Massive Socialism
Everyone in the policy community seems semi-paralyzed by the sheer scale of recent news and the volume of demands for basic explanations of what, exactly, is happening. But looking a bit past all that, isn’t there an enormous progressive opportunity here?
In November, there’s going to be an election. And in January, there’ll be a new President. And in the interim, progressive groups will probably come up with a lot of “ten ways to make everything awesome” proposals. And it’ll take 41 conservative senators to filibuster them all, and so they’ll all be filibustered. But if the government directly controls major financial institutions, that would give the new administration extraordinary leverage over the national economy. Suppose the new CEO of AIG decided he didn’t want to insure assets of companies whose executives make unseemly multiples of the national median income? There are all kinds of crazy things you could do. And of course not all of them woul dbe good ideas. But some of them would! And the smart folks on our side need to be figuring out which ones they are. It seems doubtful to me that a progressive administration would ever be able to get away with this much nationalizing of everything, but what’s done is done and I think it creates a real opportunity for “socially conscious insurance underwriting” or whatever you care to call it.
72 Responses to “Massive Socialism”
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September 17th, 2008 at 11:26 am
And remember as William Shakespeare so happily put it in King Lear:
The worst is not, so long as we can say, “This is the worst.”
Or as twas said in Young Frankestein, “It could be raining.”
September 17th, 2008 at 11:29 am
Yeah, it’s a great opportunity for the left to start controlling everything. So was the Great Depression. It took you two days to think of this?
September 17th, 2008 at 11:29 am
“Suppose the new CEO of AIG decided he didn’t want to insure assets of companies whose executives make unseemly multiples of the national median income?”
Then those companies would take their business to any of dozens of other major insurance companies. Not your best work.
September 17th, 2008 at 11:30 am
So Matt, I’m guessing that you read this column in NYT:
http://www.nytimes.com/2008/09/17/opinion/17koppell.html?ref=opinion
the jist: Why not make investment banks and other companies pay premiums for this catastrophic risk insurance?
September 17th, 2008 at 11:30 am
The stock market is collapsing!!!
Goldman and Morgan are getting the crap kicked out of them!!!
WTF
September 17th, 2008 at 11:31 am
Matthew, don’t get me all hot and bothered like that
September 17th, 2008 at 11:31 am
It’s pretty naive to think that the ideas the smart guys on your side would come up with would be the ones actually implemented by any administration. It’s also naive to think that “the smart folks on our side,” whichever side you’re on, are capable of managing the national economy.
This post makes me think of the Naomi Klein book, only here we’re talking about “Disaster Socialism.”
September 17th, 2008 at 11:32 am
“…that would give the new administration extraordinary leverage over the national economy…”
Right! I’m just wetting my pants thinking of how wonderful it will be when the blowhards in D.C. have even more opportunities to game the system in their favor.
September 17th, 2008 at 11:32 am
Well, that scared the bejesus out of me. May I humbly submit that progressives will do their long term causes the most good by focusing on making sure the financial and insurance markets are actually performing their primary functions well?
September 17th, 2008 at 11:33 am
Ah, Matthew, don’t go all wobbly on us.
I want to see a row of Republican heads sitting on stakes. On the National Mall. And I want it now.
The Fucking Republican Party wouldn’t exist after the election if the Democrats could somehow grow a pair and point out to the voters how badly they’ve been screwed.
September 17th, 2008 at 11:34 am
Great idea. Never happen.
September 17th, 2008 at 11:36 am
Via the Great Orange Satan:
September 17th, 2008 at 11:38 am
Unfortunately, Don Williams, we have to deal with the Actually Existing Democratic Party, not some imaginary and possible Democratic Party.
September 17th, 2008 at 11:41 am
I wouldn’t say that investing the executive branch with dictatorial control of major sectors of our economy is necessarily a “progressive” development. I mean, how much more power does the imperial presidency need?
Maybe some day the president won’t even need a congressional appropriation to go to war. He can just order some government-operated financial institution that he runs to loan the Pentagon the money it needs.
Or maybe one of these government corporations can buy Blackwater and operate it as a subsidiary.
September 17th, 2008 at 11:44 am
Democrats and Liberals are not Socialists, Matt. At least I’m not. I don’t see any good coming from the Federal government owning AIG or Freddie Mac and Fannie Mae. These are disasters and examples of corporate welfare. The government should find ways to get these entities back into private hands and recover our tax dollars as soon as possible. The shareholders and executives of these firms should get nothing. I can understand that we didn’t want these firms to fail and cause a larger financial crisis. However, thinking that the this would be a good time for the government to start nationalizing private businesses is nuts. Regulation and accountability - yes. Contol over the means of production - no way!
September 17th, 2008 at 11:56 am
yes, we’ve seen the collapse of capitalism for something like crony socialism, and yes, changes better be in order. unfortunately, the real seers are not in the democratic establishment. not in congress, not in former administrations. rubin et al were a huge part of the problem. recall hillary just a few months ago saying she’d bring in greenspan and rubin to fix things!!! (or delong praising greenspan–unless he’s stopped; i stopped reading him. he’s so clueless.) clearly mccain is lightyears wrong (phil gramm), but i’d like to know, matt, who you think has these ideas. we wouldn’t want it being set up like the provisional gov in iraq.
personally, i’d consult paul volcker. and he came out for obama early.
September 17th, 2008 at 12:00 pm
the verdict is in - massive deregulation doesn’t work. tax cuts don’t create jobs. and they don’t create enough revenue to pay for themselves. preemptive war doesn’t work. so many of the republican policies have simply been proven to be failed idealology. but there is a tremendous danger in a democratic president with a democratic congress going way too far in the other extreme. this post…if not sarcastic…scares me.
as for the aig buyout…$85b divided by 130m taxpayers is $653 each. I’ll take mine now.
September 17th, 2008 at 12:06 pm
Re El Cid’s comment “Unfortunately, Don Williams, we have to deal with the Actually Existing Democratic Party, not some imaginary and possible Democratic Party.”
———–
So you go to War with the Democratic Party you have — not the Democratic Party you might want or wish to have at a later time …
What was that burst of laughter coming upwind from the Chesapeake Bay?
September 17th, 2008 at 12:07 pm
How about just hammering home that deregulation should never have been an ideology, but a strategy that works in small doses. I’m not really gung-ho about Barney Frank running our financial institutions (now, Barney Smith should be hired immediately), so maybe we should try to find a way to get Fannie, Freddie, and AIG off the government’s books ASAP and return to the tighter financial regulations of the pre-1970s.
In the meantime, I’d be happy with a little fiscal stimulus, if you know what I mean… GrrrRRRrrrr
September 17th, 2008 at 12:15 pm
Re hey norm’s comment “as for the aig buyout…$85b divided by 130m taxpayers is $653 each. I’ll take mine now.”
————
Er..no. Half of those taxpayers are too poor to pick up Georgie’s bar tab. And it ain’t $85 Billion — throw in Freddie, Fannie, Emergency loans,Bear,etc and we’ve just bought Wall Street a $700 Billion round of drinks.
So $700 Billion divided by 65 Million taxpayers roughly equals $10,000 per middle class taxpayer.
Of course there’s also that $10 Trillion of federal debt — $8 Trillion of which was incurred by the personal signatures of fiscal conservatives Ronald Reagan, George H Bush and George W Bush. $10 Trillion div by 65 million equals $154,000.
Adding in the latest $10,000 brings the total to $164,000 per taxpayer.
Will that be Cash, VISA or Mastercharge?
Personal Check?? Are you fucking Kidding?
September 17th, 2008 at 12:26 pm
I propose we convene a Constitutional Convention and pass the following Amendment:
“We, the People of the United States, hereby Terminate this Constitution and render it null and void. The only legal governments within the area formerly known as the United States are the governments of the States”.
No sovereign –> no sovereign debt. Simple.
September 17th, 2008 at 12:35 pm
I do take Matt’s point that these recent actions suddenly put the broad issue of an expanded government role in our economy back on the table after a couple of decades of post-Cold War neoliberal doldrums and market fundamentalism.
There are certain areas of our economy in which I would like to see much more active government involvement, but other areas in which historical experience shows government doesn’t do very well. The areas where activist government has worked, and where I would like to see more involvement are:
1. Organizing and funding large economic reorganization projects and infrastructure overhauls that meet pressing national needs and aims, but are beyond the capacity of the decentralized free market system to grope toward. Tasks like building dams, interstate highway systems, a space program, national security infrastructure, energy sector restructuring, etc. are public investments that require an organizational effort that spans the highest and broadest levels of our society, and a singleness of plan and purposes, and can’t be left to smaller risk-takers competing with each other to create ill-fitting and haphazard pieces.
2. Regulation: establishing the rules that participants in the market economy must play by. The rules are aimed at the public good, and includes such things as wage policy regulation. (Personally, I think we need a “maximum wage law” that pegs a cap on executive salaries according to a fixed multiple of the lowest salaries in their firms. Among other benefits, this helps to avoid irrational overcompensation, his gives management an incentive to raise all boats together by raising salaries at the bottom.)
The areas that government is not so good at are:
3. Direct participation as a competing producer or provider of services in sectors of the economy. This is something we need to be very careful about. It can dangerously concentrate economic power in poorly accountable bureaus of government, and can suppress necessary competition in areas where constant innovation and ingenuity are important. The security of government employment and absence of competition also tends to quash the hustling, constantly improvement, customer service orientation found in private industry.
4. Planning and direction of major sectors of the economy; setting production quotas and targets, regulating prices etc. This is straight-out old-fashioned communism or socialism, and it really doesn’t work. Human life is too complex, human needs and desires too diverse and local, human curiosity and experimentation too restless, and human creativity and innovation too important for this kind of micromanaging to work well beyond a few narrow limits.
September 17th, 2008 at 12:58 pm
No thanks, Don Williams. No way in hell I want to live completely under the State Government of Georgia.
September 17th, 2008 at 1:04 pm
Don, a lot of that sovereign debt is owed to “We, the people”.
Over half is held by the Federal government itself (SS and medicare trust funds). About 5% is in pension funds. Another 5% is in State and local governments. About 3% is directly in the hands of citizens in the form of savings bonds.
Of the part owned by foreign governments (25% of our debt), most is held by countries we consider allies - Japan still owns more than China.
So, if you want to destroy Social Security and Medicare, bankrupt retirees, squeeze state and local government spending and piss off our closest allies, then default on the debt. It would be a very Republican thing to do.
The reason Republicans are so keen on destroying Social Security is that they know the bonds the fund holds will be paid off with income taxes on the wealthiest.
That was the deal 25 years ago. Payroll taxes subsidized the general fund so income taxes could be lowered. In turn, income taxes would pay back the trust fund with interest. republicans know they have only about 8 years left to destroy social security before the implications of it become obvious to even the most uninformed voters.
September 17th, 2008 at 1:12 pm
Heck, just think of what a progressive administration could do with all the expanded executive powers Bush has assumed: CEO’s could be wiretapped, held without hearings, renditioned off to Syria and tortured. Companies that invest in risky fairy-tale bundled sub-prime mortgage futures could be preemptively bombed, invaded and occupied. What fun it will be.
September 17th, 2008 at 1:17 pm
Njorl, Social Security is a Ponzi scheme. So is Medicare. If you think the baby boomers are going to get the benefits they’re promised, you probably believe in the tooth fairy. You probably thought Fannie and Freddie buying up all those no down payment, no assets, no income, sub prime mortgages from crooks like Countrywide was a great way to put Americans in their own homes.
September 17th, 2008 at 1:27 pm
E Oneal,
Do you know anything? Subprime, was by definition, a mortgage that Fannie or Freddy wouldn’t buy.
just stop posting about things you are ignorant about.
September 17th, 2008 at 1:31 pm
Re O’Neal’s comment “Njorl, Social Security is a Ponzi scheme. So is Medicare. If you think the baby boomers are going to get the benefits they’re promised, you probably believe in the tooth fairy.”
————–
Hate to agree with O’Neal but he is right and Njorl is wrong.
An asset is when I have money in the bank that I can take out and spend.
A liability is a debt that I am on the hook to pay.
A “Trust Fund Asset” is both — and hence worthless. It is a Bush IOU in my Social Security /Medicare account that says I’m entitled to a $300,000 check –but only if I first pay $300,000 into the account so there’s funds to write the check.
That’s well …I’m too strangled with rage to describe it. But whatever it is , it was created in a period when there were almost as many Democrats in the Senate as there were Republicans.
September 17th, 2008 at 1:32 pm
26: You are a joke. You’re the one whose always here trumpeting the great ‘fundamentals of our economy’. Describing social security as a ponzi scheme is equivalent to asserting that our society does not have the economic means to prevent our retirees from living in desperate poverty. So which is it? Good fundamentals or not?
September 17th, 2008 at 1:39 pm
Re mpowell’s comment “Describing social security as a ponzi scheme is equivalent to asserting that our society does not have the economic means to prevent our retirees from living in desperate poverty. So which is it? Good fundamentals or not?”
———
The good fundamentals are that Medicare has a $35 TRILLION shortfall and Social Security only has a $8 Trillion shortfall.
So the baby boomers won’t drain Social Security because they will die of untreated medical problems first.
Which makes a better PR image than having them starve in the streets in large numbers.
September 17th, 2008 at 1:50 pm
Social Security only has a $8 Trillion shortfall.
Where do you get these numbers? Rest assured, that if our economy does not collapse, the boomers will not increase the dependency ratio to the point of unsustainability for SS. It’s just a choice of whether we want to commit resources to support our elderly or not.
September 17th, 2008 at 1:52 pm
“In November, there’s going to be an election. And in January, there’ll be a new President. And in the interim, progressive groups will probably come up with a lot of “ten ways to make everything awesome” proposals. And it’ll take 41 conservative senators to filibuster them all, and so they’ll all be filibustered.”
———————-
Or alternatively, we pass our “ten things to make everything awesome” bills by introducing them as budget reconciliation bills which aren’t subject to filibusters and pass them with 51 votes.
I’m all for being realistic in the face of insurmountable obstacles, but when being tactically thorough makes those obstacles “mountable” (urg, poor choice of puns), why not go for what we actually run on?
September 17th, 2008 at 2:17 pm
You can’t be serious, Matt. I share your policy goals, but this is not the way to achieve them. Do you have any idea what doing this would open the door to? Pandora’s box is a cookie jar by comparison.
If this is typical of your judgement on economic matters, please, stick to foreign policy.
September 17th, 2008 at 2:21 pm
Ack! Terrible, terrible idea Matt. The best we can hope for is for the Federal Government to see this as a temporary situation, manage to stability, and then get out. Federall mandated “socially conscious insurance underwriting”?? Give me a break. It sounds positively Orwellian.
September 17th, 2008 at 2:42 pm
mpowell, the economy is fundamentally strong — it produces $45,000 a year of goods and services per capita (that’s not all personal income, of course). What’s not sound is the infrastructure of lies and impossible promises that the politicians have created in a bi-partisan way. Fannie, Freddie, government pensions, Social Security and Medicare are egregious examples. Social Security can be fixed by indexing present benefit levels to inflation rather to increases in wages. Medicare is the looming disaster, as Don’s numbers indicate.
September 17th, 2008 at 3:04 pm
mpowell, the economy is fundamentally strong — it produces $45,000 a year of goods and services per capita (that’s not all personal income, of course). What’s not sound is the infrastructure of lies and impossible promises that the politicians have created in a bi-partisan way. Fannie, Freddie, government pensions, Social Security and Medicare are egregious examples. Social Security can be fixed by indexing present benefit levels to inflation rather to increases in wages. Medicare is the looming disaster, as Don’s numbers indicate.
Social Security is fine. Funny how you to try to change the subject to the problems of government. It’s the oldest conservative trick in the book.
When at the moment the only thing that is saving the global finacial markets ass is the government.
In response to your assertion that the economy is sound - yes I wouldn’t panic like some people seem to be doing, but Scott Lily puts it in context well:
It is clear to any detached observer that the travails on Wall Street are not simply a superficial kink in the circulation of the nation’s money supply. There are deep-seated problems here that will impede growth, and accelerate business failures and job losses if not objectively identified and forcefully addressed. While we have recklessly disregarded the need for prudent supervision of our banking and financial systems, the real problem is even deeper.
For eight years [longer IMHO] we have papered over the fact that American consumers do not have the purchasing power to sustain economic expansion. As a report I authored a little more than a month ago details, the wage and salary increases that have occurred since 2000 have not been sufficient to even maintain the level of income that most families enjoyed at the beginning of this decade. Employment has not kept pace with population growth. And even though worker productivity has increased by nearly 20 percent over this period, weekly wages are barely higher than they were on the day the current president took office.
Under normal circumstances, we would have seen the effects of slow wage and job growth much sooner in the economic cycle. But the Bush administration and their enablers at the Federal Reserve Board found a way to inoculate the economy temporarily from the fact that the paychecks which Americans were taking home were insufficient to buy the goods and services the economy was capable of producing. The prescription was easy credit—car loans, credit cards, and most importantly, mortgages.
http://www.time-blog.com/swampland/2008/09/its_the_wages_stupid.html
September 17th, 2008 at 3:22 pm
mpowell, the economy is fundamentally strong — it produces $45,000 a year of goods and services per capita (that’s not all personal income, of course). What’s not sound is the infrastructure of lies and impossible promises that the politicians have created in a bi-partisan way. Fannie, Freddie, government pensions, Social Security and Medicare are egregious examples. Social Security can be fixed by indexing present benefit levels to inflation rather to increases in wages. Medicare is the looming disaster, as Don’s numbers indicate.
Certainly indexing social security to inflation instead of wages will make paying for it easier. But it’s not necessary. Obviously, as wages go up, the ability to pay increases accordingly. So the only thing you have to worry about is the dependency ratio, which is the number of retired persons receiving benefits to the number of workers. As the boomers retire, this ratio will increase, but not as much as the cries of hysteria suggest. Certainly, ponzi scheme is a ridiculous description. Social security does not require an unsustainably low dependency ratio to be properly financed.
The financials of medicare work differently, of course, but I don’t see a reason to panic. If we can’t support the level of medical care that the best medical science allows at some point in the future, we will have to back off of those commitments. But it’s not as if we couldn’t continue to provide healthcare at today’s standards of care, or the standard of care that will likely be present 5 years from now, for example.
September 17th, 2008 at 3:36 pm
Re mpowell’s question “Where do you get these numbers? [For Social Security and Medicare Shortfalls] ”
—————
From the Reports filed by the Trustees for the Social Security and Medicare Trust Funds.
A) Re Social Security,
1) Present Value of Unfunded Obligations from now to 2082 is $4.7 Trillion. (Table IV-B5, 2008 OASDI Report at http://www.ssa.gov/OACT/TR/TR08/IV_LRest.html#266203 ).
2) But that number assumes Social Security currently has $2.24 Trillion in assets –which it really doesn’t because the “assets” are debts we have to pay. So removing those false assets makes the real liability more like $7 Trillion.
That’s using the Intermediate Assumptions — if the High Assumptions are used, then the liability is about $5 Trillion more.
3) Plus that assumes that you fuck everybody who has paid into Social Security starting at 2082 — that you ignore the obligations you’ve incurred to younger workers. If you take that into account — i.e., calculate the obligation to the horizen, you add $9.3 more Trillion to the obligation –making it $16.3 Trillion dollars.
4) My $8 Trillion is an understated estimate but is more in the middle of the several sets of numbers.
September 17th, 2008 at 3:36 pm
5) The Medicare Trustees Report is here:
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf
a) Present value of Unfunded Obligations for H1 from now to 2082:
$12.4 Trillion.
b) Present Value of Unfunded Obligations for H1 from now to infinite horizon: $34.4 Trilion. (Ref: Table III B.10,page 67)
b) Present Value of Unfunded Obligations for SMI portion over next 75 years: $23.6 Trillion (Ref Table V.E2, page 197, at
http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf ) Obligations to unlimited horizon are not given.
So just for for 75 years out, Medicare unfunded obligation is $12.4T + $23.6 T = $36 Trillion . It will go broke well before (within a few years?) then unless we heavily tap the taxpayers.
September 17th, 2008 at 4:01 pm
tomboy, Google “Fannie Freddie subprime” and you’ll see they were both up to their ass in subprime loans. What you said was true at one time, but the politicians loosened the standards. Here’s a good article from the NYT five years ago about efforts to rein in the GSEs. Read to the end to see who blocked the regulatory reform bill. Hint: It wasn’t the Republicans.
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
September 17th, 2008 at 4:05 pm
Don, what you’re missing is that you’re looking at present value of long term obligations. I’m not sure that even makes sense because the pool we’ll be paying out of is the American economy. What do we project it’s growth rate will be? And what do we assume the discount rate is? You move one of these independently of the other by 0.5% and the net differential over 70 years is enormous. $36T is a big number, but does it really doesn’t tell us anything?
September 17th, 2008 at 4:10 pm
Peter K,
Please stop using facts and reality when discussing any topic with Ed O’Neal. Like Sen. McCain, he believes whatever makes Republicans look less culpable for their incompetence.
Regards,
Colonel Danite
September 17th, 2008 at 4:18 pm
mpowell, what are there, 78 million baby boomers? Do you really think the taxpayers are going to provide them with Cadillac quality health care for 25+ years of retirement? Maybe if the economy grows at a nice clip and we get more effective price competition into health care markets. Otherwise, we’re looking at British or Canadian-style rationing and poor quality. “Sorry, you’re too old for that operation”.
September 17th, 2008 at 4:40 pm
I would hardly describe medicare as Cadillac quality health care. And yes, I do think we can support the boomers in their retirement. The dependency ratio is what counts. Not the raw number you can assign to a generation.
September 17th, 2008 at 4:46 pm
Organize every eligible worker in the organization before the Carlyle Group buys up the profitable lines of business.
September 17th, 2008 at 5:05 pm
Hmmm… let’s take a disaster caused ostensibly by government programs (which predate the current admin, btw) and use the disaster to nationalize a portion of the economy. Once completed, let’s use the power of government to enforce our political programs.
sounds fascist to me.
(Oh, and special thanks go to Don Williams for adding the bloodlust against the undesirables.)
September 17th, 2008 at 5:33 pm
mpowell, I’m not sure why you’re so sanguine about dependency ratios. The worker-retiree ratio is expected to go from 4.7 to 1 in 2010 to 2.8 to 1 in 2030. High rates of immigration could raise the ratio, but if it’s low-skilled, low-paid workers, the funding won’t be helped appreciably. It’s seems a bit unreasonable to expect a single worker to kick in 36% of your SS check. http://www.nationalreview.com/nrof_kucewicz/kucewicz022403.asp
I’m sadly amused at those who think the federal government can effectively regulate investment banks, something it’s never before attempted. Any corporate CEO who kept books like the government’s would be headed for prison. It was politicians who egged on Freddie and Fannie to get into subprime loans and to keep shoveling money out the door without heed for risk. Now, as a famous preacher observed after 9/11, “America’s chickens are comin’ home to rooooost!”
September 17th, 2008 at 7:18 pm
I’ve got a great idea! Let’s have the government lean hard on the financial industry to give mortgages to people in low income and minority neighborhoods with dubious credit!
Oh, wait, the government is already doing that …
How’s that working out?
September 17th, 2008 at 8:05 pm
I’ve got a great idea! Let’s have the government lean hard on the financial industry to give mortgages to people in low income and minority neighborhoods with dubious credit!
Actually, they didn’t have to do much leaning. In the end they chose the much savvier strategy of simply making lending to poor credit risks immensely profitable.
September 17th, 2008 at 8:30 pm
It was profitable to James Johnson, Franklin Raines and Jamie Gorelick, who each made off with tens of millions of dollars, but not to Fannie’s or Freddie’s shareholders and the taxpayers. Do a Wiki search on these three big-time Dem fixers, if you’re not familiar with them. Two are top money raisers and advisers to The One.
September 17th, 2008 at 8:32 pm
…you ignore the obligations you’ve incurred to younger workers. If you take that into account — i.e., calculate the obligation to the horizen, you add $9.3 more Trillion to the obligation –making it $16.3 Trillion dollars.
Don Williams: that’s a pretty big number, but it’s a projection that predicts outlays that occur over the next three quarters of a century. That’s a mighty long time. Heck, while you’re at it, why don’t you tell us what Social Security’s “unfunded obligations” are through the year A.D. 3195? That would no doubt take us into the quadrillions.
The Social Security issue has been studied ad nauseaum. All the numbers you’re giving us are a just a needlessly scary way of saying that Social Security’s share of GDP will likely rise by no more than two or three points between now and then. At present America’s public sector consumes something like ten whole points of GDP less than the OECD average. By rich world standards, America’s public sector is fairly small, and her citizens are relatively lightly taxed. We can afford a couple of points of GDP worth of public sector growth spread over many decades to insure that most old people live with dignity, and enjoy a reasonable standard of living.
September 17th, 2008 at 8:40 pm
It was profitable to James Johnson, Franklin Raines and Jamie Gorelick, who each made off with tens of millions of dollars, but not to Fannie’s or Freddie’s shareholders…
Freddie and Fannie were private firms until a short while ago. As such the firms’ owners were perfectly free to fire the persons you mention, or not hire them in the first place, if their services weren’t sufficiently valuable. Similarly, nobody was holding a gun to anybody’s head forcing them to buy shares of these firms.
September 17th, 2008 at 9:34 pm
Private firms with an implicit, now explicit, taxpayer guarantee. We’re on the hook for unknown tens of billions of dollars in losses from the GSEs. Thanks to Obama’s friends. No wonder his outrage has been so muted!
September 17th, 2008 at 10:09 pm
Re: Plus that assumes that you fuck everybody who has paid into Social Security starting at 2082 — that you ignore the obligations you’ve incurred to younger workers. If you take that into account — i.e., calculate the obligation to the horizen, you add $9.3 more Trillion to the obligation –making it $16.3 Trillion dollars.
16.3 trillion sounds like a scary amount of money, but if you amortize it over 75 years it isn’t.
Re: Do you really think the taxpayers are going to provide them with Cadillac quality health care for 25+ years of retirement?
Retirees right now (unless independently wealthy) do not get “Cadillac healthcare” under Medicare. They get Ford Escort healthcare.
Re: How’s that working out?
It was working OK until a bunch of middle class, quite often lily-white, speculators, decided that real estate was a get rich quick scheme, and mortgage companies abandoned any pretense of vetting applicants.
Re: Otherwise, we’re looking at British or Canadian-style rationing and poor quality. “Sorry, you’re too old for that operation”.
Horrors! Our life expectancy might end up looking like Britain’s or Camada’s– oh wait, their numbers are better. (By the way, there are plenty of cases where people are told in this country they are too old for a given operation. Want a bone marrow transplant at 70? Sorry, even if you’re richer than Bill Gates no one will do it for you.
September 17th, 2008 at 10:30 pm
I’ve got a great idea for these public-private partnerships. Future President Obama has an old friend with enormous experience running “socially conscious” public-private partnerships whom Obama could put in charge: Tony Rezko! Fat Tony started out in Chicago as the financial brains behind the Nation of Islam, using Elijah Muhammad’s son as his front for affirmative action contracts, then he managed all that Section 8 housing, so he’s socially conscious out the wazoo.
Of course, Rezko is otherwise occupied at the moment, but President Obama could pardon him so he can get to work running stuff.
September 17th, 2008 at 10:35 pm
Compared to Bush/Cheney and the Republican Congresses, Rezko is a virginal debutante prone to blushes and giggles.
September 18th, 2008 at 3:14 am
Shouldn’t Steve Sailer be kind of wary of guilt by association considering that most of his friends are Nazis?
September 18th, 2008 at 10:15 am
I wouldn’t say that I’m sanguine about it. But looking at dependency ratios, you can see the fixed increase in percentage of support we have to provide to seniors. It’s not going to just keep dropping without limit. And it also brings up something else that should be obvious: we only need to address this when it becomes a problem. If the costs are too much or the economy hasn’t grown enough by 2030 to support those ratios, there are many mechanisms we can employ to increase that ratio to something more manageable at that time. No need for crying about ponzi schemes or multi-trillion $ liabilities.
September 19th, 2008 at 1:13 am
Hi, I found your blog on this new directory of WordPress Blogs at blackhatbootcamp.com/listofwordpressblogs. I dont know how your blog came up, must have been a typo, i duno. Anyways, I just clicked it and here I am. Your blog looks good. Have a nice day. James.
September 21st, 2008 at 12:04 am
How about some “socially conscious” death camps like your pal Stalin favored?
You can take your communism and shove it. Move to France if you love socialism so much. Freedom-loving people don’t have a place to move to; keep pushing us up against the wall and see what happens.
October 21st, 2008 at 4:21 pm
McCain is correcting in referring to Obama’s regulatory and taxation policies as ’socialist’. Since these policies are quite similar to European socialist welfare state wealth redistribution (spreading) policies, then either Obama IS A SOCIALIST, or Obama IS ‘COURTING’ SOCIALISM.
For more detail on this See: “‘Yes We Can’ - ‘Crises’ Used as Pretense for EURO-Socialist Global Governance Wealth Redistribution - ‘Change We Can Believe In’”
ITSSD Journal on Economic Freedom at: http://itssdeconomicfreedom.blogspot.com/2008/10/yes-we-can-crises-used-as-pretense-for.html
”Yes We Can’ - ‘Crises’ Used as Pretense for EURO-Socialist Global Governance-based Wealth Redistribution - ‘Change We Can Believe In’”
OUTLINE
I. Introduction
II. European and Certain U.S. Leaders Are Using the Exaggerated Climate ‘Crisis’ as a Pretense for Strict New Global Governance Wealth Redistribution Regulations to Save the World from the Enviromental Externalities ‘Triggered’ by Anglo-American Market-based Capitalism
III. European and Certain U.S. Leaders Have Characterized the Current Financial ‘Crisis’ as One of Capitalism’, and Are Using it as a Pretense to Reform Global Financial Markets as Part of an Overall Effort to Create a NEW Global Governance Regime Intended to ‘Save’ Anglo-American Market-based Capitalism From Itself’
IV. European and Certain U.S. Leaders Have Called for Global Financial Governance Reforms Based on Feared Similarities Between the Causes of 19th Century Globalization and the Current Era of Globalization. Certain U.S. Leaders Also Seek to Use This ‘Crisis’ as an Opportunity to Complete Their Long-Term ‘European Experiment’ Gone Awry
V. List of Sources (set forth below in order of appearance)
————————————————————————————————-
I. Introduction:
The following articles demonstrate efforts being undertaken by current and former public officials in Europe and the United States to sensationalize and exploit ‘CRISES’ (both real - financial and exaggerated - climate change) to justify the imposition, at the national, regional and global levels, of more public regulation of private economic activities. This pretense for more governmental control of peoples’ private economic lives is NOT CONDITIONED ON the need to establish reasonable and fair ‘rule of law’ substantive and procedural benchmarks (verifiable empirical science, economic cost-benefit analysis, political checks and balances/balance of powers - accountability, transparency and ‘due process) for the public benefit and consistent with individual rights. Unfortunately, the strict rules and regulations called for will, no doubt, impair individual rights and national sovereignty. They also fall outside the requirements of due process, transparency and political accountability which are guaranteed to ALL U.S. citizens by the U.S. Constitution and its accompanying Bill of Rights.
These ‘leaders’ implore their public constitutents to simply ‘trust’ in their knowledge, judgment, foresight and grandiose ‘reputations’ when, in reality, it is precisely their LACK OF wisdom, knowledge, foresight, sincerity and judgment that we all should be suspect of and concerned about!
NO. The burden is on governmental officials to present to the public credible evidence that substantiates and differentiates the real risks from the potential but remote hazards they have exaggerated, and which they claim must be reduced or eliminated (i.e., problems they wish to solve) immediately. If they are unable to prove that there is an urgent problem that necessitates ‘fixing’ in the first place AND that their recommended solutions to the problem identified provide the best ‘fix’ at ‘the least cost’ to individuals’ political and economic rights, especially that of exclusive private property, then they CANNOT go forward with their proposals and/or recommendations, for they will NOT have the consent of the governed.
In the United States, the legitimacy of the ‘rule of law’ and the license to be governed by all branches of the U.S. Government, including the Executive, Legislative AND Judicial branches, derives from the consent of the American people. Former U.S. President Abraham Lincoln clearly recognized that the American nation was: 1) “conceived in Liberty and dedicated to the proposition that all men are created equal”; 2) uniquely and flexibly structured to serve the needs and interests of both the individual and the American people as a whole; and 3) one in which the government is constrained (limited) by the ‘rule of law’ (rather than based upon the ‘rule of men’), founded on the universal principles set forth within the U.S. Declaration of Independence and the U.S. Constitution and its accompanying Bill of Rights. It is worth repeating to these ‘leaders’ that, the U.S. Government has long derived its legitimacy ONLY from the consent of the governed - i.e., the American people. THIS IS NOT EUROPE, WHERE THE PEOPLE DERIVE THEIR RIGHTS FROM THE GRACE OF THE GOVERNMENT!!
Arguably, the governing documents of the United States are as unique in today’s world as they were when they were adopted during the 18th Century. The U.S. nation remains the oldest and most stable form of representative democracy (a true republic) in the world today. Thus, it would immeasurably benefit peoples around the world (but not perhaps their elitist leaders and governments) if these documents served as the framework for a new global ‘rule of law’ system of Governance ‘Of the People, By the People, and For the People’.
According to one European legal expert:
“The purpose of the rule of law is to tame the discretionary power of government and thus enable individuals to pursue their private ends in efficiency-friendly way[s]. On the other hand, the rule of men is about the power of the ruling group to make discretionary changes in the pursuit of its own ends. A major difference between the rule of law and the rule of men is that the rule of law requires a well-defined, stable and credible process by which formal rules can be changed. In a rule of men state, changes in formal rules are a vehicle through which the ruling group seeks its ends.”
For example,
“…the European regulators’ historical inclination is to subjugate individual rights and freedoms to “social obligations” and “socially beneficial” causes.” International law experts agree that European citizens are deemed to enjoy only a positive implied conditional right to private property that is highly subject to “collective power” and the “public interest”— that is, the “general will.”
“[T]he constitutional rights of European citizens have long been viewed as “positive rights” granted by the state to the people, rather than as “negative rights” of the people recognized by the state.”
“A brief review of German legal and political history is quite revealing. According to Humboldt University law professor Dieter Grimm, the constitutions and bills of rights previously enacted by successive German monarchs were intended to preserve the legitimacy and survival of their dynasties, and little more. As a result, they created “positive” rather than “negative” rights that subsequently failed to endure the political whims of national parliaments and to secure consent from short-term-minded monarchs and unelected bureaucracies.” Id., at note 17, at 4.
By comparison,
“One purpose of the American Revolution, therefore, was to strengthen and protect the people’s fundamental rights. Consequently, fundamental rights “could from the very beginning be negative rights” that served primarily to protect individuals from the government . . . . In contrast . . . the inclusion of positive rights in German law can be traced to the fact that European constitutions, unlike the U.S. Constitution, did not establish an entirely new political entity because the nation-state existed before the constitutions emerged. This meant “they never changed the tradition of the state,” and part of this saved tradition, especially in Germany, was that “the state always retained the role of being the representative of the higher aspirations of society”…..
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