Is it Fair?

Stephen Moore asks Is it Fair?

Great questions! Except for the last one, which posits what I believe to be a counterfactual – in fact, our grandkids aren’t going to have to “pay off” trillions in debt, regardless which President can be blamed for it. Americans only have to pay interest on the national debt. They don’t have to – and shouldn’t try to! – retire it. But 19 out of 20 isn’t bad at all!


The Liberal Enforcers by Mark Steyn

I confess to having a weakness for Mark Steyn. Although his arguments aren’t always rigorously correct or logically airtight, he makes up for it by being very funny. And he’s usually quite right, in fact.

In The Liberal Enforcers he writes, on the Susan G. Komen affair:

The American Association of University Women announced it would no longer sponsor teams for Komen’s “Race for the Cure.” Sure, Komen has raised $2 billion for the cure, but better we never cure breast cancer than let a single errant Injun wander off the abortion reservation.

Apparently so! Go ahead and read the whole thing. Viva Mark Steyn!

How to Repeal Obamacare

I am not in favor either of piecemeal repeal of PPACA, which might improve the overall situation just enough to make it barely tolerable (thus losing the impetus to repeal the entire abomination), or of de-funding efforts that will turn out to be futile in the end.

I would suggest the following tack for the Republicans.

Call out Obama and the Democrats by publicly reminding them that Obamacare was passed in an entirely partisan way over the objections of a majority of Americans. It was rushed through, with inadequate debate, and inadequate review (“we have to pass it so the American people can find out what is in it”), and sausage-making so revolting that some of it had to be dropped entirely (“the Cornhusker Kickback”). The only bi-partisanship was in the opposition to it. It has set the nation up not only for long term fiscal disaster, but worse, for a hobbling of the last engine of advancement in medical science in the world.

“It was wrong, therefore, to pass such transformational and risky legislation in the first place. And it’s time to right that wrong by repealing it, and starting over.

If you, Mr. Obama and Mr. Reid, and your party, do not agree to repeal, you will be explicitly slapping the electorate in the face, and denying the expressed will of the American people, who changed their representation in Congress in a national electoral landslide of epic proportions largely in opposition to PPACA. You will be obstinately charging ahead with a fundamental change to our nation that the people of this nation have rejected.”

How could Mr. Obama, Mr. Reid, and their enablers in the mainstream media, effectively respond to that challenge? What convincing argument (besides: “we used our small window of total control to ram home our vision of America’s medical future – and you’ll have to get used to it”) could they make to the American people in opposition to a move to repeal?

The advantage of my approach is that it appeals to the fundamental principle of democracy (majority rule), and sets the Democrats up for a charge of massive and unforgivable hypocrisy, since they, much more than their Republican rivals, have ever brayed more loudly about “democratic values.”

Ever Growing Debt! Yes, Please!

Ever-growing debt! Sounds a like tea-party sign… a warning of what faces us if we don’t soon mend our profligate ways.

I’d like to state a startling conclusion which follows from MMT: in a growing economy (an economy that continues to add more goods and services over time), the debt will need to grow to keep pace with that economic growth in order to provide enough money to purchase those goods and services. So, if you want the economy to grow more or less continuously, the debt will need to grow more or less continuously, to infinity. It should never be paid down, and attempting to do so would be at best contractionary and at worst disastrous.

How then will our proverbial grandchildren ever pay down our debt?  They won’t, hopefully. Just as our grandparents left us a federal debt, we’ll leave an even larger one to our grandchildren. But if that debt grows in a measured and proportionate way, in a growing economy, that need not concern us.

As I stated here before: you buy the debt of someone who has a future. It’s the future growth and/or earnings that you care about when you fund someone’s debt. As long as our country has a future, as long as its economy continues to grow year after year, there should be no concern on any debtor’s part or any citizen’s part about a national debt that grows without bound – as long as that growth is measured, and commensurate with the growth in goods and services.

The main policy driver should be economic growth: do whatever it takes to allow continuous growth in the production of goods and services. (Note that I haven’t said anything about making “economic equality” a driver – that’s the egalitarian goal, and one which has been shown time and again through history to be inimical to both human freedom and advances in the standard of living. An essay for another day.) The incoming Republicans, tea-partiers and otherwise, need to understand this before they take measures that may sound good on the surface, but in fact be at best counter-productive. While we need to get the rate of debt growth under control, we don’t need to reverse it.

If you want a quick explanation of why the money supply must grow to allow growth in prosperity, you could do worse than read part 1 of a six part series by the estimable Skeptical Optimist. If you want to see a nice chart showing, historically, what has happened when we’ve tried to pay down the national debt, see part 6 in that series. If you want a quick and easy explanation of fiat currency in a laboratory economy, check out Coupon Clipper’s series at ESM’s blog, here. If you want to learn how debt growth is synonymous with money growth in a fiat currency regime, you should check out the mandatory readings section at

For those who have neither time nor patience for those other readings, here is a brief sketch of the argument I am making:

1) In a fiat currency regime, the money supply is increased by increasing the national debt
2) In order to maximize prosperity in an economy, the money supply must grow commensurately with the growth in the supply of goods and services
3) A growing economy is good for everyone, because it results in more goods and services being available, to increase our standard of living
4) Therefore, if we wish to increase our standard of living without bound we will need to increase our national debt without bound

Yes, I know it sounds weird: but that’s because as individuals, we are not in the position of a national government which issues a fiat currency. Households should not increase their debt without bound.

To check the validity of the premises in this argument, you’ll have to do additional reading.

When will the mutually beneficial curves of increased national debt and increased economic activity come to an end? Well, hopefully never, but in the real world, something will eventually occur to bring an end to the nation and/or civilization. And then we’ll have to learn all of this all over again.

Please tell your incoming congressmen to do what they can to keep the Bush tax cuts in place for all income levels – even though that will result in a temporary increase in the national debt. But please don’t encourage them to make ill-considered attempts to balance the budget, or to pay down the debt. And please don’t blame them when they eventually see the sense in what I am saying and decide to perpetuate deficits and debt – I’m thinking that although few in Congress understand MMT or macroeconomics, they have developed a feel for what happens when you enact contractionary policy. At least I hope so.

Jeffrey Miron Nails It on Prop 19

I was talking about the failure of Prop 19 at work yesterday, and (unknown to me at the time) pointed to the same employment law overreach that Miron notes here. They couldn’t be satisfied with mere legalization; no, they had to find a way to restrict employer rights as part of the deal. Idiots.

Jacob Sullum at Reason, although admitting the basic validity of this point, can’t bring himself to accept it as sufficient, and tries to defend the totality of Prop 19 anyway.

Nope… not buying it, and neither should the voters have. Try again next time, Californians, but without the overreach and violation of employers’ rights, maybe?

Reason at Rally to Restore Sanity/Fear

This video of reason editors interviewing people at the Stewart/Colbert rally this weekend in DC is very entertaining. It’s well worth watching all the way to the end — in fact the last few seconds are especially hilarious. I LOLed several times throughout.

While the two guys at the end are kind of hard to beat, I think the woman who criticizes people who compare other people to Nazis, only to concede it’s a pretty apt comparison in the case of George W. Bush comes in a close second. Let me know in the comments which parts made you laugh (or cry) the most.

Shelby Steele Identifies the Party of Bad Faith in America

I read Shelby Steele’s opinion piece in the Wall Street Journal yesterday, and was astounded at Steele’s perceptiveness and courage in writing about President Obama’s identification with a certain kind of American: the kind who finds little but evil in his own nation, and virtue only in himself and his left-wing ethos.

Steele first devastates Obama’s policy making:

…His policymaking has been grandiose, thoughtless and bullying. His health-care bill was ambitious to the point of destructiveness and, finally, so chaotic that today no citizen knows where they stand in relation to it. His financial-reform bill seems little more than a short-sighted scapegoating of Wall Street. In foreign policy he has failed to articulate a role for America in the world. We don’t know why we do what we do in foreign affairs. George W. Bush at least made a valiant stab at an American rationale—democratization—but with Mr. Obama there is nothing.

He then describes the world view of those whose instinct is to blame their country, its citizens, and its distinctive institutions for all of the evil in the world:

Bad faith in America became virtuous in the ’60s when America finally acknowledged so many of its flagrant hypocrisies: the segregation of blacks, the suppression of women, the exploitation of other minorities, the “imperialism” of the Vietnam War, the indifference to the environment, the hypocrisy of puritanical sexual mores and so on. The compounding of all these hypocrisies added up to the crowning idea of the ’60s: that America was characterologically evil. Thus the only way back to decency and moral authority was through bad faith in America and its institutions, through the presumption that evil was America’s natural default position.


So why am I astounded? I’m astounded because a respected public intellectual, an award winning author and journalist (and not “just a politician”), has identified a world view that is unique to the American left, and has in effect ascribed that world view to millions of Americans, along with their president and the current leaders of Congress. And we all know that those Americans find a home, almost to a man, in the modern Democratic party — the party currently headed by Barack Obama.

The Democratic party is the political home for Americans whose world view is based on bad faith in America. That’s what Shelby Steele is telling us. President Bush would have never said this — I’m not sure he was even capable of believing it. If candidate McCain had said it, he would have been savaged as a hater — as outside the mainstream. Let’s see what happens to Shelby Steele’s reputation in coming days and weeks.

Sit in the Back Republicans!

Anyone wondering whether the Obama people will have had enough of the “car in the ditch” analogy any time soon? Maybe Nancy Pelosi can pick up on it, and tell us we’ll need to buy the car so the American people can find out what’s in the trunk.

Honest question: can anyone remember, in eight long years, President George W. Bush demeaning the other party like President Obama has done regularly? Even once? All I can remember are things like his reaching across the aisle and working with people like Ted Kennedy. The current president may be the most partisan president of our lifetime.

Citizens Against Government Waste and the Yellow Menace

At The Atlantic, James Fallows comments on the brilliance of the new Citizens Against Government Waste ad.

While I agree that this ad will resonate with the American people, the economics in it is really stupid.

This idea that if China “owns our debt” that we “work for them” or that they “own us” is severely mistaken. They have pretty pieces of paper (cash and T-bills) which have no value except that they can be exchanged some time in the future for goods and services produced by Americans, at prices we then set. That’s it. They’ve spent decades working their people like dogs to produce goods for us and get slips of paper in return. This has been a huge win for the American people. I hope China takes a long time to figure this out.

Over at The Belmont Club, a guy named Kaspar made the great point that you only buy the debt of someone who has a future. China buys our debt, we don’t buy theirs. They buy our debt because they think we have a future (again, for their sake, hopefully a future where we can produce real goods and services to sell them for their otherwise worthless fiat money and T-bills).

Their very real problem is that they aren’t going to be able to “keep ’em down on the farm” any longer now that Chinese peasants are used to improving their lives by moving to the cities to get jobs in industry. If they try to stop this, they may have a revolution on their hands. And that almost certainly means they’ll continue to export goods at amazing prices, to our benefit, for a very long time to come. And our idiot politicians are going to try to put an end to this, in part inspired by ads like this — I guess because they’d rather we were the ones working to export goods to the rest of the world in exchange for pieces of paper. Why would anyone in his right mind want to spoil this great thing we’ve got going on?

Juan Williams Hit the Jackpot

I’ve listened to Juan Williams’ reporting over the years on NPR, and have enjoyed his recent stint as a panelist on Brett Baier’s Special Report which I catch most weeknights. Like many others, I’ve come to appreciate the guy as an honest and reasonable liberal, with a real human quality. Come to think of it, I guess I can understand why he doesn’t fit in at NPR any more. What he was guilty of here was honesty: he admitted to a feeling that 99% of non-Muslim Americans would probably share (one poll I saw reported on Fox showed 88% of respondents agreeing with Williams – but that’s only those who were willing to admit it to the pollsters).

Anyway, he’s hit the jackpot now. I’m not sure he could have planned this any better. A $2 million-a-year contract with Fox News and (no doubt) a barrage of book deals from publishers seems like a very nice way to soothe the pain of his firing.

For many of the rest of us, we’ll also get to enjoy watching NPR and its posse of pipsqueaks be savaged by Bill O’Reilly, Fox News, and a number of other outfits on the political Right. Deservedly so. The Stalinist creature (Vivian Schiller) who appeared in a public interview to explain the firing, while simultaneously insinuating that Williams is either psycho or a publicity hound, is likely in for a long period of suffering or at the very least a lot of damage control. Ah, sweet, sweet Schadenfreude. (Would it be wrong of me to point out that in real life she doesn’t look like her airbrushed publicity photo?)

Ironically, I predict that, rather than making people more ashamed of their feelings of fear regarding Muslims on airplanes, this affair will make it more popular to admit the truth. Only the leftist totalitarians really enjoy political correctness – most Americans despise it, and sympathize with those who are forced to suffer at its hands.

In reading up on this issue, I also learned, for the first time, that Juan called Michelle Obama “Stokely Carmichael in a designer dress.” Ouch! Impolite, to be sure. But I can’t bring myself to hold it against him.

Good luck Juan.

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