Examining some Libertarian ideas

E.J. Dionne angered some Libertarians with his piece “The Libertarian Problem.” Two of them responded with a link to the same piece “‘The Question Libertarians Can’t Answer' Part II.” Many years ago, The Comics Journal explained why they were reviewing what they felt was a poorly-written comic book. They said something to the effect of: “Every now and then we like to drag out some really poor example of the comics-writing craft and flog it for the amusement of our readers.” In that spirit, I'll review what the Libertarians have to say.

Only continued capital accumulation, which occurs when businesses may reinvest their profits in the purchase of capital goods without being expropriated by government, made it possible for the economy to become physically productive...

Actually, according to UK Public Spending, public expenditures for 1820 (in 2012 currency) added up to 57.5 million pounds, 17.1 was for defense and 31.1 for interest. In 1830, those were 53.7, with 15.6 defense and 29.1 interest. In 1870, 67.1, 23.4, and 29.1. 1890, when industrialism really took off, the numbers were 90.6, 33.4 and 24.5. Additionally in 1890, the UK government spent 8.3 million on their Postal service and 21.5 million locally on waste water management and the water supply, street lighting, etc. So no, the Industrial Revolution was not simply a matter of allowing capitalists to keep and then to reinvest their own money. There was also a good deal of public spending involved that made the Industrial Revolution possible. As Elizabeth Warren, now a Democratic Senator from Massachusetts said:

“I think the basic notion is right. Nobody got rich on their own. Nobody. People worked hard, they buil[t] a business, God bless, but they moved their goods on roads the rest of us helped build, they hired employees the rest of us helped educate, they plugged into a power grid the rest of us helped build."

From the Libertarian piece:

“Most of the government’s medical payments on behalf of the poor compensated doctors and hospitals for services once rendered free of charge or at reduced prices,” writes historian Allen Matusow.

Yes, that's entirely true, but keep in mind that when he's talking about what doctors once did “free of charge,” he's talking about the days when a person broke his leg, he'd fix it by breaking off a tree branch, tearing up his shirt, tying the branch to his leg, hobbling back home and then staying in bed until his leg healed. Nowadays we, as a society, can afford slightly more effective services. But those better services cost more, so instead of having the individual cover them, we transfer the costs to the larger economy, which can easily afford to pay them.

Yes, back In the days of the Model T, people realized that they couldn't simply peel off a couple of bills from a wad of money and cover a new automobile, so payment plans came into effect. Can we use payment plans for medical services? Not really, because we can't plan on having to pay major medical expenses the way that we can plan to buy a car. When we really need big dollars for big services, we're usually well past the age when we've retired from work and are on a fixed budget or we're in our last decade or so of work and can't reasonably expect to make much more money then we're already making.

It's a nice idea to try and make market capitalism apply to everything, but it really doesn't effectively handle medical expenses because a medical “customer” doesn't equal a car customer. They don't always just walk into a showroom with the money they need to buy services and are often in no position to compare costs and benefits of various forms of treatment. There's a reason we call them “patients” and not “customers.”

Dionne then says, “Smaller government meant too many people were poor.” This is flat-out idiocy. The greatest gains against poverty in the United States occurred when government was least involved. In 1900, the poverty rate by today’s standards was 95 percent. By the time the federal government got involved in poverty relief in a non-trivial way, in the late 1960s, that figure had already plummeted to between 12 and 14 percent...

Well, yeah, in 1913 until midway through World War II, average annual incomes were between $10,000 and $20,000, frequently staying close to the $15,000 mark. They then increased at a rapid, steady clip until 1970, at which point, they've been around $40,000 to $50,000. Obviously, a family in 1950 that's making $25,000 and that, just a decade earlier, was making $15,000, considered itself quite wealthy and probably considered itself quite wealthy in 1920, when they were making $18,000.

Poverty is not a solid, fixed status. Wikipedia defines a person who's living above the poverty line as someone who has adequate amounts of “food, water, sanitation, clothing, shelter, health care and education.” How do we define “affordable housing,” i.e., a decent, adequate level of housing? A person living in New York City or San Francisco is not going to define the term the same way that a person in Arkansas or in Russia's Ural Mountains or in Southern Niger would. “Poverty” is a highly subjective term that depends on a number of factors. In terms of just plain, straight numbers, yes, the poverty rate in 1900 was much higher than it is today, but that measurement is a pretty meaningless one. It's not just that inflation has risen, it's that there are many more things to buy, at a higher cost, then there were way back when.

Mainstream economics identifies monopolists by their behavior: they earn premium profits by restricting output and raising prices.

Now, there's certainly something to this if we look at Karl Marx's definition of monopoly. He begins by focusing on how concentrated an industry is, but then agrees with the Libertarians after that.

In 1904 large-scale enterprises with an output valued at one million dollars and over, numbered 1,900 (out of 216,180, i.e., 0.9 per cent).

…

Almost half the total production of all the enterprises of the country was carried on by one-hundredth part of these enterprises! These 3,000 giant enterprises embrace 258 branches of industry. From this it can be seen that at a certain stage of its development concentration itself, as it were, leads straight to monopoly, for a score or so of giant enterprises can easily arrive at an agreement, and on the other hand, the hindrance to competition, the tendency towards monopoly, arises from the huge size of the enterprises. (Emphasis in original)

The Libertarians make a strong case that monopoly wasn't really a concern during that period and that price-fixing was not a problem that anyone really worried about. So what exactly was the problem with economic concentration during the Gilded Age (From the Civil War in 1865 to the Progressive Era in 1890)? Well, companies, and indeed all sorts of groups, might compete in some ways, but might very well cooperate in others. Police officers from different cities may badmouth and disparage each other, but if a suspect flees from one city to another, the police will forget their differences and cooperate.

What is the major claim made by labor unions as to the service they rendered to the American people during the early days? It concerned an issue where the companies found it advantageous to be large and where they all took the same approach, it concerned labor conditions and working hours.

By the 1820s, various unions involved in the effort to reduce the working day from 12 to 10 hours began to show interest in the idea of federation-of joining together in pursuit of common objectives for working people. 

Later on,

Most industrial workers still worked a 10-hour day (12 hours in the steel industry), yet earned from 20 to 40 percent less than the minimum deemed necessary for a decent life.

Such lengthy working hours left employees enough time to eat, sleep and work and not much else. Why did it help for companies to be large? Because large companies could mechanize their work more easily than small companies could and could thus employ less-skilled labor. It was labor unions, combined with the New Deal and not inter-company competition that resulted in the 8-hour work day. It was when workers banded together and demanded a reduction in hours and when the national government agreed with them that excessive working hours were ended.

So yes, it was a bad thing for companies to control as much market share as they did, but not for the reasons that Marx and Dionne specify.

Finally, we read this: “And when the Depression engulfed us, government was helpless, largely handcuffed by this antigovernment ideology until Franklin Roosevelt came along.”

Well, it was actually the Supreme Court that put out the anti-minimum wage, pro-sanctity of contracts decision Lochner v. New York in 1905 and that reversed itself in 1937 with West Coast Hotel v. Parrish by ruling that Washington State could impose minimum wage regulations on private employers without violating the Constitution. It appears very highly likely that the Court took note of popular attitudes towards the sanctity of contracts and Roosevelt's influence can't be absolutely proven, but Roosevelt was certainly making his views clear that the Court was standing in the way of progress.

Yes, President Hoover came up with many good ideas, but that and a buck will get you a cup of coffee. Roosevelt was the president that actually implemented those ideas, or implemented them on a meaningful scale, and so he's the one who properly gets the credit for them. I don't agree with the Libertarian view of the Great Depression at all. I see the Depression as having been the result of a general systems failure and not just a trivial hiccup.

So, the Libertarians certainly make a couple of good points, but in general, I find their history pretty incompetent.

Rep. Paul Ryan - an assessment

In a recent column for the Inky, Representative Paul Ryan (R-WI) complains that the President wants to "Fight a straw man. Avoid honest debate. Win the argument by default." What is his evidence that Obama is smacking Republicans with straw man-type accusations? "The president will bait us," Ryan said. "He'll portray us as cruel and unyielding. Just the other day, he said Republicans had 'suspicions' about Social Security. He said we had 'suspicions' about feeding hungry children. . ."

Dan Froomkin, now at the Huffington Post, sketched out for us just what the term "straw man" meant. President George W. Bush was speaking about the illegal warrantless surveillance that his administration was engaged in:

"You can't protect America unless we give those people on the front lines of protecting this country the tools necessary to do so within the Constitution. And that's where the debate is here in the United States. There are some decent people who don't believe -- evidently don't believe we're at war, and therefore, shouldn't give the administration what is necessary to protect us. "

As Froomkin points out, no one in America was suggesting that we weren't at war. Also, the question of whether warrantless surveillance was within the Constitution, a question simply assumed by Bush to be answerable in the affirmative, is a very deeply controversial one and one that has never been properly investigated or adjudicated. Nor, of course, was it ever shown by the Bush Administration that warrantless surveillance did anything whatsoever to protect America.

So, is it truly a straw man that Republicans have " 'suspicions' about feeding hungry children," in other words, that Republicans have no real desire to see to it that children are properly fed?  Well, according to the former Governor of Michigan, Jennifer Granholm, Republicans care deeply about children, so long, of course, that those children are still in the womb. Children who have aleady been born? Ehh, not so much.

Can you be pro-life and vote to cut funding that supports the life of a child? Paul Ryan's cut-at-all-costs budget and philosophy, which 100 percent of the pro-life Republicans voted for, would gut the funding that supports at-risk babies and children: food stamps, temporary assistance to needy families, day care, Head Start, early childhood education, children's health care.

At the state level GOP governors are cutting the child protection workers who handle child abuse and neglect cases -- you know, those awful public employees who must have caused the financial crisis. Programs that would benefit at-risk children outside the womb are all on the chopping block.

So no, I don't agree with Ryan at all that he and his fellow Republicans are being smeared with a straw man-type statement when people question whether they really favor the feeding of hungry children.


How about the charge that Republicans have " 'suspicions' about Social Security"? Well, here too, the facts are seriously biased against Ryan.

The proposal was in Ryan’s 2010 “Roadmap For America’s Future,” a broad blueprint to remake the federal budget which elevated the little-known congressman into the Republican Party’s visionary. It involved shifting Social Security funds to private retirement accounts as well as reducing benefits and gradually raising the age of eligibility.

In other words, again, the charge of Democrats smearing Ryan and Republicans with straw man-type charges comes up as a statement that's without merit.

What does Ryan ultimately want? According to him, a "smaller, smarter government." Okay, that sounds pretty reasonable, even though I'd question why people want, specifically, a smaller government. What's his plan for getting that? What, specifically, would Ryan and his buddies in the Republican Party be comfortable cutting? As The Washington Monthly put it:

For years, a variety of polls from a variety of outlets during a variety of conditions all show the same thing: Americans want to see the government cut public spending -- in the abstract. Asked for specifics, the same Americans actually like public spending and don't want to see cuts.
...
There is one area that everyone's willing to trim: foreign aid. Good 'ol foreign aid. A category that, as Roger McShane dryly points out, "makes up less than 1% of America's total spending." Beyond that, there were only four areas that even a quarter of the population was willing to cut...

So for many, many years, yes, the American people have wanted to see a smaller government and want government spending cut, except of course, when they're pressed for specifics. Then, they really don't agree on actually cutting anything. The article then documents Ryan making a number of vague, fuzzy statements that don't get anywhere close to specifics.

So no, I don't see any reason to be even slightly impressed with Ryan's promises and accusations.

The Failure of Reaganism

Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid.

Paul Krugman

With Hurricane Sandy, the Ronald Reagan-inspired Republican policy of preferring small government, or even better, private industry, to big government took a really hard hit. Presidential candidate Mitt Romney said back in May 2011:

... every time you have an occasion to take something from the federal government and send it back to the states, that’s the right direction. And if you can go even further and send it back to the private sector, that’s even better,” Romney responded.

“Instead of thinking in the federal budget, ‘What we should cut?’ we should ask ourselves the opposite question, ‘What should we keep?’ We should take all of what we’re doing at the federal level and say, ‘What are the things we’re doing that we don’t have to do?’ And those things we’ve got to stop doing,” Romney continued.

But all of the sudden, Romney recognized that he had a very poor case on his hands and that big government wasn't looking so bad, after all. Very understandably, Romney dodged questions about whether, as president, he'd continue to support the existence of FEMA. Understandable, but in doing that, he essentially conceded that the whole right-wing argument for shrinking the government was kind of silly. As Krugman points out, even after many decades of anti-big-government talking points being put out by the Republican Party, members of the public "strongly support [big government programs such as] Social Security, Medicare, and even Medicaid."

The fire at a factory in Bangladesh that was producing clothes for sale by Walmart was another hard blow to the right-wing, Republican project of "getting big government off the backs of the people" of industry. It turns out that corporations will not, after all, effectively regulate themselves and will cut expenditures on safety in the name of making bigger profits.

In late November, there was a toxic train wreck in Paulsboro, NJ, where whole freight cars full of a flammable gas known as vinyl chloride, used to make PVC plastics, were derailed and fell into the Mantua Creek. Of course, the industry that produces vinyl chloride has been tramsporting and handling "massive amounts of toxins with minimal oversight," which works really good until one day it doesn't.

A local blogger found a March 2010 survey that gauged public attitudes toward Republicans:

Here are the perceptions “where the Republicans seemed in trouble”:

“The Republicans are not for the average person…”

“The Republicans do not champion the public interest….

“The Republicans put the needs of big corporate interests ahead of the ordinary citizen….”

“Though the Republicans are strong on moral values, only half the voters think Republicans share their values and priorities….”

“Republicans may be going too far in pushing their religious conservative agenda….”

“They are not heralded for their economic policies….”

“They are not heralded on the environment….”

“They are not heralded for how they relate to the world….”

“They are the establishment….”

In other words, the Republican project of shrinking big government down to size has resulted in nothing more than that the American people regard the party as heartless and heedless of the damage they're causing in the name of their small-government ideology.

Rewards and punishments

And on precisely the same note as in my previous post, Hostess is asking their bankruptcy judge to distribute bonuses to executives on the logic that giving out $1.8 million in bonuses to just 19 executives of a bankrupt company (While discharging 18,000 workers) means they'd be able to keep those executives on the job during the year or so that it would take to properly and effectively close the company down. The argument on behalf of the executives is that "In January, Hostess filed for its second Chapter 11 bankruptcy in less than a decade, citing steep costs associated with its unionized work force" while the counter-argument is that "The company's demise came after years of management turmoil, with workers saying the company failed to invest in updating its products."

Hostess is hardly the only company to reward executives of failed firms, but

Even as it blamed unions for the bankruptcy and the 18,500 job losses that will ensue, Hostess already gave its executives pay raises earlier this year. The salary of the company’s chief executive tripled from $750,000 to roughly $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000. Those raises came just months after Hostess originally filed for bankruptcy earlier this year.

Also:

But the union and the 5,600 Hostess workers represented by the union did not create the crisis that led the company’s incompetent managers to announce plans to shutter it.

The BCTGM workers did not ask for more pay.

The BCTGM workers did not ask for more benefits.

The BCTGM workers did not ask for better pensions.

The union and its members had a long history of working with the company to try to keep it viable. They had made wage and benefit concessions to keep the company viable. They adjusted to new technologies, new demands.

My problem with rewarding what strongly appears to be a case of vulture capitalism is that it gives corporate executives every incentive to drive their companies into the ground and loot them dry. If we make it pay for executives in charge of companies go under, what's to prevent them from making decisions that they know will harm the company, its customers and their larger community?

My proposed solution is to remove the profit motivation for corporate executives to seek the destruction of the firms they supervise. When a company goes under, every executive should be placed on seven-eighths of their usual pay and no bonuses, ever! No stock sell-offs, no financial compensation of any sort. Any stock they own should be taken back and discontinued. I don't think the employees should be automatically rewarded either, just in case it really is union demands that make the company go under, but most certainly, the owners and executives should "take a haircut" on any company that goes bankrupt.

Flabbergasted

I'm absolutely amazed that the Romney campaign has not only failed to cut the salaries of all of their people in half, but that they've actually gone in the other direction and have handed out bonuses!!!!!! Now, I would understand that, on victory night, you give everybody a "Well done!" and a slap on the back and the next day, cut them all nice, fat checks. That would make complete sense.
I can understand that after a loss, you'd need about a month to close up shop, pay off all your bills and debts or at least set up long-term arrangements to do so and maybe, just maybe, you'd have something left over to hand out as a consolation and as a "Better luck next time."
But to hand out bonuses before the campaign is over?!?!? To hand out bonuses to a campaign that's a complete disaster??!?! This is beyond incompetence, this is why the culture of the golden parachute is so horribly inappropriate and so blatantly counterproductive for American business.

The Republican Convention

Ann Romney started it off by giving a very nice, pleasant speech that was completely devoid of any bothersome policy specifics, y'know, anything that might tax the minds of any of the gentle, proper ladies that were listening. Reading between the lines and listening carefully, a feminist might actually take heart from Romney's acknowledgement of women's struggles, but Romney presented it as "whattaya gonna do, huh?" instead of as a challenge to be confronted and surmounted.

Clint Eastwood talking to the empty chair that was supposed to represent President Obama...whooo-weee!!!!!! Yeah, Eastwood's Hollywood buddies clearly thought that he's, uh, kinda lost it.

The speech reminded me of the grandfather on the cartoon The Simpsons yelling at clouds.

What really bothered me about the speech was that Eastwood addressed a right-wing caricature of a rude, disrespectful Obama and not the real-life fellow who's actually quite likeable.

Wow! ALL of the factcheckers came out swinging against Ryan's speech!

Of course, some media outlets don't regard fact-checking as their mandate and contented themselves with theater critcism, i.e., how well did Ryan tell his many lies?

An especially annoying lie of Ryan's was his description of the Simpson-Bowles "Cat Food Commission" (As it's policy prescriptions were guaranteed to leave the middle and working classes more desperate and impoverished than before).

But there's so much more. Ryan claimed that Obama "created a bipartisan debt commission. They came back with an urgent report.  He thanked them, sent them on their way, and then did exactly nothing." In fact, the Simpson-Bowles debt commission never issued an official report—in part because Paul Ryan, who sat on the commission, voted against it because he and his fellow Republicans opposed raising taxes on the rich to increase revenue and reduce the debt.

Romney's speech? Well, again, the speech completely lacked any real specifics. Romney promised 12 million new jobs, no specifics as to how and his point number three, his promise to forge "new trade agreements," presumably in the mold of NAFTA, actually contradicts the idea that he'll create new jobs here in America. Also, as we DFH lefties have been pointing out for many years, Romney's fifth point, that he wants to cut the deficit, ALSO completely contradicts the promise of new jobs. America simply cannot cut the Federal Budget AND create new jobs in the numbers that are desperately needed.

Jon Stewart ran a segment on The Daily Show a few years ago on Romney's first point, that of energy independence, showing that EVERY American president, from Harry Truman onwards, has made exactly the same promise. Not that it's a bad promise to make, but Romney really needs to flesh that promise out a bit. I looked at his campaign website a few weeks ago and his energy policy is just Sarah Palin's "Drill, baby, drill." Romney wants Americans to be educated. Okay, what does he plan to do about the crushing burden that student loans have become? No word on that.

USA Today poll

I was corresponding with a right-winger last night (Using the comments section attached to a piece in our local paper) and he suggested that I check out a USA Today poll concerning the Obama campaign's attacks on Bain Capital and what people thought of Romney's  business experience as far as his economic expertise goes. Apparently, the news on that is good for Romney as the poll showed that the public thinks 63% to 29%, that Romney's business experience is a plus when it comes to dealing with our economy.
Slight problem, though. When the focus of the question is narrowed from the public at large to just independent voters who have been paying attention to the campaign in swing states (Where the Obama campaign anti-Bain advertisements have been airing), the result is far less pleasant to the Romney campaign. The polling there shows a significant movement towards Obama and against Romney when those particular voters hear about Bain focusing on "creat[ing] wealth for their investors" as opposed to "creat[ing] a stronger American economy."
Problem is, there's a difference between running a private, for-profit corporation, no matter how large it may be, and between running a democratic government. Democratic governments can't simply toss liabilities overboard and stick others with taking care of them the way private industries regularly do. Overseeing the budget for a private company is a relatively simple matter, you want to make sure that your bottom line is a positive number. If it is, you're a success and if it's a really big positive number, you're even more of a success. Governments are more multi-purposed and have several different mandates to juggle. As US News pointed out back in February, the idea that businessmen automatically make good presidents, well, that may be a great idea in theory, but once you start really examining that idea, it quickly falls apart.

Update: and yes, we've now confirmed that Obama's attacks on Bain Capital did indeed have their intended effect. Romney has now stopped talking about his business background and is now talking about his being Governor of Massachusetts!