Tuesday, July 15, 2008

Commentary 38- Dionne on Capitalism

Capitalism's Reality Check

By E. J. Dionne Jr.
Friday, July 11, 2008; Page A17

The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.

Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism."

The old script is in rewrite. "We are in a worldwide crisis now because of excessive deregulation," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview.

He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation." This helped create the subprime mortgage mess and the cascading calamity in banking.


While Frank is a liberal, the same cannot be said of Ben Bernanke, the chairman of the Federal Reserve. Yet in a speech on Tuesday, Bernanke sounded like a born-again New Dealer in calling for "a more robust framework for the prudential supervision of investment banks and other large securities dealers."

Bernanke said the Fed needed more authority to get inside "the structure and workings of financial markets" because "recent experience has clearly illustrated the importance, for the purpose of promoting financial stability, of having detailed information about money markets and the activities of borrowers and lenders in those markets." Sure sounds like Big Government to me.

This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early '80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What's becoming the Panic of 2008 will mean an end to the latest Capital Rules era.

What's striking is that conservatives who revere capitalism are offering their own criticisms of the way the system is working. Irwin Stelzer, director of the Center for Economic Policy Studies at the Hudson Institute, says the subprime crisis arose in part because lenders quickly sold their mortgages to others and bore no risk if the loans went bad.

"You have to have the person who's writing the risk bearing the risk," he says. "That means a whole host of regulations. There's no way around that."

While some conservatives now worry about the social and economic impact of growing inequalities, Stelzer isn't one of them. But he is highly critical of "the process that produces inequality."

"I don't like three of your friends on a board voting you a zillion dollars," Stelzer, who is also a business consultant, told me. "A cozy boardroom back-scratching operation offends me." He argues that "the preservation of the capitalist system" requires finding new ways of "linking compensation to performance."

Frank takes a similar view, arguing that CEOs "benefit substantially if the risks they take pay off" but "pay no penalty" if their risks lead to losses or even catastrophe -- another sign that capitalism, in its current form, isn't living by its own rules.

Frank also calls for new thinking on the impact of free trade. He argues it can no longer be denied that globalization "is a contributor to the stagnation of wages and it has produced large pools of highly mobile capital." Mobile capital and the threat of moving a plant abroad give employers a huge advantage in negotiations with employees. "If you're dealing with someone and you can pick up and leave and he can't, you have the advantage."

"Free trade has increased wealth, but it's been monopolized by a very small number of people," Frank said. The coming debate will focus not on shutting globalization down but rather on managing its effects with an eye toward the interests of "the most vulnerable people in the country."

In the campaign so far, John McCain has been clinging to the old economic orthodoxy while Barack Obama has proposed a modestly more active role for government. But the economic assumptions are changing faster than the rhetoric of the campaign. "Reality has broken in," says Frank. And none too soon.




My Commentary:

Zemack wrote

Does the term disingenuous come to mind? I’d be surprised if Mr. Dionne kept a straight face while writing this article. There is no “capitalism, in its current form.” There is only laissez-faire capitalism; the social system based on individual rights and a government that protects those rights…or statism, the social system of dictatorship. What we have today is a mixture of the two…i.e., a mixed economy.

The part that is failing today is not capitalism. Where do you see it?

Not in medicine, where 87% of America’s health care spending represents people spending other people’s money. And where the insurance market is buried under hundreds of government coverage mandates. And where the absurd government-imposed third-party-payer system leaves the individual who ultimately pays at the mercy of his boss or the state. And where massive government price-fixing through medicare, medicaid, and other wealth redistributionist schemes masquerading as “insurance” makes a mockery of market pricing. And where a new form of slavery has been created…EMTALA…which forces hospitals and their doctors to treat free of charge any free-loader who walks through an emergency room door demanding free healthcare.

Not in energy, where the industry is beset by government-imposed restrictions on production across the board, from exploration and drilling, to refinery construction and expansion, to nuclear power plants, to electricity transmission, to the laying of new pipelines. And where virtually every new energy infrastructure project is delayed or stymied by litigation-happy “environmentalists.” And where special government tax brakes and subsidies to politically connected companies with the latest “alternative energy” scheme are rampant. And where productive companies who produce and supply the energy we need are lambasted and threatened with theft by taxation of “excess” profits earned through market prices, while other companies…utilities…enjoy legal monopoly status and guaranteed prices and profit margins while being protected from competition.

Not in finance, where the banking industry is protected from bankruptcy by a government central bank that controls the money supply, interest rates, reserve and margin requirements, etc., and then acts as lender of last resort. And where the Community Reinvestment Act “encourages” lenders to offer mortgages to “sub-prime” (i.e., low-income) borrowers based on “flexible [i.e., lower] underwriting standards.” And where those same lenders can then sell those mortgages into a market artificially inflated by two government created and backed corporations, Fannie and Freddie. Where excessive housing “investment” is encouraged by tax policy. And where sound, prudent banking is penalized while reckless, unscrupulous lending is encouraged because of federal deposit insurance and the “too big to fail” bailout policies.

Mr. Dionne is attacking a straw man. Capitalism and free markets don’t exist today, except in bits and pieces here and there. Massive government intervention and control in our lives now approaches or exceeds the elements of freedom that still exist. The original Founding principles of inalienable individual rights protected by government are all but forgotten. The minimal “pseudo-deregulation” of recent decades pales in comparison to the size and scope of government.

Attacking alleged “free market failures” without investigating the coercive government policies, regulations and controls, some of which trace back decades, that preceded them is a sham. Today, it is not the distorted and shackled free market remnants, but ever-growing government interventions in private economic decision-making that has failed. Yet, Mr. Dionne and other statists blame free market capitalism, then call for even wider government powers to close whatever “loopholes” of freedom still exist. Well, some of us are on to the game. It’s not hard to see where this is all leading. If our freedom means anything, it is those who use government power to “regulate” the productive activities of private citizens that needs a reality check.

7/13/2008 2:44:56 PM

Wednesday, July 2, 2008

Commentarys 36 and 36a- Guns and the 2nd Amendment

Jersey-born judges get it right on guns
Posted by Paul Mulshine July 01, 2008 5:43AM


I was walking around Rutgers the other day when I came upon a memorial to students who had fought in World War II. The list of names was impressive, but I imagine most major universities in America have similar memorials.

It was only when I happened to walk by Old Queens that I noticed something you wouldn't see on just any campus. It was a plaque honoring the Rutgers men who had fought in the Revolutionary War. Nearby is the spot from which Alexander Hamilton directed cannon fire against the British in cover of George Washington's army.

You don't see that sort of thing in the so-called heartland, which would be in the heart of nowhere if not for the Jersey boys. Yet hardly a day goes by that I don't receive an e-mail from some self-proclaimed 100 percent American in a red state informing me that I can't possibly be a true conservative because I and my newspaper column originate here in New Jersey.

I am thankful to Antonin Scalia and Sam Alito for forever laying that myth to rest. It is a curious fact that two-ninths of the membership of the U.S. Supreme Court originates in that city where George Washington so famously routed the Hessians back in 1776. And the Trenton two were instrumental in the historic decision last week that, to the consternation of liberals everywhere, returned the Constitution to its revolutionary roots.

That was, of course, the decision in the case of D.C. vs. Heller, in which the court ruled for the first time that the Second Amendment to the Constitution means what it says. And what it says is that the right to keep and bear arms shall not be infringed.

You might argue that anyone could have concluded the same. But the genius of the Jersey-born Scalia was in expressing that opinion in terms that are irrefutable even to liberals. Liberals love to argue in favor of both individual rights and the right of revolution, assuming the revolutionary in question looks good on a T-shirt, à la Che Guevara. Well, if that's what you like, said Scalia, then you shall have it. He went out of his way to ground the Second Amendment right to bear arms in the right of citizens to rebel against an oppressive government.

With that task accomplished, Scalia went on to make it plain that the right to self-defense is every bit as much of an individual right as the First Amendment right to free speech. He cited an 1803 version of Blackstone's Commentaries that put Second Amendment rights on the same plane as First Amendment rights and said that in both cases the courts are sworn to protect those rights from overbearing politicians.

This left liberals nowhere to stand on principle. So they turned to politics. In dissent, Justice Stephen Breyer wrote that "there simply is no untouchable constitutional right guaranteed by the Second Amendment to keep loaded handguns in the house in crime-ridden urban areas."

Again, this is a subject a Jersey guy would know a bit more about than the California-born Breyer. Though Scalia left Trenton as a lad, his parents took him to New York City, then quite a rowdy spot. Alito, meanwhile, was until recently working in Newark, a city whose virtues in that regard I need not list.

Here is where we come to a crucial difference between liberals and conservatives. Implicit in the liberal view is the idea that rights must be trimmed to fit the behavior of the citizenry. The conservative, meanwhile, argues that rights are eternal while social conditions are temporary.

Andrew Napolitano, the third in the triumvirate of great Italian-American legal minds from Jersey, shares with Alito and Scalia what he calls an indispensable link to the great tradition they espouse, the fact of growing up in "a traditional Italian Catholic household."

Napolitano, a former Superior Court judge on the Jersey bench who is now a Fox News legal analyst, said this family history links all three to a conservative tradition perhaps lacking in the heartland -- the Catholic tradition of natural law as elucidated by Thomas Aquinas.

"The most important thing in the opinion is that the right to self-defense is a natural right," said Napolitano, who attended Princeton with Alito. "You have right to defend yourself against unjust use of power."

That principle is now explicitly enshrined in constitutional law for the first time since the founding. And it is a principle that, perhaps more than any other, defines the difference between liberals and conservatives.

So for all those people in the red states who write me e-mails questioning how someone from Jersey can be a conservative, there's your answer. Our revolutionary history is better than yours. And our conservative intellectuals are smarter than yours.


My Commentary:

Posted by Zemack on 07/02/08 at 9:29PM
The only drawback I see to that decision is how close it came to going the other way. The vote was 5-4. It should have been a slam-dunk 9-0.

It is a sad and dangerous fact that many if not most Americans have lost the knowledge of the concept of inalienable individual rights, the basic founding principle of the United States, and what it takes to keep them. While the right to gun ownership is not a primary right, it is derived from those primaries, which are life, liberty, property, and the pursuit of happiness. The right to life includes the right to defend that life. As Judge Napolitano correctly states, "The most important thing in the opinion is that the right to self-defense is a natural right. You have a right to defend yourself against unjust use of power."

I have never owned a gun, and I see no personal reason for ever owning one in the future. But it is still my right. Do I want to forfeit that right, just because I happen not to exercise it? NO!! By tying 2nd Amendment rights to the 1st Amendment, Justice Scalia raises a crucial point. The loss of any one basic right endangers all of the rest. Liberty never disappears overnight. It vanishes in a steady erosion of freedoms surrendered by the people to the state bit by bit in the name of "good intentions." It is a process that has been going on in America for about a hundred years. It is the road to dictatorship.

The only way freedom can be preserved is for every citizen to be willing to stand up and defend not only his own rights, but all peoples' rights. This issue is about more than gun owners, and the anti-2nd Amendment crowd should think again here. Those who would vote away the rights of others, should know that they are voting away their own, as well.



What are People Thinking?
By Kris | Jun 17, 2008

I run another blog, which is primarily focused on outdoor pursuits, as that is one of my hobbies. I wrote a post over there addressing Obama’s position on gun control, and the 2nd amendment. Recently, someone commented on that blog that Obama’s lack of respect for the 2nd amendment isn’t really a big deal. Here is the comment from the other blog:

i support obama…..i also understand where you’re comming from feeling worried about the whole “right to bear arms” situation…..but really, IS that the most important thing right now? yes, it’s our right as americans, and some would say that gun control policies would only lead to the government then slashing away at other rights, but i don’t believe that would happen….when politicians support gun control, it’s because they believe it’s a way to make our country a safer place….their intentions aren’t those of oppression. and as i stated before, we have much bigger problems facing this country…not voting for someone who otherwise has very good policies, just because of their stance on one issue is illogical.

What this person does not seem to understand is that the right to bear arms is a constitutional right. That means that politicians are not allowed to come along and decide that they “can make our nation a safer place” by getting rid of this right. Could the same politician decide that taking away the freedom of speech (1st amendment) could make our country safer, and therefore get rid of it? I think not, there would be wide spread outrage over such a move. However, much of the country is satisfied with taking away the 2nd amendment on a whim.

I am amazed that someone would ever think that BO’s policies are good other than this. I for one, find very little (if anything) that I can agree with BO on. His policies for the future of this country will certainly bring change, but that change will not be good. His idea is to turn as much over to government as humanly possible, after all the government knows better what is good for you than you do. I for one don’t need the government taking over my health care, or taking more money from my paycheck to pay for all the entitlement programs that are on the democratic agenda. We have far too many people wanting handouts rather than a hand up in this society, and BO and his policies will only exasperate the situation.

This person obviously has only swallowed the BO and democrat kool-aid. Never has taking away guns made a society safer. We can take the handgun ban in Washington D.C. as one example. Only one time since the institution of the ban has the murder rate been lower than when it was instituted. Seems to me that makes the plan a failure, as it was put in place to help cut the murder rate in the city. And yet, proponents of the ban insist that it remain. So, there is a whole city whose citizens cannot purchase a handgun to protect themselves–the whole point of the 2nd amendment!

Liberals will so easily allow the government to take away my rights, but they want to make sure that those detainees in Guantanamo Bay have their rights. What seems to be the problem here? I am a US citizen, and as such I have a right to keep and bear arms…I don’t think BO has the right to decide for me whether that is safe or not. I will most definitely vote against candidates that campaign on taking away constitutional rights. If you vote for them, then you had better start practicing keeping your mouth shut…your right to free speech just might be next!



My Commentary:

It is a sad and dangerous fact that most Americans have lost the knowledge of the concept of inalienable individual rights, the basic founding principle of the United States, and what it takes to keep them. While the right to gun ownership is not a primary right, it is derived from those primaries, which are life, liberty, property, and the pursuit of happiness.

I have never owned a gun, and I see no reason for ever owning one in the future. But it is still my right. Do I want to forfeit that right, just because I happen not to exercise it? NO!! As Kris correctly points out, freedom of speech (or any other right) could be next. Liberty never disappears overnight. It vanishes in a steady erosion of individual self-determination surrendered by the people to the state bit by bit in the name of good “intentions.” It is a process that has been going on in America for about a hundred years. It is the road to dictatorship.

The only way freedom can be preserved is for every citizen to be willing to stand up and defend not only his own rights, but all peoples’ rights. Those who would vote away the rights of others, should know that they are voting away their own, as well.