Hmmmm

So today's Dow Jones Industrial Average closed up 936 points. Far be it for me to look a gift horse in the mouth (that's an 11 percent gain and a bit of a load off my 401(k)), but I'm forced to wonder why there is this sudden exuberance. Has the Dow Jones decided that national and international socializing of the banking business is an inherently good thing? Are they in fact saying, "Oh, goody! Our cheese has been saved! Uncle Sugar and his cousins are going to bail us out!"?

The news media is now reminding us that we are in a mixed economy, and that government action is helping to prevent another Great Depression. That doesn't mean it's right, just that it is so. What sorts of lessons is this situation teaching future big businesses, bankers, and other capitalists? It's teaching that if individuals and companies are part of a sufficiently large segment of the economy, and that segment suddenly faces unexpected or near-catastrophic losses, the government will bail them out. In which case, it will be okay to continue giving executives golden parachutes because, again, the tab will be picked up by Uncle Sam. If you have any doubt about why the non-executive voters are p.o.ed about the bailout, this would be why.

Here's the subtle temptation of socialism: if you're the one receiving the benefits--bailouts, direct cash payouts, or government subsidies--you have a vested interest in continuing to vote for public officials who will perpetuate the system of patronage--which is exactly the point. We make people at all levels of the citizenry dependent on government.

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In the interests of full disclosure: I received a government loan to allow me to attend graduate school. Note, however, that I am paying off that loan and that I am doing so ahead of schedule. Odds are, if I were to default on said loan, I would not get a bailout of any kind. Mind you, I would have preferred to obtain my "credentials" as a technical writer without getting another degree, but the economy has become such that only the diploma will ensure employment. That requires a different fix from the current student loan program. And yet one must also ask how much government intervention in the educational system has caused students to start out their lives deeply in debt, and whether the price tag is worth it. Having attended a state school, I suppose I got off lucky. I'd be paying off my grad school debts well into my 40s if I'd attended some sort of Ivy League school.

Do I consider my federally funded loan to be socialism? Probably. Have I benefitted from it? Undoubtedly. Would I have preferred another method of funding my schooling? Yes. As Milton Friedman puts it,

[G]overnment has assumed the financial costs of providing the education. In doing so, it has paid not only for the minimum amount of education required of all but also for additional education at higher levels available to youngsters but not required of them--as for example in State and municipal colleges and universities. Both steps can be justified by the "neighborhood effect" discussed above--the payment of the costs as the only feasible means of enforcing the required minimum; and the financing of additional education, on the grounds that other people benefit from the education of those of greater ability and interest since this is a way of providing better social and political leadership. Government subsidy of only certain kinds of education can be justified on these grounds.

The late Mr. Friedman, being a good free-market guy, must provide some consolation for my conservative conscience. And still, I might hope that education--the process and the funding--might eventually become more privatized. Is a college education a "right?" That can be argued, though it's amazing how few people do. The whole thing would undoubtedly cost less if government weren't as involved (consider our health care system as a similar example) or if there wasn't an expectation of, or demand for, a college degree in order to obtain jobs in particular lines of work.

There are lots of problems out there; I just wonder if the two characters running for President are concentrating on the right ones.

Airsick Yet?

As of now (October 13, 2008, 9:56 a.m. Central Time), the markets are up, perhaps in response to the global bailout, which amounts to the G7 nationalizing the capital market, perhaps because they think and hope that the market hit bottom last week. One can hope.

The Weekly Standard had an article last week about how conservative Republicans have gotten their reaction to the market all wrong. We're too nationalist, too protectionist, too anti-free trade. Here's the problem with unlimited free trade (also called "globalization"): supply and demand pushes businesses to move their labor-intensive, unskilled work to places with plentiful cheap labor and fewer regulations. This puts unskilled workers in the U.S. out of work. If those unskilled workers are unable to find other work or go where the work is, they can end up on the welfare rolls, creating a drain on the economy. Jerry Pournelle is not a huge fan of labor unions, though he does consider a minimal protectionist tax on imported goods enough of a buffer to preserve some jobs in the U.S.

We still make a lot of stuff, but as more nations' populations become industrialized and educated, the more competition we will face. Our lead in exports comes from creating and exporting high-tech, big-ticket items like commercial aircraft. What happens when our workforce is no longer as skilled as it once was--and government schools are not what they once were? There are a lot of things going on, and our leaders need to give them serious attention:

• Our borders need protection.
• Our children must be educated in both intellectual and physical trades.
• Our citizens need jobs that support families.
• Our energy supplies need to be increased and new energy technologies developed.
• We need accountability among individuals, in businesses, and the government on the subprime mortgage and capital market crash.

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And then there's this little bit from Barack Obama. His commercials lately have been touting a tax cut for 95% of Americans. Impossible, ladies and gentlemen. The bottom 50% of taxpayers get all their money back after April 15. Here's why:

Mr. Obama's campaign promise, which he has repeated in his speeches and in the presidential debates, stems from his "Making Work Pay" tax cut that will give a $500 refundable tax credit to every worker or $1,000 to each working couple. But because this provision in his economic-recovery plan is "refundable," a large number of middle- to lower-income workers who have no income-tax liability after taking tax credits and deductions the that [sic] Internal Revenue Service allows, will be given the equivalent of the tax cut in the form of direct payments from the U.S. Treasury - funded by higher-income taxpayers. [Emphasis mine.]

That is not a tax cut. That is a giveaway. It's a handout, like those "stimulus checks" we got this year and after 9/11. It's redistribution of wealth. Call it what you will, but calling it a tax cut is a lie. It's taking money from those who have more of it and handing it off to those who don't have as much and hoping they spend it in ways that will keep the economy going. In other words, the standard socialist policies we've seen before from this party.

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I was recently accused of hating the poor. The individual thought I wanted the poor to be poor. No, wrong. Wrong squared. I want everyone to have the opportunity to get rich! That means reducing taxes and regulations that hamper businesses. It means allowing individuals to keep more of their money. Why should I work hard to get rich if the harder I work, the more the government takes? And who the heck is the government to say that they have the right to take my money if I someday manage to make $250,001? Why should any of us accept this? Arrgh. I'm heading for the showers. Let's be careful out there.