Friday, January 9, 2009

A Failed Fisking Of Pat Buchanan

Journalist, Presidential Speechwriter, Rabid Isolationist, Lover of All Labor Unions, and Anti-Free Marketeer Pat Buchanan has written a column entitled "Obama's Choice: FDR or Reagan".

Hmmmmm.....I'll be needing my Fisking tools....
Scalpel - thanks.

Laptop - got it.
Righteous Indignation - I've got plenty.
Various History Websites - check.
My copy of "The Forgotten Man" by Amity Shlaes - Here it is. First edition.
Chainsaw - yep.
Let the Fisking begin ! Here's Pat Buchanan:

Barack Obama, it is said, will inherit the worst times since the Great Depression. Not to minimize the crisis we are in, but we need a little perspective here.
The Great Depression began with the Great Crash of 1929. By 1931, unemployment had reached 16 percent.
By 1933, 89 percent of stock value had been wiped out, the economy had shrunk by one-third, thousands of banks had closed, a third of the money supply had vanished, and unemployment had reached 25 percent -- among heads of households. And in those days, there was no unemployment insurance, no Medicare, no Medicaid, no Social Security, no welfare.

Nothing I can argue with there, although I can't find a reference for 89% of stock value being wiped out.

FDR's answer: vast federal spending, tough new regulations on business and higher taxes -- like Herbert Hoover before him, only more so.

Not much to attack there, either. But curiously absent from this analysis? The Smoot-Hawley tariffs. As soon as economic times got tough, Little Herbie Hoover signed something called the Smoot-Hawley tariff bill, which raised taxes on any goods imported into the U.S. That prompted all of our neighbors and trading partners to do the same, in a misguided effort to "protect" their own manufacturers. The result? No one traded with anyone. The only way to wealth is through the market, and the market died.

Next time you hear or read someone like Pat Buchanan or Tom Tancredo wanting to put up more trade barriers, remember that disaster. (To read an old post of mine that I'm rather fond of, click here. I was trying to explain the exact location of Tom Tancredo's head.)

The Depression lasted until war orders from the Allies brought U.S. industry back to life. Before 1940, not once did unemployment fall below 14 percent. In May 1939, Treasury Secretary Henry Morgenthau testified:
"We are spending more money than we have ever spent before, and it does not work. ... I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. ... I say after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt, to boot."

I'm seeing that Morgenthau quote all over the 'Net, but haven't found a source for it. But if he didn't say it (Morgenthau was an FDR appointee) he could have done so and remained truthful. It just doesn't seem like something an FDR loyalist would say.

Politically, the New Deal was a smashing success, with FDR's landslides in 1932, 1934 and 1936 virtually wiping out the GOP.

As the cliche goes, "Anyone robbing Peter to pay Paul can always rely on the support of Paul." Especially when Peter is still wearing diapers and can't vote.

Yet, economically, the New Deal was a bust, failing utterly to restore prosperity. Despite the indoctrination of generations of schoolchildren in New Deal propaganda, that is the hard truth.
Consider, now, how Ronald Reagan responded to the economic crisis of 1980, the worst since the Depression. In the "stagflation" of that Jimmy Carter era, interest rates had reached 21 percent and inflation 13 percent.

I bet somebody out there can help me out with this question.... Has EVERY economic crisis (recession) since 1929 been called the worst since The Great Depression? Do politicians like to hype the situation so that we can Loot The Children® to line our own pockets?

Reagan's answer was the tight money policy of Fed Chairman Paul Volcker and across-the-board tax cuts of 25 percent, while slashing the highest rates from 70 percent to 28 percent.
While unemployment hit 10 percent in 1982 and Reagan lost 26 House seats, in 1983 the tax cuts kicked in.
From there on out, it was boom times until Reagan rode off into the sunset, having created 20 million new jobs. "The Seven Fat Years," author Robert Bartley called them.

That's pretty much how it happened. Too bad that Reagan spent money like a Hollywood Cowboy with Alzheimer's. Which, come to think of it, he was.

Reagan had followed the lead of Warren Harding and Cal Coolidge, who had cut Woodrow Wilson's wartime tax rates of near 70 percent to 25 percent, resulting in "The Roaring '20s," a time of unrivaled prosperity.

Ahh yes. Harding and Coolidge. The laziest presidents, with the best economies. Mommy Party Messiahs don't get the same results. Could there possibly be a correlation?

The JFK tax cuts of the 1960s, also a Reagan model, were equally successful.
Harding, Coolidge, JFK and Reagan all bet on the private sector as the engine of prosperity. All succeeded. Franklin Roosevelt bet on government. And the New Deal failed. It was World War II that pulled the United States out of the Depression ditch of the 1930s.

NOT TO MENTION THE FACT THAT WE STARTED TRADING WITH GREAT BRITAIN IN A BIG, BIG WAY, TARIFFS BE DAMNED, SUPPLYING THEM WITH EVERYTHING THEY NEEDED TO CONTINUE FIGHTING THE DAMN NAZIS. That may have helped a little, Pat, you protectionist clodhopper....

Comes now the financial collapse and economic crisis of 2008, inherited by Obama, with 40 percent of all stock values wiped out in a year, foreclosures pandemic, and unemployment near 7 percent and surging.
In crafting his solutions, Obama seems to be brushing aside the Reagan, JFK and Harding-Coolidge models, and channeling FDR and the New Deal Democrats.
Already staring at a $1.2 trillion dollar deficit for the year ending Sept. 30, about 8 percent of the entire U.S. economy, Obama intends to add a stimulus package of $700 billion to $1 trillion, yet another 5 percent to 7 percent of gross domestic product. The resulting deficit would be twice as large as Reagan's largest, 6 percent of GDP, which was the largest since World War II.

Wait a minute....wait a minute....didn't we already spend something like 700 Billion channeling FDR and the New Deal Democrats when we bailed out Wall Street? Wasn't that supposed to solve the problem? Or could it be that the Obama candidacy was paid for by Wall Street, and that first 700 billion was merely in exchange for services rendered? And now we've gotta go back to the well for the real bailout? I have a warped admiration for Loot The Children® policies as much as the next person, but even the four-year-olds are starting to figure this thing out, and are starting to protest.

And how is this Niagara of money to be spent?
Hundreds of billions will go out in checks of $500 to $1,000 to wage-earners and individuals who do not even pay taxes. This is much like the George McGovern "demogrant" program of 1972, where every man, woman and child, if memory serves, was to get a $1,000 check from the U.S. government.
Other hundreds of billions will go to shore up state and municipal spending. Other hundreds of billions will go for "infrastructure" projects, another name for earmarks, which is a synonym for pork.

Yeah, the "infrastructure" projects are a synonym for pork and earmarks. But I kinda like Obama's idea of unemployed stockbrokers and investment bankers working on the roads, building bridges, leaning on their shovels, and taking a lunchbox to work.

Now, as Obama does not intend to raise taxes, at least now, he is going to have to borrow this near $2 trillion from foreigners or U.S. taxpayers, or the Fed will have to create the money.

Foreigners will give Bernie Madoff money before they give us any more money. Foreigners will loan money to Somali pirates, in hopes of a quick turnaround on their investment, before they loan us any more money. They might seriously consider the plight of that nice Christian lady in Nigeria who wants to get her money out of the country, but they're not going to loan us any more money. Foreigners will give money to the winos lounging outside of Convenience Stores who "just need a little money for gasoline so they can get home" before they give us any more money.

So The Fed is going to print the money. Count on it.

Undeniably, this will have an impact upon the economy. But what will that impact be?
Where in history, other than World War II, is there evidence that such a mass infusion of spending restored prosperity?

Well, when my daughter was playing blackjack on our recent cruise ship vacation, she lost more than half of her allotted gambling funds on the very first night. By putting more money at risk, she was able to restore prosperity. Eventually. It could've gone either way. She's a big girl now, and it was her choice. What if I'd bailed her out after the first night? I could belabor the analogy by guessing that she might've kept the money instead of putting it at risk again, much like the banks are doing now with the first 700 billion that The Children® loaned them.

Obama and the Democrats are taking a historic gamble, not only with their careers but with the country. If this monstrous stimulus package, plus the trillions in hot money, do not work; if the two ignite rampant inflation, rather than real growth, we are all out of options. The toolbox is empty.

I prefer to see the toolbox as half-full. There's still a chance that Somali pirates will attack Pearl Harbor.

And what will follow may truly resemble the 1930s.

Or a very well-funded Jack Sparrow movie.

I apologize for the total failure of this Fisking. Things are in a sad state when I find myself in general agreement with Rabid Isolationist, Lover of All Labor Unions, and Anti-Free Marketeer Pat Buchanan.

10 comments:

NickM said...

Good point about US/UK trade in the late '30s. We only finally paid you back a couple of years ago! Basically we formed a purchasing commision and if it flew, floated or fired we bought it. By mid-war the US aviation industry was enormous but a lot of those plane designs were originally to British specs.

Gordo over here is planning on qunatitive easing which is a cute way of telling the BoE to let the presses roll and fuck the consequences. What I really don't understand is that all of this is if it's because banks don't have cash to lend how come cutting interest rates helps. I mean hell's teeth what with deflation and all the best savings scheme is Granny's mattress.

We are bollocked beyond all rational comprehension. To go back to the analogy of your daughter's gambling (tut, tut!) or any business or individual. You get yourself into a financial hole then you stop digging. Gordo achieved the ever-lasting ire of Mancunians by nixxing the Vegas style casino planned for the city because he doesn't like gambling being a puritanical son of the manse and all that...

Yet now he's staked the entire country for maybe two generations on a spin of the roulette wheel. Oh, the irony! Our bank bail-out (which I really object to - due to a late payment from a client recently the bank charged my wife a total of 114 quid - a simple cash-flow cock-up rapidly corrected and where was our bailout?*)is costing twice what we spent on WWI (adjusted for inflation). WWI that broke the British Empire. I hope Gordo suffers the evils in the dark watches of the night. I so do.



*The US porn industry is after one too! And why not? Come one come all, so to speak!

Browncoat Libertarian said...

Awesome

Dr Ralph said...

NickM - I too noticed where the porn industry is looking for a handout (wait--that sounds wrong). Nice catch.

WS - after a few weeks of being vaguely snotty (layoffs in the military-industrial complex; they've got us all a little edgy), I vow to play nice.

My sympathies for the failure of your fisking. It didn't seem as if your heart was truly in it.

Re: your statement, "Anyone robbing Peter to pay Paul can always rely on the support of Paul." Especially when Paul is still wearing diapers and can't vote. --did you mean to say "especially when Peter is still wearing diapers?" Not that I agree, but it seemed to make more sense that way.

In keeping with my vow not to be snotty and argumentative, I'll pass on much of the FDR discussion (we've already put him through the wringer in a previous post).

One thing I'll ask about -- spending on infrastructure. I've gotten conflicting opinions about the LP take on this. Are roads, etc. an appropriate function of government or should we all be driving on private turnpikes? What about fixing the vast number of bridges out there in a sorry state of repair?

I do like your vision of the pin-stripe suit set standing around with shovels in hand.

Nick M said...

I dunno Dr Ralph...

I'm not above suggesting the porn bail-out would be a golden opportunity for the gubbermint to blow it all.

Personally. I see no probs with gubbermint being responsible for roads. A privatised road network would be a nightmare of toll-booths and whatnot. Of course in the future with better tech and stuff then privatised roads and seemless charging could work. But as it currently stands a huge chunk of the money raised by things like the London congestion charge go to running the system which is a waste in my book. And quite frankly everyone needs roads. Even if you don't have a car you indirectly rely on roads.

There are other problems though and I'm more than a leetle bit concerned if the primary goal is to produce jobs rather than results. Bridges to knowhere and all that.

FDR was put through the wringer... No wonder he was in a wheelchair.

Dr Ralph said...

NickM: re: blowing it -- the alternative could well be rising job loss, swelling the ranks of the unemployed and fueling desire for fiscal release -- I mean relief.

The Whited Sepulchre said...

Nick,
If you hadn't been able to pay us back, we could've arranged another bailout.

Browncoat,
No, sir, you are the one who is awesome. Either way, we shall do awesome things together inside and outside Texas State District #10, for the Libertarian Party, our districts, our neighbors, OUR STATE, OUR COUNTRY, AND THEREFORE THE WORLD !!!!

TO THE BARRICADES !!!!

Dr. Ralph,
I don't ever think of you as being snotty. I think of you as giving it your best shot, according to the dictates of your conscience, etc etc etc....

You are correct about the Peter and Paul error, which I will remedy shortly. Hope to see you next Sunday. We're going to be two chapters into the Spong book (Why Christianity must change or die), and it's pure, undiluted greatness.

My heart WAS in the fisking. The point was to set Pat Buchanan up as an anti-libertarian strawman, and then fail to kick him over because I happen to think he's correct on this issue.

The founding fathers said the government could, and should, build roads. They saw that roads, providing for the common defense, and a few other positive externalities of that nature would have to be mandated by government.
However, if roads in East Fort Worth were to be privatized? They honest-to-god couldn't get any worse.

All,
I have read about the Girls Gone Wild guy wanting some of the bailout, and briefly considered writing something about the regulations that would more than likely be associated with that particular wealth transfer.
For once, good taste prevailed.

Flee said...

I would have to agree that your heart just wasn't in it. You pointed out inaccuracies but there
were no real chalenges to these.

I never new there were other depressions until reading about them in Laura Ingalls Wilder's writtings. Back then they just toughed things out and lived with the "use it up, wear it out, make it do, do without" mentality. Just think how many future generations will have to deal with the 9/11 legacy and comparisons to that.


The problem started with Regan when productivity was increased by sending jobs overseas to save money, the savings went to the CEOs and other top officals, not the worker or consumer. The worker became the enemy. Top officals started being paid 500 times the average worker while the average workers wages remained relitively flat. (Trickle down sounded nice but sh*t also flows down hill.) Wall Street created this make believe world to play with all this extra money and make them more money without doing any phyiscal work. (The average worker saw how much money could be made and they started investing because hard work did not pay as much as it use too.) Then their ponzi schemes started to unravel and all their make believe money disapeared. (Sorry average worker.) To add insult to injury lets blame the greedy workers, especially those automotive workers. It is not just Bernie Madoff who was running a ponzi scheme, Rober Rubin and his friends were doing a good job of it over at Citigroup and I tend to believe that is only the tip of the iceberg.

I know it is simplistic but to me it seems like the people who benefitted from Regan and his tax cuts, as well as Bush's tax cuts, lined their pockets and left us the ashes. They have their off- shore accounts and we are told that it was the poor buying homes they didn't deserve that ruined the economy just invest so we can get the economy running again. Running for who?

TarrantLibertyGuy said...

Several points:
First an official welcome to The Whited Sepulchre into the 'Skull and Bones Dark Chamber' of SLECT as Co-Overlord District 10 Representative.

I was so proud of you at the double secret initiation ceremony, I almost cried a tear out of the eyehole of my ornate harlequin mask, removed my hood, dropped my torch and hugged you. But of course, at that point, the ancient spanking ritual had begun.

Second: Dr. Ralph... not snotty - SNARKY. :-) In Randville, it would all consist of private Seventeen Mile Drives, but in real life, the Constituion allows for 'Post Roads', so there you go.

Flee: Are you talking about Donald Regan? You know, there are three ways to grow an economy. Cheap Labor (See: Current day China); Cheap Capital (See: Current day everywhere else); or Sound Monetary policies and unfettered capitalism fueling actual value created by market forces (See: No where - maybe Switzerland "a little bit").

Reagan (and Regan); Volcker w/Greenspan tried the cheap capital route... See: current day fiasco.

Now, if a corporation's board rewards their CEO with a high enough salary to attract a good one - and a bonus with stock options that pay him 45,234 times the average worker - provided he makes the corporation profitable enough to fund his bonus easily(without coercion, fraud, theft, government granted monopoly powers)... so what? Dirk Nowitzki makes about $16 Million a year. That could be as much as $11 million more than the average union popcorn/peanut guy at Arena the Dallas Mavericks play in. Should the guy flinging peanuts get mad? NO - he should get a better at flinging three pointers where he could add much more value to the organization.

Don't get hung up in the "CEO makes X% what the average union employee makes" argument unless you can prove that the CEO provided less value to the organization's profitability than the average worker or trampled on the equal rights of others through fraud/theft/etc.. If that's the case, then the board should fire him... If not, consider giving the CEO a raise .

Dr Ralph said...

TLG - re: inflated CEO salaries.

In this day and age of overlapping, intermarried Boards of Directors, I would argue there is more "you scratch my back, I'll scratch yours" than competency that goes into salary decisions. After all, if the CEO where you sit on the board gets a gazillion dollars a year, it makes it a little easier to ask your board for a gazillion. Especially if the guy who you just voted a raise sits on your board.

Are there irreplaceable executives out there who deserve all that largess? Maybe, but there are a lot more who are just pigs at the trough.

Case in point -- all these jokers at financial institutions that have collapsed. I'd say they've demonstrably added less value to their organization's profitability than the average worker. And yet, they're still at the trough.

Hopefully one of the things to come out of our current economic situation is reform of executive compensation. And I'm not talking regulation: I'm talking about Boards waking up to their responsibilities.

But I'm not going to hold my breath.

Oh, and the "Randville" reference -- took me a second but I finally got it (WS will tell you I'm a little slow on the uptake).

Anonymous said...

Whited,

On the "robbing Peter to pay Paul" analogy, my mother always told me, when I overspent my budget;"robbing Peter to pay Paul makes Peter sore and anyone knows it's hard to do business with a sore Peter". Just thought you might enjoy this analogy from a 90 odd year old mother to encourage her daughter not to bet on the come, with funds earmarked for elsewhere.