Dan Greenfield explains the new American economic system.
In the oligarchy the wealthy form a natural aristocracy, but it isn’t an aristocracy of talent, it’s the accretion of closeness to power. This aristocracy changes in composition with revolutions, but its nature remains the same. It is a collection of the people with the best lobbyists, the best bribes and the closest cultural ties to whoever is in power. Any member of the oligarchy can have his wealth and influence stripped away in minutes at the behest of the regime.
Even as American Exceptionalism declined, the remaining free enterprise aspects of the country kept the American Dream alive. For a while that American Dream, the ability to enter the country and move up the economic ladder became the sum of the nation. Generations of politicians reduced the meaning of the United States to a nation of immigrants where any new arrival could launch his own business and make money.
The rise of the oligarchy is foreclosing that dream leaving only the nation of immigrants struggling within a complicated political hierarchy for government handouts from a political movement that denounces some tycoons at the behest of other tycoons. It’s the oligarchy at war for control of the dead present, even as it kills the past and the future to accommodate its plans.
It is the end of America and the rise of an Obamerica. Obamerica will still have great reserves of wealth, but on average it be far poorer and far less productive.
Obamerica will be known as a party country, a good place to buy the good things if you are one of the sons of the rich or are a tourist from a rich country. Obamericans will be described as sensuous and spontaneous pleasure-loving people. Obamerican cities will be violent, dangerous and exciting places full of decadence. Its slums will be full of drug dealers and child prostitutes. Most Obamericans will not believe in the future, but will cheerfully accept the misery of the present. They will hate the rich, but long to be in their place so that they can stomp on the poor. The old prosperous nation will be gone and in its place will be the oligarchy.
Roger Kimball lives in one of the Fairfield County, Connecticut towns bordering Long Island Sound, and his neighborhood was hit by Sandy. He has to repair his home, and consequently ran into the nightmare regime of building codes and zoning regulation that prevails everywhere in developed portions of America.
Our first exposure to the town zoning authorities came a couple of weeks after Sandy. We’d met with insurance adjusters, contractors and “remediation experts.” We’d had about a foot of Long Island Sound sloshing around the ground floor of our house in Connecticut, and everyone had the same advice: Rip up the floors and subfloors, and tear out anything—wiring, plumbing, insulation, drywall, kitchen cabinets, bookcases—touched by salt water. All of it had to go, and pronto, too, lest mold set in.
Yet it wasn’t until the workmen we hired had ripped apart most of the first floor that the phrase “building permit” first wafted past us. Turns out we needed one. “What, to repair our own house we need a building permit?”
Of course.
Before you could get a building permit, however, you had to be approved by the Zoning Authority. And Zoning—citing FEMA regulations—would force you to bring the house “up to code,” which in many cases meant elevating the house by several feet. Now, elevating your house is very expensive and time consuming—not because of the actual raising, which takes just a day or two, but because of the required permits.
Kafka would have liked the zoning folks. There also is a limit on how high in the sky your house can be. That calculation seems to be a state secret, but it can easily happen that raising your house violates the height requirement. Which means that you can’t raise the house that you must raise if you want to repair it. Got that?
I blogged about a second-hand horror experience with building codes back in 2011:
One day, while I was still living on the SF peninsula in San Carlos, I went outside to get something from my car, and the pretty Oriental young lady who lived in the house across the street (whose name I did not even know, we had only been on waving-hello terms) ran crying into my arms.
She and her husband, a silver-haired, distinguée executive-type who drove an S-class Mercedes, had purchased the typical run-down 1960s-era California spec house across the street from our rental for something north of a cool million. They then proceeded to gut snd completely rebuild the place. Construction activity had been going for about two years, and seemed finally to be nearing completion. I thought these neighbors seemed likely to be about to take up residence just about the same time I was scheduled to depart.
My neighbor began sobbing out her story. A building inspector from the city of San Carlos had just left. He had disapproved of the nails used to attach the wire-mesh to the outside of the house which had already been covered with stucco cement and painted. Because the city didn’t like the contractor’s choice of nail, my neighbors were going to have to give up plans to move in. They would be obliged to tear off the entire new exterior surface of their house, and re-attach new wire mesh and stucco, and paint the whole thing all over again. It would take months to do the demolition and exterior covering again, and it would cost a lot of money.
Beyond the many tens of thousands of dollars all that extra construction was going to cost, they’d have to do an additional move (their lease was up) and pay thousands of unnecessary dollars a month for another rental house. My neighbors had been hit with six figures in extra expenses by the local building code enforcement system over a nail.
No wonder the poor girl was sobbing. She probably felt a lot like Richard III.
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In all the suburban enclaves of the community of fashion, layers of officials have erected regulatory empires funded by the tax dollars of the generally oblivious ordinary citizen. No rational person would buy a home burdened with exorbitant levels of taxation which he can only actually use with the grudging permission of hostile and tyrannical officialdom, but one always discovers the character of one’s place of residence too late.
Really, the best choice is the complete reverse of what most people desire. Instead of living in the most toney neighborhood, surrounded by affluent neighbors with prestigious careers and elite educations, you want to live in a rural township: the kind of place lacking in prestige, fashionability, and good restaurants, where your neighbors are all rednecks and poor. That kind of township will have next to no government, taxes will be extremely low, your neighbors will be friendly, and you can hire labor at cheap rates.
Non-interference with sacred and beautiful wild creatures (Just look at those beautiful cormorants!) is obviously a higher value to all Californians than mere human convenience.
The saga now playing out in La Jolla Cove is the epitome of regulatory stupidity. In a rocky area by the cove once open to people but now fenced off for safety reasons, the feces of cormorants and seagulls just keeps piling up, generating a stench that can carry as far as a mile. Dry conditions, a hot summer and other factors have made this a gross everyday problem for the cove area, not an occasional annoyance.
So why can’t city work crews simply take care of the problem? Why can’t biodegradable cleaning products be used to make the stench disappear, as suggested by San Diego Councilwoman Sherri Lightner, who represents the area? Why can’t any reason or common sense come to the fore?
Because of complex environmental rules stemming from the cove’s designation as a state-protected “Area of Special Biological Significance.” Officials say it could take two years to get various state agencies to OK cleaning procedures.
George Savage explains the “heads, we win; tails, you lose” character of liberal statism.
Nowadays in America, statists win even when they lose. More specifically, under our dominant cultural assumptions the failure of any left-liberal policy leads, inexorably, to its entrenchment and expansion.
For the Left, this is a feature not a bug.
The most striking example is public education, where a nationwide left-liberal apparatus directs a producer-centric system that delivers an objectively awful product at absurd cost. Our exquisite political sensitivities limit the mainstream debate to the input function: more resources, smaller class sizes, additional teachers’ aides. When education funding is increased, dues skimmed from union paychecks entrench leftist politicians responsible for the failing status quo. Win win.
As they say on late night television, “But wait, there’s more.” Sustaining an incompetent educational system yields a multiplier effect: the formation of poorly educated citizens ill-equipped to challenge misinformation and outright lies from their rulers. This is how, only thirty years after the Reagan Renaissance, Barack Obama could claim financial crisis and recession resulted from laissez faire government circa 2007. He was confident that a majority of voters would be ignorant of the facts. And he was correct.
He mentions Obamacare, but neglects to note that health care reform was advanced to solve the problem of out-of-control health services costs, and those extraordinary costs really came about as the result of cost transfer billing in response to Medicare price controls. Government intervention creates the problem, so you get an even greater government intervention in response to “the free market’s failure.”
The sound and fury will be over big fights on taxes and spending. They will look like replays of the last four years and not end up accomplishing much. The big changes to our economy will be the metastatic expansion of regulation, let by ACA, Dodd-Frank, and EPA. There will be no change on our long run problems: entitlements, deficits or fundamental reform of our chaotic tax system. 4 more years, $4 trillion more debt.
Why? I think this follows inevitably from the situation: normal (AFU). Nothing has changed. The President is a Democrat, now lame duck. The congress is Republican. The Senate is asleep. Congressional Republicans think the President is a socialist. The President thinks Congressional Republicans are neanderthals. The President cannot compromise on the centerpieces of his campaign.
Result: we certainly are not going to see big legislation. Anything new will happen by executive order or by regulation. ...
[T]he unfolding of regulation will be the big story. It is news to most Americans, but the ACA and Dodd-Frank are not regulations written in law. They are mostly authorization to write regulations. They are full of “the secretary shall write rules governing xyz” with a timetable. Most of that timetable starts today, November 7 2012. You don’t have to think the administration is a bunch of willy nilly regulators to foresee a metastatic expansion of regulation. You just have to look at the time-table of regulations already legally mandated and pending.
I fished around a little on the net. The EPA has regulations under development that by its own estimates will cost hundreds of billions of dollars a year. I’m all for clean air, but there is a question of just how clean and at how much cost. ...
[H]undreds of billions of dollars are at stake, and the involved industries, their lawyers and lobbyists, are furiously “helping” to write all these rules.
This is the real news. It’s baked in. Any new regulatory agendas come on top of this. And it will remake the American economy in the next four years.
In the year 2012, the Lord came unto Noah, Who was now living in the USA and said:
“Once again, the earth has become wicked and over-populated, and I see the end of all flesh before me.”
“Build another Ark and save 2 of every living thing along with a few good humans.”
He gave Noah the blueprints, saying:
“You have 6 months to build the Ark before I will start the unending rain for 40 days and 40 nights.”
Six months later, the Lord looked down and saw Noah weeping in his yard – but no Ark.
“Noah!,” He roared, “I’m about to start the rain! Where is the Ark?”
“Forgive me, Lord,” begged Noah, “but things have changed.”
“I needed a Building Permit.”
“I’ve been arguing with the Coast Guard about the need for a sprinkler system.”
“My neighbors claim that I’ve violated the Zoning Regulations by building the Ark in my back garden and exceeding the height limitations. We had to go to the Planning Committee for a decision.”
“Then the Town Council and the Power Company demanded a shed load of money for the future costs of moving power lines and other overhead obstructions, to clear the passage for the Ark’s move to the sea. I told them that the sea would be coming to us, but they would hear nothing of it.”
“Getting the wood was another problem. There’s a ban on cutting local trees in order to save the Spotted Owl.”
“I tried to convince the environmentalists that I needed the wood to save the owls – but no go!”
“When I started gathering the animals the SPCA took me to court. They insisted that I was confining wild animals against their will. They argued the accommodations were too restrictive, and it was cruel and inhumane to put so many animals in
a confined space.”
“Then the Environmental Protection Agency ruled that I couldn’t build the Ark until they’d conducted an environmental impact study on your proposed flood.”
“I’m still trying to resolve a complaint with the Civil Rights Commission on how many minorities I’m supposed to hire for my building crew.”
“The Immigration and Naturalization Department is checking the Visa status of most of the people who want to work.”
“The trades unions say I can’t use my sons. They insist I have to hire only Union workers with Ark-building experience.”
“To make matters worse, the IRS seized all my assets, claiming I’m trying to leave the country illegally with endangered species.”
“So, forgive me, Lord, but it would take at least 10 years for me to finish this Ark.”
“Suddenly the skies cleared, the sun began to shine, and a rainbow stretched across the sky.”
Noah looked up in wonder and asked, “You mean you’re not going to destroy the world?”
Daniel Greenfield has a superb rant on government, regulation, & bureaucracy.
The first and foremost purpose of government is to create government jobs. Going back to the early days of American history a time honored tradition of newly elected politicians was to obtain positions for their friends, their nephews and assorted cousins. In those more innocent times appointing someone an inspector of something was a cordial way of repaying a favor. But the problem with inspectors is that they inspect things.
There are only so many idiot cousins you can hire to stamp papers and frown at things until you have to create an entire new department and then a division and then an agency to give them something to do. And that leads to budget drains and an expansion of government authority that interferes with the lives of people who work for a living.
A few centuries later we live in a country where every place that has more than three people living within three miles of each other is overseen by a multitude of agencies with overlapping levels of authority beginning from the locals to the staties and all the way up to Washington D.C. where the swamps were paved over to construct massive buildings full of agencies all descended from the day someone’s idiot cousin got a sinecure, a government horse and an inkwell in a city that no one used to take seriously.
Many of us would gladly trade off those buildings and those bureaucrats in return for a few dozen idiot cousins drinking in Washington taverns on the public’s dime in a country with no income tax and no one pounding on your door every five minutes because you don’t feed your kids arugula, don’t recycle your trash and don’t care about the latest trendy cause already being written into the state religion. ...
The left has rejected the industrialization of mechanical things, but it remains deeply in love with the mechanization of human beings, the mass production of impulses and the programming of their souls. It is constantly drawing up five year plans to achieve one social goal or another, and if the five year plans never succeed, then that just means that it’s time for an even more ambitious ten year plan to fight people who use too much water or don’t teach their children tolerance.
But the reasons why machines work is because people design them. Machines however cannot design machines. When the average functionary is as devoid of autonomy and innovative thinking as your Windows PC, then the society will begin crashing as it encounters errors not in its programming. Deploying masses of asses to tackle social problems while following a rigid script filled with inflexible assumptions is a surefire way to fail and use that as an excuse to throw more men at the job.
Failure is built into the system. Large armies of men following orders is a good way to grind down equally large armies. It’s not a way to run a country. Human industrialization creates bureaucratic hives which worsen everything they touch. It fills the country with functionaries following scripts that require them to confiscate our freedoms for our own good, a good that even in their limited definition they cannot achieve.
The very inflexibility of the idiot cousins guarantees their tenure. The more they fail, the more of them are needed. If we spent X amount of money to achieve Y without achieving it, then next time we must spend X+2. It’s the linear mechanical logic of the idiot who can only think in terms of tackling every problem with more resources until it finally cracks. If our last machine didn’t do it, then our massive EDUTRON 2000 which is twice as big and costs twice as much will surely educate all our children properly.
We have been throwing idiot cousins are the war on poverty, at discrimination and at overeating. And now we’re poorer, more bigoted and fatter than we used to be. Given another generation we’ll have trouble getting up out of bed at the homeless shelter long enough to carry out hate crimes. That’s not the official progressive party line which says that we are more tolerant than we used to be, even as they discover five new kinds of bigotry over the weekend. And as for poverty, it’s tempting to say that the only people who got rich fighting poverty were the idiot cousins, but even they are worse off in a country which is poorer than ever and which can only afford fattening food.
Like the Soviet Union, the progressive agenda never fails, it just succeeds so much that it moves on to fight new challenges, like racist babies, the imminent destruction of the planet and understanding how right wing talk show hosts brainwash people into hating all their programs. There are never defeats, only strategic retreats. Each setback is an opportunity to create a new agency full of idiot cousins with a 40 billion dollar budget in order to “invest in our future”.
The Economist finds “the land of the free” has become increasingly tied up by red-tape.
Americans love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children’s lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.
But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.
The feature humor item you’ll be seeing everywhere this holiday season is about a drastic shortage of butter in Norway occurring just as the Christmas season is at hand.
The journalists are telling us that the scarcity is the result of recent high Norwegian butter consumption resulting from a fashionable low-carb, high-fat diet on top of reduced production caused by a shortage of hay due to an unusually rainy summer growing season.
Profiteers are reported trying to charge as much as 350 euros ($465) for a 500-gram (1.1 lb. or 1 lb and 1.6 oz) packet of butter.
Ho, ho! Isn’t it funny?
None of the features on this news item I have found, however, notes that no butter shortage exists elsewhere in Europe or in the United States. But the AFP story offers a clue:
Last Friday, customs officers stopped a Russian at the Norwegian-Swedish border and seized 90 kilos (198 pounds) of butter stashed in his car.
The butter shortage obviously is not result, in a modern world, of a local dairy feed shortage, or of local supplies being exhausted by unusual demand. With rising demand and consumers willing to pay higher prices, the supply would be being met by enterprising Russians trying to make a kroner, if government were not standing in the way.
It is obvious that some kind of Norwegian limits on butter importation, doubtless in place to protect Norwegian dairy farmers, prevents legal access to supplies from abroad.
Norway’s holiday problem isn’t really about diet fads or rainy summers. It’s about government doing what government likes to do: delivering favors to special interests at the expense of society as a whole.
lynnux notes that government regulation establishes the rules by which banks operate and even creates their opportunities for profits, but these vital economic realities come into being in the first place through the agency of politicians, people like Barney Frank, whose expertise (such as it is), and interests and concerns have no connection to economic realities or markets.
Politicians seem such busy-beavers today, “doing things” “for” us. Why such whirling dervishes, generating laws in bulk? In its broadest outlines, law is mostly static. Politicians seek to appear to the public to be men of action “doing something.” This leads them to make too many economic and personal choices that they are not supposed to be making “for” us at all, picking winners and losers. It is now to the point where, famously, they no longer even read the laws they promulgate upon the body politic. Their process is finger in the wind (test the zeitgeist for what buzz evokes positives), then claim to be acting in name of the democratic will of the people—who, like banks to regulators, can later be blamed, should anything go wrong. As a republic, not a direct democracy, our representatives are supposed to be doing the right thing, in their best judgment. We rely on their decency, wisdom, and intelligence and vision for the long term. They have no way of knowing anything about their constituency anyway, because to pollsters, people only express self-interest, not the public interest. The public interest can only be assessed at a remove, which is the representative’s job. Pollsters get whatever they fish for. Responders also like to echo conventional wisdom. Implementing conventional wisdom is not politicians’ job. ...
Politicians wrapped in soundbites simply may not be qualified to make all the rules they seek to impose on us in their show of “caring” for us. This, I think, is what Richard Posner is getting at when he speaks of The Crisis of Capitalist Democracy. We need systems engineers today who really do understand the system. Politicians are mostly not this, but marketing specialists. They dissolve always into futile calls for infinitely ethical global governmental forces (themselves) to abolish investment uncertainty in a complicated utopian merger with perfect empirical risk analysis, forgetting that the past is no divining rod of the future (nor of truth. ...
The law is being asked to make business judgments law simply should not be making at all. Law is static. Markets are not. The market will adjust to any fixed rule, changing the “new normal.” Positive feedback loops (“positive” does not imply good) can ensue, at many unexpected levels. The media’s celebrity focus on political figure summiteering, however, follows an old trope, of suggesting to the public that our pseudo-gods and deities, through law, can command markets. These heroes then arrogantly begin to believe their press releases and to act accordingly.
Lawyers often go to law school precisely because they don’t like math or statistics. The type can quite easily ignore economic reality as they proceed to plug old forms and numbers into new contexts.
Libertarian (sounds like the modern California version to me) Jason Brennan is in a position make his liberals allies uncomfortable, when he connects the dots between liberal statist policy prescriptions and the kind of crony capitalism in which fat cat banks and corporations get to use the state as their servant and ally to build deeper regulatory moats and higher walls against competitors.
Dear members of the moderate left,
America is suffering from rampant, run-away corporatism and crony capitalism. We are increasingly a plutocracy in which government serves the interests of elite financiers and CEOs at the expense of everyone else.
You know this and you complain loudly about it. But the problem is your fault. You caused this state of affairs. Stop it.
Unlike we libertarianish people, you people actually hold and have been holding significant political power in the US over the past 50 years. What have you done with this power? You’ve greased the corporatist machine every chance you’ve gotten. You’ve made things worse, not better. Our current problems are your fault. You need to stop.
We told you this would happen, but you wouldn’t listen. You complain, rightly, that regulatory agencies are controlled by the very corporations they are supposed to constrain. Well, yeah, we told you that would happen. When you create power—and you people love to create power—the unscrupulous seek to capture that power for their personal benefit. Time and time again, they succeed. We told you that would happen, and we gave you an accurate account of how it would happen.
You complain, perhaps rightly, that corporations are just too big. Well, yeah, we told you that would happen. When you create complicated tax codes, complicated regulatory regimes, and complicated licensing rules, these regulations naturally select for larger and larger corporations. We told you that would happen. Of course, these increasingly large corporations then capture these rules, codes, and regulations to disadvantage their competitors and exploit the rest of us. We told you that would happen.
It’s not rocket science. It’s public choice economics. You recognized, rightly, that public choice economics was a threat to your ideology. So, you didn’t listen, because you didn’t want to be wrong. Public choice predicted that the government programs you created with the goal of fixing problems would often instead exacerbate those problems. Well, the evidence is in. You were wrong and public choice theory was right. If you have any decency, it is time to admit you were wrong and change. Stop making things worse.
You spent the past fifty years empowering corporations and the most unscrupulous of the rich. You created rampant moral hazard in the financial sector. You created the system that socializes risks but privatizes profit. You created the system that creates a revolving door between Obama’s staff and Goldman Sachs. There’s a reason why Wall Street throws money at Obama. It’s because you, the moderate left, are Wall Street’s biggest supporters. Oh, I know you complain about Wall Street. But your actions speak louder than your words.
