The Liberal Conspiracy Theories

Glen Beck has been pushing his conspiracy theories.  Now the liberals are doing it.  They are unable to imagine that there is anything wrong with their president or with their economic theories.  So many of them believe that the Republicans and their business allies,  to ensure that the president will not get re-elected, are deliberately sabotaging the economy.  From Michael Gerson:

If a president of this quality and insight has failed, it must be because his opponents are uniquely evil, coordinated and effective. The problem is not Obama but the ruthless conspiracy against him.

So Matt Yglesias warns the White House to be prepared for “deliberate economic sabotage” from the GOP – as though Chamber of Commerce SWAT teams, no doubt funded by foreigners, are preparing attacks on the electrical grid. Paul Krugman contends that “Republicans want the economy to stay weak as long as there’s a Democrat in the White House.” Steve Benen explains, “We’re talking about a major political party . . . possibly undermining the strength of the country – on purpose, in public, without apology or shame – for no other reason than to give themselves a campaign advantage in 2012.” Benen’s posting was titled “None Dare Call it Sabotage.”

So what is the proof of this charge? It seems to have something to do with Republicans criticizing quantitative easing by the Federal Reserve. And opposing federal spending. And, according to Benen, creating “massive economic uncertainty by vowing to gut the national health care system.”

One is tempted to respond that it is $1 trillion in new debt, the prospect of higher taxes and a complicated, disruptive health-reform law that have created “massive economic uncertainty.” For the purposes of this argument, however, it is sufficient to say that all these economic policy debates have two sides.

Yet this is precisely what the sabotage theorists must deny. They must assert that the case for liberal policies is so self-evident that all opposition is malevolent. But given the recent record of liberal economics, policies that seem self-evident to them now seem questionable to many. Objective conditions call for alternatives. And Republicans are advocating the conservative alternatives – monetary restraint, lower spending, lower taxes – they have embraced for 30 years.

via Michael Gerson – Liberals resort to conspiracy theories to explain Obama’s problems.

The proletariat votes Republican

Statistical slicing and dicing of the election results shows what I had been saying:  Blue-collar workers, who used to be Democrat’s base, are now overwhelmingly voting Republican.  Higher income folks are voting for the Democrats.  These class dynamics, of course, fly in the face of leftist political theory.

Democrats remained strong in areas with the party’s core of minorities and higher-educated whites. But movement of white working-class voters away from the party is a concern for Democrats, especially because of President Obama’s traditional weakness with those voters.

Republicans’ success with the blue-collar vote and the high enthusiasm of the tea party gives it a fired-up base headed into 2012. But in a presidential election with higher turnout, the party might have trouble winning a majority with those voters alone. It certainly can’t rely on that bloc to carry the party into the future.

Democrats largely held on to their high share of the vote in the country’s densest places. The party captured 54 percent in counties with populations of more than 500,000 people, compared with only 49 percent in 1994. In smaller counties, Democrats’ share of the vote slid to 39 percent this year from 43 percent in 1994.

Much of the reason for the Democrats’ decline in less-dense areas can be attributed to the party’s trouble attracting white, working-class voters. Exit polls showed that Democrats lost white voters without a college degree – one way to measure blue-collar voters – by almost 30 percentage points in House races.

via Political divide between coasts and Midwest deepening, midterm election analysis shows.

The article, which is putting the best construction on everything for the Democrats, says that the Republican dominance among low income white people will not last long, since that demographic is shrinking.  I don’t know.  With the current economy, that number may just skyrocket.

And it doesn’t look like the Democrats will try to win back their base as long as they give off the classist vibe, the sense that all of those uneducated voters, those ignorant white trash rednecks, just don’t belong among their betters.

So what about THIS debt-reduction plan?

Yet another bipartisan commission is proposing a plan to cut the federal deficit.  What do you think of this one?  From  co-chairs Pete Domenici and Alice Rivlin:

To ensure a more robust recovery, we propose a one-year “payroll tax holiday” for 2011, suspending Social Security payroll taxes for employers and employees. We also would phase in the steps to reduce deficits and debt gradually beginning in 2012, so the economy will be strong enough to absorb them.

We would stabilize the debt held by the public at less than 60 percent of gross domestic product, an internationally recognized standard; reduce annual deficits to manageable levels; and balance the “primary” budget (everything other than interest payments) by 2014.

We would dramatically simplify the tax system, establishing individual tax rates of 15 and 27 percent (from the current high of 35), cutting the corporate tax rate to 27 percent (from 35 today), ending most deductions and credits while simplifying the rest, and ensuring that nearly 90 million households no longer have to file returns. To reduce the debt, we would supplement our spending cuts with a 6.5 percent “debt-reduction sales tax.”

We would strengthen Social Security so it can pay benefits for the next 75 years by gradually raising the amount of wages subject to payroll taxes; slightly reducing the growth in benefits for the top 25 percent of beneficiaries; raising the minimum benefit for long-term, low-wage workers; indexing benefits to life expectancy; and changing the calculation of cost-of-living adjustments to better reflect inflation. We would not raise the age at which senior citizens can begin receiving benefits.

We would control health-care costs – the biggest driver of long-term deficits – by reforming Medicare and Medicaid while, starting in 2018, capping and then phasing out the tax exclusion for employer-provided health care. We would reform medical malpractice laws and help address the health costs tied to rising obesity by imposing a tax on high-calorie sodas.

We would freeze domestic discretionary spending for four years and defense spending for five, both at 2011 levels, and then limit their future growth to the rate of growth in the economy.

Finally, we would cap domestic and defense discretionary spending (with tight exceptions for true emergencies) and trigger across-the-board cuts if the caps are breached; enact a strict pay-as-you-go statutory rule for tax cuts or expansions of entitlements; and enact long-term budgets for major entitlements while creating a Fiscal Accountability Commission that would recommend policy changes every five years if entitlements are exceeding their budgets.

via Pete V. Domenici and Alice M. Rivlin – Payroll tax holiday and other measures to reduce the debt.

The Social Security payroll tax holiday for an entire year would be enormously popular and would put extra money in people’s paychecks immediately.  Maybe that would be the boost the economy needs.  I like the flat tax in principle, but I worry that eliminating charitable deductions (if that’s part of it; the article doesn’t say) would hurt churches and other good causes.  And wouldn’t a 6.5% “debt reduction sales tax” hurt the economy, taking away the good other parts of this plan might do?  Caps and freezes would probably be good.

Again, what do you think?  Do you have better ideas?

Religion blocks consumerism

In another odd experiment, it seems as if religious people are less susceptible to buying things according to their brand, which to secularists is often a means of enhancing status and self-worth:

Prof. Ron Shachar of Tel Aviv University’s Leon Recanati Graduate School of Business Administration says that a consumer’s religiosity has a large impact on his likelihood for choosing particular brands. Comsumers who are deeply religious are less likely to display an explicit preference for a particular brand, while more secular populations are more prone to define their self-worth through loyalty to corporate brands instead of religious denominations.

This research, in collaboration with Duke University and New York University scientists, recently appeared in the journal Marketing Science.

There is considerable statistical evidence that consumers buy particular brands to express who they are to the outside world, Prof. Shachar says. From clothing choices to cultural events, people communicate their personalities and values through their purchases.

Prof. Shachar and his fellow researchers decided to study the relationship between religiosity and brand reliance. . . .

Researchers discovered that those participants who wrote about their religion prior to the shopping experience were less likely to pick national brands when it came to products linked to appearance or self-expression — specifically, products which reflected status, such as fashion accessories and items of clothing. For people who weren’t deeply religious, corporate logos often took the place of religious symbols like a crucifix or Star of David, providing feelings of self-worth and well-being. According to Prof. Shachar, two additonal lab experiments done by this research team have demonstrated that like religiousity, consumers use brands to express their sense of self-worth.

via American Friends of Tel Aviv University: Shopping Religiously.

I suppose this simply proves that religious people are not as “worldly.”  It also suggests how pathetic it is to be “worldly,” having to turn to corporate logos as a substitute for religious symbols.

HT:  <a href=”http://www.futurepundit.com/archives/007649.html”>Future Pundit</a>

The state bank solution

My brother put me onto the example of the North Dakota State Bank as a solution to our country’s financial woes:

While the Fed continues playing parlor tricks to try and stimulate the economy, a much simpler method of igniting long-term economic growth and stability exists in North Dakota. Yes, North Dakota, a state operating with a surplus of cash and unemployment at 4%. In the early 1900′s the economy of North Dakota was agriculture-based, and the farmers there were experiencing serious financial problems that prevented them from buying and selling crops and financing farm operations. Grain dealers from out-of-state controlled prices and kept them artificially low, while farm suppliers continually increased their prices. To no one’s surprise, interest rates on loans climbed.

By 1919 the people of North Dakota had had enough and wanted state ownership and control of marketing and credit agencies, and so the legislature established the Bank of North Dakota. Its mission: to promote the development of agriculture, commerce and industry in ND. The Bank of North Dakota is a public bank that is robustly solvent, with a strong record of financing loans for agriculture, housing and higher education, as well as funding municipal bonds. All tax revenues and fees in the state go into the State Bank, allowing North Dakota to finance construction of roads, bridges and other infrastructure, maintain schools and libraries, and assist local businesses.

The Bank of North Dakota is truly a peoples’ bank that exists for the benefit of the state and its residents, only, with loans made at low interest rates and no bloated, outrageous CEO salaries and benefits that squander funds. And no shady derivatives allowed, either; a novel concept indeed. For 91 years the bank has flourished and North Dakota today is a rare example of economic strength in a sea of debt-ridden states that must slash services and raise taxes to stay afloat, giving a whole new meaning to the term “red states.” . . .

via Pearl Korn: North Dakota — A Template For Our Economic Recovery.

Here is more about how it works, from Ellen Brown:

By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions.

Still, you may ask, how does that solve the solvency problem? Isn’t the state limited to spending only the money it has? The answer is no. Certified, card-carrying bankers are allowed to do something nobody else can do: they can create “credit” with accounting entries on their books.

Under the “fractional reserve” lending system, banks are allowed to extend credit (create money as loans) in a sum equal to many times their deposit base. Congressman Jerry Voorhis, writing in 1973, explained it like this:

“[F]or every $1 or $1.50 which people – or the government – deposit in a bank, the banking system can create out of thin air and by the stroke of a pen some $10 of checkbook money or demand deposits. It can lend all that $10 into circulation at interest just so long as it has the $1 or a little more in reserve to back it up.”

The Federal Reserve’s 10 percent reserve requirement is now largely obsolete, in part because banks have figured out how to get around it with such games as “overnight sweeps”. What chiefly limits bank lending today is the 8 percent capital requirement imposed by the Bank for International Settlements, the head of the private global central banking system in Basel, Switzerland. With an 8 percent capital requirement, a state with its own bank could fan its revenues into 12.5 times their face value in loans (100 ÷ 8 = 12.5). And since the state would actually own the bank, it would not have to worry about shareholders or profits. It could lend to creditworthy borrowers at very low interest, perhaps limited only to a service charge covering its costs; and it could lend to itself or to its municipal governments at as low as zero percent interest. If these loans were rolled over indefinitely, the effect would be the same as creating new, debt-free money.

But, you ask, wouldn’t that be dangerously inflationary? Not if the money were used to create new goods and services. Price inflation results only when “demand” (money) exceeds “supply” (goods and services). When they increase together, prices remain stable. . . .

Our workers and our factories are sitting idle because the private credit system has failed. An injection of new money from a system of public banks could thaw the credit freeze and bring spring to the markets again. The mathematical flaw in the private credit system is the enormous tribute siphoned off to private coffers in the form of interest. A public banking system could overcome that flaw by returning the interest to the public purse. This is the sort of banking that was pioneered in Benjamin Franklin’s colony of Pennsylvania, where it worked brilliantly well. We need to return to our historical roots and implement that system again.

Liberals like this, moving capital from the private to the public sector, while conservatives might like the federalist implications for empowering the states, as well as the decentralization of finance (which is not exactly laissez faire as it is). And North Dakota is a Red State with pretty conservative citizens, isn’t it? What do you think? I told my brother I would submit the idea to my readers and let him know.

End of the welfare state?

England’s coalition government is getting tough on welfare.  As are other European nations:

Britain announced the most radical overhaul in decades Thursday to its once-generous welfare system, pledging harsh penalties for those who refuse jobs and community work service for the unemployed in return for benefit checks.

Work and Pensions Secretary Iain Duncan Smith unveiled sharp changes to the country’s cradle-to-grave social safety net, which was first introduced after World War II to better protect newborns, families, the jobless and the sick.

Critics have long said the British system offered hefty benefits unavailable to other citizens across Europe, the U.S. and other major economies — encouraging some people to snub modest jobs in favor of an easy life on handouts.

“The message is clear. If you can work, then a life of benefits will no longer be an option,” said Prime Minister David Cameron, whose government last month announced it would slash benefits payments by 18 billion pounds ($29 billion) under a four-year package of spending cuts worth 81 pounds ($128 billion).

Under the new plan, many of the 5 million people who claim jobless benefits in Britain will be ordered to regularly do four weeks of unpaid community work to remain eligible for their 65 pounds ($105) weekly welfare payment. The stints could include manual labor tasks like removing graffiti or gardening in public parks.

Unemployment claimants routinely also receive other welfare payments to help with housing costs and raising children.

The plan is the centerpiece of Cameron’s legislative program, and one of the key elements of his strategy to fix so-called “Broken Britain,” his election slogan for the social problems that he says have blighted the nation’s prospects.

Duncan Smith said under his reforms, those who turn down job offers, fail to show up for job interviews or decline to take part in community projects face tough punishments. Benefits will stop for three months on a first offense, for six months for the second time and for three years after a third breach.

The system is still much more lenient than that in Spain, where a third offense means a person loses their welfare payments for good.

Duncan Smith insists the changes are not just to reduce the country’s budget deficit but are meant to jolt a group of around 1.4 million Britons who have been without a job for about a decade.

“For too long, the success of our welfare system has been judged by the number of people who are on benefits,” said Deputy Prime Minister Nick Clegg. “Our welfare system should be judged by the number of people who are off benefits and into work.”

Britain’s reforms echo a program by Sweden’s center-right government to get more people into the work force and reduce the number of benefit-takers.

Sweden’s motto — “it should pay off to work” — was echoed by Duncan Smith.

via Off the sofa! UK gets tough on welfare.


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