Archive for Economics

Demographics Against Democrats

Here’s a word you don’t often see associated with Republicans: Demographics.

Over the past five years, the Democratic Party has tried to add class warfare to its pre-existing focus on racial and gender grievances, and environmental angst. Shortly after his re-election in 2012, President Obama claimed to have “one mandate .?.?. to help middle-class families and families that are working hard to try to get into the middle class.”

Yet despite the economic recovery, it is precisely these voters, particularly the white middle and working classes, who, for now, have deserted the Democrats for the GOP, the assumed party of plutocracy. The key in the 2014 mid-term elections was concern about the economy; early exit polls Tuesday night showed that seven in 10 voters viewed the economy negatively, and this did not help the Democratic cause.

“The Democrats have committed political malpractice,” says Morley Winograd, a longtime party activist and a former top aide to Vice President Al Gore during the Clinton years. “They have not discussed the economy and have no real program. They are offering the middle class nothing.”

Winograd believes that the depth of white middle- and working-class angst threatens the bold predictions in recent years about an “emerging Democratic majority” based on women, millennials, minorities and professionals. Non-college educated voters broke heavily for the GOP, according to the exit polling, including some 62% of white non-college voters. This reflects a growing trend: 20 years ago districts with white, working-class majorities tilted slightly Democratic; before the election they favored the GOP by a 5 to 1 margin, and several of the last white, Democratic congressional holdovers from the South, notably West Virginia’s Nick Rahall and Georgia’s John Barrow, went down to defeat Tuesday night.

Rather than the promise of “hope and change,” according to exit polls, 50% of voters said they lack confidence that their children will do better than they have, 10 points higher than in 2010. This is not surprisingly given that nearly 80% state that the recession has not ended, at least for them.

Much more; do read.

But we have enough for discussion to work with here. The GDP grew a respectable 3.5% last quarter, after a whopping 4.6% the quarter before. The unemployment rate is finally below 6%, and the “Unexpected”™ weekly layoff numbers have been historically low recently. Yet nobody feels good about the economy.

Are we stupid? Or have five-plus years of piss-poor “recovery” left us jaded? The labor participation rate is still at historic lows, and 93 million Americans—about the total population of Spain and Kenya combined—don’t work.

And some of us have more personal reasons:

[W]hile failing most Americans, the Obama era has been very kind to plutocrats of all kinds. Low interest rates have hurt middle-income retirees while helping to send the stock market soaring. Quantitative easing has helped boost the price of assets like high-end real estate; in contrast middle and working class people, as well as small businesses, find access to capital or mortgages still very difficult.

Perhaps the biggest attrition for the Democrats has been among middle-class voters employed in the private sector, particularly small property and business owners. In the 1980s and 1990s, middle- and working-class people benefited from economic expansions, garnering about half the gains; in the current recovery almost all benefits have gone to the top one percent, particularly the wealthiest sliver of that rarified group.

You can bet Elizabeth Warren knows those numbers. It would behoove the Republicans to learn them too. I have no patience for bashing the wealthy and chanting about the “99%”, but if Obama’s recovery has left the middle class behind—how many new jobs are full time? who gets a raise any more?—smart people know their political future, and the country’s economic future, lie in getting that right.

And I do not want that person to be Elizabeth Warren.

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Number 32 With a Bullet

To the head:

On Monday the Tax Foundation, which manages the widely followed State Business Tax Climate Index, will launch a new global benchmark, the International Tax Competitiveness Index. According to the foundation, the new index measures “the extent to which a country’s tax system adheres to two important principles of tax policy: competitiveness and neutrality.”

A competitive tax code is one that limits the taxation of businesses and investment. Since capital is mobile and businesses can choose where to invest, tax rates that are too high “drive investment elsewhere, leading to slower economic growth,” as the Tax Foundation puts it.

The index takes into account more than 40 tax policy variables. And the inaugural ranking puts the U.S. at 32nd out of 34 industrialized countries in the Organization for Economic Co-operation and Development (OECD).

One small correction: the authors of the study list Slovenia and Slovakia separately when everyone knows they’re the same thing. And is there really a Switzerland and a Sweden? Someone should clean that up.

Aside from that, however:

Any day now the White House and Sen. Charles Schumer (D., N.Y.) will attempt to raise taxes on business, while making the U.S. tax code even more complex. The Obama and Schumer plans to punish businesses for moving their legal domicile overseas will arrive even as a new international ranking shows that the U.S. tax burden on business is close to the worst in the industrialized world. Way to go, Washington.

With the developed world’s highest corporate tax rate at over 39% including state levies, plus a rare demand that money earned overseas should be taxed as if it were earned domestically, the U.S. is almost in a class by itself. It ranks just behind Spain and Italy, of all economic humiliations. America did beat Portugal and France, which is currently run by an avowed socialist.

The new ranking is especially timely coming amid the campaign led by Messrs. Obama and Schumer to punish companies that move their legal domicile overseas to be able to reinvest future profits in the U.S. without paying the punitive American tax rate. If they succeed, the U.S. could fall to dead last on next year’s ranking. Now there’s a second-term legacy project for the President.

And people wonder why Recovery Summer V has been no more successful than Recover Summers I-IV. (People wonder, but the media seem not to.)

But get a load of this remedy. Are you sitting down?

Rather than erecting an iron tax curtain that keeps U.S. companies from escaping, the White House and Congress should enact reform that invites more businesses to stay or move to the U.S.

OMG! You are one bad-ass newspaper, WSJ. Next you’ll be arguing for a cut in the capital gains tax rate:

A rising tide lifts all boats, but Obama warned us that the tide would stop rising if he were elected president. One promise he kept.

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Jobbed and Jobless

Jane Austen’s novel of bad manners on the state of Americans under the burdens of ObamaCare:

On Thursday the Federal Reserve Bank of Philadelphia reported the results of a special business survey on the Affordable Care Act and its influence on employment, compensation and benefits. Liberals claim ObamaCare is of little consequence to jobs, but the Philly Fed went to the source and asked employers qualitative questions about how they are responding in practice.

The bank reports that 78.8% of businesses in the district have made no change to the number of workers they employ as the specific result of ObamaCare and 3% are hiring more. More troubling, 18.2% are cutting jobs and employees. Some 18% shifted the composition of their workforce to a higher proportion of part-time labor. And 88.2% of the roughly half of businesses that modified their health plans as a result of ObamaCare passed along the costs through increasing the employee contribution to premiums, an effective cut in wages.

Those results are consistent with a New York Fed survey, also out this week, that asked “How, if at all, are you changing (or have you changed) any of the following because of the effects that the ACA is having on your business?” For “number of workers you employ,” 21% of Empire State manufacturers and 16.9% of service firms answered “reducing.”

To complete the triptych, an Atlanta Fed poll earlier this month found that 34% of businesses planned to hire more part-time workers than in the past, mostly because of a rise in the relative costs of their full-time colleagues. ObamaCare may be contributing to that surge to the extent the law’s insurance mandates and taxes increase spending on fringe benefits for people who work more than 30 hours.

Somewhere between one-fifth and one-third of employers are cutting hours for their employees. The Left likes to think of itself as fact-based and scientific. But ObamaCare was built on the promise of sugar plums and unicorns. Define full time workers at 30 hours a week, and that’s what you’ll get, an army of 29-hour a week workers without health care. The Soviet Union learned that a command economy doesn’t work. Now we don’t work.

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Lemons for Lunkheads

Like so many Democrat schemes, it seemed like a bad idea at the time:

The government’s “Cash for Clunkers” program – pitched as a plan to jump-start U.S. auto sales and clean up the environment by getting gas-guzzling vehicles off the road — may have been a clunker itself, according to a new economic study.

Researchers at Texas A&M, in a recently released report, measured the impact of Cash for Clunkers on sales and found the program actually decreased industry revenue by $3 billion over a nine-to-11-month period.

“Strikingly, we find that Cash for Clunkers actually reduced overall spending on new vehicles,” the researchers reported, noting households “tended to purchase less expensive and smaller vehicles such as the Toyota Corolla, which was the most popular new vehicle purchased under the program.”

They found buyers who participated “spent an average of $4,600 less on a new vehicle than they otherwise would have.”

During the two months of the program, the frequency of purchasing a new vehicle was around 50 percent higher for those who qualified for the program compared with those who did not. But after the program ended, the researchers found, car-buying habits returned to normal.

It should be known as Twenties for Toyota from now on, though I have to admit that the title of the actual study, Cash for Corollas, is better than mine.

I glanced through the report, and I found this intriguing footnote:

We focus only on identifying the stimulus impact for the U.S. auto industry. Though we believe that this policy likely had important consequences for the broader U.S. economy, we do not attempt to quantify the impact of the program on overall economic growth.

Government intervention always drags down economic performance, even when (especially when) it is intended as a “stimulus”. If only liberals would get that through their thick skulls.

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Black Man Keeping the Young Down

No, that’s not dyslexia or a typo:

In President Obama’s speeches this year, a steady theme has been creating jobs and economic opportunity for Americans. In his State of the Union address in January he said that “what I believe unites the people of this nation . . . is the simple, profound belief in opportunity for all—the notion that if you work hard and take responsibility, you can get ahead.” And in his weekly address on Saturday, he repeated his strong appeal to young people: “As long as I hold this office, I’ll keep fighting to give more young people the chance to earn their own piece of the American Dream.”

Yet during the more than five years Mr. Obama has been in office, young people have been especially hard-hit by the slow and virtually jobless recovery. Given the destructive effect this has on individual initiative and the prospects of a productive and rewarding working life, the continuing struggle of young Americans to find jobs, start building families and contribute to society is no longer simply a matter of politics or policy. On a deeply human level, it’s profoundly sad.

Yeah, but parents’ basements have never been put to more use! Sorry, out of place.

Where are the entry-level jobs?

Five years of 2% average yearly GDP growth simply doesn’t produce enough jobs to absorb the natural increase in the labor force, and over the past eight quarters GDP growth has averaged only 1.7%. Between May 2008 and May 2014, BLS data show that the employable population increased by 14,217,000 while the number of people employed actually decreased by 94,000 and the number of people unemployed increased by 1,404,000. It remains a bad time for young people to be looking for jobs.

We noted the same point yesterday: the media may herald the recovery to the number of jobs pre-recession, but we’re fourteen million people bigger than we were then. Where are their jobs?

Nonetheless, various states and municipalities have increased their minimum wage, thereby increasing the cost of employing inexperienced workers. Minimum-wage jobs have always been a gateway to better opportunities. In making hiring decisions, businesses must weigh the quality and value of work that entry-level employees produce against the cost of employing them. For many businesses in high-minimum-wage states or municipalities—Seattle leads the list, having approved a move to a $15 minimum wage—that trade-off is no longer working.

The bottom line on labor: Make something less expensive and businesses will use more of it. Make something more expensive and businesses will use less of it. The Congressional Budget Office has forecast a loss of 500,000 jobs should the president’s proposal to increase the federal minimum wage to $10.10 an hour become law.

The CBO also forecast that this increase would lift a number of people who already have jobs above the poverty threshold. For 500,000 unemployed people, however, that’s 500,000 opportunities American businesses will never create.

Don’t get this guy started on ObamaCare. Talk about a job killer. In fact, looking at Obama’s policies, you’d almost think he was killing the job market on purpose. Perhaps to capture a permanent class of dependents. He couldn’t be doing a better job (fortunate as he is—and unfortunate for us—to have one).

I think more than a few young people would be happier to graze on ol’ Obama’s farm than work like this:

I’m not speaking primarily as a business CEO. My company will adjust to new laws. I’m speaking as someone from a working-class family. I started work scooping ice cream for the minimum wage at Baskin-Robbins. To put myself through college and law school while supporting my family, I cut lawns, painted houses and busted concrete with a jackhammer. I know how important these jobs are. For one thing, they taught me—as no lectures from my parents ever could—that I needed a good education so I wouldn’t have to settle for low-paying work the rest of my life. Too many young people today are being deprived of even that basic lesson.

For which they give great thanks!

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We’re Number Two!

President Obama’s Greatest Achievement:

China is set to overtake the U.S. as the world’s number one economy, while India has jumped into third place ahead of Japan, according to a new study from the world’s leading statistical agencies.

The 2011 International Comparison Program (ICP), which involves the World Bank, assesses economies based on purchasing power parity (PPP), an estimate of the real living costs. The results revealed on Wednesday paint a new and different picture of the global economy compared with the last update in 2005.

The research puts China’s gross domestic product (GDP) at 87 percent of the U.S. in 2011 and says the Chinese and Indian economies have more than doubled relative to that of the U.S. In the 2005 study, the ICP believed China’s economy was less than half the size of the U.S., at 43 percent.

China’s economy grew an annual 7.4 percent in the first quarter of this year, slowing from a 7.7 percent increase in the final quarter of 2013. Still, its economic growth continues to outpace that of developed world economies.

They grew at only 7.4%? Eat our dust, China! Zero-point-one percent and going strong!

Investors know the Rule of 72, which is a handy way of estimating (very accurately) how quickly an investment will grow. Divide the interest rate into 72 and the answer is the time it will take for the the investment to double. For example, $100 invested at 4% will yield $200 in 18 years (72/4 = 18). At China’s average growth (7.whatever), their economy doubles every decade, easily. At 0.1%, ours takes 720 years.

Pocahontas’s wampum would still have 60% purchasing power in today’s economy. (As long as she pays her fair share.)

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What is “Social Justice”?

I’ve come to be very suspicious of the phrase, given those who are so fond of using it, but what does it mean?

Wikipedia?

Social justice is the ability people have to realize their potential in the society where they live.

Realize their potential—you mean like charter schools, where the pupil, not the teacher, and certainly not the teachers union, is paramount?

Ha-ha, very funny:

Chicago Teachers Union president Karen Lewis wants schools to teach social justice, not “consumerism,” she said in a video.

“You want to talk about organizing? You want to talk about social justice?” the Chicago union leader asked. “People always talk about how that there’s no political and values in math, that you can teach math without a place for social justice.”

“Johnny has five pencils and if he spent two cents for the red pencils and eight cents for the green pencils, and he has 47 cents, how many pencils can he buy? We’ve all seen that, right?” Lewis said. ”That’s a very political statement, because it’s all about consumerism — it’s about buying stuff, right?”

Instead, Lewis prefers the approach of one progressive teacher who uses union-approved rhetoric in math problems, instead of the damaging consumerism of two cent pencils.

“Bob Peterson tells them about Jose working in a factory making piecemeal clothes. He uses the same numbers and gets the same answer,” Lewis explained. “Math is political, too.”

Told you it was funny. Apparently being a teacher is political, as well:

Lewis is best known for leading a strike within the ailing Chicago Public Schools system. Lewis’ strike caught national attention, winning 17.6 percent pay increases for Chicago teachers, who then earned on average $71,000-$76,000 per year.

Lewis is currently focusing on fighting potential pension cuts to city teachers. Illinois is facing at least $100 billion in unfunded pension liabilities for public workers.

Don’t give up a penny, Karen. Green pencils don’t grow on trees.

I thought liberals celebrated “consumerism”. That’s what Pelosi and Obama tell us when they celebrate welfare and unemployment benefits. “Folks” have the money to buy pencils, “piecemeal clothing” (thongs?), Big Macs, whatever, thereby employing stationers, seamstresses, and fry cooks—at least until a hike in the minimum wage forces employers to cut back.

As a conservative, I not only approve of but celebrate the opportunity for people to “realize their potential”. But what that has to do with this fat hackette’s (sorry, not really, for the ad hominem attack) nonsense escapes me. The very reason Jose is working in a sweatshop is that he was failed by the Chicago schools. They didn’t teach him English or good communication skills, didn’t teach him that red pencils are just as good as green, and cheaper, didn’t teach him that capitalism is the best system for people to “realize their potential”—but you have to have something to offer, a trade, skill, talent, whatever to sell in the marketplace. Those who do indeed do “realize their potential” and found businesses and whole industries. Those who don’t tend to work at the lower end of those businesses and industries, until Democrat policies ruin the economy, and they get laid off.

In this sense, “social justice” would seem to mean a vicious cycle of liberal nonsense. Which is what I thought.

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What, Really, is the Point?

We barely notice Tom Friedman anymore, much less quote him. The other sages of the Times op-ed page, Kristof, Dowd, et al appear here more rarely still, if at all. The page has shrunk itself to insignificance.

About the only one who anyone notices these days is Paul Krugman. And that’s only because…

Well, have a look:

Yesterday, New York Times columnist and CUNY economics professor Paul Krugman had some very strong words about the position in Republican Congressman Paul Ryan’s new poverty report that American welfare programs discourage work and “actually reduce opportunity, creating a poverty trap.” In fact, after contrasting the Ryan report’s view on poverty traps with some data on inequality and welfare states, Krugman resoundingly concluded that Ryan’s ideas were a total sham:

So the whole poverty trap line is a falsehood wrapped in a fallacy; the alleged facts about incentive effects are mostly wrong, and in any case the entire premise that work effort = social mobility is wrong.

Despite Krugman’s strong conclusions, however, Ryan’s views about US welfare policies and poverty traps are actually pretty mainstream – cited by people across the political spectrum as a big reason to reform state federal poverty programs. In fact, a New York Times columnist and Princeton economics professor expressed these widely-held views on the Old Grey Lady’s pages a mere two months ago:

But our patchwork, uncoordinated system of antipoverty programs does have the effect of penalizing efforts by lower-income households to improve their position: the more they earn, the fewer benefits they can collect. In effect, these households face very high marginal tax rates. A large fraction, in some cases 80 cents or more, of each additional dollar they earn is clawed back by the government.”

Even more, the Ryan report’s “poverty trap” analysis is based on the work of the Urban Institute’s Gene Steuerle’s (see p. 7 of the Ryan report), on whom the very same Princeton professor once wrote:

[I]t’s actually a well-documented fact that effective marginal rates are highest, not on the superrich, but on workers toward the lower end of the scale. Why? Partly because of the payroll tax, but largely because of means-tested benefits that fade out as your income rises. Here’s a recent discussion by Eugene Steuerle…

That professor, if you haven’t already guessed, was none other than Paul Krugman.

That could be called mailing it in, but he isn’t even licking the stamp. To have an intellectual debate, you need an intellect. This discussion is a waste of time. Krugman evidently did as much to earn his Nobel Prize in Economics as Barack Obama did for his in Peace.

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Spike Lee, Meet Louise Day Hicks

Ms. Hicks was the very public face of the Boston busing kerfuffle.

She and Spike Lee could have quite a chat about the evils of integration:

“I grew up here in New York. It’s changed,” Lee said at Brooklyn’s Pratt Institute, an art, design, and architecture school. “And why does it take an influx of white New Yorkers in the South Bronx, in Harlem, in Bed Stuy, in Crown Heights for the facilities to get better? The garbage wasn’t picked up every mother******* day when I was living in 165 Washington Park. … The police weren’t around. When you see white mothers pushing their babies in strollers, three o’clock in the morning on 125th Street, that must tell you something.”

Mitchell Moss, a professor of urban policy and planning at New York University’s Wagner School of Public Service, said the city has witnessed an enormous recovery since 2001, and the greatest change has been felt in Brooklyn, which has drawn newcomers because of its housing, access to Manhattan and improved safety.

“Cities don’t stand still, and the cities that stand still are Detroit,” Moss said. “So if Spike Lee wants to see a place where there is no gentrification, he’ll also find a place where there are no investments. Obviously, he’s someone who knows how to make a movie but doesn’t know anything about cities.”

He added: “Brooklyn has become more attractive to more people. Of course, that means some people are going to have to find other places to live, but that’s the magic of New York. We create new places. Today, Bushwick, which was an area that people were afraid to go to, now has some of the best restaurants in the city.”

“Let me just kill you right now,” Lee, the “Do The Right Thing” director, told D.K. Smith, a Brooklyn homeowner and tech start-up director, at the speech when Smith brought up the subject of the “other side” of gentrification.

And then he launched his lengthy tirade.

Smith told Lee on Tuesday that he didn’t dispute his point that services in the neighborhoods had changed after the new people — most of whom are white — moved in.

“Whoa, whoa, whoa…” said Lee. “Let me kill you some more.”
“Can I talk about something?” Smith said.

“Not yet. Then comes the mother******’ Christopher Columbus Syndrome. You can’t discover this! We been here,” he said to applause from the audience.

He gave the examples of people playing drums in Mount Morris Park, a tradition he said lasted 40 years until the new residents complained.

And then there was the one that literally hit home. Lee said his father, “a great jazz musician,” bought a brownstone 46 years ago.

“And the mother******’ people moved in last year and called the cops on my father. He’s not — he doesn’t even play electric bass. It’s acoustic. We bought the mother******’ house in 1968, and now you call the cops? In 2013?

Point of clarification, Spike. They call the police at two in the morning.

And are you complaining about the increased security and waste management?

Smith couldn’t get a word in during Lee’s speech Tuesday night. But the next day he said he was glad the filmmaker got people talking about the issue.

But Smith said there was a definite lack of balance in Lee’s rant.

“I’m black, and America is America,” he said. “I don’t need to moan and groan about it all the time.”

“I’m personally tired of moaning and groaning about being black,” he said. “Here’s a case where it has its advantages — for the first time tens of thousands, if not hundreds of thousands, of blacks can participate in American wealth creation. My God, that’s what this country is all about.”

Referring to reports that Lee’s 9,000-square-foot mansion on Manhattan’s Upper East Side is on the market for $32 million, Smith said: “Spike is a causative factor in gentrification. If Spike moves to a swamp … that land next door goes up immediately.”

Spike Lee is the living embodiment of “what this country is all about.” A film school grad with smarts and ambition, he made a film, She’s Gotta Have It, that launched him to international stardom. Deservedly—he’s a great filmmaker. I don’t begrudge him a single dollar he’s earned, a single square foot of his “mansion”, a single front row seat at Knicks games. But it’s not just black people buying tickets to see his movies. I was among the “influx of white New Yorkers” who not only went to see his movies, but moved to a “marginal” neighborhood (for the neighborhood as much as the rent, more Dominican than African American). Curiously, the public services did not improve upon our arrival.

Many of the neighborhoods that were predominantly African American in Spike Lee’s youth bore strikingly different ethnic identities in the decades before. Immigrant Jews and Italians lived in Harlem as newcomers (which was named by the original Dutch settlers); before that:

Harlem was “a synonym for elegant living through a good part of the nineteenth century.”

Many people share Lee’s lament and frustration. I live in a town many lifers can no longer afford to live in—due in part to mother******’ newcomers like me bidding up house prices. I guess that makes me a serial gentrifier. (I did the same thing when I lived in London—only Americans and Arabs can afford to live in some neighborhoods.)

But the best refutation of Lee comes from the academic we quoted above: “Cities don’t stand still, and the cities that stand still are Detroit.”

PS: It’s not Lee’s first offense:

Ted Nugent apologized. Now it’s Spike Lee’s turn.

Lee sided with Minister Louis Farrakhan when the leader of the Nation of Islam accused President George W. Bush’s administration of intentionally blowing up levees during Hurricane Katrina. “It’s not far-fetched,” Lee said, “And also I would like to say it’s not necessarily blow it up. But, the residents of that ward, they believe it, there was a Hurricane Betsy in ’65, the same that happened where a choice had to be made, one neighborhood got to save another neighborhood and flood another ‘hood, flood another neighborhood … ” Far-fetched? “Presidents have been assassinated,” Lee said, “So why is that so far-fetched? … Do you think that election in 2000 was fair? You don’t think that was rigged? If they can rig an election, they can do anything!”

No apology from Lee for accusing Bush of mass murder?

This brings us to Lee and the Trayvon Martin case.

In Chicago, Obama’s hometown, murders in 2012 topped 500. 2013 saw a “low” murder total of 421 — the equivalent of a Sandy Hook every three weeks. Most of the killers and the killed are black. Worse, only about one-fourth of these cases are “cleared,” where a suspect has been identified and arrested. Nationwide, the No. 1 preventable cause of death among young black males is not accidents — as it is with whites — it is homicide, almost always committed by another black person.

But when a black is killed by a non-black, even where the shooter could reasonably claim self-defense, out comes Lee’s agenda. To Lee, the killing of Martin, a 17-year-old black teen, by non-black George Zimmerman was a referendum on how America’s criminal justice treats black victims. Incensed that authorities had not yet arrested and charged Zimmerman, Lee tweeted what he thought was the home address of Zimmerman’s parents. Wrong address. Lee did apologize for this one, later paying a financial settlement to the owners of the “wrong” home.

Lee also once publicly stated his opposition to “interracial couples.” About a year after he released “Jungle Fever,” a film about a black-white couple, Lee said: “I give interracial couples a look. Daggers. They get uncomfortable when they see me on the street.” This might have been news to Obama’s parents.

Lee, a gun control proponent, seems okay with the use of a firearm — depending upon the target. He once verbally threatened NRA head Charlton Heston. Lee said somebody should “shoot him with a .44-caliber Bulldog.”

No president ever held a fundraiser in Ted Nugent’s mansion. Lee, on the other hand, has a close relationship with Obama. Will Lee apologize for calling Lott a “card-carrying member of the Klan,” for urging the assassination of the president of the NRA or for affirming accusations against George W. Bush of mass murder?

Nugent apologized. Now it’s Spike’s turn.

Add one more to the list.

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Simple Truths

The Fed has pumped so much money into the economy, yet the economy is still… the economy.

What gives?

In her first Congressional appearance as Chairman of the Federal Reserve, Janet Yellen cheered Wall Street with her promise to continue the easy-money policies of predecessor Ben Bernanke. But Judy Shelton warns in our pages that “when the low-grade fever of perpetual inflation becomes a full-blown economic malady—when the next financial bubble bursts with horrible consequences for the real economy—average Americans will pay the biggest price.”

While Ms. Yellen’s Senate testimony today is likely to attract more media attention, we’d say this week’s most important speech from the Federal Reserve system came last night in Texas. Before a gathering of financial executives, Dallas Fed President Richard Fisher quantified how much money the central bank has been pumping into the economy. Mr. Fisher said that total reserves of depository institutions “have ballooned from a precrisis level of $43 billion to $2.5 trillion.” He added that “the amount of money lying fallow in the banking system is 60 times greater now than it was at year-end 2007. One is hard pressed to argue that there is insufficient money available for businesses to put people back to work.”

“It is my firm belief,” he continued, ” that the fault in our economy lies not in monetary policy but in a feckless federal government that simply cannot get its fiscal and regulatory policy geared so as to encourage business to take the copious amount of money we at the Fed have created and put it to work creating jobs and growing our economy. Fiscal policy is not only ‘not an ally of U.S. growth,’ it is its enemy. If the fiscal and regulatory authorities that you elect and put into office to craft taxes, spending and regulations do not focus their efforts on providing incentives for businesses to expand job-creating capital investment rather than bicker with each other for partisan purposes, our economy will continue to fall short and the middle-income worker will continue being victimized, no matter how much money the Fed prints.”

Game. Set. Match.

This is why I don’t believe the US is a completely lost cause; why our best days are behind us. Federal government policy is completely at odds with “providing incentives for businesses to expand job-creating capital investment” or “creating jobs and growing our economy”. This administration wouldn’t know how to grow the economy if you held a gun to its head (metaphorically speaking, of course). Candidate Obama didn’t want to create wealth, he told Joe the Plumber, he wanted to spread it.

On that, and that alone, he has kept his promise. But if the dry rot hasn’t penetrated too deep, the house divided may still be saved. Put another way, if my faith is in capitalism, that faith has not been shaken. What we have had lately is crony socialism, quite a different thing.

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A New Fave

My blogging favorites are well known: Mark Steyn, Caroline Glick, James Taranto, among a select few others. But you know who’s popped up on my radar screen, based on talent alone?

Kevin D. Williamson:

The Left is at war with economic reality. The intellectual poverty of the Left — which is also a moral poverty — is evident in the fact that its leaders are much more intensely interested in incomes at the top than those at the bottom. Examples are not difficult to come by: Senator Elizabeth Warren is visibly agitated by Jamie Dimon’s recent raise, the AFL-CIO maintains a website dedicated to executive compensation, Barack Obama avows that “at a certain point, you’ve made enough money,” et cetera ad nauseam. The entire rhetoric of inequality is simply an excuse to rage about incomes at the top, a generation’s worth of progressive shenanigans having failed to do much about those at the bottom.

It is the case that incomes at the top have gone up while those in the middle and at the bottom have stagnated or declined in real terms. It is not the case that incomes at the top have gone up because those in the middle and at the bottom have stagnated or declined, nor is it the case that incomes in the middle and at the bottom have stagnated or declined because incomes at the top have gone up. There is a relationship between the two phenomena, but it is not the relationship that progressives imagine it to be.

The Starbucks-vandalism faction of the Left likes to rail against globalization, but to do so is like railing against the fact that it is cold in the winter. Winter is an important part of the natural cycle, but it can be unpleasant — even deadly. It is something that must be prepared for, and instead of Ned Stark to warn us that winter is coming, we had Lyndon Johnson, a vicious and corrupt man who presided over the building of a vicious and corrupt welfare state. There are things we should have done to prepare for the future that is now our present, reforming the education system and our labor practices, among other things. (GM went bankrupt paying its workers half of what their German counterparts make: the worst of both worlds.) But we did not do those things. We can rail against the tyranny of winter, or we can start gathering firewood.

LBJ: “vicious and corrupt”. So he was, and so is his legacy. My elision leaves out some of his corroboration, but it’s there. Williamson nay not have Mark Steyn’s mercurial wit, but he’s a beautiful writer in his own right. And as prophetic as Jeremiah.

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Mayor for Life

For the sake of accuracy, I should have written “Mayor Serving Life”. But I stand by the title: Detroit is still suffering from Con-Man Kilpatrick, and will for a long time to come:

Detroit leaders are suing to invalidate several Wall Street deals that allowed the city to borrow more than $1.4 billion in 2005 for its underfunded pension plans, arguing that the agreements were illegal and shouldn’t be repaid.

In a lawsuit filed in U.S. Bankruptcy Court in Detroit, city lawyers said the deals reached under a former mayor, Kwame Kilpatrick, led the city to borrow more than the state’s debt limit, resulting “in the creation of city debt that was not authorized” by state law. Michigan cities, with few exceptions, can’t borrow more than 10% of the value of the “real and personal property” within their borders.

The pension borrowing deals go back to 2005, when the city had fallen nearly $1.7 billion behind in payments to the retirement funds that distribute benefits to more than 20,000 of the city’s retirees. Facing lawsuits from the retirement funds, Detroit officials turned to Wall Street bankers for a fix.

Detroit once had so much to recommend it: three great sports teams (the Lions being the lone—and perennially losing—exception); a second-tier symphony orchestra (that’s a huge compliment, actually: after the Big Five, Detroit’s was among the next best); a similarly esteemed art museum. Now, it’s a remaindered city. People poke among its glorious ruins looking for a deal or a steal.

The suit said that the deals were done “at the prompting of investment banks that would profit handsomely from the transaction,” but it didn’t name the city’s financial advisers. Mr. Kilpatrick, who is in prison on federal corruption charges, also wasn’t a target of Friday’s suit.

Capitalism doesn’t have a conscience—that’s its most redeeming feature. A locomotive doesn’t have a conscience either, but would you rather have Mother Teresa pull your train or a diesel? So, of course Wall Street would leap at the chance to make a buck—and “help” the hard-wroking, entitled retirees of the Motor City.

Snort!

They just needed the hard-working, earnest public servants of the city to act as responsible stewards of the ship of state.

Guffaw!

This sounds like the same Catch-22 that the banks were forced into. Accused of “red-lining” (sorry for any unpleasant reminder, Mr. President) certain underprivileged neighborhoods, banks were forced to give mortgages to financially dodgy applicants. When they borrowers couldn’t pay, even after repeated restructuring, the banks took a hit for “predatory lending”.

Government sounds like a great idea until you’ve been governed by it.

PS: What did I just write about a remaindered city?

It was late Friday afternoon before Labor Day weekend when Fernando Palazuelo reached the head of the line at the tax collection window of the treasurer’s office in Wayne County, Mich.

He had traveled 3,700 miles from Lima, Peru, to make a simple request. “I am interested in buying the Packard plant,” he said. “And I want to speak to the man in charge.”

A few minutes later, he was ushered in to see Raymond Wojtowicz, the 84-year-old county treasurer responsible for tens of thousands of foreclosed properties in the bankrupt city of Detroit.

And with that, Mr. Palazuelo, a developer of broken-down buildings from Europe to South America, was on his way to buying the biggest, most iconic eyesore in this city — the abandoned Packard Motor Car plant.

I’ve been to Peru, and love it. Mean it. Seriously. But if you’re such a wreck that even Peruvians are buying your ruins, you are past saving.

PPS: I’m serious about loving Peru. It’s more than Machu Picchu: there are Incan ruins all over the country. It’s got Andean peaks and Amazon rain forests; sandy beaches and rugged hiking; first world dining and third world subsistence. And now it owns the old Packard plant!

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