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Editorial See other Editorial Articles Title: A WANING FAITH IN GOVERNMENT When people lose faith in any religion, they cease attending services. Maybe they transfer their membership. American pastors learned this two centuries ago. When Massachusetts abolished tax support for Congregational churches in 1833, that ended the last trace of state compulsion in church circles. But religion is not limited to churches. It extends to the state. The state is perfectly happy to use tax revenues to promote this religion, just as it was in ancient Rome. When faith wanes in political religion, members of the congregation start looking for alternative places of worship. They want their tithes and offerings to be voluntary. The state denies this way of escape. Voters see no way out, so they choose another approach: to impose pain on the priests. We are seeing this on YouTube. Congressmen who venture into a local town hall meeting are finding that they no longer are in control. The people who were once deferential are confrontational. They are mad as hell and won't take it any more. Invariably, someone in the room has a pocket video device of some kind. Cell phones are common. Out it comes. Within hours of the confrontation, the video is on YouTube. Then Facebook takes over. The really good ones, meaning the ones where the politician looks scared or foolish or both, get picked up by people outside the district. Their delight is so great in seeing any Congressman pilloried by some outraged voter that they pass along the video. But when it's a U.S. Senator, the delight is even greater. A good video gets posted several times. Here, Sen. Kay Hagan of North Carolina gets an earful from a parent who is about to lose her health insurance because of the new law. Joe Louis's words describe the plight of any politician who voted for the health insurance bill: "He can run, but he can't hide." Politicians know that any public appearance they make can blow up in their faces. They are making fewer public appearances. This puts them on the defensive individually. They are not yet on the defensive as a class. The system still operates to perpetuate itself. The voters have been divided. They don't know where to transfer their membership. The results are basically the same, no matter whether they vote for Republicans or Democrats. So, their anger intensifies. This is the threat to the prevailing system. It is not just that a growing minority of voters are fed up with their representatives. It is that they are fed up with the system. These voters do not have the votes to roll back spending by 50% or more, which is what needs to be done as a first step. The mass of voters want their handouts. But we are seeing the formation of a voting bloc that cannot be placated by business as usual. This represents what the Bible describes as a cloud no bigger than a man's hand. A storm will follow. LOSS OF FAITH It is always comforting to think that faith in anything is based on a careful inquiry into the foundational literature, creeds, and performance of a specific movement. But this is not how most people accept the logic of their faith. Maybe they were raised in a household of faith. Maybe they were taught in a school that promoted the faith. Maybe they married strong defenders of the faith. Or maybe they saw that people are getting rich by accepting the faith. They wanted in on the action. If there is a universal faith in the West, it is this: economic growth solves the main problems of life. Anything that promises economic growth gets a hearing. Anything that can point to a history of economic growth gets a hearing. This is why free market capitalism has been getting a hearing since about 1850. Before that, it took faith in the tenets of the faith. After this, the evidence was universal and obvious in the West. The world in 1850 was fundamentally different from 1800. The economic world of 1800 was not fundamentally different from 1750, or even 1650. People could see this in many inventions, but one was overwhelmingly clear: the railroads. They were changing the face of the West. They were cutting transportation costs, thereby extending the division of labor. Couple this with the mechanical reaper and the fertile soil in the American heartland and you had an agricultural revolution. Food costs began to fall. They continued to fall until now. The combination of falling energy costs and falling food costs, when coupled with electricity, transformed the West. From an early stage, the defenders of centralized government have tried to take credit for these developments. They have claimed that without government subsidies, these developments would never have taken place. It takes enormous faith in government planning to accept such a view of history, 1830-2010, but the tax-funded schools have persuaded millions of voters of this cause- and-effect explanation of economic progress. They have persuaded voters that, without the state, consumers would have been exploited by the providers of these services. The dominant denomination of the religion of economic growth today is Keynesianism. Growth is attributed to consumer demand, not consumer production. The state is presented as an agency whose deficits can create demand by transferring borrowed money to political voting blocs. This faith is beginning to wane among voters, while non-Keynesian mainstream economists rushed back into the sanctuary after 30 years of wandering in Chicago School wilderness. The most visible convert is Richard Posner, a Federal judge and a pioneer of the Chicago School academic invention, law and economics, which is a scientific defense of the idea that judges should decide who owns what in terms of economic efficiency, not deeds of trust. He publicly recanted at age 70 in "The New Republic." THE KEYNESIAN DIET Michael Pento has written a delightful analogy of the debate between Dr. Hayek and Dr. Keynes. A morbidly obese person walked into Dr. Hayek's clinic. What must he do? Hayek recommended a strict diet and exercise. The patient did not like the prescription. So, he sought a second opinion. The overweight gentleman sauntered across the street, where he found the office of Dr. Keynes. He told the new doctor about his acute chest pain and lack of appetite, and complained about the previous doctor's "heartless" prescription. After a cursory examination, Dr. Keynes rendered his diagnosis: the patient's condition did not stem from the fact that his gigantic frame was causing undo strain on his heart; instead, the doctor concluded, the patient's chest pain was merely causing a temporary lack of hunger. Furthermore, Dr. Keynes argued, the stress of cutting weight at the present time would certainly prove detrimental to the man's already weak heart. Therefore, his prescription was for the 500lb man to [eat] as much as possible, as quickly as possible. Anything less might cause the man to suffer a heart attack, he noted. Now the doctor did concede that, at some point in the distant future, it might be a good idea for the man to shed a few pounds. But for the present, the most important thing to do would be to consume as much as he could stomach. Who is this patient? The Federal government. The voters are trying to de-leverage. They have begun to save. They are trying to cut back. But politicians will not hear of this. They are forcing food down the patient's throat. According to the Flow of Funds Report, households reduced debt at a 2.4% annualized rate ($330 billion) during Q1 of 2010. Meanwhile, the federal government was piling on debt at an 18.5% annual rate ($1.44 trillion). Since every dollar of government debt is a promise to tax the private sector in the future with interest, this public spending spree effectively negated the Herculean efforts of the private sector to return to a sustainable path. The government has done whatever it could to offset the effects of private thrift. It is running up the bill. The voters do not fully understand that the bill will come due. They have been told by Keynesians that we can "grow our way out of debt." This is becoming less plausible every day. This is why faith is waning. But the priesthood is spending more. The voters gave the power of attorney to the government, and the government is running up the bill. THE DAY OF DECISION: 2008 The reliability and stability of the capital markets have decreased over the last three years. The crisis of 2008 was a sign to the public that the promises of the Federal government to provide constant economic growth have been false promises. When the government and the Federal Reserve System intervened in September and October 2008, nationalizing the mortgage market and pumping in over a trillion dollars, the public said nothing. But the $800 billion bailout of Wall Street did catch their attention. Then came Obama's stimulus package of another $800 billion in the following February. The public was opposed to these bailouts, but they were passed into law, This sent a message: voters are not in control. The voters' future income was pledged as collateral for a massive increase in the Federal deficit, The public had no say in the matter. Now the promoters of those bailouts face a challenge. The public perceives that the economy is not recovering. The green shoots that Bernanke kept seeing in 2009 are withering. The job market is where the rubber meets the road. It is in the tank. Nothing gets it out of the tank. Two markets count for voters: residential housing and jobs. The other markets do not mean that much to the voters. The housing market is in the tank. It is sinking deeper. The job market is doing the same. The former is a function of the latter. If the job market does not recover, neither will the housing market. The public can understand housing and jobs. These are the perceived sources of wealth. This is where people look for an answer to this question: "How am I doing?" The answer: "Worse than in 2007." The Congress passed the two spending bills. Bush signed one. Obama signed the other. That was a bipartisan transfer of the public's credit to the Federal government. This year saw the health insurance law. That was not a popular measure, but it passed anyway. The Congress did not perceive the Tea Party as a threat when it first began to appear in early 2009. Like the pundits who thought Carter would be re-elected in 1980, and who failed to spot the advent of the religious Right, so did pundits not see the Tea Party as anything significant in early 2009. The morning after the November election, we will begin to hear the gnashing of teeth in the mainstream media. There will be talk of voter disaffection. There will be attempts to dismiss this as a reaction against the staggering economy., This will be true. The bad economy is indeed the sword of Damocles over the heads of the Democrats' incumbents. But the bad economy only provides the shock troops who go to the polls. The more important issue is the loss of faith in Keynesian solutions. These solutions are visibly not working. The chief priests of Keynesianism, such Paul Krugman, will wail that it is the lack of faith that prevents the Great Healing. They will say that there needs to be another round of trillion-dollar deficits. There must be more stimulus. But the voters will have repudiated the Keynesian solution. The Democrats will not have the votes in Congress. Then will come gridlock. The Republican majority in the House, and maybe the Senate, will prevent another major spending bill. The goal will be to tell the voters that "We're holding the line." The strategy will be to block Obama's agenda. He will be a lame duck President come January. OBAMA'S TOURETTE'S SYNDROME He suffers from Tourette's syndrome. He keeps blurting out "Bush's recession." He cannot control his tongue. But the swing voters are not buying it any longer. He has had his chance. He failed to make the recession go away in housing and jobs. The rest of it doesn't matter politically. Beginning in the next term, he will be Herbert Hoover. He will be facing voters who have lost faith. He will not be able to get his agenda passed by Congress. Nancy Pelosi will once again be Minority Leader. Maybe the Old Guard Democrats will replace her. Nancy Pelosi has accomplished the impossible. She makes Hillary Clinton look moderate. The intense hatred which plagued That Woman from 1993 onward has been transferred. That Woman is now the representative from San Francisco. Nancy Pelosi come December will be perceived by House Democrats as the Chief Lemming in Charge. Obama has not taken the role of ramrod. Pelosi has. The Democratic Party can afford to let her career ship go down. It dares not let Obama's ship go down. It is stuck with him in 2012. The Party has got to deflect attention from the failure of the White House in the realm of the economy. The man who gave us this mess is Alan Greenspan. Bush and Obama have been mere pawns in the central banking game. They both ran up huge deficits, and they both pushed big spending. Bush's prescription drug law was the predecessor to Obama's health insurance law. But each of them had to accept blame for the recession. They are the public symbols. They could not escape blame. The buck stops on their desk. Truman had it right. His sign, "The buck stops here," was correct. Bernanke ought to have one: "The buck starts here." The gridlock will last two years, assuming there is no war in the Middle East. I am not convinced that peace will prevail there, but on the assumption that there is no war with Iran, the gridlock factor will be the reigning policy in Washington. The public wants gridlock. That is the only visible alternative to the waning faith in Keynesian solutions. The public sees that spending is out of control. Voters know they cannot cap this red-ink well. They don't want to sink any new ones. CONCLUSION Hegel had a phrase, quoted by Karl Marx: "The owl of Minerva flies only at dusk." The meaning: a world-and-life view becomes universal among scholars and the Establishment shortly before its demise. The Keynesian owl is flying. Stay out from under it.
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#2. To: DeaconBenjamin (#0)
that statement is so true. lots of non-religious people have very strong faiths in this ideology or that ideology - or I would argue in idols.
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