Morning Joe 2/5/2013 -- Drones and stimulus

On the issue of drones and Presidential power to kill Americans without due process of the law if the Americans are suspected of terrorist activity, I'm in complete agreement with Scarborough, Mika and the Morning Joe guests who expressed concern. I've written about this problem many times. One thing I'd like to say is that when the State gains powers beyond what the Constitution allows, and when many people happily accept such violations when it suits them or when it jibes with an anti-capitalist ideology, they have themselves to blame when the extra-Constitutional violations expand to areas that concern these very same people. When Leviathan is created, Leviathan does what unlimited power does. Congress has to act responsibly, devising a new definition of patriotism, and provide oversight, stop the violations of basic rights and totally re-evaluate the War on Terror, the Patriot Act, Mideast interventions, the drone program and our entire military/industrial complex.

An area of disagreement is the ongoing dicussion on Morning Joe regarding stimulus spending and long term debt reduction. Scarborough has framed the argument as his form of smart conservativism distinguished from the Democrats' desire for stimulus with no immediate fixes for entitlements. The GOP Centrist position now is that we need government stimulus -- education, research, infrastructure -- and we need to design debt fixes that take place down the road when the economy is better. This Centrist plan ignores those conservatives in the GOP who want to make serious changes to government and cut governement spending by reducing its size and scope of government power. Centrists are presenting their plan as the new GOP plan which addresses Democrat's desire for stimulus, but it forces the Democrats to develope a plan now to reduce the debt in the future. Democrats, following Paul Krugman, say that we need stimulus now to get the economy going, then after we know where we stand, after economic growth is a reality, and after we know exactly what the entitlement situation is, then we can deal with deficits and debt. If we make plans now, the cuts might not be needed later, or we might not cut enough, so just wait to see what has to be done after the economy is fixed.

If these are the two choices, the Centrist plan or the Democratic Party plan, then the Democrat's plan makes more sense -- if we're going to fix the debt and defict in the future, then wait to see what has to be fixed and how much has to be cut or tweaked or reformed. Scarborough says we need to make a plan now to satisfy investors and foreign countries, but, if we put the problem off, these smart professionals in business or foreign governments will know that either way, it's a long shot that the US government will do what it says it will do regarding real spending cuts or real entitlement reform unless reality is so dire we're forced to do it, but who's going to force austerity on the US? Maybe China and Russia and India will have the influence and economic power to force the US to follow through, but it's more likely that it will take a severe economic crisis within the US for the government to act.

I don't agree with the premise. I have no confidence that government stimulus will create economic growth sufficient for jumpstarting sustainable private sector economic growth I've stated my position of limiting government power, deregulation, non-interventionism abroad, free trade, economic growth through economic freedom, and elimination of entire government programs and departments, plus comprehensive tax restructuring. But the faction of the political class that leans toward classical liberal solutions is not even considered in the conversation in the media at this point. They haven't been mentioned on Morning Joe except as part of the crazies who need to be marginalized and coopted by Centrists.

Obama said limited government and economic freedom don't work

It was about a year ago in Kansas that Obama gave his speech claiming that free market principles have never worked. Is there any wonder that our economy is stalled with a President in power who ridicules limited government and economic freedom? Obama characterized limited government and economic freedom as rugged individuals claiming that markets can do everything, just lower taxes, especially on the rich, and remove regulations and let her rip. Obama told his audience that this simple theory is appealing, but the only thing wrong with it is it doesn't work. It didn't work before FDR and it's never worked, Obama defiantly proclaimed.

Americans have to decide if we believe in limited government and economic freedom or not. There really is no choice in 2012 if you are someone who believes that government shouldn't intervene in the economy, because a vote for Obama is a vote for more intervention. Businesses of all sizes have let it be known that they aren't hiring and expanding because they don't know what's coming next from government nor do they know how much it will cost. The Left has tried to refute this by saying that there's no evidence government interventions have stalled the economy. The Left says the problem is demand, and that government must do more to stiimulate demand. Obama has poured billions upon billions of taxpayers' dollars into the economy to stimulate demand, and it hasn't worked. It has made the problem worse by increasing the debt. This is the same analysis of FDR's interventions by revisionist economic historians -- FDR's interventions prolonged the depression causing suffering to last a lot longer than it should have lasted. Japan's interventions into its big recession caused the recession to linger for more than a decade.

The choice regarding the economy in 2012 is between statist intervention in the economy or economic freedom. Which do you trust?

The problem with stimulus

Our problems are no longer short term problems that are ameliorated by short term stimulus gimmicks. Obama plans to give a speech in September in which he promises a little bit of everything to everyone which means we'd better be worried. Unless Obama proposes fundamental changes, his speech and his promises will be meaningless. We don't need pep talks, national ego boosts and gimmicks to get us past 2012 -- 2012 is only important to Obama -- but to people who have to plan for the long term there needs to be clarity over the long run, as much as possible anyway.

Obama is hinting at lowering taxes, spending on infrastructure and dealing with the long term debt. Anything that will happen in the future can be automatically scrapped because the long term promises never materialize in DC. As for tax cuts, if he's talking about short term reductions in payroll taxes, well, that's nice but it doesn't alleviate concerns regarding upcoming tax hikes to pay for Obamacare and unfunded liabilities. So, that leaves us with infrastructure and green energy spending and unemployment benefit extension and more food stamps which will hit immediately. Also, Obama will likely use Warren Buffett's whining to justify raising taxes on millionaires&billionaires, but this is not about Warren Buffett or Bill Gates or Donald Trump -- it's about how wealth is used.

We should decide if created wealth should be invested in the private sector and left to private sector decisions as to how it will be used, or whether trillions of dollars should be extracted from the private sector into government hands to be spent by politicians and government officials. It doesn't matter if Warren Buffett wants to be taxed higher, he can't speak for all creators of wealth and he can't make the decision that government should take the created wealth rather than have it in private sector hands. Warren Buffett would like the government to have the wealth because Buffett depends on government connections for his wealth -- he's just an old crony of the Merchant State, an old Hamiltonian backroom rent-seeker making statist deals with his buddies, so his wishes are irrelevant. If his government connections were severed he'd cry like a scared boy in the dark.

Short of fundamental free market changes, Obama can do nothing but get some good crank from his dealer Bernanke and shoot it in the arm of the economy to get him past the 2012 election, and then promise to get the economy straight tomorrow -- but tomorrow never comes, and it's always one more high, one after another until this junkie govenrment crashes and the dealer is busted.

Morning Joe 4/19/2011 -- S&P warning

The Morning Joe crew wasted much of the first part of the show - the crew does some things very well, but free style comedy is not one of them. I think they are a little too wrapped up in their personal relationships and inside jokes that just don't translate to the audience.

The crew did finally settle on a topic -- the news that S&P has a negative longterm outlook on America's credit worthiness. The controversy among the group was that the administration dismissed the warning as political. Joe Scarborough took the position that the administration should have "used" the report to get the message across to Republicans that defense cuts are necesssary as well as taxes on the rich.

Mark Halperin and Mika felt like Obama played it well and that Obama is serious about cutting and understands the debt problem. Chris Hayes from the Nation mag came on the show and he stated that S&P is a discredited outfit and no one should listen to what they say. Hayes also said that the warning the adminsitration should look for is higher interest rates, and that now it makes good economic sense for government to borrow and spend because interest rates are so low. No one on Morning Joe called Hayes a moron, but they should have -- obviously the Morning Joe crew didn't understand the idiocy of Hayes' position.

After accusing S&P of missing the banking/mortgage crisis, which was caused in large part because the Fed kept interest rates artificially low, Hayes turns right around and urges government to borrow and spend more money on "investment" schemes because interest rates are low. Apparently, no one on Morning Joe understands the nature of the debt problem. Obama and the Democrats want to borrow and spend more money, and they don't show any willingness to tackle entitlements, and they continously go back to taxing the rich. So, the Democrats want to take more money out of the private sector along with more borrowed money and spend it on government stimulus, but they are willing to cut defense spending.

Democrats had an opportunity to cut defense spending when they had the majority, but they expanded the operation in Afghanistan -- now, Obama has entered Libya and is spending hundreds of millions more with no plan to exit soon. Why Halperin thinks Obama is serious about cutting spending, I don't know. Why Joe Scarborough thinks that Republicans should agree to raise taxes that will be sucked down a black hole, I don't know. Why Hayes thinks government should borrow and spend more because interest rates are low, I don't know. It's absolutely incredible -- and the most amazing thing is that the New Republicans and the Tea Party will get demonized.

Klein promotes replacing broken windows to stimulate economy

Ezra Klein wrote:

It's worth saying why this is. Our definition of waste in government spending is something like "a project that doesn't seem worthwhile to me." When Tom Coburn and John McCain released their list of wasteful stimulus projects, the first item was "$554,763 for the Forest Service to replace windows in a closed visitor center at Mount St. Helens." Assuming the description is right, it seems dumb, right? Why does a closed service center need new windows?

But from the point of view of stimulus, that project wasn't wasteful at all: We paid people to replace windows, we paid window-makers to produce glass, and we put $554,763 of new demand into an economy that was operating far below its potential. Here's what would be wasteful: Giving me a payroll-tax cut. Or, as the Bush tax cuts would have it, a break on my income taxes.

I'm a young, single worker. I don't have many expenses. I'm currently saving money. If given a tax cut, I will save every cent of it. My tax cut will create no new demand in the economy. It will not employ new workers or buy new things. I will, in other words, waste the entire thing. If you want to create jobs and stimulate economic activity, you'd be much better off hiring people to replace the windows in a vacant storefront than giving me a tax cut.

This is unbelievably dense. First of all, the example of the wasted individual tax cut received by young Klein cannot be extrapolated to claim waste by allowing all of us to keep the money we earn. The ego-centrism is a little worrisome. Klein is right that a one time tax cut that doesn't affect ongoing tax rates is not as beneficial as permanent cuts in rates, but all tax cuts are good.

I guess Klein has never heard of the broken window fallacy. However, we know he has heard of the  fallacy, but like Paul Krugman he obviously believes printing or borrowing money and having government "invest" it is good for the economy, despite understanding the fallacy. The example Klein uses is too small in a multi-trillion dollar economy to have much meaning -- it's silly to debate that one issue -- I suppose if you believe that government can continue borrowing and printing money with no adverse effects, then putting a half million dollars in the economy seems like a good thing. If it's a positive for the economy, in other words, if spending money to replace windows that don't need to be replaced creates a return on investment, why not have government replace windows, doors, tires, shingles on roofs, shoes, streetlights, stop signs, fences, parking meters, etc. and really get the economy going?

Or is Klein saying that government investment in goods and services can only be done in certain amounts to be effective? How much spending would get the economy back on track without causing more negative than positive effects? It seems that after years of Keynesian economics we'd have a known amount which needs to be invested to cure recessions, so that when a recession is apparent, government spends that amount and stops the recession. The amount is obviously much more than 800 billion.

But the issue is not about an isolated case of government spending which benefits a certain small segment of society, it's about the overall effects of Keynesian economics vs allowing the free market to work by not allowing govenment interference. The issue is not about whether an individual like Klein would save his tax cut -- it's about the overall effect of taxing wealth or allowing people to keep what they earn and spend it, or save it, as they see fit. For that matter, the example of the windows doesn't prove the people who received money from the window replacements would spend the money or save it, and whether the window companies would hire any additional workers just for a one time increase in window sales.

Government can not manage the economy, because it doesn't have the vision or the knowledge to know where money needs to be spent, plus, if governent puts too much money into circulation and creates  superficial demand, inflation will eat up any benefit and the money used for government purposes merely means it can't be used for other more productive purposes. The current idea that we can just print money will soon fail as other countries lose trust in the dollar. Money means nothing if its simply printed to support a failing economy -- it's a desperate act that shows the rest of the world that we have no wealth to back up the pieces of paper. The fact that there is no private demand right now is because statism has overwhelmed the private economy, but overwhelming the economy even more is not the answer.

The way to prosperity and the creation of new wealth is for the government to quit managing the economy, cut wasteful government programs and spending, allow people to keep what they earn and spend it how they see fit. I'm obviously not an eonomist, but I don't think replacing broken windows and giving more money to government in taxes are the solutions.