There is general fatigue among United States citizens associated with hearing leftist (democrat) media personalities (journalism is supposed to be objective, and unfortunately there is no longer such a thing as objective journalists) claim "Republicans have no solutions for healthcare" policy. This is false. Solutions have been discussed by republican congressmen and policy pundits for decades. One brief summary as stated by Jeffrey Anderson of National Review in 2014:
(1) Reduce runaway malpractice lawsuits.
(2) Allow citizens to buy insurance across state lines.
(3) Allow private insurers to offer lower premiums to consumers with healthy lifestyles.
(4) Provide a tax break incentive to the self-insured (those of us who have our own policies and not through an employer) and to the uninsured (those who voluntarily do not wish to spend money on a monthly premium for insurance coverage).
(5) Increase federal support for state-run high-risk pools to help those with pre-existing conditions.
Friday, May 2, 2014
Saturday, January 11, 2014
The World Needs Heroes (#1)
"A 14-year-old Pakistani boy is being hailed as a hero after he sacrificed himself to stop a suicide bomber from storming his school [a government boys' school]. Ninth-grader Aitazaz Hassan Bangash was walking to school Monday in the Hangu district of northern Khyber Pakhtunkhwa province when he and his cousin became suspicious of a man, dressed in a student uniform, asked where the school was.
"The other students backed off, but Aitazaz challenged the bomber and tried to catch him. During the scuffle, the bomber panicked and detonated his bomb," the cousin, Musadiq Ali Bangash, told the reporter.
Aitazaz tried to grab the bomber at the entrance to the school with around 1,000 students — and that’s when the blast went off. Aitazaz and the bomber, who was not identified in reports, died at the scene. Two bystanders were injured, according to witnesses speaking to CNN.
"It was a great sacrifice to save the lives of hundreds of both Shia and Sunni students, who were in morning assembly," Musadiq told the network.
Aitazaz’s father, Mujahid Ali Bangash, 55, told Agensse Presse his son died a hero. "Aitazaz has made us proud by valiantly intercepting the bomber and saving the lives of hundreds of his fellow students," he said."I am happy that my son has become a martyr by sacrificing his life for a noble cause." The tragedy, Bangash said, was cause for celebration. "Many people are coming to see me but if they try to express sympathy, I tell them to congratulate me instead on becoming the father of a martyr," he told AFP.
"I will be even more than happy if my second son also sacrifices his life for the country."
"I will be even more than happy if my second son also sacrifices his life for the country."
Tuesday, September 3, 2013
Quote of the Day: Pope Francis
"We are all sinners [...], the problem is not being a sinner. The problem is not repenting of our sins, not being ashamed of what we have done." --- Pope Francis, May 17, 2013
Sunday, September 1, 2013
Great Quotes on Economic Policy
"The politicians who negotiate wage deals with public-sector unions are often funded by the same unions [i.e. campaign contributions and ads]. This is one reason why America's municipal finances are a mess."
- The Economist magazine, Nov. 24, 2012
"The government should not provide any services that are already advertised in the Yellow Pages." -Jeb Bush
"Some argue that spending cuts are "austerity" and that the sequester has hurt the economy. Wrong. The economy and jobs have picked up steam as the government has shrunk. Through it's still a flimsy recovery, economic growth and government spending have been shown to move in opposite directions in recent years, refuting the Keynesian gospel of the Left. This has been the pattern for the last 50 years at least. Milton Friedman had it exactly right: Less government spending means more private-sector growth; there is no magical "multiplier effect" of government spending."
- Stephen Moore for National Review, discussing cause and effect of sequester from 2012 to early 2015.
"I have no problem with people making money, even lots and lots of it. That is what a free country is all about. Freedom is the opportunity to work hard and change your economic circumstances by providing great benefits to others. That is how true capitalists become wealthy. They provide society with billions in products and get billions of dollars in return. Everybody wins. That is not how socialism works. In a socialist system, the ruling class extracts everything everyone else produces and offers [very little] in return. It is what i call trickle-up poverty."
(i.e. leftist policy makes everyone equally poor unless you are a member of the elite or oligarchy).
- Michael Savage (radio talk show host and author of Government Zero, 2015)
- The Economist magazine, Nov. 24, 2012
"The government should not provide any services that are already advertised in the Yellow Pages." -Jeb Bush
"Some argue that spending cuts are "austerity" and that the sequester has hurt the economy. Wrong. The economy and jobs have picked up steam as the government has shrunk. Through it's still a flimsy recovery, economic growth and government spending have been shown to move in opposite directions in recent years, refuting the Keynesian gospel of the Left. This has been the pattern for the last 50 years at least. Milton Friedman had it exactly right: Less government spending means more private-sector growth; there is no magical "multiplier effect" of government spending."
- Stephen Moore for National Review, discussing cause and effect of sequester from 2012 to early 2015.
"I have no problem with people making money, even lots and lots of it. That is what a free country is all about. Freedom is the opportunity to work hard and change your economic circumstances by providing great benefits to others. That is how true capitalists become wealthy. They provide society with billions in products and get billions of dollars in return. Everybody wins. That is not how socialism works. In a socialist system, the ruling class extracts everything everyone else produces and offers [very little] in return. It is what i call trickle-up poverty."
(i.e. leftist policy makes everyone equally poor unless you are a member of the elite or oligarchy).
- Michael Savage (radio talk show host and author of Government Zero, 2015)
Tuesday, July 30, 2013
Great Quotes on Ideology and Philosophy and Government
"[...] the whole purpose of a written constitution is to fix limits on government power. When judges ignore the textual limitations on government power, this is not judicial "restraint" so much as judicial abdication. [...] If changing conditions suggest that constitutional constraints should be altered, it is not for judges to make these alterations but for the people to act through the amendment process. Until that point, judges are obligated to enforce the Constitution by its terms, even if it means rejecting the work of democratic majorities and elected representatives. [...] Judges must force government officers to supply reasons for restrictions on individual liberty and, where such are lacking, be willing to strike laws down."
--- Jonathan H. Adler, writing for National Review magazine, 2016.
"For more than 100 years, progressives have sought to "transform" America, to make the political, economic, cultural, and legal foundation of our constitutional republic (our "regime" in the Aristotelian-Tocquevillian sense) more statist, more centralized, more regulatory, more "European", more secular, and less capitalist, less entrepreneurial, less "provincial", less religious, less exceptional."
---- John Fonte for National Review magazine, in a review of the book Taming Globalization by Yoo and Ku about the concerns of international law conflicting with United States sovereignty.
"You cannot go from a $2,000-a-night suite at La Mirage to a penitentiary and really understand it and come out a liberal."--- Actor Robert Downey Jr. explaining his transformation to a more conservative thinker after dealing with a difficult time during his life.
"I feel the greatest destroyer of peace today is abortion, because it is a direct war, a direct killing - direct murder by the mother herself."
---Mother Teresa, after winning the Nobel Peace Prize in 1979.
"Psychology has served up one excuse after another for bad behavior - our terrible childhoods, our genes, our neurotransmitters, our addictions. In each case, and often with extremely unscientific reasoning, we are offered absolution. The whole psychological enterprise [...] has had the effect of excusing poor choices and bad character. 'Virtue is [no longer] manifested in one's behavior, always so difficult and tedious to control, but in one's attitude to victims'."
---Mona Charen, for National Review, in a book review of T. Dalrymple's "Admirable Evasions: How Psychology Undermines Morality"
"You just have to get that word 'average' out of your vocabulary. And you have to tell yourself that you are great. And you have to believe it. [...] So just go out there and work hard."--Donald Trump, successful business and real-estate tycoon and US presidential nominee in 2016.
"My parents' priority was building character, not maintaining my happiness. They wanted to raise a child who would love God and live by the Golden Rule. So I had to learn that i was not the center of the universe. I had to learn that i was often wrong. And i had to learn the daily courage necessary to confront and overcome problems on my own, without constantly appealing to a higher earthly authority [government] for aid and comfort."
--David French, in writing for National Review Magazine
"Che Guevara was a murderer. He wasn't a hero. Also, Raul and Fidel are murderers, not legitimate authorities, not legitimate heads of state. They are there by force, not by the will of the people."
--Danilo "El Sexto" Maldaonado, Cuban citizen, artist, and young rebellious leader in Cuba, fighting for freedom from leftist oppression.
"The most fundamental fact about the ideas of the political left [democrats] is that they do not work. Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive." (i.e. universities; government departments)
--Thomas Sowell
"The fate of the world depends on the United States, the fate of the United States depends on the conservative movement, and the fate of the conservative movement depends on the health and success of the Republican party."
-- Harry Jaffa (author)
"Emerson, Thoreau, and Whitman were ultimately provincial, repetitive, narcissistic nihilists who could tell us nothing about how to live together and who had "emancipated" themselves from the religious, rational, and ethical traditions of the past that animated the best human behavior: their solipsistic "secular incarnation involves a denial of history and an extreme anti-nomianism."
--Laura Dassow Walls (author) and M.D. Aeschliman (Nationial Review)
Thursday, May 30, 2013
Quote of the day: Redevelopment Authorities (city planning)
"...RDAs [redevelopment authorities] operate in the most expensive way possible. It is a fact that government, as an entity, is the least efficient way to do anything. Witness the high-speed rail conflagration in California and the recent collapse of cities [bankruptcies] throughout the US. For an RDA to use tax money to provide for development that should and could be privately accomplished with efficient and effective leadership simply inhibits growth. Californians are now paying more than 65% of their income in [combined] taxes. How can someone earning less than 7 figures survive on a disposable income that is 35% of gross? The affordable housing crisis is a result. Simply put, there is no private money left to invest. It all goes into taxes, which are used to pay for unnecessary government programs, wages, and benefits. The situation will get worse as the tax base declines when people decide they can no longer manage to live in California." - Joseph E. Herbert
Tuesday, May 28, 2013
Misuse of Qu'ran quote by islam apologists
Use of Qu'ran (5:32) verse 32 of Surah 5 very well explained....
http://www.youtube.com/watch?feature=player_embedded&v=-SoXs-0_rHY&bpctr=1369788197
5:33 is the verse that needs to be repeated to those who use 5:32 to defend islamic teaching.
http://www.youtube.com/watch?feature=player_embedded&v=-SoXs-0_rHY&bpctr=1369788197
5:33 is the verse that needs to be repeated to those who use 5:32 to defend islamic teaching.
Saturday, May 25, 2013
Quote of the Day (May 6, 2013)
From National Review's John D. Davidson for a book review:
"...there's no dismissing the Lone Star State, no matter what one thinks of it. Five years on from the Great Recession, Texas's low-tax, pro-business [republican] policies have largely shielded its residents and businesses form the economic downturn suffered by the rest of the country. Between 2009 and 2011, whe unemployment was hovering between 9 and 10 percent nationwide, Texas alone created 40 percent of America's new jobs. Last year, it accounted for nearly 9 percent of the country's economy. Millions of people have moved there over the past decade, drawn by the promise of work.
The plain facts of the Texas economy confound liberals [democrats], who have a hard time believing in this so-called Texas Miracle, despite mounting evidence that it is real and durable, taht something fundamental about Texas's approach to economic growth is distinguishing it from, say [democrat controlled] California."
"...there's no dismissing the Lone Star State, no matter what one thinks of it. Five years on from the Great Recession, Texas's low-tax, pro-business [republican] policies have largely shielded its residents and businesses form the economic downturn suffered by the rest of the country. Between 2009 and 2011, whe unemployment was hovering between 9 and 10 percent nationwide, Texas alone created 40 percent of America's new jobs. Last year, it accounted for nearly 9 percent of the country's economy. Millions of people have moved there over the past decade, drawn by the promise of work.
The plain facts of the Texas economy confound liberals [democrats], who have a hard time believing in this so-called Texas Miracle, despite mounting evidence that it is real and durable, taht something fundamental about Texas's approach to economic growth is distinguishing it from, say [democrat controlled] California."
Tuesday, February 12, 2013
Ode to the Welfare State
For another example of how human nature and politics do not change over time, here is a 1949 example of sarcasm used to vilify the unsustainable democrat economic policy of central government welfare programs....
Unfortunately, democrats misinterpret the Constitution as usual, "promoting" the general welfare (which is what our founding fathers wrote) is not the same thing as "providing" for the general welfare. It is not the role of the central government to provide charity, it is their role to promote conditions that encourage hard work, reward, opportunity to succeed for all citizens. Charity is for us as individuals and communities to provide.
Unfortunately, democrats misinterpret the Constitution as usual, "promoting" the general welfare (which is what our founding fathers wrote) is not the same thing as "providing" for the general welfare. It is not the role of the central government to provide charity, it is their role to promote conditions that encourage hard work, reward, opportunity to succeed for all citizens. Charity is for us as individuals and communities to provide.
Saturday, December 15, 2012
Quote of the day: Lamenting the election of Mr. Obama
James Lileks sarcastically lamenting the loss on election day, where 50.6% of the voters voted for Obama (2012):
"Half the country apparently believes national greatness is defined by the number of people who get signed up for food stamps while having an abortion on a light-rail train. To them, President Obama is (great) because he has organized a bucket brigade from the free money geyser that makes sure teachers have free phones and birth control. [...] No election will change your mind. No recovery that follows from an application of fiscal restraint will penetrate your adamantine brainpan. These are the people who scoff at Romney's desire to put people back to work. Work? For what? The same stuff we get now for free? What kind of deal is that?"
"Half the country apparently believes national greatness is defined by the number of people who get signed up for food stamps while having an abortion on a light-rail train. To them, President Obama is (great) because he has organized a bucket brigade from the free money geyser that makes sure teachers have free phones and birth control. [...] No election will change your mind. No recovery that follows from an application of fiscal restraint will penetrate your adamantine brainpan. These are the people who scoff at Romney's desire to put people back to work. Work? For what? The same stuff we get now for free? What kind of deal is that?"
Friday, September 14, 2012
Tolerating Intolerance by Islam
This is an informative piece from The Economist magazine.....
"May was a cruel month for Indonesians trying to do nothing more than worship God. During an Ascension Day service on May 17th and May 20th, about 100 Protestant [Christians] were attacked by a muslim mob at their church in Bekasi on the outskirts of the capital, Jakarta. The mob hurled stones, bags of urine and death threats at the congregation. The church was stil only half-built when it was attacked; the pastor has been waiting for more than 5 years for permission from the local district administration to complete it. Since May 2nd local government officials in the [...] Muslim province of Aceh, in northern Sumatra, have closed at least 16 Christian churches, citing lack of permits."
"Such intimidation, and the ongoing rows over permits, are now so commonplace that they are barely reported. On May 26th, however, the issue of religious intolerance in this Muslim-majority nation made international headlines when Islamic hardliners forced the cancellation of a sold-out concert by Lady Gaga, an American pop-star. The Islamic Defenders Front (known by its initials in Indonesian, FPI) had threatened to provoke chaos if she entered the country. Her promoters said that they could not guarantee her, or her fans', safety. They were probably right."
"Critics argue that these are only the latest incidents in a remorseless rise of religious intolerance, and often violence. Human Rights Watch, a New York based lobby group, reports that incidents of sectarian violence became 'more deadly and more frequent' last year. Islamic hardliners not only attacked Christian churches but also [minority] Muslim sects such as the Ahmadiyah that they believe to be heretical. [...]"
"The government of president Susilo Bambang Yudhoyono has been accused of doing too little to stop such attacks, or to express enough concern about violent Islamic groups." [...] Certainly, cabinet ministers from the Islamic parties have been less than helpful in promoting Indonesia as the moderate, pluralistic country it claims to be. The religious affairs minister [...] has blamed the Ahmadiyah itself for inviting deadly attacks, saying it has strayed from mainstream islam. In March he suggested banning women from wearing skirts that were above the knee, calling them 'pornographic'. [...]
"[islamic groups] now feel that they can act with impunity. Sometimes the police are in cahoots with the hardliners. The situation continues to worsen."
The Economist, June 2012
"May was a cruel month for Indonesians trying to do nothing more than worship God. During an Ascension Day service on May 17th and May 20th, about 100 Protestant [Christians] were attacked by a muslim mob at their church in Bekasi on the outskirts of the capital, Jakarta. The mob hurled stones, bags of urine and death threats at the congregation. The church was stil only half-built when it was attacked; the pastor has been waiting for more than 5 years for permission from the local district administration to complete it. Since May 2nd local government officials in the [...] Muslim province of Aceh, in northern Sumatra, have closed at least 16 Christian churches, citing lack of permits."
"Such intimidation, and the ongoing rows over permits, are now so commonplace that they are barely reported. On May 26th, however, the issue of religious intolerance in this Muslim-majority nation made international headlines when Islamic hardliners forced the cancellation of a sold-out concert by Lady Gaga, an American pop-star. The Islamic Defenders Front (known by its initials in Indonesian, FPI) had threatened to provoke chaos if she entered the country. Her promoters said that they could not guarantee her, or her fans', safety. They were probably right."
"Critics argue that these are only the latest incidents in a remorseless rise of religious intolerance, and often violence. Human Rights Watch, a New York based lobby group, reports that incidents of sectarian violence became 'more deadly and more frequent' last year. Islamic hardliners not only attacked Christian churches but also [minority] Muslim sects such as the Ahmadiyah that they believe to be heretical. [...]"
"The government of president Susilo Bambang Yudhoyono has been accused of doing too little to stop such attacks, or to express enough concern about violent Islamic groups." [...] Certainly, cabinet ministers from the Islamic parties have been less than helpful in promoting Indonesia as the moderate, pluralistic country it claims to be. The religious affairs minister [...] has blamed the Ahmadiyah itself for inviting deadly attacks, saying it has strayed from mainstream islam. In March he suggested banning women from wearing skirts that were above the knee, calling them 'pornographic'. [...]
"[islamic groups] now feel that they can act with impunity. Sometimes the police are in cahoots with the hardliners. The situation continues to worsen."
The Economist, June 2012
Sunday, August 5, 2012
Democrat Stimulus Failures: Green Energy
In 2009-2012, the democrat administration has subsidized at least 10 "green" companies that have wasted taxpayer dollars and declared bankruptcy, guaranteeing a net loss (arguably theft) of taxpayer funds. Solar panel maker Solyndra was the infamous company that received $535,000,000 in loan guarantee funds before filing for bankruptcy in August 2011. Here are some other failures the democrat controlled media does not discuss:
- Raser Technologies of Utah (geothermal). $33,000,000 taxpayer funds received, declared bankruptcy in April 2011.
- Abound Solar, panel manufacturer, took $70,000,000 of its loan guarantees from the DOE before filing for Chapter 7 in July 2012.
- Energy Conservation Devices, received $13,300,000 in taxpayer funds before filing bankruptcy in February 2012.
- Solar Trust, financials uncertain but declared bankruptcy in April 2012.
- Enerl (electric car batteries), received $118,500,000 in taxpayer grant money from the DOE (stimulus) in 2009 and filed for bankruptcy in January 2012.
Nationally syndicated columnist Deroy Murdock quipped: "President Obama should beg taxpayers' forgiveness for pouring their hard-earned cash down at least 10 green rat holes." He points out these 10 failures and calculated a loss of $3,400,000,000 in taxpayer dollars and commitments combined. This is yet another example of government interference proving again it does not work as efficiently and effectively as a free market environment. $3.4 billion in reduced regulatory costs and reduced taxes (instead of this reckless spending and debt accumulation for our younger generation) could instead have achieved benefits in the private sector (i.e. growth and jobs).
Thursday, August 2, 2012
Nigeria: Another location where violence instigated on behalf of Islam
"Increasingly deadly attacks on churches by Boko Haram [...] Islamist group, are straining fragile relations between Christians and Muslims. Attacking churches is not new for Boko Haram but it has turned its attention to targets in Nigeria's 'middle belt' where the two populations mix, often stoking ferocious retaliation. Christian leaders have been warning that the patience of their flocks 'will wear out'."
Although sectarian violence has been going on for a long time, the current muslim-based "insurgency" started in 2009. Suicide-homicide bombings, sniper shootings, brazen assassination shootings, kidnappings, are all activities of the Boko Haram. The national government makes some attempt to address the situation (i.e. the president, who is Christian, hired a muslim to be his national security advisor) but has not succeeded in preventing the activist muslim group from carving out a muslim state for itself, particularly in the NE area of the country, although the entire northern half of the country is predominantly muslim (see map). Sharia law has been implemented in 9 of the northern states (Sharia law is still alien to Americans who have not had to live under its rules, influence, punishments, and laws). Although social issues other than religion play a role as usual in political conflicts (standard of living concerns, ethinic and tribal issues, legal issues, poor law enforcement, corruption), religion and their respective cultural differences are becoming the primary influences promoted in the conflict. International joint Christian-Muslim committees/delegations are trying to address the issue, so we can only wait and see if peaceful coexistance is possible without separation (i.e. Sudan).
Friday, July 20, 2012
Difference between Tea Party and Occupy Protests
Tea Party: Motivated by anger at being forced to pay for bailouts.
Occupy Movement: Motivated by anger for not getting handouts.
Occupy Movement: Motivated by anger for not getting handouts.
South Sudan
Paraphrasing a writer from National Review:
South Sudan recently formally selected english as its official language. This new African nation, which is mainly black, and tribal and Christian, attained independence from the arab-islamist government in Khartoum in July 2011. Poor, lacking infrastructure and institutions, and embroiled as usual in tribal conflicts, South Sudan was in need of unifying influences. Its choice of a national language marks a decisive turn toward the West and away from Islam. The english declaration is a good start to unifying the population and trading with the West. "Poor she may be, but in at least one respect [english as the official language] South Sudan is now ahead of the USA".
South Sudan recently formally selected english as its official language. This new African nation, which is mainly black, and tribal and Christian, attained independence from the arab-islamist government in Khartoum in July 2011. Poor, lacking infrastructure and institutions, and embroiled as usual in tribal conflicts, South Sudan was in need of unifying influences. Its choice of a national language marks a decisive turn toward the West and away from Islam. The english declaration is a good start to unifying the population and trading with the West. "Poor she may be, but in at least one respect [english as the official language] South Sudan is now ahead of the USA".
Saturday, June 23, 2012
This is another great article by Mark Steyn for National Review he named "Lethal Leisure"...
In 1853 or thereabouts, Czar Nicholas I described Turkey as the sick man of Europe. A century and a half later, Turkey is increasingly the strong man of the Middle East, and the sick man of Europe is Europe — or, rather, “Europe.” The transformation of a geographical patchwork of nation-states into a single political entity has been the dominant Big Idea of the post-war era, the Big Idea the Continent’s elites turned to after all the other Big Ideas — Fascism, Nazism, and eventually Communism — failed, spectacularly. The West’s last Big Idea is now dying in the eurozone debt crisis. Although less obviously malign than the big totalitarian -isms, this particular idea has proved so insinuating and debilitating that the only question is whether most of the West dies with it.
“Europe” has a basic identity crisis: As the Germans have begun to figure out, just because the Greeks live in the same general neighborhood is no reason to open a joint checking account. And yet a decade ago, when it counted, everyone who mattered on the Continent assumed a common currency for nations with nothing in common was so obviously brilliant an idea it was barely worth explaining to the masses. In the absence of ethnic or cultural compatibility, the European Union offered Big Government as a substitute: The project was propped up by two pillars — social welfare and defense welfare. The former regulated Europe into economic sloth even as India, China, and Brazil began figuring out how this capitalism thing worked. The latter meant that the U.S. defense umbrella ensured once-lavish budgets for hussars and lancers could be reallocated to government health care and other lollipops — and it still wasn’t enough. Whatever the individual merits of ever-more-leisurely education, 30-hour work weeks, six weeks’ vacation, retirement at 50, the cumulative impact is that not enough people do not enough work for not enough of their lives. And once large numbers of people acquire the habits of a leisured class, there are not many easy ways back to reality.
Defense welfare does the same at a geopolitical level. In absolving the Continent of responsibility for its own defense, the United States not only enabled Europe to beat its swords into Ponzi shares but, in a subtle and profound way, helped enervate the survival instincts of some of the oldest nation-states on the planet. I tend to agree with John Keegan, the great military historian and my old Telegraph colleague, that a nation without a military is in a sense no longer a nation. One of the few remaining serious second-tier powers is now joining their ranks: Under the “Conservative” premiership of David Cameron, a nation that within living memory governed a fifth of the earth’s surface and a quarter of its population and provided what global order there was for much of the rest will have a military incapable of independent force projection. Were the Argies to seize the Falklands today, Her Majesty’s Government would have to content itself with going to the U.N. and getting a strong resolution. Were the toppling of Saddam to be attempted today, Britain would be incapable of reprising the role it played eight years ago — of holding down the lower third of Iraq all but singlehanded while the Yanks pressed on to Baghdad. But beyond that, in a more general sense, nations that abandon their militaries tend also to abandon their national interests: Increasingly, instead of policies, they have attitudes. “Global warming” — “saving” the planet — is the perfect preoccupation for the ever-more-refined sensibilities of the post-national nation.
While Europe slept in and slept around, new powers emerged. China and India, on course to be the world’s top two economies within a couple of decades, both act as more or less conventional nation-states. So too do Iran, Saudi Arabia, Turkey — and many lesser players. We live on a planet in which the wealthiest societies in history, from Norway to New Zealand, are incapable of defending their own borders while basket cases like North Korea and Pakistan have gone nuclear, and Sudan and Somalia are anxious to follow. Whatever supple lies it may tell itself, a rich nation that cannot bother keeping up an army is retreating not only from imperialism and conquest but also from greatness. Continentals enjoy more paid leisure time than anybody else, yet they produce less and less great art, music, literature. A land of universal welfare invariably universalizes mediocrity.
Whether Greece defaults or gets bailed out one mo’ time doesn’t really matter: It’s insolvent, and there isn’t enough money in Germany to obscure that fact indefinitely. The longer “political reality” tries to dodge real reality, the bloodier the eventual reacquaintance will be. Europeans are going to have to relearn impulses three generations of Continentals have learned to regard as hopelessly vulgar. Can they do that? A land of 30-year-old students and 50-year-old retirees has so thoroughly diverted the great stream of life that it barely comprehends what’s at stake. “Europe” as a geopolitical rather than geographical concept has been for half a century the most conventional of conventional wisdom. Those, like Britain’s Euroskeptics, who dissented from it were derided as “swivel-eyed” “loony tunes.” The loons were right, and the smart set — the political class, the universities, the BBC, Le Monde — were wrong. “Europe” was a blueprint for sclerosis and decline, and then a sudden, devastating fall. As the “loony tunes” could have told them, it ends with, “That’s all, folks.”
Great quotes on statism and economic policy
"Government is the great fiction through which everybody endeavors to live at the expense of everybody else." - Frederic Bastiat
"The free-lunch myth is the belief that somehow or other, government can spend money at nobody's expense." - Milton Friedman
"The free-lunch myth is the belief that somehow or other, government can spend money at nobody's expense." - Milton Friedman
Saturday, May 12, 2012
Houston vs Detroit, Republican vs Democrat, GOP wins
This is a great article about Houston and Detroit, and provides another example of why conservative/Republican economic policies and principles work, and why liberal/Democrat policies do not. This was written by Mario Loyola for National Review magazine, arguably the best magazine for conservative voices in the USA.
"A tale of two cities"
BY MARIO LOYOLA
"On a warm Saturday evening in June 1943, crowds were relaxing on Belle Isle, a retreat slightly larger than New York’s Central Park nestled in the Detroit River, which separates Canada and the United States. Belle Isle’s landscapes and structures were a showcase of great American architecture: Frederick Law Olmsted, Albert Kahn, and Cass Gilbert all were represented. Its botanical garden, yacht club, memorial fountain, golf course, and opulent marble lighthouse offered a serene testament to the grandeur of Detroit.
Exactly what started the riots that night, we’ll never know for sure. There seems to have been a confrontation between a white sailor’s girlfriend and a black man, which led to a brawl. As contradictory rumors raced through the city, the conflagration spread. By the time federal forces intervened to impose law and order three days later, dozens of people had been killed, mostly blacks, and millions of dollars of property destroyed, mostly in the poor, black, inner-city neighborhood of Paradise Valley.
Detroit’s fall can be traced to the race riots of 1943, though many decades of prosperity and achievement still lay ahead. The rise and fall of Detroit is history on an epic scale: Favored by fortune at first, then plowed under its wheel, the city has had a lot of bad luck. But as Oscar Wilde lamented as he languished in Reading Gaol near the end of his life: “I must say to myself that I ruined myself, and that nobody great or small can be ruined except by his own hand. . . . Terrible as was what the world did to me, what I did to myself was far more terrible still.”
Houston had suffered race riots, too, during World War I, but fortune would smile on it for most of the 20th century. And when oil prices collapsed in the mid-1980s, sending the city into a depression, it bounced back as if suspended from a bungee cord — even though the oil bust lasted nearly two decades. What Houston did for itself is not merely a model for any city facing the danger of sudden economic decline: The policies that Houston and Texas have followed are proof of concept for the conservative vision of government, which is, essentially, to keep the government off the people’s backs and let a free society find its own way to prosperity.
Detroit, conversely, is proof of concept for the liberal vision of government, which seeks to solve every problem through government, to shape economic development through government, to redress grievances through government, to attain social justice through government, and, finally, to insinuate government into every aspect of our lives. The problems Detroit faced in the latter half of the 20th century would have been enormously challenging no matter what policies it embraced. But it embraced the worst ones and so plunged recklessly down the slope of decline.
Each city has offered a nearly pure exposition of a particular philosophy of government and a vivid demonstration of the results. In the degree of collusion between business and government, in the power of labor unions, in the method of economic development, in the burden of taxation and regulation, in the tolerance for diversity — in all these ways and more, the two cities stand as diametric opposites in the choices a society can make.
By 1943, it was clear that both Detroit and Houston were having a great war. Detroit’s massive car factories had all been converted to war production, and it was churning out tanks, jeeps, and bombers at a dizzying pace. The demand for wartime labor drew more than 300,000 migrants to Detroit, mostly from Appalachia and the South. In 1943, the population was approaching 2 million, and it seemed to be growing with no end in sight. But the race riots had revealed a sore festering beneath the surface, and there were others.
As early as the middle of the 19th century, Detroit had emerged as a leader in the Great Lakes maritime trade. It was perfectly positioned to capitalize on the Industrial Revolution, and soon was home to major industries producing machine tools, maritime steam engines, and horse carriages — the business in which William Durant, founder of General Motors, made his first fortune. Standardization of parts meant that many were interchangeable and could be used for a variety of things. When the gasoline engine was developed, Henry Ford put together his first automobiles largely from readily available components.
The rise of the machines led to an explosion of industry and a huge demand for unskilled labor. Between 1900 and 1930, Detroit was the fastest-growing city in the world. But soon, especially in the years after World War II, machines began to replace a lot of that unskilled labor. The ranks of the unemployed swelled — especially among blacks. In the 1950s and 1960s, large populations of idle young black men became a mainstay of neighborhoods such as Paradise Valley. Crime quickly became epidemic.
Race relations deteriorated, until they finally exploded in the riots of 1967. This time the trouble started with a police raid on an unlicensed after-hours bar that was packed with nearly 100 people. The police tried to arrest all of them, and a crowd gathered outside the establishment to protest. Most of those arrested were black, and the mostly black crowd became enraged and began looting. With all the velocity of sudden combustion, the violence turned into one of the worst riots in American history.
White flight began in earnest soon after and never abated. Court-ordered public-school desegregation encouraged the trend, and those who moved took the tax base with them. In 1973, Detroit elected its first black mayor, Coleman Young, an unabashed grievance-driven liberal who thrived on stoking the very tensions of race, class, and politics that were pulling Detroit apart. His highest priority seems to have been to show that he was the “m — — — — — r in charge,” as he would quaintly call himself: “M.F.I.C.” became his semi-official nickname.
Young’s administration bore more than a passing resemblance to Barack Obama’s in this sense: He used the machinery of government to attack the economic interests of his political opposition and extract benefits for his own supporters. As these policies drove his opponents’ political base out of the city, his own political base expanded proportionately. He apparently believed that increasing the political power of Detroit’s blacks was worth impoverishing the whole city.
Detroit’s transition to a majority-black city (the population is now more than 80 percent black) occurred just as the welfare programs of the Great Society started to destroy the black family. The Great Society was not merely an enormous disincentive to competition and self-reliance; it also disincentivized marriage by supplying the income that mothers used to depend on their husbands to provide.
Mayor Young presided over this disaster for 20 years. The city he left behind is a disheartening relic of its past. Of its 350,000 homes, more than 80,000 stand vacant, and the business-vacancy rate is 62 percent. As if that were not bad enough, many Detroiters enjoy whiling away the empty hours by setting empty houses on fire. Devil’s Night is a local tradition of vandalism and arson on a massive scale around Halloween. It was vigorously celebrated under Coleman Young, when it was common to have as many as 800 fires in the last days of October. Last year, there were more than 160 fires around Halloween, the drop due at least in part to the fact that the city has lost about a third of its population since 1993. City Hall is full of calls to tear down empty buildings, but there is no money even for demolition.
There was a time when Detroit’s problems were those of the auto industry, but the city is far past that now. Detroit has become the country’s capital of vagrancy and delinquency, and the most basic problem now is the breakdown of the black family. A staggering 80 percent of the city’s children were born to unwed mothers, a statistic that leads directly to the school system’s predictably high dropout rates. Detroit today has a functional-illiteracy rate (reading level below sixth-grade average) of nearly half, a level of illiteracy more characteristic of the Third World than of the first.
Detroit has entered the 21st century with perhaps the most deeply uneducated city labor force in the developed world. The results are predictable: Michigan’s statewide unemployment rate of 10.9 percent is among the highest in the country, and Detroit’s is even higher: It approached 30 percent during the depths of the recession. According to Bill Johnson, a reporter at the Detroit News, the city has become “an assembly line for criminals.”
The auto industry is much reduced. Part of the reason that Detroit’s powerhouse failed to meet the competition from Japan and Germany head-on in the 1970s and 1980s was its high degree of consolidation, which gave the Big Three and their unions enormous political leverage. They used that leverage to extract protection from the free competition that might have saved both them and the city by forcing them to abandon failed business models and seek out new ones.
The automakers prevailed on President Reagan to strong-arm Japan into accepting “voluntary” export quotas, on the theory that Detroit needed only a few years to adjust to the new competitive climate. In truth, the Big Three were morbidly bloated and uncompetitive, and making poor-quality cars to boot: Open competition was the best thing that could have happened to them. Instead, their consolidated oligarchy and the political influence that went with it produced a form of state capitalism, and they continue to abuse their power to this day.
The Chrysler bailout in 1980 was prologue to the bailouts of both Chrysler and General Motors in 2009. Over the course of several decades, the unions had managed to extract enormous pensions and health benefits for their retirees. The funds to back up these liabilities were fractional — that is, at any given time, the pension funds were required to hold funds equal to only a fraction of their liabilities. Even when competitive pressure finally forced the companies to learn how to produce cars as cheaply as their Japanese and German competitors, retiree obligations ensured that they still could not compete on price. They were soon insolvent.
On top of the retiree benefits, the United Auto Workers of America extracted enormous wage concessions during the boom years and refused to give them up when the industry faced withering competition. Supplemental unemployment benefits of 95 percent of wages are only one example of how the UAW strangled Detroit’s economy, and it is not the only union doing the strangling. A few years ago, the Detroit public-school teachers’ union went on strike to prevent the city from accepting a private gift of $200 million to build 15 charter schools. The city now faces a shortfall of more than $300 million, and schools are closing by the dozen.
The state has made things worse. Michigan’s approach to economic development involves heavy government intervention. For example, in the early 1980s, Detroit condemned 1,300 houses, 140 businesses, six churches, and a hospital to make way for a new General Motors plant. Beyond that, the Michigan Economic Development Corporation offers a variety of incentives and tax credits to favored projects. In tax credits alone, the state has spent $3.3 billion over 15 years, invariably distorting the efficient allocation of the human and material resources that the state — and Detroit in particular — desperately need to be put to genuinely productive use.
Both the state of Michigan and the city of Detroit impose an income tax on top of the city’s property taxes. The state imposes a 4.95 percent income tax on businesses as well as a gross-receipts tax of nearly 1 percent. It is no wonder that when Japanese and German carmakers started opening plants in the United States, they avoided Michigan and settled mostly in the right-to-work South — including Texas.
The launch of Ford Motor Company in 1903 came two years after a drilling rig called Spindletop struck oil north of Houston, sending a sustained gusher of black gold hundreds of feet into the air. Nobody had ever seen anything like it, and it quickly became by far the most productive oil well in the world. Discoveries soon spread throughout Texas, and Houston’s position as a port city on the Gulf of Mexico ensured its emergence as the world’s energy capital by the late 1930s, fueling a general boom in heavy industry.
During World War II, Detroit was called “the Arsenal of Democracy,” but Houston was hardly less critical. It contributed ships, airplanes, and, of course, oil to the war effort. While Detroit suffered from the consolidated nature of its core industry, Houston thrived on its diversity. The land from which the precious resource was extracted was owned by thousands of private citizens. The oil was extracted by hundreds of independent drillers and operators. Huge multinational corporations eventually aggregated in Houston, but their interests were not entirely coincident with those of the independents, which limited the ability of all parties to seek political favors.
The Texas oil boom continued for most of the 20th century. During the 1970s, the Houston Chronicle became widely distributed in Detroit, chiefly for its help-wanted ads. By the early 1980s, “black taggers” — cars bearing the black Michigan license plate — were a common sight in Houston. In the second half of the century, the size of the two cities’ population positions flipped. In the 1950s, Detroit had 2 million residents, Houston only about 700,000. Today, Houston has far more than 2 million residents, Detroit just over 700,000.
But Houston would suffer its own bad luck. In 1985 the Saudis abandoned their position as “swing producer” in OPEC and dramatically ramped up production, from 2 million barrels per day to 5 million barrels, in a matter of months. The price of a barrel of oil fell from an average of nearly $30 in 1985 to around $20 in January 1986 and then nosedived to under $10 by midyear.
For Houston, “it was a bloodbath,” recalls one former Shell executive. Profit margins had already been in the single digits, and businesses rapidly went bust left and right. In a matter of months, massive layoffs rocked the city. Real-estate values plunged, and Texas was sucked into the savings-and-loan crisis. The unemployment rate for the state as a whole jumped from 6.1 percent in September 1984 to 9.3 percent just two years later.
As soon as oil prices fell, the independent oil producers cried out for protection, much as Detroit’s Big Three had done just a few years before. But the largely Houston-based oil giants were international traders, so they fought against tariffs. Beset by these conflicting appeals from the oil sector, the government was paralyzed in its response — and, happily, did nothing. Unemployment rates in the city dropped quickly, reaching 5 percent in 1990.
More recently, Houston has benefited from a spike in oil prices, and for that Texans can thank Washington liberals more than Lone Star conservatives. Obama’s policies, and those of congressional Democrats, have significantly constricted the domestic production of oil, creating upward price pressure. These policies don’t benefit the environment a whit; the chief beneficiaries are the oil companies, which see windfall profits as the value of their reserves rises.
Texas likes to brag that it is “business friendly,” but it would be more accurate to say that it is, by both philosophy and force of circumstances, “competition friendly.” Like most states, Texas has an economic-development fund, but it’s a small one: Since it was created, the Texas Enterprise Fund has disbursed slightly less than $363 million. That’s one-tenth the amount Michigan has spent on economic development in recent years, and Texas has almost three times the population. In other words, the government of Texas spends about one-thirtieth as much per person on corporate-development projects as Michigan.
Texas has prospered from the fact that it is a right-to-work state. This is not to say that Texas is anti-labor, or even that it is anti-union. Many refineries in Texas are unionized. But Texas seeks to reward labor through the free market. In the words of one former Shell executive, “If you’ve got good management, people aren’t going to want to get unionized. And management has gotten smarter and smarter over time. That’s why the unions are in trouble.
Houston weathered the storm nicely, in large part through a rapid reallocation of human and material resources. Diversification was the key. Before the bust, the energy sector accounted for about 80 percent of Houston’s economy; now it’s barely 50 percent. Of the 51 Texas companies on the Fortune 500 list, there are computer makers, airlines, retailers, gas-and-electrical utilities, food-and-grocery companies, construction companies, and a telecommunications company. The Texas Medical Center in Houston is the world’s largest, employing nearly 100,000 people and receiving nearly 6 million patients per year.
The diversification of Houston’s economy has been particularly potent in heavy industry. For the state as a whole, employment in the oil-and-gas sector increased by 5.1 percent between June 2010 and June 2011, largely because of natural-gas projects made possible by “fracking.” Employment in heavy construction and civil-engineering construction, by contrast, increased 10.6 percent in the same period; in primary metal manufacturing, 6.6 percent; in fabricated metal products, 8.2 percent; and in machinery manufacturing, 11.9 percent. Meanwhile, the government work force contracted 1 percent.
Tolerance of cultural diversity has become a hallmark of Houston’s ascent, despite the state’s checkered history of race relations. Texans take individual freedom and individual responsibility very seriously, so meritocracy comes naturally to them. In the words of George Strake, one of Houston’s most venerated oilmen, “Everyone’s welcome here, so long as you’re willing to pull the wagon and not just sit in it.” That is perhaps why anti-immigrant feeling is not nearly as pronounced in Texas as it is in other parts of the Southwest. Like Detroit, Houston is minority white, but more diverse: Blacks make up 25 percent of the population, Hispanics 37 percent, and Asians (chiefly Vietnamese and Chinese) more than 5 percent.
Texas has managed to preserve something very essential about America, namely the frontier mentality, what the great Texas historian T. R. Fehrenbach described as the “cult of courage.” Or, in the words of Mr. Strake, “Give me wide open spaces. Let me enjoy the good times, and don’t feel sorry for me in bad times.” Naturally, this leads to a certain vision of government: Defend our shores, deliver the mail, and get the hell out of the way.
Gov. Rick Perry has been true to that vision. When recession created enormous gaps in the state budget, as in 2003 and 2011, Perry resisted pressure to raise taxes or raid the state’s “rainy day fund,” and managed to balance the budget mostly through spending cuts. (The state still has no personal-income tax.) Perry’s signature tort reforms essentially broke the power of the trial bar and have drawn thousands of doctors and substantial business investment to Texas. The state’s environmental health has improved dramatically as state regulators worked to meet national air-quality standards in cost-effective ways without imposing needless burdens on business. Houston, home of the world’s largest petrochemical industrial complex, satisfied federal ozone standards in 2009 and 2010, after massive investments by the private sector. Perry can justly run on a record of keeping government off people’s backs and letting the free market innovate its way out of recession. The Lone Star State is now the industrial engine of the American economy, singlehandedly responsible for half of the country’s job growth in recent years.
James Madison believed that one purpose of government was “to reward the best and punish the worst.” In Detroit, the best were punished until they finally left, and under Obama, the country is marching down that very same slope. That’s the significance of losing half our deepwater drilling rigs to other shores, of forcing corporations to relocate to Europe in order to avoid stifling corporate tax rates, of shutting down coal plants regardless of recent retrofits and other emissions improvements.
As the next election looms, Americans should consider how rapidly we could unleash the power of American industry and bounce out of this recession, if instead of taking our cue from Detroit, we follow Houston."
"A tale of two cities"
BY MARIO LOYOLA
"On a warm Saturday evening in June 1943, crowds were relaxing on Belle Isle, a retreat slightly larger than New York’s Central Park nestled in the Detroit River, which separates Canada and the United States. Belle Isle’s landscapes and structures were a showcase of great American architecture: Frederick Law Olmsted, Albert Kahn, and Cass Gilbert all were represented. Its botanical garden, yacht club, memorial fountain, golf course, and opulent marble lighthouse offered a serene testament to the grandeur of Detroit.
Exactly what started the riots that night, we’ll never know for sure. There seems to have been a confrontation between a white sailor’s girlfriend and a black man, which led to a brawl. As contradictory rumors raced through the city, the conflagration spread. By the time federal forces intervened to impose law and order three days later, dozens of people had been killed, mostly blacks, and millions of dollars of property destroyed, mostly in the poor, black, inner-city neighborhood of Paradise Valley.
Detroit’s fall can be traced to the race riots of 1943, though many decades of prosperity and achievement still lay ahead. The rise and fall of Detroit is history on an epic scale: Favored by fortune at first, then plowed under its wheel, the city has had a lot of bad luck. But as Oscar Wilde lamented as he languished in Reading Gaol near the end of his life: “I must say to myself that I ruined myself, and that nobody great or small can be ruined except by his own hand. . . . Terrible as was what the world did to me, what I did to myself was far more terrible still.”
Houston had suffered race riots, too, during World War I, but fortune would smile on it for most of the 20th century. And when oil prices collapsed in the mid-1980s, sending the city into a depression, it bounced back as if suspended from a bungee cord — even though the oil bust lasted nearly two decades. What Houston did for itself is not merely a model for any city facing the danger of sudden economic decline: The policies that Houston and Texas have followed are proof of concept for the conservative vision of government, which is, essentially, to keep the government off the people’s backs and let a free society find its own way to prosperity.
Detroit, conversely, is proof of concept for the liberal vision of government, which seeks to solve every problem through government, to shape economic development through government, to redress grievances through government, to attain social justice through government, and, finally, to insinuate government into every aspect of our lives. The problems Detroit faced in the latter half of the 20th century would have been enormously challenging no matter what policies it embraced. But it embraced the worst ones and so plunged recklessly down the slope of decline.
Each city has offered a nearly pure exposition of a particular philosophy of government and a vivid demonstration of the results. In the degree of collusion between business and government, in the power of labor unions, in the method of economic development, in the burden of taxation and regulation, in the tolerance for diversity — in all these ways and more, the two cities stand as diametric opposites in the choices a society can make.
By 1943, it was clear that both Detroit and Houston were having a great war. Detroit’s massive car factories had all been converted to war production, and it was churning out tanks, jeeps, and bombers at a dizzying pace. The demand for wartime labor drew more than 300,000 migrants to Detroit, mostly from Appalachia and the South. In 1943, the population was approaching 2 million, and it seemed to be growing with no end in sight. But the race riots had revealed a sore festering beneath the surface, and there were others.
As early as the middle of the 19th century, Detroit had emerged as a leader in the Great Lakes maritime trade. It was perfectly positioned to capitalize on the Industrial Revolution, and soon was home to major industries producing machine tools, maritime steam engines, and horse carriages — the business in which William Durant, founder of General Motors, made his first fortune. Standardization of parts meant that many were interchangeable and could be used for a variety of things. When the gasoline engine was developed, Henry Ford put together his first automobiles largely from readily available components.
The rise of the machines led to an explosion of industry and a huge demand for unskilled labor. Between 1900 and 1930, Detroit was the fastest-growing city in the world. But soon, especially in the years after World War II, machines began to replace a lot of that unskilled labor. The ranks of the unemployed swelled — especially among blacks. In the 1950s and 1960s, large populations of idle young black men became a mainstay of neighborhoods such as Paradise Valley. Crime quickly became epidemic.
Race relations deteriorated, until they finally exploded in the riots of 1967. This time the trouble started with a police raid on an unlicensed after-hours bar that was packed with nearly 100 people. The police tried to arrest all of them, and a crowd gathered outside the establishment to protest. Most of those arrested were black, and the mostly black crowd became enraged and began looting. With all the velocity of sudden combustion, the violence turned into one of the worst riots in American history.
White flight began in earnest soon after and never abated. Court-ordered public-school desegregation encouraged the trend, and those who moved took the tax base with them. In 1973, Detroit elected its first black mayor, Coleman Young, an unabashed grievance-driven liberal who thrived on stoking the very tensions of race, class, and politics that were pulling Detroit apart. His highest priority seems to have been to show that he was the “m — — — — — r in charge,” as he would quaintly call himself: “M.F.I.C.” became his semi-official nickname.
Young’s administration bore more than a passing resemblance to Barack Obama’s in this sense: He used the machinery of government to attack the economic interests of his political opposition and extract benefits for his own supporters. As these policies drove his opponents’ political base out of the city, his own political base expanded proportionately. He apparently believed that increasing the political power of Detroit’s blacks was worth impoverishing the whole city.
Detroit’s transition to a majority-black city (the population is now more than 80 percent black) occurred just as the welfare programs of the Great Society started to destroy the black family. The Great Society was not merely an enormous disincentive to competition and self-reliance; it also disincentivized marriage by supplying the income that mothers used to depend on their husbands to provide.
Mayor Young presided over this disaster for 20 years. The city he left behind is a disheartening relic of its past. Of its 350,000 homes, more than 80,000 stand vacant, and the business-vacancy rate is 62 percent. As if that were not bad enough, many Detroiters enjoy whiling away the empty hours by setting empty houses on fire. Devil’s Night is a local tradition of vandalism and arson on a massive scale around Halloween. It was vigorously celebrated under Coleman Young, when it was common to have as many as 800 fires in the last days of October. Last year, there were more than 160 fires around Halloween, the drop due at least in part to the fact that the city has lost about a third of its population since 1993. City Hall is full of calls to tear down empty buildings, but there is no money even for demolition.
There was a time when Detroit’s problems were those of the auto industry, but the city is far past that now. Detroit has become the country’s capital of vagrancy and delinquency, and the most basic problem now is the breakdown of the black family. A staggering 80 percent of the city’s children were born to unwed mothers, a statistic that leads directly to the school system’s predictably high dropout rates. Detroit today has a functional-illiteracy rate (reading level below sixth-grade average) of nearly half, a level of illiteracy more characteristic of the Third World than of the first.
Detroit has entered the 21st century with perhaps the most deeply uneducated city labor force in the developed world. The results are predictable: Michigan’s statewide unemployment rate of 10.9 percent is among the highest in the country, and Detroit’s is even higher: It approached 30 percent during the depths of the recession. According to Bill Johnson, a reporter at the Detroit News, the city has become “an assembly line for criminals.”
The auto industry is much reduced. Part of the reason that Detroit’s powerhouse failed to meet the competition from Japan and Germany head-on in the 1970s and 1980s was its high degree of consolidation, which gave the Big Three and their unions enormous political leverage. They used that leverage to extract protection from the free competition that might have saved both them and the city by forcing them to abandon failed business models and seek out new ones.
The automakers prevailed on President Reagan to strong-arm Japan into accepting “voluntary” export quotas, on the theory that Detroit needed only a few years to adjust to the new competitive climate. In truth, the Big Three were morbidly bloated and uncompetitive, and making poor-quality cars to boot: Open competition was the best thing that could have happened to them. Instead, their consolidated oligarchy and the political influence that went with it produced a form of state capitalism, and they continue to abuse their power to this day.
The Chrysler bailout in 1980 was prologue to the bailouts of both Chrysler and General Motors in 2009. Over the course of several decades, the unions had managed to extract enormous pensions and health benefits for their retirees. The funds to back up these liabilities were fractional — that is, at any given time, the pension funds were required to hold funds equal to only a fraction of their liabilities. Even when competitive pressure finally forced the companies to learn how to produce cars as cheaply as their Japanese and German competitors, retiree obligations ensured that they still could not compete on price. They were soon insolvent.
On top of the retiree benefits, the United Auto Workers of America extracted enormous wage concessions during the boom years and refused to give them up when the industry faced withering competition. Supplemental unemployment benefits of 95 percent of wages are only one example of how the UAW strangled Detroit’s economy, and it is not the only union doing the strangling. A few years ago, the Detroit public-school teachers’ union went on strike to prevent the city from accepting a private gift of $200 million to build 15 charter schools. The city now faces a shortfall of more than $300 million, and schools are closing by the dozen.
The state has made things worse. Michigan’s approach to economic development involves heavy government intervention. For example, in the early 1980s, Detroit condemned 1,300 houses, 140 businesses, six churches, and a hospital to make way for a new General Motors plant. Beyond that, the Michigan Economic Development Corporation offers a variety of incentives and tax credits to favored projects. In tax credits alone, the state has spent $3.3 billion over 15 years, invariably distorting the efficient allocation of the human and material resources that the state — and Detroit in particular — desperately need to be put to genuinely productive use.
Both the state of Michigan and the city of Detroit impose an income tax on top of the city’s property taxes. The state imposes a 4.95 percent income tax on businesses as well as a gross-receipts tax of nearly 1 percent. It is no wonder that when Japanese and German carmakers started opening plants in the United States, they avoided Michigan and settled mostly in the right-to-work South — including Texas.
The launch of Ford Motor Company in 1903 came two years after a drilling rig called Spindletop struck oil north of Houston, sending a sustained gusher of black gold hundreds of feet into the air. Nobody had ever seen anything like it, and it quickly became by far the most productive oil well in the world. Discoveries soon spread throughout Texas, and Houston’s position as a port city on the Gulf of Mexico ensured its emergence as the world’s energy capital by the late 1930s, fueling a general boom in heavy industry.
During World War II, Detroit was called “the Arsenal of Democracy,” but Houston was hardly less critical. It contributed ships, airplanes, and, of course, oil to the war effort. While Detroit suffered from the consolidated nature of its core industry, Houston thrived on its diversity. The land from which the precious resource was extracted was owned by thousands of private citizens. The oil was extracted by hundreds of independent drillers and operators. Huge multinational corporations eventually aggregated in Houston, but their interests were not entirely coincident with those of the independents, which limited the ability of all parties to seek political favors.
The Texas oil boom continued for most of the 20th century. During the 1970s, the Houston Chronicle became widely distributed in Detroit, chiefly for its help-wanted ads. By the early 1980s, “black taggers” — cars bearing the black Michigan license plate — were a common sight in Houston. In the second half of the century, the size of the two cities’ population positions flipped. In the 1950s, Detroit had 2 million residents, Houston only about 700,000. Today, Houston has far more than 2 million residents, Detroit just over 700,000.
But Houston would suffer its own bad luck. In 1985 the Saudis abandoned their position as “swing producer” in OPEC and dramatically ramped up production, from 2 million barrels per day to 5 million barrels, in a matter of months. The price of a barrel of oil fell from an average of nearly $30 in 1985 to around $20 in January 1986 and then nosedived to under $10 by midyear.
For Houston, “it was a bloodbath,” recalls one former Shell executive. Profit margins had already been in the single digits, and businesses rapidly went bust left and right. In a matter of months, massive layoffs rocked the city. Real-estate values plunged, and Texas was sucked into the savings-and-loan crisis. The unemployment rate for the state as a whole jumped from 6.1 percent in September 1984 to 9.3 percent just two years later.
As soon as oil prices fell, the independent oil producers cried out for protection, much as Detroit’s Big Three had done just a few years before. But the largely Houston-based oil giants were international traders, so they fought against tariffs. Beset by these conflicting appeals from the oil sector, the government was paralyzed in its response — and, happily, did nothing. Unemployment rates in the city dropped quickly, reaching 5 percent in 1990.
More recently, Houston has benefited from a spike in oil prices, and for that Texans can thank Washington liberals more than Lone Star conservatives. Obama’s policies, and those of congressional Democrats, have significantly constricted the domestic production of oil, creating upward price pressure. These policies don’t benefit the environment a whit; the chief beneficiaries are the oil companies, which see windfall profits as the value of their reserves rises.
Texas likes to brag that it is “business friendly,” but it would be more accurate to say that it is, by both philosophy and force of circumstances, “competition friendly.” Like most states, Texas has an economic-development fund, but it’s a small one: Since it was created, the Texas Enterprise Fund has disbursed slightly less than $363 million. That’s one-tenth the amount Michigan has spent on economic development in recent years, and Texas has almost three times the population. In other words, the government of Texas spends about one-thirtieth as much per person on corporate-development projects as Michigan.
Texas has prospered from the fact that it is a right-to-work state. This is not to say that Texas is anti-labor, or even that it is anti-union. Many refineries in Texas are unionized. But Texas seeks to reward labor through the free market. In the words of one former Shell executive, “If you’ve got good management, people aren’t going to want to get unionized. And management has gotten smarter and smarter over time. That’s why the unions are in trouble.
Houston weathered the storm nicely, in large part through a rapid reallocation of human and material resources. Diversification was the key. Before the bust, the energy sector accounted for about 80 percent of Houston’s economy; now it’s barely 50 percent. Of the 51 Texas companies on the Fortune 500 list, there are computer makers, airlines, retailers, gas-and-electrical utilities, food-and-grocery companies, construction companies, and a telecommunications company. The Texas Medical Center in Houston is the world’s largest, employing nearly 100,000 people and receiving nearly 6 million patients per year.
The diversification of Houston’s economy has been particularly potent in heavy industry. For the state as a whole, employment in the oil-and-gas sector increased by 5.1 percent between June 2010 and June 2011, largely because of natural-gas projects made possible by “fracking.” Employment in heavy construction and civil-engineering construction, by contrast, increased 10.6 percent in the same period; in primary metal manufacturing, 6.6 percent; in fabricated metal products, 8.2 percent; and in machinery manufacturing, 11.9 percent. Meanwhile, the government work force contracted 1 percent.
Tolerance of cultural diversity has become a hallmark of Houston’s ascent, despite the state’s checkered history of race relations. Texans take individual freedom and individual responsibility very seriously, so meritocracy comes naturally to them. In the words of George Strake, one of Houston’s most venerated oilmen, “Everyone’s welcome here, so long as you’re willing to pull the wagon and not just sit in it.” That is perhaps why anti-immigrant feeling is not nearly as pronounced in Texas as it is in other parts of the Southwest. Like Detroit, Houston is minority white, but more diverse: Blacks make up 25 percent of the population, Hispanics 37 percent, and Asians (chiefly Vietnamese and Chinese) more than 5 percent.
Texas has managed to preserve something very essential about America, namely the frontier mentality, what the great Texas historian T. R. Fehrenbach described as the “cult of courage.” Or, in the words of Mr. Strake, “Give me wide open spaces. Let me enjoy the good times, and don’t feel sorry for me in bad times.” Naturally, this leads to a certain vision of government: Defend our shores, deliver the mail, and get the hell out of the way.
Gov. Rick Perry has been true to that vision. When recession created enormous gaps in the state budget, as in 2003 and 2011, Perry resisted pressure to raise taxes or raid the state’s “rainy day fund,” and managed to balance the budget mostly through spending cuts. (The state still has no personal-income tax.) Perry’s signature tort reforms essentially broke the power of the trial bar and have drawn thousands of doctors and substantial business investment to Texas. The state’s environmental health has improved dramatically as state regulators worked to meet national air-quality standards in cost-effective ways without imposing needless burdens on business. Houston, home of the world’s largest petrochemical industrial complex, satisfied federal ozone standards in 2009 and 2010, after massive investments by the private sector. Perry can justly run on a record of keeping government off people’s backs and letting the free market innovate its way out of recession. The Lone Star State is now the industrial engine of the American economy, singlehandedly responsible for half of the country’s job growth in recent years.
James Madison believed that one purpose of government was “to reward the best and punish the worst.” In Detroit, the best were punished until they finally left, and under Obama, the country is marching down that very same slope. That’s the significance of losing half our deepwater drilling rigs to other shores, of forcing corporations to relocate to Europe in order to avoid stifling corporate tax rates, of shutting down coal plants regardless of recent retrofits and other emissions improvements.
As the next election looms, Americans should consider how rapidly we could unleash the power of American industry and bounce out of this recession, if instead of taking our cue from Detroit, we follow Houston."
Wednesday, March 7, 2012
Thursday, March 1, 2012
Ron Paul Isolationism
"You may not be interested in the world, but the world is interested in you. And "America: love it or leave us be" is especially unpersuasive when your future's mortgaged to foreigners, and everything in your house is made overseas."
- Mark Steyn, in a critique of Ron Paul's isolationist philosophy
- Mark Steyn, in a critique of Ron Paul's isolationist philosophy
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