Nationalizing Airports Because Of a Bit of Snow?

Well, not a bit of snow actually. Some tens of thousands of travelers were stranded at the London airports because of the poor weather conditions there. No wonder that Britain's leftist newspaper The Guardian favors renationalization then.

According to The Guardian's Neil Clark even before last weeks terrible delays, Britain's privatized airports, "with their shortage of public seating, their lack of reasonably priced food and drink outlets, and their depressing, unfriendly atmosphere, were an international disgrace." I never noticed Heathrow had a lack of "public" seats but I do wonder just what constitute "reasonable" food and drink prices according to Mr Clark? Also, could he point to a single government building that has an uplifting, "friendly" atmosphere to it? And is that really what travelers were upset about when they spent the night at the airport?

Airports' "spectacular failure to adequately deal with recent snowfalls has," according to Clark "surely exposed to all but the most fanatical free marketeers, the enormous price we pay for having our infrastructure in private ownership." He reminiscences about the 1960s when state owned terminals had to provide "lots of seating" for the public whereas according to the "commercial attitude" of private airlines today, "every square inch must be turned over to retail space." Isn't that despicable?

Unlike its state owned predecessor, the privately owned BAA is seemingly guided by just one concern: maximising profits for its Spanish owned parent company, Ferrovial.

Clark seems startled to find that a private company cares to turn a profit. Indeed, it's ridiculous, he writes, "to have profit hungry multinational companies running things that really are best left to the public sector." If that includes airports, what doesn't it, I wonder?

Public seating aside and disregarding the moral implications of public versus private ownership, there is no doubt that privately owned services always do better than their public counterparts. As Clark so disgustingly points out, private companies care about maximizing profits. That means that they have to offer better products and better service than their competitors else their customers will turn elsewhere. Indeed, people are quite willing to drive an extra mile for an airport that serves cheaper airlines and flights. They aren't usually so willing to pay extra for comfortable seating though---which is probably why many people fly economy while very few buy a first or business class ticket.

Public ownership by contrast has no competitors. Consequently, it has no reason to innovate, no reason to improve its service, for the people have nowhere else to go. The only reason government has to ensure that its nationalized companies do well is some altruist benevolence maybe or the fear of being voted out of office. History tells us that the profit motive is a far more solid incentive.

The Gulag State

Jeremy Hildreth reporting for The Wall Street Journal reminds us of the real face of Communism: the gulag.

[...] there once were 8,000 Soviet labor camps spattered like islands across the Russian landscape—the "Gulag archipelago" of which Alexander Solzhenitsyn famously wrote. Each camp housed about 250 prisoners, most serving 10- to 25-year sentences for contrived offenses like "uncooperativeness" or "sabotage." By the time the U.S.S.R. fell, some 30 million individuals had experienced the Gulag personally [...]

The atrocities of Soviet Russia were worse than the gulag. Millions more died as a result of the failed collectivization of Russian agriculture and the famine that ensued. Suffering was the universal condition under Communism. Scarcity its norm.

As Hildreth wandered about Perm-36, the last remaining Gulag forced labor camp, which is now a tourist attraction and memorial, he wondered the same time while beholding the Killing Fields of Cambodia, the former KGB prison in Lithuania, and the wrecked streets of East Timor: "How did this ever seem like the right thing?" Consider this quote from Ayn Rand, "Conservatism: An Obituary," published in Capitalism: The Unknown Ideal (1966):

The social system based on and consonant with the altruist morality—with the code of self-sacrifice—is socialism, in all or any of its variants: fascism, Nazism, communism. All of them treat man as a sacrificial animal to be immolated for the benefit of the group, the tribe, the society, the state. Soviet Russia is the ultimate result, the final product, the full, consistent embodiment of the altruist morality in practice; it represents the only way that that morality can ever be practiced.

Napolitano Breaks it Down

The judge appeared on Glenn Beck's show recently to talk about what's wrong with America and why November's elections are so important.

ObamaCare Forces Insurer Off Market

Cato @ Liberty reports that financial services provider Principal Financial Group is exiting the health insurance business as the impact of the Democrats' health insurance overhaul becomes clearer.

By forcing the exit of Principal Financial Group---which ran a profitable, $1.6 billion health insurance business---ObamaCare has now left 840,000 Americans to find another source of coverage.

And Principal is not the only one. Many small health insurers are struggling to meet the new requirement to spend at least 80 percent of their revenue on actual health care.

OMB Director Candidate Says Deregulation Didn't Cause Crisis

The Huffington Post reports that former Citigroup executive Jacob Lew, the administration's nominee to lead the Office of Management and Budget, told Senate Budget Committee this Thursday that deregulation was not exclusively to blame for the financial meltdown and recession.

Lew was asked by Senator Bernie Sanders of Vermont whether he believed that the "deregulation of Wall Street, pushed by people like Alan Greenspan [and] Robert Rubin, contributed significantly to the disaster we saw on Wall Street."

Lew answered that "the problems in the financial industry preceded deregulation," and after discussing those issues, added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."

The Huffington Post can hardly believe it, stressing that experts and policymakers, "including US Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression." The article further alleges that "experts agree on most of the several factors that led to the crisis," and since they agree, evidently, the argument requires no further explanation.

Repeatedly "Wall Street greed" and "inhuman capitalism" are attacked for a recession that started in one of the single most regulated sectors of the US economy: the housing market. The past decade experienced President George W. Bush's attempt to bring about his "ownership society" and the country today is witnessing the results of this experiment. Through consistent all time low interest rates set by the Federal Reserve and through an enormous increase in size and influence of the government-sponsored Fannie Mae and Freddie Mac enterprises, Washington promoted homeownership by artificially extending credit to people that, put simply, could never dream of affording their own house---let alone pay back their loans.

That is not to say that the private sector is free from blame entirely. But consider that Fannie Mae and Freddie Mac, supposedly privately owned, were publicly chartered and represented the archetype of unfair competition. Consider the Community Reinvestment Act of 1977 that "encouraged" banks to lend to uncreditworthy borrowers and sought to end "discriminatory" credit practices against low-income neighborhoods. And consider that the very banks who let themselves be pressured into participating in this madness were "bailed-out" by the government with billions of dollars of taxpayers' money. Was this a free market at work?

In a truly free market, failure is possible and consumers are aware of the risk---with the result that they rationally and voluntarily assume less of it. What the US economy needs is not more government oversight. What is needs is more personal responsibility.

Fannie and Freddie: Banks Should Return the Favor

From the AP wire:

WASHINGTON — The nation's largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday.

Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans sold to the two government-controlled companies [...]

Really? Private banks have an obligation to help out the so-called government "sponsored" monstrosities that were largely responsible for bringing down the financial system and starting the recession America is still in? Really? They need to "return the favor"?

Is this a bad joke?

Michelle Obama: Don't Go Into Corporate America!

The New York Times' David Brooks quotes Michelle Obama in the context of America's changing attitude toward capitalism.

"Don't go into corporate America," she told a group of women in Ohio. "You know, become teachers. Work for the community. Be social workers. Be a nurse. ... Make that choice, as we did, to move out of the money-making industry into the helping industry." As talented people adopt those priorities, America may become more humane, but it will be less prosperous.

What the First Lady is saying: Don't be so selfish, you smart people. Don't obsess about making money. Dedicate your life to those less fortunate instead. Because that's virtuous.

In "The Morality of Making Money" at the Atlantic Sentinel I previously contested this sentiment, citing Ayn Rand who considered money representative of productiveness and freedom. Making money, according to Rand, rests on the axiom "that every man is the owner of his mind and his effort."

A virtuous man, a man who makes money honestly and purposefully, is a proud man. Pride, consequently, is one of the defining values of Objectivism. "It means that one must earn the right to hold oneself as one's own highest value by achieving one's own moral perfection," wrote Rand in "The Objectivist Ethics," The Virtue of Selfishness (1964). One must strive relentlessly for accomplishment and success to pursue happiness and the will to "make money," to create one's own wealth, is the indispensable articulation of this code.

Even Castro Doesn't Believe in Communism Anymore

From the Associated Press wire:

HAVANA – Fidel Castro told a visiting American journalist that Cuba's communist economic model doesn't work [...]

The fact that things are not working efficiently on this cash-strapped Caribbean island is hardly news. Fidel's brother Raul, the country's president, has said the same thing repeatedly. But the blunt assessment by the father of Cuba's 1959 revolution is sure to raise eyebrows.

Jeffrey Goldberg, a national correspondent for The Atlantic magazine, asked if Cuba's economic system was still worth exporting to other countries, and Castro replied: "The Cuban model doesn't even work for us anymore" Goldberg wrote Wednesday in a post on his Atlantic blog.

On Cuba, the state controls well over 90 percent of the economy, paying workers salaries of about $20 a month in return for free health care and education, and nearly free transportation and housing.

Little wonder, after sixty years to trying that, the country is desolately poor and backward and even Fidel Castro can't pretend otherwise.

Should Washington Leave Social Security Alone?

Ezra Klein likes to think so. In Newsweek he urges lawmakers not to mess with Social Security in order to restore balance to the federal budget.

Popular wisdom has it has Social Security is financially unsustainable. Klein disputes that. He notes that, over the next 75 years, the program's shortfall will equal approximately 0.7 percent of GDP. That isn't a crisis, he attests. "It's a question of priorities."

Both Democrats and Republicans in Washington agree that raising the retirement age is part of the solution. "We live longer, and so we should work longer," writes Klein. But he doesn't agree. "Most people," he believes, "by the time they're in their 60s [...] want to retire." Evidently, because they want to, they should be able to. "We have more than enough money to buy ourselves some leisure time at the end of our lives. At least if that's one of our priorities."

What Klein conveniently neglects to consider is that it's not people buying themselves some leisure time at the end of their lives; people working today are forced by their government to pay for other people's leisure with the thin and evermore uncertain assurance that there'll be workers just like them, paying for their retirement in the future.

But let's take up Klein's challenge and pretend that organizing people's pension plans is a "priority" of government. All we need to solve now is find out how to pay for it! According to polling data, some two thirds of people oppose raising the retirement age. Instead, a little over 60 percent are in favor of eliminating the cap on payroll taxes so that workers who are better off pay the tax on their full income. Presumably, that 60 percent wouldn't be the ones affected by what amounts, effectively, to a tax increase.

It's always easy to spend other people's money and Ezra Klein is no exception. His solution to fixing Social Security's long term unsustainability is to have the rich pay more. It takes him three pages to cloud that proposition in praise of Social Security's efficiency and egalitarianism along with complaints of Washington's detachment from ordinary Americans but that doesn't change the fundamental premise of his argument: that the more you make, the more you pay.

The Return of the $1,000 Down Mortgage

In case you assume people learn from their mistakes, read this story in The Washington Independent.

In the states of Idaho, Massachusetts and Wisconsin, the National Council of State Housing Agencies along with Fannie Mae---the government "sponsored" enterprise that just recently had to be saved from bankruptcy with billions in federal aid but continues to purchase mortgages from lending banks---have launched a pilot program called "Affordable Advantage." (California, Colorado and Pennsylvania have similar schemes in place.) The gist? With just $1,000 down, people can get a mortgage to buy a home there.

Given the dangers of these types of mortgages and the specter of the housing bubble, where unconventional loans wreaked disaster, it is also raising questions from wary housing experts and legislators.

You think?

At Voices for Reason, Alex Epstein reminds us that this is exactly the sort of policies that brought about the recession in the first place. "The idea that it is the government's job to 'promote homeownership' or create 'stimulus' is the root cause of the financial crisis." While millions of Americans are still out of work or struggling to make ends meet, government agencies are already hard at work, preparing the way for the next recession.

Socializing Social Security Even Further

President Barack Obama may wish to preserve Social Security forever, he certainly doesn't intend to preserve it in its current form.

The Wall Street Journal reports that the White House-created commission studying the future of Social Security is considering:

[...] raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees.

Raising the retirement age is sound policy considering that living expectations have risen sharply since Social Security was originally enacted.

Lowering benefits for "wealthier" retirees is outright unfair though considering that everyone's been paying equally into the fund. But wait, the administration might chance that as well:

On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt.

So if you make a little more money, you're hit from both sides when it comes to your retirement: first, you have to pay more into the scheme while you're still working only to receive less when you retire.

These sort of shenanigans are inevitable when dealing with a government entitlement program that's financially unsustainable in the long run. How matter how much more money the government intends to take from the "wealthy", in the end, Social Security will bankrupt itself.

The only rational solution is to phase out the system over the years ahead and eventually abolish it. People should be responsible for their own pension.

Frank: Abolish Fannie and Freddie

From The Huffington Post:

Fannie Mae and Freddie Mac should be abolished, Rep. Barney Frank, chairman of the House Financial Services Committee, said Tuesday when asked whether the mortgage giants should play a role in housing market reforms.

So now you do? After pretending, just a few years ago, that nothing was wrong with these "government sponsored" entities (see video); that, in fact, they were doing an outstanding job, giving homes to the poor. Now you say they should be abolished, congressman, after passing the most pervasive financial reform bill in recent history that hardly even mentioned the two mortgage giants which caused the crisis in the first place?!

Medicare and Social Security Are Unsustainable

Government is boasting that with the new health care legislation enacted, Medicare's funding is in better shape than ever, able to last a dozen years longer than anticipated.

Nonsense, says Michael F. Cannon of the Cato Institute. At Cato @ Liberty he writes that "the Medicare and Social Security 'trust funds' contain zero funds."

This is not up for dispute. When those programs' revenues exceed outlays, Congress puts the excess in general revenues and spends it. Congress marks the event by leaving an IOU to itself in these "trust funds." Those IOUs are not "funds," any more than an IOU that you write to yourself is money. These so-called "trust funds" therefore have no bearing on the (in)solvency of Medicare and Social Security.

Yet every year, the trustees for these programs claim that they do, making the Medicare and Social Security trustees reports an annual, ritualized lie that the U.S. government broadcasts to the American people.

No matter the president's wish of preserving Social Security forever; no matter the Democrats' wish of turning America into a social democracy where every citizen is properly cared for from birth to death, massive entitlement programs like Medicare, Medicaid and Social Security are, in the long run, fiscally unsustainable and always, immoral, because they are designed to give money to those in "need" at the expense of responsible citizens who could otherwise perfectly take care of themselves. They should be phased out and eventually, abolished.

America Becoming an Entitlement Nation?

Also read about The Unemployment Debate at the Atlantic Sentinel today.

Obama: Preserve Social Security "Forever"

President Barack Obama used the anniversary of Social Security to accuse the opposition of wanting to destroy it. In his weekly address to the nation, Obama said that he had an "obligation" to keep Franklin D. Roosevelt's monumental pension legislation intact---"today, tomorrow and forever."

According to the president, Republicans are "pushing to make privatizing Social Security a key part of their legislative agenda if they win a majority in Congress this fall." In reality, few Republican candidates even dare touch Social Security out of fear of losing senior voters. Even most Tea Partiers, renowned for their newfound libertarianism, typically believe that existing entitlement programs such as Social Security should not be changed.

Privatization, according to the president, is "an ill-conceived idea that would add trillions of dollars to our budget deficit while tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market."

As it is, America spends about as much on Social Security as it does on defense each year, amounting both to approximately 19 percent of the federal budget. Along with Medicare (12 percent) and Medicaid (7 percent), the country spends twice as much on entitlements as it does on defense, and it's doing so on borrowed money. With a budget that's skyrocketing, this administration is leaving America greatly in debt.

Privatizing what is nearly the single largest expenditure of the Federal Government would do anything but add "trillions" to the deficit, no matter what the president believes. To the contrary. By gradually phasing out the program and letting people take care of their own retirement, government could save trillions, cut taxes, and let people spend, and save, their own money. Moreover, they wouldn't need to be subject to the "whims" of Wall Street if the government allowed them to save for their retirement, tax free.

I don't suppose Democrats, the president included, like the sound of that though.

"Social Justice" To The Extreme

From The Washington Examiner

Some states long ago implemented policies to protect the uninfected part of the prison population while providing exceptional medical treatment and counseling to the infected population.

In South Carolina, it has worked so well since 1998 that there has only been a single transmission of HIV/AIDS to a noninfected prisoner. All that may change, however, thanks to a threat from Eric Holder's Justice Department.

South Carolina received a letter from the now-infamous Civil Rights Division that the policy of keeping infected inmates at a designated facility, instead of scattered across the state in the general prison population, may unfairly stigmatize infected prisoners. To the Obama political appointees in the Civil Rights Division, this constitutes discrimination under the Americans With Disabilities Act.

The Justice Department objects to separate living facilities and specialized medical treatment for the HIV/AIDS prison population.

So protecting prisoners from rape and infection violates the rights of their rapists and "stigmatizes" perpetrators and victims alike who, in order to keep them and others safe, are locked away in a separate facility? Just what's wrong with that, considering that they're imprisoned anyway? Why, it's discrimination, according to this administration, and that should be challenged, no matter the consequences.

This is "social justice" taken to an extreme, indeed, an absurd new level and it will seem preposterous to anyone except a Justice Department newly obsessed with "protecting" people against discrimination, even if the price is likely to be higher HIV infection rates among inmates.

Bailouts as Evidence of "Faith" in American People?

From The New York Times:

Against a backdrop of American-made cars, President Obama cast his Republican critics on Thursday as having lost faith in the American people [...]

"I wish they could see the pride you take in building these great cars, American-made cars. And my message to them is: Don't bet against the American worker; don't lose faith in the American people; don't lose faith in American industry. We are coming back."

That's wonderful but the opposition isn't losing faith in American industry of course, nor in the American people. It is losing faith in government's ability to "help" them both recover from economic hardship.

The president sadly confuses the very premise of government interference in private sector industry. That isn't a sign of "faith" in people's ability to control their own lives. To the contrary, it displays a blatant lack of faith in people's right to make their own choices. After all, if people always made the "right" choices in the eyes of policy makers, surely there'd be no need for bailouts and regulation in the first place?

The Real Face of ObamaCare -- Frightening

I write about Dr Donald Berwick, Obama's head of the Center for Medicare and Medicaid Services and a self-confessed "romantic" about Britain's infamous National Health Service at the Atlantic Sentinel a few months ago. I already knew the quotes from this video but it's startling to hear them spoken by a doctor and an American; an educated man who, by all accounts, should be able to reason that his appeals to "humanity" and "civilization" are not objective standards; are not arguments to justify the collectivization of an entire industry as is happening with health insurance in the United States today.

(Note that I'm not going to retort all the mundane, irrational arguments and claims put forward by Dr Berwick in this short video or during the entirety of his 2008 speech. You can read this post of mine from May which does exactly that.)

Abolishing the Department of Agriculture

Amid the controversy surrounding Shirley Sherrod's firing and subsequent rehiring by the Obama Administration, Jacob Hornberger has a good idea: get rid of the Department of Agriculture altogether---"along with all the socialist programs that enable those welfare-state bureaucrats to dole out other people's hard-earned money to farmers."

Where is the morality in forcibly taking some people's money from them and giving it to others? Who's the compassionate saint in this process? The federal bureaucrat? The taxpayer? The IRS agent? Congress? The president? The voters?

Actually, none of the above. When "help" to another person is the result of force or coercion, the entire process is morally delegitimized.

There is nothing moral or economically sound about subsidizing farmers. It is a market disturbing measure that puts unsubsidized farmers at a disadvantage.

Subsidies are defended in the name of "fairness" because farmers, in the United States, are subject to a variety of regulations and red tape which makes it harder for them to compete with farmers from developing countries. But just what's "fair" about impoverishing struggling farmers from other parts of the world in the process?

The answer should not be more government interference in the form of subsidies; the answer is less government. Allow US farmers to produce and trade freely on an international market and everyone will profit.

The Declining Pull of American Unions

James Rosen has an interesting blog post about union power in US elections up over at Fox News. That power is substantial, but it's on the decline.

Organized labor spent some $75 million on federal election candidates in 2008. More than 90 percent of that money went to Democrats.

Approximately 15 million Americans belong to a union, but they represent only 12 percent of the American workforce. That's down from a peak of nearly 36 percent in 1953. Nonetheless, "unions have scored an impressive string of victories on various policy agenda items," according to Rosen, "most recently including the recess appointment by President Obama of Craig Becker, the former counsel to the Service Employees International Union, to the National Labor Relations Board."

"The most recent report from the Department of Labor showed that more union members are public employees than private sector employees," notes Michael Barone, columnist for the Washington Examiner and coauthor of The Almanac of American Politics. "So, in effect, the union movement has become a movement in large part of taxpayer-supported workers, whose leaders can put a lot of money into elections and try to elect state legislators, members of Congress, who are favorable to giving their members more money." It's amazing that just 15 million of Americans would chose to be in on this game!

Indeed, in spite of the significant political pull which unions continue to enjoy, Americans are increasingly skeptical about them. "Workers understand," according to conservative UCLA economics professor Lee Ohanian, explaining the decline in union membership. "They would like to have the opportunity to call their own shots. They can't do that with unions. And businesses understand that if they get unionized then that extremely limits their ability to hire workers."