Sorry, Joe. No free lunch.

Joe “the Plumber” Wurzelbacher, or “Wurzelburger” if you’re John McCain, is quickly becoming the Clara Peller of this election. Before his 15, or maybe five minutes are up, I thought I’d jump on the bandwagon. Instead of Clara’s “Where’s the Beef?” tagline, Joe said that Barack Obama wants to “redistribute wealth” and that this was a scary prospect. Joe added,

“[…]I’m not trying to make statements here, but, I mean, that’s kind of a socialist viewpoint. You know, I work for that. You know, it’s my discretion who I want to give my money to; it’s not for the government decide that I make a little too much and so I need to share it with other people. That’s not the American Dream.”

The Republicans and Senator McCain in particular have made similar arguments in this campaign and for decades. The problem is that, by the definition Joe offers, both parties redistribute wealth, and thus embrace “socialism.” Or did Joe not notice the $700 billion recently redistributed from taxpayers to lenders? The redistribution argument today wears almost as thin as “ownership society” privatization of Social Security does following the collapse of the market. The one thing Joe and the rest of us can be thankful for is that our Social Security accounts are not in the same shape as our 401(k)s.

If Joe’s not convinced, we can look at the original socialism bogeyman, healthcare. Anyone who proposes providing for 100% health insurance coverage is branded a socialist, usually accompanied by the argument that government involvement would mean a bureaucrat will decide what doctor you see and what care you get. This ignores the fact that we already have a socialized healthcare system, but an extremely inefficient and costly one. It’s socialized because a) medical facilities cannot legally deny care, and b) the costs of the uninsured are passed on to businesses and employees in the form of higher premiums. So Joe is already having money taken away from him against his will, except the money is being taken by an insurance company instead of by the government. And which is more responsive to Joe? A company that sees paying his claim as a loss rather than the service he paid for, or a government agency accountable to him through his elected representatives in Congress?

The latent “socialism” extends further. So McCain says Obama will raise taxes. But to avoid ever being accused of raising taxes, the only place for McCain and “conservatives” to go is to foreign governments to borrow the money. Or did Joe think the Iraq War was free? And cutting pork only gets you less than $20 billion in savings, less than one percent of the federal budget. So would Joe rather pay taxes to fight our wars today, or would he like to finance it with credit from People’s Republic of China and Saudi Arabia? That way, Joe’s taxes never go up, but his and my kids will be paying foreigners for decades to pay today’s bills.

And if Joe likes flat taxes, how about we ask all candidates why they don’t push to extend FICA witholding to wages above $102,000 a year?

We need to get past this, all of us. This republic costs money, and there’s no getting around it. You can’t wish it away, though decades of ideological imperatives have put a premium on hiding this fact from us. The costs are hidden through truly redistributive shell games like hiring illegal immigrants to keep prices and Americans’ wages low. The costs are hidden by comparing costs of electric cars to gas powered cars based only on the retail price of gas at the pump, rather than including the huge associated costs of keeping the oil economy running. Promoting the general welfare costs money. Patriots understand that we are all in it together, and that we all have to pay our share. Believing that doesn’t make you a socialist. It makes you a realist and a good steward, something I always associated with conservative ideals.


A Lion of the Senate in Winter

John McCain is ultimately a tragic figure. A great, honorable man, a consistent force for good in the Senate, in 2000 he fell to the low, cynical machinations of a lesser man.  It is impossible not to imagine how the world would be different had President McCain been in charge on September 11, 2001.

Eight long years later, McCain traded his independence, his integrity to win the approval of a party that always disdained him, and for what? Time had moved on, and his pet issues of fighting pork and low taxes and small government were suddenly blown away by Obama’s generational tide and by the 100-year-flood of conservative pet theories going bust.

$700 Billion Spent, But Nothing to Fix Root Cause of Crisis

I’ve been on the same emotional roller coaster as everyone else on “Main Street” over the past weeks, but I was finally able to clarify my anger just as the bailout became a reality. Despite all of the “sweetening” to bring over House Republicans and some Democrats, the bill now signed into law still does absolutely nothing to address the collapse of the real estate market that is the engine of the meltdown. As Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan notes,

Because of the 20% fall in the price of homes since the bursting of the house-price bubble, there are now some 10 million homes with mortgages that exceed the value of the house. Residential mortgages are generally “no recourse” loans, meaning that if the homeowner stops making payments, the creditor can take the property but cannot take other assets or attach income. Individuals with loan-to-value ratios greater than 100% therefore have an incentive to default even if they can afford their monthly payments, and to rent an apartment or other house until house prices stop declining. When individuals default and creditors foreclose, the property is added to the stock of unsold homes. That depresses prices further, increasing the number and magnitude of negative equity houses.

The prospect of a downward spiral of house prices depresses the value of mortgage-backed securities and therefore the capital and liquidity of financial institutions. Experts say that an additional 10% to 15% decline in house prices is needed to get back to the prebubble level. That decline would double the number of homes with negative equity, raising the total to 40% of all homes with mortgages. The mortgages of five million homeowners would then exceed the value of their homes by 30% or more, which could prompt millions of defaults.

Glen Hubbard of Columbia, another former chairman of the Council under President George W. Bush, has a similar assessment. They and others have proposals worth a hard look and prompt action, but I haven’t heard it yet, and certainly it hasn’t been a priority like the insistence on the bailout passed this week. Why is this? Is it because of fear tactics? Is it because we still cling to trickle down concepts even when it’s clear everyone involved is making a best guess at what will bring faith back to the market?

I don’t know. I do know one thing, however. We can’t stop asking questions now, as I’m sure the conspicuously quiet executives on Wall Street hope we will. Where have they been? Aside from Warren Buffett, where was the leadership? Why didn’t executives come forward with gestures of their own? Imagine how powerful a statement by top financial executives would have been along these lines:

Until our firms return to profitability, we will not receive salary or a bonus. Once we have succeeded in putting our houses back in order, we will only accept pay at a level no more than 20 times non-executive pay in our firms. And because we believe so firmly in the American economy and the spirit of opportunity, severance packages for executives will be performance based–no more no-fault golden parachutes.

I am not holding my breath, but it’s exactly what is needed, and our politicians and pundits who travel in the same circles would do well to quietly prod their executive friends to consider it.

Beijing Stuns

The Chinese can be rightly proud.

The Chinese can be rightly proud.

Having watched China for much of the past 20 years, I had come to expect to be disappointed by the Chinese Communist Party’s inability to restrain its need for safe, conservative art. From the Beijing leadership’s perspective, art, like everything else, is judged not by its ability to move, but by its ability to serve the Party. As a result, major Chinese events broadcast to the world have consistently appeared just as stifling and archaic as the government that continues to hold a billion people back in the name of stability and harmony.

Against this backdrop, yesterday’s Olympic opening ceremonies were a marvelous surprise. Yes, it is clear that Zhang Yimou, the famed and acclaimed movie director, had to make compromises and accept a political imprimatur from the fearful men running Zhongnanhai. Nonetheless, the spirit, strength, and beauty of thousands of years of Chinese culture punched through the usual government crust to express, for the first time to so many at once, the majesty of China to the rest of the world.

Plenty of others have provided a play-by-play, so there’s no need to add to that volume here. Suffice it to say that if I was set back on my heels, I hope that many of my fellow countrymen now are also reconsidering their perception of this complex country that already plays a central role in our economy and will play an increasingly large role in the rest of our world over time.

No Way to Avoid Petroleum. Imagine That.

All Roads Lead to Petroleumland

All Roads Lead to Petroleumland

I was sucked in to playing Energyville by impressive ads in the Economist and the Wall Street Journal. I expected a complex, sophisticated game that would show me, as promised, the tradeoffs involved in providing energy for a fictional city 20 plus years into the future. Silly me. As I knew, Energyville is sponsored by Chevron, but I didn’t think, apparently naively, that Chevron would so obviously skew the game in its favor. What happened to subtlety? The game is laughably simplistic, and all gambits played result in a future full of oil. Specifically, no matter how much you opt to conserve in your future world, no matter how much solar, wind, and nuclear power you employ, the game insists that cars, planes, and other modes of transport will need to burn things. Now airplanes, OK, I get it. But cars? And when you get 20 years down the road, those cars still have to use internal combustion engine, using new energy sources like hydrogen and shale oil. There we see Chevron’s tell. There can’t be a world without internal combustion engine-driven cars, because that would mean the end of Chevron and other oil companies’ lifeblood. That would mean no more gas stations, no more oil (or hydrogen) distribution network, no more refineries, no more exploration–no more reason for Chevron to exist.

Sound Marriage Advice from MoDo

Maureen Dowd

Maureen Dowd

“Never marry a man who has no friends,” he starts. “This usually means that he will be incapable of the intimacy that marriage demands. I am always amazed at the number of men I have counseled who have no friends. Since, as the Hebrew Scriptures say, ‘Iron shapes iron and friend shapes friend,’ what are his friends like? What do your friends and family members think of him? Sometimes, your friends can’t render an impartial judgment because they are envious that you are beating them in the race to the altar. Envy beclouds judgment.

“Does he use money responsibly? Is he stingy? Most marriages that founder do so because of money — she’s thrifty, he’s on his 10th credit card.

“Steer clear of someone whose life you can run, who never makes demands counter to yours. It’s good to have a doormat in the home, but not if it’s your husband.

“Is he overly attached to his mother and her mythical apron strings? When he wants to make a decision, say, about where you should go on your honeymoon, he doesn’t consult you, he consults his mother. (I’ve known cases where the mother accompanies the couple on their honeymoon!)

“Does he have a sense of humor? That covers a multitude of sins. My mother was once asked how she managed to live harmoniously with three men — my father, brother and me. Her answer, delivered with awesome arrogance, was: ‘You simply operate on the assumption that no man matures after the age of 11.’ My father fell about laughing.

“A therapist friend insists that ‘more marriages are killed by silence than by violence.’ The strong, silent type can be charming but ultimately destructive. That world-class misogynist, Paul of Tarsus, got it right when he said, ‘In all your dealings with one another, speak the truth to one another in love that you may grow up.’

“Don’t marry a problem character thinking you will change him. He’s a heavy drinker, or some other kind of addict, but if he marries a good woman, he’ll settle down. People are the same after marriage as before, only more so.

“Take a good, unsentimental look at his family — you’ll learn a lot about him and his attitude towards women. Kay made a monstrous mistake marrying Michael Corleone! Is there a history of divorce in the family? An atmosphere of racism, sexism or prejudice in his home? Are his goals and deepest beliefs worthy and similar to yours? I remember counseling a pious Catholic woman that it might not be prudent to marry a pious Muslim, whose attitude about women was very different. Love trumped prudence; the annulment process was instigated by her six months later.

“Imagine a religious fundamentalist married to an agnostic. One would have to pray that the fundamentalist doesn’t open the Bible and hit the page in which Abraham is willing to obey God and slit his son’s throat.

“Finally: Does he possess those character traits that add up to a good human being — the willingness to forgive, praise, be courteous? Or is he inclined to be a fibber, to fits of rage, to be a control freak, to be envious of you, to be secretive?

“After I regale a group with this talk, the despairing cry goes up: ‘But you’ve eliminated everyone!’ Life is unfair.”