Thursday, November 20, 2008

International Reaction

I was asked last week if I knew what the reaction of the international community has been to the election of Barack Obama. Since I haven't been following international papers too closely, I thought it was a good time to take a look. The Huffington Post compiled a short list of reactions here. From the looks of things, I'm not surprised to see the general reaction from more socially liberal countries like England and Australia as a positive change in American politics. What strikes me as a telling undertone is the impression that the new President will lead America in a new effort of global partnership with Europe. The only problem is the new administration is already talking about protecting American industry to jump-start our economy. Protectionism won't help the global economy. So that also tells me the other nations are not as concerned with their economic well-being as they are with protecting their ideological demagoguery.

As an aside, I just noticed this little aspect of Obama's plan.
A New American Jobs Tax Credit: Obama and Biden will provide a new temporary tax
credit to companies that add jobs here in the United States. During 2009 and
2010, existing businesses will receive a $3,000 refundable tax credit for each
additional full-time employee hired. For example, if a company that currently
has 10 U.S. employees increases its domestic full time employment to 20
employees, this company would get a $30,000 tax credit -- enough to offset the
entire added payroll tax costs to the company for the first $50,000 of income
for the new employees. The tax credit will benefit all companies creating net
new jobs, even those struggling to make a profit.
Basically, what he's saying is that he'll relieve taxes on struggling businesses so that they will hire more people and put even more of a strain on their budgets. What? How does that make sense? A business will only hire more people if they are making enough money to cover the cost and need another person to do work that is getting over looked without enough employees.

However, there is at least one country somewhat concerned by the election's results: Israel. Israel's concern is probably well founded. While the Jewish state does not rely on the US for protection, it is certainly comforted by the knowledge that it has our support in its struggle against neighboring states who would like nothing more than the dissolution of Israel. The case for Israel's existence has been heated and the conflict is well documented. If the US is seen as supporting the enemies of Israel, then I'm afraid I assume the Israeli military will be fully prepared to do what it sees fit to defend the continued integrity of the county. Whether or not we might get dragged into it.

Overall, the international reaction reflects a belief that the US has shifted to a mindset more in line with European schools of thought. I believe that the answer to whether or not that sort of shift would be good for the people of the United States lies in an examination of the collective economies of the European Union. (The CIA has a pretty good run down in public domain.) I know that mere numbers and economic output cannot measure the well-being of a population, but it is a good indicator of the way of life and that has direct impact on well-being.

Edit to Add: Al-Quida has made their opinion clear. I'm not surprised, but I do wonder if they will try to push Obama's buttons more than they would have another leader's.

Thursday, November 13, 2008

The Economy of Coercion

John Stossel's latest column at Town Hall echoes some of my latest reading material. Stossel makes his point far more eloquently than I would, but it won't prevent me from trying to expand on what he wrote. Von Hayek wrote about why government cannot run an economy better than the Invisible Hand made famous by Adam Smith. A government run economy depends on experts in their field to plan the best route for production and, through that, the best route for consumption. The major flaw with this is that experts have a very narrow scope of vision, primarily the field in which they have studied. What happens then is they all vie for the important aspects of their division to be paramount while not being able to comprehend the total interaction of all aspects of the economy.

If the experts can't put it all together, how can the average citizen, you ask? Simple, the average citizen merely has to concentrate on that which is pertinent to his or her life. When you have an entire populace looking out for number One, the invisible hand appears. Market forces shape the flow of commodities by making the most used products and industries buy more and industries and products that aren't economical fall off the map or become a specialty and niche market. It makes for a very fluid and sometimes unpredictable economy. However, it also creates something of a market Darwinism, an evolution of production. Those companies that are useful and have a working business model profit and continue be useful in the economy; those that lack those things fail and remove the excess fat and chaff from the market.

Yes, a free market makes uncertainty a part of life, but it also drives innovation and development. The liberal ideas that sparked the explosive growth of the past three- hundred years still work but they also mean that we must be able to understand that sometimes things must change to continue that growth. This brings me to my next point: What will happen if we bail out the Detroit automakers? What happens when we artificially prop up failed business models? In the short run, a bail out may allow the companies to free up and divert capitol to projects that make them more competitive. Or it might give them the illusion of a cushion against the current push of the markets and make them even more sluggish in response to changing consumer needs, merely prolonging the death throws of a dieing business model which other companies have already left behind (including the continued leaching by the UAW.) The biggest hurdle the American automakers face in becoming competitive is the cost difference in production compared to their foreign brethren. GM has hourly labor costs (including benefits) of $78 per hour, while Toyota has a mere $35 per cost. At half the cost of labor, the non-union model is more streamlined and can cut consumer cost further. Add to this the perception that Toyota has higher quality cars and you get a compelling reason to cut the chaff that is GM from the economy.

The above is one example where a free market would cause fluctuation and uncertainty, but the economy would come out stronger. What worries me the most about the auto bailout currently proposed would pave the way for nationalization of the auto industry. If the government already owns a portion of the company, how big of a step would it be to buy the rest of it in the name of helping direct the company to more effectively aid the economy? Why does nationalization worry me? If my opening paragraph doesn't paint a clear enough picture, let us examine what happens to any industry when it gets taken over. First, it is important to note that most countries that at one time nationalized various industries re-privatized them later. It seems that the main effect of nationalization is to remove the incentive to innovate: profit for the individual (or group of investors.) Without that drive to innovate the economy stagnates and flounders, see the example of the "progress" experienced by the ultimate example of state control, the Soviet Union. The USSR did increase production under state control with a mandated shift away from agriculture to industry, but it also increased the cost of such development (including the human cost of producing less food,) resulting in the lowering of the standard of living. I suppose that is one way of achieving equality, and perhaps the only way. To make everyone equal you must bring everyone to a common denominator, usually down.

Monday, November 10, 2008


I recently began reading von Hayek's The Road to Serfdom and, while I have yet to finish it and therefore cannot give an analysis or review, it started me thinking. What is freedom?
Freedom would seem like it is a very simple concept. Yet, even when you look up the definition, it gets complicated quickly. In a political sense does freedom mean merely an absence of confinement or does it mean the ability to choose one's actions, thoughts, and words? The Declaration of Independence is often thought of when somebody asks about documents of freedom, but it actually never uses the word and only has the word "free" twice. Once in saying "A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people." and once describing the colonies as "Free and Independent States." This tells me that the writers of the Declaration already had a concrete idea of what Freedom means.

"Under the law of nature, all men are born free, every one comes into the world with a right to his own person, which includes the liberty of moving and using it at his own will. This is what is called personal liberty, and is given him by the Author of nature, because necessary for his own sustenance." --Thomas Jefferson: Legal Argument, 1770.
"Of liberty I would say that, in the whole plenitude of its extent, it is unobstructed action according to our will. But rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."--Thomas Jefferson to Isaac H. Tiffany, 1819.

When you put those two comments together, you get the image that the word freedom meant the right to live your life as you see fit and to have no one but you responsible for how it turns out. The only restrictions that can morally be placed on your individual freedom is when your actions abridge the liberty and freedom of another individual.

What does this say about government's role in the life of the people? What does it mean when the government is called to care for the "general welfare" of society? Does it mean that government must help the less fortunate members of society or does it mean that government is only there to prevent those who would take advantage of the less fortunate of society from doing so? If government chooses to support the poorer people is that an abridgement of the poor's right to living their own life and their duty as free people to take responsibility for themselves?

Wednesday, November 5, 2008

A well done speech...

As I've said before, I am not a scholar of American politics but some events warrant comment.

Overall, I found the speech given last night to be very well done, hopeful, and humble. But President-elect Barack Obama said a few things that make me wonder how his vision will color his leadership. He said that he will be not only a president for those who voted for him, but attentive to the concerns of those who oppose him. A very hopeful sign for a president trying to unite a country. If he can stay away from the non-centrist record tailing along behind him, he can be a leader for all of this fine country.

However, one or two sections from the speech caught my attention.
This victory alone is not the change we seek. It is only the chance for us to make that change. And that cannot happen if we go back to the way things were.

It can't happen without you, without a new spirit of service, a new spirit of sacrifice.

So let us summon a new spirit of patriotism, of responsibility, where each of us resolves to pitch in and work harder and look after not only ourselves but each other.

I have no problem with the idea of renewing the old American sense of helping our neighbor. It is something required of us as Christians. However, a government pushed sense of duty and sacrifice is a common thread among states that become more than the people wished. And worse. With our Constitution and the strength of our people, I don't see us slipped into that dark pool. That being said, what if our leaders consider the Constitution out of touch and out-dated? What if they decide that the ideals that shaped our founders are not applicable to the situation of today?
That's the true genius of America: that America can change. Our union can be perfected. What we've already achieved gives us hope for what we can and must achieve tomorrow.

He has said before that our paradigm is flawed, this only reinforces my fear that the standard by which our laws and dreams are judges will become warped with time, even more than time has already done to the proud writings handed down to us to help guide our country when it needs the advice required to maintain our "more perfect union." Not our "perfect union," but a "more perfect union." Perfection is unattainable and we should not change that which has allowed us to flex and grow.

Tuesday, November 4, 2008

Happy Election Day, USA

Kind of like a birthday and a New Year celebration, without the fireworks. Presidential elections mark a new parcel of history with each consecutive president, like birthdays, as well as another chance to tell our politicians what direction we want the country to take, like New Year resolutions. However, like a birthday, the day after seems like just another day of the same old life and like a resolution, we never seem to quite attain the lofty goals we started out with. But, no matter who gets elected or what happens in the election, life goes on and we all strive for our personal goals and dreams and if we miss the mark this time, well, there is always the congressional election in two years to correct ourselves.

I do have a few quotes I would like the reader to ponder as they go to the election booth though. These have no bearing on the platforms either of the major parties have put forth, but I believe they do remind us of what sort of mindset we should have when viewing our political leaders and choosing the right type of person for the job.
"A strict observance of the written laws is doubtless one of the high duties of a good citizen, but it is not the highest. The laws of necessity, of self- preservation, of saving our country when in danger, are of higher obligation. To lose our country by a scrupulous adherence to written law would be to lose the law itself, with life, liberty, property, and all those who are enjoying them with us; thus absurdly sacrificing the end to the means." --Thomas Jefferson to John Colvin, 1810

"If ye love wealth greater than liberty, the tranquility of
servitude greater than the animating contest for freedom, go home from us in
peace. We seek not your counsel, nor your arms. Crouch down and lick the hand
that feeds you; and may posterity forget that ye were our countrymen." -- Samuel

"A people may prefer a free government, but if, from indolence, or carelessness, or cowardice, or want of public spirit, they are unequal to the exertions necessary for preserving it; if they will not fight for it when it is directly attacked; if they can be deluded by the artifices used to cheat them out of it; if by momentary iscouragement, or temporary panic, or a fit of enthusiasm for an individual, they can be induced to lay their liberties at the feet even of a great man, or trust him with powers which enable him to subvert their institutions; in all these cases they are more or less unfit for liberty: and though it may be for their good to have had it even for a short time, they are unlikely long to enjoy it." -- John Stuart Mill, Representative Government, 1861

And finally, Thomas Jefferson summed up the reason behind our Constitution:
"Free government is founded in jealousy, not confidence. It is jealousy and not confidence which prescribes limited constitutions, to bind those we are obliged to trust with power.... In questions of power, then, let no more be heard of confidence in men, but bind him down from mischief by the chains of the Constitution." -- Thomas Jefferson, 1799

Happy voting, everyone.