FedUpUSA

Archive for the ‘Keynesian Stimulus’ Category

Keynesian “stimulus” has failed to do anything but prop up the Status Quo. If we want to create jobs, we need to clean the house of impaired debt and lower the cost structure of the entire economy.

Politicos across the spectrum and cargo-cult Keynesians are  constantly bleating about “creating jobs.” You really want to  create jobs instead of just  helplessly  wringing your soft little hands? Here’s how:

1. The only engine for jobs is small business, so quit pandering to global corporations and start pandering to the people who might actually hire someone in America. The back-of-the-envelope number bandied about is that small business creates about 60% of the new jobs in the U.S. I suspect that’s a number from a decade or two ago; in the real world of the present, it’s more like 90%.

As noted here many times before, Global Corporate America is a profit machine with no loyalty to the nation or its workforce. It only has one prime directive: deploy capital and labor wherever it reaps the most profit and the quickest return. That’s it.  Everything else is political propaganda and PR.

This is not a judgment, it is a statement of fact.  As capital is allowed to flow freely, then it seeks the highest return and the lowest labor costs. Once global supply chains are in place, then that place is rarely America.

Why? Because the U.S. economy has a high cost structure for small business that’s getting higher while yielding diminishing returns. Rents are high, thanks to the real estate bubble, taxes for small business are high, healthcare costs are double that of our developed-world competitors–the list goes on. America is not an efficient place to do business; you pay high costs and taxes (if you’re a small business or self-employed), and don’t get much in return.

It’s a great place to be a global corporation or billionaire, because they can buy special favors that exempt them from the same burdens imposed on small business.

The U.S. economy is hobbled by two systemic burdens: sickcare and the insolvent “too big to fail” banking system. Both act as enormous taxes on the productive citizenry.

You want to create jobs? Then stop diddling around with cargo-cult Keynesian “stimulus” which just props up the least efficient and most parasitic elements of the economy: the banking sector, Wall Street, cartels and fiefdoms.Keynesian stimulus is simply another facet of the Wall Street/bank/corporatocracy Status Quo: we’ve already squandered trillions in “stimulus” government spending, and very little has trickled down to the businesses which might actually hire  someone in the U.S. It is a failed policy precisely because it is entirely Status Quo.

If we really want to create jobs, we need deep structural reforms. Rearranging the deck chairs on the Titanic–i.e. trimming the payroll tax 2%–is meaningless.Here’s the to-do list for those who are serious about creating jobs:

1. Write off $3 trillion in underwater mortgages, $1 trillion in impaired student loan and consumer debt, and $1 trillion in doomed commercial real estate loans.Here’s the core fact: those debts will never be paid back; they’re already lost.  Keeping them in a zombie state cripple the borrowers and the economy. The 10 million mortgages which are deeply underwater are not coming back; they’re gone, let’s accept it and  set the stage for real growth. This writedown will have several salutary consequences:

A. It will wipe out the 6 “too big to fail” banks which are acting as a dead weight on the economy and on its political governance. It’s too bad the Keynesians are too busy painting radio dials on rocks and chanting tired incantations to realize that the only step that will make a difference in jobs is destroying the “too big to fail” banks, and thus destroying their grip on the nation’s throat.

Replace them with 50 smaller banks which are precluded from buying each other–or 250 banks.  Re-enact Glass-Steagal to separate depository and investment banks–recall the bill was less than 10 pages long. Once the TBTF banks are gone, there won’t be enough  concentrated wealth and capital to so easily subvert the political system.

B. By wiping out doomed home mortgages, you free up workers who were immobilized and unable to move to where jobs are being created. Labor mobility  is absolutely critical, so those with the right skills can move to where the skills are needed; underwater mortgages trap potential employees in dead-ends.

C. Wiping out the debt via auctioning off 10 million homes would drop prices and lower the cost structure of housing across the board. The critical destructive event of the past decade was making housing a speculative playground.  That jacked up costs and left underwater owners and lenders fighting to keep prices propped up. That is a hopeless exercise, another “hidden tax” on the economy.

Writing off debt that will never be collected cleans the slate and lowers the cost structure. Once housing returns to its historical levels of valuation, a lower salary will still be enough to buy a house.

In other words, propping up housing to “save” the banks has helped render America uncompetitive on the global marketplace. Historically, a house should cost no more than two years of the median salary in the area.

2. Reduce healthcare/sickcare costs by a third, from 17% of the nation’s gross domestic product (GDP) to 11%–then reduce it again to the level of Australian and Japan healthcare costs, around 8% of GDP.Sickcare is truly pernicious, as it acts as an 8% “useless tax” on the economy: if our developed-economy competitors can provide healthcare to all their citizens for literally half of what we spend per capita, then  we are instantly uncompetitive just as a result of sickcare.

As I have endlessly explained here, “healthcare” in the U.S. is nothing but an enormously profitable assembly of cartels. It is truly sickcare, because in a  profit-based system, health is profitless and therefore the enemy of profit: it’s illness that’s profitable, so the sicker the populace, the better.

That’s why 50% of our healthcare costs are expended on 5% of the people. They’re where the money is to be made. Diabesity is immensely profitable; low-BMI healthy people are uselessly profitless. Illness is highly profitable, health is unprofitable.

I have covered this many times, and I don’t have time to repeat it all. Please enter “sickcare” into the Google custom search bar in the upper left sidebar, and you can find all the source material you want.

If you read the history of healthcare, it seems more an historical accident than some well-thought-out plan that employers were saddled with providing healthcare insurance for their employees. This was workable when healthcare was 1% or less of a workers compensation, but now that it’s 50%, and millions of people work part-time or are contract workers, it no longer works on a systemic level. There is nothing written in stone about this system, and in a “freelance nation” it no longer makes sense.

I have often written about healthcare, and what it all boils down to is this:either the system shrinks in a chaotic collapse, or we deal with reality and shrink it via a complete redesign. It’s going to implode if the current course is maintained, and then we’ll have nothing but shambles. Is that really preferable to grasping the nettle and redesigning the system from the ground up? Isn’t America supposed to embrace innovation? Or is that just PR for selling a new electronic toy?

Scrape away the propaganda spewed by cartels and their think-tank toadies, and the bottom line is that there are only two large-scale healthcare systems which are efficient in the U.S.: the Veterans Administration and cash. To understand why this is so, we need to realize the staggeringly negative consequences of not having a nationally mandated “best practices” for care that is also strictly cost-conscious.

Without a coherent, rational, cost-conscious set of national “best practices” guidelines, doctors and their employers are open to claims of wrongful care, inadequate care, etc. This lack of national standards creates wasteful “defensive medicine” on a vast scale. This site has many readers within the medical profession, and I could relate many horror stories of the perverse incentives created by the current sickcare system.

I am not an expert on the VA, but it seems to have a national set of “best practices” which are applied at all VA facilities around the nation.  There are limits on care–there has to be. That is simply reality. I knew an older internal medicine doctor in my 20s and 30s, and he often had very ill patients with multiple conditions and diseases. At this stage of illness and life, there is very little anyone can do to restore the health of a very ill person. “Heroic measures” undertaken to stave off lawsuits just throw away money and place additional burdens on the family and the patient.

Why is it so difficult for us to recognize these simple realities? One reason is the system rewards “heroic measures” (highly profitable) and lawsuits (potentially profitable, so “fishing expeditions” are encouraged) if they’re not undertaken.

The VA is the only truly innovative healthcare provider in the nation. I don’t have  time here to explain why, so do your own research on national computer systems in healthcare. The VA is owned lock, stock and barrel by the Federal government, and while it has its problems like any vast bureaucracy, nobody is claiming that it is corrupt. We seem to have forgotten that corruption comes with concentrations of wealth and political power which forms partnerships of cartels and Central State fiefdoms. If there is no profit, then the motivation for corruption falters.

How corrupt is NASA or the VA?  Are they really like the banking sector? The answer is no.

Here’s the key feature of the VA system: doctors get to be doctors, not gate-keepers or profit-skimmers. Doctors don’t own the labs that do the tests they order, and when somebody sues them, the doctors are backed up by a regiment of government lawyers. Doctors  don’t have to lay awake at night worrying about getting sued or making their malpractice payment.

The common-sense solution to cut healthcare costs in half is a dual system: a VA-like system with universal access but strict cost controls and no profit, and cash: buy whatever care you want, from whomever you want. Don’t like the VA system? Fine, save your cash and buy whatever care you want, no restrictions. Don’t want to work for the VA system? Fine–get your license to practice medicine and set up shop, cash only.

This would not be a painless transition; after all, the cartel-Medicare/Medicaid complex has been on a hiring spree ever since the cartels realized there was literally no limit to how much they could bill the government. (Recall that 40% of our sickcare costs are paper-shuffling, embezzlement and fraud. That’s what’s incentivized, so  that’s what blossoms.)

But the reality is that cutting sickcare in half would restore it from a “profit center” to actual healthcare in the hands of primary-care physicians.

The ultimate answer to improving healthcare is community-based healthcare. As long as isolated “consumers” have few incentives or local options for improving their own health with their peers and primary-care physicians and nurses, then improving health is fighting the headwinds of marketed illness via junk food and techno-entertainment inactivity.

If you don’t like these solutions, then come up with your own, but they have to cut U.S. healthcare spending per capita in half. Nothing less will create a competitive economy.

Lest you think this alarmist, the Establishment journal Foreign Affairsreached the same conclusion: How Health Care Can Save or Sink America.

It’s easy to predict what will happen is we do nothing; in a few years, Medicare will exist in name, but there won’t be anyone left to provide care for IOUs. That’s the ultimate irony: when the whole system implodes, the only thing left will be the VA and cash care: the two systems I am recommending as solutions.

3. State and local government “one-stop” permits and oversight for new business.Those outside small business have no understanding of the roadblocks, the junk fees, and the madness-inducing pettiness of competing government bureaucracies, the vast majority of which take no risks and whose employees view small business as the enemy or as  tax donkeys upon which they can heap abuse without any fear of retribution. The general mindset of government from the point of view of struggling small business can be summed up in one word: Extortion.

If you think this harsh, please go out and try starting a business from scratch and hire 10 people to work for you. Was the experience enjoyable, low-cost, risk-free and seamless?

The truth is that government workers trying to do a good job of regulation and oversight are just as frustrated as small business: the current system’s tangle of self-serving fiefdoms makes it almost impossible for government workers to do their jobs well.

Regulation and oversight are like vitamins: if you don’t have any, the economy suffers, but having too much is deadly, too.

I know one growing suburban community that has been trying to get a new train station on an  existing rail line for over ten years. The number of agencies and monopolies which can inhibit or block every step of the process is somewhere between 10 and 13. If you think this tangle of competing jurisictions and bureaucratic bloat offers great value to the nation, I invite you to compare efficient nations with low unemployment and bloated banana republics with high unemployment and crony Capitalism.

The latter take 10 years to approve a new commuter train station.–or maybe 15 years, or never. This is the acme of a broken system.

Yes, the issues are complex. But does stretching the decision process out for 10 years add value?  Couldn’t a decision be reached in two months, if there was any incentive and pressure to do so? Yes or no, proceed or do something else: we have lost the ability to incentivize speed and efficiency in government, and this has crippled the economy being regulated.

If the nation is serious about encouraging new businesses, then government has to strip away the inefficiency and bloat which inhibit growth for essentially zero payoff.   Permits are important, and oversight is important; but it is merely common-sense that these functions be centralized and speeded up to foster “best practices” without  stultifying new businesses.

Government employees who want to do their jobs efficiently and productively  would be delighted to work for a stripped down, centralized agency which was designed to approve or disapprove projects quickly, and regulate the economy like vitamins–enough for safety, but not too much, i.e. a self-serving fiefdom.

It’s that simple: lower the cost structure of the economy, and remove the impediments to starting new businesses and hiring workers. For more on these topics:

Unemployment: The Gathering Storm (September 26, 2009)

Here’s Why Small Business Isn’t Hiring, and Won’t be Hiring (July 11, 2011)

Seven Headwinds for the U.S. Economy (August 4, 2010)

Of Two Minds

A Center for Freedom and Prosperity Foundation “Economics 101″ Video Exposes Keynesian Consumer Spending Fallacy.

“Keynesian stimulus schemes failed under Bush and now they are failing under Obama” said CF&P Foundation President Andrew Quinlan. “This new video hopefully will prevent similar mistakes in the future by helping people understand the importance of growth rather than redistribution.”

“Keynesian policy is based on the fallacy that you can become richer by taking money out of one pocket and putting it another pocket, but this is a zero-sum game that appeals to statists and other redistributionists,” added Dan Mitchell of the Cato Institute. “Real economic growth occurs when we figure out ways to increase national income, which is why good policy means reducing the burden of government.”

Video Summary

Politicians and journalists who fixate on consumer spending are putting the cart before the horse. Consumer spending generally is a consequence of growth, not the cause of growth. This Center for Freedom and Prosperity video helps explain how to achieve more prosperity by looking at the differences between gross domestic product and gross domestic income.

This new video is part of CF&P’s Economics 101 video series, which is designed to explain free market concepts, with particular emphasis on reaching students and young people. This is the tenth video in the series.

Other Econ 101 Videos

• Indexing the Capital Gains Tax to Protect Taxpayers from Inflation,
• Repealing Obamacare and Restoring a Free Market in Healthcare,
• The Job-Killing Impact of Minimum Wage Laws;
• Deficits, Debts and Unfunded Liabilities;
• Cost of the Internal Revenue Code;
• Lessons Learned From Sweden; Government Monopolies; Moral Hazard;
• Don’t Copy Europe’s Mistakes.

Mini-Documentaries

• Tax Competition Primer,
• VAT-Hidden Tax,
• Global Flat Tax Revolution,
• Cutting the U.S. Corporate Income Tax,
• Promoting Prosperity,
• Obama’s So-Called Stimulus,
• Obama’s Deferral Proposal,
• Case Against Class-Warfare Tax Policy,
• President Obama’s Dishonest Demagoguery on Tax Havens,
• Six Reasons Why the Capital Gains Tax Should Be Abolished,
• Benefits of Tax Havens
• Laffer Curve.

Inquiring minds will want to check out some of those videos.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Financial Jenga

During the current economic crisis, most of the major countries have tried to spend their way out – either with government programs funded with new debt or by forcing debt directly into the private economy through guarantees, regulations and action by quasi-government bodies. We discussed the implications for China in Command and Control and for the US in The Federal Funhouse. These initiatives were based on Keynesian economic theory – that government should make up for any shortfall in private demand by spending (likely
incurring deficits) sufficient to stabilize aggregate demand.

This is a temporary band aid at best and the governments and central banks were hoping to buy time and convince everyone that things were OK so they should go out and spend. This was doomed to fail as prior private demand was based on nearly universal lending at suicidal risk levels. One of the key objectives of Financial Jenga was to document the extent of the madness in credit. Enough people have seen through the wishful thinking so that there will be greater caution on the part of both borrowers and lenders for the foreseeable future.

The massive deficits that various governments have run can only be sustained as long as there are lenders out there willing to finance them. Several bond auctions have failed or nearly failed in the last several weeks. Now we see the appetite for debt drying up and some key nations beginning to talk about austerity. A good example is this statement from the G-20 Meeting Communique:

The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances… We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions.

Clearly, the finance ministers are signaling a new mood of fiscal responsibility here – in sharp contrast to the “stimulus” measures that have previously reigned. This change in emphasis is further reinforced by the recent statements from two key European governments. From the UK we have (Prime Minister) “Cameron warns of painful cuts to tackle debt” as a headline. In Germany, Chancellor Merkel is cutting the budget by nearly $100 billion according to Bloomberg. This is not only a sharp contrast with the Keynesian program here in the US, it is a direct slap in the face of Tim Geithner at Treasury and the entire Obama Administration:

German Chancellor Angela Merkel’s Cabinet approved levies on banks, air travel and nuclear-power plants as part of what she called an “unprecedented” round of budget cuts, rejecting U.S. calls to spur growth.

Bux Populi

Austerity is the new watchword and it is showing up first in places where governments either have their backs to the wall or are less under the influence of the banks. Yet even here in the US, where we have the best government the bankers’ money can buy, things are starting to change. Actual voters concerned about the rapidly growing deficit seem to be a stumbling block to Congressional spending with less than 6 months until the elections. Web-based My Way News reports:

Obama’s proposed $250 bonus payment to Social Security recipients was killed by the Senate. Also gone is an $80 billion-plus Senate plan that promised money to build roads and schools, help local governments keep teachers on the payroll and stimulate hiring in the home improvement industry with rebates for homeowners who make energy-saving investments.

Just last month, deficit concerns killed $24 billion in fiscal relief to prevent state workers from being furloughed. It was a measure that earlier had won initial votes in both the House and Senate.

The battle over extending jobless benefits for up to 99 weeks for the long-term unemployed typifies how the Democrats’ jobs agenda has foundered. What originally was a $200 billion measure combining the jobless benefits with renewing popular business and family tax breaks was cut to $115 billion by House leaders after moderate Democrats who are particularly vulnerable in November refused to support it.

The Federal Government has been able to finance large deficits so far. Partially this results from capital flight as Europe’s problems become more apparent. Part of the equation is an increased preference for Treasury bonds over stocks and lower-grade private bonds. Finally, there is the large-scale purchases of MBS by the Fed, which has indirectly funded Treasury auctions by putting more money into the hands of bond buyers and Primary Dealers. Despite a very favorable environment for Treasury bond demand, huge issuance pushed yields upward until the recent resurgence of Europe’s problems.

The difficulty financing our debt led the Obama Administration to float several proposals for major tax increases in an effort to convince bond buyers that there would be enough tax revenue to support the debt. This included a VAT. Notice how little we have heard about that and other taxes since the Euro crisis made the dollar and Treasuries the only game in town. Even so, the easy period of debt finance is coming to an end – even for the US government. Washington had best not expect to fund large deficits easily into the indefinite future.

A lot of bankers have to be asking themselves a question. If governments are cutting back, who is going to bail me out? 

From The Daily Capitalist.

Dear Santa:

Since you give away stuff for free, I hope you aren’t a socialist and ignore my wish list during the annual potlach. By the way, it seems that the Obama Administration is way ahead of you in giving out free stuff to everyone. I hope you can catch up.

I think I’ve been a pretty good boy this year. I have regularly bitten my tongue in my commentary so as not to be accused of being a flamer. I don’t think I’ve defamed anyone. And I try to write as much original material as possible to avoid being labeled a “scraper” (lifting stuff off the Net and publishing it under my own name). And, I haven’t sold out my opinions for mere money. For a blogger, that’s a pretty good record.

Here’s my wish list. I couldn’t find where to post it on Amazon, so here goes:

1. Kill The Bill

No, not the Uma Thurman thing. I’m talking about the health care “reform” bill going through Congress right now. If your magical powers extend that far, please put economic sense into our politicians’ collective heads that government control over the system is not a way to “save money” or create “efficiency.”

2. Put in the Fix

Instead of eliminating market forces in health care, please convince Congress to fix it by peeling back the convoluted rules and regulations that have screwed it up in the first place. Suggest these four little things we could try first that actually would work, save billions, and cover more people:

Give Medicare enrollees a voucher and the freedom to choose any health plan on the market;

Give workers control over their health care dollars with “large” health savings accounts which would allow them to purchase secure health coverage from any source;

Break up state monopolies on insurance and allow insurance companies to compete across state lines; and

Block-grant Medicaid and the State Children’s Health Insurance Program to prevent massive waste and encourage states to target resources to the truly needy.

3. Turn the Sausage Makers into Sausage

I understand it’s Christmas and it would be kind of negative to wish political ill fortune on someone, but, there’s this especially despicable sentator, Ben Nelson, that I would like for you to arrange to catch him with a hooker or taking a bribe. Whatever you think would work, Santa. Make sure there are tapes. I have lots more names, but I’d be happy with Ben.

4. Firing Suggestions

Please arrange for Obama to fire Ben Bernanke, Larry Summers, Timmy Geithner, and Christina Romer.

5. Hiring Suggestions

To replace the above, how about Ron Paul at the Fed, and the following economic advisers: Walter Block, Russ Roberts, and Joseph Salerno. They are all fine economic scholars and would steer our President in the right direction.

6. Freeze Congress

Don’t let Congress pass any more bills until they’ve all read, and discussed with the No. 5 guys, Economics in One Lesson by Henry Hazlitt, the best little book on economics, ever. Televise it.

7. Bring Back the Real Constitution

Please have Obama appoint strict constructionists to the Supreme Court. Nominees who understand natural law, and that the Ninth and Tenth Amendments actually mean something. Maybe we’d get our individual sovereignty back.

8. Make Work is No Work

Let Mrs. Pelosi and Mr. Reid see the folly of the American American Recovery and Reinvestment Act of 2009, a useless $787 billion bill that is nothing other than intergenerational theft. Someone has to pay for it and I’m afraid it will be my children, grandchildren, and ten generations of my great-grandchildren.

9. Beautiful Sunsets

Require Congress to sunset every spending law they pass. You know how they promise that a program will be very effective and that it will only cost so much? Make them prove it, say every two years. If the bill fails to cure the perceived ill, get rid of it. If the program exceeds its budget, get rid of it. It will also provide us with a handy voting guide at election time.

10. Let a Thousand Flowers Bloom

Sprinkle some free market magic dust on the economics departments of our major universities. Maybe that will help the sheep break from Keynesian orthodoxy and actually begin to think.

Thank you, Dear Santa. I’m forever hopeful.

Econophile

From The Daily Capitalist

As my readers know, every so often I really get fed up with what comes out of Washington (Our Nation’s Capital) and feel the need to vent. My recent irritation is a letter Christina Romer, the president of Obama’s Council of Economic Advisers, published in the Wall Street Journal.

The letter is an apologia for the economic policies she and Summers and Geithner have been recommending to the president. She seems like such a nice lady, and she’s the wife of economist David Romer. Both were econ professors at Berkeley and both studied economics at MIT. But …

Here are some excerpts from her letter, with my comments:

Within a month of taking office, the administration had announced its Financial Stability Plan and signed the American Recovery and Reinvestment Act. The Recovery Act helped stem the decline in spending caused by consumers and businesses reeling from the fall in asset prices and the drying up of credit. Real GDP, which had fallen at a 6.4% annual rate in the first quarter of 2009, began to grow again just two quarters later. …

She seriously believes this. But she has a slight problem with the cause and effect, post hoc ergo propter hoc*, thingie. That is, there is no evidence, theoretical or empirical, that the Recovery Act did anything positive or lasting. Even assuming Keynesian stimulus works, the government hadn’t spent enough money to make it work according to the Keynesian formula. At least that’s what Paul Krugman said. Whatever, no one has ever offered any proof that such stimulus works.

And, as far as I know, PCE (consumer spending) is still very low, asset prices are still declining, and credit is worse.

We’ve already seen from the Recovery Act that spending on infrastructure—everything from roads and bridges to schools and municipal buildings—is an effective way to put people back to work while creating lasting investments that raise future productivity. …

Yadda, yadda, yadda. Again more spending on things the government wants, not the things that the market wants. The jobs are already fizzling. See this excellent article in the WSJ, ironically published on the same day as Mrs. Romer’s piece. The gist is that when the government money ends, the jobs dry up.

Subsequently the president pushed for the Cash for Clunkers program that was successful in boosting demand and job creation. …

All this did was to junk a bunch of good cars, fill the pockets of auto dealers, and appease the UAW. Auto sales are already declining again. It just accelerated future sales of people who would have bought cars anyway.

[A]bout a month ago the president announced the latest in a series of measures to encourage banks to lend to small businesses. …

As we all know credit is still shrinking, not growing. They have tried every trick in the Keynesian book to loosen credit but to no avail. I’m sure this new legislation will be different.

[I]n early November the president signed into law a measure that would provide relief and spur job creation by adding additional weeks of unemployment insurance, cutting taxes for businesses, and expanding and extending the home-buyer tax credit. …

That must have worked really fast, because unemployment, according to the Bureau of Labor Statistics, dropped from 10.2% to 10% in November. Wow, that’s great legislation. But, as we all know, Things Are Not What They Seem. As David Rosenberg pointed out in one of his reports, the government stats look funny because they are so different from what ADP reported. 

Despite these positive developments, the job market remains very weak. … American businesses appear hesitant to hire, and are producing more with fewer workers. …

Didn’t she just say that things are getting better?

Tomorrow [the President] will convene a meeting of business and labor leaders, small-business owners, economists and community representatives to discuss our ideas and solicit others for accelerating hiring. … [W]e need to harness the private sector, bringing large and small firms in off the sidelines to boost job creation. …

This is the part that really upset me. First, this is a typical political move. “Let’s all get together and come up with some great ideas!” No offense to the community organizers out there, but getting a bunch of people in a room like this gets nowhere. The best thing they could do is cancel all meetings, and get the hell out of the way.

But what really got me was the “harness the private sector” comment. I hope she didn’t mean it in the way I’m thinking, but if she didn’t then it’s even worse because she doesn’t realize the implications of her policies. When government gets together with business and labor to create policies for political benefit, it is called fascism, or national socialism. The words she used were rather telling: a “harness” is not something I would want to be in. You know who has the whip.

While the words seem innocent, it is all about losing our freedoms. Here’s the conclusion from a piece I wrote about the takeover of GM (in homage to Ayn Rand):

Sometimes it’s hard to see what is happening in front of your eyes. It seems rather benign and logical when you read about it, but it’s not. Nationalizing GM is just good old fashioned fascism–just like what happened in Italy in the 1920s and ‘30s … And now us. If you think I’m exaggerating, it’s probably because you think everything the government does is OK because we’re having a crisis. As Wesley Mouch said in Atlas Shrugged, “We’ve got to act!” That’s how we are losing our freedom, by a thousand cuts.

*Since that event followed this one, that event must have been caused by this one.