Elections

Saving American Democracy for the Zombie Apocalypse

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Within weeks of the 2016 presidential election, the New York Times launched the campaign against President Elect Donald Trump as a racist autocratic Threat to Democracy, followed by the main stream media. Democratic candidate Joe Biden presented a ho hum globalist foreign policy as redressing President Trump’s threat to foreign democracies, conflated with his anti-capitalist domestic policy.

What does “Democracy” Mean to the Democratic Party?

European populations attracted to communism after the devastation of WW II were encouraged, sometimes with the subtle help of America’s CIA, to choose “social democracy,” i.e., a democratically elected central government that provided a welfare state financed by a market economy, over Soviet communism. America adopted social democracy in the 1960’s not out of desperation but capitalist material abundance.

Today after almost six decades of Great Society welfare over three quarters of all democrats are now “democratic socialists, i.e., they prefer socialism to market capitalism. The young party leaders demand “racial and social justice,” a political Jacobin revolution. Democratic officials have actively supported the demonstrators and rioters in the streets celebrating the Meltdown of Capitalism orchestrated by the Marxist Black Lives Matter and ANTIFA groups demanding a majoritarian “peoples’ democracy” like that of prior communist totalitarian regimes.

How Progressive Democrats Became Zombies

Since the takeover of Cornell University and others at gunpoint, most universities implemented black studied programs that indoctrinated the Charlottesville premise that America was born to slavery and American racist oppression never ended, causing the current income and wealth gap with whites. Thomas Sowell, one of the greatest economists of the past 60 years, who is black and was present at Cornell at the time, has a lifetime of scholarship exposing the fallacy of this premise.

The “Cold War” against Soviet communism lasted from 1945 to 1990. The Communist Party was outlawed in the United States in 1954 with progressive political support out of fear that voters could be too easily seduced by the meretricious promises of socialism where income equality is achieved by impoverishing all but its leaders – without understanding the inherent totalitarianism that led to communist atrocities under Stalin and Mao, murders and deaths measured in the tens and hundreds of millions. The claim by democratic socialists of western democratic countries with a socialist economy, e.g., Sweden, is a myth.  

A century of progressive mis-education explains the zombies’ attack on capitalism. Primary education peddles soft socialism while universities are populated by “effete intellectual snobs,” the label given by VP Spiro Agnew to “national masochists” i.e., intellectuals who would bring national ruin, written a half century ago by the New York Times writer William Safire. American historians have generally been biased against market capitalism. The term “Robber Baron, first used by the New York Times in 1859 to describe Cornelius Vanderbilt, was popularized during the Depression by a disciple of socialist/progressive writer Charles Beard. America’s dark history has been made hopeless to many millenials through the lens of socialist sympathizer Howard Zinn and racist through the lens of the New York Times 2019 revisionist 1619 Project, with the Democratic Party re-writing its’ own racist past. Economists have been the most easily seduced by the attraction of state power, finding “market failures” at both the macro and micro level to justify their intervention. The Austrian economists Schumpeter and Hayek recognized socialism’s masochistic appeal to “intellectuals” who felt that they could run the world better than those chosen to do so.

After the Zombie Apocalypse: the Pigs Rule

Accusations of autocratic behavior by Trump are mostly in response to micro-aggressions of politically incorrect tweets and comments. Coups that overthrow representative democracy from the right generally start with the armed military taking over the media, the bureaucracy, the universities, the unions and all the other sources of political power. The idea that President Donald Trump could direct any of those sources of political power is ridiculous: the deep state has been trying to take him down since he took office. (If the accusations against his AG had any merit, the Democrats would have conducted a real hearing instead of a five hour show trial – a bit long by Stalin’s standards).

Democrats on the other hand are the Party of the deep state. It has been cultivating those sources of political power for a century, and now controls them with the “carrot and stick” method that was so successful for Mexico’s one party PRI for almost a century, suppressing free speech. It’s only a small additional step from social democrat to one-party democratic socialism.

Winning this election (fairly or not) provides the Democratic Party the opportunity for one party rule if their agenda faces any serious opposition. They have already discussed many tools at their disposal, e.g., eliminating the Electoral College, further lowering the voting age to 16, packing the Supreme Court (again), mail in ballots, etc. But Barack Obama’s demand at John Lewis’s recent funeral to end the filibuster and announce four new (almost assuredly democratic) senators from the new states of Puerto Rico and the District of “Columbia” (to be renamed of course) in the name of racial and social justice would likely be more than sufficient, maybe even just the threat.

What Good is the U.S. Constitution?

The founding fathers didn’t anticipate political parties, so it isn’t an obstacle to one-party rule. Franklin’s Republic of limited powers was replaced by an all-powerful administrative state rather like Hemingway’s character went bankrupt: “gradually, then suddenly.”

The first necessary condition was to amend the constitution. The end of the Civil War enabled the 13th, 14th and 15th Amendments extending voting rights to blacks. The 16th Amendments in 1909 enabling a federal income tax and the creation of the Federal Reserve System in 1912 provided the funding for President Woodrow Wilson’s entry into the European war and “make the world safe for democracy” the rationale. The direct election of Senators in the 17th  Amendment of 1912 limited potential state opposition. All these changes shifted power to the federal government.

Second, the specific enumerated powers of the Constitution have been mooted through Supreme Court political nominations, legal manipulation and intimidation producing “creative” decisions subsequently protected by a convenient legal doctrine of stare desisis, i.e., protection of past progressive Court victories that enable meretricious populist promises. Supreme Court resistance to the New Deal withered in the wake of FDR’s failed attempt to pack the Supreme Court. The subsequent Great Society of the 1960’s, also designed by socialists and implemented by FDR’s protégé President LBJ, substituted federal government funding and decision making not only for states and localities, but for most of civic society and eventually the family.

Four quotes from H.L. Menken of about a century ago sum it up:

  1. Democracy is a pathetic belief in the collective wisdom of individual ignorance.
  2. Democracy is also a form of worship. It is the worship of jackals by jackasses.
  3. Democracy is the art and science of running the circus from the monkey cage.
  4. Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

Kevin Villani

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Kevin Villani was chief economist at Freddie Mac from 1982 to 1985. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on how politicians and bureaucrats with no skin in the game caused the sub-prime lending bubble and systemic financial system failure.

Consulting My Magic 8-Ball

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So, last week the Daughter Unit asked me when the new civil war would kick into high gear. Note she said ‘when’ not ‘if’ for we’ve been in a cold civil war for some time now. I’d say this cold civil war became manifest with upsurge of Tea Party demonstrations in 2009, and has rumbled along all through the Obama administration, building up reservoirs of bitter anger and resentment ever since. My personal SWAG is that things will get interesting (and even more interesting for certain values of interesting) late in the evening of November 3, 2020, when the polls close and the first election results are reported.

And no, it won’t make a particle of difference who wins; Trump or Biden, or whoever has replaced Biden as the Great Dem Party Hope. My sidebar prediction is that the higher echelons of the Democrat Party will realize, probably shortly following the party caucus to be held sometime this month, that Joe Biden has finally and definitively lost track of his single remaining marble, and that there is no possible and convincing way that he can be propped up as a viable candidate.

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Is the Biden Economic Plan on the Right Track?

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It promises to improve economic well-being relative to current economic policy for average and particularly less well-off citizens now and in the future, and to do the same for citizens of other countries including all immigrants. Can it deliver?

The Mock Democratic Platform was released in February, the Biden-Sanders Unity Task Force a few weeks ago, and the draft 2020 Platform a few days ago. The economic plan is the most ambitious progressive anti-capitalist agenda at least since FDR’s New Deal and arguably in American history. It consistently proposes numerous government carrots and sticks to achieve its economic objectives, doubling down on the New Deal and Great Society methods.

Causes and Consequences of Reducing Capital and Labor Productivity

Potential national wealth is limited only by the amount of capital (national savings) and the incentive to maximize the productivity of capital (e.g., with new technology) and labor (through appropriate education and training). Politics often distorts individual incentives for the worse.

Politically Re-directed Investment

The US national savings rate hovered around 3% after turning negative in 2007-2009 and again now. The Biden economic plan for politically re-directing resources to, e.g., conservation, clean energy, transportation, manufacturing, infrastructure, affordable housing, etc. by subsidizing public and taxing private investment more has some merit. However, it may have problematic economic returns and the total cost is many multiples of total national savings.

Education and School Choice

Biden would limit the competition with public schools by restricting higher performing charter schools. Higher education would be made either affordable or free with reduced entrance requirements to compensate for a poor primary education, but higher education only contributes to individual and national wealth to the extent it improves productivity, e.g., with more STEM graduates.

Labor Market Intervention

By traditional measures, the country was fully employed prior to the Covid-19 epidemic, but the Biden plan calls for the “creation” of multiple millions of new high paying jobs, both in the nominally still private sector and the public sector. Pay would be raised by eliminating the right to work without being forced to join a union, something private sector unions have demanded since the passage of the Taft Hartley Act of 1947. But Biden plans to go beyond that, forcing all states to unionize public employees as well. For those that fall out of this broad union net, the federal minimum wage would start at $15/hour, superseding state laws. These are the tools that progressives historically used to keep blacks, other minorities and recent immigrants out of the labor force, and is is difficult to see how they would do otherwise this time around.

Trade Protection

As these politically inflated domestic labor costs will again be uncompetitive internationally the Biden plan opposes any trade deals, calling for manufactured goods to be sourced and stamped “made in America.” Consumer prices would have to rise commensurate with labor costs.

Immigration

Borders would be relatively open and immigrants incentivized to come both by the decline in export-related jobs and the benefits of the U.S. social welfare state. But they would be excluded from the formal job market by the union and minimum wage requirements once inside the U.S. border.

Taxation, Debt and Money Printing: The Limits of Expropriation

All senior mob leaders know two things well: 1. There is only so much extortion money to go around (gangster killings are usually over excessive greed), and 2, There are limits to how much you can extort without killing a business. At their peak in the 1980s the New York Mafia “owned” the labor unions that extorted from business, enabled by a symbiotic relationship of both with the Democratic Party. Sooner or later taxpayers and consumers always pay.

Debt and Taxes

State and local governments are in dire straits and blue states are technically insolvent, demanding a bailout. Federal funding has morphed the states into Soviet era oblasts with the federal government the funding source of first resort.

Current federal debt is $27 trillion, exceeding that of WW II as a percent of the economy, with over $200 trillion in additional contingent liabilities.. The current federal deficit for this fiscal year is over $3 trillion, to which the Democrat-proposed Heroes Act would add an additional $3 trillion. Candidate Biden has offered tiny constituent groups, e.g., caregivers, almost $1 trillion, large constituent groups such as the environmentalists’ Green New Deal could cost upwards of $100 trillion, with lots of constituent promises falling in between.

The Biden plan calls for reversing the Trump corporate tax cut that stimulated investment and exports. Taxing the “rich” will raise some revenue in the short run but reduce investment and growth in the longer run. Middle class taxes will follow, although he is committed to restoring the (blue) state and local income tax deduction for the relatively wealthy.

The Federal Reserve and Modern Monetary Theory

Having gone past the limit, a gangster may turn to counterfeiting as a last resort. The Federal Reserve is already “printing” enough money to be the primary buyer of Treasury debt and at the current pace would own it all in two years. Under the Modern Monetary Theory espoused by the Sanders campaign and now implicitly incorporated into the Biden economic plan, debts and deficits don’t matter so long as the Fed can print money to purchase them. The Biden plan adds “racial equity” to the Fed’s full employment and price stability goals to reduce differences in wages and unemployment.

Biden’s Plan is an Extortion Racket on the Left-Behind Track

Across time and space the evidence supports competitive market capitalism as the source of virtually all human economic progress. The Biden economic plan is essentially an extortion racket that fails to recognize its inherent limits, doubling down on the bad policies of the current Administration while eliminating the good, apparently because the Party’s octogenarian leaders either never learned the limits or have lost control to the young radical left. This plan so far exceeds the limits that even partial success could easily lead to hyper-inflation.

There is a sense that America can always turns things around if it gets derailed but the progressive perspective dominates America’s intellectual elite and media. Argentina was once on the capitalist fast track parallel to the U.S., but progressive President Juan Peron switched tracks in 1946, and Argentina has been left behind ever since.

Kevin Villani

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Kevin Villani was chief economist at Freddie Mac from 1982 to 1985. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on how politicians and bureaucrats with no skin in the game caused the sub-prime lending bubble and systemic financial system failure.

What do Democrats Want ?

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I have been watching the gradual, then sudden, dissolution of a political party. My parents were Democrats. They were shocked when they learned I had voted for Richard Nixon in 1960. Jimmy Carter was a failure as a President but I wasn’t really worried about the country when he was in office. His actions with Iran and the Panama Canal were harmful but they were a matter of policy. Ronald Reagan, not a governor I was fond of in California, was a successful president. He was able to work with the Democrat Party in spite of some far left loonies like Chris Dodd. Many of the far left members of the Democrat Party favored communists like the Sandinistas but they were kept in line by the old pols to whom graft and spending were more important. Tip O’Neill would let Reagan win the Cold War as long as Reagan let the Democrat Congress run up the deficit.

Bill Clinton changed much of this dynamic in two ways. First, he was a lot more ideological than previous presidents and second he was incompetent at it. Clinton is a very smart man but his wife, Hillary, was far too obvious in her corruption. First the 900 FBI files, then the White House Travel Office. Both were scandals that primed him for a big loss.

Then the 1994 elections turned the Congress over to the Republicans and we learned how little they were interested in Conservatism. They accomplished nothing before being ousted by Democrats in 2006. This, of course, was followed by the housing and mortgage collapse of 2008. There was some attempt by Bush administration officials to rein in Congress and the debt explosion but it was probably too late anyway. The 2008 election placed Congress in Democrats’ hands for the first time with a Democrat president since 1974. Clinton’s two years did not result in much happening. The first Obama Congress spent like drunken sailors but were quickly reined in in 2010.

What might happen if Biden won the presidency and the Democrats got a majority in the Congress ?

In the past until now, there was zero chance that the hard Left would ever win an American election. No socialist has ever come close. Even Bernie Sanders accepted that the Democratic establishment for six years broke rules, leveraged candidates to drop out, and warped the media to ensure that he would remain a septuagenarian blowhard railing at the wind from one of his three houses. George McGovern was buried by a landslide. Most Democrats, after Kennedy and until Obama, never won the popular vote unless possessed of a Southern-accented hinting at centrism.

Only the Great Depression and World War II ensured four terms of FDR, who still knew enough not to let his house socialists ruin the wartime U.S. economy.

But in perfect storm and black swan fashion, the coronavirus, the lockdown, the riots, anarchy and looting, all combined with Trump Derangement Syndrome to be weaponized by the Left—and the media far more successfully than with their failed pro forma, legalistic efforts with Robert Mueller and impeachment to destroy the Trump presidency—have pushed socialism along.

I thought Obama was an empty suit. Biden is an empty head.

Who is behind all this and why ?

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Sell Your Soul or Lose Your Livelihood (updated)

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Every day, people are losing their jobs because of political opinions or assertions about reality which are considered unacceptable.  David Shor, a political data analyst, lost his job after tweeting a summary of research indicating that nonviolent protest tactics tend to be more effective than violent tactics. At  the Poetry Foundation, both the president and the chairman resigned after being heavily attacked because their statement on the current situation…which said that the members “stand in solidarity with the Black community, and denounce injustice and systemic racism”…was vague and lacked any commitment to concrete action.  An Illinois high school principal  finds her job under attack after advising students that, if they protest, they should refrain from violence and looting. The list could be expanded indefinitely and includes people in all industries and at all levels.

This isn’t new. For the last two decades, the ‘progressive’ left has loudly insisted that dissenting voices (dissenting from the Prog worldview, that is) must be suppressed. But the trend has accelerated sharply.

I am reminded, as I often am, of the memoirs of Sebastian Haffner, who grew up in Germany between the wars. One very affecting section of the book describes what happened to Haffner’s fathera civil servant under both Weimar and the Kaiserfollowing the Nazi takeover. The elder Haffner, long-since retired, had considerable accomplishments to his credit:  “There had been great pieces of legislation in his administrative area, on which he had worked closely. They were important, daring, thoughtful, intellectual achievements, the fruits of decades of experience and years of intense, meticulous analysis and dedicated refinement”and it was extremely painful to him to see this work ruthlessly trashed by the new government. But worse was to come.

One day Mr. Haffner received an official letter. It required him to list all of the political parties, organizations, and associations to which he had ever belonged in his life and to sign a declaration that he ‘stood behind the government of national uprising without reservations.’ Failure to sign would mean the loss of his pension, which he had earned through 45 years of devoted service.

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