Silken Slippers and Hobnail Boots Surviving the Decline and Fall

PART I: POLITICAL ISSUES

SILKEN SLIPPERS AND HOBNAIL BOOTS

History is the patter of silken slippers descending the stairs to the thunder of hobnail boots climbing up from below – Voltaire

This pattern has been repeated consistently since ancient times. Hungry, ambitious, aggressive nation-states have grown, prospered, and faded. America has always been the land of opportunity, an ownership nation. Now it’s a welfare state that pays people not to work, permits illegal aliens to remain and take jobs from blacks, Latinos and poor whites, gives preferential college admission and employment to people with colored skin, and takes money from more successful and productive people to give to the larger number of less successful people to buy their votes. This is the way career politicians destroy a prosperous nation and the opportunity for its productive citizens to succeed.

Franklin Roosevelt planted the seeds of America’s future decline. Instead of letting market forces correct fairly quickly the economic problems of the Great Depression, as had happened many times before, he injected large-scale welfare programs and economic meddling, lengthening the depression by seven years. It eventually ended when the war in Europe brought military business to the U.S. and we started building up our own weak military forces.

World War II energized our country and the post-war economy prospered with pent-up consumer demand, new family formations and general hustling. Then Presidents Kennedy, Johnson and Carter, aided by politicians, revived and expanded Roosevelt’s social engineering and fiscal policies that hamper free-market prosperity, penalizing success and rewarding failure.

The great communicator, President Reagan, was able to bypass the politicians and convince the people that "government is not the solution to the problem; government is the problem." Reagan lowered top income tax rates from 70 percent to 28 percent, but total tax revenues actually increased with the lower rates. Carter’s stagflation was corrected in two years and the country prospered for another 25 years.

But starting with the first President Bush, each new president, aided by Congress, raised taxes and increased spending, added or expanded a large collection of new regulatory agencies and programs – EPA, OSHA, food stamps and a hundred other major federal bureaucracies. As Milton Friedman noted, Nothing is so permanent as a temporary government program. The principle is concentrated benefits for a small, organized lobby that seeks some benefit, with diffused costs paid by unorganized or unaware taxpayers who don’t oppose the pork.

Occasionally our relentless progress toward a stagnant welfare state has slowed. On President Clinton’s watch, congressional Republicans twice passed welfare reform legislation, requiring recipients to do public work. Clinton vetoed it twice, but faced with an election and public support for the third legislation, he signed it, vowing to repeal it later. When it became very successful, cutting welfare rolls in half, he claimed credit for the legislation and the liberal news media called it Clinton’s welfare reform. Unfortunately, since then Obama and Congress have almost destroyed that successful reform.

One disastrous social engineering effort was the promotion of more home ownership, which instead resulted in an unsustainable housing bubble. It started with Carter’s Community Redevelopment Act, which forced mortgage lenders to make loans in blighted areas where lending was not good business practice. Carter punished lenders who didn’t make what his regulators decreed were enough bad loans. Clinton and Bush 43 added more vote-buying programs to increase home ownership. To make that happen, FHA, Freddie Mac and Fannie Mae lowered credit standards and down payments, eventually permitting some loans with no down payments, no verification of borrowers’ employment and income, and without checking the borrower’s credit history, encouraging people to buy houses they couldn’t afford.

The Federal Reserve facilitated the politicians’ housing bubble by printing large amounts of fiat money and holding interest rates artificially low. Rising housing prices attracted speculation, with speculators often buying several houses and flipping them even before they were completed. Wall Street bundled these mortgages for sale to investors, rating agencies (who were paid by the packagers) rated the shaky mortgage securities AAA and great quantities were sold to banks and investment firms around the world.

In 2008 the big investment bank Lehman Brothers folded and the bubble was pricked. Panicky Bush 43 and Congress, like all politicians, had to do something, instead of just correcting bad lending practices and monetary policy, and letting market forces restore sanity to the housing market. They created $800 billion with the Fed’s printing press and borrowed from China and others to save the politically connected, too-big-to-fail banks, securities brokers and insurance companies, starting the spending frenzy to save the economy, which it didn’t.

Then in 2009 Barack Hussein Obama, an inexperienced community rabble rouser, showed up at the carnival and we were off on the race to the bottom. He spent another $833 billion for emergency shovel-ready projects that still weren’t ready years later. He gave that money, Chicago-style, to friends, failing projects, windmill manufacturers, unions, and to Brazil to drill for oil while not issuing pending permits that were badly needed for drilling in this country.

Five years later the country still has a stagnant economy, with revised methods of calculating official statistics concealing high unemployment and inflation. If unemployment were calculated the way it was formerly, Obama’s 7.6 percent number for June, 2013 would be 23.4 percent, according to Shadow Stats. From the October, 2012 Financial Intelligence Report: The official August, 2013 inflation rate was 1.69 percent. Using 1980 methodology, the August rate was 9.3 percent ... As the underlying reality has turned more sour, the Obama White House has gone further than any of its predecessors toward converting U.S. economic reporting into an exercise in fiction-writing.

Aided by the news media, the Democrats now engage in full-time, all-year, every-year political campaigning, not on issues but in convincing gullible segments of the voting public – blacks, Latinos, single women, young people, the unemployed, the working people - that the Republicans and the greedy, heartless businesses that are the engine that drives the economy and the only source of real jobs, are their enemies and must be punished, not encouraged. Businesses and successful people have alternatives. Hostess Bakeries is a typical case. With heavy losses and facing a second bankruptcy, the company had to reduce high labor costs. Offered an eight percent wage reduction, 92 percent of their union workers rejected it and voted to strike. Hostess simply closed their 36 U.S. plants and fired their 18,500 workers.

Obama’s National Labor Relations Board puppets tried to punish Boeing for opening a plant in right-to-work South Carolina. Obama’s relentless attacks on business result in businesses and individuals not hiring or making capital investments or expansions, with some of them closing, retiring or moving themselves or their businesses overseas where taxes, labor costs and government policies are more favorable and unreasonable regulations and taxes are understood to be fatal to prosperity.

The U.S. continues to borrow by selling more Treasurys, the Fed continues to print more money to buy most of them and also to buy bad mortgage loans, the deficits continue to accumulate at close to $1 trillion annually, the national debt now exceeds $17 trillion, and the Roman circus continues its performance.

Those ultimately responsible for America’s downfall are not Obama and his toadys. It is a parasitic voting public, wanting the government to care for them at the expense of others, voters who re-elected a failed, incompetent gang of Chicago machine politicians and their limousine-liberal, elitist partners, people determined to change prosperity into a stagnant welfare state of people dependent on the career politicians. Our prosperity has been based on equal opportunity for all. Now the liberals strive for equal outcomes for all, killing incentives to produce and succeed. The majority of the voters were more interested in their bribes from the government than their own opportunities and the country’s prosperity. With more people riding on the wagon than pulling it, it is likely that more pullers will just say "Nuts!" and become riders themselves, head for the golf course, the beach in Panama or move their business to Asia.

Obama and many Democrats are shouting Compromise! at the Republicans, but compromise to the Obama gang means, "You compromise!" And that means one more step down the slippery slope to ancient Rome and modern Greece. The something-for-nothing voters have chosen to let their opportunity nation be dismantled, following an incompetent Pied Piper toward stagnant socialism, savings-destroying inflation and national bankruptcy. It is painful to remember what happened to Rome and realize it is happening here.

ENDANGERED SPECIES

There is a great hue and cry from such passionate warriors as the Sierra Club, Audubon Society, National Wildlife Federation and others when they perceive some species of animal, bird, fish or bug is diminishing in population or -- Gasp! -- in danger of dying out. Consider the rationality of those concerns.

The supreme law of nature is Adapt or die. Survival of the fittest applies not just within each species but between species. It is the essential basis for the improvement and continuation of some species, and the decline and disappearance of others unable to adapt and compete successfully. The survival of the fittest ensures preservation of the most efficient and viable species on earth, providing the optimum use and balance of the earth's resources. More capable and aggressive individuals and groups become dominant, weaker ones accept subordinate positions in the pecking order or disappear. In extreme cases, weaker groups disappear completely. That is nature’s grand scheme, competition for the planet’s resources and space. It applies to individuals, groups and nations.

Pecking orders are nature’s efficient way of organizing and managing all critters, including the naked apes, with a minimum of conflict. The strongest, cleverest and most aggressive individuals, groups and nations often maintain order and control simply by acting dominant, avoiding actual conflict.

It has been estimated that about ninety-nine percent of all the species that have ever lived are now extinct. Why must the environmental radicals now interfere with that process? (The term radical is used to distinguish those who ignore private property rights and legal requirements to pay the costs of appropriating them and who do not consider the estimated costs-benefits tradeoffs in proposed restrictions.) When some humans, in their infinite wisdom and compassion, interfere with natural competition, they are not doing a favor for nature or for struggling species. Often they are simply providing crutches for weak or incapable species that will probably fail anyway.

Federal biologists in Oregon announced that hunters working for the California Academy of Sciences are killing barred owls on the Klamath National Forest, saying they have invaded the habitat of their sacred northern spotted owl. The politically-incorrect barred owl has moved in from somewhere east and is described as more aggressive and adaptable, an apparently unforgivable sin. Nature’s survival of the fittest is being turned upside down by bureaucrats.

Guiltiest of the parties in this fiasco are the courts, which apparently cannot read our Constitution, and the U.S. Fish and Wildlife Service, with the power to dictate Endangered Species Act rules by powers delegated to them by Congress. FWS imported wolves from Canada in 1994. By 2002 the wolves had again become a nuisance killing livestock, FWS delisted the wolves, a federal court ordered that the wolves still be protected, Congress intervened and delisted the wolves, and environmental groups immediately filed another suit to protect the wolves -- another expensive imbroglio started by the tree-huggers. There is no authority in the Constitution for the federal government to do what it is doing, with or without compensation to property owners. Still, if some species preservation were conducted on a rational basis, probably few people would object.

There are a few species for which some protection or attempt to restore a viable population were justified, like American bison and Chinese pandas. Now such decisions are made by a few bureaucrats or a few politicians, using taxes carelessly and often taking private property simply by restrictions on its use but without the compensation required by law. The result is an incredible number of species on the endangered species list that simply cannot be justified either rationally or legally, in addition to causing many lawsuits seeking compensation for denial of private property rights..

Almost 1,300 domestic species of plants and animals are listed, unconstitutionally protected by our great government benevolent and protective society. On a recent count only 10 species had been reclassified recovered. The construction of schools, hospitals and all kinds of public and private developments are delayed or prohibited by the anointed elites who say there is or even might be a snail darter, sucker fish, pygmy owl or some other sacred critter either on the property or, incredibly, that might like to be on that kind of property. California alone has 308 plants and creatures on the endangered species list, including one fly and one rat.

The July 15, 2013 Wall Street Journal reported a typical example of the damages caused by President Obama in his transform America adventures. This spring his Bureau of Reclamation cut water allocations to one of the most important bread baskets in the United States because 300 desert smelt, a threatened species, were caught in the pumps at the south end of the Sacramento-San Joaquin Delta. The Administration cut the water deliveries to between 20 and 35 percent of the contractual allocations, flushing 800,000 acre-feet of irrigation water into San Francisco Bay. That’s enough water to sustain 800,000 families, irrigate 200,000 acres of land, grow 20 million tons of grapes and employ thousands of workers in an area with high unemployment. The report said more smelt are captured by biologists conducting population surveys every year than are trapped by pumps.

Such interference has often proved to be folly. Because of a supposedly endangered red squirrel, there were years of hassles and delays in building an observatory on Arizona's Mt. Graham. Years later, after the government finally located someone who could identify and count the endangered red squirrels separately from ordinary red squirrels, it was found that the endangered population on Mt. Graham had increased substantially since the offending telescopes, roads and buildings had been constructed, joining the trend to urban living.

The environmental radicals trying to kill the Alaska oil pipeline project said the caribou population would die out because they would not cross the pipeline during their seasonal migrations. As it turned out, the caribou like to stand under the nice warm pipeline, think warm thoughts and make love. Consequently, the Central Arctic Caribou herd which inhabits the Prudhoe Bay region has increased fivefold since oil operations began there, increasing from around 5,000 to 27,000 today.

This country is or should be desperate to reduce its dependence on foreign oil imports, but there is still a controversy over drilling for what is believed to be a large amount of oil in the Alaska National Wildlife Refuge (ANWR), also known as the Alaska National Mosquito Refuge. It has been reported that the estimated 10 billion barrels is more than a five-year supply of our worldwide oil imports, at the present rate. Environmentalist opponents always describe the area as a pristine wilderness and use photos of some other gorgeous area, but photographs of the proposed drilling site show it to be a desolate, soggy moonscape. New horizontal drilling techniques allow geologists to tap the oil from a tiny surface area of 2,000 acres -- a mere 1/100 of 1 percent of the ANWR’s 19,000,000 acres. The only people really affected are the Inupiat Indians who are pleading for the development of their oil, along with Alaska citizens generally, 75 percent of whom favor the drilling and development. The Alaska pipeline is down to half of its design capacity, endangering its future ability to function, and it could handle substantially increased flow from the ANWR's and other new production.

The obvious conclusion is that sophist bureaucrats, the Obama gang and the limousine liberals think critters and even non-commercial fish are more important than people. If they followed the Constitution’s property-rights provisions, the list of endangered species would be short, their protection would be rational and taxpayers would pay fair compensation to private property owners now denied their property rights.

EARMARKS AND RECKLESS SPENDING

Career Politicians vs. Our Children and Grandchildren

Once upon a time voters had a fairly clear idea how to vote, depending on whether or not they favored a bigger government, more welfare spending and higher taxes. Now voters must choose between tax-and-spend Democrats and don’t-tax-but-spend Republicans. In January, 2007, Republican House Minority Leader John Boehner punished Republican Representative Jeff Flake for his continual, almost sole opposition to earmarks legislation. Both parties are leading us astray, buying votes today in the hope that future politicians will handle their mess some day -- while today's politicians are collecting fat congressional pensions, consulting and lecture fees, book royalties and high-priced lobbying.

The Democrats seek a utopian socialistic democracy, with every American and business owing their survival to a government wagon loaded with subsidies, special benefits, welfare goodies, pensions, medical care, housing, food, unemployment and other forms of taxpayer-paid and borrowed welfare. Since 1940, toward the end of the Great Depression, real GDP has increased by five times and, during those years, government benefits have increased by 25 times. From 1966 to 1976 alone, Democrat-controlled congresses expanded federal benefits - now called entitlements - six-fold in inflation-adjusted dollars.

Democrats have never met an entitlement they didn’t like – benefits to special interests are a religion to them and a bribe to make voters political dependents. While Republicans have never met a tax cut they didn’t like, under George W. Bush they also learned how to spend even more than the Democrats did when they ruled. Then unknown mountebank Obama and his Democrat puppets broke all records, spending us close to national bankruptcy. We have become a welfare state, killing the incentives to achieve, to risk capital to start or expand businesses, to save and to enjoy the satisfaction of personal responsibility and success. Now Americans look to the gummint to solve their personal and business problems, and Americans are suckered into thinking that government help is free. They have voluntarily become government vassals.

Few Americans really understand the financial disaster this country is headed for. They hear the Republicans saying that Social Security needs to be reformed and the Democrats saying that there is no problem, or that we have decades to make some little changes in Social Security. The biggest disaster is the future of Medicare and Medicaid, and now Obamacare. The public hears there are some problems with them but feel no urgency to address them, only to be sure they get theirs, and the politicians repeatedly kick the problem down the road, lest they lose a vote or contribution.

Most people don't understand or care about huge federal deficits continuing into the indefinite future, massive imbalances in our foreign-exchange payments, a weakening dollar and the threat of reduced foreign investments in the United States and reduced foreign holdings of dollar reserves, all causing our interest rates to rise, with inflation set to destroy savings. Those threats are vague, meaningless, or simply of no interest to most Americans. The truth is that those are all crucial, compelling matters that need to be understood and addressed promptly.

Jaded by years of overspending, politicians talk about billions and now trillions as if they were just numbers. Forecasts of future deficiencies in Medicare, Medicaid and Social Security vary from $90 to $200 trillion, an unimaginable amount, but politicians continue to delay action. For perspective, our nation’s total net worth is estimated at $40 to $60 trillion, including all real, personal and financial property owned by U.S. residents.

In his 2004 book, Running on Empty, Peter G. Peterson, former chairman of the Federal Reserve Bank of New York, said some estimates of our unfunded benefit liabilities range from $45 trillion (American Enterprise Institute) to $74 trillion (Federal Reserve Bank of New York). His forecast concluded that if we want to balance the budget by 2014, on our current track we would either have to raise both individual and corporate income taxes by 38 percent or cut both Social Security and Medicare by 55 percent. Farther on, with the Woodstock generation retiring en masse, the trends begin to worsen quickly. To balance the budget by 2030 (assuming we do nothing until then), we would have to raise all payroll taxes by 100 percent and individual income taxes by 50 percent or we would have to cut Social Security and Medicare benefits in half and cut all non-defense discretionary spending by half. Those disastrous forecasts are low – very low. The head of the Dallas Federal Reserve Bank estimates the future shortfall at $104 trillion, and others at almost twice that, an unthinkable future.

What went wrong? What is still going wrong? Every American knows that his personal and business spending and incurring debt have to be limited by his earnings. A reckless Congress and the Administration spend and borrow as if there were no need to equate income and spending, no tomorrow, no day of reckoning -- they just borrow more money. Aside from the usual problem of career politicians buying votes and campaign contributions, many of them have the national baby-boomers’ disease: If you want something, just borrow the money and buy it!

Earmarks are another source of runaway spending, allowing money to be spent on projects that undergo no legislative evaluation. They are, in effect, no questions asked gifts to powerful and obedient legislators. In 1982, the House transportation authorization bill contained only 10 earmarks, while the 2004 bill had 2,881 earmarks plus several billion dollars more set aside for unspecified future earmarks. In that bill, average House members got about $14 million in earmarks. Representative John Murtha, Pennsylvania Democrat, got $150 million for his Johnstown airport that has only three flights daily, to and from Washington, D.C. Murtha said, If I’m corrupt, it’s because I take care of my district.

Don Young, chairman of the House Transportation Committee, took $590 million for his district, including $200 million for a Ketchikan, Alaska bridge to replace a delightful seven-minute ferry ride to the airport. Even Ketchikan residents reportedly called the bridge to nowhere a colossal waste of taxpayers’ money and the controversy eventually killed the project, but Congress immediately gave Alaska the same amount of money to spend elsewhere.

Citizens Against Government Waste ranked Alaska’s Senator Ted Stevens, then Republican head of the Senate Appropriations Committee, Number One Hog every year since it began calculating pork per capita in 2000. In 2005 he took $984.85 for each Alaskan. One slice of his 2005 pork was $1,500,000 for one bus stop