Saturday, May 25, 2013

The dishonorable and disgraceful Clinton/Obama years

One could only wish that all those who inflicted the Clintons and the Obama crowd on the rest of us would read and think long and hard on this particular column. When Shakespeare's character famously said, "There's something rotten in the state of Denmark" he was referring to the Clinton and Obama governments.

Hillary's - and now Obama's - Vast Left-Wing Cover-Up

By Jim Guirard

Almost 20 years ago, early in the Clinton-Rodham-Gore era, the late New York Timescolumnist William Safire charged that First Lady Hillary Clinton was so routinely dishonest in her reaction to the many scandal-"gates" of which she and Husband Bill were being accused as to merit the label of "congenital liar."

According to that highly acclaimed political affairs commentator and author of theTimes "On Language" column, Hillary's tendency to spin, scam, deceive, and lie in her response to charges of impropriety and corruption (e.g., in Whitewater-gate, S&L-gate,Travel Office-gate, Cattle Futures-gate, Missing Files-gate, Hubble-gate, Vince Foster-gate, Lippo/China-gate, and many more) was so deeply rooted as to be in her genes.

Now that President Barack Obama is being accused of similar spins, scams, and cover-ups, the reaction of the White House, the left-wing Democrats, the establishment media, and most of academia is -- like then -- one of indignant outrage. But are not Barack and Hillary joined at the hip in their Saul Alinsky ideologies, their Rules for Radicals tactics, and their current tar baby of the Benghazi cover-up?

Back then, in a masterstroke of misdirection and disinformation worthy of Harry Houdini, Hillary loudly alleged (and a compliant left-wing media loudly amplified) a "vast right-wing conspiracy" against both herself and First Husband Bill -- with all of the blame going to the dastardly right-wing Republicans.

And so it will be again if the finger-pointing, blame-gaming "Progressives" (code-word for Socialists) are given free rein to demonize Barack Obama's critics and detractors, no matter how correct and justified the Tea Partiers and other Republicans are in their anti-Obamanism.

The Other Side of the Coin -- Proofs of a "Scamalot" Cover-Up

But this victimization need not be the case if Obama's critics have the good sense to charge -- in Hillary Clinton style -- a vast left-wing cover-up of not only the Benghazi and IRS scandals, but also many other BHO spins, scams, false denials, false promises, and programmatic abuses.

Now, in an exercise of "history repeats" and of appropriate legacy labels for these two less-than-truthful presidencies -- which happen to share the VIP persona of Hillary Clinton -- here is a critical look at some of the ignoble, deceitful, and scam-filled aspects of Obama's "Age of Scamalot" presidency.

In terms of the latter label, this author's January 30, 2010 posting on the American Thinker -- "From Camelot to SCAMALOT" -- took the first step toward forever disconnecting Jack and Jackie Kennedy's legacy label from the always upbeat, smiling, and charming but so deeply deceitful presidency of Barack Obama.

Having completed four tortured years in office -- and now extending "Four More Years" into nearly a decade of redistribution, dependency, and egalitarian poverty -- it is a legacy label which should be as damaging to today's Obamanoid and Clintonian "Progressives" as the heroic-sounding "Camelot" label has been a political benefit for almost 50 years to the Kennedys and the Democrats as a whole.

So desperate are the Obamanoids to escape the dreaded "cover-up" label that they have concocted an endless list of euphemistic alternatives by which they and the media might paint a much less sinister picture of L'Affaire Benghazi -- e.g., a sideshow, a political carnival, no "there" there, old news, a witch hunt, a fleeting story, a Fox News story, a minor bump in the road, Speaker Boehner's fixation, a desperate right-wing distraction, radical partisanship, a GOP cut in funding, a tool for fundraising,ad infinitum.

But at the base of it all is the question: just who is this man of the vast left-wing cover-up? Who is the man whose entire life history is either unknown or so highly spun as to dwarf even the Benghazi Talking Points fiasco? (Author's note: A remarkable list of at least 35 separate offenses of cover-up, too lengthy for this posting, will soon be available as an appendix to this essay on my own TrueSpeak.org website.)

And is he even now covering up and scamming the breaking news (just as this article is being submitted for publication) about his April 31, 2010 White House meeting with National Treasury Employees Union President Colleen Kelly -- the very day before NTEU leaders at the IRS initiated the illegal targeting of Tea Parties and other "conservative" and "Patriotic" applicants for tax-exempt status?

The Great Evil of False Words, Labels, and Narratives

So now, in this shameful "Age of Scamalot" and of vast left-wing cover-ups, let us recall what the great Chinese philosopher Confucius said 2,400 years ago when asked what would be his first action if he were placed in charge of the government of China:

It would certainly be to correct language. If language is not correct then what is said is not what is meant. If what is said is not what is meant, then what ought to be done remains undone. If this remains undone, then morals and acts deteriorate. If morals and acts deteriorate, justice will go astray. If justice goes astray, the people will stand about in helpless confusion. Hence, there must be no arbitrariness in what is said. This matters above everything.

And much closer to home and to the current political situation, that great American man of words, Mark Twain, once asserted that "[t]he difference between the right word and the almost right word is the difference between lightning and a lightning bug." If that be the case, let us hope that a thoughtful and proactive use of many truthful "lightning words" and a strict avoidance of the many cover-up narratives cited above will:

First, help to unmask both Hillary Clinton's and Barack Obama's insidious vast left-wing cover-up -- which stretches back several decades to their shared lockstep devotion to the "transitional Marxist" likes of Antonio Gramsci, Saul Alinsky and, alas, George "Soroctopus" Soros, and

Second, will enable all of us Americans to limit this ignoble "Age of Scamalot" and its OPRAH Land (Obama-Pelosi-Reid-and-Hillary Land) Plantation of dependency, egalitarian poverty, and indentured servitude to no more than the unfortunate "Four More Years" to which a slim majority of American voters have recently sentenced us all.

A D.C.-area attorney, writer and national security strategist, Jim Guirard was longtime chief of staff to former U.S. Senators Allen Ellender and Russell Long. His TrueSpeak.org website is devoted to truth in language and truth in history in public discourse.

The anecdote to Islamic outrages?

This is a movement and political party to watch. As Islamists continue to terrorize the West, movements like the one and politicians like this one will become a force. It is most apparent the politically correct parties have no answers to bombings and murderous actions like the recent beheading that took place on the streets of London.

Die Freihiet, the German political party, is called, in full, Freedom Civil Rights Party for More Freedom and Democracy (Die Freiheit Bürgerrechtspartei für mehr Freiheit und Demokratie).

Freedom was founded in October 2010 by the Berlin parliamentarian René Stadtkewitz.

Stadtkewitz was expelled from the Christian Democratic Union in 2010 after inviting Dutch politician Geert Wilders of the Party for Freedom (PVV) to give a speech in Berlin. A number of other politicians, who left their respective parties, also joined Stadtkewitz.

Mr. Stadtkewitz was born in communist East Berlin. As a young adult he worked in a factory making industrial equipment. After that, in September 1989 -- two months before the fall of the Berlin Wall -- he fled East Germany with his wife and son. He returned to Berlin after German unification in 1990 and joined the CDU in 1995.
Stadtkewitz is a former long-time member of the Berlin House of Representatives.

At Freedom's opening meeting he said that "the established parties, unfortunately, are not ready to take a clear stand but instead abandon the people to their concerns". He then went on to say that "Western civilization, for centuries a world leader, faces an existential crisis".

At the heart of this existential crisis is Islam in Europe. Stadtkewitz said that "Islam is not just a religion but also a political ideology with its own legal system."

As a response to the clear and present threat from militant Islam, Freedom has called for the scrutiny of all German imams, mosques, and Islamic schools, as well as for a review of Islamic organizations to ensure their compliance with German laws. Freedom also condemns all efforts to build a parallel legal structure based on sharia law.

Because of Freedom's position on Islam, it also rejects the Turkish accession to the European Union.

At a 10th anniversary remembrance of the 9/11 attacks in New York, René Stadtkewitz said:

The three most important terrorists of the 9/11 attacks had studied in Hamburg and were also radicalized there. Germany must be made aware of this ... [but] nothing has changed here. We must not only openly debate the political ideology of Islam; we must also consider the political consequences of such an ideology.

In an interview with the website Politically Incorrect (PI), Robert Spencer of Jihad Watch commented on both the problems Europe faces and also the encouraging fact that various political parties are attempting to deal with such problems. In one part of the interview Freedom and Geert Wilder's PVV were discussed. Spencer said:

[These] parties give me great hope that Europe is not dead, that Eurabia is not a reality and never will be, and that European people will reassert their freedoms and the human rights that are threatened by Islamic law.

Young Turks

In an interview on Dutch TV, René Stadtkewitz took the interviewer around the Kreuzberg and Neukölln area of Berlin. Stadtkewitz said that "these neighbourhoods are also called the largest Turkish city outside Turkey, a society in itself". During the same interview, one of the co-founders of Freedom, Aaron Koenig, said that "the equating of criticism of Islam with 'the right' is completely wrong, I would really like people to resolve this for once". He then went on to say that "it is clear that Islam-criticism derives from the centre of society".

The zealots of mass -- and unquestioned -- immigration keep on telling us that all immigrants are a vital source of skills and productivity; yet in Germany, as in the UK, large numbers of the immigrant population are unemployed. This is especially true of Muslims. In Germany, 2nd and 3rd generation immigrants are often undereducated and unemployed; a huge weight on Germany's welfare state.

The problems Germany has with Muslims are similar to those of the UK, except instead of mainly Pakistani and Bangladeshi Muslims, the Germans have a very large Turkish population. As Michael Stürzenberger, the spokesman of the Politically Incorrect (PI) group and provincial Bavarian Die Freiheit chairman since early 2012, puts it:

Back then, Germany gave in to US pressure, and thus, Turkey was able to unload a portion of their 30% unemployed on us at the beginning of the 60s. They came as guest workers because our government back then hoped that they might sometime leave again. After all, there wasn't the desire of having workforces with a foreign culture here for the long term. But they stayed, brought their relatives and married partners from Turkey.

Stürzenberger went on to say why Germans had a problem with many Muslim Turks:

When people knuckle under such attempts at intimidation, the Muslims always feel more superior and as a result become even more audacious. A bar needs to be shoved across this aggressive behaviour. It needs to be made unmistakably clear to them whose land this is, and which rules are to be followed here. As Moslems they are in our eyes still tolerated guests, even if they might have been born here because we consider Islam to be a dangerous, hostile ideology.

However, this is most certainly not a question of race. That is, many Turks have indeed assimilated themselves, just very rarely Turkish Muslims. Stürzenberger says that

...all citizens of Turkish origin who have assimilated out of conviction, that is Kemalists, Christians, Atheists, many Alavites and those Moslems who don't worry about the commands of their ideology and are willing to distance themselves from all of the components hostile to the Constitution, these are of course heartily welcome among us, and they aren't the ones being described in this article. This, of course, also means those mostly non-Moslem immigrants from other Islamic countries who have assimilated as well.

Policies

Of course not all of Freedom's policies are focused on Islam or on Muslim immigrants. Nonetheless, if the Islamization of Germany continues, Freedom's policies, along with everyone else's policies in that country, won't amount to much in the long run anyway.

Here are some of Freedom's other core policies:

i) The introduction of direct citizen democracy based on the Swiss model.
ii) Euroscepticism.
iii) Tougher measures on crime.
iv) Support of Israel.
v) Stricter social welfare policies.

The program of the party is modeled after that of the Dutch Party for Freedom.

Freedom's main problem with the German political system is that the German people

share [a] fear that the current policy of ignoring citizens will, of turning a blind eye to serious social problems, of incurring escalating debt, and last but not least, that all of this within the framework of a wrongly constructed European Union, could ultimately jeopardize prosperity, liberty and even peace in Germany and Europe.

Freedom explains its position on direct democracy by saying that "the political system in Germany has turned into a dictatorship of [the] parties". There is also a German problem with "a low election turnout and frustration with [the] parties".

Freedom's solution to these problems is to "introduce a direct democracy as practiced in Switzerland with nationwide referenda allowing Germans to vote on their constitutional law."

Hayek and China's future

Reading Hayek in Beijing

Yang Jisheng By BRET STEPHENS

In the spring of 1959, Yang Jisheng, then an 18-year-old scholarship student at a boarding school in China's Hubei Province, got an unexpected visit from a childhood friend. "Your father is starving to death!" the friend told him. "Hurry back, and take some rice if you can."

Granted leave from his school, Mr. Yang rushed to his family farm. "The elm tree in front of our house had been reduced to a barkless trunk," he recalled, "and even its roots had been dug up." Entering his home, he found his father "half-reclined on his bed, his eyes sunken and lifeless, his face gaunt, the skin creased and flaccid . . . I was shocked with the realization that the term skin and bones referred to something so horrible and cruel."

Mr. Yang's father would die within three days. Yet it would take years before Mr. Yang learned that what happened to his father was not an isolated incident. He was one of the 36 million Chinese who succumbed to famine between 1958 and 1962.

It would take years more for him to realize that the source of all the suffering was not nature: There were no major droughts or floods in China in the famine years. Rather, the cause was man, and one man in particular: Mao Zedong, the Great Helmsman, whose visage still stares down on Beijing's Tiananmen Square from atop the gates of the Forbidden City.

Zina SaundersYang Jisheng

Mr. Yang went on to make his career, first as a journalist and senior editor with the Xinhua News Agency, then as a historian whose unflinching scholarship has brought him into increasing conflict with the Communist Party—of which he nonetheless remains a member. Now 72 and a resident of Beijing, he's in New York this month to receive the Manhattan Institute's Hayek Prize for "Tombstone," his painstakingly researched, definitive history of the famine. On a visit to the Journal's headquarters, his affinity for the prize's namesake becomes clear.

"This book had a huge impact on me," he says, holding up his dog-eared Chinese translation of Friedrich Hayek's "The Road to Serfdom." Hayek's book, he explains, was originally translated into Chinese in 1962 as "an 'internal reference' for top leaders," meaning it was forbidden fruit to everyone else. Only in 1997 was a redacted translation made publicly available, complete with an editor's preface denouncing Hayek as "not in line with the facts," and "conceptually mixed up."

Mr. Yang quickly saw that in Hayek's warnings about the dangers of economic centralization lay both the ultimate explanation for the tragedies of his youth—and the predicaments of China's present. "In a country where the sole employer is the state," Hayek had observed, "opposition means death by slow starvation."

So it was in 1958 as Mao initiated his Great Leap Forward, demanding huge increases in grain and steel production. Peasants were forced to work intolerable hours to meet impossible grain quotas, often employing disastrous agricultural methods inspired by the quack Soviet agronomist Trofim Lysenko. The grain that was produced was shipped to the cities, and even exported abroad, with no allowances made to feed the peasants adequately. Starving peasants were prevented from fleeing their districts to find food. Cannibalism, including parents eating their own children, became commonplace.

"Mao's powers expanded from the people's minds to their stomachs," Mr. Yang says. "Whatever the Chinese people's brains were thinking and what their stomachs were receiving were all under the control of Mao. . . . His powers extended to every inch of the field, and every factory, every workroom of a factory, every family in China."

All the while, sympathetic Western journalists—America's Edgar Snow and Britain's Felix Greene in particular—were invited on carefully orchestrated tours so they could "refute" rumors of mass starvation. To this day, few people realize that Mao's forced famine was the single greatest atrocity of the 20th century, exceeding by orders of magnitude the Rwandan genocide, the Cambodian Killing Fields and the Holocaust.

The power of Mr. Yang's book lies in its hauntingly precise descriptions of the cruelty of party officials, the suffering of the peasants, the pervasive dread of being called "a right deviationist" for telling the truth that quotas weren't being met and that millions were being starved to death, and the toadyism of Mao lieutenants.

Yet the book is more than a history of a uniquely cruel regime at a receding moment in time. It is also a warning of what lies at the end of the road for nations that substitute individualism with any form of collectivism, no matter what the motives. Which brings Mr. Yang to the present day.

"China's economy is not what [Party leaders] claim as the 'socialist-market economy,' " he says. "It's a 'power-market' economy."

What does that mean?

"It means the market is controlled by the power. . . . For example, the land: Any permit to enter any sector, to do any business has to be approved by the government. Even local government, down to the county level. So every county operates like an enterprise, a company. The party secretary of the county is the CEO, the president."

Put another way, the conventional notion that the modern Chinese system combines political authoritarianism with economic liberalism is mistaken: A more accurate description of the recipe is dictatorship and cronyism, with the results showing up in rampant corruption, environmental degradation and wide inequalities between the politically well-connected and everyone else. "There are two major forms of hatred" in China today, Mr. Yang explains. "Hatred toward the rich; hatred toward the powerful, the officials." As often as not they are one and the same.

Yet isn't China a vastly freer place than it was in the days of Mr. Yang's youth? He allows that the party's top priority in the post-Mao era has been to improve the lot of the peasantry, "to deal with how to fill the stomach."

He also acknowledges that there's more intellectual freedom. "I would have been executed if I had this book published 40 years ago," he notes. "I would have been imprisoned if this book was out 30 years ago. Now the result is that I'm not allowed to get any articles published in the mainstream media." The Chinese-language version of "Tombstone" was published in Hong Kong but is banned on the mainland.

There is, of course, a rational reason why the regime tolerates Mr. Yang. To survive, the regime needs to censor vast amounts of information—what Mr. Yang calls "the ruling technique" of Chinese leaders across the centuries. Yet censorship isn't enough: It also needs a certain number of people who understand the full truth about the Maoist system so that the party will never repeat its mistakes, even as it keeps the cult of Mao alive in order to preserve its political legitimacy. That's especially true today as China is being swept by a wave of Maoist nostalgia among people who, Mr. Yang says, "abstract Mao as this symbol of social justice," and then use that abstraction to criticize the current regime.

"Ten million workers get laid off in the state-owned enterprise reforms," he explains. "So many people are dissatisfied with the reforms. Then they become nostalgic and think the Mao era was much better. Because they never experienced the Mao era!" One of the leaders of that revival, incidentally, was Bo Xilai, the powerful former Chongqing party chief, brought down in a murder scandal last year.

But there's a more sinister reason why Mr. Yang is tolerated. Put simply, the regime needs some people to have a degree of intellectual freedom, in order to more perfectly maintain its dictatorship over everyone else.

"Once I gave a lecture to leaders at a government bureau," Mr. Yang recalls. "I told them it's a dangerous job, you guys, being officials, because you have too much power. I said you guys have to be careful because those who want approval from you to get certain land and projects, who bribe you, these are like bullets, ammunition, coated in sugar, to fire at you. So today you may be a top official, tomorrow you may be a prisoner."

How did the officials react to that one?

"They said, 'Professor Yang, what you said, we should pay attention.' "

So they should. As Hayek wrote in his famous essay on "The Use of Knowledge in a Society," the fundamental problem of any planned system is that "knowledge of circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess."

The Great Leap Forward was an extreme example of what happens when a coercive state, operating on the conceit of perfect knowledge, attempts to achieve some end. Even today the regime seems to think it's possible to know everything—one reason they devote so many resources to monitoring domestic websites and hacking into the servers of Western companies. But the problem of incomplete knowledge can't be solved in an authoritarian system that refuses to cede power to the separate people who possess that knowledge.

"For the last 20 years, the Chinese government has been saying they have to change the growth mode of the economy," Mr. Yang notes. "So they've been saying, rather than just merely expanding the economy they should do internal changes, meaning more value-added services and high tech. They've been shouting such slogans for 20 years, and not many results. Why haven't we seen many changes? Because it's the problem that lies in the very system, because it's a power-market economy. . . . If the politics isn't changed, the growth mode cannot be changed."

That suggests China will never become a mature power until it becomes a democratic one. As to whether that will happen anytime soon, Mr. Yang seems doubtful: The one opinion widely shared by rulers and ruled alike in China is that without the Communist Party's leadership, "China will be thrown into chaos."

Still, Mr. Yang hardly seems to have given up hope that he can play a role in raising his country's prospects. In particular, he's keen to reclaim two ideas at risk of being lost in today's China.

The first is the meaning of rights. A saying attributed to the philosopher Lao Tzu, he says, has it that a ruler should fill the people's stomachs and empty their heads. The gambit of China's current rulers is that they can stay in power forever by applying that maxim. Mr. Yang hopes they're wrong.

"People have more needs than just eating!" he insists. "In China, human rights means the right to survive, and I argue with these people. This is not human rights, it's animal rights. People have all sorts of needs. Spiritual needs, the need to be free, the freedoms."

The second is the obligation of memory. China today is a country galloping into a century many people believe it will define, one way or the other. Yet the past, Mr. Yang insists, also has its claims.

"If a people cannot face their history, these people won't have a future. That was one of the purposes for me to write this book. I wrote a lot of hard facts, tragedies. I wanted people to learn a lesson, so we can be far away from the darkness, far away from tragedies, and won't repeat them."

Hayek would have understood both points well.

Mr. Stephens writes "Global View," the Journal's foreign-affairs column.

A version of this article appeared May 25, 2013, on page A11 in the U.S. edition of The Wall Street Journal, with the headline: Reading Hayek in Beijing.

Friday, May 24, 2013

Big time rent seeking

From the WSJ:

The Other Government Motors

The list of the Obama Administration's industrial policy failures is long, from Solyndra to Fisker Automotive. But now we are hearing that one success redeems them all: Tesla Motors TSLA +4.69% . Tesla's share price has soared this year on rave reviews for its electric car, growing sales and its first quarterly profit.

Rarely noted is how much this profit is a function of government subsidy and coercion. So let's take apart Tesla by the numbers, if only to give our reader-taxpayers a better sense of what they've paid to make Tesla's owners rich.

The decade-old Tesla debuted its first product, the Roadster, in 2006. With a base price of $109,000, it was discontinued before it hit 2,500 sales. Tesla introduced its Model S a year ago and had sold an estimated 9,650 at a bargain $70,000 through April. By contrast, Ford sold 168,843 F-series pickup trucks in the first quarter alone.

Tesla wouldn't have sold even that many cars without the extraordinary help of government. In 2009 the company received a $465 million Obama loan guarantee, supplemented last year by a $10 million grant from the California Energy Commission.

That money has underwritten Tesla's engineering and manufacturing, but federal and state governments also subsidize the purchase of Tesla products. Any U.S. buyer of a Tesla car qualifies for a $7,500 federal tax credit, while states like Colorado throw in up to $6,000 more in state income-tax credits. Taxpayers pay first so Tesla can build the cars and again to help the wealthy buy them.

These subsidies are important enough to Tesla that its website features an "Incentives" section directing buyers where to look for their states' electric-vehicle benefits—rebates, free parking, exemptions from state sales tax, use of high-occupancy lanes, and the like. Buyers from states that offer no incentives get this Tesla message: "Want to help make EV [electric vehicle] incentives a reality in your area? Encourage your local or state representative by calling or sending them a letter."

Tesla's biggest windfall has been the cash payments it extracts from rival car makers (and their customers), via its sale of zero-emission credits. A number of states including California require that traditional car makers reach certain production quotas of zero-emission vehicles—or to purchase credits if they cannot. Tesla is a main supplier.

A Morgan Stanley MS +0.41% report in April said Tesla made $40.5 million on credits in 2012, and that it could collect $250 million in 2013. Tesla acknowledged in a recent SEC filing that emissions credit sales hit $85 million in 2013's first quarter alone—15% of its revenue, and the only reason it made a profit.

Take away the credits and Tesla lost $53 million in the first quarter, or $10,000 per car sold. California's zero-emission credits provided $67.9 million to the company in the first quarter, and the combination of that state's credits and federal and local incentives can add up to $45,000 per Tesla sold, according to an analysis by the Los Angeles Times.

One irony is that rival car makers—even those making electric hybrids or gasoline subcompacts—don't get the same benefit from zero-emissions mandates. As environmentalist Bjorn Lomborg notes, manufacturing and charging electric cars over their life cycle can produce more carbon than small, gas-powered vehicles. Yet Tesla is cashing in because of the policy bias for fully-electric cars.

Another irony is that the main beneficiaries of this electric-car largesse belong to—well, the 1%. Tesla co-founder Elon Musk is already a successful entrepreneur, and his estimated net worth has soared past $4 billion thanks to the IPOs of Tesla and Solar City (a separate operation that received a $344 million federal loan guarantee).

Also realizing Tesla IPO windfalls are the elite of Silicon Valley venture capital: the Westly Group (whose principal, Steve Westly, is an Obama campaign bundler), Draper Fisher Jurvetson, and VantagePoint Venture Partners. Other paupers in the Tesla venture include or have included Daimler, Fidelity Investments, Google co-founders Sergey Brin and Larry Page, Hyatt heir Nick Pritzker, and former eBay president Jeff Skoll. The state-owned Abu Dhabi Water & Electricity Authority last year booked a $113 million profit selling its share of Tesla. You're welcome.

Tesla isn't oblivious to the politics of all this, and on Wednesday it said it had fully repaid its government loan. That's good, since Tesla's long-term prospects are far from certain. The major auto makers will soon have their own zero-emissions vehicles, which Mr. Musk says will end Tesla's credits boom by year end. Analysts are also warning that Tesla has yet to show it can sell its very pricey car to a mass market.

***

Tesla's investors claim this taxpayer support is worth it if it creates a new electric-car company, and for them it is. But such a success must still be measured against other taxpayer losses and misallocated capital.

And even if Tesla's cars do sell, the policy question is why billionaires in California couldn't have financed the business themselves. Why should middle-class taxpayers whose incomes are falling still pay to subsidize the purchase of cars that only the affluent can afford, and then partly as a gesture of their superior environmental virtue? When does the rest of America get its return on Tesla's profits?

A version of this article appeared May 24, 2013, on page A12 in the U.S. edition of The

Thursday, May 23, 2013

Where are we now with the debt?

Gramm and McMillin: The Debt Problem Hasn't Vanished

By PHIL GRAMM
AND STEVE MCMILLIN

President Obama has raised the national debt by nearly $6.2 trillion, the equivalent of $78,385 per family of four. It is true that projected deficits recently have been reduced. April tax filings increased 28% from 2012, but much of this was thanks to a one-time rush at the end of 2012 to report income before rates rose in January. The second largest reduction in the deficit came from Fannie MaeFNMA +14.75% taking a one-time accounting adjustment.

But unless the economy soars, or a significant budget agreement is reached, the most lasting legacy of the Obama presidency will be a $10 trillion increase in the national debt—a burden that bodes ill for the nation's future.

Once the Federal Reserve's easy-money policy comes to an end and interest rates return to their post-World War II norms, the cost of servicing this debt will explode. The cost will increase further as the Fed sells down its $1.85 trillion holding of government bonds, and the Social Security system runs deeper and deeper into the red. The Treasury will then have to pay interest on an ever-growing percentage of the debt.

Since the World War II era, the average maturity of outstanding federal debt has been about five years, and the average interest cost on a five-year Treasury note has been 5.9%. At this interest rate, the expected cost of the Obama debt burden will eventually approach some $590 billion per year in perpetuity, exceeding the current annual cost of any federal program except Social Security.

An America forever burdened by massive government debt would have been unthinkable for much of the nation's history. Beginning with the Revolutionary War, the pattern has been that federal debt increased to help finance the nation's armed conflicts. But government spending after the wars dropped and debt was paid down, or even paid off, as under President Andrew Jackson in 1835.

Federal borrowing during the Civil War reached nearly $2.8 billion, about 30% of GDP. Thereafter the government ran surpluses and redeemed U.S. bonds that served as the reserve base of national banks and literally burned U.S. paper currency—greenbacks—in the furnace of the Treasury building. The money supply fell and federal spending plummeted to $352 million in 1896 from $1.3 billion in 1865.

These are policies that horrify modern Keynesian economists. Yet over that late 19th-century period real GDP and employment doubled, average annual real earnings rose by over 60%, and wholesale prices fell by 75%, thanks to marked improvements in productivity.

Getty Images

With the onset of the Great Depression, the national debt increased dramatically for the first time in the peacetime history of America, reaching 43% of GDP in 1938. World War II meant more borrowing. Since 1930, there has been no concerted effort to pay down the national debt. Any reductions in the national debt relative to the GDP have been almost solely the result of economic growth and inflation.

As the debt burden rises, so too does the cost of servicing the debt increase as a share of the growth the economy is capable of generating. When the debt on which interest is paid equals the GDP level of a nation, the economy must grow faster than the interest rate to avoid debt-servicing costs consuming all the benefit of economic growth. A nation then begins to lose its ability to grow its way out of a mounting debt crisis. Its options start to narrow down to forced austerity, inflation or default.

Today the total U.S. federal debt is 103% of GDP. Since interest paid to the Fed, the Social Security system and other government pension funds is effectively rebated to the Treasury, taxpayers currently bear only the burden of interest on 60% of this debt. But the size of the debt and the percentage of the debt on which interest will have to be paid are rising.

Some seek solace in the fact that at the end of World War II, the national debt exceeded GDP and still the economy prospered. But when the war ended, federal spending dropped to $29.8 billion in 1948 from $92.7 billion in 1945. Spending as a percentage of GDP fell to 12% from 44%. The U.S. emerged from the war as the world's dominant producer of goods and services. The demand for dollars around the world was insatiable, and a long period of record prosperity ensued. High GDP growth and inflation eventually brought down the debt-to-GDP ratio.

Americans today face a totally different situation. Spending and huge deficits continue unabated, and growth rates have declined since the recovery began four years ago. The reduction in government spending that occurred following World War II would be politically impossible today short of a cataclysmic crisis. Under Mr. Obama, the government has run trillion-dollar deficits for four consecutive years, and the top marginal tax rate today is already higher than it was when the budget was balanced in fiscal year 2001.

The president and many in Washington are complacent because, thanks to the Fed's unprecedented near-zero interest rate policy, the burden of servicing the debt today is just 0.9% of GDP, the lowest level in over five decades. But this cannot last, and the Fed is already looking for an exit plan.

Sadly, nations generally discover the truth of Albert Einstein's dictum that compound interest is the most powerful force in the universe—not through the happy accumulation of wealth but through the agonizing enslavement of debt.

Mr. Gramm, a former Republican senator from Texas, is senior partner of U.S. Policy Metrics, where Mr. McMillin, a former deputy director of the White House Office of Management and Budget, is a partner.

A version of this article appeared May 22, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: The Debt Problem Hasn't Vanished.

Monday, May 20, 2013

The Bowdoin case study

Anyone following the twists and turns of higher education these days will appreciate this fisking of the recent report/study produced by two researchers on the subject of the education offered by Bowdoin College, in Maine. The author of this piece is Harvey Mansfield, a professor of Government at Harvard. Mansfield, a conservative, provides the clearest distinction yet between what a liberal education used to mean and what it has become in the new world dominated by the "diversity" and "political correctness" mantras now prevalent. The bottom line: when all subjects and cultures and studies have equal value, they all become devalued without standards. My bottom line: there may be better ways to spend huge sums of money and get a mush education these days than going to some elite school like Bowdoin, or Harvard, or Yale, or Princeton, etc., etc. These schools may still have credential value, but credential value has a lot less meaning than it did 30-50 years ago.

The Higher Education Scandal

Bowdoin College in Brunswick, Maine, is an institution of good reputation and high quality, where I have some friends. It offers a liberal arts education typical of the best available in America today. It troubles me that Bowdoin, rather than, say, Harvard—a bigger and richer place where I work—should be made an example of. Nonetheless, Peter Wood and Michael Toscano have done just that in a comprehensive new study, “What Does Bowdoin Teach?” the first of its kind and probably destined to be the best, which shows in the practices and principles of one college what political correctness in our time has done to higher education in our country.

The authors are conservatives and their study was sponsored by the National Association of Scholars, a conservative organization. (It is available as a free download at www.nas.org.) It seems that liberals, even those critical of American education, are not inclined to investigate what their liberalism has done to it. Once upon a time, earlier in my life, liberals took pride in the high standards they set for the colleges that they had recently come to dominate and had made the headquarters of their liberalism. Now, they have made an unholy sacrifice of the devotion to excellence they once prized as a mark of distinction over fuddy-duddy, tradition-bound conservatism, and it is conservatives who stand for high standards in education.

Today’s liberals do not use liberalism to achieve excellence, but abandon excellence to achieve liberalism. They have effectually eliminated conservatism from higher education and intimidated—“marginalized”—the few conservatives remaining. These few are the only ones in academia who think something is missing when conservatives are gone. There was a liberal president of Harvard for a brief time recently who thought something was missing when conservatives are gone, and then, courtesy of the liberals, he was gone.

The Bowdoin study was done without the cooperation of Bowdoin, relying on the public statements of its president and faculty, its official documents, and its student newspaper to show what the college is about. Perhaps too much is made of the statements of its president, Barry Mills, a good man as I happen to know. It pains me to see him criticized for affirming things he would have been ousted for denying, as the example of Harvard’s Larry Summers suggests would happen. Bowdoin, like other such colleges, is ruled by a certain principle today, the principle of openness. It claims to be “inclusive,” open to all claims, yet it does not include conservatives. The study counts perhaps a half dozen conservatives among the 182 faculty members. But according to Bowdoin, this absence doesn’t matter. One can be open-minded about conservatism without being conservative, the college believes, perhaps by being objective like a scientist, perhaps simply by doing one’s best to understand it. Of course, it’s true that the best understanding of conservatism doesn’t necessarily come from conservatives, nor from having conservatives present on campus. You need Hindus on campus in order to understand Hinduism? Actually, that is a multicultural imperative that liberals might well apply to Hindus, but will never use to bring in conservatives. Conservatives as opposed to Hindus are the main rivals of—opponents to—liberals in America today, yet somehow it is considered openness not to include those with whom you mainly disagree. This study uses strong words at the end, but only after supplying evidence and argument on the way to its conclusions. It begins with a question: is Bowdoin as open as it claims to be?

It’s easy to number the conservatives at Bowdoin and to wonder why so few, but how does their near-complete absence affect the education Bowdoin delivers? The Bowdoin course catalogue states that “Bowdoin students must design an education.” They are to do this out of their own goals, the college’s “vision,” and its requirements. Yet the requirements are few and the vision is openness: the result is that Bowdoin students are mainly responsible individually for choosing the courses they take. Except for light requirements of distribution outside one’s major and of concentration within it, requirements that have been lessened whenever the college stops to think about them, the student is free to choose. By this principle, all courses are treated by the college as equal, none more important, none necessary to or contributing more toward the “liberal arts.” A liberal arts education, the study says, has become an education in liberating oneself from the liberal arts.

Facilitating this change is a new attitude among the faculty, emphasizing less what students need to know for a liberal education and more what they might want absent that discipline. Hence the arrival of many “topical” courses, as the study calls them, courses that take a current topic, such as the environment (“sustainability”) or samesexuality (my neologism), or “global citizenship,” or multiculturalism, and show its relation to current research by professors of various specialties. One example, freakish but still exemplary, is a course on “Queer Gardens,” which “examines the work of gay and lesbian gardeners and traces how marginal identities find expression in specific garden spaces.” It was abandoned because it got insufficient student enrollment—not because the faculty or the professor had second thoughts about this—call it odd—combination.

The equality of courses affects the courses offered; they are less and less survey courses aimed at teaching a subject-matter, and more and more a variety of courses aimed at showing the relevance of a professor’s specialty. Courses that still have the appearance of following a tradition—summed up in Bowdoin’s longtime favorite phrase, “the common good”—often bend it to the topical model. The phrase itself is bent so as to recommend “diversity” courses. In one official expression the phrase is traced to Richard Rorty rather than John Rawls, revealing a certain slippage within liberalism toward postmodernism that is characteristic of political correctness.

The common good as practiced at Bowdoin is no longer a liberally educated student body to which the professors variously contribute but a collection of students who have individually validated the ill-considered hope of their professors to make them resemble professors like themselves. The college is now not so much a body of teachers teaching students as a research institution that makes small-time, overpraised researchers out of its undergraduates. The research model perhaps fits science students, but the topical courses allow non-science students to be researchers on the frontiers being explored—and defended—by political correctness. Political correctness with its present-minded exactness, its not quite selfless objectivity, and its esoteric jargon is science for non-scientists. Political correctness, the study points out, brings necessary unity to the otherwise incoherent notion of diversity. For how else than by political fiat can one bring together, or be “inclusive” of, subjects defined not by essences but only by their mutually exclusive “otherness”?

Topical courses are featured in programs called “Studies,” such as Gender and Women’s Studies, Gay and Lesbian Studies (separate from the preceding), Environmental Studies, and Africana Studies, that were founded explicitly as political advocacy for their constituents. But also Asian Studies and Latin American Studies, with apparently neutral names, are now concerned mainly with repudiating Western colonialism—long after its demise one would think. The various Studies, but also regular departments, have stimulated other developments in the curriculum—the cross-listing of courses given by one department in another department and the new emphasis on interdisciplinary study. Both have the purpose of making specialty courses seem more general than they are, and both try to endow the idiosyncratic, parochial, even trivial subject-matter of topical courses with the universality of science. The report sums up the Bowdoin curriculum of equal courses as having a certain “flatness” and tending toward “entropy,” where faculty and students share the undemanding practice of self-expression, and the uninterest in teaching of the former joins with the uninterest in learning of the latter.

There is a good deal more in the Bowdoin study, but this much will serve to introduce and recommend it. Perhaps I have spoken too long of the curriculum when the main interest of students is the extra-curricular. One could say, indeed, that the curriculum itself is directed toward the extra-curricular, toward the not particularly well-intentioned and certainly foolish hopes for a not very attractive utopia, as the study concludes, that is without wisdom and without culture. I have focused on the curriculum in order to make it clear that what Bowdoin lacks is not so much the teaching of conservatism by conservatives, as if conservatives could be satisfied, and the troubles of academia resolved, by giving conservatives their own brief act in the Diversity Circus. Bowdoin’s curriculum lacks the academic standards of excellence that conservatives mostly and mainly defend in academia with little or no help these days from liberals. It is conservatives who deplore and resist the brazen politicization of the classroom, the loss of the great books, indeed the disregard of greatness in general, the corruption of grade inflation, the cheap satisfactions of trendiness, the mess of sexual license, the distractions of ideology, the aggrandizement and servility of administrators, the pretense and dissembling of affirmative action, the unmanly advice of psychologists, the partisan nonsense of professional associations, and the unseemly subservience everywhere to student opinion. None of these was necessary or useful in order to welcome those non-WASPs previously excluded from our colleges.

What Bowdoin produces in its students, according to the study, is a certain “knowingness,” a word that nicely captures an attitude I see a lot of at Harvard. Students have learned that to see means to see through, instead of having a good look. There is one bright spot, though. In its diversity Bowdoin decided to allow a “chem-free” dormitory, meaning no alcohol (why not say that?). But it turned out that many minority students opted for this kind of safety, thus failing in their duty to mix with the partying majority, and, combining selfishness with self-righteousness, keeping their diversity to themselves instead of spreading it around so that the lazy majority could lap it up without effort. Minority students made themselves the wrong sort of minority (this is the bright spot), and Bowdoin stomped on them, abolishing the chem-free dorm.

“What Does Bowdoin Teach?” covering much more than can be treated here, contrasts the new Bowdoin with the old Bowdoin. The new came out of the Late ’60s and thinks itself greatly superior to the old bastion of white males with its policies of exclusiveness. From this study, one could conclude that the old Bowdoin set and met high standards for itself and for the white males, at least, and that its biggest mistake was to make way so willingly for the new Bowdoin with its liberal, politically correct policies of exclusiveness. What was gained when so much was lost? Bowdoin—representing the American college—is now open, though not to all, and its openness, now exposed by Peter Wood and Michael Toscano, discloses a new poverty of undernourished hearts and minds. ave credential value but other than the hard science and economics studies they really don't offer much value.