Yes, kids and kittens, we’re back with our friend, Kevin Hassett. Hassett has been a busy motherfucker in the weeks since we last flung poo at him, producing a couple of very worthwhile articles:
These tidy analyses demonstrate Hassett’s considerable political prowess as they are rather adept commentaries on pop culture’s treatment of elected officials and the petty wars amongst our betters. But, never fear, for Hassett never leaves the economic crazy train for long, slanging a remarkably incoherent screed despite the very good points into which he occasionally rambles. Fire up the FJM machine, the shitter’s full!
Commentary by Kevin Hassett
June 22 (Bloomberg) — In his landmark 1942 book, “Capitalism, Socialism, and Democracy,” economist Joseph Schumpeter emphasized the key role that creative destruction plays in generating long-run economic growth. It is the driving force of capitalism.
It’s always fun when Hassett mentions a landmark book because then we can bring up DOW 36,000! Now in Ninja Text!
That. Just. HAPPENED.
While the used paperback is $0.98 on Amazon, the hardback can apparently be had for $0.01. Don’t forget the $0.18 audio tapes! I’m trying to think who would be the most fitting to read it, and I think it’s a tie between Jim Cramer and Lenny Dykstra.
There have been numerous accusations that President Barack Obama is intent on reforming America as a socialist nation.
It sells better with the liberals like fascist does with the republicans.
Obama himself may have fed the beliefs with his own words, saying, as he did, that he believes government should “spread the wealth around.”
Which is naturally code for “sucking up whatever is not nailed down, then taxing nails.” And remember kids, “preemptive war” is code for “serial rape”.
He also said, back in 2003, that he favors a single-payer system for American health care.
“But seriously, fuck that Jew. Wait, are we not talking about Franken anymore?”
Most of Obama’s policies to date are very far from the socialist ideal.
What is the socialist ideal? Canada? France? A Buddhist monastery? Berkley?
They may well move the economy in a direction that a conservative might oppose, but they do not revive the model of the Soviet Union either.
We’re sidling awfully close with preventive detention getting kicked around, protecting the worst civil liberties abuses of the Bush Administration and the wholesale nationalization of industries. All we need is a menacing national hockey team and a sweet name for our secret police.
Still, there is one aspect of Obama’s policies that gives a student of Schumpeter great pause, and perhaps even some sympathy for Cheney’s answer.
CHENEY DOES NOT NEED YOUR SYMPATHY! *shoots puppy, claims to be aiming at pheasant, urinates on puppy’s corpse*
Obama and his team seem sharply opposed to the view that creative destruction is a valuable economic force. They seem happy with what might be called destructive destruction — the obliteration of value and wealth without any resulting positive change.
What, like carpet bombing other countries and missile defense systems for no practical reason than to piss off Ivan?
Creative destruction describes the painful effects of innovation and progress. Sometimes great inventions wipe out the existing economy, just as the Internet may be killing print newspapers.
Like DVD porn before them. So it goes.
In other cases, economic failure clears the way for competition among inventive newcomers. In both scenarios, the nimble and inventive replace the calcified old guard, eventually moving economic welfare to a higher level.
This mention about economic welfare by itself neglects the point about creative destruction. Economics is fundamentally about the allocation of scarce resources, best implemented by a free market in which property rights are respected, thereby assuring that costs and benefits are borne by those who contribute to them. When new industries or inventions replace the old, resources are redistributed to a more productive area, through the coordination engendered by the free market system. This often increases welfare, but the point of economics is coordination between acting humans. Welfare is a more subjective concept.
No Bank Innovation
The Obama administration has regularly opposed changes that might ignite a positive wave of creative destruction. Banks, for example, engaged in imprudent practices that pushed them toward the brink of bankruptcy. Where are the new innovative banks to replace them?
I don’t know. How about we ask the Administration that bailed them out? Can someone get Hank Paulson and GW on the phone?
They don’t exist, because private capital can’t compete with the enormous subsidies flowing from the government to the diseased dinosaurs.
But what of our deflationary spiral if the banks go under?!?! A fairly bold move to go against the Keynesian orthodoxy so directly.
Make no mistake, there is destruction: investors have seen their wealth destroyed. But the government’s actions have prevented any creative outcome.
And created that destruction in the first place; the Federal Reserve, hard at work. Governments are creative when it comes to destruction.
Imagine the wave of innovation that could be set off if General Motors Corp. and Chrysler LLC were allowed to fail. Existing firms, such as Ford Motor Co., Honda Motor Co. and Toyota Motor Corp., would have vast new markets to compete for. New firms, such as Tesla Motors Inc., whose Model S may well be the most revolutionary automobile to hit the market since the Model T, would not have to compete against cheap, subsidized government-made cars.
It’s probably not the best thing to mention as your free market icon a car company that just took a $465 million loan from the Federal government. Which was in the Wall Street Journal. Two days before this article was published. Perhaps some forms of socialism are more free market than others.
Instead they do have to compete, because it is just unthinkable for Obama to force his unionized political allies to make any sacrifices.
Wait, Obama’s political allies have formed a union? We demand more time with Bo! Rahm, get your finger out of that dog’s ass! I don’t care if it’s dressed like it wanted it!
Obama is opposed to letting failure produce space for creation, but he also is opposed to innovative creation that would have destructive repercussions.
He’s opposed to creation that causes destruction? Like a stealth bomber or something? Or is his opposition of creation causing destruction? WHAT DOES THIS SENTENCE MEAN? It’s probably the latter, but it’s probably written by someone on a bender.
He has proposed large new increases in business taxes to extract the profits that motivate innovators, and he signaled a willingness to force firms to share their wealth with a resurgent organized labor.
Instead of forcing firms to vie for government contracts for imperialist wars and consolidating energy companies into a government cartel (like the banks!). But we could always go for broke and use both Bushesque wars and cartelization in addition to socialist policies. Fascism and socialism together—going both ways in America. We’ll be the bisexuals of tyranny.
The actions of Obama and other Democrats speak volumes. They are supporting so-called card-check legislation, which would make it easier for unions to organize workplaces. And a provision in the Federal Aviation Administration reauthorization bill passed recently by the House appears to have been specifically designed to allow the Teamsters union to organize FedEx Corp.
Tax on Success
The message is clear. If you succeed and become profitable, Obama will take a big share of your profits for the federal government and give another big share to the unions.
The scale of the combined tax that results from this is hard to fathom. Federal Reserve economist Bruce Fallick and I
Of course he worked with the Fed’s people. But remember, government enforced monetary and banking cartels are not socialism.
estimated in a research paper published in 1996 that unions tend to successfully extract from firms about a third of their profits.
Does this include the portion that would be actually justified by their labor? Apart from it? Do I really have to read that paper? THERE BETTER BE NAKED WOMEN FORNICATING IN THIS PAPER.
Unions seem to calculate their wage demands based on a firm’s profits.
As opposed to fairy tales and acid dreams, like when the US presents ultimatums to rogue nations.
In the new world that Obama is preparing for us, where unions can organize almost everyone, the tax rates from states, unions, and the federal government will approach 70 percent.
“Can”, unfortunately for the commies, does not equal “will”. For private industry in 2008, the amount of the labor force unionized was 7.6%. That’s a long way from even a majority, which unionists have never had.
Fun fact however, upwards of 36% of government employees are shaking down the man for a little extra in the pension kitty. And with Bush and Obama nationalizing everything they could wave their dicks at, this sort of thing portends more poorly for highly regulated industries. Health care, I’m looking in your direction (oh wait, you’re already run by a cartel).
Again, there’s the destruction. It is the wealth of entrepreneurs that is destroyed.
Like the government sugarbaby, Tesla. I don’t disagree here, but it should be noted that the absolute height of the socialist folly is believing you can invade another country, destroy it, and then rebuild it in your own image. That is literally the endgame of central planning.
Such policies will chase the ambitious away from the U.S. and leave the long-run economy a stagnant mess.
Mmmmmm, smells like France.
Path to Socialism
Socialist states emerge over time because entrenched interests like organized labor achieve a position from which they can extract extra sustenance from successful firms.
Or because the nation’s central bank causes an economic meltdown with hyperinflation, helping fuel the National Socialist Workers Party’s rise in Germany ‘round 1930. As much as I dislike organized labor, the Fed is easily the biggest danger to a free state.
Workers who have won a higher wage than their productivity would rationalize do not want old things to die, or new things to be created.
This is sort of a roundabout way of saying unions are aghast at competition, as their fight for higher wages is typically one against their competitors: other workers. Hassett’s phrase here seems to paint them as misanthropic curmudgeons who try to douse laptops in holy water while cowering from cell phones. Unionists don’t mind change as long as they can control it, though I will agree that they have little incentive to innovate, and much to be wary about the competition (see here, US vs foreign auto workers and the resulting tariffs).
Whether he is socialist or not, by embracing the idea of destructive destruction, Obama is giving such stakeholders exactly what they want, and threatening to suck the vibrancy out of our economy.
Hassett inadvertently gives the President a new slogan: Obama will personally suck your vibrancy, America!
On a side note, while Hassett speaks a lot about the damage of proto-socialist policies, I would argue that most Republican platforms subvert the free market framework in a more devious fashion. The policies of many republican administrations has been to the lower regulations while leaving the regulatory agencies in place, or worse, secretly working those regulations to benefit certain players at the expense of others. By taking these half measures and outright plunder, they then help precipitate recessions (which the Fed and fractional reserve banking always has a hand in) or business crimes, which are then blamed on these alleged free market policies, which are in reality anything but (closer to fascism than anything else). In my mind, the Republicans with their limp deregulation efforts, cronyism and aid to moral hazard have done more damage to free market economics by flying their pirate ships under the laissez-faire banner than the socialists who dug their own graves with the millions who suffered under the Soviets and Chinese.
And now, here’s Primus: