- On several occasions during the Michigan GOP debate,
we heard various candidates promising to fix chronic problems within the
US government--from education and the economy to unemployment--just like
politicians have been promising for ages. A close analysis of their remarks
indicates that none except Ron Paul have a clue about how to accomplish
an honest and effective fix. His answers were clear, concise and enlightening
for those who wanted to hear, which did not include the moderators, who
gave Paul less than half the time to speak as top tier candidates. While
the debate sponsors were not completely effective in suppressing applause
for Ron Paul in the audience, they did suppress the post-debate polling,
as usual. After a futile 2 hour wait for the rest of the top tier candidates
to catch up to Paul's overwhelming 78% lead in their online poll of "who
won the debate," MSNBC shut down their poll. CNBC shut down their
poll after Paul garnered 86% of the vote. This week we'll take a look at
why the establishment candidates' proposals to fix the system never work.
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- On fixing the economy, former Senator Fred Thompson (the
latest media darling to enter the race), was clueless. Incredulously he
blurted out, "We're enjoying low inflation. We're enjoying low unemployment.
The stock market seems to be doing pretty well. I see no reason to believe
we're headed for an economic downturn." What planet is he living on?
Low inflation? Everyone is reeling from huge fuel and energy costs. Even
basic food stuff have started rising dramatically, not to mention professional
and medical fees. Real inflation is now above 10% annually, and going higher
as the dollar continues to decline in value. The only reason we aren't
experiencing hyper-inflation is because the world is being held hostage
to all the dollars they currently own. They can't unload them rapidly without
causing a crash in values-so they keep accepting more of our debt in hopes
of keeping the world dollar bubble afloat.
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- Mitt Romney continues to sound more like a wily politician
with every answer. Asked about Michigan's economic problems (7% unemployment
and auto business shrinking 30%), and whether the answer is to be found
in public or private solutions, he said, "It's everybody's job. It's
inexcusable that Michigan is undergoing a one-state recession, that the
rest of the country is growing...[the] president's going to have to stand
up and say -- you know what? -- to the auto industry: The door's always
open. We're ongoing to work with you and make sure that you have a listening
ear and someone who will participate with labor and with management."
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- "Listening ear?" What does that say? This is
pure political grandstanding and says nothing specific. It's not "inexcusable"
that Michigan is in a one-state recession. That's a natural consequence
of being dominated by a single unionized industry for more than a century.
It happened to Pittsburgh and its steel industry. When federal laws give
unions monopoly powers, including forced collective bargaining, wages and
benefits will rise far above market rates and lead inexorably to a dead,
uncompetitive industry. Protected by law, only an industry wide collapse
is capable of undoing the monopoly grip a union has on a bloated company.
This is not a tragedy, it is economic justice. "We're going to work
with you" is nothing more than Romney promising more taxpayer Chrysler-style
bailouts, which didn't last.
-
- Then Romney dropped the universal appeal that all politicians
whether federal, state, or local rely on: FIX EDUCATION! This is the political
equivalent of "motherhood and apple pie" that voters can seem
to resist. It's the universal drug of socialist thought that corrupts even
conservatives--who, like other Americans, don't want to pay the full cost
of schooling for their kids. Who can say no to "our" public schools?
I can, because they are NOT my schools nor your schools even if you use
them. They belong to the government, and they can't be fixed as long as
government has a monopoly on the power to extract non-participants' taxes
to subsidize the public school users--effectively making private school
supporters pay twice for education. That's simply not fair.
-
- Romney declared, "We're going to have to fix the
schools, as Newt Gingrich pointed out, 22% ...graduate from high school.
That's unacceptable." Anyone who holds up Newt Gingrich (the ultimate
Republican deceiver) as an example of trust is dangerously ignorant. Yes,
a 22% graduation rate is unacceptable, but so is the graduation rate of
every other public high school in America, even when higher. How many new
"solutions" and how many more billions have to be poured into
the public school system before America realizes that none of these people
know how to fix the problem? I can say that with confidence because the
only thing teachers' unions, school administrators and school boards have
to offer is to throw yet more of YOUR money at the mess they have created.
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- Money isn't the only key issue. If government schools
had good text books (which they don't); if they had excellent teachers
(they do have some); if they got rid of the load of federal regulations
and reduced all of their regulatory load; and even if they got rid of flawed
teaching methods and screwed up curriculums, they would still fail. Why?
Because public schools as an institution universally don't believe in discipline
and don't require discipline. Worse they don't give effective consequences
for lack of discipline.
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- Without discipline no education is possible. Education
is work, not play. You can try and make some things fun, but the hard things
to learn, the important things to learn, take work--and work takes discipline.
The only reason people succeed in public schools, without school discipline,
is because they have their own internal discipline, or their parents provide
some discipline. In short, they succeed in spite of the system; yet the
schools take the credit.
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- Sadly, modern legal precedents won't allow effective
or strong discipline in public schools--and I'm not talking about spanking,
though that has its place on occasion. I'm talking about kicking people
out when they become predators or fail to abide by the rules, or willfully
fail to do their assignments. When education becomes an entitlement, and
you can't remove kids from schools there is no ultimate discipline. When
the taxpayers are forced to fund schools no matter how bad their performance,
there are no ultimate monetary consequences either that can be applied
to the teachers, unions or administrators of this incompetence.
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- It's the same with the economy. There are only two things
wrong with the economy, and they are chronic: Over regulation, and fiat
money. Rudolph Giuliani had the stock political answers, though he is lying
about his intention to follow them. "So the reality is a president
has to work on the fundamentals. What are the fundamentals? Keep taxes
low. Keep regulations moderate [Rudy thinks the current level of regulation
is moderate! In fact, its so bad in the US that it's the number one reason
why companies are fleeing to China--lack of regulations]. Keep spending
under control [Anyone who believes that either of the two major parties
will stop deficit spending is fooling themselves. If deficit spending stopped,
Americans wouldn't be able to afford the bill for the Iraq war, let alone
all the other entitlement programs,] .
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- Giuliani had the audacity to decry the legal cost of
doing business in the US: "And make sure you do something about legal
reform so that our legal system doesn't -- it's 2.2% of our GDP now, is
spent on all these frivolous lawsuits. It's double any other industrialized
nation." What Giuliani doesn't tell you is that he and his law firm
have garnered millions in fees from the same kinds of lawsuits, backing
legalized corruption and engaging in lobbying that costs taxpayers millions.
Even as a public prosecutor he perpetrated one of the most costly farces
on the private investment world--the trumped up prosecution of Michael
Millikin. Paul Craig Roberts wrote an expose this week on this legal hypocrisy:
http://www.lewrockwell.com/roberts/roberts208.html
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- When Giuliani was asked about the role of hedge funds
and derivatives in our economy, he praised them as true representatives
of "the free market." Fortunately, they gave Ron Paul a chance
to rebut. "Congressman Paul, I think you have questions and concerns
about the bonanza in the hedge fund industry. Do you?
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- "Mr. Paul: Yes. I think this is not a consequence
of free markets... there's transfer of wealth from the poor and the middle
class to the wealthy.... This comes about because of the monetary system
that we have. When you inflate a currency or destroy a currency, the middle
class gets wiped out. So the people who get to use the money first, which
is created by the Federal Reserve system, have a benefit. The money gravitates
to the banks and to Wall Street [who have first use of the liquidity the
Fed injects into the markets to bail out speculators].
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- "It's because of the monetary system and the excessive
spending. As long as we live beyond our means we are destined to live beneath
our means. And we have lived beyond our means because we are financing
a foreign policy that is so extravagant and beyond what we can control,
as well as the spending here at home. And we're depending on the creation
of money out of thin air, which is nothing more than debasement of the
currency. It's counterfeit. And it is a natural, predictable consequence
that you're going to have people benefit from it and other people suffer."
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- "If they continue what they're doing, it's [dollar
value] going to go to zero, we're going to have runaway inflation; all
paper currencies eventually self-destruct and are ruined, and we're in
uncharted waters right now - this is the first time in the history of man
you've had no solid currencies [meaning redeemable in gold or other valuable
commodity] around the world and this has been going on for 35 years."
Ron Paul understands why the system will never be stable as long as the
government persists in creating fiat money. There is no fix without strictly
honest money--all paper money must have 100% commodity backing with full
redeem ability.
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- Fiat money only appears to have worked in recent decades
because of moderated use (present times excepted) and controlled doses
of liquidity promoted by Milton Friedman's "monetarist" school
of money and credit (The Chicago School). The idea was that if you keep
monetary creation in line with the natural rate of growth of the economy,
you can avoid the traditional boom/bust cycles of fiat money. It worked
for a while, but now is breaking down as unrestrained credit creation is
required to forestall collapse. What Friedman did not count on was the
inevitable corruption of the electorate in a semi-socialist society demanding
more and more government spending on wars, entitlements and "free"
public schooling, busting the budgets of both federal and state governments.
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- He also failed to take into account that our government
is controlled by powers that have a globalist agenda which have a constant
need to fund these wars and conflicts throughout the world--which cannot
be sustained by taxes lest the citizens revolt. Thus deficit spending,
well beyond the "moderate" level of injections of credit that
Friedman envisioned, was inevitable as well. Much of this harmful monetary
inflation is, in fact, still hidden--created off the books to fund illegal
government activities (black projects) by "dark side" elements
of our government.
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- Robert Kuttner, co-founder and co-editor of The American
Prospect, testified this week before the House Financial Services Committee.
His presentation was a dramatic review of the alarming parallels between
1929 and today, emphasizing the role of improper deregulation in the rise
of speculative bubbles. Read it here:
- http://www.prospect.org/cs/articles?article=the_
alarming_parallels_between_1929_and_2007
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- While Kuttner praises New Deal financial regulations,
he fails to distinguish between the proper form of financial regulation
(that requires commodity backing, transparency and honest evaluations of
market and debt instruments) and the type that needlessly restricts free
market innovation. Other bloggers added these comments:
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- "This article is incorrect in several ways; first,
the Federal Reserve is not part of the government [but it is part of the
government conspiracy to control money and credit on behalf of the insiders],
it is a private entity given monopoly rights on the issuance of the legal
currency. Second, the revolving door of corporate executives and politicians
has nothing to do with the free market and everything to do with classic
statist socialism, where an elitist aristocracy determines social policy
while most people are cleverly distracted with media diversions. Functionally
it is no different than the old Soviet apparatchiki system, only here corporations
and government agencies are ostensibly different organizations; the same
cliques run both collectives in reality." --A. Magnus
-
- "There was rampant insider trading and stock manipulation
during the dot com bubble. Wall St. realized that the average joe did not
understand all the new technology and it was a great story to spin to the
public. Day-Trading infomercials were all over the tv. The dot com bubble
burst and the American public lost trillions... After the dot com bubble
all the rogue brokers (with felonies) moved into the mortgage market. Why
not? Here is another industry the average joe knew nothing about and the
average sales guy could make $20,000 to $30,000 per transaction. Heck,
that was better than being a stock broker or day trader. Despite what anyone
says, the mortgage industry is not regulated. Sure, there are mandated
fees but the joke is any lender or broker can throw on a fee or charge
points and if the consumer was dumb enough to pay for it he was out of
luck.
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- "But, it was not [only] the buyer who should beware.
The industry eventually got brought down by it's own monopoly. All the
lenders, banks and brokers were slamming borrowers over the head with excessive
fees. Borrowers did not care [this is a key to suckering in the public]
because money was cheap and home prices kept going through the roof. But
seriously, why does it cost so much to refinance your home? In short, the
industry set the rules (via wealthy lobbyists) and the government was more
than happy to play along [Indeed, they created the Fanny Mae and Freddie
Mac machinery to finance the reselling of mortgages upline]. The mortgage
industry is plagued by corruption and was kept low tech to keep fees high.
How is this not a fast and cheap transaction?
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- "So now the real estate bubble is bursting and government
moves in with it's usual 'we will clean up this mess' with new rules and
regulations. But in the mean time, the damage is done and average American
now has big troubles. Because our homes are really worth about 30% less
than what we paid for them. Your home is worth less, [but] your taxes and
insurance are soaring and the cost of gas is at record highs. No inflation?
This is the first wave of the credit crunch. The US economy must go into
recession and clean out the riff-raff before we can resume healthy growth
and prosperity." --Chuck W.
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- Well said. However, the Fed shows every sign of increasing
inflation and liquidity to keep the bubble from bursting. We may see a
mild recession, but our greatest danger is harder-to-hide inflation.
-
- Senator John McCain was also touting fixes in the Health
care and insurance programs. "Every town hall meeting that I have
people say, 'I don't know if I'm going to have health insurance or not.'
We're going to have to bring costs under control of health care if we're
going to assure people that they're going to have retirement and they're
going to be able to have the much needed medical care that they need, as
they grow older. The fact is that Social Security is going broke. The fact
is that Medicare is going broke. That's a little straight talk and we've
got to fix it."
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- Health Care won't be fixed because the current direction
also has a fundamental flaw, just like education--lack of price discipline.
Health insurance IS a major part of the problem, not the answer--even when
it's private. When the government induced businesses to take huge tax write-offs
by offering "free" health care as an employee benefit, workers
began to overuse the medical system and under use the self-discipline of
good nutrition, exercise, and natural remedies. Even with small co-pays,
most people pay only a tiny fraction of the cost of their personal health
care, and thus there is little resistance to price increases. Nobody asks,
"What's it going to cost me" when a doctor orders an MRI or other
special test. The insurance pays, so there is no price resistance from
the user.
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- Now that health care prices have risen to extreme levels,
no one can afford NOT to be without insurance [so they say-to justify making
national health insurance mandatory], and the prices just keep rising because
there is still little price resistance from the end users. When price resistance
does arise against expensive drugs (for those foolish enough to take modern
drugs with all their dangerous side effects), the high cost of drugs is
used by politicians to justify more government intervention in the medical
systems.
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- Those of us who have long chosen to stay out of the health
care system are at risk to these astronomical prices, if we ever have a
problem. I mediate the risk by avoiding the typical American life style
and diet which almost always leads to chronic disease. Being out of the
health care system and being "at risk" is actually a great motivator
to stay healthy and learn how to use natural remedies. This is the real
"free market" of health.
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- A Tax Fix? Duncan Hunter wants a flat tax. But that still
doesn't get rid of the IRS mandate to snoop into people's income-a major
violation of a citizen's right to privacy. Neither does it eliminate the
normal business exemptions for business related expenses. Thus, the majority
of business tax complexity would remain with any form of income tax, flat
tax or no.
-
- Ex Arkansas Governor Mike Huckabee, waxed enthusiastic
about his consumption tax, which in the EU ranges from 15% to 25%. Huckabee
ignorantly claimed that such a tax would NOT deter spending: "Nothing's
going to discourage them [Americans] from spending money." He obviously
hasn't studied Europe. In France, after the introduction of a 21% consumption
tax, restaurants declined about almost 30% in two years until they gained
a lower rate from the government. Many companies that sold high priced
items like yachts saw their business decline 20-40%. Auto sales declined
as well.
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- A 21% tax off the top really does deter purchases, especially
above the $1,000 level. A major portion of the EU tax system relies on
a VAT tax where tax value is added at every level of commerce, and it's
all hidden within the retail price. But even though hidden the higher prices
associated with the tax does deter buyers at the margin (of being able
to afford something). When a large percentage of the production of the
economy is syphoned off in hidden taxes, there is less money (at any given
time period) left over for other purchases. We've seen this in the US as
a larger and larger portion of everyone's monthly budget goes to fuel,
which impacts other potential purchases. There are hidden victims to all
forms of taxation. Naturally, the free market always gets the blame for
the poor performance that results. In fact, it is the depressive effect
of regulation and hidden taxation that causes the markets to falter and
lag behind.
-
- Foreign Policy: The most egregious comment of the night
came from Mitt Romney as the prospect of an Iran war was raised. Ignorantly
taking the "super hawk" position advised by his globalist advisors,
Romney was asked if he would need to seek authorization from Congress to
attack Iran. He responded:
-
- "You sit down with your attorneys and [they] tell
you what you have to do, but obviously the president of the United States
has to do what's in the best interest of the United States to protect us
against a potential threat. The president did that as he was planning on
moving into Iraq and received the authorization of Congress...Mr.
-
- "Matthews: Did he need it [the authorization from
Congress]? Mr. Romney: You know, we're going to let the lawyers sort out
what he needed to do and what he didn't need to do.
-
- Then the moderator turned to Congressman Paul with the
question. His quick response was as dramatic as it was predictable: "Absolutely.
This idea of going and talking to attorneys totally baffles me. Why don't
we just open up the Constitution and read it? You're not allowed to go
to war without a declaration of war. Now, as far as fleeting enemies go,
yes. If there's an imminent attack on us. [But] We've never had that happen
in 220 years.... The thought that the Iranians could pose an imminent attack
on the United States is preposterous. There's no way."
-
- Ron Paul added as an after thought that the American
economy is at great risk from a Bush foreign policy: "If Bush is foolish
enough to start bombing Iran, that might precipitate such a crisis as oil
going to $200 dollars a barrel and really dampening the enthusiasm of the
whole dollar." He's absolutely right. We'll see permanently high oil
prices in a Middle East regional war.
-
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- World Affairs Brief - Commentary and Insights on a Troubled
World.
-
- Copyright Joel Skousen. Partial quotations with attribution
permitted.
-
- Cite source as Joel Skousen's World Affairs Brief
- http://www.worldaffairsbrief.com
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