Elizabeth Warren, the Democratic candidate for the U.S. Senate in Massachusetts, recently created a media flap when she said:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you!

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Conservatives and libertarians took offense at Warren’s claim that the government has a superior claim to “a hunk” of people’s earnings merely because every individual lives in and benefits from a society to whose creation many other people have contributed.

The critics might well have been grateful for small blessings, however. Warren was prepared, rhetorically at least, to let people keep “a big hunk” of their earnings.

(more…)

I’ve commented many times about the misguided big-government policies of both Hoover and FDR, so I can say with considerable admiration that this new video from the Center for Freedom and Prosperity packs an amazing amount of solid info into about five minutes.

Perhaps the most surprising revelation in the video, at least to everyone other than economic historians, is that America suffered a harsh depression after World War I, with GDP falling by a staggering 24 percent.

But we don’t read much about that downturn in the history books, in large part because it ended so quickly.

The key question, though, is why did that depression end quickly while the Great Depression dragged on for a decade? (more…)

An article in a recent issue of The Economist (“Sweet Land of Subsidy,” December 3rd to 9th, 2011, p. 42) tells the story of Iuka, Mississippi, a small community (2000 pop. 3,059) in Tishomingo County, where the local economic development foundation “invested” an unreported sum of the taxpayers’ money in the mid-1990s to build a 90,000 square foot facility so as to lure a job-creating private employer to the area. Although several call-centers have since “taken a look”, the building never has had a rent-paying tenant and remains vacant nearly two decades on.

The director of the development foundation there blames the county’s failure to attract businesses on the lack of local access to broadband internet connections.

Not to worry, though. In early November, the Federal Communications Commission (FCC) announced that it would redirect $4.5 billion from a program established to guarantee universal access to landline telephone service to a new “Connect America Fund” (CAF), intended to provide “reliable” broadband internet connections to Americans living in rural areas and, as is obligatory in a period of state-created recession, claiming with a straight face to add 500,000 new jobs and $50 billion to GDP over the next six years.

According to the FCC, 18 million U.S. souls do not now have broadband service, and it claims that 7 million of them can be reached with the new subsidy. The subvention thus amounts to more than $640 per person, assuming that none of the unconnected people live in the same household. (The marginal cost per household is estimated to be $775, although, owing to duplication, the incremental cost of previous subsidies has run as high as $350,000 per house.)

More recently, according to the same article, $7.2 billion in federal stimulus money was spent on rural broadband access. CAF raises the ante by 62.5 percent.

(more…)

The bombing of Pearl Harbor by the Japanese on December 7, 1941 killed over 2,400 Americans and led directly to the entry of the United States into World War II.

In his powerful, thickly researched new book, December 1941: 31 Days That Changed America and Saved the World, Craig Shirley chronicles the day-by-day shifts in American culture, politics, and national identity through that horrible month. Before December, Shirley tells Reason’s Nick Gillespie, a solid majority opposed entry into World War II and the “eminently respectable” America First movement was poised to help select the next president of the United States. Non-interventionism was so universal that Franklin Roosevelt himself had campaigned for his third term as president on a promise to keep “American boys” out of European wars.

By the start of 1942, says Shirley, the long tradition of isolationism was over, never to be seen again. The nation that had rejected the League of Nations after World War I helped create the United Nations and America quickly became not simply a global economic, political, and military power but the dominant player on the globe.

(more…)

Gov. Rick Perry stated at the outset of his presidential campaign that he is running for president based on his principles and leadership accomplishments, not his oratorical skills. Media focus on his debate missteps deliberately ignores Perry’s record and charisma.

Six months ago discussing Perry’s possible candidacy, a top conservative leader privately said, “Rick is a great leader. But he’s not a greater debater. And he knows it. The question would be whether he overcomes it.”

Technology regularly creates new challenges for presidents. Debating skill was a non-issue for many consequential presidents, but some are trying to make it an automatic disqualifier for the Texas governor.

America’s third president—Thomas Jefferson—was a lousy public speaker. He was literally a genius, and his singular eloquence as a writer is seen in his prose in the Declaration of Independence and other writings.

But Jefferson was no speaker, so much so that he only gave a couple speeches in his entire two-term presidency. He was so bad that he fulfilled his constitutional requirement to give an annual State of the Union by sending a written document to Congress.

The media would pan Jefferson’s radio and television performance today. Does America regret electing such a lackluster orator?

(more…)

Greece is about to default on its public debt or ruin the European Union, or both. The Greeks are destroying themselves today much as they did during the Peloponnesian War. This looks like the inevitable result of the welfare statism and entitlement mentality that is destroying the entire Western world. We see similar forces of anarchy at work in the “Occupy” movements in American cities.

An important factor in these movements is the fundamentally anarcho-syndicalist tenor of the union movement, which demands an ever greater share of national income. Public-sector unions like the American Federation of State, County and Municipal Employees have been prominent in the “occupy” movement. Wisconsin AFSCME proudly sent pizzas “in solidarity” with the Wall Street occupiers.

Rutgers University labor economist Leo Troy calls public-sector unionism “the new socialism.” The old socialism was based on state ownership of the means of production. The new socialism involves the transfer of an ever greater share of the economy to the public sector. Government at all levels took about 5% of GDP a century ago and 13% on the eve of the Great Depression. The New Deal increased the proportion to one-third by 1960. We are in the forty percent range now, and the full nationalization of health care will put us over half.

Unions have been a primary force in the expansion of state power. Even the reputedly “conservative” American Federation of Labor called for “the abolition of the wage system.” A.F.L. President Samuel Gompers put organized labor’s goal as simply “more” — exactly what Johnny Rocco, the Al Capone-like figure portrayed by Edward G. Robinson in the 1939 film “Key Largo,” explained as his ultimate end. The New Deal’s expansion of state power was based principally on private-sector unionism that began with the “occupy Flint” sit-down strikes of 1936.

(more…)

The simple proposition that no one should be forced to pay tributes to labor bosses or they will lose their job, is not a conspiracy.  It is freedom from tyranny.  Using forced dues to finance politicians who vote to force citizens against their will to pay union bosses in order to keep their own jobs, is a conspiracy.

The fact is, until 1935, the United States Government did not force people to pay tributes to union bosses in order to get or keep a job.  If there was a conspiracy, it was between the AFL, CIO, President Franklin Delano Roosevelt, and a Democrat Congress passed the Wagner Act, selling the concept as “workers rights.”  The Wagner Act foisted union servitude on millions of working Americans overnight.  We see the AFL-CIO, the president, and Congress attempting the same scam today.

The only workers who can escape from Wagner Act compulsion work in the 22-states which chose a Right to Work law to protect their citizens from this tyranny.  This Wagner Act forced-dues tyranny can be clearly blamed on Big Labor Bosses.

Then-A.F.L. president William Green boasted of Big Labor’s role in the Wagner Act in Liberty Magazine: “We helped write it. We thought of it as ‘Our Baby’.”  And at a union convention Green said, “The A.F.L. is wholly and fully responsible for the Wagner Labor Relations Act.”

Mr. Hoffa, freedom is no conspiracy.  Freedom is an ideal that both men and women aspire to obtain.

(more…)

There is a great discontent emanating from the Democrat and Progressive base regarding President Obama’s performance, a demographic he desperately needs if he is to succeed in his bid for re-election. Many in the traditional Republican circles, especially the so-called Republican strategists, argue that Republicans could run a teleprompter-reading “animatron” and win in 2012.

This is a foolish and dangerous position to espouse but one that should come as no surprise. Republicans, since their first days as a party, have honed the skill of shooting themselves in the foot to perfection. If Conservatives and Republicans don’t wake-up, evolve in their media tactics, get ahead of the message, frame their opponents and mandate the argument before the Progressives do, we could very well find Barack Obama taking the Oath of Office in 2013.

Steve Chapman, no stranger to the Chicago Progressive crowd, wrote in The Chicago Tribune:

“The vultures are starting to circle. Former White House spokesman Bill Burton said that unless Obama can rally the Democratic base, which is disillusioned with him, ‘it’s going to be impossible for the president to win.’ Democratic consultant James Carville had one word of advice for Obama: ‘Panic.’

“But there is good news for the president. I checked the Constitution, and he is under no compulsion to run for re-election. He can scrap the campaign, bag the fundraising calls and never watch another Republican debate as long as he’s willing to vacate the premises by Jan. 20, 2013.

“That might be the sensible thing to do….”

Chapman continues by submitting his choice to replace Mr. Obama for the Democrat nominee in 2012:

“The ideal candidate would be a figure of stature and ability who can’t be blamed for the economy. That person should not be a member of Congress, since it has an even lower approval rating than the president’s.

“It would also help to be conspicuously associated with prosperity. Given Obama’s reputation for being too quick to compromise, a reputation for toughness would be an asset.

“As it happens, there is someone at hand who fits this description: Hillary Clinton.”

Hillary Clinton.

Truth be told, there has been a softening among the moderate Conservatives and Republicans where Mrs. Clinton is concerned. Some feel sorry for her, and for myriad obvious personal and professional reasons. Others believe that she would have been a better choice for the nation as president than Barack Obama. Regardless of their reasons, the fact remains that there is a contingent on the Right side of the aisle who have forgotten that Mrs. Clinton is, herself, a Progressive, and by her own admission.

(more…)

Ouch. Maureen Dowd in today’s The New York Times:

The leader who was once a luminescent, inspirational force is now just a guy in a really bad spot.

His Republican rivals for 2012 have gone to town on the Labor Day weekend news of zero job growth, using the same line of attack Hillary used in 2008: Enough with the big speeches! What about some action?

Polls show that most Americans still like and trust the president; but they may no longer have faith that he’s a smarty-pants who can fix the economy.

(more…)

As reported in the Boston Globe and as seen in the New Hampshire debate video, both Mitt Romney and Newt Gingrich believe it is perfectly okay for the federal government to mandate that every private sector worker in the United States pay forced-dues to labor unions as a condition of getting or keeping a job. Attention Mr. Romney and Mr. Gingrich: Right To Work is not a states’ rights issue, it is a freedom issue. The Federal government should not mandate compulsory unionism.

Mitt Romney from the Boston Globe, “Pressed by John Kalb, executive director of New England Citizens for Right to Work, about whether he would actively advocate for a federal law, Romney responded, ‘I’m a Tenth Amendment guy. I’d like the states to be the place we carry out this path.’”

It appears that Forced Unionism is a Big Government idea that Newt & Mitt embrace. In fact, it was the brain child of our Biggest Big Government president, before Obama. Franklin Roosevelt’s 1935 Wagoner Act used, for the first time, federal powers to force every working man and woman to pay a third party, Big Labor bosses, in order to get or keep a job. It was wrong then, and it is outrageous now. Why would Gingrich and Romney embrace it?

In 1947, the American public had become so exasperated with Big Labor abuses of power that Congress made a half-hearted effort to fix the problem and passed the Taft-Hartley Act over President Harry Truman’s veto. (Truman’s presidential campaign had been heavily financed by forced-union dues.)

The Act gave states the right to opt out of federal forced-unionism created under the Wagoner Act. But, the platform for federally imposed compulsion remains in-effect today. Essentially 50 states had forced-unionism for twelve years before their citizens had an opportunity to opt out of it.

Americans are forced to fight the forced-union dues financed Big Labor political machine to obtain Right To Work freedom. Though freedom is a Big idea, Big Labor “taxes” employees to create political machines that spent, by their own admission, over $1.1 Billion in the 2010 election cycle to prop-up legislators who support forced unionism.

It’s hardly been a fair fight, but thanks to millions of members of the National Right To Work Committee and others there are currently 22 Right To Work states. (more…)

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

On today’s edition of Coffee and Markets, Hillsdale professor and author Burt Folsom joins Pejman Yousefzadeh and Kevin Holtsberry to discuss his book, New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Buy the Book: New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America
Professor Burt Folsom
Mackinac Institute
Hillsdale College
(more…)

America is in shambles from sea to shining sea. Unemployment is at Great Depression levels. Real Estate is collapsing. The stock market is crumbling. Retail sales are vanishing. Consumer confidence is plummeting. Inflation is skyrocketing (on the products that matter- energy and food prices). And of course, our U.S. Triple A credit rating is gone for the first time in history.

America is staring at economic disaster- Obamageddon. We are the Titanic, headed straight for the iceberg. Even delusional 500 point up days on Wall Street will not change the frightening long term picture. The iceberg is straight ahead.

Obama and his socialist cabal have channeled Hoover and FDR, who turned an ordinary bust into The Great Depression with a toxic strategy of more government, more spending, more debt, more entitlements, more rules and regulations strangling business, higher minimum wages, more power to unions, higher taxes, more printing of money by Fed, and trade tariffs. This is the Obama blueprint squared.

Here’s where the story gets downright frightening. This time the results are going to be dramatically worse than 1929. This time we are facing The Greatest Depression ever. Obamageddon.

Why? Because The Great Depression had NONE of problems and obligations we are now facing.

(more…)

I am a successful small businessman and a patriot who loves America and always sees its greatness. I am also an optimistic, positive thinker who always sees the glass half full.

But not this time.

I predicted doom if Obama was elected. Sadly the results are far worse than imagined. The economy is in shambles. America is staring at economic disaster — Armageddon. Even me, the eternal optimist is scared at what the future holds. We are the Titanic, headed straight for the iceberg.

America has always been a land of boom and bust. It’s just part of business cycle. But Obama and his socialist cabal have channeled Hoover and FDR, who turned an ordinary bust into The Great Depression with a toxic strategy of more government, more spending, more debt, more rules and regulations strangling business, higher minimum wages, more power to unions, more entitlements, higher taxes, more printing of money by Fed, and trade tariffs. This is the Obama blueprint squared.

The question this time is, is Obama doing it because he understands nothing about business? Or does he understand exactly what he’s doing? Is Obama’s goal to overwhelm the system, incite crisis, sow doubt about capitalism, and force the citizens to beg for government to save them, thereby opening the door to Socialism? Is Obama’s plan to redistribute the wealth, and at the same time to bankrupt the people with wealth and power, thereby crippling his political opposition?

Does it really matter?

(more…)

From The Washington Times:

The big issue in Wisconsin today is whether or not public sector workers should have collective bargaining rights. In an Aug. 16, 1937 letter to Luther Steward, the president of the National Federation of Public Employees, President Franklin Delano Roosevelt had something to say about that:

[M]eticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the Government.

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Roosevelt would have absolutely rejected the mass demonstrations aimed at blocking access or regress from the state’s legislative building, and at keeping children out of school:

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of government employees.

(more…)

From The Economist:

Politicians have repeatedly given in, usually sneakily—by swelling pensions, adding yet more holidays or dropping reforms, rather than by increasing pay. This time they have to fight because they are so short of money. But it is crucial that the war with the public-sector unions is won in the right way. For amid all the pain ahead sits a huge opportunity—to redesign government. That means focusing on productivity and improving services, not just cutting costs. (Indeed, in some cases it may entail paying good people more; one reason why Singapore has arguably the best civil service in the world is that it pays some of them more than $2m a year.)

The immediate battle will be over benefits, not pay. Here the issue is parity. Holidays are often absurdly generous, but the real issue is pensions. Too many state workers can retire in their mid-50s on close to full pay. America’s states have as much as $5 trillion in unfunded pension liabilities. Historic liabilities have to be honoured (and properly accounted for, rather than hidden off the government’s balance-sheet). But there is no excuse for continuing them. Sixty-five should be a minimum age for retirement for people who spend their lives in classrooms and offices; and new civil servants should be switched to defined-contribution pensions.

Another battleground will be the unions’ legal privileges.

(more…)

We are headed for major trouble in these United States.  Realistically speaking, the knight on the proverbial white horse who will ride to our rescue is apt to speak Spanish or Vietnamese or, perhaps, Polish.  An infusion of young, Immigrant citizens (workers to be blunt) are what stands between America and a very bleak future, so we had better get used to the idea of welcoming newcomers to our shores who share our values, work ethic and aspirations.  Concurrently, we should also enact, on a crash basis, policies geared to stimulate steady, long-term economic growth as our highest national priority.  The Fed alternately slamming its foot on the brake and then on the accelerator must give way to sensible growth-driven policies that encourage investment, work and entrepreneurship.

There has always been a “them” and “us” faction in America seeking to batten down the hatches and bar the door to immigrants seeking a better life, or to make that doorway as narrow as possible. We’ve even passed legislation in years past to bar certain ethnicities from our shores such as the racist Chinese Exclusionary Act that was in effect for over sixty years.  The attractiveness of campaigns laced with America for the Americans rhetoric has long appealed to politicians who look no further than the next election cycle.  A little xenophobia mixed with a dash of demagoguery has secured more than one election in America.

Fortunately, America, more than any other nation, still has the world’s best track record for integrating varied cultural and religious ethnicities into the fabric of the land and America has reaped enormous rewards in the process.  Immigration has largely fueled the engine of our growth for most of our history.  And that is a lesson the moral of which has never been more important to understand than it is today.  Here’s why.

(more…)

The Great Recession officially ended way back in June of 2009, so why are so many Americans still out of work?

It’s not because politicians were twiddling their thumbs. Indeed, from from bailouts to “Cash for Clunkers” to the massive stimulus plan, government has busied itself with trying to fix the economy. And, according to President Obama, this “bold, persistent, experimentation” has brought our country back from the brink.

Obama borrows that phrase from President Franklin Rooselvelt, and today’s president has a lot in common with the original bold, persistent, experimenter. Like Obama, FDR was a charismatic Democrat who replaced an unpopular Republican during a time of crisis. And like Obama, FDR championed a slew of policies designed to get America back to work.

Today many Americans credit FDR with rescuing our nation from the Great Depression, but there’s plenty wrong with that view, says Lee Ohanian, a UCLA economics professor who specializes in economic crisis.

(more…)

“The middle class is still treading water, while those aspiring to reach the middle class are doing everything they can to keep from drowning.”

—President Barack Obama, 8 September 2010

Bad metaphors bring bad policies. During the Great Depression Americans were told that “the pump” had to be “primed.” Despite twelve years of pump-priming, F. D. R. did not bring America out of the Depression. Bipartisan tax cuts targeted against Truman’s “Fair Deal” did.

Roosevelt had also used the metaphor of “war,” but that analogy was brought to perfection in L. B. J.’s “war on poverty.” The image is problematic. Marines going into a battle, for example, want to know, as they are locking and loading, who the “bad guys” are, that is, whom to shoot. Who were the bad guys in the “war on poverty”? The impoverished? The rich? When President Obama took office a year and a half ago, the universal call from the Democrats was to pass a stimulus package in order to “jump start” economy. Is the American economy really an old jalopy whose owner would not dare go out for a drive without taking his jumper cables? Yet that image was invoked countless times without a trace of irony as the government was moving in to take over parts of the auto industry.

If bad political metaphors are not exposed, bad policies invariably follow. That is why one of the most important moments in the debate over independence was when Thomas Paine required the American colonists to rethink the idea of Britain as the “mother country.” Does a mother send an army to attack her young? Do not children eventually grow up? In deciding to become a republic, Americans chose not to have a permanent parent overseeing their every move and aspiration.

Having failed to “jump start” the economy, President Obama and the Democrats are moving onto a new metaphor. The people are “drowning.” Now this is an indisputably powerful image. Who would not throw a “life line” to a person who is drowning? Only the most unfeeling capitalist on his mega yacht (about the size of John Kerry’s) would let someone go down in the treacherous waters of the present economy. When examined closely, though, the analogy reveals more than the president knows.

(more…)

Regime uncertainty has gained increasing recognition as the current economic troubles have persisted with little or no improvement since the economy reached a cyclical trough early in 2009. As described in my 1997 paper, regime uncertainty pertains to

the likelihood that investors’ private property rights in their capital and the income it yields will be attenuated further by government action. Such attenuations can arise from many sources, ranging from simple tax-rate increases, to the imposition of new kinds of taxes, to outright confiscation of private property. Many intermediate threats can arise from various sorts of regulation, for instance, of securities markets, labor markets, and product markets. In any event, the security of private property rights rests not so much on the letter of the law as on the character of the government that enforces, or threatens, presumptive rights.

In the latter half of the 1930s, many investors feared that the government would destroy the private enterprise system and replace it with fascism, socialism, or some other extreme transformation of the existing economic order.

In testing my hypothesis, I marshaled three distinct types of evidence: historical documentation of government actions and public reactions; findings of public opinion surveys, especially surveys of businessmen; and evidence from financial markets. The latter seems to some observers, especially to economists, to be the most telling because it is relatively “hard” and quantitative. In any event, it is the sort of evidence economists are accustomed to analyzing.

My most striking financial evidence for the New Deal episode pertains to the yield curve for corporate bonds, that is, to the spreads between the effective yields on high-grade corporate bonds with various terms to maturity. I found that this yield curve became suddenly much steeper sometime between the first quarter of 1934 and the first quarter of 1935 (a period when the New Deal lurched from its first, or business tolerant, phase to its second, or business hostile, phase) and remained very steep until sometime between the first quarter of 1941 and the first quarter of 1942 (a period when the New Deal handed over the reins to the military and the big businessmen who, along with the president himself, ran the war-command economy for the duration). I interpreted these extreme spreads as risk premiums on longer-term investments caused by regime uncertainty.

(more…)