The clamor for centrism

This morning on Morning Joe the panel yearned for more centrism like government is supposed to do things, getting together and "getting things done". I've heard this a lot from pundits lately, and many of Obama's critics on the Right have been laughed at when they call Obama a progressive -- why, he's just a centrist, after all. What does it mean to be a centrist, a moderate? The way most in the political class talk about centrism, the main characteristic is pragmatism.

Statists claim to be pragmatists when they're charged with central planning and social engineering. The idea is that in modern politics, in this complex world, an ideology is too limiting to deal with all the diverse problems facing the country, and one ideology can't possibly address all the challenges facing us. Therefore, the centrist pragmatically considers each situation and uses comoon sense to find the best solution for the greatest number. Sometimes indivdual rights are violated for the greater good, because pragmatism shouldn't be limited by principles carved in stone. The centrist believes that if there are two opposing views, the answer usually lies somewhere in the middle, therefore, finding compromise is the only way to effectively govern.

This centrist view gained popularity at the beginning of the 20th century when government became more active in guiding America's economy and role in international affairs. Pragmatically, we entered two world wars and created the Federal Reserve as a pragmatic solution to recessions, depressions and deflation/inflation. The 16th Amendment came about as a means to fund our new pragmatic, interventionist statist system. Government intervened in the economy and became entangled in foreign affairs before the 20th century, but nothing to the extent of the interventions and entanglements since the 20th century. I don't have the time here to go into all the arguments in favor of interventions, such as freeing the slave, giving women the right to vote and the Civil Rights Act -- these were mostly amendments and adjustments to flaws in the Constitution and laws which didn't go far enough in the beginning to ensure every individual enjoys our basic rights equally.

What I want to consider is the centrist/moderate mindset of the last few decades. Statism became acceptable after the New Deal and surely so after LBJ's Great Society. Kids who grew up in the 80s, 90s and now in the 21st century have been taught that government management of the economy is natural and necessary, and our role as World Police has helped further the cause of Democracy against tyrants of all stripes (although it's also taught we've been imperialist bad guys, too). The State has become powerful in ways the Founders feared in the beginning, but now State power is normal. Recently, though, Americans have started to question the role of government in our lives, the economy and abroad, and many people have gone back to the Constitution for guidance.

We've been told by statists on the Right and Left that the Constitution had to evolve to deal with problems that the Founders couldn't have foreseen. These statists acknowledge that America should not drift into bonafide Socialism or Communism, but we also shouldn't expect a strict adherence to the Constitution -- these two extremes should be avoided in favor of a pragmatic approach which re-interprets general welfare and interstate commerce in particular. The State, through an interventionist government, has taken the responsibility of general welfare to new heights to ensure justice, equality and a safety net for everyone -- also, the State has widened the scope of the interstate commerce clause to regulate business and prevent the jungle of the market from creating chaos and unfair advantages for the rich and powerful. The State seeks civility, order, social justice and stability. Centrist efforts aim to avoid the extremes of Socialism on one hand and a chaotic free market on the other hand. Unions, the Fed, an interventionist government, media, and government/corporate partnerships all go toward maintaining and supporting a powerful State machine that guides the general direction of our economy and our role in international affairs. How has this worked so far?

Well, right now, the State is in serious trouble. Government spending, after building steadily through the years, has skyrocketed in recent years and our welfare/warfare/regulatory State is faced with debt and unfunded liabilities which will crush us if nothing changes. We're at the tipping point. After a series of bubbles and crashes and a Fed monetary policy that has kept us somewhat afloat through borrowed and printed money, American enterprise at home has come to a halt, almost, and real unemployment is close to 20%. We're bogged down in Mideast wars, and our military/industrial complex is basically unaudited, spending billions each year that can't be accounted for. Foreclosures are at record highs, and there's no recovery in sight. These are just a few of our problems. The next bubble to burst is likely the massive amount of student loans which jobless young people no longer want to, or can't, pay back. Banks and auto companies have been bailed out, and now Europe's financial crisis threatens to hit banks and our economy with another severe blow.

A pragmatist might think change of direction is in order. Those who blame the current standoff between Democrats and Republicans over the role of government for our crisis should realize that all these problems didn't start with Bush in 2000 -- these problems have been building for decades, and our "centrist", statist government created most of the problems. Now that some Americans are taking a stand and considering the need to limit government power, cut spending and create a free market, the political class is up in arms screaming "Extremism"! Pundits are pushing for a quick return to the staus quo, the same centrist, statist compromises that got us here. A real pragmatist would search for real solutions. The center now is simply a weak admission that we can't change the system, but systemic changes are surely needed in this mess. History shows us that government manipulations only prolong economic downturns, and if we continue down the centrist, statist path, we'll experience anothe Great Depression lasting another decade or so. Japan did just what our political class is recommending we do and Japan still hasn't recovered -- that was two decades ago.

It appears to me that pragmatism calls for limits on government power and spending and the creation of a free market that can compete in the global market, along with changes to education, the end of the Fed and Fannie and Freddie, evacuation of the Mideast, closure of military bases and a few other pragmatic changes. Tomorrow I will write about the Republican establsihment's push for status quo centrism.

Morning Joe 8/5/2011 -- Ezra Klein and Rick Santelli

On Morning Joe today the push for infrastructure/stimulus spending continues -- the idea on the Left and in the middle is that we should make some long term tweaks to entitlements but continue short term stimulus spending to keep the economy going. Ezra Klein was on the show, and the more I listen to this guy the more I realize how the Left is bereft of ideas -- also, they don't understand history, or they have interpreted history through their political spin purposefully for propaganda reasons.

Scarborough asked if QE3 is necessary -- it's already happening. What the Left doesn't understand is that more government spending is the exact opposite of what we need. The stock market loss yesterday is a reflection that the market is afraid the government WILL do something. Government has done enough damage, but Klein and Scarborough and others want government to do more. Recessions are an adjustment when capital is no longer invested productively -- we need to allow a free market to find productive stability, but a free market is an illusion in America, and it has always been an illusion, especially since the creation of the Fed.

Rick Santelli came on the show and Ezra Klein asked him a progressive question about the unfair shifting of money to the rich. Santelli schooled Klein that "unfairness" is a useless adjective when talking about investment, that investors put money where they think it will be productive -- when it's no longer productive, they shift their investments. Now we have investors frozen in uncertainty because of  interventions like the Dodd-Frank bill and Obamacare and EPA regulations. Santelli also made the point that the Fed, and central banks around the world, are not allowing economic adjustment -- they continue to manipulate the money supply for political reasons.

Then Klein made the most preposterous claim I've heard lately -- he said the Great Depression was a failure of the market to adjust. My God, does he not know what government did, or what the Fed did? Then Mike Barnicle further complicated the craziness by saying that there were leaders in the 30s, and none now. What is it? Did government cause the extension of the Great Depression by allowing the free market to play out, or did we have great leaders? Klein said WWII was the Keynesian boost that ended the depression. Klein hasn't read history other than Keynesian apologist history, or he's dishonest. Barnicle is simply confused in his old age. Government intervention caused the extension of the Great Depression, and the contrast with the depression in the 20s shows the difference between two approaches. The 20's depression ended quickly because adjustment was allowed.

The Left is in serious trouble if Ezra Klein is their idea of a progressive thinker. Klein was stunned by Santelli -- I suppose in Klein's little world, many of his colleagues praise him  -- Santelli dismissed him as a lightweight.

Thomas Friedman's nation-building dream

http://www.nytimes.com/2010/11/28/opinion/28friedman.html?_r=1&ref=thomaslfriedman

This is representative of the statist dream I've been writing about -- we just need a good five-year plan designed by Obama and the Super Technocrats. Stalin might have left behind some five-year plans we could use as models.

This misplaced confidence in presidents to lead "nation-building" efforts is strange when we look back at the Great Depression. Many economists now blame Roosevelt's meddling for extending the depression.

This statist mentality has done enough damage -- you would think a man as smart as Friedman would realize this. This is the opportunity I've been writing about for liberals to reject these old ideas and become creative. Hey, I have an idea -- let's stop our president from meddling and allow the free market to do some Economy-Building.

A free market and a new understanding -- Part 4

The Roaring Twenties have been criticized as being an era in which the market was most free and the verdict has been overwhelmingly negative despite the incredible, widespread prosperity. Thanks to a one sided assessment the 20s are described as materialism gone wild, self-absorption of the worst sort, a drunken orgy of capitalistic philistinism. More sober (pardon the pun) accounts reflect the amazing accomplishments of an era when government was, for the most part, held at bay, and the market was, to a greater extent than before or after, allowed to operate without heavy-handed intervention. The 20s are also blamed for over-heating the economy and leading the Great Depression, proving once and for all that the free markets are not the answer and a State-managed economy is essential for steady, well-distributed growth. The facts, however, show a different picture.

Once again, I will refer to the writings of Friedman, Rothbard, Mises and the other I listed in Part 2 of this series -- plus, I strongly recommend reading Paul Johnson's Modern Times, especially the chapter -- The Last Arcadia. Also follow his references listed in the book.

After reading these alternative accounts of economic reality in the 20s, an honest reader has to wonder why public schools have pushed the greed and corruption version. Yes, there was greed and corruption, but no evidence that this period was worse than any other -- the amazing aspect of standard history is what's left out when taught in most schools. The pertinent lesson to be received from the 20s is that without government meddling, economic growth and prosperity would have steadily grown through the 30s, with perhaps a short recession -- and if all countries had practiced free market principles to the extent America practiced them domestically, we might have avoided WWII and live in a world  far more advanced and peaceful than the one in which we live.

If our government had allowed free market principles in foreign trade, and had the Federal Reserve not been created so that hard money policies and realistic interest rates were the norm rather than manipulation of rates and money supply, and had a crude form of Keyensianism not been embraced, and had our government not interfered with the eonomies of other nations favoring one regime over another, and had our government not instituted protective tariffs and encouraged inflation, we would have, indeed, avoided a lot of the consequences suffered in the following couple of decades, and, likely, the influence of State power that threatens us today. 

It takes a lot of reading, studying and connecting the dots to understand what happened in the 20s and 30s and how enhanced public education history has misled generations from the whole truth. It's no wonder that narratives still exist unchallenged, because most people don't have the time to research and find the facts -- however, it's becoming necessary to gain knowledge about free market principles and the flaws of statism. It's not a clearcut finding that free markets are perfect and statism is totally flawed, but the true picture is definitely in favor of a free market -- the problem is that everyone has to read the histories to make up their own minds, unless you are fortunate enough to have a mentor or education source you trust to break it down and explain it. The new media is good in this respect, but a person has to be sure that the sources of information are valid and not just some partisan spin site with political motives. Still, there is no substitute for research, reading and critical thinking -- no one can give another a full understanding without some work and deep meditation on the other's part to let it all sink in and become real. In order to build and sustain the national will to establish a free market, understanding our history is critical. 

A free market and a new understanding -- Part 3

So, why not remove all barriers to a free market? The main justification for government intervention is to manage crises, but most evidence points to government intervention causing the crises, which brings us back to the catch-22 that we've never had a free market. Government intervened from the start, leading to crises which led government to intervene even more to "fix" the problems, causing another crisis and another "fix", so on and so forth. We can say that State management of the economy has created a series of crises which government has used for justification to intervene. During times when government intervention has caused  backlash among the public, the initial resistance to government intervention waned, so that the original tendency for the State to expand power returned. We've never broken out of this loop, which over time represents a downward spiral. A myopic focus on short term ups and downs has missed the long term decline. 

Now the experts are warning that our current course is unsustainable, Ben Bernanke being one of the most notable-- however, there's no consensus on the causes. Cause and effect are so far removed in time, that most people lack the ability to trace current effects back to the original causes, and this prevents acknowledgement of government's role in the decline. The economic thinkers I listed in the previous post have been some the most comprehensive thinkers tracing effects back to original causes -- most current economists who have been co-opted by the State, or failed to gain a proper economics education, look at short-term gyrations, suggesting technocratic tweaks, jolts and nudges, as if keeping the patient alive until the next election is a solution. It's getting to the point that the suggestion will be to prop up the dead patient, like the "Bernie" movie, to give the appearance of being alive, until the technocrats can figure out how to perform a miracle resurrection.

The struggling technocrats and myopic economists remind me of a story about a man in a lake holding on to a large rock, going up and down in the water, soon, surely, to drown -- people on the shore are yelling "Drop the rock!", "Drop the rock!" -- after a while of this, as it looks like the man is going under for the last time, a greater cry comes from the people on the shore "DROP THE ROCK!" -- the man comes up one last time and yells back "I can't -- it's the only rock I've got!" 

We're at a point, it appears from all the evidence, that State management of the economy has caused too many problems and is leading us to total financial collapse or, at best, stagnation and high unemployment with a corresponding deterioration in the standard of living for most of us.

Establishing a free market will be the most difficult thing we've done as a nation outside those who've fought in wars and those who survived the Great Depression. This is a different kind of war, it's a war to establish free market principles which necessitates a strictly limited government, even if constitutional amendments have to be passed to close loopholes in the constitution. Do we have the will to take on the State and transition power back to the private sector?

More later.