DC PotW, February 8-14th 2009
February 15th, 2009 Black Ops Posted in Commentary, Politics, PotW | Comments Off
SOME OF OUR CONSTANT READERS may not be familiar with the Darwin Central discussion forums, which is a shame – it’s where all the cool kids hang out. We’re open to all, and welcome those of a like mind. We believe you shouldn’t have to choose between self-styled conservatives who reject newfangled ideas like the scientific method, or scientists whose politics make Cynthia McKinney look like a mushy moderate. Here we strive for rationality in all things, both in the natural world and in human affairs.
With that in mind, I’d like to kick off a new set of entries here at DC – the DC Forums Post of the Week. It’s intended to recognize those posts that capture the unique flavor of DC, that which separates us from the rest. They’ll be chosen by our operators at the forums, but for now, I’ll start things by selfishly designating the following post as the inaugural PotW all by myself. It’s from a thread triggered by a Nicholas Kristof editorial in the New York Times calling for what amounts to Hugo Chavez-style nationalization of US banks. DC denizen Gumlegs suggests the following in response:
While punishing America’s leading 100 bankers might make some people feel good, the unfortunate fact is the bankers didn’t cause this financial mess. The unstated premise of Kristof’s op-ed is that our 100 leading bankers suddenly went crazy, all at the same time.
Why would that happen? One of them might lose his mind at any given moment and start handing out piles of cash to people who rationally could never be expected to pay it back – bankers are as human as everyone else. But all of the “leading 100 bankers” simultaneously going off the deep end leads us to wonder, “Why would something like that happen?” Could the answer be exogenous to the business of banking? Could it have to do something with, say, regulations under which all bankers must do business?
Ratcheting up the more insane regulations in the Community Redevelopment Act might have something to do with it. By the late 90s, Congress and its bureaucrats were informing banks that if they wished to expand, they had to make loans to people who were unqualified to get them.
The quickest way to get Barney Frank to the edge of apoplexy is to mention this in his presence. His face will turn several entertaining colors, and he’ll scream that wasn’t in any Congressional bill. It was all about equal access to housing. That’s right as far as it goes – the exact words “Give money to people who can’t pay it back,” aren’t there. But that’s how it’s been applied, and that’s what it means, and everyone knows it.
For the good of the country, every interviewer should mention this to Barney until he simply explodes in a studio like Mr. Creosote after ingesting that last mint. It will make for interesting television and cleanup isn’t all that difficult – the local HAZMAT squad is but a phone call away.
The op-ed also assumes against all evidence that the ever-expanding bailout is going to work. Kristof cites the 90s Japanese melt-down, but the lesson he draws is that Japan didn’t spend enough money! Coincidentally, this is always the reason a government scheme has failed. But this time, we’re assured, it will all be different.
Will it? Tell us up front what “enough” is. And after we spend “enough,” and it doesn’t work, what’s wrong? Kulaks? Wreckers? Unlicensed plumbers asking impertinent questions?
It’s not really the bankers, as Kristof finally admits, but torturing them would be fun: let’s have government dictate their wages. Why stop at that? Dictate pay for the whole country! Kristof’s suggestion does have the benefit of being hilarious, and we could use a good laugh right now. Okay, some fool in Washington, D.C. knowing the “right” pay level (or that there actually is a “right” pay level), might not be a “good” laugh, but it is hilarious. Because it’s worked so gloriously everywhere it’s been tried: Cuba, North Korea, the USSR. It worked so well in the USSR, it’s not even a country any more.
Kristof approvingly reports, “As Representative Barney Frank asked the bankers testifying on the Capitol Hill dunk-tank on Wednesday about their bonuses: ‘Why do you need to be bribed to have your interests aligned with the people who are paying your salary?’”
Will someone ask that question of Senator Dodd? Oh, wait. He didn’t consider the interests of the people paying his salary. Sorry.
Leaving aside Barney’s assumption that payment for work is bribery, how will reducing my neighbor’s salary help me? If Representative Frank were being honest – I’ll wait while you stop laughing – he’d simply introduce a bill to confiscate all income over $500,000 per year. (Or $400,000 or $10. It really doesn’t matter).
After that, expect headlines bemoaning a sudden, inexplicable drop in charitable donations.
Barney won’t do that, not because he knows that there won’t BE any income over $500,000 a year if that were the law, but because the outcry would be instant and deafening. Too obvious – dictate wages instead.
The hidden assumption is that when people are high earners (interesting word “earner” – it implies work, a concept that seems to have eluded Kristof), they hide the money somewhere. I forget just who, but someone clever noted that it’s as though rich people have a big room, where like Scrooge McDuck, they amuse themselves by diving into piles of dollar bills. This is counter to my experience. (Full disclosure: I don’t know the Sulzbergers).
Broadly speaking, there are three things the rich do with their money: spend it, invest it, and save it.
Evil Rich Guy Option One: SPENDING MONEY creates jobs. There is no getting around this. The outrageously overpriced gewgaw the Evil Rich Guy buys had to be transported from point A to point X with stopovers for refining, transforming, and fitting at every point in between. Curiously, the people involved in this expect to be paid for their work. The money the Evil Rich Guy spent paid all of them.
Evil Rich Guy Option Two: INVESTING MONEY helps the economy. This is people freely putting their own money where they expect it to fetch returns, not the dishonest locution, “the government will invest in …” When people get a return on their investment it means that other people are working to provide the return.
Evil Rich Guy Option Three: SAVING MONEY, say at the local bank. It doesn’t sit in the bank’s vault, the bank invests it. See paragraph above.
Kristof’s idea that taxpayers are somehow “subsidizing” executive pay is known in advertising as “lying by telling the truth.” Executive pay is subsidized only in the sense that it is deductible against corporate income in the same way that ALL salaries and expenses are deductible. It’s taxable to the individual, and the top individual rate is higher than the corporate rate. Kristof is either dishonest or he’s an idiot. Or both.
In New York City, the annual outcry over stratospheric Wall Street bonuses was a two-parter this year. None of the scare stories included the datum that the bonuses were down from last year, the decrease roughly matching the decline in the market. Part two was a bit of a novelty: because the bonuses decreased, the city and state will lose mucho tax loot. Evil Wall Street Bankers don’t pay taxes on money they don’t get!
Kristof suggests the banks nationalized and shares given to Americans, presumably to bribe them into compliance with an outrageously unconstitutional action. If you give something away, its cost to the person who gets it is zero. This effectively values the banks at zero, which will doubtless greatly improve everything.
Will Kristof recommend a government takeover of failing newspapers? According to the Census Bureau, there were 1,483 newspapers in the United States in 1999. Journalism.org reports that in the same year, there were 12,500 radio stations. Newspapers are failing, and a much scarcer commodity than radio stations. I therefore propose the government seize the newspapers and give us all voting shares. Call it “The Fairness Doctrine.”
They’ll love it at the New York Times.
http://forum.darwincentral.org/viewtopic.php?p=447155#p447155
Well, Pinch may not love it, but we sure do.
