Pat Buchanan: Pitchfork Time

When one of the Pitchfork and Musket Junta's favorite public figures, Pat Buchanan, writes an article called Pitchfork Time, the Junta takes notice. This article is a good one. Here is an excerpt:

In his campaign and inaugural address, Barack Obama cast himself as a moderate man seeking common ground with conservatives. Yet, his budget calls for the radical restructuring of the U.S. economy, a sweeping redistribution of power and wealth to government and Democratic constituencies. It is a declaration of war on the Right. The real Obama has stood up, and lived up to his ranking as the most left-wing member of the United States Senate....
...Where the U.S. government usually consumes 21 percent of gross domestic product, this Obama budget spends 28 percent in 2009 and runs a deficit of $1.75 trillion, or 12.7 percent of GDP. That is four times the largest deficit of George W. Bush and twice as large a share of the economy as any deficit run since World War II. Add that 28 percent of GDP spent by the U.S. government to the 12 percent spent by states, counties and cities, and government will consume 40 percent of the economy in 2009.
We are not "headed down the road to socialism." We are there.

Buchanan concludes his article this way:

The president says he is gearing up for a fight on his budget.
Good. Let's give him one.

I'm with you, Pat. My pitchfork is ready.

Priming the Pump

Last night, President Obama gave his first press conference to make his case for the spending package. He did a pretty good job of demonizing the opposition, and painted a pretty bleak economic picture. First of all, I agreed with him on two points: 1) Republicans, specifically Bush, got us into this mess. 2) Alex Rodriguez using steroids is a black eye on Major League Baseball.

For his main point though, Obama's defense of using massive government spending for stimulus is based on junk science. I don't remember him using the analogy, but the typical one used for this kind of stimulus package is "priming the pump". His idea is that the government can spend a lot of money on projects for a while, and that will create confidence, spark consumption, and at some point, spark private investment will create more long-term jobs. It's an idea right out of Lord Keynes' General Theory. The problem is that the theory has never been supported by evidence in the real world. During the New Deal, despite 5% of the workforce being employed by the CCC and WPA, unemployment remained relatively constant. The jobs created by government were almost completely offset by jobs destroyed in the private sector. We got some nice National Parks' buildings from the CCC, and nice paintings on Post Offices from the WPA, but no economic growth. Over the past 15 years or so, Japan has had a similar experience.

We will get some good infrastructure projects out of the spending bill and some wasteful ones. Some people who have lost their finance job that won't come back will get to stay in their house a little longer than they would earlier. Some state and local governments won't have to cut as many programs. What we won't get is stimulus.

This Thanksgiving, Thank God for Capitalism

Happy Thanksgiving! I am thankful for many things this year. I am thankful for a wonderful, loving family, friends that I can count on, new challenging opportunities in my life, turkey, basketball, and the fact that I live in the greatest country that ever existed. And much like the Pilgrims that first celebrated Thanksgiving, I am thankful for the lessons of capitalism. Jennifer James of the Kid's Reading Room at the L.A. Times inspired me with her great story on this topic.

When the Pilgrims landed at Plymouth Rock in December 1620, in addition to seeking religious freedom, they intended to create a communist paradise. They had initially landed north, but after skirmishes with Indians they moved down the coast. When they got to Plymouth, they were greeted by friendly, English-speaking members of the Wampanoag tribe who had friendly relations with the English fisherman that fished off of that coast. (They might have kept going south, but they were out of beer.) The Wampanoag taught them how to farm corn, and when Spring arrived, they went right to it. They set up a system where each family would grow what they could, it would be put into a common storage, and then they would be rationed enough food to survive. Unfortunately, it didn't work very well. Despite the famous Puritan work ethic (roughly half of the Pilgrims were Puritan), many didn't work very hard, and they had a poor harvest. Some people starved, some resorted to theft from each other, and no one had enough. The following year, they used the same system with the same result. Sharing was going to kill them.

Finally in 1623, after much prayer and deliberation, the governor, William Bradford, decided to implement a capitalist system. Each family was given their own plot of land and told that they could keep whatever they grew and profit from it. It was a resounding success. Here are Governor Bradford's observations:

This had very good success; for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Gov. or any other could use, and saved him a great deal of trouble, and gave far better content.

The women now went willingly into the field, and took their little ones with them to set corn, which before would allege weakness, and inability; whom to have compelled would have been thought great tyranny and oppression.

By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many, for which they blessed God. And the effect of their particular [private] planting was well seen, for all had, one way and other, pretty well to bring the year about, and some of the abler sort and more industrious had to spare, and sell to others, so as any general want or famine has not been among them since to this day.

The Pilgrims were incredibly thankful for their prosperity, and were able to share with their Wampanoag friends for the first time. They had a great feast to celebrate and give thanks, and the Wampanoag were amazed by the production. They had enough to make it through the winter with plenty, and prosperity in the English settlements in America had begun. It is a lesson for which we can all be thankful.

Socialism and the Very Wealthy

Shannon over at Chicago Boyz has a great post about how socialism benefits the very wealthy. It is based on a revealing article by the Tax Foundation about how the United States already has the most progressive income tax system among the wealthiest nations. And it goes back to a fundamental truth about socialism and it's sloppier brother Progressivism: While Marx's ideals were about worker empowerment, every time a nation becomes more socialist, the only ones who benefit are those in government and those who can influence government. It is a shame that when the Progressives claim to be fighting for the working poor and middle class, Conservatives never hit back with truth. When government grows its income, it has to spend the money somewhere. Only 60-70% of that money makes it back to the people in most governments, and 80% in the most efficient governments. The remaining 30-40% either stays in government or goes to the most favored outside of government, whether they be Wall Street bankers or Stuttgart military contractors with no-bid contracts. The same favored class lean on governments to regulate their competitors into a non-threatening position. Finally, when taxes are increased, they never destroy those producers already in power. They destroy those on the margin, which are small competitors and start-ups. Progressivism and increased central planning tends to create a small permanent upper class, and a large, poorer, more equal lower class. The only thing that allows greater class mobility is removed barriers to market entry (real deregulation), greater opportunity, and removed disincentives for investment.

The incomparable Barry Goldwater had this to say about progressive income taxes in his classic The Conscience of a Conservative: "What is a 'fair share?' I believe that the requirements of justice are perfectly clear: government has a right to claim an equal percentage of each man's wealth, and no more.... The graduated tax is a confiscatory tax. Its effect, and to a large extent it's aim is to bring down all men to a common level. Many of the leading proponents of the graduated tax frankly admit that their purpose is to redistribute the nation's wealth. Their aim is an egalitarian society -- an objective that does violence both to the charter of the Republic and the laws of Nature. We are all equal in the eyes of God, but we are equal in no other respect."