Tuesday, February 19, 2013

The White House Press Corps' Free Milk

I've known for a while now that the White House press corps is rather unhappy with the level of access the Obama administration gives them. Politico's story is hardly the first one on the subject, as the reporters have been visibly grumpy since around 2011. There's an important lesson about incentives here if you read carefully. Note this sentence:

The president has shut down interviews with many of the White House reporters who know the most and ask the toughest questions. Instead, he spends way more time talking directly to voters via friendly shows and media personalities. Why bother with The New York Times beat reporter when Obama can go on “The View”?

To ask this question is to answer it. The New York Times overwhelmingly prints positive coverage about the Obama administration. Coverage prior to the 2012 election was especially glowing. They kept mum on Fast and Furious, ignored Benghazi, and chided Republicans for thinking Solyndra was anything other than completely on the up-and-up. What can Obama possibly gain from giving an interview? It's all risk and no reward. The NYT already gives the administration everything it wants in terms of positive coverage, so the only possible thing to come out of an interview is a reporter asking a question that makes the WH representative stumble.

If the press wanted access, they'd have to punish the White House for ignoring them and reward it for paying attention to them. For example, if the NYT had been hard-hitting on the aforementioned stories, perhaps the White House would have been interested in a chance to tell its side of the story. Twitter and social media are great ways to spread memes and images, but not to tell stories. Fortunately for Obama, journalists are trained in college to see the promotion of left-wing causes and narratives ("social justice") as their primary duty. And after two narrow wins by George W Bush, they feel a deep responsibility to do everything they can to ensure no Republican wins an election if they can help it. 

The result is that the 21st-century establishment press is going to tell a story that benefits a Democratic White House regardless of anything the administration does. Why on earth would a halfway intelligent President do anything to interfere with that?

Sunday, January 20, 2013

The Algerian Hostage Crisis

Well, that was awful and ended badly. You might notice that the American media has not considered it particularly important. The dead Americans aren't really a big deal. The fact that President Obama has completely ignored it is unreported as well. This has echoes of Benghazi, where the media angrily insisted that a dead American ambassador, State Department incompetence, administration lies, and resurgent terrorism were "non-news."

Why? What changed since the Iran Hostage Crisis?

I think the media has become substantially less liberal and far more blindly partisan since the 1960s. For example, Walter Cronkite dishonestly portrayed the Tet Offensive as a U.S. military defeat and generally portrayed the Viet Cong as plucky resistance fighters, despite the damage this did to Lyndon Johnson's presidency. Today, the media's overriding concern is ensuring that Democrats win elections.

Everyone has a subconscious hierarchy of values. When two conflict, whichever value has primacy overrides. For example, a man might value both honesty and his wife's happiness. But sometimes honesty might make his wife angry (especially honesty about his feelings), so whether or not he lies reveals which value matters more to him.

The modern, left-leaning, mainstream media outlets tend to value Democratic electoral victory as primary over ideological progressivism. That's why they mute their reporting on the President's war-mongering, his total disregard for civil rights, his embarrassing diplomatic failures, his legislative and regulatory giveaways to wealthy donors and corporate interests, the failures of his economic policies, and so on. They all recognize that harsh reporting on the reality of Johnson's failures helped put Nixon in the White House, and reporting on Carter's miserable term had a lot to do with why Reagan won in 1980. They are now determined to do everything they can to prevent something like that from happening again.

Some of them no doubt feel this is a necessary evil. After all, while Democrats aren't very progressive, at least they're further left than those evil, racist, misogynist, capitalist Republicans, right? And if a Republican wins, it sets the progressive agenda back even further, right? Well, conservatives had the same philosophy about GOP victories, which got them...Medicare D, No Child Left Behind, then-record deficits, and the Patriot Act. And look where that got them.

Friday, December 14, 2012

The Meaning of Susan Rice

I'm going to float an idea I haven't seen out there. Obama nominated Rice as a test of his power, of just what he could get away with. Remember, he nominated an extreme leftist, Elena Kagan, who has argued that the First Amendment could be abrogated in the interest of "redistributing speech," and the GOP largely rolled over on her nomination.

Or think about what just happened in Massachusetts. Scott Brown was probably the most decent Republican that could possibly win there. Elizabeth Warren is a complete sack of shit. Besides exploiting the tragedy of Native Americans to advance her own career, she's a serial plagiarist, practiced law without a license, a hypocritical grasper after wealth, and associated herself with the thuggish, violent Marxist movement known as Occupy Wall Street. Warren's victory proved that at least in MA, the Democrats can nominate the worst human being they can find and still win. And that's the point---the left can't get everything they want as long as the electorate forces them to nominate passable human beings.

I think that's what the Rice nomination was about. She's a proven incompetent and known liar, and her shameful lies about Benghazi are still fresh in her laps. Obama nominated her as a way of asking the Senate, "Can I take a dump right in your laps and be thanked for it?" As it turns out, even the obsequious glad-handers in the Senate have their limits.

Sunday, December 9, 2012

They're all liars

The most important thing to understand about the modern left is that they lie incessantly about what they believe, including to themselves. Let's look at their core beliefs:

  1. Leftists care about the poor. This is absolutely false. Leftists are vociferously opposed to nearly every single institution responsible for improving the livelihood of the bottom 25% of the population, whether we are talking about the companies that hire them or the companies that sell them products. The left wants to close down the factories that employ less-educated people and shutter the discount retailers that sell them affordable goods. Further, leftists fight even the smallest measures designed to improve the poor's ability to obtain quality education, instead adopting as an agenda the ossification of policies intended to minimize the usefulness of primary education and maximize its cost burden. And when it comes to international politics, the left's #1 goal is to ensure the world's poor have no access to energy, financial markets, or trade.
  2. Leftists care about the environment. It is no coincidence that the most efficient methods of production tend to be the cheapest---the more resources you utilize effectively, the more profit you make. But the left wants the government to intervene and stop clean, efficient methods of production and enforce wasteful, dirty methods. The left will lie and obfuscate to hide just how bad its programs are for the environment.
  3. Leftists care about women. If a woman has been raped or otherwise sexually abused by a powerful Democrat and speaks out, you can be assured that the left will come out in force to slut-shame her into oblivion and destroy her livelihood. If a woman chooses to have more than two children, she will be treated as a pariah and traitor by the left. If a woman survives the horrors if third-world, Islamic misogyny to escape to the liberal, egalitarian West, she becomes a non-person to the left.
  4. Leftists care about civil liberties. In 2008, Americans elected the most left-liberal President since Woodrow Wilson. Since then, he has killed 2500 people in drone strikes and expanded the surveillance state. And he has done so with the enthusiastic support of the vast majority of the left.
  5. Leftists want everyone to have access to quality health care. This is perhaps one of the greatest lies of all. Leftists enthusiastically support destruction of the means by which people obtain health care. Obamacare, for example, is designed to bankrupt providers, choke off the development of new technologies, push small clinics out of business, disincentivize entering the medical field, and prevent the poor (naturally) from being able to work enough hours to even provide for their basic needs, let alone afford health insurance.
  6. Leftists support science. Science says gun control laws don't work. Science says wind and solar are unable to power a developed society. Science says capitalism, not aid, is what changes a nation from poor to rich. Science says a 7-month-old fetus is a living, viable organism. Science says entitlement welfare incentivizes unemployment and unproductive behavior. Science says men and women are different. Science says "race" isn't real. Science says a lot of things that leftists aren't interested in hearing.
Now, how does the left end up lying about all these things? The answer is that when you espouse contradictory values, certain elements of them will tend to dominate when conflicts arise and force a choice. The left has two values that tend to override all others:

  1. The Democrat Party must never be permitted to lose an election. There is literally no value a leftist will not sacrifice if doing so ensures a Democrat victory at the polls. This is why leftists enthusiastically support voter fraud (such as in Al Franken's election), despite their claimed commitment to democracy, when it means a Democrat wins.
  2. The power of the government must be absolute and unquestioned. This is second on the list because it is subordinated to the previous one---the power of the government can be challenged and questioned when doing so serves the election of Democrats and the defeat of Republicans. But in terms of policy goals, the overriding desire of the left is to have a single-party, totalitarian state ruled by the Democrats. Everything else is subordinate to that aim.
That's why I no longer argue with leftists. They don't genuinely represent any particular system of beliefs, only a naked quest for absolute power.

Wednesday, November 7, 2012

We've just been realigned.

I can't sleep. Here is my take for everyone who cares, which is no one. This was a major realigning election in American politics. 2008 wasn't. In 2008, a cool, collected, pragmatist ran against a crazy old man in the teeth of a deep recession (I'm talking about how people perceived the candidates, as perception is all that matters in elections). The 2012 election was quite different. The Republicans explicitly ran on the economy and getting the financial lunacy of the federal government under control as the most predictable (and largest) fiscal and monetary crisis in history is barreling down on us (with very limited, halfway measures that aren't actually anywhere close to drastic enough). The Democrats ran on sex, free stuff, and class warfare. This election sent a clear message to both parties: If you run on taking away anyone's free stuff, you will lose. It doesn't matter how bad the recession is, it doesn't matter how badly the incumbent has blown it, and it doesn't matter how juvenile and trivial the opposition's message is. You do not take away anyone's free stuff. Ever. Doesn't matter how broke we are.

The Republicans have now tried twice to get the cancer of entitlement spending under control, and both times the voting public has punished them for it. If it was ever going to happen, this is the election where it would have happened, and therefore it's not going to happen. The issue is now dead. There are only three ways to deal with unsustainable entitlements: Massive tax increases, massive benefit cuts, or ignore the problem and let the market force the issue by destroying the currency. Americans have rejected the first two options, which leaves only the third.

 I have seen some Republican pundits argue that the disasters bearing down upon us will surely discredit the cradle-to-grave welfare state in a kind of conservative take on Lenin's 'The worse, the better.' This is in defiance of everything we know from history. Historically, when people have a religious-like faith in the state's ability to supply material wealth via legislation, it is nearly impossible to disabuse them of it. The state's failure to answer their prayers is always blamed on a villain--either an external villain standing in the state's way, or an internal villain sabotaging the state. The idea that the state is intrinsically unable to do what they wish really doesn't enter the discussion.

As the Greek state collapses, Greeks riot, demanding that the state restore their free stuff. As businesses flee California, Californians simply demand more taxes on the businesses that remain, so they can have their free stuff. As the Argentine government destroys the currency, Argentinians reelect the president who promises to keep the free stuff flowing.

Ironically, this election was not even really about ending free stuff. It was about whether we were even willing to begin to have a conversation about just exactly how we're going to cut back a little bit on the free stuff. The answer was no. The answer was that sex is way more important than that boring money stuff, and besides, where is Argentina, anyway? The big deal is not that Obama won. He's already established that he's incompetent, corrupt, and foolish, and another four years will simply reestablish that. Nor is it that Romney lost--I don't believe his plan was nearly aggressive enough to actually solve the problem. The big deal is that financial reality and capitalism are officially losing issues in American politics.

 The problem is that something that can't continue forever won't, and promises that can't be kept won't be.

Sunday, September 30, 2012

The moral case for capitalism

I had a long conversation with a socialist friend last night, and it brought a bunch of things to mind that I'd like to flesh out. The case for capitalism isn't just one of mechanistic utilitarianism, but it is moral as well.

1. The technological progress you take for granted doesn't happen without it.  One of the most fundamental errors socialists make is the assumption that the things they think everyone should have emerge naturally from historically-determined human progress. Nothing could be further from the truth. Take anything we have in abundance today that we didn't have fifty years ago. The reason it's abundant today is some entrepreneurs and investors saw an opportunity for profit. It's true that governments can invent technologies--ours has done it, and even the Soviets did it. But it is one thing to invent a device, and quite another to figure out how to produce millions of them with a minimum of waste, know how to balance production with other products utilizing the same resources, and distribute them to the people who want and need them. It is this latter thing at which socialist planning completely fails. For example, some of the core technologies of the Internet were invented in government labs. But the methods of distributing the Internet, the devices we use to connect to it, its content, and even the means of searching that content were produced via the market process.

2. Capitalism feeds the world; socialism starves it. The fact is that if you want to find real, mass famine and starvation in the world, you have to go to countries with repressive social systems that prevent foreign trade and/or the development of private property. This goes back to the distribution and production thing--the profit motive has proved time and time again to be much better at guiding people to find ways to increase crop yields and distribute food than "rational" planning.

3. The Iron Law of Wages is false. The Iron Law of Wages is that the wages of unskilled labor naturally fall to a bare subsistence level over time. This was debated by important economists of the 19th century and was one of the motivations behind Marxism. The problem is that it's false. In capitalist economies, wages rise over time. In the 19th century, long before minimum wage or any modern labor regulations, real wages for unskilled labor increased by 350%. So the fact is that one of the main moral motivations behind socialist thinking is simply not true. In fact, nothing has proved so effective at ending mass poverty and improving the lot of unskilled labor as capitalism.

4. Someone must make economic decisions. Capitalism rewards efficient, creative, helpful decisions. Socialism rewards political decisions. My socialist friend said that no one should control the kinds of economic resources that the management of large corporations and investors do. Here's the problem--whether we are talking socialism or capitalism, somebody is going to make the big decisions. The good use of resources and the provision of people's needs is an important moral issue. But socialist systems aren't very good at finding people who are good at making decisions and even worse at getting rid of people who make bad decisions.

5.  Socialism is based on violence. Whatsoever the government does, it does because its power is backed up by the force of arms. No matter how awful you think it is to be threatened with being fired in a capitalist system, it's not 0.00001% as awful as being threatened with prison, which is how socialist systems get things done.

Friday, September 7, 2012

There is No Treasury Market

It's been rather popular to claim that the low interest rate on USTs proves that "the market" has judged the US government's position re: assets and liabilities as no big deal, therefore Republican whining about the deficit is just that--whining. There are two premises behind that argument. The first is the Efficient Market Hypothesis, which is the claim that the price of an asset reflects the aggregate of the market's total knowledge about an asset. This hypothesis may or may not be true, but it's pretty reasonable. The second premise is that the USTs are in a market. This claim is false, and we're about to see why.

The first problem is due to the existence of central banks. In a free-market system, investment banks have to raise capital by offering yield to clients. The securities they invest in must therefore have a higher yield in order for the bank to profit. The yield offered to clients must be high enough to create an incentive to save, and the yield on securities must be high enough for the bank to earn enough profit to satisfy its shareholders and to cover the borrower's risk of default:

  1. Interest offered by banks rises when people haven't saved very much, and fall when they've saved a lot.
  2. Bond rates rise when entities want to borrow a lot, and fall when they've not got much desire to borrow.
  3. Bond rates must be higher than bank interest for banks to profit.

This process is vitiated by the Fed. Banks don't offer yield to the Fed to obtain savings; the Fed prints money and dictates yield to the banks. As a result a critical component in market interest rates--the desire of savers to save--is outright eliminated. Instead, it works like this:

  1. The Fed sets the discount rate based on macroeconomic policy goals.
  2. Bond rates rise when entities want to borrow a lot, and fall when they've not got much desire to borrow.
  3. Bond rates must be higher than the Fed's discount rate for banks to profit.
This what is known as a "carry trade." All a bank has to do is find an asset with higher yield than the Fed's discount rate in order to profit. And if it can use sufficient leverage, it can obtain just about any imaginable rate of profit, so the rate of inflation ceases to be relevant. Since the US government prints money to pay its debts, that makes a carry trade in Treasury Bonds look mighty attractive.

The second problem is due to regulations requiring certain classes of funds to invest in highly-rated assets. In a free market, which entities get what fraction of the available savings at what interest rate is determined by the investors' assessment of their risk. However, US financial regulations legally obligate certain classes of investors to invest a government-mandated fraction of their funds in assets based on ratings agencies' assessment of their risk. That's why that AAA rating is important--it puts an asset into that special class that things like pension funds are legally required to invest in. Before the bursting of the housing bubble, mortgage-backed securities were a huge chunk of AAA-rated securities. Those are gone. Italian, Spanish, and Greek bonds are off the table, too. Since the USA issues 60% of AAA-rated debt, that forces a lot of investors into bonds that would look elsewhere in a free market, artificially depressing interest rates.

The third problem is what Zero Hedge derisively calls "front-running the Fed." There are two ways to make money from bonds: holding a bond until maturity, and selling it whenever the interest rate drops. For the last several years, Bernanke has announced all kinds of bond-buying schemes. In a market, investors keep their cards close to their chests--you don't announce how much you're going to buy days in advance, or you won't make money. It's a pretty simple technique--the Fed announces it's going to buy quantity of bonds. This will push the interest rate down. All you have to do, then, is buy some bonds right before the Fed does, and sell them to the Fed at a profit. Easy as pie! This demand for bonds isn't being driven by any kind of market phenomena; it's driven entirely by guessing at and then reacting to Bernanke's announcements of how much money the Fed is going to print and then buy bonds with.

So there you have it. There is no bond market to be analyzed with the conventional tools of market analysis. It's entirely a rigged game right now.