Progressive Conundrum

The head of the Chamber of Commerce was on Bret Baiers' special today, and he reiterated what many of us have said for a long time regarding this down economy. He said that the fiscal cliff deal didn't help, but we also have a regulation cliff. Obamacare, Dodd-Frank, which is only 25% completed, and all the EPA regulations add to the market uncertainty. He said if government can get its act together and provide some sense of stability regarding regulations, taxes and costs of doing business associated with all government interventions, we'd see economic growth like the world hasn't seen in a long, long time. We would attract foreign investment, and the economy would boom. The Progressive conundrum is that they can't provide the welfare state they want to provide without healthy economic growth, but in order to allow economic growth they have to stop intervening in the economy, and they haven't been able to do this.

I don't know if Progressives/Statists really believe that government interventions are necessary to spur economic growth, or whether they're afraid of losing control if they allow more economic freedom. I believe economic freedom is the only path to real, sustainable economic growth which creates new wealth. The problem for Progressives is that even if they relax on regulations and stop interventions for awhile, they don't have the patience to wait for economic adjustment from non-productive activities to productive economic activity, plus, they wouldn't likely appreciate the direction growth takes, such as booming energy production.

Another problem is that public education isn't preparing enough young people for the difficult brain work today that pays the highest wages, so the recovery will be uneven as educated workers make a lot of money and the poorly educated make next to nothing. Progressives will not allow this inequality -- they will have to intervene by raising taxes and redistributing the wealth, thus creating the problems of uncertainty again. If Progressives don't allow economic freedom sufficient for economic growth and wealth creation, they can't fund the government they desire, and, if they allow economic freedom, they lose power and control and are forced to accept inequality, or allow education reforms that are comprehensive enough to meet the demands of the 21st century labor force. Progressives will not even much think in terms of education preparing young people for work, much less will they allow the types of fundamental solutions, including private solutions, that are necessary for lower class advancement.

Progressives can tax present wealth only so much, and then they run into a wall. Sustainable economic growth and new wealth creation are vital to the Progressive agenda, but their "investments" won't do the trick, and they can't allow a free market, so they're stuck in stagnation until they can think of more interventions that will work -- good luck with that. Progressives would no doubt accept stagnation, if we could fund welfare solutions to give each person a decent living, but this is not possible -- it takes new wealth creation to keep a large welfare state functioning, and stagnation in a global market will not create new wealth. In the meantime, the unemployed and underemployed will have to wait until enough people, often including themselves, realize the Progressive agenda is a systemic failure.

Morning Joe 10/5/2012 -- Companies don't hire because they only want profit

On Morning Joe today the crew was  flummoxed regarding the debate and today's jobs report which is expected to be pitiful. How can Obama turn this around? MSNBC is no doubt strategizing with its news outlets to concede that Romney won, but keep the idea alive that he flip-flopped and lied, and then spread seeds of doubt regarding what might have been going on with Obama. Maybe he had important government business pre-occupying him. But, really, who cares? Most people have decided, right? Donnie Deutsche says it's practically over and Obama wins.

They talked about how Obama could have offered many comebacks to Romney, and that Obama could have made a strong defense of his four years and his plan going forward, and that likely the next debate will show a more fired up Obama, and he will be the Come-Back Kid. Of course, Obama was holding back, giving Romney a win upfront so that Obama can close the deal later. Why didn't I see this? The old rope-a-dope strategy perfected by Cassius Clay decades ago.

In reality the president has nothing to go on. Poor jobs numbers brings up the central problem -- Obama's direction creates uncertainty in the business world. Mika said that businesses are not hiring because they only care about profit. Scarborough patiently and patronizingly tried to explain to Mika, who has blond hair, that hiring means profitability for companies, so companies want to hire, but they are uncertain about the future. That's partly true. Businesses don't exist to hire people -- they exist to produce a product or service that is in demand and to develope the most efficient, productive company possible. Different companies have different beliefs regarding what creates efficiency and productivity, but all companies try to keep their overhead low, and the most expensive overhead walks in the front door on two legs. Workers are more than overhead -- they are necessary parts of a business, but no business hires just to hire. No business says Well, we're in a recession so I'm going to hire ten people  don't need and let them hang around and draw a paycheck. No business says I will hire a lot of people so I can be profitable. Businesses plan, and unlike the government, they have to plan smartly and with frugality. If government interventions in the economy create an atmosphere of uncertainty, then planning is impossible -- calculation is impossible.

Leftists don't like to hear about business uncertainty, because it's too true and it reflects damningly on statist intervention. Leftists want to pretend that government and corporations can act in partnership according to a central plan and all will be okay, that government can subsidize companies to hire and build infrastructure, and that this will jumpstart the economy. This was the idea behind the first trillion dollar stimulus, but Krugman and company said it didn't work because it wasn't big enough and the plan wasn't smart enough. Now, the Left, including Obama, propose a larger, smarter stimulus, a stimulus that is actually investment, that will really jumpstart the economy this time. That's all Obama has.

When Romney looked at Obama in the debate and said that he, Romney, would open oil drilling and naterual gas production and clean coal production, Obama weakly responded that oil drilling is up. Romney looked at Obama and said that only on private land is oil drilling happening, but that permits on government managed land, land that shouldn't be managed by government, is signifinantly down. Obama couldn't respond. Obama knows, and Romney knows, and all who pay attention know, that if Obama's priority is green energy, then he has to reduce oil and coal and limit natural gas -- Obama can't promote both. Obama has given 90 billion in corporate welfare to green energy companies, so we know his priority, and Obama said that green energy is his priority. Obama has no rational, smart plan to develope needed energy now at home while allowing entrepreneurs to create the means to produce alternative sources of energy. This is one more area in which Obama leads government interventions that create negative consequences in the economy, and, as a result, gas is around 4 dollars a gallon when people are hurting financially. Obama doesn't have an answer for this -- not a good answer he can give in a debate. So, this is why Obama did poorly -- he has nothing to stand on. Obama has no good plan for economic growth. All the interventions led by Obama reduce economic activity and create uncertainty in the market. The idea that infrastructure will jumpstart true economic growth and new wealth creation, or that Obamacare will help companies and individuals save money on healthcare, thus boost their bottom lines and generate more economic growth, is ludricrous. You can take money from one place and shift it to another, ignore where the money came from and call it wealth creation, but it's not real.. New wealth creation must be based in something real. Maintenance of highways is an expense -- it might need to be done, but it isn't new wealth creation, and it's not real economic growth. Hiring 100,000 teachers will help those teachers and their families, but the money has to be borrowed and paid back, it's not new wealth creation. The teachers might help educate young men and women to be productive later on, but they might not -- it depends on the system and the students more than hiring more teachers. Obama has a simplistic, ignorant view of the market and economics. Obama seems to be stuck in the political realm with no understanding of the economic realm.

Morning Joe guests and regulars touched on some of this, but they don't see the hopelessness of four more years under Democrats following the same direction. The Morning Joe pundits don't understand free market principles and they don't understand the need for a limited government -- they aren't alone, because about half the nation, if not more, don't understand either. Yes, we need more education, but a different kind of education. 

Left divided

Talk in the media about divisions on the Right is common, but the growing division on the Left is hardly discussed. There have been a few stories regarding dissatisfaction on the Left with Obama's presidency, but the reasons for the dissatisfaction are unclear -- mostly, though, it's said he hasn't fought hard enough for the progressive agenda. However, the divide is not really about President Obama.

Watching the Sunday news shows this weekend a few issues emerged in stark contrast. One subtle but noticable contrast was the panel discussion on Meet the Press. Tom Friedman and Tom Brokaw represented the Traditional Left and Marc Morial represented the anti-Traditional Left, for lack of a better term. I'll call it the New Left, but I want to avoid any misunderstanding regarding how the New Left was defined in the 20th century.

The Friedman/Brokaw Left calls for an establishment-Left understanding of blue collar worker bee production in relation to Big Government/Private partnership schemes elevating America's role in the world as the mecca of equality and fairness. Friedman-type Leftists call for a cutting edge statist movement in the 21st century that embraces technology while simultaneously embracing the environmental concerns and high-horse of compassion which the Left has owned for decades. While the New Left is also concerned about jobs and social issues, it's a much different concern.

Just as the Infomation Age and New Media have uncovered different strains on the Right, from libertarian to yahoo war-mongers and social puritans, different strains on the Left are also revealed. The major movement on the Left was uncovered in the OWS movement, and although it's not necessarily new, it's overt claims which were once hidden in obscurantism are in the open. This part of the Left is not necessarily interested in blue collar jobs and grand work projects guided by government. The New Left believes the establishment Left is too cloesly aligned with the establishment Right and that both have colluded to rig the game. This New Left fears Obama has been captured or cowered by the establishment. This New Left wants action now to defeat and dismantle the capitalist inner sanctum and to enjoy the spoils of victory. Brokaw and Friedman are a part of the 1%.

This New Left is not interested in being the worker bees for the establishment Left, patted on the head for being loyal -- they want a New Social Contract. The New Left wants guarantees that the Masters who've stolen the wealth will be brought low and that their wealth will be redistributed. They want obstacles removed so that their version of pursuit of happiness is implemented. They don't want any job -- they want the type of jobs or pursuits which are meaningful to them, even if the pursuit is not in the workforce. This New Left believes there's enough wealth to ensure a basic living for everyone -- they value leisure and community building and spiritual quests more than a lousy dead-end job that benefits the Fat Cats more than the worker bee. The ones on the New Left who do want to work and to contribute want their pursuits valued as much as products being built -- they want to contribute in the ways they think are important -- isn't it more important to express a higher purpose than to labor just to pay bills or to win some rat race to wealth?

The New Left realizes there are many people who like the rat race and wealth creation, but not everyone is cut out for those pursuits, and some groups of Americans don't have a fair chance in that rat race even if they want to join, so, different arrangements must be made to ensure those who can't create wealth in the rat race or who will never be happy in worker bee jobs can still live a comfortable life and contribute their unique offerings to community and society. They want a New Bill of Rights.

While the Traditional Left has played with the idea of New Rights, and have even made progress implementing New Rights, the New Left wants to go all the way and transform the entire system built on out-dated capitalist ideas. They thought Obama was the One, but they've become disillusioned that Hope and Change has been thwarted by the Right, and that Obama has allowed the Right to block the transformation. The New Left is going directly to the system in order to bring it down.

The Traditional Left shows concern, while at the same time giving support to the New Left. The Traditional Left attempts to explain the New Left in terms acceptable by the public -- we do need fairness and equality -- the Fat Cats have gobbled up the wealth and should pay their fair share -- etc, etc. But, the Traditional Left of the Friedmans and Brokaws don't want to tear down the system -- they want to continue their idea of the process of reform. There's a wide divide between reform and revolution, and the Left will find that 2012 presents a challenge to bring the two sides together. The New Left is in no mood to capitulate, though, so there will be fireworks, and the Traditional Left has some big decisions to make -- where do they stand between free market principles and a new democratic/socialist order? Where do the Friedmans and Brokaws stand between limited government and statism on steroids? Where do they stand between productive work/wealth creation and guaranteed, State sponsored happiness/income/living?

Are higher taxes and stimulus all liberals have left?

I hear a lot of complaining from liberals/progressives about income disparity and unemployment. The vague charges of unfairness don't propose any plan I know of to seek solutions other than taxing the rich, redistributing the wealth and government spending on the creation of jobs.

We're not in a normal economic downturn. Our economy has stumbled through a transition, and this level of unemployment is likely the best it will get until something new is created. We're not waiting for capital to find more productive avenues, consumers to save and for businesses to throw off the waste -- capital is frozen because the economic system managed by government has halted production and new creation of wealth. Until the statist system changes, businesses will operate overseas and remain cautious at home.

One of the founders of Home Depot was asked if he could create Home Depot in today's market, and he said that he couldn't. Small business creation is what drives economic growth and the creation of new wealth, but our statist system has become such that negative consequences have overwhelmed the market and are preventing new Home Depots from materializing.

Raising taxes and going into more debt for government to create temporary stimulus jobs will not change the factors which stagnate business growth and new wealth creation. Actually, higher taxes and stimulus will only compound the problem. There was a time when government could direct capital through incentives and gimmicks, even though it's always had negative consequences, but the system now is so unsuited for business, investors and entrepreneurs are not responding to incentives and gimmicks. No business is going to expand and hire when there's no gaurantee that a government program or more regulations won't come about to raise costs still higher. Plus, business men and women know that with our debt, government is going to raise taxes going forward -- they just don't know how much.

Obamacare and Dodd-Frank were two straws that finally broke the back of business expansion and new hiring. Beyond that is the fear that government has so much power, and the attitude toward capitalism is so negative, investors feel under seige. No one is going to risk investment when those with the power to destroy are waging a war against business and wealth creation.

Economic growth or bust

One of the criticisms of the libertarian philosophy is the focus on free enterprise and growth. I don't think libertarians are focused on growth to the exclusion of other concerns, plus, economic growth is about more than the Koch brothers amassing more wealth. This simplistic view of libertarian philosophy and economic growth is more of a political attack than a valid criticism.

Modern liberalism values the State's safty net, environmental protection, unions, safe work places, and other social concerns they feel are more important than wealth creation. Neocons place value on national defense and our ability to defend against domestic terrorists. There are many social concerns and libertarians are not blind to them.

I won't address all the social concerns, but taking environmental protection as one of a few examples -- without economic growth, the environment can only suffer. Our influence in the world is predicated in large part on us being productive, and other nations are influenced by environmental concerns only to the degree that they need something from us. If we decline economically as a nation, we won't have much influence over developing nations, and they certainly won't voluntarily utiliize the necessary resources to reduce environmental damage from production. Also, if we are in decline, there will be less innovation to improve manufacturing processes to reduce pollution. Economic growth and new wealth creation enable the environmental protection efforts that liberals value.

Although libertarians usually disagree with neocons and progressive interventionists about the wisdom of overseas military interventions, if we're going to have an excellent national defense, it will come about through a well balanced manufacturing approach. Gorbachev, upon taking power in the USSR, quickly realized that agriculture and non-military manufacturing were suffering because of an unbalanced economic performance -- capital was misdirected because there was no free enterprise, and therefore very little economic growth and new wealth creation.

We can address higher level social concerns when there's economic growth and new wealth creation, but if we're in decline, soon there's pressure to cut safety net programs, defense spending, environmental protection efforts, as we begin to worry about the basic needs of housing, energy, food and clothing. People from all political stripes should promote economic growth and wealth creation. Yes, yes, yes -- there are other concerns, but unless we're wealthy enough to address these concerns, they will become distant problems of a better time as we focus on surviving. We can address these concerns as we create more wealth, but if anger at capitalism in a free market causes economic stagnation then decline, we can't and won't address these concerns.