United Liberty

From Michael Medved’s most recent column comes a statistic that made me take a double-take:

The Gallup-Healthways Well-Being Index, which has surveyed 1,000 adults almost every day for more than two years, shows that even in the midst of high unemployment and bitter political turmoil, people are pleased with their private progress. From 2008 through 2009, participants’ “life evaluations” of their current situation and future expectations rose by more than 5 percentage points. Without exception, every racial group, income level and age cohort showed brightening attitudes, with particularly big improvements among blacks, young adults (18-29) and people of modest means ($24,000 to $48,000 in annual income).

In other words, blacks, young people and the middle class are doing well. When’s the last time you heard that? Additionally came a striking poll regarding health care:

I don’t know how many times I have made the remark to friends and family that this Great Recession is occurring like a slow-motion movie. We saw the bodies sailing through the air in our peripheral vision—the Ken Lewises, the Alan Schwartzes, the Martin Sullivans, the Richard Fulds. The stock market implosion took several weeks to come crashing to the floor, and the resultant slow-blooming dust cloud looked thick and impenetrable from a distance, yet translucent and impressionistic up close. With our telephoto lenses we could capture snapshots of the flustered figures scurrying for cover, the fragmented federal institutions falling by the wayside, the thick unbreathable hot air billowing, and the knee-jerk uninformed decision-making with its domino effects.

There are good reasons to cast blame on multiple characters in this film. The financiers were short-sighted and egocentric—and they still are, with no market force intervention to change their behavior. The overseers were, and are, just as short-sighted and egocentric. No market forces ever touch their behavior, except maybe during elections. Even the central bankers were, if not shortsighted and egocentric, at least somewhat smug and over-confident, which is also to be expected since no market forces ever touch their behavior, except perhaps the flux and reflux of Presidential favor.

I know what you’re thinking: man that Pete is a positive guy. I like to describe myself as realistic, with a bit of fatalism throw in. Either way, I find it hard to look at the economic landscape and have any hope. It is especially dreadful when politicians have to get re-
elected, AND said politicians consult certain “economists”.

Economists have for years looked at what is happening in a society and sought to come up with solutions as to how an economic crisis can be “fixed”. The problem is, like in all fields, you have good economists, and you have the not so good (The latter seem to be the ones that always find their way onto the public payroll).

In extremely broad terms economists can be split into two categories:

If you are a student of American history your eyes should be opening as to which economist is most often chosen by our elected officials. The real question is “why”?

Well, why wouldn’t a politician pick economist #2?

The Heritage Foundation has released the 2010 Index of Economic Freedom,which measures the various different types of fiscal and economic freedoms (such as business freedom, fiscal freedom, free trade and property rights) in 138 countries.

Here is a look at the top 10 most free economies in the word:

1. Hong Kong
2. Singapore
3. Australia
4. New Zealand
5. Ireland
6. Switzerland
7. Canada
8. United States
9. Denmark
10. Chile

Notice how far down the United States is on the list. Unfortunately, our country’s score dropped from last year due to the government’s response to the 2008 economic crisis. As you can see below, scores dropped in seven out of 10 areas from the previous year.

Even though scores dropped in several areas, the main concerns (in my opinion) are government spending, fiscal freedom and monetary freedom.

On government spending:

The Washington Post recently conducted a poll on a wide variety of topics, asking opinions on everything from Barack Obama and the state of economy to Afghanistan and budget deficits.

Buried deep inside this poll is some very positive for those of us that believe restraint in government:

By 58 percent to 38 percent, Americans said they prefer smaller government and fewer services to larger government with more services. Since he won the Democratic nomination in June 2008, the margin between those favoring smaller over larger government has moved in Post-ABC polls from five points to 20 points.

Could it be that Americans don’t believe that expanding government helps their own individual standing? Who’s to blame them, generally when government gets involved it makes matters worse.

From the Washington Post, by way of the Cato Institute comes a story of some Americans that are doing well for themselves during the recession:

As struggling communities throughout the country wait for more help from the $787 billion stimulus package, one region is already basking in its largess: the government-contractor nexus that is metropolitan Washington.

Reports from stimulus recipients show that a sizable sum has gone to federal contractors in the Washington area who are helping implement the initiative — in effect, they are being paid a hefty slice of the money to help spend the rest of it.

The contractors’ work hardly differs from the basic operations of the federal departments hiring them. The Energy Department is paying Technology & Management Services, a Gaithersburg firm, $6.9 million to review applications for renewable energy loan guarantees. The Department of Homeland Security awarded Deloitte Consulting’s Arlington branch $8.6 million to provide “program management and support” for the stimulus plan’s $1 billion airport security initiative, and gave McKing Consulting, a Fairfax firm, a $1.5 million contract to review applications for fire department construction funding.

Held against the total stimulus package, the contracts represent a relatively small portion of spending. But they help explain why the Washington area is weathering the recession so well.

Like a true socialist dystopia, the only ones doing well during the Obama age are government bureaucrats. Everyone else is left in the dust.

That is the question asked by Nate Silver at FiveThirtyEight. Besides noting the obvious anti-tax and anti-big government rhetoric, Silver notes a few subtle shifts in policy:

— Republican insiders are increasingly uncertain about whether gay marriage, which was such an important issue for the party over 2000-2004, is any longer a winning issue at all for them. Reaction to the Iowa Supreme Court decision was surprisingly muted in conservative circles. Meanwhile, at least one prominent Republican presidential candidate, Utah’s John Huntsman, has come out in favor of civil unions (although not gay marriage itself).

We recently learned that the Federal Reserve is going to put into practice its announced plan to buy US government debt. Yesterday’s Financial Times article by Krishna Guha gives the gory details.

Everyone knows that this action by the Fed increases money supply, and most are aware that it increases the probability that at some point in the future the amount of money created will be excessive with regard to the actual needs of the marketplace, which in turn will tend to lead us towards a state of price inflation, or bubble inflation. Another article by Javier Blas on the early signs of this in the commodities markets is a fun read on the subject.

According to a recent report released by Chicago based research and consulting organization Spectrem Group, examining the effects the recent market downturn has had on America’s affluent, the number of American households with a networth over $1,000,000 has declined dramatically since 2007.

While this statistic is not a direct measure of inequality, this drop in the number of millionaires will inevitably have a significant effect in bringing down total inequality in our economic system.

For most investable assets, the market has been in a 25 year bubble, instigated by the poor monetary, regulatory, and fiscal policies created by our goverment and the institutions (i.e., the Fed) that closely surround it. This bubble artificially created a greater number of affluent than the economy would naturally support, and which could no longer be sustained once the bubble popped.

Not because I believe in bigger government, I don’t. -Obama

 

Many of you watched Obama make his first address to Congress tonight. His speech was concentrated nearly entirely on the economy. He started out by talking about the pitiful state of our economy, and how it is affecting everyone either directly or indirectly. He reiterated the point that America will prevail and recover. I don’t doubt that we will prevail and recover, but not because of Keynesian economic policies that the Democratic Party and Neocons are implementing. Not because of the spending, bailing out, and intervention of the Federal Government.