Want some free stuff?

That's what's driving the hoards of youths rioting in various parts of London the last few nights (and today as I write).  

It is not because of the protest of the shooting of Mark Duggan, in a case that is now under investigation.   One can't remotely claim that those rioting in Tottenham, Hackney, Wood Green, Enfield and now Lewisham are some response to the Police.  Petrol bombing shops, flats and buses, is not about some sort of protest.  There was a peaceful protest on Saturday about it, and Duggan's family long called for an end to any violence.

Even less credible is the opportunistic claim by Marxist dictatorship-felching ex. Mayor (and Labour candidate for Mayor) Ken Livingstone that it is a response to the coalition government's spending cuts (which despite the Labour propaganda, have seen a net increase in state spending).  It is a stark contrast from local Labour MP, David Lammy who said:

This is an attack on Tottenham, on people, ordinary people, shopkeepers, women, children who are now standing on the streets homeless as a consequence..

These are looters, they are amoral, impulsive young men and women who have no conception of the rights of others, who have no respect for the property of others, who couldn't care less if people lose their livelihoods, businesses or homes.   They are the output of a culture of entitlement that says if you want something you should have it, you don't need to work or save for it, for either the state will pay for it, or someone will give it to you - or you just take it when you can.  A culture of hedonistic whim worshipping, that says if it feels good it's ok and it doesn't matter who or what you destroy or harm in the process - might is right.

They are, of course, engaging in socialism - without the middle man of the state.   The likes of Ken Livingstone,  residing in pleasantly middle class Cricklewood, would steal from the businesses and the residents and the employees, just with the gloved fist of the state doing it in a far more ordered and determined way, to give a living, homes, food, clothes, TVs, mobile phones, transport and healthcare to those who steal.  Indeed, the state has been doing that for decades, and the moral vacuousness is obvious.

Note that the Metropolitan Police cannot use tear gas to deal to these thugs, it cannot even contemplate rubber bullets, because you see to protect people with more force would be against the rights of the criminals.  Neither could those whose businesses and homes were attacked could ever have a firearm to respond.

However, just wait to see who politically around the word spreads the empty nonsense that the riots are about the death of Mark Duggan (who did not exactly appear to be unfamiliar with the gang culture that infests Tottenham), or about the cruel Tory government that has cut government spending to a heartless 51% of GDP, or that its about racism (given the majority of rioters have appeared to be Afro-Caribbean), and how the way to fix it is to borrow more money we don't have to spend money on more regeneration, state housing ghettos, welfare and pseudo "jobs" with local authorities.

Whilst, of course, the people whose businesses are wrecked, who are unemployed as a result of their employers' businesses being wrecked, who are now without homes, are ignored - for they are the "collateral damage" of "disenchantment", rather than a victim of decades of failed welfarism and state housing ghettoisation, producing hot houses of feckless dependency and criminal cultures of violence, misogyny, gangster worship and aspiration less traps for the children raised in that culture.

UPDATE:  Oh and remember more than a few of the parents and relatives of these thugs DO want better.  Read Katherine Birbalsingh's column about how SHE talked to an event about young black men in London, she's an inner city teacher, who has riled more than a few because she spoke at a Conservative Party conference.

End of cloud cuckoo land economics

So says City AM editor, Allister Heath.  In an extended editorial this morning he wrote an elegant piece that summarises where we all are at:

The post-Bretton Woods era is coming to an end. Asia and the emerging nations are on the rise – and the world’s increasingly vocal creditors. As economic power shifts, so will geopolitical and cultural influence. The US, which for decades enjoyed massive inflows of cheap financing, and huge benefits from owning the world’s reserve currency, needs to start to live within its means. The same is true of Europe, which faces two additional challenges: the Eurozone, which cannot survive in its present form and which has become the most urgent threat to global prosperity; and (even more than America) bloated welfare states and a generalised failure to grasp that weak education systems, high taxes and crippling regulations are a no-no in a globalised world.

He has no time for the endless budget deficits and the abuse of fiat currencies as ways to evade reason...

“stimulus” packages of the fiscal or monetary variety have become counter-productive, with every extra pound in economic output created coming at a much greater cost. Ultimately, one needs real, sustainable growth – and that must mean deferring consumption to allow the savings required to finance productive investment; a sound, non-manipulated currency; interest rates that reflect reality; and lots of hard work, creativity, skill and innovation, suitably incentivised. The pseudo-Keynesian micro-management that dominates policy-making is not only intellectually bankrupt but has been proved to fail in practice. Politics and wishful thinking has been defeated by economic reality. In a world of scarce resources, we need to produce before we can consume – all the borrowing and money-printing in the world cannot refute this simple truth. 

His big predictions are that the US can prevaricate for some time, and be in long term relative decline as it does, but the European Union has an immediate crisis, that now threatens to spread beyond the CPIIGS (Cyprus, Portugal, Ireland, Italy, Greece and Spain) into Belgium and France.  

But while the US’s decline could run for decades, and will involve further downgrades, the Eurozone’s crisis is urgent. The only question is how much debt the authorities will want or be able to federalise – how many toxic government bonds will the European Central Bank and the European Financial Stability Facility buy, in exchange for creating money or issuing Eurobonds backed by all Eurozone countries. Prudent taxpayers in Germany and elsewhere will pick up the bill left by profligate nations; but given its huge, multi-trillion euro size, this could destroy yet more credit ratings. France could be next for a downgrade. Even more importantly, a sovereign bailout will destroy any remaining popular support for the euro project, especially in Germany, understandably so given that the population was lied to when it was told that countries would retain their fiscal independence despite giving up monetary sovereignty.

 

The implications of this for Europe, could be positive if it unshackled itself from the socialist part of the EU project, and helped set its economies free, but it is unlikely that will happen.

 

The more serious concern ought to be about the decline of the United States, what is means not so much for the global economy, but for the international order.  For decades many in the West have rallied against Pax Americana, more than a few will cheer a New World Order that does not resemble what George Bush (Sr.) declared at the end of the Cold War.   

However, bear in mind what it represents.  It means Asia being dominated militarily as well as economically by China, and India, both nuclear powers.  It means the Middle East being dominated by Saudi Arabia and Israel, it means Europe being dominated by NATO and Russia, and it means the United States doing what Obama has royally done, opting out of the world by withdrawing.

The so-called "peace movement" will proclaim the world is a safer place as a result, although if it is a place where the United States no longer carries a banner, and sword, for freedom, one wonders how true that will be (not that the "peace movement" ever believed in freedom).   Some US libertarians welcome this, not wanting the US to be "World Police" (not that it ever really was), but what it leaves is a philosophical vacuum - one that is increasingly filled with "make money wherever you can regardless of individual or property rights" as the Russia and Middle Eastern kleptocracies move forward and China seeks a 21st century imperialism over African natural resources to replicate the 19th century Western equivalent.   Islam may fill part of it, corporatist state capitalism will fill some more, as will knuckle-dragging nationalism based on ethnicity. 

However, consider this.  If you were in Poland, with a relatively chilly authoritarian neighbour to the east, and you saw the US withdraw its presence in Europe - given the past 70 years of history - would you be feeler safer as a result?

What spending cuts? (UPDATED)

Given some of the news coverage you might think the US houses of Congress have reached agreement to cut spending in the US Federal Government.

The Daily Telegraph says there are US$1 trillion in spending cuts over 10 years.

The Washington Post called them "severe cuts".

Spendaholic Paul Krugman in the New York Times says it is "slashing government spending" and even says it calls the whole system of government into question!

The New York Times editorial calls it "nearly complete capitulation to the hostage-taking demands of Republican extremists"

You'd think I'd support it, but really it isn't what it seems.  Chris Edwards at the Cato Institute points this out in the following graph.   The US$917 billion "cut" over 10 years is not a cut in real or nominal terms, but a cut from a baseline of even faster increases.

So what does it actually mean? Well Edwards says:

"The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent."

That's what is provoking a hysterical reaction among the left in the Democrat Party.  Spending isn't being cut in real terms, spending is being cut by part of the amount they wanted it to grow.

As I've mentioned before, a relatively unambitious plan from the Cato Institute would cut spending by US$1 trillion annually through to 2021, it would balance the budget by that year.  It would cut government spending as a proportion of GDP from a projected 24% to 18% (the same it was in 2000).  It would look like the graph below.   You can figure out the current plan is closer to Obama's plan than to the Cato plan.

However, because it plays with so much pork (everything from agricultural subsidies to Amtrak to public broadcasting to the Department of Education (don't worry the states do most of that anyway) to Medicaid, it would be difficult for many Republicans (who are frankly half responsible for the current mess) and virtually all Democrats to accept.

Yet it should be the bare minimum to get the USA back on track to growth, by pulling back from the crowding out of the private sector, by keeping taxes at their current level and eliminating vast amounts of distorting and damaging subsidies and government programmes.

Oh, by the way, Obama once opposed raising the debt ceiling as well:


"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

That is Senator Obama, 20 March 2006.

Thanks to Allister Heath at City AM for tweeting this and National Review for publishing it.

Just another politician isn't he?

Watch Syria, for that's the future

It shouldn't surprise anyone that Bashar el-Assad has turned the army on protestors and has shown little hesitation to create rivers of blood among his subjects.  Tanks firing on civilians, sniper taking out protestors, blocking hospitals to stop protestors entering according to a report from The Independent.   With reports of heavy machine gun fire, tanks shelling buildings and electricity and water being cut off from the city of Hama (where Assad's bloodthirsty father had massacred reportedly over 10,000 in 1982), it appears the regime will stop at nothing to remain in power.  Another report talks of tanks running over people.   Some claim over 1,600 have been killed by the regime since protests started in March, whilst this is likely to be somewhat exagerrated there can be little doubt the regime has been engaging on a spree of oppression.

It did try in recent years to put on a more moderate face.  Some thought that as Bashar Assad had been trained as an opthamologist and had not originally been seen as the successor to his father (his far more ruthless and "Uday Hussein" like brother Basil had been, before he died in a car crash), he would be more moderate, and there had been signs of a loosening of the totalitarian state his father Hafez had instituted, but it would be more like moving from Stalin to Khrushchev.   It didn't stop Vogue writing a gushing piece about Bashar's wife late last year (which it wisely has removed from its website). 

However, the truth is out.  Bashar wants to retain absolute authority and power, like his father.  He has the support of the armed forces, and the brutal Ba'athist socialist legacy of the ruling party continues.

President Obama has rightly condemned what has been going on, as have other Western leaders.  The regime's response has been to sponsor attacks against the US and French embassies.   Meanwhile you'll notice two major differences between the foreign reaction to Syria and the reactions to Libya, Serbia and other examples of what is typically referred to as "humanitarian intervention".

Firstly, the Western world is financially and politically exhausted as regards "saving the world" from the brutality of dictatorships.  Barack Obama has no appetite or inclination to do anything to intervene in Syria, not least because of the cost, but also because he firmly believes that it is for the UN Security Council to authorise any such action.  Is he pushing for this?  Well no, because he knows it wont be politically popular, he knows he'd struggle to pay for it and as he didn't support the overthrow of Saddam Hussein (and was subdued on Libya) he doesn't believe the US should project itself militarily, in order to save the lives of others.  Meanwhile, as the UK and France effectively lead the continued presence over Libya, they are not so inclined to go into Syria either, because of money.  Germany opposed intervention in Libya at all.   Of course neither Russia nor China are in any way inclined to support intervention against a government that turns on its own people, given that both are quite adept murderers of their own domestic populations.

So the post-Cold War age of humanitarian intervention, which has had mixed results including the former Yugoslavia, Somalia, Liberia and Libya (I count Afghanistan as being action against those that harboured an aggressor and Iraq as action against a proven threat to international peace and security), is now over.

You'll have to get used to watching TV coverage or hearing/reading reports of governments massacring their own people.  For the US and European powers are no longer willing to save them.  That is, in part, because they have nearly bankrupted their own economies through many years of overspending on bribing voters and interest groups with future taxpayers' money. It is also because the cost in lives and money of such interventions (and the organised forces against them from the left) have made it politically more difficult to support.   The UK was embarrassed about its previous sycophancy for the proven mass murderer Muammar Gaddafi, so could not stand by as he used helicopters to take out civilian protestors.  However, Syria has never been a friend of the West, so the guilt isn't there.

All of this should please the so-called peace movement and human rights advocates from the left who opposed the Allied invasion of Iraq and overthrow of that Ba'athist dictatorship, as well as the smaller group who thought the Taliban should have been left alone in Afghanistan, to keep harbouring Al Qaeda and enforce a dark ages Islamist year zero ultra-patriarchy.   The same people have been relatively quiet over Libya, except the usual tiresome claim that its only about oil.  

You see, the so-called peace movement have long held up Afghanistan, Iraq and even Libya as of late as being "the fault of the West".  This is a line whereby all NATO members and Western allies of military intervention in all these cases, must carry the blame for the actions of previous western governments in the Cold War.  Never ever is the finger pointed at Russia or the governments of the former Warsaw Pact countries and the like.

Afghanistan was the fault of the West supporting the Mujahideen against the brutal Soviet backed Najibullah regime.  The Soviet invasion of Afghanistan was, after all, supported by Keith Locke of all people.   It takes a peculiar contortion of one's belief in human rights, womens' rights and freedom of speech to oppose the overthrow of the Taliban, but that is what the far left did (it would have been ok had the Afghan people done it on their own efforts though - like how it would have been good if the Jews had overthrown the Nazis in Germany).  Support for the Islamists in Afghanistan was a mistake, but it doesn't mean one cannot rectify it when they not only have proven to be brutally sadistic, but harbouring those who attack you.

Iraq was also the fault of the West, for the support Saddam Hussein got against the Iranian Islamists.  That piece of realpolitik (your enemy's enemy is your friend) was an appalling miscalculation, which was eventually figured out in the late 1980s when the West stopped arming and supporting Hussein (though one shouldn't forget the French help for Hussein's first attempt at building a nuclear reactor, which Israel swiftly dealt to).   Of course, the USSR and Warsaw Pact countries also extensively armed and assisted Saddam, but Russia and its former allies are forgiven, somehow.  However, that doesn't matter now, for notwithstanding Saddam's use of chemical weapons against his own people, his invasion and occupation of a neighbouring state (for oil) and his extended oppression and brutality against anyone who opposed him, he was deemed protected by international law by the so-called peace movement.  Invasion against this dictatorship was "illegal" and "unjustified" as the borders of a dictatorship are considered inviolable.  The left considered Saddam's regime as having at least enough moral authority for the actions to overthrow him to be considered less justifiable than letting him be.  

This Ba'athist hereditory dictatorship in Syria has so many hallmarks of being abominable it should be more surprising that it didn't long ago raise anger and activism among the legions of self-styled human rights protestors in Western countries.  You know, the ones who will raise a flotilla for the Gaza Strip, or rally against apartheid, or protest against the Chinese one-party state.

However, Syria's past can't be easily blamed on the West.  It gained independence in 1946, but between then and 1956 was marked by multiple military coups.  In 1956 it became explicitly allied with the USSR, and merged with Egypt in the ill-fated "United Arab Republic" of Nasser in 1958, before withdrawing in 1961.  A 1963 coup led by the socialist Ba'ath Party set the stage for the future of the country.  With Hafez Assad staging his own coup within the regime in 1970, he held power for 30 years, with an iron fist and a personality cult to match, with Bashar taking on the legacy in 2000.  Throughout the entire period since 1956, Syria has been allied with the USSR, and subsequently maintained warm relationships with Russia, Iran, North Korea and other regimes with an overtly anti-Western stance.

So for now, you can watch Syria's regime massacring its own people.  In the knowledge that the Western advocates of peace and human rights are rather quiet on it all, expressing concern, but not at all supporting intervention (how could they).  They will be quiet about a regime they have ignored for decades, because it never had Western support and was always antagonistic towards Israel (although Israel has for some years sought a peace treaty based on progressively handing back the Golan Heights, but Syria wont make peace until the Palestinian situation has been resolved).  

Meanwhile, with Obama in the White House, and largely uninterested in international affairs.  With Western leadership dependent on a fairly wet British Prime Minister who is in coalition with anti-interventionists, it may be up the the French (given Syria was a French colony) to seek action.   Yet, as China and Russia have no inclination to support it (and since few dare to ignore the UN Security Council nowadays), expect to see more blood flowing in Syria with no intervention.

It is, after all, the consequence of a policy of non-intervention and what the so-called peace movement and human rights movements want as a response.

The "radical" plan Obama is rejecting

The Cato Institute has reviewed the latest Republican plan to stop the US overspending slow down the growth in US government spending, it isn't impressed:

The plan is to cap discretionary spending over 10 years to achieve $1.2 trillion in savings; have (another) bipartisan group of policymakers come up with $1.8 trillion in “deficit reductions” over ten years; and get a vote on a balanced budget amendment. In exchange, the president would get to increase the deficit by $900 billion this year and by another $1.6 trillion next year.

That means:

• Under the Congressional Budget Office’s optimistic spending baseline, the federal government will spend $46 trillion over the next ten years. Obviously, reducing spending by $1.2 trillion oven ten years is relatively small.

• The same dysfunctional congress that treats entitlement programs like lit sticks of dynamite is supposed to come up with $1.6 trillion in “deficit reduction.” Note that we’re not even talking specifically about spending cuts here, so that figure would likely include tax increases assuming they’re able to even come up with something.

• Under the Boehner plan, spending and debt will continue to rise. At the most, the plan would produce an average of $300 billion a year in cuts in exchange for increasing the debt ceiling by $2.5 trillion over the next two years.

• Boehner’s bill includes language that tightens up the definition of what constitutes “emergency” spending. Congress regularly slaps the “emergency” designation on all sort of non-emergency spending bills.

• Where are the immediate spending cuts? Once again, we have the promise of cuts but no specifics. Even if the discretionary caps hold the line on that portion of spending, total federal spending (and debt) will continue its unsustainable upward climb. Entitlement spending is the biggest driver of our long-term budgetary problems but entitlement spending isn’t capped under the Boehner plan.

Obama is rejecting this, because he wants more taxes and wants the issue resolved so it looks like he managed to chaperone a compromise that will outlast his Presidential term.  Of course, some Democrats want tax increases to be a major component of the deficit reduction strategy, because they want to entrench the growth in government that has been the legacy of Obama and Bush before him.   Tea Party aligned Republicans want deficit reduction to be entirely about spending cuts, and I agree.

Even the Cato Institute's own rather meek plan, by Chris Edwards, to cut spending would be a vast improvement, because a balanced budget would still be a decade away, but so much wasteful spending would be addressed.  It would cut the Federal budget to 18% of GDP, down from Obama's projected 24%.

It is about competing visions for the USA.  Some Democrats (and likely Obama himself) want the US to be more like Europe, and to have an activist state involved in health, education, welfare and economic development more than now.  Tea Party Republicans want to keep a sizeable gap between the European size of the state and the US, and want to balance the books by getting spending down, and then address the debt bubble.   However, I suspect most congressmen and women from both parties just want to get elected, be loved and popular, and to convince people that they are just the right ones to solve their problems.  The deficit being something most have spent little time thinking about.

For now, it is a game of chicken.  Obama does not want a deal that needs to be replicated next year during the election season, he wants to look like the honest broker who saved the country from bankruptcy (or at least convinces his core voters that he is in charge and competent).  The recently elected Republicans don't want a deal that includes any tax rises, because they campaigned against that, and they want a balanced budget constitutional amendment so that there is a legal requirement to eliminate the deficit over time (and avoid the risk of this ever happening again).   Both Obama and the Republicans fear being blamed for a default.  Obama bears the bigger risk, because he is President and more people think he is in charge than Congress.  All the Republicans can say is they reject any tax increases, and want to cut waste.  Yet, they also don't want to be seen as being incapable of compromise.

Two visions of the USA - will one win, or will a lily livered half arsed middle ground be found that does barely enough to get past this hurdle.