Month: November 2021

The Willful Blindness of Progressives

In a prepared remarks delivered at the White House on November 23 2021 President Biden made the following statement.

“We’ve made historic progress over the last 10 months.  Unemployment is down to 4.6 percent two years faster than everyone expected.  When we started at this job, it was over 14 percent.”

Except, as the graph below illustrates, the unemployment rate was 6.7% the month that Biden was elected. It was 6.3% when he took the oath of office, and it was already headed rapidly downward. And somehow or other the fact checkers were amazingly quiet about the President of the United States falsely claiming that the unemployment rate was more than double what it actually was. In prepared remarks on White House stationary no less. 

It’s not like this episode is an anomaly. The White House and its progressive allies, including those in the press, routinely mischaracterize events—when they are not simply inventing them. Consider Afghanistan. In an interview with George Stephanopoulos, Biden insisted that his military advisors had not counseled him to keep a residual force of 2,500 soldiers in the country. But Joint Chiefs Chair General Milley and General Frank McKenzie, in testimony before the Senate Armed Forces Committee said that they had advised the President to keep a small troop presence there. Who do you suppose is telling the truth? And who is prevaricating?

In the event the United States did not simply withdraw its forces; the United States surrendered to the Taliban. And now tens of millions of Afghanis are facing starvation as the country collapses. Some are now reportedly selling their daughters as child brides so they can buy enough food to survive. 

The Biden Administration, actually Biden himself, has called his surrender (they call it evacuation) a success. As MSNBC reports it, “One day after the final U.S. planes roared out of an Afghanistan lost to the Taliban, the embattled president said the exit marked an “extraordinary success.” And he framed his polarizing decision to leave as not merely strategically prudent, but part of a vital philosophical shift in American foreign policy.”

And what exactly is that “vital philosophical shift” in American foreign policy? Well, he’ll have to get back to you on that. In the meantime though, there are still about 1,000 Americans stranded in Afghanistan looking to get out. Not to mention about 14,000 Green Card holders. And Russia is amassing forces on Ukraine’s border and the Chinese Air Force is violating Taiwan’s air space. This apparently counts as foreign policy success in Biden world.  

And then there is the inflation problem. At first Biden & Co denied it. Then they said it would be temporary. Then they decided that it was a priority and that they “take action”. And what would that action be?

Well, surprisingly enough it’s the usual progressive grab bag of economic illiteracy. For instance, Biden ordered the federal bureaucracy to investigate price manipulation by the oil companies. Then the Biden Administration decided to address supply chain problems—problems that are partly due to the demands of progressive ideology. 

The main ports in the U.S. (and the only ones capable of handling the largest container ships) do not operate 24/ 7 as they do in Asia. Why? Because of union work rules designed to protect what Biden insists on calling “good union jobs”. U.S. ports are so outclassed in world competitive terms that in the 2020 “Container Port Performance Index” not one ranked in the top 50. A recent review ranked Long Beach and LA near the bottom of 351 ports, and below the ports in Tanzania and Kenya. 

And what has the Biden Administration done about that? Well, they asked the FTC to investigate supply chain problems and they threw more subsidies at the unions. 

The same type of policy disaster has beset the public school system, which seems more intent on keeping schools closed at the behest of the teacher’s unions than it is interested in actually teaching kids something. Or allowing parents to have a say in what their kids are learning. On the other hand, plenty of parochial schools stayed open during the pandemic without significant incident. And they appear to be picking up enrollment. (See this article).

The above is but a small portion of a very long list of spectacular progressive policy failures; in fact it is difficult to think of measurable progressive policy successes. Which raises the question, why is it that progressives who constantly invoke  science are apparently immune to its findings? Over time, top quality social science policy research studies by leading scholars have demolished the most cherished myths of progressive policy makers. These scholars include Milton Friedman, James Buchanan, James Q Wilson, Gary Becker, Fredrick Hayek, Patrick Moynihan, Thomas Sowell, Charles Murray and Glenn Loury to name a few.  

And what has the response of progressives been? There have been three. Response # 1 is willful blindness. Response #2 is the ritual recital of the sacred phrase “But Trump…”as if that solves everything, or anything. Response #3 is Cancelation. Like good little McCarthyites, they have simply sought to silence those who disagree or whose prior writings are suspect. In this they are very much like…Trump. 

But it’s all to preserve democracy, of course.

JFB

The New York Times Critiques Liberal Hypocrisy

The New York Times has produced a stunning video entitled “Liberal Hypocrisy is Fueling American Inequality. Here’s How”.  It amounts to a devastating indictment of actual liberal behavior when contrasted with alleged policy values. The Times contends that liberals are very good at putting up lawn signs and going to marches. But when the rubber hits the road, liberals are among the fiercest fighting against implementation of their supposed values. They simply represent the unvarnished NIMBY (Not in My Back Yard) standard. 

I one sense there is nothing new in this critique. Libertarians have been saying much the same things about liberal hypocrisy (or cognitive dissonance take your pick) for decades. To be sure, plenty of libertarians disagree with many if not most of the proffered policy solutions.  But what is important about this is that it is the New York Times, of all places, that has published this critique. 

Take a look at the YouTube video below. 

Liberal Hypocrisy…

JFB

The Jawbone of an Ass

[The White House] is considering whether to escalate an attack on parts of corporate America over rising consumer prices, according to an administration official and three people with knowledge of the discussions who spoke on the condition of anonymity to reflect private meetings.

—The Washington Post, Front Page, November 20,2021.

As surely as night follows day, the Biden Administration, a breeding ground for economic illiteracy, is once again looking for someone to blame for its policy errors. The latest search is necessitated by a sharp rise in inflation. 

Up until recently the Biden Administration denied the existence of an inflation problem. When that didn’t work they, along with the Fed, erroneously described inflation’s rise as merely transitory. Now transitory is being redefined upwards to a date uncertain. 

Funny thing though, the rise in prices has been relentless and broad based.  According to the Bureau of Labor Statistics (BLS):

“The monthly all items seasonally adjusted increase [of the Consumer Price Index] was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 4.8 percent over the month, as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.9 percent as the index for food at home rose 1.0 percent.” 

In response to the bad news, the Biden Administration has decided to jawbone corporate America. After all, that approach worked so well for Lyndon Johnson, Richard Nixon, Gerald Ford and Jimmy Carter, none of whom served 2 full terms. Moreover since the rise in inflation has become broadly based and embedded in the minds of consumers, Mr Biden will apparently have to jawbone corporations in every sector of the American economy. 

Which will all have precisely the same effect: Zero. 

The fact is that the rise in inflation is directly attributable to (1) policy actions the White House has taken and (2) policy decisions implemented by the Fed that the White House has cheered on. This year alone Congress, at the behest of the White House, has continued to spend money with gusto—and the Fed has accommodated the exercise by purchasing about half the Treasury bonds used to finance the enterprise. 

The result is a huge increase in the money supply and consumer demand. At the same time the Biden Administration and its allies have constrained the production and distribution of  goods and services. For example, the Administration is at war with domestic producers of fossil fuels, but begs OPEC to produce more. Mr. Biden’s nominee for comptroller of the currency, Cornell Law Professor Saule Omarova, has said that she wants to “…basically get rid of these carbon financiers…by [starving] them of their source of capital”. 

And then there are the executive orders the Administration is issuing that will increase regulatory costs on producers. Those costs will inevitably be passed on to consumers. Not only that,  Mr Biden has decreed that regulators no longer even need be constrained by cost – benefit analysis. Regulators may rely on aspirational but vaguely defined goals when imposing new rules on businesses. How’s that for increasing the costs and risks of doing business, not to mention handing out favors to friends?

So the net of it is that the Biden Administration is busy increasing demand and reducing supply. Any freshman student in economics will tell you what will happen as a result: Prices will rise. There isn’t any mystery here. 

It is, or should be, crystal clear that the Biden Administration is (1) simply  trying to change the subject, (2) remarkably illiterate in matters of basic economics or (3) both. My money is on 3—both.  

What is truly unfortunate is that the Biden Administration actually seems to think, despite a mountain of evidence to the contrary, that the government is actually capable of micro-managing the $23 trillion U.S. economy. But what they have actually demonstrated beyond all reasonable doubt is gross incompetence, even in executing legitimate governmental functions. 

Under the circumstances, the idea that the Administration is going to jawbone prices lower is simply ludicrous. 

At the moment the U.S. has issued over $22 trillion in outstanding (and headed higher) publicly held debt. A lot of that debt is held by foreign governments, including China. Which also means that those bond holders also hold dollars. That doesn’t leave a lot of room for policy error, a consideration which seems not to have occurred to the Biden Administration. 

A loss of confidence in the U.S. would be devastating. High and sustained inflation could be the spark that provokes such a loss. In turn that would likely cause a run on the dollar as it did when Jimmy Carter was President. And the performance of President Biden, whose Administration increasingly resembles that of Mr. Carter’s with each passing day, isn’t helping any. The U.S. Treasury may be a lot closer to the edge of a financial cataclysm than the public thinks. 

JFB

End of a Myth

The House just passed a version of President Biden’s “Build Back Better” bill. Only 1 Democrat, Jared Golden of Maine, voted against passage. He did so because he opposed a provision in the bill that raised the SALT cap retroactively from $10,000 to $80,000. 

The House vote finally and unequivocally explodes one of the more cherished myths of the punditocracy, namely that there are “moderates” among elected Democrats. Consider what the party just voted for after having already voted to spend $1.9 trillion for “COVID relief” in March, and an additional $555 billion for infrastructure in early November. And that is on top of the regular federal budget of about $4 trillion. 

The House bill nominally spends an additional $1.85 trillion over 10 years to greatly expand the welfare state. It includes a program of universal pre-kindergarten, child care subsidies that extend well into the middle class, more financial aid for college, billions more for housing, expansion of Medicare with a new hearing benefit, and (of course) price controls for prescription drugs. 

Democrats claim the bill will “only” cost $1.85 trillion. But of course the cost will be higher; in fact much, much higher. The Committee for a Responsible Budget estimates the  true cost of the bill to be as high as $4.9 trillion. According to the National Taxpayers Union (NTU), the Wharton School of the University of Pennsylvania earlier came up with an estimate of $4.13 trillion. 

The reason for the difference between the estimates produced by the Congressional Budget Office (CBO) and private forecasters is not the fault of the CBO. They are required to forecast based on a set of rules. The Democrats simply gamed the rules (as Republicans have done when they had the power). In brief, the Democrats only funded about 5 years of programs (hence the lower estimated costs) but increased taxes over the entire 10 year period (hence a reduced estimate of the deficit). 

But this maneuver fools nobody. Of course the programs will be renewed. As Milton Friedman once said, there is nothing as permanent as a temporary government program. The reason is simple. Program benefits are concentrated but costs are dispersed. The programs will naturally build up constituencies to defend them. Moreover the taxpayers are being deceived into believing that only “the rich” will have to pay higher taxes. So, they are told, for the vast majority the new programs are “free”.

However, lower and middle income earners will certainly pay for these programs, but the taxes will be indirect, by design. For example, corporations will be taxed more heavily. But corporations don’t actually pay taxes; they just pass them through in the form of higher prices for consumers, lower wages for employees and lower returns for shareholders. The mix of costs varies by industry and firm. But the middle class will pay one way or the other.

How about drug prices, that are now to be subject to price controls? The public will pay for that particular bit of economic illiteracy with the drugs that are not produced. Think about the COVID-19 vaccines that were produced in record time. That was (partially) the result of decades of research and development (including Intellectual Property) that was decades in the making. But the imposition of price controls lowers expected future profits while leaving development risks unchanged. The result is reduced capital commitment to R&D and fewer new life saving drugs discovered. 

Then there is the development of universal pre-kindergarten programs, funded by the federal government. Reflect for a moment on the irony. School boards across the country are erupting with parents protesting what the public schools are teaching their 7-year olds. Now Democrats want to unleash the bureaucrats who made such a mess of it on 3-year olds. 

The fact is, all but one of the House Democrats have voted in favor of a vast expansion of the welfare state. The programs in the bill are designed to create a subservient population easily subjected to the command-and-control whims of progressives. To accomplish that objective progressives lied about the cost, lied about the financing and handed out taxpayer financed gifts to their trade union allies, public sector unions, trial lawyers and high property tax blue states like, New York, New Jersey, California and Connecticut. 

With their votes for the Biden spending bill,  Democratic House members demonstrated beyond all reasonable doubt that there is not a single moderate  in the House Democratic caucus. Not one. 

JFB

Made in Washington DC: Inflation

An impressive list of problems has descended on the Biden presidency. Almost all of them have been brought about or exacerbated by—Joe Biden. Not only that, the Biden method for dealing with them is to (1) insist that the problem doesn’t exist, and then insist that (2) enacting his agenda is just what is needed to remedy the non-existent problem. 

Take inflation. This morning the Bureau of Labor Statistics (BLS) reported that year-over-year inflation surged to 6.2%, the highest it has been in 30 years. The surge in inflation is no statistical fluke. It simply continues the trend that has been in train since January of this year. Moreover the rise in inflation is accelerating and becoming more broad based. 

According to the BLS report:

“The monthly all items seasonally adjusted increase was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 4.8 percent over the month, as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.9 percent as the index for food at home rose 1.0 percent.” 

Back in July, Biden was dismissive of the inflation threat (See #1 above in paragraph 1). Bloomberg reports “President Joe Biden dismissed concerns that the U.S. would experience persistent inflation as the economy emerges from the pandemic…” He went on to say “There will be near-term inflation” because the economy is picking back up, [He] said Wednesday night at a CNN town hall in Cincinnati. But most economists believe that “it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand,”. 

Well, here we are 4 months later and inflation is becoming both pervasive and persistent. But not to worry says President Biden.  Enacting his agenda is all we have to do. (See point #2 in the first paragraph). 

Consider for example the musings of Transportation Secretary Pete Buttigieg, only one of the many incompetents who serve in the Administration. In a breathtaking display of economic illiteracy, Buttigieg actually said that, among other things, paid family leave is part of the Biden Administration’s tool kit to fight inflation. He went on to say that passing the Biden agenda would bring inflation down.

Said Buttigeig:

“Because if we can act to reduce the costs that Americans face: The cost of childcare, the cost of schooling, cost of access to pre-K, just literally putting more money in people’s pocket with the child tax credit that represents thousands of more dollars a year for most families with kids. That’s something that can help at a time when we see other issues like what’s going on in global oil markets increasing the prices people face,”.

Nothing like stoking up demand to reduce price pressures.

Never one to miss an opportunity to mutter a non sequitur, President Biden headed off to Baltimore to argue that the spending (in the $1 trillion infrastructure bill) “…can strengthen global supply chains to help lower prices, reduce shortages and add union jobs…”. How exactly this miracle is supposed to happen was left unstated. 

In any event, Mr. Biden suddenly decided that addressing rising inflation (that didn’t exist until this morning) is a “priority” for his administration.

We are now about at the stage where the kid in the crowd points out the obvious, namely that the emperor has no clothes. The fact is Mr. Biden and his advisors, with the exception of Treasury Secretary Janet Yellin, are clueless as to why the inflation rate has taken off, and why it is liable to be persistent. 

Secretary Yellin has already signaled that she is a team player, so it is unlikely that she will spoil the party by telling Mr. Biden that the problem is largely his fault along with the progressives that have been leading him around by the nose.   

Quite simply, rising prices—inflation—is the result of too much money chasing too few goods. There is too much money floating around for 2 reasons. The first is that the Fed has been recklessly printing money for going on 2 years.The second is that the Fed has kept short term rates near zero while buying an astonishing amount of Treasury debt. As of July 2021, the Fed held $8.3 trillion in Treasury securities, an increase of $3.6 trillion from March of 2020. 

The result has been to blur the line between fiscal and monetary policy thus drastically reducing incentives for fiscal sobriety. Mr. Biden and Congressional progressives have, not surprisingly, taken this as a green light and have ramped up spending on Bernie Sanders wish list of progressive causes. 

Printing all that money stokes demand.  At the same time, the supply side is constrained. To be sure, some of the supply side is hindered by COVID effects. But plenty of the constraints are the result of policy choices. For example, President Biden shut down the Keystone Pipeline in one of his first official acts as president. He is considering doing the same to the Michigan pipeline. 

World oil and gas prices have exploded and now the President of the United States is reduced to begging OPEC to ramp up production. All this while he is deliberately reducing domestic production of U.S. energy. 

Similarly, the ports on the coast have been backed up for months. One of the reasons is union rules that restrict the time they can be open. Another is that they are not nearly as automated as they should be because that would threaten union jobs. And we can’t have that. In fact the infrastructure bill—really an exercise in corporate welfare—spends money not to automate, but to subsidize the use of more manpower. 

The list of policy errors is almost endless. But the point is that the inflation problem we most assuredly have didn’t just fall out of the sky. It is the result of policy error. And those policy errors are likely to continue because the progressive wish list has a price tag that extends to infinity. 

The progressives are quite clear that they mean to transform the structure of the U.S. economy. Which means command and control from Washington, D.C. 

Strap in because it is going to get worse before it gets better. 

JFB

The Predictable Post Election Lefty Meltdown

The off-year elections are over, the votes have been counted and in the event Republicans won smashing victories, especially in places where they were supposed to lose convincingly. In Virginia for instance, Republican candidates won their respective races for Governor, Lt Governor and Attorney General. They also regained control of the House of Delegates. 

Predictably enough, lefty hysteria is now in full swing. 

In deep blue New Jersey, Republicans lost the Governor’s race race by a hair even though the polls had the Democratic incumbent, Phil Murphy, up by 8 points. Steve Sweeney, longtime Democratic NJ Senate President was defeated by a political neophyte. Edward Durr, a truck driver who reportedly spent $1,813 on his campaign, apparently beat Sweeney by about 2,000 votes.  

Republicans ran strong races in Pennsylvania as well. The GOP won 3 of 4 elections for seats on the appellate courts, and is on the verge of winning the 4th. In addition they won significant victories in local elections. In fact, they won local elections across the land, for instance in Iowa, Texas, Long Island, and pretty much wherever they ran outside of San Francisco and the Upper West Side of Manhattan. 

When the votes were finally counted, the biggest loser of all was Donald J Trump. The GOP won victories by keeping him at arm’s length; winning back affluent suburban voters turned off by his antics, and running up bigger margins in rural America than he did. 

You would think that Democrats would look at all this with a sense of trepidation and execute a mid-course correction. But you would be wrong. Congressional Democrats are working furiously to pass an even larger version President Biden’s “Build Back Better” monstrosity than they had proposed in their pre-election “framework”. 

That is because the Democratic Party hierarchy, running from reality at the speed of light, has deduced the reason for their widespread electoral defeat. It is The-Racism-That-Stalks-the- Land that the GOP has shamelessly exploited. The right-thinking people who voted Democratic one year ago have (apparently) fallen into the clutches of the Evil Geniuses of the GOP. With their dog whistles and attacks on Critical Race Theory, the GOP (sans Trump no less) has continued its Racist attack on “our democracy”.  

The evidence of Racism is crystal clear: Democrats lost. And if Democrats lose it must be because of Racism. What other possible explanation could there be? Not soaring inflation; not the fiasco in Afghanistan; not soaring crime rates; not the out-of-control southern border; not school closures; not the lefty propaganda taught in grammar schools; not vaccine mandates; not masking mandates; not parents being told to sit down and shut up. 

It must be Racism—the go to progressive excuse for everything. There is history here.

According to the New York Times, Roy Wilkens Executive Secretary of the NAACP, accused Barry Goldwater of “exploiting the Racial Issue” in the 1964 presidential campaign. William F Buckley was a vile racist according to Salon. The evidence? He opposed the Civil Rights agenda in the mid 1960s. (He since said he was wrong to do so). But the point is this: disagreement equals racism in the progressive lexicon. 

Then there is George Will. The Daily Kos, a lefty favorite, ran a piece about him under the subtle headline “George Will is a racist pig.” Not to put too fine a point on it, the next to last sentence reads “George Will is a racist swine”. That’s adult editorial judgement for you. 

Then there was that other well known racist, Ronald Reagan. The Boston Globe ran an opinion column by Renee Graham about him under the headline “Why is anyone surprised by Reagan’s racism?” Democratic Representative William Clay (D-MO) said in Real Clear Politics that Reagan was “trying to replace the Bill of Rights with fascist precepts lifted verbatim from Mein Kampf”.

Reagan’s Vice President, and future President George H.W. Bush was obviously a racist as well. 

After all Bush 41 ran the famous Willie Horton ad (picking up the baton after Al Gore attacked Michael Dukakis over Horton in the Democratic primary).  On the occasion of Bush’s death, The Intercept ran a story by Mehdi Hasan under the heading “The Ignored Legacy of George H.W. Bush: War Crimes, Racism, and Obstruction of Justice”. 

George W. Bush came in for the same treatment. George Soros claimed that Bush 43 displayed the “supremacist ideology of Nazi Germany”. Al Gore said that [Bush] …unleash[ed] squadrons of digital brown shirts to harass and hector any journalist critical of the President”. In 2006, Julian Bond said that “The Republican Party would have the American flag and the swastika flying side by side.” See Real Clear Politics.

And of course the latest in the make-believe pantheon of Nazi goons is represented by Glenn Youngkin (Harvard MBA) and Virginians who voted for him. And who also voted (separately) for Winsome Sears, the Lt. Governor elect; a black, female Jamaican immigrant. Winsome, who had served previously in the House of Delegates, earned a BA in Economics from Old Dominion University and an MA in Organizational Leadership from Regent University. 

The winner for Attorney General was Republican Jason S. Miyares. A graduate of James Madison University and William and Mary Law School, he unseated the 2 term Democratic incumbent Mark Herring. Mr. Miyares, a Latino, was born in North Carolina, where his parents settled after escaping Cuba’s Castro.  

It just goes to show how devious those Republican racists can be. In Virginia, they nominated highly educated, quality candidates.  Out of three candidates for constitutional executive office, two were minorities themselves. And they ran first rate campaigns. And they talked about the issues the voters cared about. And they made a persuasive case for why they would be the better choice for their respective offices. 

Dastardly. 

Democrats will do all they can to put an end to that type of campaign. After all, treating people as individuals rather than as statistical abstractions; using persuasion instead of name calling, distancing themselves from the King of Mar-a-Lago, and treating voters with respect represents a threat to…shall we call it Democratic Supremacy?

JFB