The View From 1776

Responding to Reactions To The Fed’s QE2, a reader commented:

That statement [“We didn’t get here because some politician decided to invest in the latest politically correct fad. We got here because we made it attractive for individuals to invest their capital here and because our policies provided a stable environment in which to do so.”] misses the deeper point of WHY it made economic sense to invest here - and part of the reason for our current decline.  In the recent past we were the world leaders in education and scientific innovation.  Over the last decade we have dropped that ball, letting our leads in these fields slip to 10th or 12th in the world.  We focused instead on financial gimmicks, convincing ourselves that churning financial instruments constituted “production” and “Gross National Product.”

Obama has attempted to focus our attention again on the importance of education and science, but is receiving little help from across the aisle.

A few reactions:

First, the force that pushed performance of American education off the cliff is the 1960s advent of militant, socialistic teachers’ unions.  Those unions would have had little nationwide effect absent Federal funding and Federal interference in local affairs.  Obama’s aim to augment Federal control over education strengthens anti-American teachers’ unions and diminishes prospects for the future well being of the nation.

Teachers’ unions, avidly supported and courted by the Democrat/Socialist Party, prefer to have students poorly educated, rather than allow incompetent teachers to be fired.  Teachers’ unions focus upon enlarging their membership rolls and upon milking the public taxpayers to fund gold-plated benefits packages.  More money is spent for overhead costs to meet Federal mandates than is spent upon teaching essential, basic subject matter.  Diversity and multi-cultural education have eliminated performance standards; feel-good teaching methods guarantee mediocrity.

American education has degenerated, to a dangerous degree, into proselytizing callow students for the secular religion of socialism.  Under socialism’s world-government paradigm, students are taught to be ashamed of our history, to redistribute our wealth to other nations, and to view national interests of foreign powers as equal to or more important than our own.  Attention is focused on objects of pagan Gaia worship, such as wasteful and ineffective recycling and alleged man-made global warming.

Second is the notion that businesses find investment less attractive in the United States because “we have dropped the ball” on education.  The commenter may not have meant it in that way, but his choice of words unconsciously exudes the liberal-progressive predisposition to collective action, which presumes that only the all-powerful political state has the capacity or knowledge to improve people’s living standards.  Standards were considerably higher before the 1960s, when education was funded at the local level and controlled by individuals known to and accountable to their communities.

The “economy” is a conceptual, statistical abstraction.  Reality is that productive and beneficial economic activity - let’s call it private business - originates as individual entrepreneurship, either within a large company, or in the proverbial garage (viz. Apple, Hewlett-Packard).

The anti-individual, collectivized Japan, Inc. model, beloved of President Clinton’s early advisors, led to financial collapse and domestic economic stagnation in Japan.  Under the Japan, Inc. model, MITI, the powerful government bureau, along with Japan’s giant banks and its giant ziabatsu / keiretsu industrial, financial, and commercial conglomerates, had final say over business investment decisions.  Shortly after the start of President Clinton’s first administration, Japan suffered a business and financial meltdown.  It then became apparent that centralized, politically-controlled direction of economic activity promoted very bad investment decisions.  Bureaucratic intellectuals, isolated from the real world of economic competition, are no match for the hundreds of millions of individual adjustments to changing prices and conditions, adjustments that constitute a capitalistic marketplace.

Japan, Inc. is the direction of Obama’s take-over and regulatory control of major industrial corporations and the banking industry.  Promoting green jobs or green products by regulation, government subsidy, or tax favoritism is the equivalent of pouring money down a rat hole.  GM’s money-loser Volt is an example.

Federal interference in education since President Johnson’s Elementary and Secondary Education program (1965), far from improving the outlook for new business investment here, has made such investment steadily less attractive.  Students coming out of our educational system are less competent and less productive than students before the 1960s. 

In addition, ease of forming job-creating businesses has been steadily constricted by ever mounting labor costs, millions of new government regulations, and extortionate class-action lawsuits by the Democrat/Socialist Party’s fund-raising subsidiary, the tort bar.  President Obama’s ideological commitment to man-made global warming, if fully manifested in Federal regulations and punitive taxes, will reduce our living standards to the level of the early 19th century. 

Since the 1960s, we have had two generations of students, the innocent victims of Federally directed education, who are ignorant of mathematics, economics, business, and American history.  Students are taught to believe that business is motivated solely by a lust to defraud and to harm consumers and workers.  President Obama and his wife continually condemn business as greed and urge students to enter public service.  Only working for the collectivized government is held to be admirable.

Our educational system is, in effect, training an army to combat private business and to smother individual initiative with the great gray blob that is government bureaucracy.

Business investment funds go where there is the greatest promise of secure and adequate return on investment, allowing for government attitudes, regulations, taxes, and socialistic labor union militancy.  Just as British investors in the 19th century poured money into investments in canals and railroads in the United States, because of higher returns here than in Great Britain, American companies are heeding Obama’s militant anti-business rhetoric and actions and moving where their capital is more welcome and less punished by government.