Showing posts with label american exceptionalism. Show all posts
Showing posts with label american exceptionalism. Show all posts

Sunday, March 17, 2013

Cap Fab - The Utter Fabulousness of Our Capitalist System

Is capitalism and American ingenuity so utterly fabulous that even dedicated redistributionists like the President won't be able to kill it off?  This week's issue of The Economist answers with a resounding YES!  The headlines are dominated with one sort of fiscal cliff story after another, and pressing problems that are within the province of the federal government are going unsolved, but in the states and private industry, great change is afoot that bodes well for our future.  In the leader and a series of articles, the magazine outlines reasons to believe that the American economy is set to grow again despite the dysfunction in Washington.  The bonanza of plentiful natural gas, for example "has largely happened despite Mr. Obama and his tribe of green regulators."  At the state level, to improve their economies various schemes to deregulate are afoot.  (California is not mentioned in the leader, of course.)  
One of the interesting tidbits from the special report on America's competitiveness included the prediction by a number of economists that the cheap energy from natural gas from shale is worth a half-percent per year in GDP growth.  We are still the biggest investor in R&D in absolute terms.  Even the government schools run by the states area undergoing significant change, although, agains, California is not mentioned. 
Seventeen now offer vouchers for use in private schools to some students or give tax breaks to people who donate to scholarship funds. Thirty-eight are experimenting with new pay structures for teachers or principals, often with a performance-related element. 
Because immigration law is fully in the hands of the feds, it is not a bright spot.  I have covered the idiocy of our current policy in this space many times.  The absurdity of a very low limit on H-1B visas (85,000 per year), one of my major complaints, is highlighted in this series.  

In her dystopic novel Atlas Shrugged, Ayn Rand touched on this theme, but imagined a world where those responsible for the dynamism of capitalism gave up.  What she didn't considered in that novel was that technology and innovation might outpace government's efforts to screw things up, making government increasing irrelevant.  If you we buy into the latter thesis, then we see rearguard action, like limiting the intrusion of the ACA, as helpful. Such actions give the private sector enough breathing room to invent a better solution to delivering health care.  Potentially, the delivery of health care under an alternate model might become so economically attractive that people would forego the need for anything but catastrophic health insurance, mooting the entire effort of controlling medicine by controlling the health care insurance industry.  If such an event happens, it will start with the well off experimenting with alternate means of receiving health care and might spread to most of society.  Then government regulators will be off in search of something else to kill off, even if they are never fully successful.  

Tuesday, January 29, 2013

Betting on America

I have read a lot of woeful talk from conservatives and libertarians in the wake of Obama's victory, the fiscal cliff negotiations and the debt limit deal, GOP softness on amnesty and the leftist grab for guns.  I think optimism is more appropriate for two broad reasons. First, the might of American capitalism is likely to bail out Obama from his own folly.  Second, the United States retains all the key advantages in the global economy.  If time permits, I might also add that the changes we have seen aren't as drastic as the press would have us believe.

Ayn Rand was the first writer to alert me to the irony that capitalism is so powerful that it can sustain huge amounts of government interference before it ceases to be an engine of growth.  This is unfortunate, because it begets the leftist fantasy that there is no limit to the amount of plunder they can extract from the economy without killing it.  Of course, the redistributive ethic of this President couches the argument in the name of "fairness," but what is really fair about stealing the hard earned wealth of one group and giving it to another?  But we appear nowhere near such an end.  Huge finds of oil and natural gas in North America are making chemical manufacture and similar industries viable again.  The oil and gas boom is by itself an engine of economic growth.  Eventually, the oil from Canada's tar sands will find its way to market.  There is nothing Obama or Hillary Clinton can ultimately due to stop it.  This will benefit America either through trade with Canada or to the extent that the oil comes through our lands.  Manufacturing is also increasing in America as companies realize that separating engineering design teams from the factory doesn't always work.

America's natural advantages are also great.  First, we have a high birth rate compared to the nation's that we compete with on a global scale, although not on an absolute scale.  Germany will not sustain its high rates of growth when its birth rate is at 1.4, among the lowest in the world, for example.  Next, the competitive advantage that Asian nations have in wage rates is eroding rapidly.  Coupled with transportation costs, the cost differential of producing products in China is diminishing.  Manufacturing wages in America have been stagnant for almost a decade while Chinese wage manufacturing wage inflation has been close to 15% for the same period.  Additionally, the advantage of cheaper labor is eroded as less labor is used in each unit produced.

Finally, in spite of increased regulation and a capriciousness, Obama has not killed freedom nor the rule of law in this country.  It remains the best place on earth to live, which is why it attracts the best people from around the globe.  We desperately need to reform our immigration policy to allow more educated and skilled immigrants to come here.  I don't think that will happen until we deal with the illegal immigrant situation.  That's why I am hopeful for a deal that gets the border really secured and doesn't grant citizenship to illegals (there has to be some price for their illegal entry).

Monday, October 22, 2012

Mitt Romney's Best Moment

Romney is clearly the alpha male, here, and you can tell that Obama is annoyed and it seems like he turns to the moderator for a bailout.  That might be unfair, but the President is clearly highly annoyed, even though he is being quoted accurately.

Wednesday, April 7, 2010

Betting Against America?

All of my life I have been optimistic about the future and a firm believer that we live in the greatest country in human history. When I was only ten years old, my uncle was repeating some of the stupidity in Paul Ehrlich's "The Population Bomb" and trying to frighten me into believing I would be dead before I was 30. My argument at the time was simple, we always invent new stuff. As I grew older I came to understand that we in fact "invent new stuff" because of the freedom we enjoy in America. We use technology to solve the problems created by older technology. (As an aside, Norman Borlaug, the father of the green revolution in Indian agriculture probably saved hundreds of millions of lives. He was awarded the Nobel Peace prize in 1970, one of the picks the committee got right.)

We interrupt this post to show a picture of one of the greatest Americans of all time.

This bullishness on the future led me to put our savings primarily in the stock market, after we purchased a home. I always felt that investments like gold, commodities or Treasuries were a bet against the ingenuity and entrepreneurial spirit of Americans, and that always seemed like a bad bet to me. (Similarly, I have never shorted a stock.) After the election of Obama, Mrs. Daddy was in a fine fiddle. She was very nervous about the combination of Obama in the White House and Pelosi leading the House, smart woman. But I cautioned her that the country is great and the people would only stand for so much. The rise of the Tea Parties confirmed my optimism, even though Obamacare was slammed through. I am also optimistic that it can be undone. We significantly reformed welfare after all.

However, today my optimism is under assault not by specific policies of Obamacare or cap and trade but by the looming problem of government bloat at all levels. When we examine the unfunded liabilities of employee pensions at the local and state levels and federal unfunded liabilities in social security and medicare. I haven't the energy to trot out the mind numbing numbers, but the graphs I displayed for the federal problem in a previous post tell only one unsettling story of a government borrowing to pay current expenses (that's like using your credit card to buy groceries and pay the rent every month and not being able to make payments.) One story at Bloomberg estimates the collective state problem at $3 trillion. A number being bandied about for local pensions underfunding is $2 trillion.

The public employees unions have significant power, influence and even sympathy from the public. Locally all politicians seem to vie for the police and firefighters unions endorsement, even if that is disqualifying in the eyes of B-Daddy. But ultimately this financial path is unsustainable and we all know it. Compare our situation to Greece (as has Dean); here in America economic hard times gave rise to a movement that called for dramatic reductions in the size of government. In Greece, there has been a childish demand by the public to save themselves from their own folly of voting for leaders who refused to balance the books and engaged in some Enron style accounting.

Will there be some pain as we work out how to reduce the size of all of our government? You betcha! But am I going to bet against America? No way, I am counting on the same ingenuity to work out these problems as well. Not without pain, because we have dug ourselves a hole, but dig out we will. The Tea Party's emphasis on the need for smaller government is VERY important. As the house of cards starts to topple, the prescience in identifying too much government as the source of our ills will swell our ranks and provide the power needed for reform.