Filed under: Capitalism, Domestic Policy, Economy, Law, Regulation, The United States | Tags: Emergency Manager Kevyn Orr, Following Bankruptcy Law, Things Looking Up in Detroit
We’ve all seen pictures of Detroit’s abandoned buildings, and read of the seemingly never-ending political disaster. Now there are growing signs of possibility.
Detroit boasted the nation’s highest homicide rate. Police response times were five times the national average. A heart attack was usually fatal because medical care barely existed. 78,000 blighted buildings were labeled “dangerous.” And about 40% of the city’s 88,000 street lights were broken. The city’s deficit was $700 million on $1.2 billion in revenue. Retirement liabilities came to $9.2 billion, and coincidentally several pension-fund trustees and money managers had been indicted for accepting kickbacks.
When Governor Rick Snyder appointed Kevyn Orr as emergency city manager, Detroit’s unions, politicians and black leaders warned that it would mean civil war. Jesse Jackson charged that Governor Snyder was creating a “plantocracy, a plantation-oracracy,” apparently failing to notice that Mr. Orr is black. Allowing the city to continue to crumble in its political failures would have been the real crime. But what courage to take on that job!
Mr. Orr filed for bankruptcy last July. He proposed slashing unfunded retirement liabilities and general-obligation bonds by up to 90%. Unions sued.
Federal bankruptcy judge Steven Rhodes set a precedent by affirming that federal bankruptcy law trumps state laws protecting pensions and contracts.
Mr. Orr has negotiated smaller haircuts which still demand tough discipline, but will put the city on a sustainable post-bankruptcy course. A new police chief has instituted new IT systems that have contributed to a 14% decline in homicides. 3,200 streetlights have been replaced, with 50,000 planned by the end of 2015. Mr. Orr’s plan will free up more than $100 million annually for revitalization. New mayor Mike Duggan and the city council have formed a land bank to clear blight and plan to cut property tax bills.
Real Bankruptcy is renewing public confidence and spurring business investment. Racial tensions are receding. The White House has offered $320 million in “repurposed federal funds,” and has offered an additional $100 million from the bank bailout. Treasury Secretary Lew is heading for Detroit to take credit for the federal contribution. Federal welfare of $700 million between 2010 and 2012 has been propping up the sick political culture.
But Mr. Orr and Governor Snyder deserve real credit for having the guts to put the city into bankruptcy. Real bankruptcy, not the auto-industry semi-demi version.
Filed under: Capitalism, Democrat Corruption, Economy, Freedom, Progressivism, The United States | Tags: A Tax Rate of 80 Percent?, French Economist Thomas Piketty, Marxism Revisited
Inequality is currently a big deal because 1). Barack Obama wants to use it in his campaign for keeping the Senate in the fall elections 2). the lapdog media is obediently cooperating in emphasizing Obama’s theme of the moment and 3). A new book by French economist Thomas Piketty which is focused on inequality, wealth redistribution, capitalist wealth, and the horrors of capitalism. Karl Marx is revisited for the 21st century.
From Cato’s Michael Tanner:
Capital in the Twenty-First Century provides a serious critique of inequality in modern capitalist economies and warns that market economies “are potentially threatening to democratic societies and to the values of social justice on which they are based.” To remedy this, he argues for a globally imposed wealth tax and a U.S. tax rate of 80 percent on incomes over $500,000 per year.
The Left has been rapturous. In the last two months, Piketty’s book has been cited more than a half-dozen times by the New York Times, something that has happened with no other book in recent memory. Paul Krugman hails it as “the most important economics book of the year.
From Daniel Suchman in the Wall Street Journal:
Thomas Piketty likes capitalism because it efficiently allocates resources. But he does not like how it allocates income. There is, he thinks, a moral illegitimacy to virtually any accumulation of wealth, and it is a matter of justice that such inequality be eradicated in our economy. The way to do this is to eliminate high incomes and to reduce existing wealth through taxation. …
Soaring pay for corporate “supermanagers” has been the largest source of increased inequality, according to Mr. Piketty, and these executives can only have attained their rewards through luck or flaws in corporate governance. It requires only an occasional glance at this newspaper to confirm that this can be the case. But the author believes that no CEO could ever justify his or her pay based on performance. He doesn’t say whether any occupation—athletes? physicians? economics professors who sell zero-marginal-cost e-books for $21.99 a copy?—is entitled to higher earnings because he does not wish to “indulge in constructing a moral hierarchy of wealth.”…
He assumes that the economy is static and zero-sum; if the income of one population group increases, another one must necessarily have been impoverished. He views equality of outcome as the ultimate end and solely for its own sake. Alternative objectives—such as maximizing the overall wealth of society or increasing economic liberty or seeking the greatest possible equality of opportunity or even, as in the philosophy of John Rawls, ensuring that the welfare of the least well-off is maximized—are scarcely mentioned.
Michael Tanner had the most obvious answer to the problem of the inequality of the lower classes, or the less fortunate: “Instead of attacking capital and capitalism, why not expand the number of people who participate in the benefits of having capital? In other words, let’s make more capitalists.”
It should not be surprising then that “the Left is unremittingly hostile to exactly those policies that would give workers more access to capital.” They want to abolish 401(k) plans, replace them with social insurance, limit tax breaks for wealthier participants, and expand (the broke) Social Security instead.
Filed under: Capitalism, Democrat Corruption, Economy, Freedom, Politics, Progressivism, The United States | Tags: Income Inequality, Persistent Joblessness, The Feckless Obama Administration
In an attempt to turn the American conversation away from the botched rollout of ObamaCare and the horror stories from new enrollees, President Obama has begun emphasizing income inequality. Envy is always a popular ploy among Democrats that plays well at the polls. Ron Bailey summed it up well at Reason:
Are the rich getting richer? Yes. Are the poor getting poorer? No. Over the past 35 years most Americans got richer. Has income inequality increased in the United States? Yes. Does it matter? President Barack Obama declared in a December speech at the Center for American Progress that “a dangerous and growing inequality and lack of upward mobility” is “the defining challenge of our time.” Is that true? No.
The financial arm of the federal government uses the census and statistics from the IRS to divide the American people into quintiles. In December 2013, the Congressional Budget Office (CBO) examined the after-tax income trends for each quintile of American households since 1979, including not just wages but also benefits and transfer payments. The bottom fifth’s after-tax income in constant dollars rose by 49 percent. The incomes of the middle three quintiles increased by 37 percent, 36 percent and 45 percent respectively.
Gary Burtless, an economist at the Brookings Institution examined CBO data from 1979 to 2010 (the last year for which data are available), and divided the top quintile into four groups: those in the 90th percentile and below, those in the 91st through 95th percentiles and the top 1 percent. During those years, incomes for those fortunate households increased by 54 percent, 67 percent, 79 percent and 202 percent. The rich got richer too, but they got richer faster. Is this when “the one percent” became an ‘important’ buzz word?
What is missing in these statistics is the fact that the people in these quintiles are not the same people over time. Forbes magazine’s annual listings of the richest Americans and world’s richest are manna for the Occupy crowd and the faculty lounge. University professors have always found it enraging that corporate CEOs make huge salaries with enormous benefit packages when they, with their PhDs, are clearly smarter. Envy. But where else do you find so many who disapprove of capitalism?
Economist Alan Reynolds points out that “those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce ‘inequality.’ Of course, the same recessions also increase poverty and unemployment.” If you follow Forbes listings, you will notice that some drop off the list and new names appear. But these are not normal times we are living through, as we have an administration determined to fix inequality, but consistently doing the wrong thing about it.
In his December speech, the president suggested that rising inequality is limiting income mobility, leaving poor Americans increasingly stuck and struggling on the lower rungs. The data do not support this claim.
We have had an astounding period of growth that has produced enormous wealth because of internet technology. I don’t know that we have ever before had a technological innovation that meant that every household and every office had to have at least one computer and probably one for each and every person. Not only that, but the industry is so busy creating and updating and innovating that everyone has to replace everything constantly, and they do so without much complaint, and there are no signs that it ever diminish.
The great defining economic challenge of our time is not putting an end to inequality. The challenge is the persistent joblessness and sluggish economic growth perpetuated by Obama administration policies. A growing economy will produce more economic mobility. Trying to make the poor stop being poor by redistributing the wealth of the rich has never worked, though often tried.
Intellectuals fretting about income disparity are far too focused on the wealthy, while ignoring the elephant in the room. The strongest statistical correlate of inequality in the United States is the rise of single-parent families during the past 5o years. In 1960, more than 76% of African-Americans and nearly 97% of white were born to married couples. Today the percentage is 30% for blacks and 70% for whites.
This trend, accompanied by high divorce rates means that roughly 25% of all American children now live in single-parent homes, twice the percentage in Europe. Roughly a third of American children live apart from their fathers. It matters. Two parents work better than one. Even rich kids don’t do as well in single parent families.
Filed under: Capitalism, Democrat Corruption, Economy, Foreign Policy, Military, National Security, Progressivism, Russia, The Constitution, The United States
The United States is sending ground troops to Poland, the Polish defense minister says after meeting with Secretary of Defense Chuck Hagel. But not to worry, this is not a major escalation. Supposedly they are sending a company, about 150 soldiers, for exercises with the Polish military for a short stay, or something like that.
The Ukrainians asked for military aid, we denied them weapons, but sent MREs and military style socks, and reportedly helmets as well. They were trucked into Ukraine as it was thought a military cargo plane might be too provocative.
President Putin, on the other hand has something like 40,000 troops massed on the Ukrainian border, but says they are just there as a precaution since there is so much unrest in the Ukraine. The officers above the rank of Major in the Ukrainian military all came up through the Russian military, and they aren’t going to fight Russians.
The Russian President denies that the militants in the Ukraine have anything to do with Russia, and he is quite helpless to stop them. Although the pro-Russian activists seem to have had military training, their weapons and equipment are all Russian, and their use of tear gas and stun grenades is inconsistent with a spontaneous local militia. Last Thursday Mr. Putin referred to Ukraine as part of “New Russia.” Even when Mr. Putin openly declares his goal, Mr. Obama prefers to ignore it. The Wall Street Journal said:
The larger problem is that Mr. Obama can’t seem to admit that his assumptions about the world are being repudiated by the week. He came to office believing his own campaign rhetoric that the U.S. was unpopular mainly because of President George W. Bush. He would end these misunderstandings through diplomatic engagement, especially with our adversaries, who would respond in kind to our good will and moral example. Nowhere in the world has that happened.
Diplomacy in Geneva has come up with about what one would expect. After seven hours of negotiations they agreed that “all parties including separatists and their Russian backer, would stop violent and provocative acts, and all illegal groups would be disarmed. A joint statement made no presence of what the U.S. has said are 40,000 Russian troops massed on Ukraine’s eastern and southern borders. Kerry said that Russia is “absolutely prepared to begin to respond with respect to troops,” provided the agreement is observed.
The U.S. has sent 12 F-16 fighters and 200 support personnel to Poland. NATO’s secretary-general Anders Fogh Rasmussen said that the alliance would fly more air patrols over the Baltic region and allied ships would deploy to the Baltic.
Polish Defense Minister Tomasz Siemoniak said the United States, having announced a “pivot” to Asia, needs to “re–pivot” to Europe, and European countries that have cut back on defense spending need to reverse the trend.
The idea until recently was that there were no more threats in Europe and no need for a U.S. presence in Europe any more. Events show that what is needed is a re-pivot, and that Europe was safe and secure because America was in Europe.
According to the New York Times, Mr. Obama has concluded that he will never have a constructive relationship with Mr. Putin. As a result he will spend his final two and a half years in office trying to minimize the disruption Mr. Putin can cause, and otherwise turn to other foreign policy area where progress remains possible.
The White House is preparing to nominate John Fl Tefft, a career diplomat who previously served as ambassador to Ukraine , Georgia and Lithuania. Administration officials were leery of sending Mr. Tefft because of concern that his experience in former Soviet republics that have flouted Moscow’s influence would irritate Russia.
Obama is less concerned with irritating Russia now, and is reportedly pivoting to the George F. Kennan strategy of containment.
The more hawkish faction in the State and Defense Departments has grown increasingly frustrated, privately worrying that Mr. Obama has come across as weak and unintentionally sent the message that he has written off Crimea after Russia’s annexation. They have pressed for faster and more expansive sanctions, only to wait while memos sit in the White House without action. Mr. Obama has not even imposed sanctions on a list of Russian human rights violators waiting for approval since last winter.
Mr. Obama says that Ukraine is not a major concern for Americans. He has concentrated his public schedule around “important” issues like job training and the minimum wage. Since Mr. Putin is not interested in a partnership, Mr. Obama is not interested in the Ukraine or Russia. But then, he’s not much interested in foreign policy at all—though it’s the major part of his job description.
David P. Goldman, writing as “Spengler” says Americans are playing Monopoly, Russians are playing chess. Ukraine is a basket case with a per capita income a tenth of that of the European Community. They are deeply in debt to the Russians and dependent on Russian energy. Putin will let the West take charge of the Ukrainian disaster until it festers, and then pick and choose what he wants. And what he wants is a “new Russia.”
Filed under: Capitalism, Economy, Education, Energy, Foreign Policy, Health Care, History, Humor, Immigration, National Security, Politics, Taxes | Tags: A Guide to Liberal Thought, Andrew Klavan on the Culture, Really-They Do Think This!
The common conservative response to a liberal pronouncement is “You’ve got to be kidding!” Can they possibly believe what they are saying? The real divisions between liberals and conservatives are deep and wide, but Andrew Klavan takes a shot at explaining what it is that liberals believe, and how liberals think. It may be helpful, but —It’s not pretty!
Filed under: Foreign Policy, History, Russia, The United States | Tags: Crisis in Ukraine, Russia's Vladimir Putin, Russian Militants
This was not Ukrainian government’s doing, but the source is unknown. The Ukrainian government is trying to find the source.
Pro-Russian militants have taken over government buildings in the eastern Ukrainian city of Donetsk. Jews emerging from a synagogue there were handed leaflets that ordered the city’s Jews to provide a list of property they own and pay a registration fee — “or else have their citizenship revoked, face deportation and see their assets confiscated,” according to Ynet News, Israels largest news website.
The leaflet was written in Russian and had Russia’s two-headed eagle on it, and distributed by masked men outside the Donetsk synagogue after Passover prayers. the region is home to about 17,000 Jews. It was signed by Denis Pushilin, as chairman of Donetsk’s temporary government. Pushilin has reportedly denied responsibility for them. The leaflets are not any official order, but they weren’t just scrawled on a sign either.
Ugly. The White House should respond in the harshest terms. The president said “there will be consequences,” and went on to claim another million for ObamaCare.
Filed under: Capitalism, Economy, Health Care, Law, Regulation, Taxes, The United States | Tags: Cause and Effect, The Great Regulation, The Weakest Recovery Ever
President Obama has liked to emphasize the depth and general awfulness of what he calls “the Great Recession”— a term that pleases him because it associates his recession with Franklin Roosevelt’s Great Depression. Roosevelt cheerfully tried to tackle the Great Depression with constant experimentation. Obama has confronted his recession with regulation without end, in the unfortunate delusion that more control would fix things.
Washington set a new record in 2013 by issuing final rules taking up 26,417 pages in the Federal Register. The rules came from various agencies, but Obama remains at the helm and leadership matters. By sheer numbers, President Obama stands at the pinnacle for numbers of rules. The federal Register contained 3,659 “final” rules (which mean you have to obey them), and 2,594 proposed rules on their way to join the others.
Neither politicians nor the media regard this effort to control as anything out of the ordinary, nor important. Yet if you wonder why the recovery has been so far below average —there it is. The bulk of this year’s regulation comes from ObamaCare—a 2,700 page law that has metastasized into a 7 foot tall stack of documents, and Dodd-Frank. Things don’t get done because nobody has the authority to make them happen.
I wrote about the pressing need to protect and update our electrical grid, vital and essential to all life in America, but there is no active plan to rebuild the grid, because the government cannot make the decisions needed to approve it. The average length of environmental review for highway projects, according to a study by the Regional Plan Association, is over eight years. Eight years!
The results and costs of the legal system are not just monetary, everything is too complicated. There are rules in the workplace, rights in the classroom, and government is bogged down in bureaucracy. Responsible people do not feel free to make sensible decisions. We are pushed around by lawsuits, and unable to move for fear of punishment for barely understood regulation.
The point of regulation is to try to make things run smoothly, make sure things work in a crowded society, but rules have consequences, and not always those intended. We now have a court system where even referendums voted on by the public have been taken over by the court system in which judges now feel free to decide these matters. The objections to “judicial activism” are richly deserved, and now even judges are mistrusted.
Consider the case of a fictional Pasquale’s Pizza chain. The typical restaurant has their pizza menu on a large lighted sign behind the counter where you place your order. The federal government has decided that nutritional values for each ingredient must be listed on the menu. Impossible on the customary lighted sign. What to do? How much will it cost? The profit margin is already slim. Pizza chains have dozens of ingredients, and changing featured recipes to entice customers. ObamaCare requires a restaurant to provide health insurance for full-time workers. The cost of policies has gone up sharply. Cut back all employees to 30 hours? Female employees and male employees must work the same number of hours for the same wage.
The requirement for ethanol in gasoline has raised the cost of pizza ingredients. It has also raised the cost of transporting supplies. Requiring a portion of power to come from wind and solar has raised the cost of electricity. Fuel-efficiency regulations have raised the cost of trucking. And all that is before regulations and taxes at the local, state and national levels.
You end up with schools that make fools of themselves over zero-tolerance regulations that do nothing to prevent violence, school lunches that kids won’t eat. You have armed federal agents raiding the Gibson Guitar Company and confiscating their guitars and their materials ostensibly because the wood used for guitar frets violated and environmental law. The wood was legally imported, meeting all the standards of the country of origin, but the costs to Gibson were huge. You not only cannot fight city hall, but you must surrender even though you are in the right, just to avoid further financial damage. There is case after case of people subjected to an armed SWAT raid, accused of violating a regulation they’ve never heard of, and ruined financially.
What business is going to take a big risk, invest a lot of money in a new venture, expanding, hiring new workers in such a climate? There is risk in everything we do. Trying to legislate risk out of our lives just leaves us with rules that keep people hunkered down, trying to avoid bureaucratic attention. In this climate, politicians cannot even get the big things done, let alone attempting to undo the web of regulation that is crippling society.
Filed under: Democrat Corruption, Foreign Policy, History, Military, National Security, Politics, The United States | Tags: Bill Whittle Explains, Mistreating Our Military, The Need for National Defense
We are defanging our military. What’s more, is that we are taking away their basic human rights to defend themselves, their Second Amendment rights to bear arms in their own self-defense, while asking them to volunteer to defend us. Moreover, we are choosing time and time again to deny them the mental health and veterans’ benefits, while giving more money to entitlements for other communities. Meanwhile, shootings on bases have occurred now multiple times, and 22 people in our armed services commit suicide daily. This is unacceptable–hear why in this Afterburner with Bill Whittle.
Filed under: Democrat Corruption, Domestic Policy, Islam, National Security, Politics, Progressivism, Terrorism, The United States | Tags: The Nation's Electric Grid, The Need for National Defense, Thwarting Terrorist Attacks
Today is the day of the Boston Marathon, and the terror and the victims of last year’s bombing are being solemnly remembered. Oddly enough, the terrorists—Chechnyan radicals allied with al Qaeda—are not mentioned. We seem to have a strange reluctance to say the word terrorism or terrorists in this country.
The massacre at Fort Hood is still classified as “workplace violence,” we have the TSA at the airports to check into a long list of supposedly dangerous things and to abuse old ladies and small children, but they may not “racially profile” nor mention the fact that their job is to search for potential terrorists. Journalists fall all over themselves to avoid the use of the word terrorism, the federal government simply does not acknowledge such events nor the intent of the perpetrators.
What’s the deal? Is terrorism to be considered just an aberration of the warmongers George W. Bush and Dick Cheney, and only mildly unpleasant things occasionally happen during the Obama administration, which never ever overreacts? Relegated to the old-news department.
Did you know that last April 16, the day after the Boston bombing, a group of terrorists attacked the Metcalf transmission substation, just outside of San Jose, in a military action aimed at disabling a part of America’s electrical infrastructure? The operation began at 1:00 a.m., when the attackers cut underground fiber optic cables, disabling communications and security systems. Thirty minutes later using high-powered rifles, they began a 20 minute assault on the substation’s extra-large transformer and the the cooling system that supports it. Police arrived at 1:50, but the shooters disappeared into the night. There has been no trace of them.
The political response to the attack ranged from an immediate dismissal by the FBI of the idea that it was a terrorist act—to recognition by a bipartisan but small group of U.S. Senators and Representatives that defending America’s electrical grid is an urgent priority. Although there are over 100,000 transformers of all sizes throughout the grid, the destruction of less than two dozen key large transformers—which weigh hundreds of tons, are transported on special rail cars, and are mostly produced in Korea—would cause a catastrophic failure that would blackout the United States. Such is the vulnerability of the system.
This was a professional operation by skilled marksmen—two to six gunmen— trained in reconnaissance, stealth and evasion, and with careful planning. The damage forced electricity to be rerouted to maintain the integrity of power transmission to Silicon Valley, and repairs took several months. One would think the politically connected in Silicon Valley might want to do some serious lobbying about protection of the grid.
We have heard about the potential of an electro-magnetic pulse (EMP) attack—a nuclear explosion in the high atmosphere, which would create a pulse that destroys electrical wiring and hardware across the affected area. This phenomenon has been well understood since the 1960s. It has recently been discovered that a massive solar storm could cause similar damage, but possibly less extensive. Those who think through the potential devastating consequences of failing to defend our sophisticated electrical grid might well wonder why the government is spending billions on frivolous projects but pays no attention to America’s physical vulnerability.
Do read the whole thing. This is a serious matter. The author, Brian Kennedy is president of the Claremont Institute, and the article is adapted from his speech at Hillsdale College, and reprinted in Imprimis, the monthly free publication from Hillsdale (sign up here).
Brian Kennedy outlines practical steps to be taken, and what we are currently doing to solve our vulnerability. (Not much). The attack on the Metcalf transmission substation was brushed aside by the media by the Boston Marathon bombing, and the extended search for the Tsarnaev brother perpetrators.
We really can’t depend on the media any more to keep Americans informed. But we also need to stop fooling ourselves and stop acceding to administration attempts to downplay anything that might interfere with the Obama administration’s efforts to avoid any negative publicity.
Filed under: Democrat Corruption, Foreign Policy, Iran, National Security, Russia, The United States
The White House on Monday said there was “overwhelming evidence” that Russia is stirring the unrest in eastern Ukraine, but President Obama hasn’t yet decided if further sanctions are warranted. …[T]he juxtaposition is a perfect summary of the current state of U.S. foreign policy.
Vladimir Putin uses Russian special forces to cow a neighbor and steal territory , while Mr. Obama agonizes about what to do.
That was the Wall Street Journal. The White House dithers about what response they may choose. The U.S. has refused to send Ukraine military aid, but offered MRIs, and military type socks.
The Journal adds “We know Mr. Obama didn’t run for President to engage in great power politics, but it is still part of the job description. Is he still interested in doing his job?
In the Weekly Standard, Ruel Marc Gerecht asks:
Is Barack Obama’s threat of preventive military action against the Iranian regime’s nuclear program credible? Would a one-year, six-month, or even three-month nuclear breakout capacity at the known nuclear sites be acceptable to him? Is he prepared to attack if Tehran denies the International Atomic Energy Agency, the U.N.’s nuclear watchdog, entry into undeclared facilities that may be hiding nuclear-weapons research or centrifuge production? Is he prepared to strike if the regime denies inspectors access to the personnel and documents that would allow the West to see whether—how much—the regime has been lying about weaponization?
Again in the Weekly Standard, Bill Kristol:
The Obama administration has scheduled a deputies committee meeting this week—tentatively set for Tuesday—to resolve a bitter inter-agency dispute over a request from Russia with respect to the Open Skies program. Informed sources believe the White House is likely to side with the State Department, which wants to accommodate Russia, over the objections of the Obama administration’s Defense Department and intelligence agencies.
The Open Skies treaty allows the United States and Russia to fly over each other’s territory with planes loaded with certain agreed-upon sensor packages, in order to ensure compliance with arms control agreements and to provide assurance against preparations for various military surprises. Russia has asked the U.S. to agree to an upgrade in the sensor package their planes can carry…The request would apparently result in a significant increase in Russian spying capabilities; the first response from Pentagon was, according to one government official close to the situation, “You’ve got to be kidding.” But the State Department has been making the case for acceding to the Russians’ demands, and the White House seems to be on State’s side. The White House has also stonewalled requests for information from the congressional intelligence committees.