Microsoft's Failure and the Success of the Market

Ten years ago, Microsoft was on top of the world. Newspapers predicted it would rule the world and governments from Europe to the United States launched antitrust investigations, set on breaking up the company that seemed well underway to establishing a permanent monopoly.

In just a few short years, Microsoft is on the decline. Competitors who once complained of its "Death Star" might are doing better in new areas of information technology. What happened? The Huffington Post explains:

In short, changing appetites of the marketplace, technological evolution and questionable decision-making inside Microsoft itself have combined to accomplish what antitrust regulators never did: rolling back the company's dominance and opening the terrain for newer, nimbler entrants.

Imagine that. The free market at work.

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.

Does the GOP Support Privatizing Social Security?

A recent headline at The Huffington Post tells us that "GOP Candidates Endorse Draconian Proposal To Cut Social Security," referring to Congressman Paul Ryan's "Roadmap for America's Future" which includes plans to privatize America's expensive government pension scheme.

But if we click through to read the article in question, it turns out there's just four Republicans currently running for Congress who've embraced the notion that Social Security, as it is, is unaffordable and that allowing a healthy bit of a free market competition in the area may be the best way out. That's four out of hundreds of Republicans running for political office throughout the country, with not a single high ranking party member having formally endorsed the plan.

It's not too surprising. While many lawmakers on the Republican side are right to stress that the Federal Government's ongoing spending spree is unsustainable and bound to drown future generations in debt, few have dared propose radical measures to cut spending, particularly when it comes to the entitlements many Americans have come to take for granted. No matter the fearmongering on the left, it doesn't seem likely that Republicans will actually go ahead and privatize Social Security if they have the chance. Ryan, so far, has been quite alone in his campaign for limited government.

Is Reality Real?

You'd think so, but no, says Robert Lanza, M.D. at The Huffington Post. "Is it possible we live and die in a world of illusions?" he wonders. Why, of course! It's no coincidence that this nonsense is posted on a left wing political blog. The best way to face reality after all, is to pretend that it doesn't exist at all.

Lanza quotes a famous experiment of a cat in a box to illustrate his argument: the cat is "both alive and dead," he writes: "both possibilities exist until you open the box and investigate."

Of course, they don't. If the cat is dead, it won't come alive when you open the box. The cat is dead or alive regardless of your perception. Existence is exists, even when you close you eyes. As Ayn Rand put it in Atlas Shrugged (1957):

Existence exists---and the act of grasping that statement implies two corollary axioms: that something exists which one perceives and that one exists possessing consciousness, consciousness being the faculty of perceiving that which exists.

If nothing exists, there can be no consciousness: a consciousness with nothing to be conscious of is a contradiction in terms. A consciousness conscious of nothing but itself is a contradiction in terms: before it could identify itself as consciousness, it had to be conscious of something. If that which you claim to perceive does not exist, what you possess is not consciousness.

Whatever the degree of your knowledge, these two---existence and consciousness---are axioms you cannot escape, these two are the irreducible primaries implied in any action you undertake, in any part of your knowledge and in its sum, from the first ray of light you perceive at the start of your life to the widest erudition you might acquire at its end. Whether you know the shape of a pebble or the structure of a solar system, the axioms remain the same: that it exists and that you know it.

To exist is to be something, as distinguished from the nothing of nonexistence, it is to be an entity of a specific nature made of specific attributes. Centuries ago [Aristotle] stated the formula defining the concept of existence and the rule of all knowledge: A is A. A thing is itself. [...] Existence is Identity, Consciousness is Identification.

(The rest of Lanza's article is useless mumbo jumbo meant to suggest that we're all helpless victims of a malevolent universe playing tricks on us, which is why I haven't bothered to quote from it more extensively.)

On Tax Relief and Deficit Reduction

Republicans have the left positively confused as they say to favor tax cuts on the one hand, regardless of their impact on the deficit, yet block the extension of unemployment benefits on the other, citing budget concerns.

Senator Jon Kyl of Arizona insisted on Sunday that Congress should extend President George W. Bush's tax cuts for high income Americans even as they would add to the deficit. "Surely Congress has the authority, and it would be right to, if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs," said the senator during an appearance on Fox News Sunday. "You do need to offset the cost of increased spending," he added, "and that's what Republicans object to."

Clear and simple? Not according to The Huffington Post, which calls it "deficit fraud"---and not according to the White House. Press Secretary Robert Gibbs accused Kyl on Twitter of pretending that the wealthy "need" tax cuts "while middle class families are on their own to fend for themselves as a result of [the] Bush economy."

Press Secretary Hari Sevugan for the Democratic National Committee deviated even further from the truth by claiming that "tax cuts for the rich at the expense of working people is the same backward policy Republicans used to put the nation in this hole, and it's the same policy they promise to return to if put in a position of power again."

Steve Benen neatly summed up the left's position at the Washington Monthly, calling it "quite a message to Americans."

Republicans believe $30 billion for unemployment benefits don't even deserve a vote because the money would be added to the deficit, but Republicans also believe that adding the cost of $678 billion in tax cuts for the wealthy to the deficit is just fine.

Were the Bush tax cuts reversed, it should surely make the current administration's job at balancing the budget much easier. But trying to beat the Republicans at their own game by pretending that they are proposing a fiscally irresponsible policy is disingenuous.

In all fairness to the Democrats, President Bush's economic policy wasn't terribly different from what they're doing. It was under President Bush, after all, that, in the name of "compassionate conservatism" and with hopes of creating an "ownership society," the foundations for today's recession were laid. It was under President Bush that the semi-government entities Fannie Mea and Freddie Mac were allowed to go wild and ruin the home mortgage market. And it was under President Bush that the first banks hit by the turmoil that ensued were bailed out with billions of dollars of taxpayers' money.

President Bush plunged the country into the red but his successor added significantly to that with the nationalization of automakers, a momentous overhaul of the health insurance industry and a multibillion dollar stimulus package that has so far yielded little result except the questionable assurance that things would be far worse without it.

In reaction to President Barack Obama's interventionist policies and under pressure from the popular Tea Party movement, Republicans are once again preaching fiscal conservatism. Democrats meanwhile still seem to think of economics as a zero-sum game in which lowering one person's taxes must come at the expense of another person's government handouts. They won't see that the economic activity stirred by a lower tax pressure will eventually benefit the whole of society.

Rather a tax cut is something that "adds" to the budget, they believe, while the rich, in spite of already bearing the grunt of government's costs, would force "working people" to "fend for themselves"---what atrocity! This administration seems to think that ordinary Americans simply can't do without government yet if opinion polls are any indicator, more and more people are beginning to realize that in spite of all its good intentions, it's government that is the problem.

Originally published at the Atlantic Sentinel, July 13, 2010.