Kausismo Or Death? Dems Face Tough Choices Past 2010
Published on: October 8, 2010
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  • Real per capita GDP has grown steadily over the past 40 years even as real hourly wages have declined. These are the hallmarks of a society that is unable, or unwilling, to share the fruits of economic progress, whether they be the gains of trade or the results of a never-ending stream of new labor-saving technologies,

    In the last century neoclassical economists learned how to deal with these problems in principle The way to share the gains of trade with poor countries overseas is to tax capital and subsidize labor. The way to deal with labor-saving technologies is to reduce the standard workweek.

    Instead our leaders prefer to distract and divide the American electorate by focusing on issues of race, But there is no issue of race here. It is about injustice to labor and affects all American working people in much the same way.

    It’s time to ban race from all public discourse until this problem is solved. Otherwise the problem won’t be solved…

  • Let me rephrase the last sentences in my comment below. I should have said it is time to ban the issue of race from political discourse until the problem of labor is solved. Once the problem of labor is solved the issue of race will have lost most of its steam.

  • nadine

    Great post, WRM. The Democrats aren’t listening to the Tea Party. Maybe if you say it, they can hear you.

  • Jacksonian Libertarian

    Anti-Trust the labor gangs and use strict adherence to the constitution to limit the Government monopoly.
    There is no multiplier effect to Government spending, only for tax cuts. This is logical as spending increases the burden on the private sector, and cutting taxes decreases the burden on the private sector, regulations have the same effect.
    Supply and Demand is such a simple concept but how difficult to understand. If the supply of a commodity shrinks, while demand remains the same, the value of the commodity will rise to balance the demand against the supply. The M3 money supply (which includes mortgages, but which the Fed stopped calculating in Oct. 06 “convenient timing huh?”) is shrinking at a 6% yearly rate at the moment, according to shadowgovernmentstatistics, the demand for money is rising as evidenced by the hoarding of money by banks, businesses, and individuals, therefore the Dollar is appreciating in value, this is DEFLATION. No matter what the very narrow measure of inflation CPI says, 60% of American family net worth is held as equity in their home, and with home prices crashing, the Dollar is appreciating in value vs. the Real Estate market.
    I would rather have 10% inflation than 1% deflation. DEFLATION is destructive, it destroys businesses, people lose their jobs, can’t pay their mortgage and lose their homes, and this depresses the Real Estate market. Isn’t this what is happening right now?
    $4 trillion in US treasuries are held by foreigners. I believe we should cash in our chips, which we earned by allowing foreign nations and people to manipulate their currencies, by having the Fed pay all of these treasuries off (it would only take an accounting change in the Fed computers as there isn’t any paper involved). This would kill several birds with one stone. It would increase the money supply, maybe enough to get us out of this destructive deflation. It would increase exports as foreigners purchase US products and services. It would increase foreign investment as foreign dollars seek returns in US equity, bond, and real estate markets. And finally it would force US hoarders off of their piles of money, as the Dollar stopped appreciating and began inflating again.

  • geary

    dont lose sight of the fact that all the presidents accomplishments were against the will of the american people. you tout his accomplishments as though americans should be grateful that he has given us [a vulgar gesture — ed].

  • hitnrun

    The real problem is that the Democrats believe some of the things you take for granted in the first place WRM, like “the multiplier effect” (as if government spending my tax money on stupid crap creates a dynamic chain reaction; but when I spend it myself on something of economic value, it disappears into the abyss). Also, the unquestioned sagacity of FDR, who only took 13 years, an apocalyptic war, and his own death to turn the economy around.

    Admittedly, it’s hard to blame voting Democrats for believing these things when they’re taught as Scripture to every American child from the 4th grade. But the collectors are at the door, and we’re arriving at a moment of anti-modernism, where reality is rudely informing us that our great prosperity has been in spite of many of our long unchallenged (and logically laughable) 20th Century “innovations,” not because of them.

  • Nobody

    Until the democrats (progressives) are shamed out of government, we cannot move forward and heal. We cannot continue to have 50% of the nation demanding things that the other 50% of the nation has to pay for. Unlimited wants by some, limited means to pay from others. Unsustainable. Labor cannot continue to demand their success on other people’s paychecks. We invest 100s of thousands of dollars into their education to jumpstart them. If they never advance past the “would you like fries with that?” Whose fault is that? It’s not my fault. It’s their own fault. No one is “owed” anything on my paycheck, on my earnings. You earn “livable” wages by bettering yourself, getting yourself some training, showing some initiative. If you’re not willing to invest in yourself, why should any of us? Why would you think you’re “owed” anything on my paycheck?

  • Nobody

    It’s a difficult conversation we have to have in our nation.

    Some in our nation need to understand, the value they bring to the table is not worth their demands in pay. Pushing a blue button is not worth 25/hour plus gold plated benefits. I have the right to try to make sure my dollar goes as far as it can. Someone who has an over inflated opinion of their value in the production of a product is going to make that product more expensive.

    It’s not a comfortable conversation to have with people, but it’s time we did. If your replacement only requires 1 hour of training, you have an entry level job. It’s not a job that is meant for you to “raise a family” on. And it doesn’t entitle you to part of my paycheck because you never improved your skills to move on. Ergo, I’m not going to “buy” american just because someone else thinks they’re “owed” a livable wage. It’s a tough conversation, but it’s time we had this conversation with certain segments of our population. The cost of your demands aren’t worth the value of your contribution to this product. That’s all there is to it.

  • mike davidson

    We are in for a monstrous battle between the political class/ public sector unions axis and the private sector.

  • garyg

    If the Democratic Party does as you suggest, they will be Republicans, not Democrats.

    A good thing, in my book. Then we just might be able to accomplish something.

  • Gordon

    Uh, one quibble. TARP was created by George Bush, and it has turned out to be an excellent emergency program. Other than that, this is one of the most insightful articles I have yet seen in this rancorous political discourse. Very well said.

  • waldo

    TARP passed under President Bush?

  • Rick Jones, Prague

    The author has done a great job in describing a paradigm shift in the economy. The 21st century is quite different from the middle of the 20th century.

    Owing to the rise of modern technology the public is better informed and slick politicians like Obama are unable to beguile the public the way FDR did.

    What the Demos are offering is nothing new. The public has seen this before and is not impressed. In fact, most of them have the fresh memory of Ronald Reagan and the benefits of free-market economics.

    Liberals ignore the insights of this article at their own peril.

  • DanW

    Here is the problem: Democrats, Progressives, Socialists – whatever you want to call them – all believe in central control. We live in a time of decentralization. Consider the Internet. It has led to the Tea Party movement. The Internet has allowed the grass roots organization of the silent majority who believe in the Constitution as it was written.

    The Internet makes top-down organization far less important than in the past. The media can no longer dictate what the news is and what we are to believe. Now the Internet gives us choice and information that we did not have before.

    Political parties now must consult the Internet community before taking action. The biggest problem with the ‘success’ of Obama is that he and the congress did not listen to the Internet informed community before enacting their legislation. They were still operating under the old centralized authority rules. Centralized government is now a thing of the past. The Democrats cannot control the flow of information and they are now out of phase with America.

  • Jeff Patterson

    Neither party is addressing the structural, systemic problems that have our economy trapped in a death spiral. The way out of the morass is to limit the scope and function (and thus the cost) of the federal government to those defined in the Constitution and to transform the way we fund government. We need to end the practice of allowing the privately held federal reserve banks to print money (by loaning dollars they do not hold) and charge interest on its repayment. This represents a massive transfer of wealth from those who produced it to those licensed by the government to steal it. If instead we used the interest on Fed lending to fund the government we could reduce the tax burden on our economy which will spur growth. More revenue could be generated by a small transaction fee on all stock sales. The US has created the greatest economy ever seen – a small transaction fee for access could generate many billions without being noticed by those reaping the benefits of our growth. Finally, we need to ban all political contributions from public employee unions. They should not be allowed to buy the very politicians they bargain with for ever increasing benefits.

    A party platform based on these principles and an enforceable ban with real teeth on hiring illegal immigrants could I think garner a governing majority of voters.

  • George

    Nobody really believes the information coming from government any longer.

  • Hey, Dummycrats can’t change who they are – they can try for a little while but socialism just oozes from every orifice on their body.

    Dummycrats lie, steal, and cheat for a living so this is when they must lie a little harder, steal a little more, and cheat much more – especially with voting machines.

    You can’t change a Dummycrat no matter how hard you wish….

  • justAThought

    The democrats only big problem is that it did not adquately address jobs. The democrats seem to address jobs as giving somebody something for nothing. In fact, it should had a all out war on jobs, giving jobs to anyone that need one.
    Instead, the corporate executives and bankers continued to get wealthy and lot of jobs.
    Any poltical party that do not address jobs is get kill in any election, period.
    It is just that simple!!!!!!!!!!!!!

  • Greg Buls

    The deeper philosophical problem for the left is that the number of people who want to be left alone to enjoy the fruits of their labors is greater than the number who want something for nothing, or need their hands held throughout life.
    The simple equation that matters for the left, assuming they stay as they are, is this: Do the dependent people outnumber the independent people? That’s the only way around their philosophical problem: They must create circumstances which force people into dependency, since they are generally unwilling to go their on their own. Unfortunately for them, only social unrest or continued economic malaise will do the job. So they have to hope for a depressed economy that Obama can blame on the new congress, and make it convincing. As it is now, people doubt him because a growing number of Americans think that Mr. Obama basically dislikes America and most of its inhabitants (center-right whites). He will have to convince those people to turn on the GOP, which is promising them greater freedom and less government, with the tea party holding their feet to the fire.

    This could all end up much worse for the left than anyone anticipates. As government and debt are actually cut and the private sector grows as a result, why stop with a haircut? Though not on the table now, the possibility of actual full privatization of social security and health care – or divestment of these resonsibilities to the states – may soon be under consideration. For generations democrats have been seen as the party that wants to level things by taking money from some people who have way more than they need, and giving it to those who have less than they need. What happens to the democrat party when they can no longer do this?
    I suggest a hail Mary pass. Democrats should try to become the party of effective stewardship. Propose an amendment to the constitution limiting federal spending to 20% of GDP, a bit more than the average in the post-WWII era. Then democrats can argue that they will truly represent the interests of the less fortunate, they will root out waste and corruption, etc. Until there is a limit to what democrats can spend, it will be a long time before they will again be taken seriously.

  • Charles Oltorf

    More than that of any other weblog, I enjoy reading your insights. Forgive me for replying once again. I do not know Mickey Kaus’s opinions of the new health care legislation or of financial reform, but it seems to me that both pieces of legislation would accord well with his goals as described in “The End of Equality.” I suspect that the Democrats’ problems have more to do with the effectiveness of FOX News than with the Democrats’ agenda per se. It is a pity that Pres. Obama did not do more during his campaign for president to make voters aware that his program would entail some costs rather than presenting health care reform as a free ride. The Democrats have a terrible problem reconciling their traditional supporters with the new left and it seems that therefore they are in a trap of having only two years of power and then out because of this.

    History moves very slowly and there is so much noise to signal that it is impossible to identify trends until they have already passed. However, if I had to guess I would say that we live in a time of diminishing expectations of government while at the same time the actual capacity of government to address problems is growing. The disappointments of the “war on poverty,” the “war on drugs,” etc have made people cynical. There are way too many well-intentioned laws that have the effect of harassing what are mostly fairly innocent behaviors these days. All this ineffectual legislation is left over from the mindset of the 60s and the 70s when BF Skinner and Herbert Marcuse were all the rage. Until more of this bad legislation is pruned it will be difficult to recreate the trust that government once enjoyed.

  • Dial Parrott

    Bravo; the best explanation I have yet read of the repudiation of liberal policies this election cycle. Absolutely brilliant and convincing.

  • valwayne

    And we thought when we elected Obama we were going to get a modern President ready to take us into the 21st century! Instead we got an arrogant rigid left wing ideologue wanting to take us back to the old policies and old stale Government programs of the 30s and 60s. How could we have been fooled so badly?

  • A. Hick

    I find it interesting that the author of this article outlines a blueprint for how a “reformed” Democratic Party can “reinvent” itself and address 21th century challenges. Most of the solutions he advocates, the GOP always give lip service about. The most salient unspoken point of the article is that the author never states that the GOP is up to solving these problems if only the electorate gives them the chance (again). I hope he didn’t say that because he believes they can’t solve them, because they can’t obviously. The USA is in very dire circumstances politically, The Democrats, probably the only existing political institution with the capacity to led, is stuck in an outmoded mindset. The only other organized alternative, at present, is one embodying irredeemably corrupt reaction. Looks like we may go over the falls.

  • Drew

    This article has it totally wrong. People simply are not convinced 435 people in DC can make decisions for over 300 million people, for example, in using the light bulb.

    Democrats lied and evaded telling the truth of what they were going to do to the country. Now the public sees what they are doing and want them out!

  • A Taylor

    The general problem facing the democrats, liberals, progressive philosophy is an existential one. After 2 years of tinkering, they can’t face the reality that their core belief that everything can be understood and once understood can be controlled has been awash in the harsh light of reality.

    Reality has a bad habit of exposing flawed theories in all its nakedness, and for Krugman to admit that maybe the supply-siders got it right this time would undermine his basic tenets, and hence he refuses to entertain that possibility, choosing to believe in a larger stimulus.

    Intellectuals, don’t believe on simple solutions, but they have a tendency to believe that complex reasoning that show a clever contradiction must be true. Hence they embrace paradox of thirift in its entirety without regard for exceptions or limits.

    The human motivation aspect of indiscriminate spending is ignored. Paying for irresponsible behavior begets more irresponsible behavior. If people believe that the government will pay heir mortgages when they don’t, then more will simply deciide to not pay.

    Because decades of American policy were crafted to encourage borrowing, people borrow more, save less, and the borrowing not only went to buy goods made in china, it also fueled a real estate bubble,

    When the banks could not handle the risk of bad mortgages, the mortgages were sliced and diced into securities, when the mortgage securities were at risk of blowing up, derivatives were invented to further push the risk onto the public.

    But all these fixes only fed fuel to the bubble. The core problem was still overvalued assets made worse by easy credit.

    If the intellectuals realized that their most cherished beliefs were flawed, soul searching would destroy the or core. They would cease to be superior to the unwashed masses, and would be….(shudder)… Ordinary.

  • Robert Gary

    Both parties need the same two insights:

    #1 It’s OK to pass laws in USA for the benefit of the American people. It might be much more “Politically Correct” to make laws that benefit foreign people, but it is still lawful to make laws that differentially benefit the citizens of this particular country, and not Mexico, or China, or Taiwan, or South Korea. A legislator may get a lot of disapproval for making laws that help Americans rather than other people, but he won’t actually get arrested for it by the League of the Red Sash.

    #2 It would also be OK to make laws that differentially benefit the middle class in USA, who are now disappearing like Buffalos and for much the same reasons — wanton despoilation with no effective regulation — they are not quite being shot from trains — just from tall buildings in New York City. Middle class means $35K/year to 200K/per year for individuals. Below that, you are poor, or perhaps destitute or structurally indigent. Above that, you are Upper class, perhaps even rich. Differentially benefitting the middle cclass means that the net impact of the law creates more people in the middle class. There’s all kinds of ways to do this, but if the money has to come out of somebody’s pocket, it’s more sensible to “soak the rich” than to cut off the poor. In Eisenhower’s day the top tax rates were in excess of 90%, and nobody ever thought that Eisenhower was a Marxist. Today we have a case of the rich getting the power in Washington, largely due to the Citizens United case decided by the US Supreme Court. If corporations are people and money is speech then corporations own Washington DC and everyone in it, so what you get is legislation that differentially benefits the very wealthy, and shoots a few more buffalo from tall buildings. The middle class needs a champion is Washington DC, and it makes no difference what party that person comes from — whichever party will get the glory and the privilege of saving our national prospect (and capitalism, like FDR did).

  • g50

    Dr. Mead – curious what you make of the comments and responses to your article?

    Another Democratic Party assumption is that problems are perceived in a somewhat rational manner by the public. In this case, there is a pretty clear example of the madness of crowds, and public delusions. The angry part of the electorate speaks for itself, for sure.

  • Nancy Austin

    The best article I have read on where we must head to maintain a vibrant and prosperous economy. It is relevant to education as well. Wish more people (both parties) could see this vision clearly.

  • David

    If the US economy was “closed” in the ’30’s, why did the tariff and FDR’s international gold/currency shenanigans have such deleterious effects?
    Also, Joel Kotkin’s commentary over the last couple of years, and Tom Edsall’s arguments in “Building Red America” describe the shortcomings of the Democratic party: the appeal of a coalition of hedge funders, trust funders, public employee unions and ethnic Mau Mau’ers is essentially limited by definition.

  • “Deficit spending, government intervention, support for the labor movement, heavy infrastructure investment: people believed that the only way forward was to have more of these things”

    If you mean the Dems believed this, than this makes sense. If you mean the voters wanted this (and more of) then you are delusional, as these in any form (small or large) are what has the majority of Americans very upset.

    The difference from the 1930s and now is that when people became alarmed at the spending and invasion of their contitutional rights they began to educate themselves via the internet, which added fuel to the flames of now appears to be the pyre of the Democratic Party. In the 30s the only way you would read about graft and corruption in the govt is to wait for the newspaper to print it (if they chose to write about it). Now we know about it within minutes.

  • WM

    “Coming in $671 billion under budget isn’t a bad record for a government program [TARP] that most economists believe avoided a massive financial meltdown.”

    What?! What economists? I know there has been a rash of pro-administration propagandists in the last few months trying to rewrite history, but TARP was universally viewed as a failure until then. What ever happened to presenting evidence when making claims? Does anyone not remember that the Dow continued to plunge all the way down to 6500 in the months after TARP, how everyone, I mean everyone, in the financial media acknowledged that TARP was an unmitigated failure by January 2009? How quickly we forget.

  • Maxbert

    TARP was signed into law by President Bush on October 3, 2008.

  • Eli Katz

    Interesting piece. But your domestic policy solutions are vague, unrealistic, and overly market-driven.

    If the last few years have taught us nothing, they have taught us that government and businesses are equally capable of corruption, stupidity, and bad decision-making. From the Invasion of Iraq to the Wall Street meltdown, the country’s public and private leaders have failed the people. It does us no good to empower one side over the other, because it would simply allow one side to empower itself further at the expense of everyone else.

    The real problem that the United States faces is that its most vital institutions — its governing and financial institutions — are overly complex. Congress is a labyrinthine mess. Using intricate rules, complex legislative processes, and a variety of legislative tricks, lawmakers can easily conceal their activities from even the most knowledgeable congressional observers, let alone the public, and thus undermine one of the most important components of democracy: accountability.

    Likewise, the financial services industry has rules and products that would make Rube Goldberg’s head explode. As a result, one of the major cornerstones of a prosperous and fair society is undermined: transparency.

    Is the solution, then, as you suggest, to foster small business growth? I doubt it. To place your faith entirely in small business is to place your faith in a simpler time. How exactly are small businesses going to produce better solutions for national problems? How are they going to create better health outcomes for the country? Ma and pa hospitals? Ma and pa pharmaceutical companies? What “new kinds of businesses,” to use your phrase, would reduce health-care costs?

    This is pipedream thinking on your part. What we need, rather, is serious reform of the country’s major institutions. I would start with Congress. If the country’s legislative branch is unable to work in the national interest, it creates a power vacuum that presidents and business interests can — and often do — exploit.

  • Maxbert

    Insightful article. FDR’s policies, however, largely failed to end the Depression. The regulatory/redistributive paradigm has never brought prosperity, not even in the last century.

    BTW: TARP was signed into law by President Bush on October 3, 2008 (Wikipedia).

  • JLKrieger

    It seems like a number of respondents did not read the article very carefully. Those who quibble are for the most part parroting WRM.

    And yes Waldo TARP was passed under Bush, but only after 3 catastrophic weeks in which Dem and Repub alike (remember Pelosi announcing a “deal” 3 times before Harry Reid stepped in?) oversaw the freeze-up of the world monetary system, the end of Lehman and the Dow dropping 900 pts in one day…the day before they finally got off their collectives asses.

    The original TARP would have been effective but unfortunately the DC sausage factory turned it into something that kinda worked but the damage had already been done through global panic.

    In closing I want to compliment WRM on being one of the very few “Talking Heads” that can tell me something I did not know. He is a brilliant man..one of the few in the Ivy Halls of acadamia.

  • After this election, just be sure to exercise your right to DEMAND that Congress puts the real spending cuts to equal their tax cuts, in the same Congressional bill. No more deficit funny stuff!

  • Arthur Dayne

    Arguably he has had more sucess? what you call sucess with helth care and bail outs and financial rules some would call EPIC FAIL.

    What happens when america is 25 trillion in debt……Hold on to your pants. we will find out!

    people better get their friends and form coalitions…militias cuz the govt will collapse.

  • anon

    FDR won because he pulled a Chavez and closed down the right wing radio stations with the “FCC”, or the Franklin Censorship Committee.

    And by the way, unemployment is at 22% right now. The official number is a lie. A pure and simple lie.

  • Greg Buls

    The Smoot Hawley tarriff was a signal that we would not be relying on export-led growth. The depression was caused by what all major recessions in growth are caused by: asset bubbles, generally resulting from mis-allocation of capital due to laws and regulations, or federal reserve action.
    The recent real-estate bubble inflated because of legal pressure on the banks to offer non-conforming loans, which were then quasi-guaranteed by quasi-governmental bodies. But still these toxic assets still had to be washed, which gave us the derivatives. Until the major government push to expand home ownership, housing prices rose virtually exactly in line with inflation. Then along comes social engineering and lots of additional houses are being built, but not enough to keep up with demand, which is skyrocketing, along with prices. The fed keeps interest rates artificially low, and owners extract easy money credit from their overvalued homes, massively increasing their indebtedness. If someone had set out purposely to wreck the economy, they could hardly have picked a better game plan. And the whole thing was made possible because of the implicit understanding among all who were involved that you – the taxpayer – would ultimately clean up any resulting mess.

  • Your triage of “required structural refinements” to foster the rebirth of the American middle class is nothing more than a shill for further concentration of financial and political power of the wealthy elite who have learned that high end computer trading is the wave of the future for even greater mindless acquisition of wealth.

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  • John

    really hits the nail on the head…politicians and the ilk from both parties should read this, not the least of which Obama and every democrat in California.

  • Foobarista

    Another problem is the structure of government itself, with massive bureaucratic organizations made up of lifers whose main purpose in life is maintaining their organizations and ultimately their jobs. This used to be the structure used in American businesses, but this sort of thing was ditched long ago except by businesses that are attached to the government such as GM or military contractors (and even these are modernizing and decentralizing).

    A related problem is government procurement or contracting, with a ton of rules, regulations, objectives, and goals that have little to do with efficiently delivering quality products or infrastructure. This is part of the reason why big infrastructure is resisted by many people – it’ll cost insane amounts of money, much of which will disappear into the pockets of lawyers, bureaucrats, unions, sundry insiders, and other ratholes. LA’s $500M high school is an excellent example.

    It’s hard to look at things like the Golden Gate Bridge and realize that they were often built under budget at the time. Pretty much no government infrastructure nowadays comes in anywhere close to budget.

  • Rick

    To Jacksonian Libertarian:

    Deflation? You’re mad. Go across the border and buy something denominated in Canadian dollars, now at near-parity with the USD, or visit Europe and pay for a hotel and a meal. Then talk to me about deflation.

    The currency is being debauched by the combination of deficit spending and near-zero interest rates. The government and the Fed are knowingly destroying the retirements of people who’ve been frugal and saved for their old age, while rewarding those who took enormous risks with borrowed money.

    The good news is there’s significant energy savings to be had by hooking up a generator to Milton Friedman’s coffin, given the spin rate he must have achieved by now…

  • Texas Mike

    Funny how two years after being demolished in the elections because of the effects of deregulation, the party which destroyed the world economy is blaming the other for not fixing it fast enough.

    The bottom line is that free trade is pitting American workers against third world slaves working for less than a dollar a day. No way to win that battle. Hence the outsourcing of blue collar jobs and the decline in manufacturing and wages, and the concentration of wealth in the economic elites.

  • Steve Gerow

    Very insightful posting. Very insightful comments by all!

  • jack carlson

    Way too many people who control and contribute to the Democratic Party benefit from the status quo. They will NEVER change. The only solution is to kick them completely out of power forever……

  • “if American politics still operated on the rules of the twentieth century, the Democrats would own this political cycle.”

    Unfortunately for Democrats, we’ve had some 68 years of their “tax a lot and spend a lot more” for the glow to fade and reality set in on their pie in the sky delusions for a bit over half of the public. (And that in spite of all that entrenched liberal/stateist/progressives in politics, our “education” system and their lock step “news” media can do to reverse the tides of current reality.) God help us, I hope it;’s not to late to save some shreads of American freedom from government for our kids.

  • John O

    The New Deal has changed the country forever. Most Americans now have an entitlement mentality and it is what is bankrupting the country. Many aren’t even aware of it and the cognitive dissonance on the matter amazes me. My income/net worth in the marketplace is my property to use as I see fit to take care of my family and nobody is entitled to a part of it. People usually agree with me when I make this statement until I point out that means Social Security recipients too since it includes the 15.3% everyone with a job pays right off the top for ‘social insurance’ and those programs would end w/o those taxes.

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  • re: GDP increases while income stagnates or declines.

    Too bad there are no Democrat business owners willing to speak on the record about where the dollars from increased productivity are going. A competitive market insures that their returns are not much better than bank returns – so where is the money going? (into purchasing decisions made by D.C. for the masses – aka regulation. Which lay heavily on the middle class because they don’t consume that much as individuals, and any purchasing decisions made by others for them come right out of their pockets – either directly – like lightbulbs, or indirectly in new costs that their employers must pay in the employee’s interest).

    It’s easy to see once you have to manage a businesses’ books. And make a payroll. And pay for benefits. And your local taxes that increase because better test equipment can now see arsenic that was always there but not measurable before.

    Since the employees have been voting these fools in for decades, I assume they must want their productivity gains to go towards these “greater goods.” Where at the extreme they are now unemployed because of these arguably unwittingly chosen “purchases.”

  • Black Saint

    Obama & the democrats are seeking to use the Calif. for the rest of the USA.

    California the Golden state, American future, is fast becoming the poster child for an bankrupt third world State!

    An unholy alliance of Socialist Democrat politicians, Unions, and Illegal Aliens supporters are feasting at the trough of tax payers paid benefits while taxing & regulating business and the tax paying public into poverty.

    The pandering of Left Wing Democrat Politicians to their constituency of Illegal Aliens, open border supporters, and unions are driving business and citizens to other states & countries, while leaving the parasites & welfare leeches in an increasing bankrupt, crime ridden, dysfunctional state!

    For years California has ignored economics 101 by rewarding Public employee with wages and benefits that far exceed any in the private sector or any thing connected to common sense to buy their votes while importing poverty, Criminals and uneducated parasites from Mexico, which increased Medical, Welfare, Crime, Prison, etc. & adding a estimated 16 billion per year to Calif. State expense to provide for the invading horde of Illegal Aliens while exporting business and educated working tax payers.

    Like all Socialist & Marxist States the results have been a astronomical increase in social welfare, schooling, prison cost etc. and a lowing of Living standards, Education standards, Tax receipts & finally Bankruptcy.

    Failure to abide by our Constitution against invasion & enforce our Immigration laws and constraints on wages and benefits for public employees will result in turning the Golden State into MexiCalif and the end of the California dream!

    The policies of Obama and Wash. DC Democrats are intent on following Calif. policies and are rewarding the Lazy, Corrupt, Criminal, Greedy and Stupid while punishing the tax paying, Law abiding citizens that pulling the cart and carrying the load.

    Amnesty & Citizenship as a reward for their invasion of the USA, will result in the rest of the USA turned into a Spanish speaking third world slum, modeled on Mexico and follow California into a polluted, over populated, Spanish speaking third world Nation of Crime, Corruption, Poverty, Cruelly & Misery!

    This will result in a population depending on Welfare and the Democrat party, thus assuring the lock on power for the Socialist Democrat party of the United States of Mexico!

  • tom baty

    The Democrats are living up to the symbol of their party, no surprises there.

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  • EJM

    Prof. Mead, you are too kind.

    Keynsian “stimulus” and democratic policies no more worked in the 30’s than in the present administration.
    As you say yourself unemployment was over 20% two years into the Roosevelt administration, and the country experienced a “double-dip” in 1938, six years after FDR and the democrats took over the reins. Instead under FDR the federal government first broke the constraints set upon it by the founders, and an all-out assault upon the Constitution began which continues until today. Deficit spending became the norm, entitlement programs were created to weaken state and local self-governance, and bind the citizen to the federal colossus. FDR tried to expand and pack the Supreme Court and he was the first imperial President to thumb his nose at Washington’s noble example of stepping down after two terms. The divisiveness of politics and the bankrupting of the country began with FDR’s administration.

    Today those policies are coming home to roost. The prosperity and global dominance of the US economy simply delayed the day of reckoning. The welfare state conceived in the 19th century by Bismarck is failing in Europe, while the economy has globalized and the rigid unthinking ideology of the “progressives” hasn’t moved in 75 years. If anything it has become more rigid and more paranoid, seeing corporations and even small businesses as the villains in a world they cannot understand or control. They propose heavy-handed and centralized statist control of health care, at the exact moment when we should be encouraging a wider variety of options. They want the federal government to do ever more, when it obvious even to the half-blind that the federal government cannot do almost anything it currently does well.

    This was a bankrupt and morally repugnant approach in the 1930’s. Now it borders on the delusionally insane. But at least we can thank Barack Obama and his followers for making the choice crystal clear. We can bankrupt ourselves, start moving to soft and then gradually harder totalitarianism, ending the American experiment in liberty and self-government, or we the people can grab the government by the horns and bring it to heel, restore fiscal sanity, and renew the social contract with a limited government defined by the Constitution.

  • johnofarc

    “Franklin Roosevelt inherited a bad economy from his GOP predecessor. And the Depression wasn’t over by the 1934 midterms … The Depression still had six years to run.”

    What was so deterministic about the years 1934 to 1940 that the Great Depression just had to continue in the USA while it had abated elsewhere in the world? It is because FDR’s propaganda has become historical dogma. The Great Depression is the one event in human history that no person, not even FDR, could have ended. It took WWII. American histo-crats would have you believe that since that was the way it happened, that was the only way it could have happened. But why not the same for this economic crisis? Why doesn’t this Great Recession have six more years to run? Mr Mead, whether or
    not you have been brainwashed, you are perpetuating the myth that FDR “guided us through troubled times,” impotent creatures that we are. Why doesn’t the same cliche apply to BHO and GWB? Why do we expect today’s politicians to take a bad situation and not make it worse, as did FDR?

  • johnofarc

    Lea Luke said: “Real per capita GDP has grown steadily over the past 40 years even as real hourly wages have declined.”

    That’s interesting. The income gap is a big problem. Two solutions.

    One, reduce the government role in paying for products and services and the wages of doctors, lawyers and financiers should come down (they’re artificially high now).

    Two, reduce the drain on wages of taxation and social security, allowing wage earners to become larger capitalists than they already are, both as stock holders and entrepreneurs. Wages are not the only source of income and wealth.

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  • Mott

    “Why? Basically, because voters believed that the Democrats had the answers to the country’s problems. Deficit spending, government intervention, support for the labor movement, heavy infrastructure investment: people believed that the only way forward was to have more of these things.”

    I stopped reading here. Obama ran as a centerist, against deficits and large gov’t intervention. In other words, he lied.

    We didn’t want what he’s doing. Conservatives didn’t want another conservative-lite, but Obama ran a campaign that was focused enough on the middle to fool many into staying home.

    Now that we’ve seen his real agenda, he’s a lot less popular and will stay that way.

  • D4N13L

    This country is unwilling to share the fruits of economic progress? Who said that? Are you insane? What economic progress? Between ten and twenty percent unemployment? Would you like a piece of that fruit? I think the fruits are rotten.

    I don’t know about you guys, but when I am working I find that nearly a third of my paycheck is gone. This is taken by the government to “share the fruits of my success”. I just hate even the sound of that. The government wants to, “share the fruits of my success”. I will remember that in November.

    PS…I’m not one of the over $200,000 “rich” people. I make less than $100,000 (much less) and yet the money is still gone. How much more should I share?

  • Edmund Burke

    The funny thing is, energizing small businesses and entrepeneurs is precisely what I hear this President talking about. Reforming health-care was about releasing our economy from the stranglehold of insurance companies and rapidly rising health-care costs as an integral part of reinvesting in our productive capacity. The much derided “cap and trade” was mostly about making carbon more expensive and thus stimulating the market for investment in alternative energy technology. That won’t happen with the current, mostly hidden, subsidies to fossil fuels and the large corporations that control them. There is this conventional wisdom in GOP circles that everything this President has done is about old-fashioned, top-down liberalism . . . I don’t see it and I am a life-long Republican. I actually see the new ideas for using government effectively to actually stimulate markets by freeing capital from old and unproductive uses and using the market to naturally channel them to the new, small ideas the GOP says it wants. What am I missing?

  • Peter

    I’ll drink to the death of the Democratic Party, a party that effectively comitted suicide when it allowed itself to be taken over by leftist radicals in 1972 when it became the home of the America-haters.

    And now, nearly 40-years later, the Democrats crowning achievement is the placement of a geniune Third Worlder, an America-hater of the first order, in the presidency.

    Either the Democratic Party as it is now structured dies, or the Republic does. I pick for the former to go.

  • Dave Zimny

    Shame on you, Mr. Mead! You and your readers (if these comments are any indication) both suffer from extreme political amnesia. Your article lambastes the Democrats for their “20th-Century” policies, as if FDR had passed the baton of power directly to Barack Obama. Even if your policy prescriptions are as modern and effective as you say they are (which I very much doubt), do you suppose that the Republicans are more likely to enact them than the Democrats? It was George W. Bush, if I remember correctly, who created most of the structural deficit that now plagues our system of government financing. It was George W. Bush who blithely assured the nation that no sacrifices needed to be made to fight a trillion-dollar war. It was George W. Bush and his congressional Republican enablers whose passion for deregulation greased the skids of the financial system as it plunged into the abyss. Are today’s Republicans the party to champion small business? Not likely: they were the party that opposed in Congress Obama’s attempt to expand credit for exactly those small businesses you say he’s ignoring. No, today’s Republicans are much more in the thrall of the Wall Street financiers, the drug companies and the Pentagon contractors than the Democrats are. And in the meantime, you and your commentators are trying to exorcise the ghost of FDR! If Obama and the Democrats are truly a “20th-Century” party, then the Republicans are a 19th-Century party, assuring us that all will be well if we simply return to the policies of William McKinley: lower taxes, less regulation and unfettered corporate power. Is this innovation? Francis Bacon was right: “He that will not apply new remedies must expect new evils, for time is the greatest innovator.” If our dissatisfaction with the Democrats brings the Republicans into power, heaven help us; we will see new evils galore.

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  • acramer

    All you conservatives. It isn’t even worth commenting on what you have written. It astounds me how blinded you all are out of your hatred of things progressive, and, I might admit, this President. You have unthinkly bought into the old neo-con pardigms. To you guys, facts and history don’t matter. Heaven help the nation if you guys get your way. Good luck, you will all be wage slaves just like those you are condemning. And that my blind and unthinking firends, is a crying shame!

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  • Stephen Nachmanovitch~ The most potent muse of all is our own inner child.

  • Actually, she has a track record for exercising poor judgment. In Martha Coakley and the child molesters she shows herself to be tough on the innocent by keeping them in jail, and lenient on the guilty: definitely poor judgment.

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