Jay Reding.com

For those who want to know what our future will look like, here’s a brief preview. F.A. Hayek’s brilliant The Road to Serfdom in a short illustrated form.

I’ve never been more bleak about the future of this country. The road to serfdom isn’t obvious. Nobody intentionally elects a dictator for the purpose of electing a dictator. Instead they pour the ill-conceived hopes and dreams into a Leader who promises them the world so long as they give him the power to create it.

Now, I don’t necessarily think that Barack Obama is a dictator. But the point is that he doesn’t have to be. He’s just creating the ideal conditions for one. What truly saddens me, what truly sickens me, is if that Obama passed the “Fairness Doctrine” to silence his critics, created “civilian work corps” to put an army of young men and women into his service, and arrested business owners, nearly half of the county would go along. Nearly half are so filled with irrational love for Obama that they’d let him become a Caesar. It isn’t about issues, it isn’t about the country, it’s about some gauzy notion of “hope.”

To hell with “hope.”

As Charles Murray says, everything Obama is promising has already been tried and failed. There’s nothing new. This isn’t “change we can believe in” this is “I can say whatever the hell I want and you simpletons will slurp it up.” It’s the wish list of every statist in the last 40 years, and it represents a radical and dangerous turn away from tested principles and towards abject statism.

Universal healthcare? It means the government will have to ration what we get. That’s the only way such a system can possibly work. Even worse, it doesn’t scale up at all. Which means America’s larger population will make the endemic and innate problem with universal healthcare worse than in a smaller country like Sweden or even Canada. Which means that we had better get used to dying in lines, and forget risky or experimental treatments.

Universal college education? For most people, a four-year college degree is a waste of time and money. I believe in a liberal arts education, but I’m not so arrogant as to say that it’s right for everyone. But now Obama will make the value of that degree effectively zero—and a four-year college degree is already worth nowhere near what people pay for it. My suspicion is that the real reason for this is ideological: make everyone go through the like-minded public university system and you’ll have an ideologically “pure” citizenry. Even if that’s not the plan, that will be the effect. A better solution would be to make our existing system actually work, but that doesn’t concentrate any political power into the President’s hands.

A cap-and-trade system for carbon emissions? It’s already been tried and failed. It’s a way of creating a stealth tax increase on energy consumption. A more honest approach would be to just slap a tax on energy. But Obama doesn’t want to be honest, he wants to play to the mob. That cap-and-trade programs hurt the Third World doesn’t seem to matter.

I don’t like to ascribe the worst motives for people, but even so President Obama is taking this country farther down the Road to Serfdom than it even has been. It may take decades for America to recover from what he is doing. He is pouring sugar into the engine of American prosperity, and we will suffer for it.

I love this country. I want this country to succeed, regardless of who is the occupant of the Oval Office or what party is in power. But the end result of what Obama wants will be a United States that is following the disastrous path of statism. At best America will suffer a “Lost Decade” like Japan.

At worst? America takes the road to serfdom to its inevitable conclusion.

I wish this were merely sour political grapes. But the future of this country truly is in deep peril. The way to the future is through individualism, hard work, limited government, thrift, ingenuity, and political pluralism. Today, we have a President who wants a cradle-to-the-grave welfare state and has the audacity to not only hope for one, but to say it in no uncertain terms.

I fear that if we continue down this road, the future will belong to India and China, while this nation lives out its twilight years in increasing obsolescence.

Bob Herbert writes in The New York Times that that what America needs to recover from the recession are more jobs. On that point, he’s absolutely right. The problem is that the jobs he would choose to create won’t do anything to help the economy. Like a good Times columnist, his preferred solution is more government intervention:

What Americans need is new employment on a massive scale, and one of the most effective ways to get that started is to invest extraordinary amounts in the nation’s infrastructure, to rebuild America in a way that creates a world-class platform for a sustainable 21st-century economy.

President Obama’s stimulus package is just a first step in the government’s effort to stabilizing the hemorrhaging economy. It contains infrastructure spending, but nothing comparable to the vast amounts it will take to make the desperately needed improvements.

Funds spent on those improvements, which will have to be made sooner or later, are also cracker-jack investments in putting people to work. The idea that the government is spending trillions on wars, bank bailouts, tax cuts, and so on, while still neglecting its infrastructure needs — and at a time when Americans are desperate for jobs — is mind-boggling.

Here’s the problem with that line of argument. What we need is not a bunch of make work jobs. Exactly what would Mr. Herbert’s plan look like? Should we take an unemployed financial analyst from Manhattan, hand him a shovel and have him dig a ditch or fix potholes on I-95? Is that really an effective use of his skills? Of course it isn’t&madash;it’s a waste of human capital.

We do need to fix infrastructure, but don’t kid yourself that doing so will make a bit of difference in job growth. Unless we want to start building roadways to the moon, there’s just no reason for millions of people to pick up shovels for all those “shovel ready” projects. What stimulus infrastructure spending produces is very limited and not terrifically effective.

Here’s where the standard argument about government jobs comes in: “but you’ve built a road!” they exclaim. Great, you have a road. Does that mean anyone will use that road? Sure, that road would be nice for all the trucks that aren’t going anywhere to take all the goods that aren’t being produced, but here in the real world just building a road produces a strip of concrete that may or may not get used. “If you build it, they will come” is a line from a movie, it’s not a theory of economics.

So, what do we really need? We really do need jobs, and we really do need infrastructure fixes. But those are two different problem with two different solutions.

If we want to get out of this mess, we need to tear down walls rather than build them up. The first bill that President Obama signed into law was an act that dramatically expanded liability for employers. You want to create jobs? Try not hobbling the people who create them.

Instead, Congress continues to punish American small businesses at every turn with higher taxes, more regulation, and expanded liability. If you’re a small business owner, now is the last time that you’re thinking about expanding your business. Yet now is also the time when we most need new job creation. Congress and the President continue to put policies in place that harm job creation, then they wonder why the economy is swirling the tubes. Then their solution to the problem is to punish the creators more with even more regulation while lavishing more and more money on the irresponsible.

If job creation is the goal, then Congress should start making it easier for small businesses to start and become big businesses. There are a number of ways to do this. For one, President Obama could sign an Executive Order today that nullifies regulations that harm small businesses—it wouldn’t solve all the problems caused by over-regulation, but it would certainly help. He could then push Congress to pass regulation that would shield small businesses from the biggest liability-increasing laws like the Lily Ledbetter Act. If you’re going to punish business for their excesses, at least punish the people with the deep pockets rather than tilting the playing field more and more against the little guy.

The next step is an across-the-board cut to the corporate tax rate to 25%. The U.S. has the highest corporate tax rates in the developed world—even Sweden has a lower corporate tax rate. Alternately, small businesses (with 25 or fewer employees) should not pay corporate taxes at all. While small businesses can elect to become Subchapter S corporations that make their income exempt from federal taxes, that rule puts more hurdles in their way. Why bother making small businesses jump through the hoops of a Subchapter S election rather than simply getting rid of all the headaches? Small businesses should not be punished with either double taxation or having to elect to go Subchapter S—the process should be as simple as possible.

Forget bailing out the Big Three auto companies. They’re dinosaurs. It’s like giving a bailout to the horse-drawn carriage industry in 1920. Somewhere in a garage an American inventor is coming up with the next revolution in transportation, free of the restraints of conventional thinking. I’d rather throw a few hundred grand to a hundred garage labs than a few billion to the dinosaurs. If just one of those innovators pans out, a new industry is born. HP, Apple, Microsoft, and even Google started not as the product of giant government R&D programs, but in garages and college campuses. You want the most bang for your stimulus dollar? Then give it to the little guys with the big ideas, not the big guys who are too constrained by their own bureaucratic inertia to revolutionize American industry.

We’re not going to fix America’s problem by repairing bridges and digging ditches. Most of our infrastructure problem should be solved by just shifting our priorities. Yes, it’s nice to have millions for the arts. But we also have to fix bridges, and we have to start making rational choices about how we spend our money. If we want to repair American infrastructure, we should do that, but it should be done in as apolitical a way as possible. That means saying that we are not going to spend millions on bike path or “community centers” that only help a small number of people. Instead, we’re going to fix the big problems like failing airports, falling bridges, and chemical plants that might as well have a “BOMB ME” sign painted on them. That means insulating these decisions from Congress, who have every incentive to put the needs of their campaign contributors above the public good.

If we want to fix the economy, we can’t follow Herbert’s single-minded focus on government as the solution to every problem. The reason why things are so bad is that our private-sector is failing. Neglecting the real engine of growth—private-sector, small-business jobs—is only going to make this recession turn into a full-blown depression.

This is the 21st Century. We can’t play with the handbook of the 1930s. If we want a 21st Century economy, we have to look beyond the top-down centralized approach and start looking at the economy in the same way we look at the Internet. Instead of a “central server” in Washington, we need a “cloud” economy that spurs innovation. Centralized networks are slow, inefficient, insecure, and costly. Distributed networks are fast, resilient, efficient, and effective. Our economy is the same way. If we’re to build a better future for ourselves and our children, we have to concentrate not on centralizing economic power, but putting it back into the hands of the people who create jobs that last.

Yuval Levin has why “partisanship” is a healthy thing in a democracy:

Our deepest disagreements coalesce into two broad views of human nature that define the public life of every free society. In a crude and general way our political parties give expression to these views, and allow the roughly like-minded to pool their voices and their votes in order to turn beliefs into action.

To ridicule these disagreements and assert as our new president also did in his inaugural that “the time has come to set aside childish things” is to demean as insignificant the great debates that have formed our republic over more than two centuries. These arguments—about the proper relationship between the state and the citizen, about America’s place in the world, about the regard and protection we owe to one another, about how we might best reconcile economic prosperity and cultural vitality, national security and moral authority, freedom and virtue—are divisive questions of enormous consequence, and for all the partisanship they have engendered they are neither petty nor childish.

Levin’s words match my own thoughts on the issue. Our current working definition of “non-partisan” seems to be more based on shutting up and getting with the program than anything else. When the President calls for an end to “childish” partisan disagreements, what he means is that everyone should accept his views on the proper role of the state and be done with it. The problem with that is that a large segment of the American population doesn’t accept the basis of his worldview, and they have a legitimate right to have their voices heard.

We don’t need “non-partisanship” at this point in our history. We need vigorous partisan debate. Democratic debate is a crucible that helps extract the truth—and today’s society is becoming less about democratic debate and more about cultural balkanization. We have a media elite that is overwhelmingly uniform in their worldview. With the exception of specialized media outlets like Fox News and talk radio, conservative voices are marginalized and diminished. Not only does this harm conservatism by denying it a forum, but it diminishes liberalism as well. Without a counterbalancing force, any ideology becomes stagnant and increasingly irrelevant. Liberalism, by constantly defining itself as the only valid worldview, has ceased being a vital political philosophy. Is it any wonder than that the banner of today’s liberalism is the empty slogans of “hope” and “change” and it’s ultimate rationale the accumulation of power? When President Obama spoke with GOP members of Congress his message was simple: “I won”. While that counts for a lot in politics, winning an election does not vindicate the rightness of a worldview.

This isn’t to say that conservatism is perfect. Many, if not possibly most of conservatism’s wounds are self-inflicted. Conservatism stopped, by and large, being intellectually vital during the Bush Administration. By going along with Bush’s “compassionate conservatism”, the conservative movement lost sight of it’s small-government origins. By becoming more stridently anti-gay rather than pro-family, conservatives alienated much of their own audience. The Republican leadership that has become the standard-bearers for conservatism lost the ability to connect to the American public because they became too ingratiated with power and defending their own record. That President Bush spent most of his second term allowing the opposition to control the public imagination helped bring conservatism in America to a new low.

But liberalism is making the same mistake. At this moment, liberalism is embodied in President Obama in a way that is fundamentally unhealthy. Just as conservatism tied itself to the political fortunes of President Bush, liberalism has become the Ideology of Obama, with the President as its pontifex maximus.

This is particularly unhealthy for a democracy. The combination of ideological arrogance and a cult of personality surrounding one great leader is a dangerous thing. The President, much to his credit, has tried to create a “team of rivals” to challenge his beliefs, but has yet been able to demonstrate more than a token commitment to that end.

Instead of trying to be aloof and above-the-fray, Obama should embrace respectful partisan disagreement as part and parcel of democracy. Instead of putting himself in an ideological cocoon, Obama should engage with the conservative movement. Instead of having The Huffington Post ask him pre-approved questions at his press briefings, he should invite prominent GOP and libertarian bloggers to grill him. It would be interesting to see how he would respond to questioning from someone like Glenn Reynolds or William Safire.

Obama has the bully pulpit of the Presidency, and he has a large hand in setting the tone. If he is serious about leading this nation, and he certainly is, he should be embracing partisanship rather than decrying it. The past President was accused, probably with merit, of living in an ideological bubble. He, like Obama, promised to be a unifying leader. If the President wishes to avoid the same problems that befell his predecessor, he needs to realize that you can’t strengthen your arguments without accepting the arguments of others as valid. For all his promising talk in this regard, his Administration has scarcely wavered from Democratic politics as usual.

Democracy cannot survive in a political monoculture or in a state where only one side is given legitimacy. Liberalism needs conservatism and vice versa. Partisanship is a crucial part of a healthy democracy, and right now American democracy is increasingly unhealthy. If we are to set things right, we need more reasoned disagreement, not mindless and rigid ideological conformity.

Francis Cianfrocca has an interesting critical look at why Paul Krugman’s call for a massive Keynesian stimulus is the wrong policy. His thesis is right: Krugman and many other economists are stuck in a world of rigid mathematical models that have little bearing on the way the world actually works—which is one of the causes of this mess in the first place. Those models keep getting proven wrong, but Krugman’s ideology is blinding him to their faults.

Take Krugman’s belief in the “Keynesian multiplier”. The Keynesian multiplier argues that for every dollar spend in government infrastructure spending, $1.50 in economic growth is realized. If this seems like “voodoo economics” to you, it’s because it largely is. Why sound investments can produce economic multipliers, the chances of the government making those sound investments is rather small.

The Keynesian multiplier might work if government was good at allocating investments in a rational manner. The problem is that government is based on political realities rather than economic ones. So, instead of allocating money on a rational basis (i.e. to where it’s actually needed), Congress allocates money based on the political clout of the campaign contributors. So, there’s no Keynesian multiplier in practice even if all of Krugman’s models say that there should be one: the government’s political mode of allocating resources is not economically efficient, and never will be. As Cianfrocca notes, the real problem is much different:

Let’s note that Krugman is a sober, first-rate economist, but also a woolly-eyed, low-grade political hack. He firmly believes that government is better qualified than private actors to direct the country’s economy, and has advocated a Federal government share of 28% of GDP, compared to the current 22% or so. Since he understands economic efficiency as few do, the conclusion is that he’s committed to the social outcomes that come with government control, as opposed to the free-marketer’s commitment to maximizing utility. But that’s a side point.

But why is the economy performing below capacity in the first place? Many reasons, too many to list here. And why won’t it simply recover on its own, as it has many times in the past? Here things get a bit more interesting. Like many economists, Krugman points to Keynes’s “paradox of thrift”: in uncertain times, ordinary people defer consumption and businesses postpone investments. The economy shrinks below capacity, because of people’s desire to save money.

It’s hard to escape the sense that the best economists and the President of the United States are blaming ordinary people for the economic crisis. If only we’d spend our money instead of save it, we wouldn’t be in such a big mess.

Cianfrocca goes on to argue that the “stimulus” won’t work because people don’t want to spend right now—the intuitively know that they are overleveraged and the country is highly overleveraged, and all this spending is just going to make things worse. Cianfrocca is right on that point.

He’s right because perceptions matter. He correctly points out that all this public indebtedness is exacerbating people’s own personal fears. Only 38% of people believe the stimulus will aid the economy, and that number will drop over time as the stimulus fails to produce any lasting growth. The more consumers feel like the economy is going down the tubes, the less they will spend. The less consumers spend, the fewer businesses will stay afloat, pushing unemployment up and feeding the cycle even more.

That doesn’t even count the pernicious effect of government regulation and liability rules which further decrease business’ willingness to invest and create new jobs. With passage of laws like the Lily Ledbetter Fair Pay Act, businesses may now be sued for alleged paycheck discrimination stemming out of events that happened years in the past. This makes every employee a potential timebomb and increases the overall cost of labor. The more Congress kowtows to the unions and enacts “employee-friendly” bills, the more likely it is that jobs will be lost. This spurs Congress to legislate even more to “save jobs” and the cycle continues. The resurgence of union political power could not come at a worse time.

Krugman’s fantasy world in which government rationally allocates money so that it grows the economy has little to do with the realities of our political system. Instead, what Krugman proposes will further erode public confidence in our government. The stimulus bill is an example of Congress giving special breaks to those with the most influence—and those with the most influence tend to be rich special interests rather than small businesses or ordinary citizens. People feel that their government is broken, and they are right.

No matter what the mathematical models predict, psychology is crucial. Krugman’s fantasy is a fantasy because he makes basic and incorrect assumptions about the way the economy functions. His Keynesian spending will not fix the “paradox of thrift” because part of what is fueling people’s unwillingness to spend is the state of government finances. Borrowing trillions more and running up the national debt is not going to make that better, it will make it much, much worse.

A real stimulus would involve the same sort of conditions we regularly impose on other countries in our situation. If we were Argentina, the IMF would be telling us to slash our spending and get our balance sheets in order. That we’re perfectly comfortable telling other countries to go through painful austerity while our government does the opposite sends exactly the wrong message. That isn’t to say government spending is all bad, but the first order of business should be to more rationally allocate the spending we have without adding trillions more in debt.

What is most dangerous about Krugman’s fantasy is that it will never end. The more existing stimulus measures push down the economy, the more Krugman would call for yet more spending. The result would be the same as it always has been: massive hyperinflation due to massive public debt. Krugman’s policies won’t work, and Krugman’s natural response to their failure would be to call for ever more.

We can’t indulge in such fantasies. Desperate times call for desperate measures, and unless we start austerity measures now, the pain is only going to get worse.

Andrew Sullivan went from being an astute conservative columnist to a frothing partisan hack somewhere around the 2004 elections. His latest column in The Sunday Times amply demonstrates his fall into hackery. Now, because the Republicans have the sheer audacity to defy the Leader and go against a budget-busting spending bill in a time of fiscal turmoil, they are akin to the Taliban.

So much for not questioning the patriotism of others.

For instance, Sullivan makes this blatantly silly argument:

From the outset, the Republicans in Washington pored over the bill to find trivial issues to make hay with. They found some small funding for HIV and sexually transmitted diseases prevention; they jumped up and down about renovating the national mall; they went nuts over a proposal – wait for it – to make some government buildings more energy-efficient; they acted as if green research and federal funds for new school building were the equivalent of funding terrorism. And this after eight years in which they managed to turn a surplus into a trillion-dollar deficit and added a cool $32 trillion to the debt the next generation will have to pay for. Every now and again their chutzpah and narcissism take one’s breath away. But it’s all they seem to know.

Which conveniently ignores the very nature of the bill—a trillion-dollar giveaway to Democratic special interests. It is hardly “narcissistic” or an act of “chutzpah” to cry foul when the Treasury is being raided in a time when America’s debts are already threatening our fiscal future. But Sullivans M.O. is already well established—Republicans are always evil schemers seeking to establish their own power while the Obama Administration is always pure of heart. His simple morality play has little to do with reality, but it is a constant struggle for Mr. Sullivan to ignore what is in front of his nose.

The Republicans are an opposition party, and they have finally rediscovered the idea that they are supposed to be the party of small and responsible government. Apparently to Sullivan, their job now is to roll over at acquiesce to whatever the Great Obama wishes them to do. That someone who so frequently quotes George Orwell cannot see the Orwellian implications of our times is distressing.

That Sullivan adds some faint condemnation of the Democrats is only due to it allowing him to show how magnanimous and post-partisan the Obama Administration is. That the Obama Administration is attempting to politicize the Census is ignored. That the Obama Administration’s attempts at partisan “compromise” is largely window dressing is ignored. The ethical scandals that surround the Obama Administration is immaterial to Sullivan’s worldview. The resignation of Sen. Gregg as Commerce Secretary? To Sullivan, this had nothing to do with the Obama Administration’s evisceration of the post in favor of having Rahm Emmanuel run the show, it was clearly an act by the Republican base.

Sullivan is capable of deep though, but he choses not to exercise it, instead going for the rhetoric of a third-string Daily Kos blogger. How tiresome must it be to be yet another unquestioning mouthpiece for the Obama Administration. One would think it to be intellectually deadening after a while. But perhaps Mr. Sullivan has become tired of thinking and would rather trade his insightfulness and relevance for the adulation of the “netroots” mob.

The loss of such a formerly insightful thinker, alas, diminishes our political rhetoric at a time when it’s at one of its lows.

Michael Totten has an amazing dispatch from the besieged Israeli city of Sderot, the most common target of Hamas rockets. He notes what it’s like for the residents of Hamas’ war zone:

Fewer than twenty Israelis have been killed by rocket fire from Gaza since Hamas and Islamic Jihad adopted the tactic. A few single suicide bombers inflicted more casualties all by themselves. Hezbollah killed around ten times as many Israelis in one month in 2006 than Hamas has managed with crude rockets for years. It’s no wonder, really, that critics slammed Israel for its “disproportionate” military response in the Gaza Strip.

It’s not just about casualties, though. Leave aside the fact that Hamas was escalating its attacks with bigger and longer range rockets and that a far deadlier scenario was on the horizon. Living under Qassam and Grad rocket attack doesn’t sound like much fun, but it’s worse than the low body count makes it seem.

Thousands of rockets have fallen on Sderot. And every rocket launched at the city triggers an air raid alert. Everyone within ear shot has fifteen seconds to run into a shelter.

Imagine sprinting for cover 5,000 times.

What constantly amazes me about the Israelis is not that the respond in a “disproportionate” manner, but that they don’t. If Mexicans rained fire down on Texas like Hamas rains fire down on Sderot, right now US Marines would be storming the beaches of the Yucatan and Vincente Fox would be running for his life. Very few countries would possess the singular patience that the Israelis have. Had the Holocaust not been such a terrible formative event for the Israeli state, I wonder if Gaza would not be a smoldering ember right now.

The people of Sderot should not have to live in fear. There is no excuse for such wanton violence. Hamas’ terrorism has not only killed Israeli citizens, but it is unraveling the social fabric of the region. The Israeli people have acted with incredible patience and restraint in the face of indiscriminate attacks against innocent civilians. It is unconscionable for the people of Sderot to have to live under such conditions.

Their story needs to be told, and thankfully independent and honest journalists like Michael Totten are out there to bring those important stories to light.

The U.S. economy shed 598,000 jobs in January, the worst job loss since 1974. There is no doubt that the U.S. economy is in a state of crisis. Our government is only making it worse.

It is more than mere coincidence that this huge job loss occurred in the same month that President Obama signed the Lily Ledbetter Fair Pay Act into law. The Ledbetter Act basically means that employers can be sued for “paycheck discrimination” years after the events occurred. In Ms. Ledbetter’s case, the alleged discrimination happened so far ago that the supervisor involved had not only left the company, but died. This Act, instead of making things “fairer” for employees, puts a massive burden on employers who now have to worry about lawsuits stemming from events decades old.

This is what the business environment will be like under the Obama Administration. There will be more regulations and those regulations will be written by representatives of big industries and radical special interests. There will be higher taxes on everything from corporate income taxes to personal income taxes to the estate tax, and there is a strong possibility of a carbon tax that will raise prices on every single good that needs shipping. The web of regulations, higher taxes, and the way society is treating the very idea of entrepreneurialism is making American business falter.

The result: more lost American jobs.

This “stimulus” bill will not help. It will give hundreds of billions to political contributors, and barely anything to American small business. Big business, the ones with the lawyers and lobbyists, have already gamed the system. The Democratic Party has no room for the interests of American small business, even though their employees are half of the American workforce. The situation for American small business will be dire: not only will there be more taxes, more regulation, and more self-righteous condemnation from Washington, but the credit markets are still tight. Unless you’re in a field that will be the recipient of government spending, like health care or road construction, forget hiring employees, you have to cut expenses to the bone right now.

American jobs are being lost because we are punishing the people who create them.

President Obama and the irresponsible Congressional Democrats are pushing this recession into a depression. Their wrong-headed pro-government economic policy is turning America into a banana republic. It is crucial that they be stopped.

Atlas is shrugging, and the world is at the brink of tumbling right off.