WHY THE LEADERSHIP DEFICIT

INTELLIGENT CONSERVATIVES AND OLD-FASHIONED LIBERALS UNITE:

ALL YOU HAVE TO GAIN IS YOUR COUNTRY’S SURVIVAL…

INTRODUCTION

THE IMPASSE IS TEMPORARY,

THE PROBLEM IS CHRONIC

To no one’s surprise the deficit-fix supercommittee has failed to fix the deficit, even in principle.  They are so sorry.

David Brooks almost always makes sense, but when he doesn’t, it’s always a “diagnostic moment.”  In today’s New York Times, he concludes a Rodney King, ‘Why can’t we get along?’ lament [The Two Moons*] with this gem:

“…it’s hard to see how we get out of this, unless some third force emerges, which wedges itself into one of the two parties, or unless we have a devastating fiscal crisis — a brutal cleansing flood, after which the sun will shine again.”

Mark this down: After the last “brutal cleansing flood”, Russia got Lenin, Germany got Hitler and the world got to live in hell for the better part of a generation.

Mr. Brooks has sound instincts that are occasionally overcome by the attempt to keep all well-meaning liberals in the conversation even when they have wandered into deep brackish waters (especially the subset that runs and reads the New York Times).  This has prevented him from making any sharp ideological critique of the hard-left elements that, sadly, seem to have a death grip on the current administration.

This problem is so severe that two prominent democratic pollsters are calling for POTUS to abdicate his second term ambitions for the good of the country, and inter alia, the good of the party.

On Monday Patrick Caddell and Douglas Schoen, called for President Obama to follow the example of Lyndon Johnson and decline to run again, arguing that-

“…the president could eke out a victory in November. But the kind of campaign required for the president’s political survival would make it almost impossible for him to govern—not only during the campaign, but throughout a second term.

“Put simply, it seems that the White House has concluded that if the president cannot run on his record, he will need to wage the most negative campaign in history to stand any chance. With his job approval ratings below 45% overall and below 40% on the economy, the president cannot affirmatively make the case that voters are better off now than they were four years ago. He—like everyone else—knows that they are worse off.”

Caddell and Schoen are traditional democrats associated with the Clintons.

http://online.wsj.com/article_email/SB10001424052970203611404577041950781477944-lMyQjAxMTAxMDIwMDEyNDAyWj.html?mod=wsj_share_email

The failure of leadership by this president is irrevocable in my opinion.  His replacement by another, reverse-image ideologue committed to another scorched earth program, opposition and dialogue be damned, will suffer the same fate.  What the country needs is a new coalition that, of necessity, will be led by a conservative who is willing to adapt and compromise sufficiently to form a new coalition.  Secretary Clinton has been sufficiently tainted by association with the incumbent and by her earlier “right wing conspiracy rhetoric” that she is only marginally more likely to assemble a governing coalition than her current boss.

This is why the current fiscal crisis requires liberals to jettison their Marxist/progressive baggage, and the conservatives to get real.  Why only a coalition of intelligent, realistic conservatives and old fashioned, constitution-supporting liberals can save the USA from ruin. Why the next move belongs to the conservatives.

The Conservative Challenge

Commentary & Analysis

By

Jay B Gaskill

► In the best, traditional sense of the word, almost all of us are all liberals, but….

Liberalism, in its present form, is hostage to a Marxist Lite ideology that exerts a stubborn grip on the hard “progressive” American left.  The core notion is that wealth inequalities are an affront to social justice. The term “justice” is code for the attempt to achieve social and economic equality through stealth rather than via up-front socialist confiscation.  To hard-core progressives, wealth disparity as such – not unjust wealth disparity, but any wealth disparity – is a social evil because all such disparities are inherently illegitimate. In their moral universe, wealth inequalities, by their very existence, are wealth inequities, carrying the stench of “selfish capitalism”.

No society in the last 1,500 years, if ever, has actually eliminated significant differences in wealth. Wars revolutions and coups have succeeded in replacing elites, destroying assets and producing different concentrations of wealth and power, but not in “leveling” – except in the extreme cases in which the survivors are more or less equally destitute.  This sort of realism was called “mean spirited” by some on the left, for whom the actual accomplishment of leveling through genocide in Stalin’s Soviet Union was once justified as “a necessary revolutionary step”.  Marxist progressives are uncomfortable with this legacy and prefer to blend in with the old fashioned liberals. But the problems with top-down wealth leveling programs won’t go away.

Wealth disparity is the cumulative result of income disparity which is the cumulative result of different earnings and takings over time.  In traditional, non-Marxist, moral theory, only the takings qualify as illegitimate. In the surreal world inhabited by political progressives many takings are invisible because they are the result of political favors, i.e., the coercive power of the political class to punish and reward. To a traditionalist, either form of taking (by a government official or agency or by the trickery of a criminal schemer) amounts thievery, whether the takings are from individuals in a classic Madoff style or from taxpayers as favors to political supporters and allies.  Marxist and Marxist Lite reasoning converge on one morally untenable assertion: The act of taking excess wealth for any public purpose, including its redistribution via the political process, can never be theft because its larger moral public purpose cancels out ordinary morality.

For the last five decades, old fashioned liberals and the hard left kind have suffered through a bad marriage because all the takings were disguised as government-enacted underfunded wealth transfers and unfunded mandates.  The stealth strategy to hide these takings was a state-sponsored Ponzi scheme in which the government financed wealth transfers (the takings) by borrowing while pretending that the indebtedness would be repaid by “growth.”  This was rather like a 20th century Robin Hood bleeding out the bank accounts of productive earners, leaving worthless IOU’s behind – “Redeem if I get rich.” We are witnessing the large scale collapse of this form of liberalism.

This is a dangerous period because, for some progressives, the crisis represents an opportunity to install hard core bureaucratic socialism using the excuse that we are witnessing the failure of “capitalism”. The time has arrived for conservatives to put aside their minor differences, to hone their core message and get on board, even inviting traditional constitution-respecting liberals to break with the Marxist-progressives and join the in saving the USA as a free and prosperous country. The crisis requires the subset of patriotic, sane traditional liberals and all conservatives to focus on just three essentials: (1) Preserve our military against the attack within. (2) Preserve and restore economic freedom against the last-gasp socialist surge. (3) Head off the coming depression.

Four moral principles define and unite authentic conservatism:  (a) Support and defend the American constitutional system. (b) Protect earnings and the accumulation of earnings. (c) Limit taxation and regulation to well-established general purposes, not political favors and special interests. (d) Uphold economic policies that promote profit-making enterprises without political manipulation and interference, refusing to pick winners and losers.

They unpack as follows:

Government exists to protect the mutual respect of individual freedoms of its citizens, to adjudicate individuated justice among them, including enforcement their contracts, the redress frauds, trespasses and assaults against them, and to secure the benefits of liberty through an impartial system of law and justice that respects no status of royalty or privilege above that of common citizen. Because work and earning are fundamental values, owning and keeping the fruits of one’s earnings is a basic right. Because taxation is a government-taking of the people’s earnings, the care and spending of tax revenues are a public trust, to be used prudently and honestly only for general purposes that clearly benefit everyone and not for special favors to special groups.  Because regulation is a disguised form of taxation, one that can and does take away the fruits of one’s earnings, the issuance and enforcement of regulations is also a public trust, to be done, if at all, prudently and honestly for general purposes that clearly benefit everyone only, and not to create special favors to special groups. Because innovation and competition, risk and reward, are among the fit and proper uses of one’s accumulated earnings, the government may not pick winners and losers.

The 2012 Conservative Message in a Nutshell

The impending economic train wreck is the result of excessive liberalism. Therefore we need a conservative-led prosperity surge. Only a surge of healthy, profit-generating commercial enterprises can save us from fiscal collapse, avert a depression and bring us out of the economic swamp.  And only a tough, focused, well-funded military, backed by a strong, guilt-free American foreign policy, can protect us from our enemies.

Both goals are achievable, provided that a business-savvy, common-sense leadership emerges that is fully committed to four bedrock principles: [1] Failure is a lesson, not a problem to be shared, therefore: Contain failure, don’t reward it. [2] Success is a model to be promoted, not a shameful example to be burdened. Honor success, don’t burden it. [3] America is the beacon of hope to an un-free world because its core principles are protected by a unique constitutional system. Guard our firewall against tyranny.  [4] Political interference ruins economies. Four decades of liberal mal-governance has brought us to the brink. Peel back the political load on commerce.                                                                                                                     

Repairing the consequences of neglect

A crash will be the final, damaging legacy of cowardly procrastination.  It will threaten the very constitution, the fragile fabric on which all of our hard-won freedoms depend.

Fiscal neglect has characterized the decades of political and economic malpractice leading up to the present crisis.  The consequences of a full-on crash would be unthinkably dire as will the malign results of the unwise effort of institutional liberalism to prevent it.  For example, further attempts to attack the US sovereign debt problem by attempting to flood the system with more fiat money will backfire: Intractable, systemic hyperinflation would erupt along with further investment paralysis, leading to a prolonged depression.

Therefore a coalition of enlightened conservatives and realistic, constitutional liberals will need to implement certain seemingly brutal, but practical and survivable steps that are urgently necessary to contain the hemorrhage.  These should be softened by parallel bold and quickly effective steps to raise revenue (see Setting Off  the Economic Surge outlined in the next section) by dramatically “lifting the lid” on private, profit-making commercial activity.

The scale is daunting because the out-of-control federal spending machine is running on empty 44% of the year.  This is a patient that is bleeding out while replacement blood is poised to become unavailable within the first term of a new president or the second term of the current one.  If anyone is still wondering why so few well qualified candidates are running for POTUS, the answer is bright line clear.  The ones not running for POTUS knew there were not up to the job and/or that anyone who actually does what is needed will not be reelected.  I disagree with that assessment, but I do sympathize with the thinking.

In order to staunch the federal fiscal bleeding before a ruinous crash takes place, six major federal expenditure areas must be addressed such that a net overall 44% savings is achieved.  Recall that even a balanced budget will not make the existing debt load go away, just prevent it from getting worse. Having shored up the national credit rating, we’ll still need to pay off the mortgage.

But to achieve balance on an emergency basis, across the board cuts must be made over a set period of time, incrementally raising the cut percentages if and as needed, until all federal borrowing is stopped.

How long do we have? The longer it takes, the more we continue to borrow, the closer the crash tipping point becomes.  Europe or China could fall into a forcing moment in any given week, giving our paralyzed political class almost no warning.  I estimate that we have fewer than three years. That we need to start immediately is evident to everyone except our elected officials.

Why the hesitation? As the recent supercommittee impasse demonstrates no one wants to bell this cat.  I’ve appended an exercise in the Appendix, inviting the reader to work out the needed percentage reductions federal sector by federal sector.  Recall that 44% of expenditures need to be covered either by increased taxes during a dangerous recession, by expenditure reductions or both. Also recall, that any significant increase in the cost or duration of current federal borrowing will trigger a fiscal crisis.  Debt service costs alone already far exceed the Homeland Security Budget. Think of achieving “savings” between 40 and 50 percent across the board in Salaries, Entitlements, Contracts, Personnel and Programs.

Drastic cuts in the military budget would be suicidal. Protecting the military means that every other federal agency and department will need to undergo a proportionately greater reduction in paid personnel – mere salary adjustments won’t be enough.  Truth be told, some activities and functions of the federal government are more important than others.  Subject only to those federal government activities that are clearly necessary to protect public health and safety, entire government functions will need to be retired, partially or in toto.  For reasons I develop elsewhere (see my article “Nukistan and Islamageddon”  – http://jaygaskill.com/dot2dot/2011/10/24/averting-nukistan-avoiding-islamageddon/), significant cuts in our exposed military forces would trigger disaster.

So…what about raising taxes?  The Beltway compromises over the last five decades have been brokered by a pattern of mutual hostage taking, liberal sponsored programs have been pitted against national defense expenditures, each held hostage, and increased borrowing resulted.  Given the impasse, some “revenue increases” are inevitable.  And given that reality, a plurality of conservatives can be persuaded to create a protective revenue stream in order to prevent national security and military preparedness from being taken hostage again. This dismal discussion brings us to the central problem: We need to decisively end the recession in a way that will reliably generate higher incomes across the board for a number of years going forward.

Starting the next economic surge

Growth alone may not close the fiscal chasm, but it can at least buy time by boosting employment and public support for short term sacrifices to get the country back on track.

But this cannot to be another bubble.  It’s too late for a manipulative, faux recovery.  The good news is the there are five, real-world elements of any American economic surge, and they play to uniquely American assets: Energy, Agriculture, Transportation, Communication and Water.

Enter the Elementals:

The resemblance to the ancient elements –earth, air, fire and water – is probably not accidental.

Water – clean, abundant, affordable and available in real time, and Energy – abundant, affordable and available in real time are deeply interconnected.  Transportation – secure, fast, affordable and available in real time, and Communication –also secure, fast, affordable and available in real time are also deeply interconnected.  Food production on a world scale is falling behind demand.

As it happens, the USA is still a world leader in communication and transportation technologies, has immense, world-scale agricultural capabilities and is sitting on immense energy resources.  For example the sheer scale and volume USA’s interstate trucking corridors trump every other comparable system in the world.  No country of comparable scale is so tightly knit by redundant communications systems.

But agriculture and human life critically depends on a reliable source of abundant clean water.  In spite of measurable urban water quality deteriorations in the last 25 years, Americans still enjoy the safest, most abundant tap water of any large country in the world. The massive settlement and development of arid regions in the USA has taken place on a scale unduplicated anywhere else in the world.

The energy production surge has an easy first step: Allow energy production and sales to go forward in the USA, using the best available, existing off-the-shelf technology to manage (not eliminate) the inevitable collateral costs.  For at least eight years the USA can afford to dramatically enhance its own prosperity while marginally contributing to so-called greenhouse gas emissions.  This country has more than enough economically recoverable conventional energy resources (coal, oil shale, oil and natural gas) to meet its own needs and make a difference in the world market for the rest of the century.  The additional government tax revenue should be used to retire our indebtedness and to prevent further borrowing.

The second, related step is to allow, via cost-free licensing, next generation nuclear reactors to be built and deployed under close military supervision (for safety and security) using military grade fissile material. These installations should initially be licensed to power military facilities, homeland security facilities and other strategic assets, including key transportation hubs, to demonstrate operational reliability before they are generally licensed for private civilian use.

All regulation and licensing obstacles to other alternate energy systems will be relaxed.  But other than the partial subsidy of nuclear by supplying fissile material and security, the energy market will govern supply and demand allocations.

The key to an agricultural surge is land use policy, water availability and the access to large markets.  Productive agricultural land use gets priority.  Water for agricultural use gets priority.  Trade, anti-trust, commercial regulation and tax policies are reconfigured with a view to allowing the maximum efficiencies and profits for all forms of American food production and sales (local and international), including the clearing away of the government measures that affect transportation to market.

Again, the government does not pick winners and losers; does not bail out losers or differentially tax winners.  Market forces need to be allowed to work.  Investors need a clear, stable regulatory path to profitability.  Political interference with commerce – even with the best of intentions – is toxic.

LIFTING THE POLITICAL BURDEN ON COMMERCE

US commerce is smothered in a vast spider web of federal and state regulations, tariffs, fees, permits, licenses, mandatory studies, reports, reviews, obstacles – often overlapping – from councils, committees, commissions and bureaus and other political entities, the net effect of which often exceeds the corrupt kleptocracies in the Third World.

This is actually good news because the suffocating spider web can be lifted, releasing an economic surge.

Much has been made of the claim by the left that vast sums of wealth are being held by a small number of elite capitalists.  This is a puerile statistical game.  No small group is capable of consuming such vast sums.  [The estimates vary but the available number is measured in the low trillions, at least enough to ignite an economic recovery.]

The real question is – Why is not this money being invested in new economic ventures in the USA? And the answer is clear: This is the last readily available money, and its owners are reluctant to pour it down a rat hole.

Tax policy needs to be non-punitive – fair to entrepreneurs, employers and ongoing businesses.  The tax system needs to be tweaked, but the regulatory system must be uprooted.  There is a straightforward way to accomplish this.

The real recovery is entirely located in the private sector, powered by new, profit-driven business activity.  Individual, well managed enterprises that make/sell/move the “real stuff” on which day-to-day commerce depends will link up with the “better mousetrap’ ideas and the surviving sound financial sources.  This is where the real recovery will begin.  That is where it has always been.

But this is exactly where a whole set of government impediments, tolerable in a boom, are fully capable, during a fragile recovery, of aborting the new stirrings of economic life in utero.

What impediments, you ask?  Think of tariffs, business licenses, building permits, mindless approval loops, excise taxes, sales taxes, capital gains and income taxes, land use barriers, fees, more fees, hearings, slow-moving bureaucrats, all standing in line, blocking the path to economic growth….  You get the idea.  This is why successful businesses in the Third World have line-item budgets for bribes.

This is the “Political Commerce Load Factor” (or PCL).

The existing PCL has been augmented by an environmental set.  The PCL factors (extant and contemplated) are dangerous enough by themselves.  But when combined with price/cost instabilities induced by haphazard political market manipulation (the unintended consequences of non-productive subsidies, leading to artificial supply scarcities and-spot inflation), the effect is the same as putting a heavy foot on the national carotid.  Unchecked, political good intentions will consign us something worse than Japan’s fate, far worse.

Therefore, our secret weapon, our only means available for a self-bailout, is to seriously attack the accumulated political load on commerce.  This will generate opposition, but some perspective here is needed.  Nothing generates bigger riots than sudden, involuntary poverty.

As we approach the prospect of reducing the political, regulatory and bureaucratic impediments in the US to profitable economic activity (i.e., recovery), we need to focus with laser efficiency on the legitimate core concerns that animated the regulation in the first place. They fall into three categories: Environmental toxins; Heath risks; Public safety risks. Everything else is expendible.

In each of these areas, China’s blowtorch economy is a cautionary tale as well as a working model of a rapid capitalist expansion.  China’s post-communist leaders have ignited a Wild West economy, the rough edges of which are insulated from protest by the selective use of the legacy tyranny-instruments from the Maoist days.  We’ve witnessed more of this than the Chinese people have.  The burning skyscraper in Beijing captured on US television during Diane Sawyer’s recent visit, the lead-painted toys of Christmas’s past, and the adulterated pet food are just the visible hints of the not-so-hidden costs of economic speed.

By contrast, the USA economy is like a sclerotic elder, using a walker, hesitating for endless discussion about the next step.  But the decrepitude of our own design, much of which was implemented over the last six decades by semi-autonomous bureaucracies tasked to make life better for some of us, no matter the general cost.

The moment is overripe for an intelligent, focused attack on the political load burdening US commerce.  We are ready for a discussion of how regulatory easing would be managed and implemented.

Not all of the burdens holding us back stem from health and safety concerns.

Much of the burden represents the bureaucratic processes themselves, the “hearings” and “inputs’ and “reports” that are designed to substitute endless, unproductive discussions for decisive progress.  The post-earthquake San Francisco Bay Bridge replacement project (the quake was in 1989 and the work is just now approaching a visible terminus) was delayed at least a full decade while a highly politicized process invited “input”.  Most of the discussion was nominally about esthetics, but really about credit-sharing and the courting of embedded interests.  All this talk trumped public safety concerns and drove up costs. Delay is a form of regulatory abuse, the direct byproduct of politics as participatory obstructionism.

We have the power to break out of economic paralysis, only if we have the wisdom and courage to use our best tools now. This dangerous economic malaise requires us to break through the Political Load Factor in the service of robust economic recovery. It is both legally and practically feasible for a specific, as yet unnamed federal agency to be created, empowered and charged with the mission to break clear paths through the red tape and punitive taxation so that nascent, privately funded commercial enterprises can flourish more quickly and robustly than anyone thought possible, especially in the pre-recovery economic environment. 

In the same way that an Arctic ice breaker can break open a clear path for a fleet of fishing trawlers, a federal regulation and taxation ice breaker can do the same for a strong business recovery.  This would be proactive, creative conservative-liberal policy at its very best.  It would serve the same, practical function in the tangled web of business-killing regulations, licenses, permits, delays and kleptocratic taxes that bribes to in corrupt Third world economies.  Except that its operations, in partnership with cooperating state governments would be above board, transparent, subsidy-free and legal.

The solution – or a major part of it – is to implement comprehensive commercial liberation, utilizing the commercial regulation powers conferred by the Commerce Clause, operating in reverse.  Business people are not fools.  The protections afforded a start-up would need to provide a clear path that could relied upon to remain clear for a reasonable time, say, a full fifteen years. The basic template would be as follows:

A new Agency, let’s call it the Interstate Commercial Enterprise Deregulation Agency (ICEDA) would be given a fifteen year charter to liberate private businesses from burdensome, growth-impeding government rules, regulations, fees, mandatory reviews and other bureaucratic impediments to economic health.

(1) Does the challenged government rule, regulation, fee, mandatory review or other bureaucratic impediment constitute a significant negative impact on new business activity, development or employment, whether directly or indirectly, potential or immediate? (2) Would its elimination or proposed modification pose a significant risk to public health or safety over and above that which normally could be expected to occur from increased economic activity?  (3) When (1) is YES and (2) is NO, the ICEDA is empowered and directed to remove the impediment.

The path clearing protection should be reserved for privately funded ventures only, the kind where the cost of failure is born by those who took the risks in the first place, the same investors who can reasonably expect to be allowed to retain the rewards of their success.

History tells us that this model or something very much like it will work.  History also tells us that when we Americans are challenged, we rally.

There every reason to be optimistic about the prospects of a real American recovery prompted by the liberation of profit-making commercial activities along these lines.

As Hoover scholar Victor Davis Hanson put it his must-read essay, What America Does Best….

“The Obama experiment of the last three years did not bring prosperity, and is likely soon to prompt a sharp reaction and a return to the American devotion to individualism and choice that made us the wealthiest nation in history. The American model is the antithesis of the socialism, Communism, theocracy, and statism that have impoverished so much of the world — and the 21st century has brought that fact home in a way few imagined.

“Why does the United States continue to reinvent itself, generation after generation, to adapt to a radically changing world? Our ancestral Constitution checks the abuse of power and guarantees the freedom of the individual — all in transparent fashion. And our habits and customs that have evolved over two centuries are grounded in the human desire to be judged by what we do rather than what we look like, or under what circumstances we were born — a fact that explains our vibrant and sometime crass popular culture. The essence of our culture is constant self-critique and reexamination — a messy self-audit that so often fools both ourselves and our critics into thinking that our loud paranoia about decline, rather than our far quieter effort to arrest it, is the real story of America

“In short, the 21st century will remain American.”

(http://www.victorhanson.com/articles/hanson111711.html)


APPENDIX

Here is your cut-the bleeding exercise.  The percentage numbers are plug-ins designed to give the reader a realistic sense of how difficult it is going to be to make the transition from 44% borrowing to no borrowing before the Big Ax falls.  In round numbers, you need to save about 1 trillion dollars.

[1] Salaries: All federal salaries and benefits, starting with salaries of the president, the entire executive branch, the congress and all other federal employees, except the uniformed, active-duty military, are initially reduced XX%. This is necessary on two levels.  (1) Shock treatment: Until the executive and legislative branch do something this forward and significant, little credible sacrifice can be expected of the rest.  (2) Federal salaries are too generous in relation to recession paychecks in state, municipal and private employment.

[2] Entitlements: Obama care is repealed and defunded.  All other health benefits, going forward, are frozen at 2010 levels and some form of Congressman Paul Ryan’s block grant to the states solution is phased in for Medicare and Medicaid.  All other federal entitlement payments, excepting current social security beneficiaries, are initially reduced XX%. All payments to current social security beneficiaries are frozen at the current levels. [Further Social Security reform is deferred on the pragmatic grounds that the cost crunch is further downstream than the imminent crash and that the political system can’t be distracted by that argument right now.]

[3] Contracts: All procurement contracts, other federally funded “contracted-out” services and purchases, and block grants and transfers to state and local governments and private entities are frozen until they can be renegotiated or unilaterally reduced to XX% of their prior cost or less.

[4] Personnel: Every federal agency and department, except possibly law and justice, homeland security, the defense department and the armed forces are thinned out sufficiently to yield an additional XX% in payroll costs (after the salary and benefit cost reductions in 1). The executive branch is given plenary authority to bypass seniority and other restrictions with the goal of achieving as much “merit and productivity” retention as possible.

[5] Programs: A rapid and comprehensive functional review of all federal agencies, departments and bureaus is conducted by the executive branch, given plenary authority to make reduction and elimination decisions as appropriate.

Now you know why your favorite candidate did not decide to run for president.

Copyright © 2011 by Jay B Gaskill, Attorney at Law

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