Archive for the ‘Economics’ Category

The Politics of Dependency

The Politics Of Dependency   <– PDF version

Our topic today is the policy that seeks to reduce poverty.  But before I address the modern particulars, first consider an extended passage from a book by the 19th century American economist Francis A. Walker [1].   I have indicated in square brackets some explanatory notes, mostly related to the calculation of dates.  It is very important to recall as you read this, that Dr. Walker was a white person talking about other white people.  In his 1884 book he writes [2]:

The Impotent vs. the Able-bodied Poor.  The relief of the impotent poor, whether by private or public charity, is, so far as political economy is concerned with it, a question relating to the consumption of wealth.  It is so much a matter of course, under our modern civilization, that the very young and the very old, the crippled and deformed, who are unable to earn their own maintenance, shall not be allowed to starve, that the matter of relief to these classes becomes one of administrative detail, that does not require even to be alluded to in an elementary treatise on economics.

The experience of that country from which we derive our law and much of our administrative machinery [Great Britain], is, however, so instructive as to the influence for mischief upon the entire laboring population and upon the future production of wealth which may be wrought by ill-considered provisions for the distribution of alms to the able-bodied poor, as to make it worth while briefly to recite that experience here; and thereupon to define the limits outside of which the consumption of wealth for this purpose becomes prejudicial to production.

We shall get at our subject most directly by inquiring why it is that the laborer works at all.  Clearly that he may eat.  If he may eat without it, he will not work.  The neglect or contempt of this very obvious truth by the British Parliament, during the latter part of the eighteenth and the earlier part of the nineteenth century, brought the working classes of the kingdom almost to the verge of ruin, created a vast body of hopeless and hereditary pauperism, and engendered vices in the industrial system which have been productive of evil down to the present day.

Establishment of the English Pauper System.  By the act of the 43rd year of Queen Elizabeth’s reign [1601], every person in the kingdom was given a legal right to public relief, if required; but voluntary pauperism was severely dealt with, and the able-bodied compelled to work.

The principle of requiring the able-bodied poor to work continued for generations to be fundamental in the English pauper system; and for the better enforcement of this requisition parishes or unions of parishes were, by an act of 9th George I. [1722], authorized to build workhouses, residences in which might be made a condition of relief.  Moreover, from the days of Elizabeth to that of George III, the spirit which actuated the poor laws was jealous and severe.  Doubtless in that administration unnecessary harshness was sometimes practiced; but, on the whole, the effect on the working classes was wholesome, for it was made undesirable to become a pauper.

Removal of the Workhouse Test.  On the accession of George III [1760], a different theory came to direct legislation relating to poor relief, and a widely different temper of administration began to prevail.  Six successive acts, passed in the first years of George III, intimated the changed spirit in which pauperism was thereafter to be dealt with.  In the 22nd year of that reign [1781], the act known as Gilbert’s act gave a fuller expression to this spirit.  By the act the workhouse was no longer to be used as a test of voluntary pauperism:

The 32nd section provided “That where there shall be in any parish, township, or place, any poor person or persons, who shall be able and willing to work but who cannot get employment, the guardian of the poor of such parish, etc., on application made to him by or on behalf of such poor person, is required to agree for the labor of any such poor person or persons at any work or employment suited to his or her strength and capacity, in any parish or place near the place of his or her residence, and to maintain, or cause such person or persons to be properly maintained, lodged and provided for, until such employment shall be procured, and during the time of such work, and to receive the money to be earned by such work or labor, and apply it in such maintenance as far as the same will go, and make up the deficiency, if any.”

By the repeal of the workhouse test, and by the additional most injudicious provision which we have placed in italics, a deadly blow was struck at the manhood and self-sufficiency of the working classes of England.

The Logical Outcome.   By 1832 the false and vicious principle on which Gilbert’s act was based had been carried logically out to its limits in almost universal pauperism.  The condition of the person who threw himself flat upon public charity was better than that of the laborer who struggled on to preserve his manhood in self-support.  The drone was better clothed, better lodged, and better fed than the worker.

All the incidents of this bad system were unnecessarily bad.  The allowance for each additional child was so much out of proportion to the allowance for adults, that the more numerous a man’s children the better his condition, and thus the rapid increase of an already pauperized population was encouraged; while the allowance in the case of illegitimate children was even greater than for those born in wedlock.  “It may be safely affirmed,” said the Poor Law Commissioners of 1831, “that the virtue of female chastity does not exist among the lower orders of England, except to a certain degree among domestic servants, who know that they hold their situations by that tenure and are more prudent in consequence.”

Such may be the effects of foolish laws.  The legislator may think it hard that his power for good is so closely restricted; but he has no reason to complain of any limits upon his power for evil.  On the contrary, it would almost seem that there could be no nation, of any race of men, which a few laws respecting industry, trade and finance, passed by country squires or labor demagogues in defiance of economic principles, could not transform within half a generation into a nation of beasts.

Poor Law Reform.   We have seen what a system the English squirearchy substituted for the economic law that he that would eat must work.  The natural effects of this system were wrought speedily and effectually.  The disposition to labor was cut up by the roots; all restraints upon increase of population disappeared under a premium of births; self-respect and social decency vanished before a prize for bastardy.  The amount expended in the relief and maintenance of the poor had risen, in 1832, to 7,000,000 [pounds sterling].

In this exigency, which, in truth, constituted one of the gravest crises of English history, Parliament, by the Poor Law Amendment Act (4th and 5th, William IV) [1833 and 1834], returned to the principle of the act of Elizabeth.  The workhouse test was restored; allowances in relief were abolished; paid overseers were appointed, and a central system was created for the due supervision of the system; illegitimacy was discouraged by punishing the father, instead of rewarding the mother; and the law of pauper settlement was modified so as to facilitate the migration of laborers in search of employment.

By this great legislative reform the burden of pauperism, in spite of the continuing effects of the old, evil system, was reduced in three years, by an average amount, the kingdom over, of forty-five percent.

The Principle that Should Govern Poor Relief.  The moral of this episode in the industrial history of England is easily drawn.  It is of the highest economic consequence that pauperism shall not be made inviting; but that, on the contrary, the laborer shall be stimulated to the utmost possible exertions to achieve self-support, only accepting relief as an alternative to actual starvation.  It is not, to this end, necessary that any brutality of administration shall deter the worthy poor who have no other resource; but it should be the prime object of legislation on this subject to make the situation of the pauper less agreeable than of the independent laborer, and that, by no small interval.

“All”, says Mr. George W. Hastings [3], “who have administered the Poor Law, must know the fatal readiness with which those hovering on the brink of pauperism believe they cannot earn a living, and the marvelous way in which, if the test be firmly applied, the means of subsistence will be found somehow.”

The white people of England between the 1780′s and the 1830′s showed that if you subsidize dependency, you get more of it.  If you reward illegitimacy and the breakdown of the family, you get more of it.  If you treat the idle better than the worker, you get more idle people, and a great deal of resentment from those who work and pay taxes to support the idle.  It turns out that the people of America, white and black alike, have demonstrated the exact same behavior in the last fifty years as the English did over a similar interval.  Ambition to work is generally down; illegitimacy and poverty are generally up among all the races in America.  But this problem cannot get the attention it deserves because those heavily invested in the current system will not allow a discussion of it.  Consider the similarity of Walker’s conclusions with the remarks of Congressman Paul Ryan (R-WI), on 12 Mar 2014:

“We have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning to value the culture of work.”

To which Her Most High Indignancy Congresswoman Barbara Lee (D-CA) commented:

“Let’s be clear, when Mr. Ryan says ‘inner city’, when he says ‘culture’, these are simply code words for what he really means: ‘black’.”  She also called Rep. Ryan’s statement a “thinly veiled racial attack”.

By calling Ryan’s statement “a racial attack”, Her Imperial Righteousness Rep. Lee is implying that blacks and whites are somehow different; that black people do not want the same things as white people, and behave differently than white people.  That sentiment is foreign to true civil rights advocates, but typical for narrow-minded race-baiting bigots.  How can Congress correct the problem if one faction of Congress calls the other side racists just for stating the obvious?  But enough said about politicians.  What about the 7 million pounds sterling that Dr. Walker mentioned, and how does it relate to America today?

The data from two websites [4, 5] reveal the following statistics:

a.  Nominal GDP of the United Kingdom in 1832 was 459,000,000 pounds sterling

b.  Nominal GDP in the United Kingdom in 1832, measured in 2008 pounds sterling, was 45,087,000,000.

c.  Nominal GDP in England (to which Walker referred) was 36,837,000,000 measured in 2006 pounds sterling.

Ignoring the difference in 2006 vs. 2008 pounds sterling, we have the ratio of the GDP of England to GDP of the UK in 1832 as 36937 million / 45087 million = 81.7%. Hence the nominal GDP of England in 1832 pounds sterling was 81.7% of 459,000,000 = 375,012,376.  The 7 million pounds Walker referred to thus represents 7,000,000 divided by 375,012,376, or 1.86% of GDP, which Walker called a “grave crisis”.

The U. S. 2013 federal budget [6] contains the following entries under the category “Welfare” (all figures are in $ billions US).

a.  Family and Children:           269.8

b.  Unemployment:                      53.2

c.  Worker Compensation             8.0

d.  Housing:                                   53.9

for a total of $ 384.9 billion US.  This excludes $ 366.6 billion for “Vendor payments for health care (Welfare)”.  I have excluded the latter figure since the payments for poor relief in England likely did not include any medical expenses.

Using only the 384.9 figure, and the 2013 GDP of the U. S. [7] as  $ 15,684.8 billion US, it is seen that the $ 384.9 B represents 2.45% of GDP; even worse than the ratio under the English system.  If the medical costs of welfare were included, the total comes to 4.79% of GDP.

So where does it end?  It doesn’t.  We will have more of the same (dependency and resentment) because the race-baiting politicians want it that way.

References

[1]  Francis A. Walker (1840 – 1897); economist and statistician, officer in the Union Army in the Civil War; chief of the Bureau of Statistics 1869-1870, Superintendent of the 1870 Census, President of the Massachusetts Institute of Technology 1881 – 1897.

[2]  Francis A. Walker, Political Economy, NY: Henry Holt and Co., 1892, (copyright 1884), pp. 356 – 361

[3]  George W. Hastings (1825-1917), English Liberal politician, Member of Parliament from East Worcestershire 1880-1892.  He was expelled from the House of Commons for fraud.

[4]  http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/threecenturiesofdata.xls

[5]  http://www.measuringworth.com/ukcompare/

[6]  http://www.usgovernmentspending.com/federal_budget_detail_fy10bs12014n_4010#usgs302

[7]  http://www.tradingeconomics.com/united-states/gdp

 

 

 

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On Bail Outs and Bail Ins

OnBailOutsAndBailIns  <– PDF version

Are you tired of seeing the government rescuing wealthy bankers from their errors with your tax money?  Are you tired of watching banks creating questionable securities, then making large profits by selling them to unsuspecting customers based on risk ratings that were bought and paid for by the banks who created the suspect securities?  Meanwhile, when the bad securities crashed, the bankers took your tax money from the government to continue and expand their gambling racket.  Are you tired of watching your friends and neighbors lose their houses and jobs while the politically well-connected bankers are compensated and rewarded for failure?  In short, are you tired of seeing these Wall Street losers line up to take bailouts to save them from their own incompetence while the taxpayers take the loss?  Well cheer up chumps, in addition to future recurring bail-outs, there will come a day when you will be “invited” to “participate” in a bail-in.  Here’s how the scam will work.

When you make a deposit at a bank, you receive in return a demand deposit in the form of either a savings account or checking account entry.  Likewise, when you purchase a certificate of deposit, you receive a document, which is, like the savings and checking accounts, a receipt showing that the bank owes you the deposited amount upon presentation of a claim.  In other words, the bank does not sequester the money you deposited; it simply issues you a future right to a certain amount of money in the future, namely, the amount you deposited in one of the account types.  You are actually lending those assets to the bank, and the bank may do with it as it pleases.  The bank is merely obligated to fulfill its promise return it to you upon demand, and likewise with all other depositors.  The bank therefore keeps a small amount of cash on hand to disburse to its depositors from day to day; the rest is loaned out at a profit to the bank.  (Yes it’s true: banks make their profits by lending out something they do not actually own: your deposit).

But what if the bank engages in shady real-estate transactions, or lends money to people who refuse to pay back, or who cannot pay back; or if the bank over-extends itself through highly leveraged investments that decline in value?  There may come a time when the bank’s cash flow is insufficient to meet the daily demands by its depositors; in that case, it will have to obtain more capital to cover those losses and make good on its promises to the depositors.  But what if it cannot raise the required capital?  Remember, banks do not make money by risking their money; only by risking yours.  The CEO of the bank is not going to pony up $300 million of his own money to cover the depositors: he will inform the government that a bailout is needed.  If enough banks make the same mistakes, and the entire cartel becomes insolvent, then they get a very large bailout because they can claim that the entire financial system will collapse.  So it becomes an extension of the old rubric, which goes: “If you owe the bank $100 and can’t pay, you have a problem.  If you owe the bank $1,000,000 and can’t pay, the bank has a problem”.  To which we now add, “If the banks owe $1,000,000,000,000 and can’t pay, then the taxpayers have a problem.”  Hence the need for the government to bail out the bankers; the funds to do so are created by the central bank (the Federal Reserve in the U. S.), and the repayment is made by future tax increases to pay off the new debt created by the central bank.  A bail-out is when the bank is rescued by some external entity, usually the central bank acting on behalf of the government.

A bail-in is different.  A bail-in is when bankers are rescued by internal entities, which is to say, the depositors.  This is done by getting the government to allow the banks to refuse to honor claims by depositors, or prevent risk of capital loss to the bank by depositors demanding their own property back.  The bankers are unable to understand the colossal nerve of depositors, demanding to exercise their rights, formerly issued by the bank, to retrieve their own property on demand.  To the bankers, you are nothing more than an ingrate if you still insist that the bank uphold its end of the deal.  A bail-in is manifested by “capital controls”, (not on the banks since they do not risk their capital), but on its depositors.  It comes in the form of limitations upon depositors on how much can be withdrawn per day or week; a prohibition on the cashing of checks, limitations on how much currency can taken out of the country, limitations on overall volume of transactions, etc.  It matters not that a depositor needs money to pay for groceries or the mortgage: what matters is that the bank, by exercising a bail-in, gets to keep their money as long as it needs to, thus avoiding default, until it can coerce, bribe, or intimidate a government or other banks to give it a bail-out.  Now banks do not have the legal power to invoke a bail-in unilaterally: it has thus far required a conspiracy with the government to transfer such a power to the bank; for which consideration, the politicians are of course rewarded with favorable loan terms or even forgiveness of existing loans.  A bail-in generally does not permit the banks to pilfer the contents of “safe deposit” boxes, but it would be naive to exclude such a future possibility.

Lest you think this is all idle speculation, be advised that it already happened in Cyprus in 2013.  When the Cypriot national banks got into trouble, it negotiated a bailout with the IMF and other European central banks, but the deal was contingent upon the government of Cyprus to allow a bail-in binding on depositors.  So, in March of 2013, Cypriot depositors were saddled with the following restrictions on their own property [1, 2], some of which are still in effect:

a.  withdrawals limited to 300 euros per day

b.  cashing of checks prohibited

c.  Persons exiting Cyprus could take no more than 1000 euros with them

d.  Payments or transfers to foreign accounts limited to 5000 euros per month

e.  A 9.9% tax levied on depositors with balances greater then 100,00 euros, and a 6.75% tax on deposits less than 100,000 euros

What happened when the government imposed these violations of rights upon its own citizens in order to save the incompetent and/or corrupt bankers?  Did the people reach for the pitchforks and torches and descend upon the bankers and politicians?  No; they patiently waited in long lines like sheep; they raised no protest at the violation of their rights; they did not question the merits of the government’s actions against them.  You may be sure that this quiet acquiescence did not go unnoticed by the bankers and their political cronies.  When U. S. banks get in trouble again, as they are sure to do, it will create the perfect excuse for the government to restrict most cash transactions, allow the banks to prosper without risk, and track your every economic move electronically.

[1]  BBC News Europe, “Cyprus eases some bank restrictions after bailout”, 29 Mar 2013, http://www.bbc.co.uk/news/world-europe-21978286

[2]  Edward Harrison, “Cyprus’ Bank Deposit Bail-In”, 16 Mar 2013, http://www.nakedcapitalism.com/2013/03/cyprus-bank-deposit-bail-in.html

 

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The Politics of the “Fiscal Cliff”

ThePoliticsOfTheFiscalCliff  <– PDF version

So the elections are finally over and our illustrious federal officials now turn their attention to the so-called “fiscal cliff”.  At issue here is whether the Bush-era tax cuts will expire, along with the Social Security withholding reduction enacted in 2010 as a temporary stimulus measure.  The “fiscal cliff” came about per an interim agreement reached last year, as a result of the debt-ceiling escalation in Aug 2011 and the subsequent failure of Congress to come to a consensus on a fiscal policy.  The idea behind the interim agreement was simple: impose across-the-board spending cuts of $1 trillion over ten years and let the Bush-era tax cuts expire on 1 Jan 2013 unless a long-term fiscal policy is enacted.  The $1 trillion in spending cuts, spread over ten years, result in $100 billion in cuts every year, split approximately equally between defense and non-defense.  This was regarded by its designers as so abhorrent that it would provide sufficient motivation for Congress and the President to actually make a deal.  But the negotiations since the election have not been going too well; and of course both sides are busy blaming each other.

I will review the situation, and show how the Republicans, contrary to conventional wisdom, actually hold all the cards here.  First, a few undisputed facts:

1.  The President campaigned successfully on two notions: that tax rates must go up for the wealthy, and must come down for the middle class.  He has said the marginal rates on the wealthy should go back to the 1990’s; in other words, from 35% now to 39.4% as they were in theClintonera.

2.  If the “fiscal cliff” occurs, tax rates will go up for both the wealthy and the middle class.

3.  The long-term fiscal problem of the nation cannot be solved by spending cuts alone, nor by tax increases alone; a combination of the two is necessary (i.e., a comprehensive package).

4.  The history of past “comprehensive” reforms, as enacted under Reagan and Bush, Sr., shows that the Democrats always insist on tax increases immediately, with a promise of spending cuts in the distant future.  Of course, politicians being who they are, those cuts never happen.  It is safe to say that no Democrat in Congress will ever vote for any bill that actually cuts spending in the near term unless he is forced to do so.

5.  No Democratic President will sign a bill that results in immediate spending cuts, unless he is forced to do so (like Bill Clinton).

6.  If anything bad happens to the economy, the propaganda wing of the Democratic Party (i.e., CNN, CBS, ABC, NBC, and PBS; plus the major newspapers led by The New York Times) will blame the Republicans; if anything good happens in the economy, they will give Mr. Obama all the credit.

7.  The Democrats and their propaganda wing have long held that the Republicans are the party of the rich (conveniently ignoring the fact that tax provisions favoring the wealthy were passed mostly by Democratically-controlled Congresses over the last 50 years).

8.  The Democrats and their propaganda empire have claimed that the Republicans are holding the middle class hostage to protect the rich.

9.  Mr. Obama has stated that he will only accept a “fiscal cliff” deal if it raises tax rates on the wealthy.  He has claimed the wealthy are those with incomes over $250,000.

10.  The Republicans have thus far admitted that revenue increases are necessary and are willing to do so by removing some loopholes used by the wealthy and limiting some deductions.  They do not want to raise tax rates on the wealthy due to a “tax pledge” made some years ago.

Here are a few observations and applications.  First, consider the cuts in the “fiscal cliff” legislation.  The cuts are across-the-board, without the necessary and prudent prioritization that rational people would do.  However, let’s be realistic: it actually imposes spending cuts immediately, and for that reason alone is probably the best that our ruling elite can do as things stand presently.

Secondly, the wealthy already pay a large portion of income taxes.  So, if revenues are to be increased via the Republican preference (closing loopholes and limiting deductions), or increased by Mr. Obama’s preference (raising marginal rates), the wealthy are going to pay more either way.  In reality, the best thing for the nation is the Republican way, since it will do more to promote fairness in the tax code, and limits the ability of Congress to punish their enemies and reward their friends through the tax code.

Third, if we go over the “fiscal cliff”, taxes will go up for those of us in the middle class.  So taxes will go up — what else is new; and how will it matter all that much?  State and local taxes of all types have been going up all along.  Recall that the Social Security withholding reduction was intended to be temporary anyway (it was also a bad idea).  The increase in taxation via federal marginal rate increases is small compared to the already-occurring increases in the cost of living due to the Federal Reserve’s currency-printing machine.  If either side truly cared about the middle class, perhaps they would take action to restrain Mr. Bernanke.

Fourth, although most Republicans were dumb enough to sign “no-tax” pledges at the urging of Mr. Grover Norquist, the simple fact is that both the expiration of the Bush-era cuts and the repeal of the Social Security withholding reduction are already accomplished facts if a deal is not made.  They cannot be accused of raising taxes if they allow law per a vote already taken in 2011 to occur.  Only a moron would sign such a pledge anyway; since when did Mr. Norquist assume the authority to supersede the needs of the nation and the powers of Congress contained in the Constitution?  If Mr. Norquist wishes to be emperor, perhaps he should run for the office.

Fifth, the “smart money” has known for months that our ruling elites are incapable of anything better than the impending “fiscal cliff”.  As for the future of the stock market, the “smart money” managers have probably already priced-in the effects.

Sixth, if one is going to be accused of something, one may as well do it.

With these facts and observations in mind, it seems to me that the Republicans hold all the cards here, and it is possible to get true reform that actually helps the nation.  Mr. Obama needs to score political points by raising taxes on the wealthy (it won’t solve the fiscal problem, but he needs to score points).  He won re-election, so let him have his political points.  The increases on the wealthy are his most famous political need, but not his most important one.  Many of his supporters are middle-class.  He needs a tax cut for them much more than he needs a tax increase on the wealthy.  The Republicans in the House should immediately pass legislation that raises marginal rates on the wealthy to 50%, with no corresponding demands for spending cuts and no other conditions subject to objection.  This is far above the rates that prevailed in the Clinton era.  In fact, they should pass a series of bills that raise rates on the wealthy to 60, 70, 80, or 90%, and let the Senate Democrats and the President choose the one they want.  This turns the argument around while costing the Republicans nothing: taxes are going up on the wealthy either way.  If the Democrats think those marginal rates are too high, it will be incumbent on the Democrats to negotiate lower rates for the wealthy to protect their friends in the tall buildings in Manhattan.  If the Democrats do not really want higher rates on the wealthy, by all means they shall have their “fiscal cliff”.  If they settle on the new rates for the wealthy, Mr. Obama will have his political points, but leaves the Republicans in control of what he needs more (the middle class tax cut).  Then the Republicans can actually do what they’ve been accused of: hold the middle class tax cuts hostage — not to protect the rich, but to get spending under control and thus stabilize and secure the nation’s long-term financial health.  They should demand immediate spending cuts in return for an immediate reduction in tax rates for the middle class, thus forcing the Democrats to do what is necessary but have never done before.

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How Obama Gets Re-Elected in 2012, Part 5

HowObamaGetsReElectedIn2012_Part5   <== PDF version

Now that the respective nominating conventions are over, it is safe for the mainstream media to start the traditional mantra “the Democrats are running unopposed”.  Governor Romney’s odd rhetorical missteps haven‘t helped his cause.  While there continue to be debates about the merits of one poll as against others, the fact remains that media will continuously seek ways to help the Democrats get elected or re-elected.  This year is no different.

The next phase of the Presidential race is the series of joint press conferences, laughingly referred to as “debates”.   The paid Democratic operatives/moderators will of course make 90-second speeches about the evils of “predatory capitalism”, then follow up with a question to Governor Romney demanding he explain in 15 seconds why he hates the working class so much, and does he feel bad about all those defenseless foreign workers he exploited when Bain Capital invested in Chinese companies while laying off American workers.  President Obama, on the other hand will be faced with “tough” questions such as “Do you like ice cream, and if so, what is your favorite flavor?”  Mr. Obama can then re-assure us that he likes vanilla and chocolate equally, and that anyone who says differently is a right-wing race-baiter.

But that is not Mr. Romney’s biggest problem.  As I alluded to in an earlier edition of this series, Mr. Romney’s main problem is that he is unable or unwilling to lay out a consistent set of policies (translation: ones that do not directly contradict the policies announced during the nominating campaign).  His secondary problem is that he appears to be weak and vacillating in describing the things that differentiate him from Mr. Obama.  He will no doubt come fully armed with every variety of gentlemanly wet noodles to match up against Mr. Obama’s Chicago-style ideological gunfight.  It will be a hostile environment, but Mr. Romney should emphasize the significant differences between Mr. Obama and himself, and ignore the rudeness of the Democratic Party’s hand-picked audience.

The first of these is the basic difference in their experience.  The difference between Mr. Romney, businessman, and Mr. Obama, community organizer, that that a businessman can read numbers.  Mr. Obama seems unfazed by consistently high unemployment and the $6 trillion addition to the national debt.  Mr. Obama has claimed that the private sector is doing well; proving that he believes 8% unemployment (14% true unemployment) is evidence of a successful economic policy.  Mr. Romney can say that while he might be a dumb businessman, he at least knows that the present course cannot be sustained because the numbers suggest the middle class is shrinking and the debt will further reduce future economic opportunity.

Secondly, Mr. Romney, businessman, knows the importance of keeping track of the competition, which requires monitoring of trends and activities in the industries, looking out for both opportunities and risks.  On the other hand, one can prepare a daily Presidential Security Brief, but you can’t make Mr. Obama read it.  Perhaps if Mr. Obama had been paying attention, the fiasco in Libya could have been averted.  Mr. Romney can say that he may be another out-of-touch CEO, but he at least knows enough to listen to the advice and threat assessments made by his expert subordinates.

Speaking of the fiasco in Libya, Mr. Obama insisted for ten days that the killing of four American employees was the work of a mob angry about a video.  Let me get this straight: Mr. Obama, who claims to be familiar with the Moslem religion, and shows respect for all religions equally, believes that regular Moslems engaging in a peaceful protest will spontaneously invade a consulate, kill people, and burn it to the ground?  Peaceful Moslems went berserk over a video?  If Mr. Obama believes that, then he must also believe we are at war with all of Islam, not just the radical lunatic fringe.  Here is the third difference: Mr. Romney can say that he may be a white-guy Mormon, but he at least knows that we are in a shooting war with only a small contingent of Islamic retards, not the entire faith.

The Bolshevik communists ran a dictatorship in the Soviet Union for over seventy years.  During that time, the official price of bread was fixed at 10 kopecks (100 kopecks to a ruble).  The plan was that the dictatorship, founded on the centrally planned economic theory of Karl Marx, would provide bread for all citizens at 10 kopecks.  There was only one small problem: even with the entire agricultural workforce consigned to slave labor under collective top-down management, and with every other available resource (including the army) enlisted to aid with harvest and production, the dictatorship could not produce bread for 10 kopecks.  Hence, for over seventy years, the official price remained unchanged, but there was never any available to buy except on May Day, the dictator’s birthday, and other important economic milestone anniversaries.  Mr. Obama’s health care plan will turn into the same thing: health care is getting “cheaper”, except that premiums are actually going up now.  When Obamacare comes into its full fruition, health care will be “free”, except you won’t be able to get a doctor’s appointment because they’ve all been forced out of business, not being able to provide the service for the price the government dictates.  Here is the fourth difference: Mr. Romney can say that he might be a rich profit-taker, but he at least knows that everything of value must have a price, and that price is best regulated by free competition, not by top-down central planning as was bread in theSoviet Union.

Mr. Romney, even with all his other weaknesses, does have some significant advantages compared to Mr. Obama.  I am doubtful he will find the will to bring them up and defend them against the sneering media.  If he doesn’t, he will lose by allowing the Democrats and their media allies to frame the debate.

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