AIG, Silas Marner, and a misdirected rage

George Eliot’s “Silas Marner: The Weaver of Raveloe” was published during the Industrial Revolution in England. It tells a tale of virtue, the rewards of hard work, and the inevitable and eventual punishment of evil against your neighbor.
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Silas Marner, expressing his rage.

Dunstan Cass is the selfish, deceitful, and corrupt villain in this classic story, and his family is the wealth and government of the city. When his spineless brother Godfrey gets drunk, Dunstan convinces Godfrey to give him money intended for rent. When Godfrey sobers, he demands payment from Dunstan in order to pay his own bills. Unable to return the squandered money, Dunstan convinces him to sell his horse to raise the necessary funds. After the horse is sold, but before it is delivered, Dunstan subsequently kills it during a hunt. Undiscovered in this atrocity, Dunstan burgles the title character’s home, steals his hard-earned fortune, and seemingly gets away with it (he is found dead at the bottom of a well sixteen years later along with the gold he stole).

 

 

Today, President Obama, congress, and the populace publicly cast their outrage at AIG, the multinational insurance corporation of whom the government owns eighty percent. Newswires, bloggers, and commentators went berserk at the revelation of AIG’s disbursement of bonuses to executives, which totaled nearly $165 million. Employees received threats from private citizens and the company had to post armed guards at their headquarters to keep peace. Republican Senator Chuck Grassley even expressed his desire that AIG executives “resign or go commit suicide.” President Obama asked, “How do they justify this outrage to the taxpayers who are keeping the company afloat?”

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Less Income, More Spending

Obama is reportedly considering delaying his rollback of the Bush tax cuts to the Upper Class of America. This apparently comes after great consideration of the possibility that raising taxes in an economic flu is not a good thing. Like Republicans have been saying since he announced this policy.

 

A few questions for his supporters: Will you be upset that he has failed to deliver on redistributing the wealth? Will you be upset at his continuing Bush’s policies of unfairness? Will you be upset that he is now showing preferential treatment to the Upper Class? Probably not, because most of you never cared about or understood the issues anyway.

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Deflationary Spiral and Government Spending

Obama’s “bold” stimulus package is anything but. He is not venturing into any unchartered terrirtory. He has not come up with any new ideas. He is using a simple variation-on-a-liberal-theme, which involves more and more government spending in order to get out of a crisis. FDR did it, Carter did it, now Obama plans to do it.

 

Throughout this entire politicization of economics, hundreds of solutions have been offered. Coming from the right is mostly the idea that the government should stay out of it. Coming from the left (and McCain and Bush) is the idea that infusing the economy with “capital” is the way to go; nevermind where that “capital” comes from. One thing I have not heard from a prominent politician is a reduction in government spending.

 

We have seen hundreds of thousands of jobs lost, and Obama has warned of “millions” more. Have there been any federal government layoffs? Has there been an effort to curb spending by any government agency? Has there been any sort of inclination for the federal government to set the example and live within their means? The answer to all three of these has been “no.”

 

The United States Postal Service was reportedly considering layoffs in October, but then they denied it in November and announced a raise in rates beginning January 1, 2009 (as if that is going to encourage the use of snail-mail). Government agencies have been spending their budget to the fullest over the past year; some have even been spending more. (If they don’t spend their budget to the fullest, they don’t get the same amount next year.) And now the Obama administration is announcing a “bold” stimulus package that will increase government spending by trillions over the next four years, although he hasn’t exactly given a number.

 

Obama claims that this deflationary spiral will increase the defecit. What is he talking about? If prices go down and the defecit remains the same, it is only an increase in relative defecit. The only way to increase the actual defecit is by spending more money. If you owe $1,000 on your Visa for a computer you bought, you owe $1,000 regardless of the value of the dollar or the computer; it may just be a little harder to pay off. If you continue to use your Visa you will owe more.

 

But Obama’s answer to the economic flu has been to create more and more government jobs (Office of the President-elect; Change.gov; technology czar…), and he hasn’t even been sworn in yet…

Obama’s Plan for Bigger Government

Reuters has reported three very distrutbing things in a recent article about the Obama administration’s plan:

1. The Securities and Exhange Commission will “become a more robust agency with increased powers.” We do not need increased government power, especially to an agency that contributed greatly to our current economic situation. President-Elect Obama will appoint a new chairman of the SEC who will presumably be very involved in business’s operations.

The “financial crisis” has opened the door for the federal government in numerous ways. Whenever there is a national crisis, the federal government has the opportunity to step in and seize more power. During the Great Depression FDR implemented huge government increases, some of which were unconstitutional. Congress and the American public did not care because we were in a crisis. During the Civil War, President Lincoln took drastic measures to preserve the Union, even by directly defying the contitution by denying habeus corpus. The most recent topic of debate has been the Patriot Act a a result of 9/11, which some people insist violates a constitutionally implied right to privacy.

The point is that government benefits from crises. It allows them to justify their existence and expand their boundaries. The problem arises when they encroach on the boundaries of others, in this case, businesses. It has been a long time since we have had a truly laissez faire economic system, but the more the government encroaches on a business the more power it has over its operations. According to Reuters, Obama “insisted that the banks taking the [bailout] money accept the rules.” One of these rules is described later as limits on executive pay, or as I like to call it, a maximum wage. Interestingly, the following paragraph to the quote above is Obama’s stated desire for another stimulus package. Can we presume if these stimuli keep coming we must eventually play by the rules in order to benefit?

What I want to know is if the first stimulus package didn’t work, what makes Obama think another one will? He wants to dole out this money so his subjects will feel obliged to him. If Obama throws us a bone he will expect us to do tricks. The average person won’t think of a stimulus package as getting back what was rightfully theirs to begin with (for those who actually pay taxes); they will consider it a gift from the federal government.

2. Reuters reports, “Obama is expected to promote economic growth by encouraging building infrastructure for high-speed Internet use, and has vowed to create a new chief technology czar that may be at the Cabinet level.” A Cabinet level technology czar, Mr. President-Elect? And what will his job be? One can only presume that it will ultimately be to regulate the internet. As the fastest growing technology–-and showing no signs of slowing down–-the internet has been a target for government regulation for years. Thankfully, President Bush has kept his hands out of this cook-eJar during his tenure.

I wrote earlier about Obama’s new website Change.gov. In a somewhat jocoserious manner, I implied that this might lead to a Secretary of Change Cabinet post. Perhaps this is it. If he succeeds in creating this post, regardless of the practical impacts it will have on everyday technology use, billions more in government spending will be created to grow this department and billions more to maintain it. Apparently, Obama’s philosophy on job-creation is to create more government jobs.

Why create more governement jobs? Going back to the first disturbing item, it allows the government to have direct power over indviduals and departments. Perhaps Obama’s ultimate goal is to have every job in the United States be a government job. That would certainly fit in with his socialistic economic philosophies. Departments are created to regulate on a national level. The Secretary of Defense, Secretary of the Treasury, Attorney General, and Secretary of State all influence policies according to their respectively related duties. What could the Secretary of Technology regulate that is not already in place? It could require businesses to have broadband internet capabilities, I suppose, evetually, perhaps leading to everyone setting Change.gov as their home page…

3. Ironically, the only mention of President-Elect Obama’s proposed spending cuts had to do with defense spending. I agree that we have spent more than we needed to over the past years in the defense budget, but that is what happens when wars are fought. The Department of Defense wants lighter, faster, and more lethal soldiers; the Department of Justice wants more humane, more politically correct enemy treatment; the troops want lighter equipment and better living conditions; the media wants more access to information; the families want more armor and more protection; the defense contractors are merely trying to comply at the most profit to them. If Obama wants to cut defense spending, at least one of the above “wants” will be compromised.

This proposed defense spending cut is ironic because of its juxtaposition with the technology czar. There has never been a better catalyst for technology than war. For every war we have had, numerous technological advancements have been made that allowed for an everyday commercial use. The internet is perhaps the greatest example. So, if Obama wants to advance technology by regulation AND cut defense funding, he will have created a technological paradox.

In the end, all of these ideas give President-Elect Obama more power, more oversight of the American people, and more government involvement in our daily lives. Plato said, “Dictatorship naturally arises out of democracy, and the most aggravated form of tyranny and slavery out of the most extreme liberty.” I fear that Plato is correct, but it is the job of a conservative by definition to conserve our present democratic principles and not allow the government to further infringe upon our freedoms.

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