Slow Motion

In a slow motion train wreck that will result in the eventual failure of Greece and then the slow collapse of the EU, the West watches helplessly as Greece reaps the poison fruit that it has sown for many decades. Greece, like most EU countries is a social democracy—a prime example of the ultimate result of big government. Massive government pensions protect retirees, government funded universal health care drains tax revenues, strikes occur at the drop of a hat as public sector unions demand more and more, private unions follow their lead, demanding 6 or more weeks of vacation as productivity plummets, cradle to grave “benefits,” all paid by the government with money borrowed from European banks, make the populace happy. If this sounds familiar it's because the same system exists in countries like Spain, Italy, and Portugal, and all are in trouble.

But why not increase taxes on the rich? Or for that matter, on everybody? The top income tax rate in Greece is 45% (12 percent higher than ours) but that hasn't seemed to help.

As demands for more and more money occurred, continued government borrowing became close to impossible, and the money simply ran out. Internal attempts to implement “austerity” measures were met by protests and then riots. How dare the country try to salvage its economy? Demands by creditor nations to implement even more austere “austerity” measures were met with xenophobic derision and then more riots. And now, Greek politicians have decided to put the whole austerity thing to a vote. I wonder how that will turn out?

David Warren comments on the latest attempt to save Greece after creditor banks were convinced to take a 50 percent write-down (a.k.a. haircut) on Greek debt:

… Even after write-downs that begin to seriously limit the ability of European banks to finance the European economy (which is where the wealth comes from), Greece is left owing more than 100 per cent of GDP …

And once again, let me emphasize: no banks, no economy. No economy, no jobs; and incidentally, no tax revenue. The fatuous "Occupy Wall Street" movement is premised on the notion that this isn't true, that all bank lending should be taken for free money, if the borrowers aren't in a mood to repay … A substantial part of every western electorate nods approvingly towards them, without bothering to think through what they are approving.

It was upon such electorates the Nanny States were built; and in turn, within such Nanny States that incredibly irresponsible public attitudes were cultivated. The very impulse to blame everything that has gone wrong on the greed of "bankers" and "capitalists" betrays a world view that is essentially insane, and now shifting, under pressure, towards malice.

Which is hardly to say bankers and capitalists are without blame. They played along with fanciful regulatory regimes, from short-term self-interest. They knowingly accepted a dream world in which paper is backed by paper in infinite recession, and applied all their wits to devising the clever instruments by which they themselves were fooled.

Why is all of this important? After all, it’s a European problem. Or is it?

As we watch a perpetually campaigning President demagogue economic issues, propose programs “right now” that follow the Greek model, and at the same time sow the seeds a class warfare, it’s not difficult to envision an outcome for us that is not too far different than the inevitable outcome for Greece.

The class warriors who support Barack Obama live in a fantasy world in which “the rich” can be taxed at levels that will assuredly support the economy. Just tax at 50 or 60 or 70 or 80 percent, and everything will be okay. It simply isn’t possible for such a small number of people (“the rich’) to support the growing trillions that the same class warriors expect us to spend. But no matter, the class warriors believe it to be true. Just like the Greek people believe that their government is lying to them when it states that the money is gone and the creditors will lend no more.

If we follow the lead of the class warriors, your children, like Greek children today, will live in a time when the money is gone and our creditors will lend us no more. If we follow the lead of the class warriors, our future is assured—and it won’t be pretty.

One Percent

President Obama has escalated his class warfare rhetoric in what appears to be a desperate attempt to gain some political traction among many within his base who are becoming increasingly disaffected with his leadership. Although class warfare is a common political meme among those on the Left, the President is the first chief executive in my lifetime who has been so strident and obvious on the subject.

Rep. Paul Ryan ((R-Wisconsin and certainly no friend of the President) characterized the President’s class warfare strategy in the following manner:

"He gave us a message of hope three years ago of uniting, not dividing. And what we're getting now is class warfare. We're getting very polarizing rhetoric that puts class against class, pits people against one another. And I would simply say sowing social unrest and class resentment does not make America stronger, it makes America weaker."

It seems that the Occupy Wall Street movement has picked up on the President’s meme and introduced the term “one percent” into the political lexicon. The term is pejorative, suggesting that those who reside in the top one percent of all income earners somehow did not work hard for their wealth, did not pay taxes or paid them at an unfair rate, do not contribute their “fair share,” and are therefore subject to government mandated income redistribution. The one percenter cut-off income of just under $600,000—is far, far beyond my personal income. Yet, I don't sympathize with those who are now trying to demonize the one percent.

Over the years, I’ve worked with and have known many one percenters. In the main, they work very long hours, take substantial risks to build businesses that employ others (sometimes, many others), pay their taxes at rates that exceed those of the other 99 percent, are philanthropic by becoming major donors for charities, universities, the arts, and medicine. Relatively few work on Wall Street. Many are politically liberal. And yet, if you are to believe the President, they’re somehow to blame for uncontrolled spending, skyrocketing deficits, and 9.1 percent unemployment.

The President and his supporters appeal to anger and envy when they talk about private jet owners and billionaires who pay taxes at rates that are lower than their secretaries. They want the listener to extrapolate these anecdotal accounts to everyone in the one percent. In reality, it’s likely that billionaires and jet owners make up less than 1 percent of the one percent and are hardly representative.

It also appears that politics has more to do with one’s membership in the one percent club than annual income or wealth. Consider the following conversation between CNN’s Piers Morgan and Michael Moore, reported by CelebrityNetWorth.com :

Piers Morgan:I need you to admit the bleeding obvious. I need you to sit here and say, I’m in the 1 percent, because it’s important.
Michael Moore: Well, I can’t. Because I’m not.
Morgan: You’re not in the 1 percent?
Moore: Of course I’m not. How can I be in the 1 percent?
Morgan: Because you’re worth millions.
Moore: No, that’s not true. Listen, I do really well. I do well. But what’s the point, though?…

Moore denies the obvious. His net worth is well in excess of $50 million. He earns additional millions from his movies and books. He goes on the claim that because he "cares" about the "workers" and has dedicated his life to their plight, that he somehow doesn't qualify for the one percent. Of course, many others in the one percent care about their workers by creating businesses that employ them, a work environment that supports them, and opportunity for those same workers to progress to higher levels of achievement and income. But somehow, that doesn't seem to count.

By Moore’s logic, I’m certain that Al Gore, Sean Penn, The Clintons, and thousands of other multi-millionaires are also not members of the one percent. To Michael Moore and those who think like him, only those people who are politically agnostic, centrist, or conservative qualify for one percent demonization. It’s not about the money—it’s about the ideology.

It seems to me that Moore clearly understands that one percenters are being demonized. That’s probably why he adamantly claims that he’s not part of the group. Discarding all logic, he ignores the definition, steps through the looking glass, and baldly states that he is not a one percenter.

Well, neither am I. But I know demonization of a particular class of people when I see it. It’s distasteful at best and dangerous at worst. I expect those things from Michael Moore, but I believe that the President of the United States should be held to a higher standard.

Numbers

President Obama is already in full campaign mode, traveling the country and blaming the poor economy on pre-existing circumstances, the hated-Republicans, and world events. It’s only fair to state that the President did not have a healthy economy when he took office, in fact, a combination of poor public policy going back to the 1990s and Wall Street malfeasance led the 2008 crash. President Bush had culpability for this, but so did many prominent congressman and senators from the President’s party.

Many of the President's supporters—DNC Chair Debbie Wasserman-Schultz comes to mind—have already begun delivering an oft-repeated message that under this President the economy has “turned the corner” and is significantly better than it would have been if George W. Bush was still in office. Obama supporters buttress their claims by citing that anywhere from 1.6 to 2.2 million jobs have been “saved”—convenient, because that number cannot be realistically measured and has never before been used as a metric for economic health.

Given that this argument will get a lot of air time and print in the coming months, it’s only reasonable to look at a few other numbers. Milton R. Wolf does this when he writes:

Under Obamanomics, the unemployment rate has increased from 7.8 percent to 9.1 percent, and underemployment has increased from 14.0 percent to 16.2 percent. The average length of unemployment has increased from 19.9 weeks to 40.3 weeks. Median income has dropped from $52,029 per year to $49,445.

Since Mr. Obama has taken office, the total number of jobs in America has decreased from 142.2 million to 139.6 million. Most schoolchildren with a calculator would say that’s a loss of 2.6 million jobs, but not Barack Obama. The White House has claimed that the stimulus created - or saved - 2.5 million to 3.6 million jobs. Off by 6 million, but close enough for government work, I suppose.

On President Obama’s watch, $835 billion dollars were squandered on a stimulus that didn’t create enough jobs. Now, the President insists that doing more of the same, but only half as much, will create 1.9 million jobs. Luckily, even with Democratic control of the senate, his jobs legislation was rejected. The President bashed Republicans, even though they are in the minority.

And even after the expenditure of almost a trillion dollars, much of it going to programs to help those at the low end of the income scale, Wolf reports:

Under Obamanomics, the poverty rate has increased from 13.2 percent to 14.3 percent. The number of Americans living below the poverty level has increased from 39.8 million to 43.6 million. The number of Americans on food stamps has increased from 31.9 million to 45.2 million.

And finally, there’s the small matter of the debt. Again from Wolf:

Since Barack Obama and his Democratic allies in Congress took control of the national checkbook, annual spending has increased from an already mind-blowing $2.9 trillion to $3.8 trillion. The annual deficit has increased from an already shameful $438 billion to an unbelievable $1.5 trillion. Meanwhile, the national credit card balance has increased from $10.6 trillion to a maxed-out $14.7 trillion.

In 2008, Sen. Obama complained that President George W. Bush “added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back - $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.”

Irresponsible, he said, before he tacked on another $17,000 for every man, woman and child. Unpatriotic. It’s hard to disagree.

I suppose it's possible to explain away some of these numbers, but it will be difficult to explain away all of them. In fact, it’s the numbers, plain and simple, that will be the President’s undoing.

OWS

After everyone from Nicholas Kristof (of The New York Times) to Mahmoud Amadinejad (of the Islamic Repubic of Iran) began comparing the Occupy Wall Street (OWS) movement (a.k.a. the 99 percenters) to Tahir Square in Cairo, I thought it might be worth trying to understand exactly what the OWS positions are.

Like many within OWS, I do think Wall Street bears a significant portion of the blame for the economic debacle that has been visited upon us since 2008. I do, however, wonder why those who are angry at Wall Street aren’t equally angry at the Obama Justice Department who has not indicted a single Wall Street senior executive, even though their actions and decisions are in the gray area that is close enough to criminal behavior to be indictable (think: Michael Milken). You’d think the OWS members would be picketing the Justice Department or the Obama White House—curious that they aren’t.

Like many within the OWS, I do think that many senior executives at major U.S. corporations are compensated without regard to their accomplishments and often, without considering the value they bring to shareholders. I find it interesting, however, that the OWS protesters don’t carry signs decrying the enormous income disparity between say, someone like Bono and the lowliest member of his roadie crew or someone like George Clooney and the grips who build his movie sets.

Like most within the OWS, I agree that capitalism isn’t a perfect system, but unlike the majority of people sitting in parks and carrying signs, I believe that history has indicated that it is the only viable economic model that gives people from humble beginnings the opportunity (not the guarantee, the opportunity) to improve their lot in life. I also wonder why many within the OWS movement use "capitalist" as a pejorative term, but at the same time, decry a lack of well-paying jobs. Exactly who do they think creates private sector jobs?

Like many young people within the OWS, I think it's a travesty that institutions of higher education drive a majority of their students into significant indebtedness. But I wonder why instead of demanding student loan forgiveness and thereby sticking the overburdened 99 percent with the bill, the OWS doesn’t question whether those in higher education are selling a product that ill-prepares most liberal arts students for the economy of the 21st century. Maybe a few elite universities should be occupied as well.

Like many within OWS, I recognize that there are income disparities across the broad spectrum of people that make up our population, but I wonder why OWS members believe, against all of human experience, that everyone should be guaranteed an equal outcome, regardless of the work they put in, the career they choose, or, the luck they have. On a similar note, I wonder why members of the OWS become enraged when discussing income disparity and the “1 percent” they claim is raping the other 99 percent, but seem less than concerned about the huge disparity between the 10 percent who fund the vast majority of all government functions and the remainder of the populace who fund relatively little.

Like many within the OWS, I agree that no one should become destitute because they become seriously ill, but I wonder why no one asks whether there a difference between catastrophic health coverage provided by private insurers but subsidized by the government (a relatively low cost form of universal health care) and dollar-one coverage that is enormously expensive and ruinous to our already monumental indebtedness.

Unlike many within the OWS, I’ve learned that life isn’t fair, and that no one is guaranteed a job, a happy, stress-free life, or a cradle-to-grave government security blanket. What we are guaranteed is the opportunity to achieve those things, and in return, our society only asks that we take responsibility for ourselves and our actions.

An Iconic Capitalist

As I read and watch the tributes to Apple’s Steve Jobs, I’m struck by how a successful, very, very profitable corporation, lead by an iconic innovator, can change the world for the better. In fact, in many ways, Jobs’ company has done more to better the human condition, provide jobs, educate the young, and establish a role model for future entrepreneurs than all the politicians and "activists" who currently criticize corporations in America.

Steve Jobs has been lionized as an innovator by virtually every writer and pundit. Yet many seem to forget that in addition to being a true visionary, he was a hard-nosed businessman and the leader of one of the most influential corporations on the planet. In fact, for a time, Apple’s market valuation exceeded that of Exxon.

Back in August of this year, The Wall Street Journal wrote this about Jobs:

… let's also acknowledge that coupled with [his] vision and the pursuit of excellence was hard-headed business strategizing. The triumph of iTunes, the App Store and the incipient Apple Cloud ushered in the era at Apple of network-esque complexity as well as the possibility of network-esque revenues. It made Mr. Jobs, despite himself, an empire builder. Success brought rivals like Google and Amazon. There came the need to anticipate moves and countermoves, the need to play defense. This was an unsung part of the Jobs C.V. in later years. And almost tactless to mention is the garish side effect: the rise of Apple to exceed Microsoft and on some days Exxon Mobil, as the world's most valuable company.

Now this was an almost inexplicable business success, a miraculous reversal of fortune of the sort that inspires banner headlines and hyperventilating on cable TV when it happens on the ball field. It was an astonishing achievement, emblematic of a man meeting his moment completely, when few men get a chance to meet their moments even partially.

Apple is an American corporate success story. And few would argue that Steve Jobs was the driving force behind that success. Jobs demonstrated how a dedicated entrepreneur can build something important—something that has set the stage for computing throughout the reminder of this century.

He made no apologies about striving for profit. He was unabashed about creating wealth for those who invested in his company. And he had few regrets about his competitive attempts to defeat his business rivals. Steve Jobs was a capitalist. He exemplified the very best of that breed. In his short life, he certainly contributed his fair share.

Steve

It’s exceptionally rare for the founder of a garage shop operation to build a company that employs tens of thousands and has evolved into one of the most respected brands in the world. It’s rarer still for the founder to take risks—repeatedly—and insist that his company innovate rather than copy. It’s even rarer for the founder to have the vision to conceive of transformation products, even when others told him there was no market, that those products wouldn’t sell. But that was Steve Jobs—the founder of Apple.

Steve Jobs died today.

Apple released the following statement: "Steve's brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve."

Indeed.

One hundred years from now, the transformative products that were created under Jobs’ leadership will be seen as the true harbingers of the inextricable integration of computing into our lives. That integration is just beginning. But Jobs, more than any other person on the planet, created the products that defined the beginning. He was, in his own way, something that is very rare in this era—Steve Jobs was a great man.

He will be missed.