The American Conservative

The White House today announced a new initiative, part of the wider “We Can’t Wait” initiative, to help young people find summer work. With help from the private sector, the White House says that nearly 180,000 youth working opportunities will be available this coming summer. With an election coming up it would make political sense to announce this sort of initiative, especially while the President is visiting Ohio, a swing state with high unemployment and a manufacturing base. Despite the political benefits that these sorts of initiatives might reap, they rely on a blind faith in economic miracles.

Schemes and initiatives such as these are used by right and left leaning governments, and not exclusively the recourse of traditionally economically interventionist governments.  Over in the UK a conservative-lead government announced a similar scheme in November’s Autumn Statement, for which British taxpayers will be expected to pay almost £1 billion. According to the plan announced by Cameron’s government, young people who have been unemployed for more than three months will be offered private-sector work experience. Young people who do not take up the offer risk losing their unemployment benefits. The scheme was introduced by the British government in light of the depressing youth unemployment figures. When faced with such figures, any politician’s first instinct will be to do something.

The plan announced by the White House shows the same damaging instinct in practice. Faced with a falling popularity and disappointing employment figures, the President has decided to implement a plan that aims to boost employment while maintaining support from underemployed or unemployed youth.

The root cause of unemployment here and in the UK is flawed fiscal and monetary policy. Businesses are not hiring because there is not enough flow of credit. In addition many times the regulations and procedures in place for the hiring process make taking someone on economically prohibitive. Governments should let the private sector do the hiring and training and concentrate on developing a sound fiscal and monetary policy that will enable economic growth and employment.

Prof. Scott Sumner reviews Tim Congdon’s collection of essays Money in a Free Society: Keynes, Friedman, and the New Crisis in Capitalism. Tim Congdon, one of the UK’s most prominent monetary theorists and former adviser to John Major’s Conservative government, offers an overview of the development of monetary theory and the role misguided monetary theory can play in creating economic downturn.  Through an examination of Britain’s relationship with “old Keynesianism,” recent Japanese deflation, and Friedman’s own intellectual development, Congdon presents a robust case against economic stimulus. Given the contemporary debates on the relationship between fiscal and monetary policy, government spending and government cuts, and the role of government more generally, this collection could not be more timely.

 

“Events are in the saddle and ride mankind.”

In describing 2011, few clichés seem more appropriate. For in this past year, we Americans seemed to lose control of our destiny, as events seemed to be in the saddle.

While President Barack Obama maneuvered skillfully to retain a fighting chance to be re-elected, the economy showed no signs of returning to the robustness of the Reagan or Clinton years. And Obama is all out of options.

By January 2013, he will have added $6 trillion to a national debt that just earned America a downgrade on its AAA credit rating.

The nation hearkened to the tea party in 2010, giving the GOP 63 new seats in the House. But Republicans, too, have little to show for it, if their goal was reducing the deficit.

During 2011, the European Union was gripped by a crisis caused by a collapse in confidence that eurozone nations like Greece and Italy will be able to service their debts and a fear that they will default and bring down the European banks holding trillions of that debt.

Europe could plunge into a depression like the one in the 1930s, which would leap the Atlantic and cause a recession here that would spell the end of Obama’s presidency.

Should the Greeks or Italians, chafing at the austerity imposed upon them and seeing no way out for years, choose to run the risk of bolting from the eurozone, the consequences could be catastrophic.

And, again, there is little Obama could do about it. Events in Europe could decide his destiny. The same is true in that most volatile region that engaged so much of America’s attention in 2011.

With the withdrawal of all U.S. combat soldiers from Iraq, Prime Minister Nouri al-Maliki has begun to attack his Sunni rivals, accusing his own vice president of instigating acts of terrorism.

A return to Sunni-Shiite sectarian war is a real possibility. Read More…

Bloomberg’s Roxana Tiron reports on the cozy relationship between Newt Gingrich and Mitt Romney’s advisers and the businesses most adept at siphoning off the taxpayer’s money in the name of war and bogus security:

Five of former Massachusetts Governor Mitt Romney’s 41 national security and foreign policy advisers have links to companies that last year alone received at least $7.9 billion in federal contracts, according to data compiled by Bloomberg Government analyst Christopher Flavelle. Of that, $7.3 billion came from the Department of Defense.

Romney and former U.S. House Speaker Newt Gingrich of Georgia, who are leading in the polls, have advisers who sit on the board of directors of BAE Systems Inc., which has received at least $37 billion in U.S. government contracts since 2008, the most of any of the companies with ties to Republican national security advisers.

No surprises, but it’s always good to document this kind of thing. Read the rest here.

America is by geography a maritime state. Even with a vastly shrunken defense budget, we must remain a naval power.

Fortunately, we can. The first reason is that that we face no serious naval challengers. Only Russia and, prospectively, China, have fleets that could contest with ours beyond coastal waters. Russia is not an enemy, and strategy dictates that we not let China become one.

Second, the end of the Cold War made many of the ships in the U.S. Navy obsolete—including some under construction. Heading the list are cruisers and destroyers armed primarily with the Aegis anti-aircraft system. Third World air forces pose little threat to our ships. A handful of Aegis ships would suffice, especially since the effectiveness of Aegis has never been demonstrated in honest testing.

Our twelve big aircraft carriers are worth retaining, because big floating boxes with flat tops are useful in a variety of roles, not just to transport aircraft. The same goes for our carrier-like amphibious ships.

The Navy’s 14 ballistic missile submarines should be retained, because our strategic nuclear forces not only deter other nuclear powers, they also make large-scale conventional warfare unlikely. That saves a lot of money.

Attack submarines are the modern capital ship, in that they determine command of the sea. The current number of 53 is about right, but new nuclear attack subs should be smaller and cheaper—and we need some non-nuclear boats as well, especially for coastal waters.

At this point, we find ourselves wanting to keep a lot more ships than we could afford on a $100 billion defense budget. The key to retaining an adequate Navy with much less money is a revival of the centuries-old practice that diminished in the 19th century and disappeared in the 20th. In peacetime, few of the Navy’s ships should be in commission. Most would be in reserve or, to use the 18th-century term, “in ordinary.”

To man the fleet on mobilization, the new Navy would adopt a variant of the old Prussian army reserve system. Each active-duty crew would go into reserve together, like a regiment. When mobilized, they would man a reserve ship identical to the one they had served on. With the same people working together doing the same jobs on the same type of ship, reserve ships could quickly attain active-duty levels of efficiency. An active-duty sailor would serve three years, then be in reserve for nine years, allowing each ship manned in peacetime to support three other ships in reserve. Read More…

Several days ago Rod Dreher brought up comments by Britain’s chief rabbi, Lord Jonathon Sacks, relating to the problem of mass consumerism.

“What does a consumer ethic do? It makes you aware all the time of the things you don’t have instead of thanking God for all the things you do have. … the consumer society is in fact the most efficient mechanism ever devised for the creation and distribution of unhappiness.”

Marx claimed religion to be the opiate of the masses, but Judeo-Christian religions, which preach respect and love for life, may be on the decline in America. Is a culture of nihilistic mass consumerism the contemporary substitution? Before the Thanksgiving turkey could even be digested, Black Friday kicked off — on Thursday. Several videos captured the chaos that ensued; people being trampled, shoved, and disregarded. One incident even had people getting pepper-sprayed. Let me not forget to mention the shootings, and fighting over $2 waffle makers. Here is one clip among many floating around the web:

Imagine this kind of chaos, elevated, if the American economy follows the Eurozone into crisis. Dreher is also pessimistic about such a development:

Can you imagine most Americans, whether on the left, right, or in the middle, in the 1930s having such an attitude? What happens to a generation that believes in nothing more than consumerism and sexual autonomy?

After making what is likely the catch of a lifetime, an 881 lb. bluefin tuna, Carlos Rafael learned that he would not be reaping the rewards of his work. Making shore with his prized catch, the fisherman was greeted by agents of the National Oceanic and Atmospheric Administration’s Office of Law Enforcement. The fish was seized on technical grounds. (It was caught in a net, not with a rod and reel.)

No charges have yet been filed in connection with the catch, but a written warning is anticipated, according to Chris­tine Patrick, a public affairs specialist with NOAA who said the fish has been forfeited and will be sold on consignment overseas. Proceeds from the sale of the fish will be held in an account pending final reso­lution of the case, NOAA said. No information on the value of the fish was available Friday.

What should be seen as an accomplishment is vilified by red tape and arbitrary code.

A friend of mine at the Pentagon has told me about an idea that has been circulating on various email circuits.  She suggested that everyone make the maximum effort to buy for Christmas only goods, products, and services that are either made in America or that directly support the local community.  For example, if a family member goes to a certain barber or hairdresser regularly you can buy a gift certificate for that service, ditto for car services, book certificates for students, etc.   I would leave it to everyone’s imagination and ingenuity for how it all would work locally and how the idea could be expanded.  As I was watching the endlessly repeated commercials on television during a football game this afternoon (alas, the Jints lost) I realized just how few products were made in America and became a bit annoyed at how we have been trapped into supporting foreign manufacturers because we have frequently not been resourceful enough in supporting our own local economies.  As America’s political class really doesn’t begin to understand just how badly many working and middle class Americans are hurting and probably doesn’t care, it would help for all of us who do care to make a conscientious effort to keep at least some portion of holiday spending within our local communities.

NEW YORK – Why should 330 million Europeans face a financial and likely political meltdown for the sake of 11 million profligate Greeks?

They should not. Just ask the angry Germans who actually believe there is no free lunch.

The best thing for the Greeks and for Europe is for Greece to be asked to quietly leave the Euro club. That’s the simple, brutal solution to the current financial crisis that is threatening to tear apart the European Union and provoke a global financial crisis.

As the old New York expression goes, “first loss, best loss.” Meaning, the longer one delays taking a loss, the worse it gets.

Greece, let’s recall, wriggled into the 17-member Euro zone by faking its accounts and falsifying economic and tax figures. The EU closed its eyes to these frauds because of a desire to unite all of Europe.

So, it seems, did Italy, which currently owes money lenders $2 trillion and must borrow $300 billion this year alone just to service its gargantuan debts. Read More…

I did a cover article for The American Conservative back in 2005 called “Money for Nothing”.  I detailed how more than $20 billion of mostly Iraqi government funds earmarked for reconstruction had disappeared.  In one case a Blackhawk helicopter load of $100 bills was handed over to a contact in the Kurdish region without so much as a receipt changing hands.  The tale was horrific, particularly as Congress and the White House seemed uninterested in it, but it now seems that I underestimated the scale of the theft that was carried out by American contractors and officials as well as by corrupt Iraqis.  It is also interesting to note how supporting America’s increasingly expensive overseas empire sometimes feeds abuses back here at home.

It is being reported over at antiwar that “Between 2003 and 2008, over $40 billion in cash was secretly shipped in trucks from the New York Federal Reserve compound in East Rutherford, New Jersey to Andrews Air Force Base outside of Washington, where it was then flown by military aircraft to Baghdad International Airport. In just the first two years, the shipments of hundred dollar bills weighed a total of 363 tons.”  The money made its way to the US authorities in Baghdad and then wound up with a Saudi-born naturalized Lebanese-American citizen hired as a civilian contractor for the US military. Only his first name is known: Basel. Basel was the last to see the money before it was deposited in the Iraqi Central Bank and then more-or-less disappeared.

But the interesting part is that the money apparently did not come out of existing accounts at the Fed.  It seems that it was just printed up to support the military presence and reconstruction effort, another example of how the non-transparent and unaccountable Fed might well be supporting the interests of the Washington status quo while doing terrible damage to the overall economy.  Occupy Wall Street would probably benefit from expanding its aim to occupy the Fed.