.365, Turkmenistan at 9.222, Argentina at 9.161, Peru at 8.795, Botswana at 8.562, Nigeria at 8.394, Sweden at 5.536, or Mexico at 5.518.

In fact, out of 184 nations listed, 68 of them grew at a rate of 5% or faster last year- and yet Obama and the Democrats think that this is impossible for the United States to do, and they believe that we've turned it around and that Americans should be happy with a growth rate of 2.834% for 2009, which makes our nation the 117th fastest growing economy in the age of Obama.

Our economy that Obama and his liberal Democrat allies thinks it is impossible and silly and just wrong for our economy to grow faster than 5%, and their policies are doing just this- high taxes, high fees, increased regulation, increased government control over society, more bureaucrats, breaking the rule of law, excessive environmental regulations, rhetorical attacks on business and investment and success and industry, policies that attack our energy industry, policies that break the law white hindering our nuclear industry, and massive stimulus and spending bills that mis-allocate resources.

Republicans offer an alternative- they still believe in America, they still believe in the dream of a growing economy, and they still think that 5% growth rate is possible. Vote for them next election.

Africa has long been saddled with poor,even malevolent, leadership: predatory kleptocrats, military-installed autocrats,economic illiterates, and puffed-up posturers. By far the most egregious examples come from Nigeria, the Democratic Republic of the Congo, and Zimbabwe—countries that have been run into the ground despite their abundant natural resources. But these cases are by no means unrepresentative: by some measures, 90 percent of sub-Saharan African nations have experienced despotic rule in the last three decades. Such leaders use power as an end in itself, rather than for the public good; they are indifferent to the progress of their citizens (although anxious to receive their adulation); they are unswayed by reason and employ poisonous social or racial ideologies; and they are hypocrites, always shifting blame for their countries’ distress. Under the stewardship of these leaders,infrastructure in many African countries has fallen into disrepair, currencies have depreciated, and real prices have inflated dramatically, while job availability,health care, education standards, and life expectancy have declined. Ordinary life has become beleaguered: general security has deteriorated, crime and corruption have increased, much-needed public funds have flowed into hidden bank accounts, and offcially sanctioned ethnic discrimination—sometimes resulting in civil war—has become prevalent. This depressing picture is brought into even sharper relief by the few but striking examples of effective African leadership in recent decades. These leaders stand out because of their strength of character, their adherence to the principles of participatory democracy, and their ability to overcome deep-rooted challenges. The government of Mozambique, for example, brought about economic growth rates of more than ten percent between 1996 and 2003, following the economic catastrophe wrought by that country’s civil war (which ended in 1992). And in Kenya, President Mwai Kibaki has strengthened civil society, invested in education, and removed barriers to economic entrepreneurship instated during the repressive rule of Daniel arap Moi.The best example of good leadership in Africa is Botswana. Long before diamonds were discovered there, this former desert protectorate, which was neglected by the British under colonialism, demonstrated a knack for participatory democracy, integrity, tolerance, entrepreneurship, and the rule of law. The country has remained democratic in spirit as well as form continuously since its independence in 1966—an unmatched record in Africa. It has also defended human rights, encouraged civil liberties, and actively promoted its citizens’ social and economic development.
GOOD APPLES
What has enabled Botswana to succeed where so many other African nations have failed? Some observers point to the relative linguistic homogeneity of the country. But Somalia, which remains unstable despite a similar uniformity, shows that this factor is far from sufficient.Others point to the century-old teachings of the congregational London Missionary Society—the peaceful, pragmatic outlook that is inextricably bound up in the country’s political culture. But this explanation also fails to explain why the same positive effects have not been witnessed in other countries with a history of Christian teaching, such as in neighboring Zambia. Nor are Botswana’s plentiful diamond reserves responsible:Angola, Gabon, and Nigeria all have abundant natural resources, but none has seen comparable returns for its people.It is Botswana’s history of visionary leadership, especially in the years following independence, that best explains its success. Sir Seretse Khama, Botswana’s founding president, came from a family of Bamangwato chiefs well regarded for their benevolence and integrity.
When Khama founded the Botswana Democratic Party in 1961 and led his country to independence, he was already dedicated to the principles of deliberative democracy and market economy that would allow his young country to flourish. Modest, unostentatious as a leader, and a genuine believer in popular rule, Khama forged a participatory and law-respecting political culture that has endured under his successors, Sir Ketumile Masire and Festus Mogae. Although operating in very differerent circumstances, Mauritius’ first leader,Sir Seewoosagur Ramgoolam, held to the same leadership codes as Khama.Ramgoolam gave Mauritius a robust democratic beginning, which has been sustained by a series of wise successors from different backgrounds and parties.Both Khama and Ramgoolam could have emulated many of their contemporaries by establishing strong, single-man, kleptocratic regimes. But they refused to do so.Effective leadership has proved the decisive factor in South Africa, too: without Nelson Mandela’s inclusive and visionary leadership, his adherence to the rule of law, his insistence on broadening the delivery of essential services, and his emphasis on moving from a commandeconomy toward a market-driven one, South Africa would probably have emerged from apartheid as a far more fractured and autocratic state than it did.Too few African leaders have followed the examples of Mandela, Khama, and foreign affairs . Ramgoolam. Ghana, Lesotho, Mali, and Senegal are all showing promise. But in many other African countries,leaders have begun their presidential careers as democrats only to end up, a term or two later, as corrupt autocrats: Bakili Muluzi of Malawi, Moi of Kenya,and, most dramatically of all, Robert Mugabe of Zimbabwe. Other leaders, such as Sam Nujoma of Namibia and Yoweri Museveni of Uganda, may be heading in the same direction.
A BOLD INITIATIVE
To build on the positive leadership examples, a select group of prominent past and present African leaders who met over the last year decided to confront the continent’s pathology of poor leadership with deeds as well as words. At the conclusion of a series of private meetings(the final one of which was held in Mombasa, Kenya), they established the African Leadership Council, promulgated a Code of African Leadership with 23 commandments, issued a Mombasa Declaration promoting better leadership,and proposed a series of courses to train their political successors in the art of good government.Members of the council believe that absolute standards of leadership are both appropriate and attainable. Good leaders deliver security of the state and of the person, the rule of law, good education and health services, and a framework conducive to economic growth. They ensure effective arteries of commerce and enshrine personal and human freedoms. They empower civil society and protect the environmental commons. Crucially, good leaders also provide their citizens with a sense of belonging to a national enterprise. Conscious that Africa’s poor are getting poorer and that good governance is essential for successful economic development, the council sees itself at
the vanguard of fundamental reform in the continent. Its approach certainly goes far beyond the New Partnership for Africa’s Development (nepad) and proposals for the African Union. The Code of African Leadership, for example, says in its first commandment that leaders should “offer a coherent vision of individual growth and national advancement with justice and dignity for all,” implying that most leaders today do not. Other commandments demand that African leaders encourage “broad participation,” adhere to the letter and spirit of their national constitutions (especially term limits), encourage dissent and disagreement, respect human rights and civil liberties, strengthen the rule of law, promote policies that eradicate poverty and improve the wellbeing of their citizens, ensure a strong code of ethics, refuse to use their offices
for personal gain, oppose corruption, and bolster essential personal freedoms. This uncommonly bold agenda seeks to avoid renewed patrimonial leadership debacles, such as those presided over by Mobutu Sese Seko in Zaire, Moi in Kenya, Idi Amin in Uganda, and Jean-Bedel Bokassa in the Central African Republic. The council is highly conscious,too, of the hijacking of Zimbabwe’s government by Mugabe, which has resulted in starvation and drastically reduced living standards.The council is chaired by former President Sir Ketumile Masire of Botswana and includes former Nigerian head of state General Yakubu Gowon,Vice President Moody Awori of Kenya, former Prime Minister Hage Geingob of Namibia, and a dozen other present and former prime ministers and cabinet ministers from Sierra Leone to Kenya, Malawi, and Uganda. All are regarded throughout Africa as men of unusual personal probity and esteem and as accomplished proponents of good governance. The council intends to recruit additional members from the ranks of Africa’s outstanding democratic leaders, Francophone and Anglophone, female and male. Together they will serve the continent by advising international organizations, individual countries, and donor agencies on how to improve leadership. The group stands ready to assist civil societies in countries undergoing serious leadership crises. It will also urge greedy national leaders to attack corrupt practices and adhere to term limits (the current presidents of Gabon, Malawi, Namibia,Uganda, and Zambia, for example, have all had pangs of desire for illegal third terms). Next year(2005), it expects to begin holding special seminars for cabinet ministers and others. The council’s curriculum emphasizes constitutionalism, the rule of law, ethics, accountability,diversity, good fiscal management, coalition building, and the fundamentals of modern micro- and macroeconomics. Training courses will soon be launched.Whether the efforts of the African Leadership Council will reduce bloodshed,diminish corruption, and encourage more prosperity for citizens across Africa is by no means certain. But as a unique African response to the continent’s immense needs, this innovative endeavor is a promising, dramatic step forward.

By
Robert I. Rotberg

Reprinted with permission
Copyrighted 2004 Council on Foreign relations Inc. All Rights Reserved

Catherine Kuchta-Helbling writes

Emerging democracies and economies are struggling to provide their citizens with better lives marked by political participation and economic prosperity. Yet, excessively high transaction costs hinder such efforts. Making this aspiration a reality hinges on instituting democratic governance in the public and private sectors. Such a change will contribute to more responsive policies and will increase efficiency, transparency, accountability, and growth, as well as reduce corruption. Moreover, if citizens are granted a greater voice in the reform process, they will gain a sense of ownership over reform measures. This will strengthen democracy and help to build a broader pro-reform constituency essential to consolidate political and economic reforms.

via CIPE

From PrairiePundit comes this post commenting on the recent poor performance on a civics and history test by US public officials:

US elected officials scored abysmally on a test measuring their civic knowledge, with an average grade of just 44 percent, the group that organized the exam said Thursday. Ordinary citizens did not fare much better, scoring just 49 percent correct on the 33 exam questions compiled by the Intercollegiate Studies Institute (ISI).

Among the questions asked of some 2,500 people who were randomly selected to take the test, including "self-identified elected officials," was one which asked respondents to "name two countries that were our enemies during World War II."Sixty-nine percent of respondents correctly identified Germany and Japan. Among the incorrect answers were Britain, China, Russia, Canada, Mexico and Spain.Forty percent of respondents, meanwhile, incorrectly believed that the US president has the power to declare war, while 54 percent correctly answered that that power rests with Congress.

Asked about the electoral college, 20 percent of elected officials incorrectly said it was established to "supervise the first televised presidential debates."In fact, the system of choosing the US president via an indirect electoral college vote dates back some 220 years, to the US Constitution.

The question that received the fewest correct responses, just 16 percent, tested respondents' basic understanding of economic principles, asking why "free markets typically secure more economic prosperity than government's centralized planning?"

PrairiePundit thinks that he may have blundered into an explanation of how liberalism works- it requires an ignorance of history and economics to survive. This may also explain our recent election- a recent Zogby poll indicated Obama voters were grossly ignorant of facts related to the election campaign. And liberals think they are so smart!

UPDATE: Not to toot my own horn, but I got a 97%- guess I'm smart too, maybe even smart enough not to be ignored by smarty-pants liberals?

UPDATE 2: The Corner has a good take on the results of this test- think about this:

There seems to be the idea that all the affirmative-action history we're feeding kids (black studies, women's studies, black women's studies, etc.) is a supplement to learning the basics, which they'll somehow absorb no matter what. Instead, the ISI civic literacy test suggests that such instruction is actually crowding out the fundmentals of history and civics. Other than the Declaration's reference to "life, liberty, and the pursuit of happiness," the two highest scores — i.e., the ones the largest number of people got right — relate to Susan B. Anthony and to MLK's "I have a dream" speech. The 80 percent who got those right compares to fully one-third who didn't know that Germany and Japan were our enemies in WWII, half who didn't know the three branches of government, and nearly 80 percent who didn't know that "government of the people, by the people, for the people" came from the Gettysburg Address. And elected officials scorced even lower than the general public. OK, I shouldn't be surprised, but it seems to me that students shouldn't even hear the words "Susan B. Anthony" until after they've recited the Gettysburg Address from memory and after they've proven they know who was on the losing side of the greatest war in human history.

Keith Hart writing in Memory Bank:

When I graduated to the field of development studies, the picture of West Africa’s cities was just as distorted as one you might get from boorowing a Manchester school perspective. Here the emphasis of the economists was on the new states’ ability to pursue a neo-Keynesian development program. How could ‘we’ (the politicians, bureaucrats and their academic advisers) provide the jobs and other needs of the hordes flocking into the cities at the time? It was assumed that such provision had to come through the bureaucracy and conform to state-made laws. My paper on ‘informal income opportunities and urban employment’ pointed to the wide range of economic activities that were invisible to bureacracy. But even I saw them through a statist lens (“seeing like a state”), hence the term ‘informal’, not regulated by the bureaucracy. At that time I assumed that the bulk of economic progress must come though public and private sector enterprise of a corporate type.
The informal economy was never adequately described or defined, but these days it is commonplace to read assertions that African economies are 70-90% ‘informal’. Certainly the deregulation undertaken over the last three decades of neoliberal economic policies have led to a radical informalization of the world economy, not least in Africa. But to label these activities ‘informal’ is to avoid identifying what they are positively for or how they are organized, by which social principles.
I would say that the last half-century has seen a massive transfer of population to the cities, where most people have been left to generate their own forms of commerce. The informal economy in this sense has been a holding operation allowing many people to survive in the city and some to flourish. Whatever is coming up next will draw to some extent on this sprawling self-organized economic activity. Our task is to find out more about the promising sectors spawned by such a development.

More here

George Ayittey writes:

Economic development does not mean the wholesale and blind acquisition of the symbols and signs of modernity. Nor does it mean everything about indigenous Africa must be rejected in favor of alien systems. In fact, the true challenge for development practioners is how to use the existing so-called "primitive, backward and archaic" institutions to generate economic prosperity. These institutions can never be alienated from Africa's peasants. They are part of their culture. One cannot expect these peasants to suddenly renounce their age-old traditions and ways of doing things. Nor is such abjuration absolutely necessary, as demonstrated by the stupendous success of the Japanese. The Japanese did not have to become "Americanized" or "Sovietized" in order to develop.-Cheetah Index

via Indian Economy Blog

[C]reative human insights are the driving force of our prosperity. By allowing xenophobia and protectionist rent-seekers to restrict the number of people who contribute their ideas to the market process, we inevitably reduce — and perhaps even reverse — the rate of economic growth. Our prosperity will be lower and lower than it would otherwise be.
And this lower rate of economic growth and the correspondingly lower standard of living might well never be revealed by the data.

Benard Wasow writes"...It was not access to foreign aid or special access to Northern markets that gave Asia its advantage over Africa...The external conditions facing these two great regions were similar. The North looked out for its own interests in its dealings with Thailand as much as with Kenya...Asian success was not made in Washington — nor in G8 summits. It was made in Asia. Likewise, we have to recognize that African success ultimately will be made in Africa...the burden of stimulating economic development, the burden of allowing economic development to happen without draining it away through corruption and authoritarian regulation, does not lie in Europe or the United States...The leaders of the G8 cannot bring democracy to the Middle East, nor can they bring prosperity to Africa..."

The graph demonstrates that Obama's economic policies, notably his massive stimulus spending bill and his other spending programs, have made our economy worse than even his worse-case projection said it would be. Let's buy the argument that Bush left Obama with a train-wreck of an economy- in that case, not only did Obama not 'fix' Bush's flaws (bottom graph), not only did he simply hold status quo from the 'awful' economy that Bush left him (the middle graph), but rather, Obama messed up our economy even worse (the more accurate top graph, which I still think understates how bad the economy is).

In fact, look at the data more closely- under Bush, the unemployment rate was in the mid 7's and projected to go as high as 9. But the introduction of the variable of 'President Barack Obama' pushed those numbers as high as the mid 10's- and locked in a 'new normal' of 9% unemployment.

Is that what all you Democrat and liberal voters voted for in 2008? A new normal of 9% unemployment??? Or is it 'Bush's fault' that the new normal of 9% unemployment is locked in in 2011, even though Democrats took control of Congress in 2006 and the Presidency in 2008? Both Reagan and W Bush were able to shorten the recessions that Democrats left them and return our nation back to prosperity quicker than Obama- perhaps Obama isn't the right guy for the job.

Look, Obama is a bad President, and likely will go down as one of the worst in our nation's history because of the damage that is doing to our nation in many ways. I suspect that Hillary Clinton would have been a lot better, and I know John McCain would have been better too- of course we would have had a recession, but it would have likely just been the middle line, and our nation would be on the road to a recovery now instead of on its way to a 'new normal', or worse, a double-dip recession bordering on a great depression due to Obama and the Democrats policies, which attack human freedom, liberty, dignity, and prosperity.

One thing that I do know- it does not matter who the Republicans nominate in 2012, they will be better for everyone in our nation than Obama is, even if they do nothing (the middle line, which is better than Obama's 'doing something). Romney, Perry, Palin, or Pawlenty- all are much better, and I'm surprised that the Democrats are sticking with Obama since he has been such an obvious failure.

The reason why you probably shouldn't go to the mainstream media for anything but sports editorials and the comics is because whenever it writes about anything else its amazing liberal bias shines through. Take for example a recent 'article' (not editorial) appearing in the Detroit News called Death a sure thing, taxes less so: Uncle Sam's share at 60-year low:

Taxes too high? Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.

And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.

Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.

From the way this is written, you would imagine that it is Obama and the Democrats in Congress that are to thank for lower taxes and that because of all those low taxes the Democrats provided us with taxes are now at a 60 year low. In reality, tax cuts were pushed for by Republicans over Democrats objections, and it is the Democrats that we can thank for the job-killing regulations and taxes and uncertainty that has destroyed our national economy leading to few with jobs and few companies earning money, thus lower overall revenue to the national government, thus all that 'lower share' nonsense.

Democrats still don't get the Laffer Curve- that when taxes are too high, they choke off investment and economic growth, leading to less tax revenue to the national government, leading to less revenue to spend on national defense, welfare for the truly needy, money for speculative science, and a secure social security system. It is liberals and Democrats who are pushing higher taxes and thus are creating lower revenues for the national government- under Bush and Reagan and Kennedy when they cut taxes revenue to the national government went up and this could allow the federal government to do all those wonderful things liberals want them to do.

The truth is though that liberals don't really want a government that provides for the poor, the needy, the sick, and everyone else if that means that they control your behavior less with lower taxes. Nope, liberals would trade higher taxes and the control this gives them even if the revenues that the federal government are lower as a consequence. That is the only conclusion to reach, if experience demonstrates time after time the truth behind the Laffer Curve.

The author of the article in the Detroit News demonstrates that lack of knowledge of the Laffer Curve must be pervasive in the liberal community- rather than think 'taxes and regulation and government control are higher and tax revenue is down; I want tax revenue up; perhaps we should have less taxes and regulation and government control' the author of the article pushes for more taxes and regulation and government control, and then will have to cast around for someone to blame when this shortsighted and uneducated policy doesn't work (I've been in Michigan for a while and seen Democrats desperately go through a laundry list of people to blame for the failures of their policies).
For more information on the Laffer Curve, check out Return to Prosperity: How America Can Regain Its Economic Superpower Status or The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen.

Amy Niang writes about the decline of leadership under the Senegalese president:

The implications for state-building in Senegal and similar regimes are clear: democratic change may be a prerequisite but the absence of an institutionalised effort to stabilise the system beyond the regime remains an obstacle. The Wade administration may have few days of glory left. But the damage done by his ruling style to the state-building project is immense. The nominal state has become a carcass institution with a flag and an anthem. Its leading structure is a coalition of an amorphous body made of new political aristocrats whose main characteristics are wealth and relative economic prosperity.

More here

Chamberlain S. Peterside writes:

Based on a recent report published by Goldman Sachs (US based global investment bank), within the ranks of so-called BRIC Nations making remarkable strides are not only Brazil and Russia (in addition to India and China), but also a new group of highly populated, resource-rich countries numbering about 11; including Indonesia, Pakistan Vietnam, Philippine, Turkey, and Nigeria – yes Nigeria. Based on the analysis, these countries are well-positioned to assume commanding heights in the future global economy. The forecast indicated that Nigeria might become one of the twenty largest economies by 2025 if it gets its act together.
As empirical evidence in advanced countries suggest, there is a direct correlation between income level, home ownership, rule of law, access to capital/information, equal opportunity and economic prosperity. Nations can hardly attain developed status and high standard of living for the majority without these key attributes. As poor countries emerge from underdevelopment in a new global village it is instructive that they utilize every opportunity to strive for not just quantitative growth, but also qualitative transformation that is measurable in the living conditions of its people.

As government becomes more and more involved with controlling the economy, specifically economic development, one has to wonder what this leads to. For example, Democratic Governor of Michigan Jennifer Granholm recently announced that her personally controlled economic council has decided to award $28 million dollars in tax payer credits for firms and businesses that her bureaucrats like and favor. This is all deemed 'economic development', and supposedly will 'bring in' $151M and create 1,254 jobs. How does this work in reality?

In reality, these politically connected companies were were successfully able to lobby government for special insider benefits will not bring in anywhere near that amount of money or jobs. In fact, I would question whether this $28M will bring in $28M in revenue for the state- I would be willing to give fair odds that the state will lose money on these investments, and the net result will be a transfer of wealth from honest tax-paying citizens to business interests, much as you see or saw in states as diverse as Syria (now), Germany (1930's), Italy (1930's), or Iran (now).

For example, Granholm was re-elected in 2006 on the strength of promises to rebuild Michigan's economy by supporting new and dynamic environmental companies. She said that under her direction, even though she had no experience in business or investing, she would direct state funds to build new environmental industries in our state by giving tax breaks to favored companies.

Take for example the solar energy company Energy Conversion Devices in Rochester Hills. This company makes solar fuel cells, and companies like this have had tax breaks and stimulus money thrown at it in spades. And yet, they are unsuccessful- which is why they weren't getting bank loans before the government stepped in. Today Energy Conversion Devices announced that it is laying off 70 employees and closing a plant. It's business plan, its means of being successful, it's only way to restore prosperity, is to get its hands on more government money and stimulus- not to be more efficient, not to produce goods that customers want, not to make our world better- but to get its hands on my money.

This is what the future looks like in a politically directed economy- it looks like Detroit. Look at these links for the sources for this post- here, here, here, and here.

UPDATE: This is what a political economy looks like- federal stimulus money is flowing into Illinois because the President of the United States is from that state. 12% of all federal stimulus money has been sent to the politically connected state of Illinois, which is probably the highest percentage (I would guess that California gets a lot too because Pelosi is from that state, and Nevada probably got a lot too since Reid is from that state). Political connections=money in today's political economy.