My apologies to those who have already read this, but for those who haven’t this is just too good not to share. Since December 2008, the Knox e-mail to GM has been making its way to inboxes all over the world; I learned of it only yesterday when listening to Neal Boortz yesterday. Within an hour of Boortz reading the now infamous e-mail, Knox himself called the show to verify the authenticity of the letter. The letter has also been verified to be “correctly attributed” to Mr. Knox by Snopes.
First, the abridged letter from Troy Clarke, President of General Motors North America
Dear Employees & Suppliers,
Congress and the current Administration will soon determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis […] As an employee or supplier, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.
Thank you for your urgent action and ongoing support.
President General Motors North America
Knox wrote the following e-mail in response and had originally sent a cc to his mother who then asked if she could forward it to her friends. Shortly thereafter, the e-mail went viral (and after reading it, you’ll understand why).
In response to your request to contact legislators and ask for a bailout for the Big Three automakers please consider the following, and please pass my thoughts on to Troy Clark, President of General Motors North America.
Politicians and Management of the Big 3 are both infected with the same entitlement mentality that has spread like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping this nation, awaiting our new “messiah”, Pres-elect Obama, to wave his magic wand and make all our problems go away, while at the same time allowing our once great nation to keep “living the dream”… Believe me folks, The dream is over!
This dream where we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers” without paying the price for these atrocities…this dream where you still think the masses will line up to buy our products for ever and ever. » Read more
21 pages of paper is apparently worth $30 billion taxpayer dollars — if you are too big to fail, that is. That’s 1,428,571,428.57 bucks per page. Here’s how ABC reports the story:
An AIG report to the Treasury Department last month warned that if the government didn’t come to its rescue again, its collapse would trigger a “chain reaction of enormous proportion” that would “potentially bankrupt or bring down the entire system” and make it impossible for AIG to repay the billions it already owed the U.S. government.
Four days later, AIG was given $30 billion in federal aid on top of the $130 billion it had already received.
Read the AIG Report to the Treasury Department here.
A draft of the report, obtained by ABC News, was marked “strictly confidential.” It said, “The failure of AIG would cause turmoil in the U.S. economy and global markets and have multiple and potentially catastrophic unforeseen consequences.”
The draft was dated Feb. 26. On March 2, the Treasury Department and the Federal Reserve system announced that AIG, which lost $61.7 billion in the fourth quarter of 2008, would receive $30 billion in new government help.
AIG warns in its report of the “systemic risk” that a potential collapse posed. It describes a “systemic risk” as one that “could potentially bankrupt or bring down the entire system or market.
Considering how easy it is to come with $30 billion of other people’s money, I thought I’d try the same approach. Of course, I’m not as greedy as AIG — I only need a million bucks to stimulate the parts of the economy in which I’m interested.
I also think my request deserves special consideration for two reasons. The first is that it was very difficult to write on toilet paper with a magic marker. Have you ever tried it?
The more important reason is that I only used four squares of singly-ply toilet paper for my request. Not only are my sheets smaller than those used by AIG, but the total cost to the taxpayer will only be $250,000 per sheet. Considering that I’m saving everyone $1,428,321,428.57 per sheet as well as saving the rain forest, I’m certain my request won’t be denied.
Instead of TARP funds, perhaps we could call them CRAP funds, instituting a new Crappy and Reckless Assets Program. For a few extra trillion dollars, I could also be appointed the Crap Czar, so I can mismanage toxic assets as well as the fine folks in D.C.
The bottom line is that if I don’t get the money, millions of people will lose their jobs, it will impact countries around the world and every bank in America will go under. And, as evidenced by my request for stimulus largesse, it’s obvious that I’m way too big to fail.
WASHINGTON – Factory jobs disappeared. Inflation soared. Unemployment climbed to alarming levels. The hungry lined up at soup kitchens.
It wasn’t the Great Depression. It was the 1981-82 recession, widely considered America’s worst since the depression.
That painful time during Ronald Reagan’s presidency is a grim marker of how bad things can get. Yet the current recession could slice deeper into the U.S. economy.
If it lasts into April — as it almost surely will — this one will go on record as the longest in the postwar era. The 1981-82 and 1973-75 recessions each lasted 16 months.
Unemployment hasn’t reached 1982 levels and the gross domestic product hasn’t fallen quite as far. But the hurt from this recession is spread more widely and uncertainty about the country’s economic health is worse today than it was in 1982.
And yet, I don’t think there’s anyone out there who is seriously arguing that the current round of unemployment, negative growth and tight credit is going to end anytime soon. In fact, the general consensus seem to be that it’s going to get worse:
“This recession is broader, deeper and more complicated than virtually anything we have ever seen,” Wachovia Corp. economist Mark Vitner said. “The whole evolution of the credit markets resulted in all sorts of complex financial instruments that are difficult to unwind. It’s like trying to unscramble scrambled eggs. It just can’t be done that easily. I don’t know if it can be done at all.”
He said he sees fear in the eyes of his clients.
“I’ve had people come up and hug me after a presentation, which is unusual,” he said. “I haven’t told them anything about how it’s going to be better, but they just feel better having a better understanding of what’s happening.”
WASHINGTON — In one of the bleakest assessments yet, economists at the World Bank predicted on Sunday that the global economy and the volume of global trade would both shrink this year for the first time since World War II.
The World Bank said in a new report that the crisis that began with junk mortgages in the United States was causing havoc for poorer countries that had nothing to do with the original problem.
As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well.
The bank’s assessment for 2009 was grimmer than those of most private forecasters. It did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks.
The global economy is “approaching” a pick-up point as positive elements that could fuel growth have yet to be priced in, G10 central bankers said Monday.
“We have a number of elements that are suggesting that we are approaching the moment where you would have a pick up,” European Central Bank head Jean-Claude Trichet said in his capacity as spokesman for the G10 central bankers meeting at the Bank for International Settlements (BIS).
Along the same lines, Mark Perry, an economics professor at the University of Michigan, has been spending a lot of time on his blog Carpe Diem cataloging evidence that things aren’t nearly as bad as the screaming headlines would have you believe. Just in the past two weeks, for example, Perry has highlighted economics statistics which:
Well, I’m not an economist, I only play one on the Interwebs, but it seems to me that it may be time for a bit of a contrarian approach here.
Last year, before the credit crisis hit, the general consensus among economists was that the economy was in generally good shape despite all the evidence to the contrary. Now, led by the White House, it doom-and-gloom chorus is pretty much all that you hear. Now, it may turn out that these pessimistic assessments are accurate (in which case, the GDP and deficit projections in President Obama’s recently released budget will be revealed to be the nonsense that they are), but the truth of the matter is that they don’t really know what’s going to happen.
Economic forecasting is basically educated guesswork that isn’t all that more accurate than the weather forecast.
So, you know, take what you hear with a grain of salt.
The federal debt matters. We cannot saddle future taxpayers with having to service the debt we create with our irresponsible fiscal policies. Cutting the deficit will additionally decrease interest rates and increase private investment.
Writing that “Calling Barack Obama’s plan socialistic lacks any class,” Albor Ruiz argues that “fear mongering over a ‘class war’ and an Obama conspiracy to turn the U.S. into a ‘socialist’ country is reaching a fever pitch.”
He then cites “Tax Hike Mike” Huckabee as an example:
Huckabee, no doubt, takes the cake. “Lenin and Stalin would love this stuff,” he has said with quasi-religious fervor. “The Union of Soviet Socialist Republics may be dead, but a Union of American Socialist Republics is being born.”
My favored definition of socialismcomes from Merriam-Webster: “ any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”
If we are to pick an accurate word to describe Obama’s (to be fair, Bush laid the foundations which hadn’t already been established by previous administrations) designs on our children’s and even their children’s money, what should it be? If we are to better describe Obama’s move towards what Karl Marx called “a heavy progressive or graduated income tax,” how would we do it?
“Abolition of all right of inheritance?” There is already talk of Obama toying with the Death Tax.
We may have moved from the Agrarian Age to the Information Age, but an “extension of factories and instruments of production owned by the State” seems to apply to AIG fairly well. If seventeen percent of our gross domestic spending is on health care, additional government control of this industry would certainly apply. Control of the automobile industry clearly involves factories and instruments of production. While Obama has backed off his call for a Car Czar, the fact remains that he certainly made the attempt and likely will again if he gets the opportunity.
“Centralisation of the means of communication and transport in the hands of the State.” Bush got a good start on transporation with the implementation of various TSA schemes and implementation of the Fairness Doctrine would move us closer to Marxism on the communications front.
While “a national bank with State capital and an exclusive monopoly,” may not precisely describe the Federal Reserve, for many intents and purposes it does.
Perhaps Mr. Ruiz is correct. Should we be calling Obama’s attempted takeover of major portions of our economy while further redistributing the wealth socialist or Marxist? Not that one necessarily excludes the other.
In reality, it all boils down to one simple question: Does it really matter if we call current policy socialism or a crap sandwich? It tastes the same either way.
There’s a new craze hitting the conservative tubes on the Internets these days: “Going Galt!” While it’s difficult to identify an exact date of reference or to provide any unique person with credit for the general meme, Michelle Malkin and Helen Smith certainly deserve honorable mention for recently popularizing the phrase.
This movement seems to have manifested itself in two distinct, but related, forms: those who say, more-or-less, that “I ain’t gonna produce more that 249,999 dollars and 99 cents of taxable income” as well as those more accustomed to singing “Amazing Grace” than Twisted Sister taking to the streets across America chanting “we’re not gonna take it anymore.”
Here are some relevant (and hopefully balanced) quotes I’ve found on all sides of the aisle regarding this recent phenomenon. Enjoy!
Stephen Moore laid it out fairly well at the Wall Street Journal: “The current economic strategy is right out of ‘Atlas Shrugged': The more incompetent you are in business, the more handouts the politicians will bestow on you. That’s the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies — while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to “calm the markets,” another trillion of national wealth is subsequently lost. Yet, as ‘Atlas’ grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate ‘windfalls.’
Every Knee Shall Bow provides a reasonable explanation of the phenomenon: “I’ve mentioned more than once that Atlas is shrugging. What this essentially means is that the producers in society are scaling back on their production purposely. People are scaling back their income in order to avoid paying higher taxes. They are at the same time avoiding spending to offset the difference. This is how producers nearly always respond to looters that come in and make productivity less worthwhile, either due to increased regulation or lower economic incentive. It’s a very predictable phenomena. Usually it’s not an organized response, just a natural response to circumstances.”
Who Is John Galt answers his own question: “Like many of Ayn Rand’s heroes, John Galt is a creative genius. He is a man of uncommon reason, but he is also completely free of guilt. John Galt is a free man who serves others only as it suits his own needs — he holds no misgivings about his ‘debt to society.’ Brilliant and uncompromising, he knows that it is society which in fact depends on him, and he proves it by stopping the creative flow that powers man’s very world.”
Jason Pye: “Atlas Shrugged is prophecy, no doubt about it. With the rise of economic populism and collectivism, the Individual will be castigated and harassed. As our incoming president tells us, ‘Only government can break the vicious cycles that are crippling our economy.’ Private investment and pro-growth policies will be discouraged and any who who promotes capitalism will be demonized.”
Ayn Rand Center for Individual Rights: “Sales of Ayn Rand’s ‘Atlas Shrugged’ have almost tripled over the first seven weeks of this year compared with sales for the same period in 2008. This continues a strong trend after bookstore sales reached an all-time annual high in 2008 of about 200,000 copies sold.”
Rep. John Campbell (R-Calif.): “People are starting to feel like we’re living through the scenario that happened in ‘Atlas Shrugged,’” said Campbell. “The achievers, the people who create all the things that benefit the rest of us, are going on strike. I’m seeing, at a small level, a kind of protest from the people who create jobs, the people who create wealth, who are pulling back from their ambitions because they see how they’ll be punished for them.”
Michelle Malkin at Real Clear Politics: “Enough. In a word, that is the message of disgusted taxpayers fed up with the confiscatory policies of both parties in Washington. George Bush pre-socialized the economy with billion-dollar bailouts of the financial and auto industries. Barack Obama is pouring billions more down those sinkholes. It isn’t just the camel’s back that’s broken. His neck and four legs have all snapped, too.”
Malkin on her own turf: “Tax hikes have consequences. Incentives matter. Only self-deluded wealth redistributors living in la-la-land believe otherwise.”
Reverse Vampyr: “I’ve never been one for protests. But I can’t just stand by and allow my country to be ‘rebuilt’ into a replica of Cuba or the Soviet Union.”
Additional McCain on “Wolverines!”: “Friends don’t let friends peddle defeatist bullshit. You cannot organize opposition unless you first believe that opposition can be effective and meaningful. Telling conservatives that there is no point deploying an ambush on the road to serfdom? That’s defeatist bullshit. If Ho Chi Minh had thought that way, the French would still rule Indochina. Conservatives are now a guerrilla resistance. Harassing the enemy — staging raids and ambushes that prevent him from enjoying his conquest at leisure — is basic to guerrilla resistance. If we are doomed to destruction, as least let it be said that we died fighting. But those who never fight, never win.”
Cassy@Wizbang: “Last week, thousands of first-time protestors gathered in a grassroots effort to make a statement. And it’s time to go Galt. Are we working to make money for ourselves and our families, or are we working to fund the socialist dreams of an out-of-control, radical government?”
Some Have Hats: “But it’s making me nuts to watch the demonization of the people who have spent their lives working hard and following the rules, and since I only have first-hand knowledge of my own life, I am forced to use my own examples if I want to talk about it. But I can tell you that from what I know of the stories of other people in my former tax bracket, I am not different or special. Charities have existed since the country became a country, and they have always been funded by (apparently this needs to be said loudly) THE EVIL RICH PEOPLE.”
Glenn “Instapundit” Reynolds: “Can you say ‘going John Galt?’ Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan. ‘A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law. So far, Obama’s tax plan is being looked at skeptically by both Democrats and Republicans and therefore may not pass at all.'”
Reboot Congress: “…my theological reasons for going John Galt are a little different. First, I feel that socialism violates the ten commandments. And, second, I believe socialism damages charity.”
Helen AKA “Dr. Helen” Smith: “Are you ‘going John Galt’ and reducing your productivity by choice, or removing yourself from the economy all together, because of the Obama Administration’s economic and tax plans? If so, PJTV may want to interview you. Watch this video for details. If you are interested in being interviewed, send an Email to firstname.lastname@example.org.”
Donald Luskin via Dave Weigel: “Luskin, who named his daughter Roark after the hero of Rand’s novel ‘The Fountainhead,’ sees basic economic concepts explained through the novelist’s work. ‘One of the reasons that the Laffer Curve works is because of the John Galt effect of creative people finding ways to cut back on their output if they know they’re going to be taxed, and demonized, for their success,’ he said. ‘We have these sort of villains, like John Thain at Merrill Lynch, who tried to pay himself a large bonus. But then in response to that we have [Sen.] Chris Dodd slipping into the stimulus a new rule that in punishing Thain punishes everybody, even the good guys.'”
From ABC News: “A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law. ‘We are going to try to figure out how to make our income $249,999.00,’ she said.”
Will Wilkinson may be too selfish to be selfish: “I can’t help but feel that threatening to withdraw from economic production, ala Atlas Shrugged’s John Galt, is a certain kind of libertarian-conservative’s version of progressives threatening to move to Canada. For my part, I can’t imagine what would make me want to stop working, and each new president makes me want to move to Canada.”
Doug Mataconis provides some healthy libertarian cynicism: “By the way, Atlas buffs, the point of Atlas Shrugged is not that you are John Galt. The point is that you are not John Galt. The point is that you are, at your best, Eddie Willers. You’re smart, hardworking, productive, and true. But you’re no creative genius and you take innovation — John Galt — for granted. You don’t even know who he is! And this eventually leaves you weeping on abandoned train tracks.”
The other half of Robert Stacy McCain’s brain: “Rand’s philosophical radicalism ultimately goes beyond a point I am willing to follow, but in her basic idea — the irreplaceable creative value of the entrepreneur, and the unworthiness of capitalism’s enemies — she hammers it home.”
My personal libertarian cynicism: “I fear that if the Republicans were to suddenly regain political power, all of the cries of ‘socialism’ would be buried under the rug as Republican defenders of big government race to outdo the Democrats with additional deficit spending.”
Megan AKA “Jane Galt” McArdle scribes: “I don’t think that we will see a mass exodus of productive people to secret hideouts. I look to Atlas Shrugged more for conveniently totable beach reading than an economic blueprint. What’s interesting to me, though, is how many details Rand did get right–like the markets in ‘unfreezing’ Ukrainian bank deposits, so similar to the frozen railroad bonds of Atlas Shrugged. Or the cascading and unanticipated failures, with government officials racing to slap another fix on to fix the last failing solution. If only the people in her novels had acted remotely like actual people, rather than comic book characters, I, too, would be rereading the thing now.”
Not PC: “Now pay attention: these people who are appropriated the symbol of John Galt are not, for the most part, Objectivists. They simply understand the power of the John Galt character as symbol of their resistance. As Robert Tracinscki explains excitedly, we’re seeing cultural change before our eyes in the visceral reaction to the tipping point of Barack’s Big Government, and the reaching for symbols in that struggle.”
Additional personal skepticism: “Why should voters believe Republicans are currently standing up for fiscal principles after taking an eight year vacation from them?”
QAndO: “I’d be more impressed if they fired a shot across the bow and coordinated a national day for cranking up their withholding allowances, just as high as they can. They’re planning their next party on Tax Day, right? One might think they’d be interested in ceasing to lend their earnings interest-free to the government. They might take some satisfaction in doing something that actually shows up on the government’s ledger. I’d be convinced of their sincerity if they subsequently considered actually not paying their taxes next year if the government didn’t change its policies. That would be civil disobedience, as opposed to loud-but-obedient. But still, hold the tea. The ‘going Galt’ thing has been a bit better — at least it involves refusing to produce — but ‘John Galt’ is a rather radical standard, ladies and gentlemen. Reducing your income so that you don’t pay the higher marginal taxes in the next bracket; partially shutting down businesses and taking more leisure time; retiring early. These are nice, but it’s like ‘going Martin Luther King, Jr.’ without risking jail or invoking the Alamo without risking death.”
Michael Powell@UnitedLiberty: “There are far better advocates in literary history for government transparency and efficiency, sound money and freedom than Ayn Rand. Like other absolutist ideologies, Rand’s Objectivism preaches contempt for non-believers and an arrogance that comes with a lack of humility and a surplus of righteousness.”
Jerome Tucille via Dave Weigel: “This view of ‘Atlas Shrugged’ has its detractors. ‘Ayn Rand romanticized capitalists,’ said Jerome Tuccille, author of the libertarian history ‘It Usually Starts With Ayn Rand,’ in a Thursday interview. ‘She saw them as great heroes. She doesn’t deal with these corporatists like Thain who were pushing paper around and using regulations to feather their nests. Some of these bastards like Thain should be in jail. I mean, I want them carted out of their houses, doing the perp walk at 3 a.m.'”
Keith Burgess-Jackson: “Who knew that Ayn Rand was a revolutionary? But seriously, one great thing about being a college professor is that I am paid (largely) in leisure rather than money, and leisure isn’t taxed. I can’t imagine working hard to build a business, only to have a huge chunk of my earnings taken from me by the government and given to the lazy, the stupid, the improvident, and the irresponsible.”
Joseph Lawler at The American Spectator: “Then again, it doesn’t take Nostradamus to predict that eventually government will go awry. In fact the ultimate riff on government came out roughly 1,957 years (give or take about 33 years) before Atlas Shrugged, when someone, probably a clever proto-Objectivist, quipped, ‘Render unto Caesar the things which are Caesar’s,’ as if to warn us that eventually the government is going to do what it wants to do, and the rest of us are better off worrying about more important things. No, if you are looking for the most complete forecast of today’s economic and political turmoil in 20th century literature you will have to look beyond Rand’s one-dimensional economic vignettes to a work of scope and sophistication: Douglas Adams’s all-encompassing masterpiece, The Hitchhiker’s Guide to the Galaxy.”
Doug Bandow@Cato@Liberty: “The president wants to increase taxes only on those earning above $250,000. Since most of us aren’t there — I keep waiting, but for some reason no one yet has offered me what I think I’m worth to express my opinions on current policy and events — who cares, right?”
TheRightRant: “How bad does it have to get before we throw up our hands and say, enough? We’ll see in 2010 if enough is enough. Oh, and if you don’t know what I’m talking about, go read Atlas Shrugged. Or you can just look around, because you’re living it.”
Jeffrey Lord at The American Spectator: “The recent spontaneous eruption of impromptu ‘tea parties’ — demonstrations modeled after the Boston Tea Party of 1773 to protest against the Obama plan to socialize America — is the first sign that Gandhi-style rebellion against the government is in the American air.”
Whiskey Fire: “The nationalization of Atlas Shrugged may strike Americans as foreign, even Swedish or something. However, the nation is already subsidizing the book’s dissemination. A banking company, BB&T Corp. of North Carolina, has given $30 million in grants in the last decade for various universities to teach the book. Most recently, in March, 2008, BB&T gave UT-Austin $2 million for a Chair in the Study of Objectivism. Then in October, BB&T took (wait for it) $3.1 billion in bailout money. It only seems fair for the nation to recoup some of its investment in future generations’ Rand-inspired economic havoc by nationalizing Atlas Shrugged now.”
Michelle Malkin: “Some tinfoil-hatted kooks are still pimping their conspiracy theories about the movement. The latest: Aha! Malkin once gave a speech to Americans for Prosperity and AFP organized the Denver anti-pork protest two weeks ago before Santelli went on his Tea Party rant last week, ergo it’s all a vast plot!!!!!!”
Wonkette: “Today at High Noon, the disciples of CNBC teevee ranter Rick Santelli held teabagging parties around the country. Apparently they did not pick up on the nonchalance in Santelli’s voice when he said, ‘we’re going to hold a… like a tea party or something because of this Obama, ha ha, weird.’ Well, the biggest of these parties was in Washington, by the White House, and like 20 people took cabs from CPAC to stand around in poop hats and complain about fiat currency for a few minutes while Michelle Malkin filmed them in various pornographic poses. Major thank yous to poop operatives ‘Jamie’ and ‘Ethan’ for sending most of the photos below, as well as to intrepid D.C. blog reporter Dave Weigel, some of whose photos we have stolen.”
Steve Benen plays the race card: “Right, the character John Galt, the hero of the novel, is the wealthy, white, blond-haired guy who convinces corporate leaders to give up their jobs in order to spite society. As the story goes, these captains of industry were repressed by heavy-handed government, so they walked away and, when society crumbled, taught everyone a valuable lesson about making sure wealthy, white, blond-haired guys don’t feel unduly put upon.”
Paul Campos at Lawyers, Guns and Money: “I’m sort of tempted to ask Professor Reynolds if this seems plausible to him. Does it seem plausible to him — a law professor who is probably paid around 200K a year by the great state of Tennessee to do whatever it is he does while performing what is technically his actual job — that he is ‘working’ five times “harder” (using Wingnuttia’s definition of ‘hard work’) than a guy roofing houses in San Antonio in July who makes 40K a year? If you think about it for five seconds it’s actually totally implausible that the correlation between ‘hard work’ in this sense and increasing income is even mildly positive. To believe it is, you have to believe that highly paid high status professionals hate their work far more than working class people who are doing dangerous, physically taxing, and/or extremely boring work for low pay.”
Nancy Nall: This is why I chuckle at the current craze among our friends on the right, which they call ‘going John Galt,’ a shout-out to one of the worst-written novels in the English language. The idea is to protest the current legislative proposals by voluntarily reducing their work output. Withdrawing from the workforce. Some call it ‘depriving the world of my talents,’ which is particularly amusing, as it’s usually the most untalented who are calling it that. I encourage them to do so, even in this dicey labor market, nay, especially in this dicey labor market. A lot of talented people are on the park bench, and would be happy to take your place. Your bluff is called. Go John Galt.”
Eschaton: “Righteous Bubba informs us that there are ‘SEVENTEEN videos dramatizing the Galt speech’ from Atlas Shrugs on You Tube. ‘It’s a long speech, so who the fuck knows how many videos are yet to be realized.’ Indeed. The punchline: ‘Views for part one? 72140 as of this writing. 361 for part 17.’ Perhaps there is a lesson here.”
TBogg: “Approximately 2% of the American households make more than $250,000 a year and (you may find this hard to believe) a very high percentage of these high-earning go-getting producers spend their days commenting over at Michelle Malkin’s place… when they’re not busy flying their Lear jets up to Nova Scotia to see the total eclipse of the sun.”
Hunter@DailyKos: “Go live your Randian fantasies, go create that wonderful utopia in which only the most wealthy are permitted entry, and you are not burdened with the outrageous insult of having to contribute back a proportionate share of your income in order to help maintain the very fabric of the nation around you. I can see now that the thought that you might have to pay the same share of your income in taxes that your housekeeper does has drained your already blanched faces, and the thought of having to pay as much in taxes as your wretched mothers and fathers did, a few decades before you, is nothing less than an armed assault on your beachheads.”
Matthew Yglesias (who is cool to drink with and has an open mind): “Just think what kind of nightmare scenario we might be inflicted with if the titans of finance who’ve made up such a large proportion of high earners in recent years were to pull back on their efforts! I shudder. Meanwhile, I haven’t actually read the book but my understanding is that in Atlas Shrugged they’re actually building a high-speed rail link from Las Vegas to Disneyland.”
UPDATE III (by Brad Warbiany): This post suggests quite a bit about what we all think of “Going Galt”. But I’ve got a potential solution. Taking the suggestion from Bryan @ QandO, I say it’s time to cut your withholding as much as you can. Do it by April 15th. Show the bastards that you’re not going to let them have that money until the last possible moment.
All of a sudden, Republicans are “going Galt.” To some degree, this is a good thing and about damned time. My friend Robert Stacy McCain (who went Galt some time ago and never looked back) describes the phenomon like this:
I’ve heard talk radio host after talk radio host lambasting Nancy Pelosi and Barack Obama for the recent stimulus packages. I don’t recall them lambasting former president Bush for his spending increases with such fervor (if any fervor at all), nor was there more than token resistance to McCain’s proposals to increase the cost of government. Hell, McCain and Sarah Palin took ink to paper over at the Wall Street Journal to promote the bailout of Freddie Mac and Fannie Mae.
Republicans (Ron Paul supporters notwithstanding) have an enormous credibility problem, not just with libertarians, but with more typical voters as well. Before the election, I wrote that the “only remaining claim for McCain defenders is that ‘John McCain may be a socialist, but at least he’s our socialist.'”
I fear that if the Republicans were to suddenly regain political power, all of the cries of “socialism” would be buried under the rug as Republican defenders of big government race to outdo the Democrats with additional deficit spending.
A new Citigroup deal has finally been announced by the Treasury. The government will convert $25 billion in preferred shares to common shares. The move could give the Treasury close to a 36% stake in the company. The government’s influence is becoming apparent. Citi will eliminate its dividend and is facing pressure to participate in a new foreclosure prevention programme.
Much to my delight and surprise, the news of Nadya Suleman (a.k.a. Octomom) giving birth to 8 children in addition to her other 6 children she could ill afford to support has not been well received by a large portion of the American public. Octomom seemed to go into this undertaking with the idea that she wouldn’t actually have to support these children herself because giving birth to so many children would make her an instant celebrity complete with book deals, TV specials, movie offer and other such ways to cash in. With the popularity of the Duggar and Gosselin families with their fame and modest fortunes derived from reality shows and book deals, it’s not too difficult to see how Octomom might come to such a conclusion (and at the end of the day, with our celebrity worship culture, her calculation might pay off).
But something unique about Octomom didn’t quite have the same charm as the Duggars and the Goslins: the ability to support the children. For all of my personal objections (which I will not get into here) I have with a family such as the Duggars cranking out 18 babies in a span of 12 years, I certainly respect the dedication of the parents to support their family themselves. While Jon and Kate Gosselin had the help of fertility science which resulted in 8 children in 2 separate pregnancies, they went into each hoping for just one child and also support the family themselves. The Duggar and Gosselin children also benefit from a two parent household.
In contrast, Octomom, an unemployed single woman on welfare, intentionally impregnates herself with the help of in vitro fertilization resulting in 14 children without any concern of how she would support these children if her celebrity scheme wasn’t realized.
What’s not to like?
This Octomom attitude seems to be that she’s entitled to have as many children as she wants because it has always been “her dream” to have lots and lots of children. Where does she get this notion that because someone has “a dream” she is entitled to force others to help her realize this dream?
One doesn’t have to look far to realize that this entitlement mentality has been fostered by the Democratic Party at least since FDR’s New Deal. The Democrats constantly demand that the most productive members of society support the “less fortunate” less productive class to help realize their dreams. According to the 2008 Democratic Party Platform, everyone has a right to a job that pays a “living wage,” “affordable” healthcare, free daycare, free education, paid family leave, and an “affordable” home.
What the Left fails to realize is that there’s no such thing as a free lunch. There never has and there never will be. Every one of these policies to give “free” or “affordable” service to those who do not have the wherewithal to provide these “rights” for themselves have to come from someone because they are not without cost. Whether or not Octomom paid for the birth of her 8 children, there was still a significant cost to the medical staff that provided this service. But what does she care? If she doesn’t get the multi-million dollar TV show, she can always count on the taxpayer to bail her out. No longer a single mother, Octomom will be married to the State.
While I’m sure many on the Right would nod in agreement with much of what I have said so far, I would have to ask them: where have you been the last 8 years? The Republican President Bush with Republican majorities in the House and the Senate for the majority of that time presided over the greatest expansion of government since LBJ’s Great Society programs. Yes, it was the G.O.P. that gave us No Child Left Behind, Medicare Part D, and TARP just to name a few. This is the party of small government?
Yes, in the Chairmen’s Preamble of the 2008 Republican Party Platform there’s a very libertarian friendly line that the Republican Party has “Distrust of government’s interference in people’s lives” then the document proceeds to outline exactly how they plan to have the government interfere in people’s lives. As awful as the Democrat Platform is, at least I can say they are honest and consistent; more than what I can say about the Republicans.
When the going got tough, the Republicans abandoned free market principles and adopted the Democrat’s approach of bailing out businesses which were “too big to fail.” Now that the Democrats run the show, the Republicans hope we will forget* that they were the other party of big government.
With the Republicans failing to stand up for these principles, perhaps Octomom also believed she was “too big to fail” (both figuratively and literally).
Oh, wait…the Republicans have stayed true to one principle: the old “every sperm is sacred” (every sperm, egg, embryo) principle. When asked why she chose to implant every single one of the embryos Octomom explained that if she allowed them to expire, it would be like killing them. As she has learned from the Republicans, if ever a “life” is created existing even on a multi-cellular level, she has a duty to give these tiny clumps of cells a “chance to be born” or otherwise be accosted for “murdering the unborn.”
I can’t help but wonder whether or not the Octomom culture would exist at all if it were Libertarian policies in place over the last 70 or so years rather than Democrat and Republican policies. If such were the case, I am sure Suleman would have made certain she had the resources to take care of herself first and playing the odds of celebrity roulette would probably been too big of a risk. If the thought of the government bailing out financial institutions and the big three was considered politically unfeasible because government only stayed within its Constitutional limits, then there certainly wouldn’t be any political will to support “one woman’s dream.”
[A]mid all the doom-mongering and recanting, I have an assertion to make. The market has not failed. The present collapse is evidence that the market is working. Confidence bubbles are an inherent feature of a free market system. Panics — confidence vacuums — are an inherent feature too. The test of the theory of market capitalism is whether the system provides from within itself the means to prick both.
It does. The first — a confidence bubble — has been pricked. We are now sucking ourselves the other way: into a confidence vacuum. In time this too will be pricked. The market will steady.
The bubble that has just burst was based, worldwide, on financial services. Financial services are a product. It is true they are a product critical to the efficient functioning of the market (so is electricity, so is oil) but that just makes them an unusually important product. From time to time products fail in any market. They may fail through force majeure — droughts, floods, pestilence. They may fail due to inherent flaws — airships, Thalidomide, blue asbestos. Or they may fail through ignorance, trickery or the credulity of human beings — Madoff, the property bubble, the repackaging of sub-prime debt.
The present financial crash has been precipitated by product failure of the third kind. Trade in financial instruments too opaque for even those who traded in them to assess them properly, and bonus incentive schemes that acted against the interests of the companies offering them, fuelled a banking bubble that has now burst.
But ask: what pricked it? Did politicians rumble the trade? Did governments, or international forums or symposiums, provide the sharp instrument? Did academic research and expertise expose the dodgy product? Did statutory regulators apply the pin? No, the free market wised up and pricked this bubble. Politicians and finance ministers (if they had had the power) would have tried to keep it inflated. The market puffed itself up, and then, without intervention — despite intervention — the market let itself down. The speed with which this has happened has been awful, but however inconvenient for many or catastrophic for a few, correction is not a failure of the market, but a success.
The Austrians among us would go further and argue that the bubble was itself created by the distortions in the market that are the inevitable result of government fiscal and monetary policy or, in the case of the various regulations that made it easier for people to buy houses they couldn’t afford, government social policy. The market, they would argue, did they best that it could to absorb these distortions but, over time, it was inevitable that the distortions — the “bubble” as some might call it — would become far too big to sustain itself.
And so, the bubble pops.
Parris is also correct when he notes that not only didn’t politicians have no role in popping the financial bubble, they did everything they could to sustain it and, even today, are implementingpolicies that are ultimately aimed at re-inflating the housing bubble that started this disaster.
For many reasons, blaming the current crisis on free-market capitalism is absurd, not the least of them being the fact that we have no such system in existence anywhere in the world at this time.
What nobody seems to consider, though, is the possibility that the crisis we’re living through today is itself a sign that, in the end, the free market works.
It takes years of schooling and a series of hard exams to become a doctor or a lawyer, but just about anyone, with enough tenacity, can become responsible for billions of dollars. Pretty much anyone can call themselves an economist and opine about fiscal policy. Perhaps even more troubling, there exists no uniform set of standards which entitles someone to work in finance. It makes John Kay wonder if we should introduce professional standards to the finance industry.
A lack of understanding and competence inflicted lots of damage. Could that have been avoided if the industry had required passage of a series of exams in order to become a hedge fund portfolio manager, or a quant, or even a banker (and I mean something more demanding than the likes of the Series 7)?
One reason so many smart and ambitious types entered the industry, as opposed to medicine or law, was the high compensation relative to the years of necessary training. Higher standards probably would have discouraged some people from entering the industry, but it would have provided some screening for intellect, ability, and determination.
Of course… It’s for the integrity of the system…
Despite what Milton Friedman would say:
The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber.
There were many causes of the mess we’re in… But I don’t think we have any recourse to say that it would have been solved by licensing. It was often those with the highest intellect, ability, and determination who led the charge into the abyss.
Seeking to stabilize the foundering housing market, President Obama is offering a plan to help as many as nine million families refinance their mortgages or avoid foreclosure, according to a summary released by the White House on Wednesday morning.
The plan, which is more ambitious than expected, would spend $75 billion to help keep as many as four million families in their homes, and would help as many as five million more refinance their mortgages to take advantage of lower interest rates.
“The plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too,” the White House said in a fact sheet.
The plan would allow four million to five million homeowners refinance mortgages guaranteed by the government-controlled housing giants Freddie Mac and Fannie Mae. The administration said allowing people to refinance at lower mortgage rates would reduce monthly payments and save families thousands of dollars every year.
The plan would seek to entice lenders into lowering rates, and would offer homeowners a chance to shave thousands of dollars off their mortgages. The government would offer homeowners principal reductions of $1,000 a year for five years if they stayed current on their payments, and would give $500 to loan servicers if they modified loans before borrowers fell behind in their payments.
Or, if a lender lowered interest rates so that buyers were spending 38 percent of their monthly income on mortgage payments, the government would provide matching funds to lower that payment to 31 percent of income. The White House said such a reduction could equal $400 in monthly savings on a $220,000 mortgage.
Think this through for a second. Your home value, along with all your neighbors, has gone down in the last year. But now your neighbor, who bought above his means and can’t make the payments, because of a reset to the REAL monthly cost of the loan, is suddenly going to get a gift. Well what about you? You did the right thing. . You didn’t buy more than you could afford. But you don’t get a break.
The proponents say you have to stop the decline in housing prices. Why? We get e-mails every day from frustrated savers who believe now is there time to be rewarded—with a home, or investment property they can finally afford. But the government wants to do everything to punish those people, and keep them out of the market, even though they did the right thing.
Instead, they are going to have their taxpayer money transferred to someone who made bad decisions. $1,000 for the homeowner, $1,000 for each modification. That’s $2,000 per loan of YOUR MONEY being given away.
In addition to the rightly-felt resentment that this creates among those of us who were responsible in their home-buying decisions, a plan like this that simply bails out homeowners who entered into risky loans, and the banks that let them do it, sends a signal to people — no matter how badly you screw up, the government will be there to save you and make sure you don’t suffer the consequences of your bad decisions.
Moreover, it’s fairly clear that the plan, which is aimed at keeping people in homes they can’t afford, is entirely mis-directed:
There are many reasons for foreclosures, from borrowers getting into a house than they couldn’t afford to a job loss or other factors that cause loss of a family’s income. Whatever the cause of the homeowners’ troubles, the focus should not be primarily on keeping people in their homes, but on opportunities to improve their economic situation. If the government wants to spend $75 billion to help troubled homeowners, it would be better off giving a tax holiday to families subject to foreclosure, rather than attempts to stop the foreclosure from occurring that often have unintended consequences.
While all foreclosures are difficult, they are sometimes the least bad option for an individual borrower. They allow borrowers to walk away from both the home and the loan, at a cost to their credit rating, but not nearly as big a hit as they would take if they declared a personal bankruptcy.
Having borrowers continue to pay into a bad loan, even with reduced payments, takes away money they could be using to start over. Redefault rates from existing government-backed loan modification programs indicate that they are often ineffective. And in the case of borrowers facing job losses, staying in one’s home while being saddled with a mortgage can delay the necessary step of moving to an area with more job opportunities.
Most of all, this part of the plan seems to be aimed at the idea that the government must reinflate the housing bubble so that housing prices return to the “correct” level.
Here’s a clue, though. The only “correct” price for your house is the price that someone is willing to pay for it. Today.
This is bad craziness. Never mind the cost. Or the fact that the bailout is doomed to failure. Government money provided to private enterprise on this basis completely distorts the function of the marketplace. It rewards incompetence. It perpetuates incompetence. The bailout does nothing to address GM’s fundamental inability to sustain car brands with class-leading products. Nor can it. It is not the government’s responsibility to pick a winner in a free market. Nor is it the government’s responsibility to “save” a loser.
College enrollment has been booming. Schools have not only been adding new seats to existing programs but also adding new programs. And, unlike the free-market process where the supply of a good is expanding dramatically, the price of these seats has been increasing dramatically – much faster than the CPI. The increased attendance at increased prices is only possible through the dramatic expansion of loans to students.
This phenomenon will lead to huge unrest; at any given time 8 million U.S. citizens are attending college. Something like 90% of them have loans. We can expect that as their situation deteriorates, graduates will demand political action that will provide them with debt relief. And the politicians are almost guaranteed to react poorly.
The solution to this problem is for the government to stop providing subsidized loans. Better yet, the government might try to dismantle the disaster called public education, which has gone from spending $275 per student to $7,000 per student (figures in 2000 dollars) to achieve worse results. A free market educational regime would consist less of warehousing and more of useful education that prepares young people for professions that best suit their natures.
“I have been wondering how bad the current economic “crisis” will get. Depending on who I talk to I have been told everything from “this is simply part of the normal cycle of economics” to being told to invest heavily in ammo”
Ok, here’s my take on it.
Short term? Not too bad. Unemployment and the credit crunch are going to creep up a bit more; but for the most part the recovery has actually already started.
Though, if the government (Democrat and Republican) continue their spending spree, they could double hump this recession…. actually, I think there’s a very good chance of it at this point.
The “stimulus” and “bailout” won’t be doing any real stimulating (except maybe in the auto industry); and could very well end up pushing us into the doublehump recession by preventing the efficient allocation and reallocation of capital and labor resources.
I have said from the beginning, this was a manufactured crisis. The banking shock and housing crash would have been serious, but relatively minor bumps; if they weren’t blown up all out of proportion by the media and government.
Through this deliberate manipulation (and yes, it was deliberate), the sectoral recession became a self fulfilling prophecy of general recession.
This was done intentionally, to create political opportunity for a plain and naked power grab (Rahm Emmanuel publicly admitted that much); and an explosion of graft, “legitimate” bribery, and vote buying not seen since Tammany.
In the long term, there could be some serious repercussions to our economy as a whole. Partly, it depends on how successful the democrats are at pushing us into socialism; or at the least, their manipulation of markets, and incentive structure.
Mostly however, it really depends on what the Chinese do.
Yes, we’re going to see an inflation hit from all this (should be a big one actually, though not 1979 big); but our RELATIVE inflation is actually far less than most other currencies around the world (and considerably less than the euro). Because of this, even with our mess right now, we’re actually gaining in value against most major currencies (excepting of course the Yuan).
The Chinese are holding the line on relative currency valuation by buying up as much of our debt as possible, because their trade and current accounts depend on the value of the dollar; but they can’t do it forever, or THEIR economy will tank from the other side of things (especially if we keep inflating, and accumulating debt; which is the current Democratic “plan”).
A debt sell off (unlikely, because it would destroy their economy as well), or a recession in China (much more likely) would stop them, and us, flat; and then the entire world will go into a true depression.
We need to avoid that at all costs; but it’s not something we have much control over; and the current government in this country seem hell bent on pushing us over that cliffs edge.
What needs to happen here to allow us to rebalance and make a true long term recovery, is a massive deleveraging, and moderate deflation for a year or two.
If we allowed that to happen naturally (and it’s too late to do so really, given the stimulus and bailout, but we could still salvage something); it would mean perhaps two years of negative growth, and a spike in unemployment, with a lot of bankruptcies, mergers, consolidations and writedowns. However, it would be followed by a period of rapid growth and expansion as capital gets more efficiently reallocated.
It’s called the business cycle, and it works, and it’s historically proven.
Unfortunately the government is actively and aggressively preventing that natural rebalancing from happening. We should be trying for a short sharp shock, and instead they are trying to move us into the European/Japanese style social protectionist stagnation.
If China holds strong, we will slowly recover, and Europe will slowly sink. If China falters, everything goes into freefall for a while, but we come out on top because of our structural strengths (again, presuming the government doesn’t try to destroy those strengths through more socialism and market distortion).
…That may take 20 years though; and what happened in the mean time would be unpleasant.
Oh and that’s not even taking into account the coming “retirement bomb” for Social Security and Medicare… that one makes this one look like a minor hiccup.
I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.
Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra