The Entitlement Society

The Decline of the American Empire

Mr Blowback rising in Benghazi

"Daddy, what is blowback?" 

By Pepe Escobar

Here's a fable to tell our children, by the fire, in a not so-distant post-apocalyptic, dystopian future. Once upon a time, during George "Dubya" Bush's "war on terra", the Forces of Good in Afghanistan captured - and duly tortured - one evil terrorist, Abu Yahya al-Libi. Abu Yahya al-Libi was, of course, Libyan. He slaved three years in the bowels of Bagram prison near Kabul, but somehow managed to escape that supposedly impregnable fortress in July 2005. 

At the time, the Forces of Good were merrily in bed with Colonel Muammar Gaddafi in Libya - whose intelligence services, to the delight of the Bush administration, were doing their nastiest to exterminate or at least isolate al-Qaeda-style Salafi-jihadis of the al-Libi kind. But, then, in 2011, the Forces of Good, under new administration, decided it was time to bury the oh so passe "war on terra" and dance to a new, more popular groove; humanitarian intervention, also characterized as "kinetic military action".  So al-Libi was back from the dead - now fighting side by side with the Forces of Good to topple (and eventually snuff out) "evil" Col Gaddafi. Al-Libi had become a "freedom fighter" - even though he was openly calling for Libya to become an Islamic Emirate. 

The honeymoon didn't last long. 

In September 2012, for the first time in three months, al-Qaeda leader Ayman al-Zawahiri, aka The Surgeon, released a 42-minute video special to "celebrate" the 11th anniversary of 9/11, finally admitting the snuffing out of his number two. 

Marx had no monopoly

Austrian Exploitation Theory

By Sheldon Richman

Eugen von Böhm-Bawerk (1851-1914), the second-generation giant of Austrian economics, famously refuted the theory, most commonly associated with Marx, that the employer-employee relationship is intrinsically exploitative. Less well known is that Böhm-Bawerk had an exploitation theory of his own, which he expressed in his 1889 masterpiece, Positive Theory of Interest, volume two of his three-part Capital and Interest.

Shall We Not Revenge?

Though this be madness, yet there is method in it

by Mark J. Grant

The gentleman, Bernanke in this case, “protests too much” and in protest reveals the true meaning of his course which perhaps is a decline to bended knee and a supine position to his Master. It is scant days to the election and I cannot help but think that our continuing trip to the “presses of creation” is an act of contrivance to support “him that must be obeyed” while shameless in its purpose serves not the “greater good” but the lesser path of political contrivance. 

In reading the explanations and the rationale of the actions undertaken I am not swayed. In fact, there were too many reasons, too much offered of almost an apology that causes me to question the validity of the foundation of our present course. In a world where things are difficult and where our Central Bank rolls out the creation of money, once again, as the end all and be all of our supposed passage to financial Heaven; I mark the day and note the consequences. Down with the Dollar and up with equities and down with mortgage rates and all contrived and perhaps ill conceived and, unlike Europe, “all for one” but not one for all; for who does not wish to be named in any chapter of this ill-begotten play.

"Can one desire too much of a good thing?”

                                                                     -As You Like It

Why we work

Capitalism, autonomy, and education

By Will Wilkinson

JOE BIDEN's comments on the dignity of work at the Democratic National Convention last week (was it just last week?) inspired an interesting meditation on "What Work Is Really For?" from Gary Gutting, a professor of philosophy at the University of Notre Dame. Mr Gutting explains that philosophers from Aristotle to Bertrand Russell have taught that we work so that we can buy time for meaningful leisure. But Mr Gutting worries that capitalist, consumer cultures leaves their natives with fatuous desires and therefore ill-prepared to make good use of their free time. This thought leads Mr Gutting to propose that higher education function less to make us to better producers, and more to make us wiser consumers, thereby somewhat offsetting the insidious effects of capitalism on our desires and enhancing our autonomy by making us more reflective about our wants and about the contours of a good life generally.

Though I agree with Mr Gutting about the role of liberal education in widening our horizons and lending context to our choices, he stumbles along the way into several errors common in critiques of consumer culture. He writes:

[C]apitalism as such is not interested in quality of life. It is essentially a system for producing things to sell at a profit, the greater the better.  If products sell because they improve the quality of our life, well and good, but it doesn't in the end matter why they sell.  The system works at least as well if a product sells not because it is a genuine contribution to human well-being but because people are falsely persuaded that they should have it.  Often, in fact, it’s easier to persuade people to buy something that’s inferior than it is to make something that’s superior. This is why stores are filled with products that cater to fads and insecurities but no real human need.

Stimulus, to infinity and beyond

Sometimes you have to cut your losses if you want to survive

by DETLEV SCHLICHTER

There was a beautiful symmetry to last week’s policy announcement by the Fed. Precisely a week after the ECB had pledged its commitment to unlimited purchases of Euro Zone government bonds, the Fed declared that its new round of debt monetization – ‘quantitative easing’ or QE3 – would be open-ended.

Unlimited, open-ended. The concept of stimulus has certainly evolved since the crisis started.

This should give us reason to pause. ‘Unlimited’ is not a word that is used much in economics or in business-life. The only thing that is really unlimited is peoples’ wishes and desires. Everything else is very limited indeed. That is why we have markets and prices and competitive enterprise, in short, that is why we have capitalism: to make the best use of limited resources in the face of essentially unlimited demands on such resources. The market is all about allocating scarce means to chosen ends (chosen by the consumer), all about relative prices, about trade-offs. And the beauty of private enterprise is precisely that when things go wrong the losses are private and limited. Every businessman, every investor, even every gambler, knows that sometimes you have to cut your losses if you want to survive.

Not so in politics – and now central banking – where the stop-loss limit is evidently seen as an indication of lack of commitment. “We will do whatever it takes” was a phrase that was much used in the early part of this crisis, around 2008. No doubt it was meant to instil confidence, yet it is one of the scariest things a policymaker can say. If policies go wrong – or have unintended consequences, as they always do – the costs are born by society. We should be concerned if those who are entrusted with the privileges of state power declare that they will use these powers without limits – the power to tax, the power to regulate, the power to legislate, and the power to print money. On Thursday Bernanke declared that he would not stop his policy until it has the results that he believes it should have.

The Direction of the Compromise

To get to a real budget solution is going to take a compromise

By John Mauldin

We are often told that the current election is the most important in recent history. I think I have heard that in about ten presidential cycles, ever since I first voted, for McGovern, as a young man. And looking back, only about one of those elections actually qualified on that score. I think this election does have the potential to be one of those rare times, at least in terms of economic outcomes. Today, we cross that gray line, but at a somewhat different angle, as we look at the economic consequences of the political decision that will come with the choices we make in November in the US.

When it comes to school reform, the United States could learn a thing or two from Sweden

Breaking the Public Monopoly on K-12

by Herbert J. Walberg 

Many believe private schools generally achieve more than public schools. In big cities, as many as 80 percent of public school parents say they would send their children to parochial or independent schools if they could afford the tuition. Scholarships for poor families are heavily oversubscribed as are charter schools, which are government-funded but run by private boards. Do private schools deserve their reputations and consumer preference?

In 2007, I tried to track down all published and unpublished studies of this question and summarized the findings in the book School Choice: The Findings. Included in the findings were studies that compared students in private and nearby public schools that were similar in social class, other demographics, and achievement when the study began.

The most important studies considered were “randomized trials” in which children from a large applicant pool were assigned by lottery to a private school or to the public school they would normally attend. Particularly valuable in this respect were studies of my Koret Task Force colleagues: Paul Peterson studied students lotteried for scholarships to attend private schools of their choice and contrasted them with children who remained in public schools. Caroline Hoxby studied similarly selected students accepted to charter schools and those who remained in their neighborhood public schools.

The post-American world is being born

The Abhorrent Vacuum

By mark steyn

In the breast of the Western media, hopes of Arab Spring spring eternal. First we were told the Muslim Brotherhood would contest only a third of the seats in the Egyptian parliament, just to ensure they had some representation in the legislature among all those students, women, and Copts. Then we were told it would be half the seats, but don't worry, they had no plans to contest the presidency. Next we were told they were taking a run at the presidency, but most unlikely to win compared with all those far more appealing time-serving hacks from transnationalist bureaucracies like the Arab League and the International Atomic Energy Agency who were itching to jump in the race. And finally, after the Brothers took the presidency and swept the parliament, we were assured that they could govern only in a finely calibrated balance of power with the secularist military.

Great Moments in Government Regulation

Massage a Horse in Nebraska, Go to Jail for Up to 20 Years

By Institute for Justice editors

Massage a horse, go to jail.

That’s the absurd fate Karen Hough could face if she wants to continue her business in Nebraska. A certified instructor, Karen has been massaging horses for years. Massaging a horse is believed to deliver many health benefits, including relieving tension, improving circulation, and alleviating muscle fatigue.

Earlier this year, she applied for a license in equine massage but was told only veterinarians can become licensed. A 2007 memo from Nebraska’s Board of Veterinary Medicine and Surgery asserted that “no health professional other than licensed veterinarians and licensed veterinary technicians may perform services/therapies on animals.” This means Karen would need to spend thousands of dollars and seven years of her life just to acquire a government permission slip to do what she’s been doing for years.

A few weeks later, she received a letter from Nebraska’s Department of Health and Human Services ordering her to “cease and desist” from the “unlicensed practice of veterinary medicine.” In Nebraska, continuing to operate a business without a license after getting a cease and desist letter is a Class III felony. So Karen could face up to 20 years in prison and pay a $25,000 fine. By comparison, that’s the same penalty for manslaughter in the Cornhusker State.

Blaze wakes Pakistan to industrial realities

Another dystopia going down the drain

By Syed Fazl-e-Haider

KARACHI - The deaths of 289 people in a fire at a garments factory on September 11 in Pakistan's southern port city of Karachi is the country's worst industrial disaster and biggest human tragedy in the country's industrial hub. (blaze-hit-karachi-garment)

On the same day, at least 25 people lost their lives in a similar fire at a shoe-making factory in Lahore, in Punjab province. The two fires laid open in brutal fashion the extent of violations of Pakistan's Factory Act 1934 and the country's inadequate labor laws, rampant corruption, and criminal negligence regarding safety standards and monitoring authorities. 

Not least, the incidents expose the racket of official regulation and inspection under which the number of illegal industrial units in Karachi has grown. Factories with no proper fire-fighting arrangements and safety equipment and non-implementation of safety standards have become killing chambers for workers and money-making machines for owners who pay kickbacks to corrupt authorities responsible for monitoring factory safety. 

Brother Obama, where art thou?

"Liberated" Libya is now warlord country

by Pepe Escobar

MENA (Middle East/North Africa) is on fire. The diffuse rage - even if manifested by a tiny minority - is distinctly anti-American. Protests in Cairo have reached Sanaa in Yemen and even Bangladesh. The administration of US President Barack Obama is perplexed beyond belief. There will be revenge. What's really going on? 

It does not matter whether that infamous, crude, made-in-California anti-Islam and anti-Prophet Muhammad flick - actually financed/produced by an Egyptian Christian Copt and American protestants, instead of a non-existent Jewish real-estate developer - was just a pretext that led to the killing of the US ambassador in Benghazi and the protests in Cairo and beyond. Let's try to identify the consequences. 

The militia ballet
The strategic target of the Salafi-jihadis who killed the US ambassador in Benghazi was to torpedo the (already shaky) Obama-Muslim Brotherhood alliance. 

Imagine if that had happened in Syria - or with a visiting US diplomat to Iran, for example; Pentagon-based revenge already would be in effect. US consulates were never attacked when Colonel Muammar Gaddafi was in power in Libya; it happened under the watch of a "NATO rebel" regime fully sponsored by Washington. 

Libya is now a militia hell - from neighborhood-watch outfits to mini-armies. They won't disarm. They refuse to be part of government security forces because their logic is tribal. They're fighting one another. No weak central government in car-bomb-infested Tripoli will rein them in. 

Sweden: Conservatopia

The surprising ingredients of Swedish success – free markets and social cohesion

The provocative Executive Summary of a paper by Nima Sanandaji, who according to his bio is a Swedish author “with a Kurdish Iranian background.”

The surprising ingredients of Swedish success – free markets and social cohesion:

• Sweden did not become wealthy through social democracy, big government and a large welfare state. It developed economically by adopting free-market policies in the late 19th
century and early 20th century. It also benefited from positive cultural norms, including a strong work ethic and high levels of trust.

• As late as 1950, Swedish tax revenues were still only around 21 per cent of GDP. The policy shift towards a big state and higher taxes occurred mainly during the next thirty
years, as taxes increased by almost one per cent of GDP annually.

• The rapid growth of the state in the late 1960s and 1970s led to a large decline in Sweden’s relative economic performance. In 1975, Sweden was the 4th richest industrialised country in terms of GDP per head. By 1993, it had fallen to 14th.

• Big government had a devastating impact on Intrepreneurship. After 1970, the establishment of new firms dropped significantly. Among the 100 firms with the highest
revenues in Sweden in 2004, only two were entrepreneurial Swedish firms founded after 1970, compared with 21 founded before 1913.

Marx, Lenin and Hoover

Two thinkers offer their perspectives on what’s wrong around the world

By Evan Simonoff        

When a California bond trading magician and a conservative Texas financial writer open general sessions at a financial conference by quoting Lenin and Marx, one might presume something is rotten in more places than the state of Denmark, where one-year government bonds recently boasted negative yields. But they are exactly whom online newsletter editor John Mauldin and DoubleLine Capital CEO Jeffrey Gundlach quoted at the third annual Innovative Alternative Strategies conference in Denver in late July.

Both of these two serious thinkers addressed a series of issues that have come to dominate the national dialogue, offering different perspectives on what is emerging as a general consensus that something is profoundly wrong. For starters, the average American male has seen his real income decline since 1973.

Though Marx died in 1883, he lived long enough to grow displeased with how many were interpreting his ideas. Explaining how frequently human events can turn in a direction very few expect, Gundlach quickly moved on to another discredited economic practitioner, Herbert Hoover. In his memoirs, the former president described the world’s shock at the outbreak of World War I. After 50 years of peace, the “evil spirits” that erupted in 1914 caught many sophisticated observers, Hoover included, off guard.

Ben Bernanke As a Child Preparing for His Future Role as Fed Chair

Qe Forever

Harmless as an enemy and treacherous as a friend

An act of war or a movie protest

By MARK STEYN

So, on a highly symbolic date, mobs storm American diplomatic facilities and drag the corpse of a U.S. ambassador through the streets. Then the president flies to Vegas for a fundraiser. No, no, a novelist would say; that's too pat, too neat in its symbolic contrast. Make it Cleveland, or Des Moines.

The president is surrounded by delirious fanbois and fangurls screaming "We love you," too drunk on his celebrity to understand that this is the first photo-op in the aftermath of a national humiliation. No, no, a filmmaker would say; too crass, too blunt. Make them sober, middle-aged Midwesterners, shocked at first, but then quiet and respectful.

The president is too lazy and cocksure to have learned any prepared remarks or mastered the appropriate tone, notwithstanding that a government that spends more money than any government in the history of the planet has ever spent can surely provide him with both a speechwriting team and a quiet corner on his private wide-bodied jet to consider what might be fitting for the occasion. So instead he sloughs off the words, bloodless and unfelt: "And obviously our hearts are broken..." Yeah, it's totally obvious.

The irony is clear

Weeks before U.S. election, Mideast gives Obama perfect storm

By Peter Apps and Matt Spetalnick

An eruption of violent unrest across the Middle East is confronting President Barack Obama with the most serious challenge yet to his efforts to keep the Arab Spring from morphing into a new wave of anti-Americanism - and he has few good options to prevent it.

Less than two months before the U.S. presidential election, a spate of attacks on embassies in Libya, Egypt and Yemen poses a huge dilemma for a U.S. leader who took office promising a "new beginning" with the Muslim world but has struggled to manage the transformation that has swept away many of the region's long-ruling dictators.

On top of that, even as he tries to fend off foreign policy criticism from Republican rival Mitt Romney, Obama is grappling with an escalating crisis in U.S.-Israeli relations over Iran's nuclear program and increased bloodshed in Syria, where President Bashar al-Assad has defied international calls to step aside.

Obama's Middle East woes deepened this week with a series of mob attacks on U.S. diplomatic compounds and the killing of America's ambassador to Libya. Demonstrators were incensed by a U.S.-made film they consider blasphemous to Islam.

Kicked in the teeth

Voting Is A Sap's Game

by James E. Miller

With the U.S. presidential election right around the corner, Americans are getting themselves all in a tizzy to go to the voting booth and remind the holders of public office who they work for.  Because it’s a presidential election, the stakes are looked to as even higher as the media paints the contest between Barack Obama and Mitt Romney as a conflict with extreme consequence.  The statist tramps known as mainstream journalists are championing the race as a great ideological battle.  The fact that the candidates differ little on policy and vision is purposefully avoided.  To the political and intellectual establishment, the show must go on.  Their way of life depends on it.

Already in both the Republican National Convention and Democratic National Convention the party elites took the opportunity to trample on the democratic virtue of dissent.  On the Republican side, Ron Paul supporters were effectively told to get lost as party leaders rammed through a rule change to make it next to impossible to nominate a pure grassroots candidate.  The Democrats, per usual, were no better.  When it came time to vote on whether the party platform should contain language on God and ensuring Jerusalem remains the capital of Israel, the voice vote was disregarded and the language was kept.  And as a Fox News showed, the decision was predetermined by the teleprompter.  In one fell swoop, both of America’s major political parties demonstrated that their own members can’t be trusted.  The irony is that this practice of top-down dictation is wholly reflective of the reality of governance.

"Obama's Middle East Policy Is in Ruins"

Germany Opines on the obvious

Since the US media appears to have little if anything to say on the topic of the global anti-Pax Americana insurrection that does not devolve purely along pre-election party lines, here is what Germany thinks.

From Spiegel

US embassies in the Muslim world were on high alert Friday following days of violent protests against an anti-Islam film. Germany, too, closed several embassies in fear of attacks. Some German commentators argue that the violence shows that Obama's Middle East policies have failed.

After days of protests over an anti-Islam film, American diplomatic missions in the Middle East and North Africa were braced for further violence after Friday prayers. The US put its overseas missions on high alert.

Germany has closed its embassies in a number of Muslim-majority countries in fear of attacks. "We are observing how the security situation develops with great attentiveness and we have increased security precautions at a number of foreign missions," a spokesman for the German Foreign Office told SPIEGEL ONLINE. Embassies in North Africa, Afghanistan and Pakistan are believed to be among those affected.

The spokesman said that the missions would only close on Friday, though. Other German institutions such as aid organizations have also been urged to increase security precautions, he said.

The Restaurant At The End Of Europe

The hoot and the holler resounding from Vienna to Amsterdam

By Mark J. Grant
This is the name of the restaurant at the end of Europe; the Palace of the Wizard. This is where I sit and watch the long story unfold until the day when the folding stops and the fabric tears. After almost forty years on Wall Street I understand both the joke and the punchline and you cannot pay off old debt with vastly greater amounts of new debt without consequences and, I assure you, there will be consequences. This paradigm does not work for a corporation or a sovereign nation and the borrower is eventually brought to his knees by the sheer weight of the debt that he has laden upon his back. The interest rate paid is only part of the equation with the rest being the absolute size of what is undertaken.

Germany, with a GDP of $3.55 trillion cannot hope, in any terms, to support a European construct that is over $15.2 trillion without the hammer of fiscal reality at some point whacking her backside with a very loud bang. The remaining economically sound nations of the Netherlands, Austria, and Finland also do not have the capacity or the desire, according to the Prime Minister of the Netherlands and the Finance Minister of Austria, to support the rest of the Continent that is sliding into the pit of fiscal morass. “No more money for other nations” is the hoot and the holler resounding from Vienna to Amsterdam.