A Lackluster Beginning

This has been a very disappointing 3 months since the President's Inauguration. Standing behind the Capitol in the frigid conditions of that overcast day, I listened to President Bush rattle off a litany of goals he had for his second term. Among them were Social Security Reform and further Education Reform. He also talked about the importance of spreading democracy across the globe. He should have stuck to foreign policy. The Social Security effort hasn't moved off the starting blocks, and the President's approval rating has sunk to an all-time low. There's just something about 2nd Terms that aren't worth a whole lot. It might just be the only legitimate reason to repeal the 22nd Amendment: no more lame ducks. It hasn't helped that the Republicans in Congress have become the same kind of cowards that the Democrats were when they were in the majority. I'm not talking about all of them, just a whole lot of them. What will it take to get their attention? My fear is that it will take a major defeat at the polls. If things don't change soon, we'll be looking at Speaker Pelosi.

The Perpetual Campaign: The Final Nail in the Republic's Coffin

It's finally here: the perpetual campaign. As our Presidential campaign cycles get longer and longer, and as midterm posturing begins on Election night, we have enough to worry about when it comes to long campaign seasons. But there is another addition to the campaign family: issue campaigning. This is not totally new, but my guess is that it is about to become more prevalent. Social Security, Judicial Nominees, Gay Marriage---all of these issues are becoming campaign issues, that is, they issues that the Administration, members of Congress, and Governors are flying about the country "campaigning for," pushing popular support upward for whatever their position is on the matter.

This is a disaster for our system of government. The Republic has been dying for about a half-century, with more democracy (the bad kind) taking root in the United States. The initial attacks on the Republic came in the form of the 16th & 17th Amendments, as well as the 18th but it was fortunately repealed. The advent of information technology and instant news has allowed the transformation from Republic to Democracy to be complete. Now the majority will rule without protecting the rights of the minority, and they will vote themselves whatever portion of the public treasury that they want. Indeed, Social Security and Medicare are the perfect examples of this, and our nation will crumble as a result.

Some Good News for a Change

Corporate Profits are up, way up in fact. This is good news for the economy, though not necessarily for consumers in the short run. It's not bad news for consumers, it just doesn't do a whole lot for them right now. Many on the Left argue that employment and more money for the "little guy" are the best things for the economy, and that nothing else really matters. Well, we had that during the 1990s, the Clinton Bubble (whose burst was very painful), and it didn't do us much good. It also was a decade of very low capital formation, we were spending our way into prosperity, only to discover that prosperity was soon followed by recession. Corporations, at least most corporations who have long term focus (and corporations that don't aren't around for long) are taking their profits and reinvesting them in capital. That is good news for productivity. Capital investment right now could also mean new alternatives to the oil-driven economy. This could be the shot in the arm that will prevent major economic catastrophe in the near future. Let's just hope the Democrats don't win any elections soon, because Big Corporations are the favorite target of Democrat tax increases (well, Big Corporations and everybody else in the country).

Stagflation Redux

Oil is up, prices are up, employment is shaky--the Fed is responding to all of this with higher interest rates. For those people who were around for the 1970s, the term Stagflation may be unfamiliar, but the realities of it are not. Prior to the '70s, economists believed that Inflation and Unemployment were mutually exclusive phenomena. In other words, there as thought to be a tradeoff: accept a little inflation to have not so much unemployment, and vice versa. This was known as the Phillips Curve in the academic literature. But the '70s broke the Phillips Curve, and economists were standing around scratching their heads. Suddenly there was unemployment and inflation, or stagnant inflation---now known as "stagflation." With oil prices soaring in recent days, and with the job creation numbers out today, it is looking like we could be having a repeat of '70s-style stagflation. The question everybody is asking is "Who do we blame?" Most people want to blame the government. And that works pretty well, but we can't lay it on a single person or group. Everybody is responsible. They are responsible for failing to reduce spending, and further cut taxes. They are responsible for failing to further reduce regulatory burdens on industry and small business. They are responsible for failing to reform the entitlement programs that are sucking the economy dry.

So on this April Fool's day, the only fool is the American public, for buying politicians' lies that more government makes things better. It just isn't so.