The Practical Philosopher's Blog

Using the practical application of timeless wisdom to address modern issues

Leftist ‘Social Justice’ Caused The Financial Crisis

 Who’s heard the following irrational or emotional exclamations on the current economic downturn?

“This economic crisis is the result of 8 years of failed Bush economic policies!”

“These events are signposts in the historic failure of American and world capitalism.”

“The…financial crisis will give rise to new era of necessary regulation.”

 The problem is these are all wrong. Those making these statements have drawn the wrong conclusions, or more likely, have not educated themselves on the root causes of this economic downturn and are simply regurgitating media sound-bites.

The simplest summary of the current crisis is that it stems from a favorite Leftist ideology of ‘social justice’. Quite simply, the politicians meddled in the free-market and set in motion bad behaviors that are now distorting our current economic markets 10-15 years later. Specifically, the current conditions are called, and objectively are, a mortgage crisis. The Leftist or Socialist view was, and still is, that everyone has a ‘right’ to a house whether they could afford it or not. Little did they know how badly their unwise ideology would end up hurting us later.

During the Clinton administration, all of the safeguards against the mass practice of risky lending were dismantled. They negated the standard practice of financial requirements (necessary income levels and demonstrated credit history) for getting a household mortgage. The government entities Freddie Mac or Fannie Mae were instructed not only to create and/or buy up these bad loans but also insure them with the full credit and guarantee of the US government (read: the Treasury- your tax dollars). This opened the gates for a flood of bad debt into our markets. The best phrase I’ve heard on this was that this created a privatization of the profits, but a socialization of the risk to the taxpayers.

I will be doing a series of posts on this topic to educate people on the real root causes of this current downturn. The main reason for these posts is that this crisis is an example of merely one negative outcome of a whole host of flawed Socialist policies that are currently being contemplating under the new Obama regime.

The article below is a great first primer on the root causes of our current economic conditions:

BB&T CEO John Allison Blames ‘Religious Belief’ in Affordable Housing for Financial Crisis

Despite what the news media keep saying, capitalism and deregulation were not the causes of the financial meltdown.

Instead, BB&T CEO John Allison pointed the finger at government creations like the Securities and Exchange Commission (SEC), Federal Deposit Insurance Corporation (FDIC) and Fannie Mae and Freddie Mac, the two government-sponsored enterprises that failed last year. Allison was giving a lecture in Washington, D.C. Jan. 29 for the Ayn Rand Center for Individual Rights.

Allison cited a “religious belief in affordable housing” that led the government to institute the Community Reinvestment Act of 1977 (CRA) and later, during the Clinton years, to a huge expansion of Fannie and Freddie.

“In my opinion, I’m certain without Freddie Mac and Fannie Mae we could not have had the magnitude of misinvestment – we [would of] had [some] misinvestment, but nothing like what we’ve had today,” Allison said.

Read the rest of this article here:

http://newsbusters.org/blogs/julia-seymour/2009/01/30/bb-t-ceo-john-allison-blames-religious-belief-affordable-housing-fina

Filed under: Economy, Politics, , , , , , , , , ,

Another Scientific Stand Against the Myth of ‘Global Warming’

As the scientific truth emerges, an increasing number of scientists are speaking out on natural variations driving our climate- not social activism and/or political ambition. You may have heard of the US Senate Minority Report of 650+ dissenting scientists on the IPCC’s politicised climate reports or the 30,000+ scientists that have signed the Oregon Petition against the Kyoto Protocol.

Another important document on the growing climate sanity is called The Manhattan Declaration. It is a document signed at the end of the 2008 International Conference on Climate Change in New York. According to the declaration it is signed by scientists and researchers in climate and related fields, economists, policymakers, and business leaders present at the conference. It calls for the immediate halt to any tax funded attempts to counteract climate change. The document has been cited as an indication that the myth of  ‘scientific consensus’ in favor of man-made global warming has collapsed.

Filed under: Environment, , , , , , ,

Ayn Rand Eerily Predicts Our Lurch Towards Socialism

Today we see a serious threat to the very core values of America and its demonstrably successful free-market capitalism with run-away government bail-outs of financial institutions, and now, seemly every business that comes calling to Washington. This is a massive slide away from American democracy towards Socialism with the US government becoming the owner or partially owner of a number of our large companies and/or nearly whole industries (ex: Auto). 

One of my favorite books is Ayn Rand’s “Atlas Shrugged”. She was a US resident that fled the oppression of the Communist USSR. With that life experience, she wrote with great moral and literary clarity on the flaws and lies that were inherent in the Communist ideology in her fictional stories based on her philosophy of Objectivism. She was especially adept at describing the devastation that could be visited on a society by a group of relentless wealth redistributionists/Leftists.

 To read Rand’s skewering of Communism’s failings in a fictional story setting was one thing, but to see it actually happening in the real world, especially the US, is surreal. A recent WSJ article describes her book:

Many of us who know Rand‘s work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that “Atlas Shrugged” parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

Ultimately, “Atlas Shrugged” is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand‘s political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear — leaving everyone the poorer.

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism. 

WSJ “ ‘Atlas Shrugged’: From Fiction to Fact in 52 years”

If you’ve never checked it out, I urge you to look up “Atlas Shrugged” at your local library or go buy a copy. It is an incredible story and illustration of the horrible, practical outcomes of the Leftist/Collectivist world view. That it almost prophetically describes some of today’s current political and economic scenarios makes it an extremely relevant and enlightening read. 

 

Filed under: Philosophy, Politics, , , , , , , ,

Foreign Countries Again Hope US Will Abandon Its Principles

On the morning before the inauguration, I saw a snippet of the pre-ceremony TV news. CNN was interviewing people in the crowd before the Capitol. Part way through, they cut to a BBC reporter who earnestly informed us of the results of a new ‘worldwide’ poll. 70% of the ‘world’- coming from a variety of nations, she assured us- felt that relations of their country and the US would improve with the new Obama administration.

 

For most of the last 8 years, we’ve had to endure countless statements of how Bush has ‘upset’ the ‘world’ or how the ‘world’ was unhappy with US leadership and/or for not consulting with the ‘international community’ enough before acting on the international stage.

 

The reality in the international stage is that countries need to act according to their national values. Those values should drive their leadership. In the US, that is democracy first and foremost. It’s also a focus on individual liberties, free-market capitalism, and the rule of law.

 

If the values of a foreign country are different (ex: Socialist/collectivist)  from those of the US (individualist/capitalist), they will never be ‘happy’ with us or the decisions our President makes. As the most powerful country on the planet and the most committed to freedom, the US world leadership should never take the high-schoolish attitude that we should do things that will cause us to be ‘popular’ with other foreign countries. We must first do what is right and let the popularity-contest chips fall where they may afterward. If we want to team with others, we should find those that share our principles. If they do not, we should not waver from our principles in order to do something different so we are more ‘liked’.

 

With the inauguration of a new administration we gain a President and congress with a distinct Leftist/Socialist past history like that of Europe and other foreign countries. We can only hope that Obama will not abandon American principles and make decisions calculated to ‘please’ the ‘world’.

Filed under: American Values, Politics, , , , , , ,

Is the Economy That Bad, Or is it Really Media Bias?

I have noticed for an unrelenting drum-beat of economic depression by the mainstream media during Bush’s terms in office. This has occurred, despite the fact we had a nearly unbroken string of growth quarters during the last 8 years. Now, with the collapse of the housing market-bubble, we have a necessary correction of bad fiscal behavior by BOTH lenders and borrowers.  But, to believe the media, we are just this side of economic Armageddon. It’s the sequel to the Great Depression.

But is it really that bad or is the reporting wrong? The facts point to a media message that is at odds with reality. The Bureau of Labor Statistics says the current unemployment rate is 7.2%. That’s nowhere near the 20-odd% unemployment rates of the Great Depression and still about half the usual rate of our European neighbors. The financial sector is paying specifically for its bad behavior and those businesses that were uncompetitive or financially unsound (Big 3 auto makers, for instance), are the ones suffering solvency issues with the downturn in consumer spending.  Outside of that, most industries are only working against a general contraction of consumer activity and not the predicted ‘catastrophic economic collapse’. All I’ve seen personally when I go out is a ton of lowered prices, coupons, and key commodities like gasoline that have fallen to historically low prices. Call me silly, but this change doesn’t seem that bad.

So really, my hypothesis is that a Leftist-biased mainstream media is at the root of driving an unbelievably intense campaign of information ‘doom and gloom’. It seems like they don’t want to see (or want you to see) any positive social or economic realities. But why? Because it’s been a non-Liberal leadership in the White House and, until the last few years, a non-Liberal dominated Congress. History shows us that, until about the 90’s, there was a monopoly that controlled and shaped the news. Not because it was some vast conspiracy, but because there were so few channels for the news to flow through. The news primarily came through the Big 3 TV networks (ABC, NBC, CBS) and a finite set of major newspapers (New York Times, Washington Post, etc). The other half of the equation, though, was that journalists have become increasingly more Liberal than their general public readership. Pew Research has documented this consistently. The Media Research Center noted a Pew Research poll in 2004:

Five times more national outlet journalists identify themselves as liberal, 34 percent, than conservative, a mere 7 percent. The poll also discovered that while the reporters, editors, producers and executives have a great deal of trouble naming a “liberal” news outlet, they had no problem seeing a “conservative” outlet, with an incredible 69 percent readily naming the Fox News Channel.

Another Pew finding at their Journalism.org site found:

The research from Weaver and his colleagues echoes the findings of a Pew Research Center survey from 2004 revealing that while the majority of journalists described themselves as moderate, they were clearly to the left of the public. One example was that journalists were considerably more willing to say that society should accept homosexuality than the average citizen was.

In a good Wall Street Journal article by Peggy Noonan, she illustrates the collapse of the monopoly:

…But in the past decade the liberals lost their monopoly. What broke it? We all know. Rush Limbaugh did, cable news did, the anti-monolith journalists who rose with Reagan did, the Internet did, technology did, talk radio did, Fox News did, the Washington Times did. When the people of America got options, they took them. Conservative arguments rose, and liberal hegemony fell.

If I am right, then we will see an abrupt about-face on the tone of economic rhetoric shortly after the inauguration coming tomorrow. We will have a distinct absence of Republicans/Conservatives and a nearly monolithic Democrat/Liberal presence in the White House and Congress. I am very interested to see if, suddenly, we see a media viewing the world with rose-colored glasses because we have the ‘proper’ Liberal perspectives in our government.

Filed under: Economy, Politics, , , , , , , , , , ,

It’s a Speculative, Speculative, Speculative, Speculative World

It’s a Mad, Mad, Mad, Mad World is a 1963 American comedy film directed by Stanley Kramer about the madcap pursuit of $350,000 of stolen cash by a diverse and colorful group of strangers. Today we have a diverse and ‘colorful’ group of political leaders that are in what can be best described as a madcap pursuit of political power based on totally subjective and hypothetical predictions of future reality.

 

We’ve reached a new standard of anti-Western/irrational thinking in the US. We apparently no longer make political/leadership decisions on a rational assessment of fact or provable scientific knowledge of what will happen in the short term. Instead, our government (past and soon to be inaugurated), have made decisions, or are contemplating policy decisions, on completely un-provable or unfounded predictions of future consequences.

 

To wit:

 

1. Hillary Clinton, in confirmation recent hearings for Secretary of State (American Spectator article quote):  

Hillary Clinton, in her opening remarks before the Senate on Tuesday, identified as an “unambiguous security threat” something that doesn’t even exist — catastrophic global warming.

 

According to Hillary’s testimony, climate change “threatens our very existence,” before she put forward another modest assertion: “But well before that point, it could well incite wars of an old kind over basic resources — like food, water, and arable land.”  

History instead shows us that civilization flourished during past periods of climatic warming (Vikings in Greenland, Chinese population doubling in just 100 warmer years, Grapes growing as far north as England, the explosion in medieval cathedral building and Renaissance culture through out Europe). As the temperature was more than 20 below zero this morning in Minnesota, we would all welcome some ‘global warming’ here!

 

2. Polar bears were put on the Endangered species list not because of any measured impacts on their numbers, but based on an a completely hypothetical assertion that the Arctic might be ice-free by 2008 (false) or next few years (ice is now growing) and would possibly cause a dire threat to the cuddly polar bear population (they have demonstrably survived actual past climate periods where the Arctic was ice-free).

 

3. Global Warming Alarmism in general. We can’t predict the weather accurately even a couple days in advance. We have 0 models that actually predict any future climate trends. We simply do not scientifically know yet why our complex climate is warming (1850-1940) then cooling (1940-1979) then warming (1980-1998 ) then cooling again (1998-2008)…(you get the idea).

 

4. The Obama plan to ‘save’ jobs. Instead of sticking to creating actual jobs, Obama advisors guess or predict from a crystal ball that there will be 1.6 million jobs lost over the next 2 years (I wonder if they do lottery tickets?!). By arguing they think they can save this hypothetical job loss with a stimulus package, they claim today that they will create or ‘save’ almost 4 million jobs! Why not say 8 or 9 million jobs ‘saved’?! Go for broke! 

It’s really political nirvana. With this hypothetical world view, you can solve any number of future ‘problems’, ‘issues’, or ‘calamities’ by simply making them up. If the American people have become so removed from a rational, empirically-based world view and critical thinking skills that they won’t question this ‘Emperor’s Clothes’ approach, then anything can be passed for whim or political ambition.

Filed under: Philosophy, Politics, , , , , , , , , ,

Obama Now Thinks He Can Influence 4 Million Jobs

I heard on the radio the other day that the upcoming Obama administration now thinks they can create or save up to 4 million jobs with their stimulus package. I researched it on the Internet and I did, in fact, find that this statement and plan was submitted by the chair of his council of economic advisers, Christina Romer, and by Vice President-elect Joe Biden’s chief economic adviser, Jared Bernstein.

First, as a principle, government doesn’t create jobs. It of course has the jobs that exist for the administration of a government, but in the private sector, they don’t create jobs- they only destroy or strangle them by the amount of taxes they take away from businesses and individuals. Only private individual create jobs. As I put in my previous post “Proposed ‘Stimulus’ Plan Won’t Help Economy“, they can do some real good in reducing government’s drain on our economy by reducing corporate and individual tax rates- but they do not create any jobs!

Second, I am concerned by the weasily language used on this issue- “…create or save…” X-millions of jobs. Why do I feel like it will be an outcome of 500k jobs ‘created’ and 3.5M jobs ‘saved’? What the heck is a ‘saved’ job other than a statement of pretend achievement? Either you help grow our economy or you don’t. Either, after a quarter or a year, we’ve seen X-number of new jobs appear or we don’t.

This whole approach sounds like a political way to talk-the-talk about our economy (which a Socialist would do), but not walk-the-walk (as a free-market American would do) on really creating anything. I did not vote for Obama, but as our President, I really hope gains enough wisdom (not book-intelligence) to see the difference and lead with American values.

Filed under: Politics, , , , ,

More Gaping Holes in the Human-Driven Climate Theory

One of my greatest issues with a human-driven ‘global warming’ theory is that there are a variety of objective, historical climatic warming and cooling events that couldn’t possibly be human influenced because industrialization just didn’t exist then.

In his revolutionary climatological book, “The Chilling Stars”, Henrik Svensmark points out this obvious issue as he fights for recognition of his exciting natural-driven climate theory against ‘global warming’ alarmists that require a human-driven component to protect their professional, financial, and political ambitions:

“The Medieval Warm Period and the Little Ice Age were an embarrassment for those who, in recent years, wished to play down the natural variations in climate that occurred before the Industrial Revolution. A widely publicised but now discredited graph of temperatures, produced in 1998 by Michael Mann of the University of Massachusetts and his colleagues, tried to iron out the variations. Lampooned as the hockey stick, Mann’s graph showed the world remaining almost uniformly cool through most of the past 1000 years until 1800. Then temperatures began to climb towards unprecedented highs in the late 20th century- so making the toe of the hockey stick and the supposed onset of an unprecedented episode of man-made global warming.”

(link to full text in Svenmark’s book: “The Chilling Stars”)

So is this a subjective battle of who ever can rally the largest media megaphone or numbers for their climate opinion? No. We have to have objective, physical evidence to figure out the one, scientific truth of what really happened. The above quote is important because it comments on a very interesting discovery in the recent warming (and still not even as warm as the recent Medieval Warm Period) of 2003 in Europe. During that hot summer, a couple hiking up in the Swiss Alps found a bark quiver that scientists were amazed to discover was 4,700 years old! Why should we care? Well, Svensmark notes:

“The hiking couple had unwittingly rediscovered a long-forgotten short-cut for travellers and traders across the barrier of the Swiss Alps. To keep treasure-hunters away, the find remained a secret for two years while archaeologists scoured the area of the melt-back and analysed the finds. By the end of  2005 they had some 300 items- from the Neolithic Era, the Bronze Age, the Roman period and medieval times.”

Global warming theory proponents would say “Look! All these things were exposed to warn us of our imminent man-made doom!” Instead, real scientists noted the various period items were clustered in warm intervals when the pass of Schnidejoch was open, offering a short passage to and from the fertile Rhone valley south of the Alps. These physical pieces of history indicate that the climate had reached levels at least as warm as the current temperatures several times in the past for these physical items to accumulate in the Schnidejoch Pass. There were no Neolithic or Roman SUV’s or overly-flatulent animals spewing greenhouse gases that can be blamed for the multiple warmings and coolings that opened and then froze/closed this advantageous travel route. This is real evidence tied to the real world we can understand- unlike theoretical models and speculations that underlie the human-driven ‘global warming’ theory.

This one instance of hard, scientific evidence alone creates a massive hole in the current junk-science of human-driven ‘global warming’.

Filed under: Environment, , , , , , ,

Proposed ‘Stimulus’ Plan Won’t Help Economy

It’s interesting that Obama has proposed an economic stimulus plan that appears to be nothing more than a monetary or welfare-like handout. I think this approach illustrates the stark difference between a Socialist view/understanding of the the world and a free-market worldview.

Current news cites that the Obama stimulus plan will equate to a $500 check to individuals and a $1000 check for couples for a total deficit expansion of several hundred billion dollars. The stated purpose of this action is that the ‘wise’ government will ‘stimulate’ consumers to spend, overcome their fears of a sagging/deteriorating economy, and cause new growth.

But what will this really do for our economy? As an individual, I will probably use this money to pay some bills. I won’t be going: “Wow! lets go on a shopping spree with our new-found wealth!” If I were a small business owner, this is essentially meaningless in terms of buying equipment, hiring more people, or any growth plan in general. The net effect is an extremely short-term buying of good-will from the masses. Since it won’t create anything and it gives people something for no effort,  the average citizen’s next question will be “When can I get another?”

If the upcoming administration had leadership with wisdom or an understanding of human nature, they would enact an actual tax cut. For the definitionally challenged, this means actually lowering our tax rates. It does not mean playing a word game to re-label giving ‘tax cuts’ to a majority of people that don’t pay any tax revenues to the government. You can’t cut the taxes of someone, or some entity, that pays zero tax dollars.

To be specific, the government needs to lower the corporate tax rates. This is a real and concrete incentive for a business to chart growth on. If I, as a small business owner, would suddenly be able to bank on keeping 5-10% more of my profits, I can crunch the numbers and look at what that dollar figure would equate to. If my business does a $1,000,000 in revenue, I can chart an expansion of people and equipment on $50,000 to $100,000 of revenue that I otherwise wouldn’t have. It is additional revenue I can solidly count on. What Socialists don’t get is that this is how people drive their business decisions. Businesses won’t look at how they can pour these additional monies into increasing their social justice/community outreach programs or improving their green image. Those things will do nothing for their bottom line profits.

The above calculation on a real tax rate reduction will be done a million times a million businesses. This in turn creates millions of new jobs and capital expenditures across the whole country. Everybody’s boat rises. There are no select victim or racial or other groups that have to be chosen to win or lose. The government, counter-intuitive to those with a short-term or Socialist world view, also ends up with an overall increase in tax revenues collected by lowering the corporate tax rate.

The above will work every time, if you can find political leaders with an understanding of objective economic outcomes to enact tax cut legislation. It will not happen if you have political leaders that desire a political/social-activist outcome that runs counter to human nature and the demonstrated success of a free-market approach. Tell your political leaders to unfetter businesses in 2009 with lower corporate tax rates and then tell them: “GET OUT OF THE WAY!”

Filed under: Economy, Politics, , , , , , ,

Do You Have a ‘Right’ to Health Care?

What are your rights? Do you have a ‘right’ to health care? Today, many people think so. If you think that everyone, or at least part of our population (ex: the elderly) have a ‘right’ to health care, then you have fallen prey to a flawed Socialist or leftist mindset.

 

First, let’s clear up the concept of rights. As Americans we have the right to life, liberty, and the pursuit of happiness. That’s it. It’s a short, elegant, and an exceeding wise statement on/understanding of human nature. You don’t have a ‘right’ to food, housing, transportation, clothes, video games, etc. No one, including the government, owes you any of these commodities. What we do have a right to is access, but not a right to an outcome.

 

So if you want to work in America, you have a right to compete for a job, but you do not have a right to have a job. In our free market, you have to earn a job with a skill set desired by a business and be a better fit for that job than those competing against you. Then you must execute your job with competence and persistence. Do poor work or don’t show up on time and you will get fired and replaced by someone who will. This simple arrangement, called free-market capitalism, has objectively out-performed all other models of fiscal/economic engagement. It has made the US one of the most prosperous places on earth to live and the most socially mobile and progressive.

 

If you take the Socialist/leftist view of work, you essentially assert that you have a ‘right’ to a job regardless of your skills or your ability to execute work tasks. Businesses are entities that will always exist, are run by greedy, selfish people, and have the primary function of providing jobs for workers. This attitude usually includes an expectation that the wage for a job is a ‘living wage’ regardless of the value, complexity, or productivity that your job role produces (ex: a fast-food worker expecting a wage that would support him and/or a family). This approach dictates that peoples of all skills, experience, and education all deserve the equal outcome of getting a job vs. just getting access to the job pool. This flawed approach has destroyed the USSR in as little as 70 years and strangled the growth and freedoms of people in many countries today (compare and contrast Communist North Korea with its democratic sister to the south; compare highly socialist Germany or France with the economic dynamo of more recently free-market Ireland). 

So when it comes to health care, we all have the right of access to doctors and treatments if we have the ability to pay for them. The moment we say we have the right to something, the key question is: ‘At who’s expense?’ This is a socialized version of a Ponzi scheme or like musical chairs. It would be illegal in the business world. Just ask Bernard Madoff, the swindler that bilked individuals and whole countries out of one billion-plus dollars. Whether it starts slow or fast, those paying will become an ever-shrinking group and those (now with little or no financial barrier) demanding services will become an ever-growing group until the system breaks down and collapses. It is an objective certainty. The only question is when it will fail. 

The solution? Apply free-market principles and mechanisms to our health care system. For all our other prosperity, we have an economic-lobotomy when it comes to providing health care. It’s one of the only major areas of American society where we have no idea what the cost will ultimately come out to. If we publish prices and buy our own care, we will immediately begin to see prices fall and quality rise to an equilibrium that is naturally aligned with market demand and ability to pay. It will work just like it works in every other aspect of our economy. We will retain our power of individual choice and our market will continue to be the world-leader in innovation and cutting edge care. 

As we move ahead to our next political administration, do not allow our government to strip us of choice, accessibility, and quality medical care by going down the flawed road of ‘Universal’ health care or similar Socialist schemes. They will not work. Speak out for a market-based, consumer-driven health care system.

Filed under: Health Care, Philosophy, Politics, , , , , ,

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