Monday, November 17, 2008

Bailout Mania in America

First the American taxpayer bails out AIG, and then Wall Street/Banking/Financial System itself, and now the Big Three Automakers are asking for one, and will likely get it if President-elect Obama and a Democratic-controlled Congress have any say. By the way, since when are Democrats in favor of corporate welfare? I thought that was exactly the sort of thing that everyone from Michael Moore to Joe Lieberman were staunchly against.

I don't believe the American public in general is getting a balanced diet of information on what exactly the consequences of bailing out failing companies will do to our economy long-term. Big Media continues to spread the idea that we face imminent economic catastrophe if we do not rescue any corporate CEO who asks for a little help. One word you never here uttered is inflation. How do you think the government is paying for this? Well, let me introduce you to a little something called the Federal Reserve. Fed Chairman Ben Bernanke, and Treasury Secretary Henry Paulson seem to believe that printing more $ to pay for these bailouts is completely necessary and therefore ignore any potential long-term affects of such an action.

Injecting capital directly into banks, as a big chunk of the infamous $700 billion bailout is now being used for, which by the way was not the original play laid out by Paulson. His first ingenious idea was to buy up bad debt from mortgage and insurance firms and hold onto them until the market returns to normal, and then hopefully sell them for a profit, giving the taxpayer something in return for their "investment." Nevermind the fact that in the meantime inflation would dramatically increase, thus negating any gains that would have been made if the plan succeeded. The new plan is meant to increase liquidity, relieving the credit crunch so banks and individuals are able to have access to loans again. Unfortunately, there is no sign the $ already being spent in this manner is having any affect. Furthermore, this same strategy has been utilized in Japan, yet their economy has remained stagnant for the last 15 years!

The last I checked, Socialism has largely proven itself a failed economic policy time and time again throughout 20th century history. Unlike, Nazi Germany to Communist Cuba and many countries in between, the leading economic powers of the past century have sustained a stable society based on capitalism, as defined by Adam Smith. Interestingly, Joseph Schumpeter's "Creative Destruction" process explains how the modern free market works very nicely, despite his reluctant conclusion that socialism would ultimately replace capitalism.

In any case, these bailouts must stop somewhere, because we are simply pushing our problems further down the road and placing an even bigger burden on future generations.

Friday, May 18, 2007

Politics minus Ethics equals Corruption

Paul Wolfowitz, current President of the World Bank, has finally agreed to resign over the scandal dealing with special favors he gave his girlfriend who worked under him at the institution. The conflict of interest Wolfowitz found himself in seems to be a recurrent theme among former and current Bush Administration officials. Wolfowitz served as Deputy Sec. of Defene, and is credited with being the chief architect of the Iraq War, so obviously there are plenty of reaons not to like or trust the man, and reasson to question his competence and judgement on ethical issues or conflicts of interest.

However, to be fair, the man was simply following the advice of the World Bank itself when he gave his girlfriend, Shaha Riza, a raise and a promotion. The Ethics Committee of the World Bank made the recommendation in order to remove Riza from under both the direct and indirect management control of Wolfowitz. The problem is in how the actual contract was handled by Wolfowitz, and whether or not the Ethics Committee approved the final terms of the agreement. There are other legitimate issued involved here in how Wolfowitz approached his job, and his policies as President of the World Bank, which have caused some consternation among some world fiscal policy makers. Needless to say, Mr. Wolfowitz's credibility was already seriously circumspect when he was appointed by President Bush due largely to the worldwide unpopularity of the Iraq War, and the neo-conservative reputation which preceded him.

Also in Washington these days, Attorney General Alberto Gonzalez continues to be grilled and skewered by Congress over the firings of eight U.S. Attorneys. Once again, many hold Gonzalez responsible for the abuse of powers over the wiretapping program, the handling of Guantanamo Bay, and of course interrogation techniques or torture concerns. Therefore, there is understandably an effort to force the Attorney General to step down over a more easily accessible issue. Instead, so far all that has been accomplished is the resignation of the Deputy A.G. Paul J. McNulty. It seems the faulty memory of Gonzalez has miraculously returned, because now he seems to remember that Mr. McNulty was actually the one directly involved in the firings, case solved... Not!

Monday, April 16, 2007

Racism Obsession in the Media

Yesterday was the 60th anniversary of Jackie Robinson's debut in the Major Leagues, breaking the color barrier in professional sports. It even predated Martin Luther King's civil rights movement, and marked a new era of social change. Unfortunately, the media has a way of killing the meaning of these historic events with their relentless coverage, in other words overkill.

For example, last week the Duke Lacrosse players accused of raping a black woman were cleared of all charges, a story the media had been devouring for the last year because of the archetypes involved. In the court of public opinion, thanks to the sensationalist coverage by the media, these innocent students were long pronounced guilty and dragged through the mud for the better part of a year.
Also recently, long-time radio show host Don Imus lost his job for his insensitive and politically incorrect 'joke' about the Rutgers women's basketball team. Once again, the media has demonstrated its ruthlessness by tearing him to shreds to guarantee his termination from the airwaves. The PC police perpetuated by the media has created an environment where the First Amendment has been severely restricted, but somehow allows for the relentless defamation of character in the 24-hour news world, superseding the larger issues of our time, including the war, and domestic issues such as health care costs.

In addition, lets not forget the infamous Michael Richards tirade of earlier this year. The point is, if you make a mistake and cross the line of what is deemed appropriate by the PC police, or are simply accused of a crime with no credible evidence which fits into a race stereotype, the media will eat you alive and spit you out with little left but your tattered reputation. If we as a society want to truly get past racism,, then the media needs to stop perpetuating the race issue in every instance possible. They must stop giving priority to the sensational stories and start elevating the public consciousness by covering the truly important and challenging issues, which unfortunately are usually the boring ones.

Monday, March 26, 2007

Congress to Surrender in Iraq

The House of Representatives passed a bill on Friday by a margin of 218-212 for funding of the wars in Iraq and Afghanistan, but which also includes the provision for the withdrawal of all combat troops by September 1, 2008 at the latest. It now appears the Senate will pass a similar bill with the goal of removing troops by March 31, 2008, but without making it a requirement. A compromise bill between the House and Senate could result in a set "surrender" date for the President to veto, as he has promised to do. Unfortunately, the Pentagon has estimated it will run out of funding for the wars by next month without the $100 billion in emergency funds.

The House bill may have been a political victory for Speaker Nancy Pelosi and the Democratic majority, but certainly it will amount to nothing in the long term because a two-thirds majority vote to override a Presidential veto is highly unlikely in the closely divided Congress. A new funding bill will ultimately be passed minus any set dates for troop withdrawal, and the war in Iraq will continue to its inevitable Vietnam-like conclusion.

Wednesday, March 07, 2007

The Privatized Bureaucracy

Controversy surrounding neglect at the Walter Reed Army Medical Center in Washington D.C. sheds new light on outsourcing government work to private contractors. The sheer amount of paper work required to use the facilities would irritate a completely health person, let alone a severely wounded or impaired soldier. A common complaint about "Big Government" is that their is too much red tape or paper work, creating the system that makes up the federal bureaucracy. What most people fail to realize is that large corporations have their own internal bureaucracy that is often just as cumbersome and irritating to deal with as a government bureaucracy.

So why is it conservatives in particular prefer the "efficiency" of the free market system to solve problems rather than relying on government institutions? It seems they forget private contractors which win the bids for outsourced government work can be just as inefficient and ineffective in dealing with the task at hand. We have seen evidence of this again and again over the last 6 years, including Iraq reconstruction, building a 9/11 memorial, cleaning up New Orleans after Hurricane Katrina, the Abu Ghraib prison, and now the Walter Reed Army Medical Center. In each of these cases, at least some of the work involved was outsourced to private contractors by the government to the lowest bidder often with little to no competition, and usually to the largest corporation in a particular field. The results speak for themselves. How many more of these scandals involving private contractors doing outsourced government work are there going to be before people realize that corporate bureaucracy is no better than government red tape? At least there is oversight over the government bureaucracy which lies at the feet of Congress. Unfortunately, there is no real parallel in terms of oversight in the corporate world.