We Wish

David Azerrad from Hillsdale College has an interesting article in the What Is American Conservatism series at The American Conservative.   David’s title says American Conservatism Is Fiddling While Rome Burns.  It is a very strange title.  Is there a reason why David cares about Rome? We got the link from Paul Mirengoff at PowerLine, and like Paul, we find it interesting but lots to disagree with.

Our biggest disagreement comes in David’s second paragraph where he is describing the current state of conservatism:

Conservatism is the seven cheers for capitalism and the deafening silence on demographic change, feminism, and corporate malfeasance. It’s the same tired cast of speakers blathering about limited government almost a century after the New Deal. It’s the platitudinous Reagan quotes and the worn-out Buckley anecdotes. It’s the mindless optimism and the childish exhortations—if something can’t go on forever, it won’t!  [Emphasis added]

We wish there were seven cheers for capitalism.  As the forgotten and ignored capitalistic orphans we would settle for a single cheer.  As we have said before, we want the whole loaf of capitalism but we would take a half a loaf.  We have settled for The Donald because we get a single slice: The heel.  Our most important priority capitalism and the related free markets,  free trade, and rule of law are not a priority for any politicians and few pundits.

Then there is the non-deafening silence.  As a Mark Steyn fan, we get as much demographic change as we can bear.  We are not at all sure how David came to his opinions in the first sentence above.

What we think that David and other folks need to recognize is that each person on the right has a list.  These lists have lots of overlap.  The problem is that our priorities are very different.  We support The Donald in this year’s election because we are hoping for a slice and are almost sure to get a few crumbs from him.  Looking at the candidates in 2024 like Josh Hawley and Marco Rubio we are not sure we will be willing to do that.  We think they need us for a majority.  David and others seems to disagree on that point.  We shall see.

Capital Idea Indeed!

Four cheers for The National Review and National Review Institute they have launched Capital Mattersto the joy of us capitalistic orphans.  For those of you that might have missed a MWG post, we refer to ourselves as capitalistic orphans because supporting capitalism is rarely a priority for politicians.  It is a first priority for us.  Capital Matters is:

a new initiative on business, finance, and economics from a National Review sensibility.

When headlines are going to Climate Change and the ironically named organization Black Lives Matter it is good to start serious discussions on serious stuff from the details of the deficit and entitlements to how to encourage capitalism.  We hope that Bjorn Lomborg has put the last nail in the Climate Change activist’s coffin with

How climate change alarmists are actually endangering the planet

But we really doubt it.  We are sure that when Bill Barr (via PowerLine) pointed out the obvious:

When a community turns on and pillories its own police, officers naturally become more risk averse and crime rates soar. Unfortunately, we are seeing that now in many of our major cities. This is a critical problem that exists apart from disagreements on other issues. The threat to black lives posed by crime on the streets is massively greater than any threat posed by police misconduct. The leading cause of death for young black males is homicide. Every year approximately 7,500 black Americans are victims of homicide, and the vast majority of them –around 90 percent – are killed by other blacks, mainly by gunfire. Each of those lives matter[s].

that it won’t yet make an iota of difference.  So there will still be plenty of silly and/or trivial issues and ideas floating around but you can go to Capital Matters for important issues and we will have more to write about.  Everybody wins.

Risk Aversion I

We model investment behavior based on risk and return.  Return is the expected mean or average return and risk is the variance of possible returns.  Most models assume that people like higher returns (duh!) and lower risk.  We use the term risk aversion to describe the latter.

Kevin D. Williamson, writing in the current version of The National Review, describes how Americans tend to be less risk averse than other countries.  He nails it right from the start:

In the United States, the road to economic success is open because the road to economic failure is open.

That’s the basic American proposition: We have an unregimented business culture, easy credit, a forgiving bankruptcy regime, and a “hold my beer” model of entrepreneurship.

He recognizes that success and failure are both risks.  It is true that individuals often have different reactions to downside risk and upside risks.  We see them buy insurance and lottery tickets.

Of course you should read everything that Kevin writes.  Have you signed up for his Tuesday newsletter?

We would like to discuss professors, because they come up in Kevin’s article, and two exceptions to Kevin’s thesis.  Professors will take awhile so we will use a second post to complete that discussion.

We agree with Kevin that America helps make Americans less risk averse than other developed countries.  We see two exceptions: sports and public safety.  In almost every other country sports use a relegation and promotion system.  America has sports monopolies.  Even if you are as poor a leader as Bob Quinn, the Red Sox still stayed in the American League and he probably made money on the deal.  In England, France, or Spain a team like that would have fallen to the third tier and have little value.

Before COVID-19 we traveled a fair amount.  Comparing the Ciffs of Moher, the Castles of Scotland and other international destination to American destination like our National Parks it is clear to us that America is more risk averse in terms of public safety.  Perhaps you milage will vary but we see America has more restraints and more warning signs than any other developed country.

Perhaps, the American litigation system explains our attitude towards public safety while the nature of American capitalism, as Kevin explains, accounts for the dynamic of American capitalism.

 

 

Fighting The New Scams

Eugene Scalia is very kind in his WSJ opinion piece.  He says that investors are concerned about the environment, social factors, and corporate governance (ESG):

Many investors understandably want to do good while also doing well. But the standards for ESG investing are often unclear and sometimes contradictory.

We don’t understand but we are capitalistic orphans so we care about returns.  In one of the huge non-surprises:

Other studies show that when investments are made to further a particular environmental or social cause, returns unsurprisingly suffering

Let’s be honest.  It is a scam.  Entities promise to maximize something other than returns so that investors won’t leave because of low returns.  And, of course, it is very difficult to measure ESP as Eugene documents.  A simple question: Are wind farms good for the environment?  Are the dead birds and the rare earths used worth the returns to the electrical grid?

The excellent news is that The Donald’s administration is not buying.  The US Department of Labor says that fiduciaries have a primary responsibility to current and future retirees:

The department’s proposed rule reminds plan providers that it is unlawful to sacrifice returns, or accept additional risk, through investments intended to promote a social or political end.

Individuals can fall for ESG investing.  It is their money.  We support folks being able to sell ESG investing.  We would never recommend buying such products but if folks want purchase them then we won’t stop them.  What we want to do is stop folks from being forced to invest in ESG.  One of the things the proposed rule will do is help to give the fiduciaries some backbone when the activists come for them.

We never suggest that The Donald is anything more than a net positive compared to the alternative in 2016 and The Frontrunner.  Lots of folks point out The Donald’s negatives.  We are reminding you that Eugene and Betsy are part of that net positive.

Conservatism: Big C And Little c

In the UK the the Conservative Party or Tories or legally, The Conservative and Unionist Party is comparable to the GOP. There is substantial debate over what a conservative is in the US.  We expect there is in the UK.  In the UK it is clear who is a Conservative but both countries debate who is a conservative.

Sidebar: We often remind folks of the important of expertise.  We do not suggest that we are experts on UK politics.  We do, however, know a bit about the difference between political parties and political viewpoints.  End Sidebar.

In the US, The Donald and his followers are trying to claim the conservative mantle while folks on the left decide if they want to be progressives, liberals, or socialists, or even democratic socialists.  In discussing the UK we must be more careful of capitalization because the Conservatives are a major political party.

What brought this to our attention is an article in the UnHerd by Matthew Sweetwith the begging the question title of, “Since When Did Tories Care About Workers?”  It takes a few paragraphs but Matthew gets to his bias:

Work is a four-letter word. Worker has six, but it’s still one that sounds surprising when uttered, enthusiastically, by a figure whose political home is not on the Left.

Matthew is faux amazed that Boris Johnson, the current Conservative Prime Minister has said nice things about workers.  We don’t understand.  We think every elected official in every country (wow! we went out on a limb there) has praised its workers.  Matthew then wanders off to complain about the left: Stalin, Hitler, and Franco before coming back to the UK:

These are the new Tories. This is the new normal. Thatcher’s children, talking like Clem Attlee was their real dad all along.

Margaret Thatcher was a Conservative and a conservative.  She brought the UK back to life as prime minister from 1979-90.  Clement Attlee was a Labour party leader (think Democrats in the US although the UK is not exactly a two party country) and socialist who led the UK’s disastrous foray into socialism after WWII.

Our question is: did Margaret or Clement care about work and workers?  The left has a history of caring about workers in certain industries.  Back in Clement’s time it was the unionized workers and especially those in nationalized industries.  Clement favored certain workers but not others.  The rest suffered through high prices, high taxes, and poor quality.  Currently in the US the left focuses on unionized teachers.

A basic tenet of conservatism is being pro-work.  We don’t see why Matthew brought that up.  Encouragement of work is solely a conservative virtue.

Margaret is eligible for membership as a capitalistic orphan so she is pro-work and pro-consumer.  She wants to reduce regulation and taxes to give folks an opportunity and incentive to work.  Of course, all workers are consumers so she cared about workers in general.  But she did not look to help workers in nationalized industries to continue to collecteconomic rents.

Both parties care about workers in different ways.  Margaret cared about creating opportunities for workers and consumers.  Clement cared about certain workers in certain industries.  We strongly favor Margaret’s system.

 

The Orphanage Strikes Back

In our administrative duties at the university we often found it useful to have a third person in the room during contentious meetings.  The reputation of faculty members for nasty rhetoric is not unwarranted.  The faculty lounge was Twitter before it was invented.  The third person in the room would deflect the rhetoric because we would not be forced to respond directly to the rhetorical charges.

We felt that way about Ryan Streeter’s “The New Forgotten Man” in the National Review.  From the title on down it is, at best, a misleading criticism of capitalism and what us capitalistic orphans stand for.

Sidebar One: We know Ryan’s article was a long time ago pundit-wise.  It was in the 3/9/20 issue.  We wanted to try and be as calm as possible.  End Sidebar One.

Ryan’s title, of course, is from Amity Shlaes’ great book.  You should read it.  Amity is welcome at the orphanage.  Here is a summary from Wikipedia:

The book begins with an anecdote of the 1937 recession, eight years after the Depression began, when Roosevelt adopted budget-balancing policies indistinguishable from the stereotype of what Hoover supposedly did. Shlaes presents her arguments in part by telling stories of self-starters who showed what the free market could have accomplished without the New Deal.

A better title for Ryan would be forgetting the forgotten man.  Ryan starts out well when he is first describing the forgotten man as:

These are the shop owners, self-employed workers, small-scale entrepreneurs, and salaried employees who save their money and improve their credentials hoping to branch out and move up. They have long been at the heart of American economic growth, collectively creating massive numbers of jobs every year and keeping the American dream alive for themselves and others.

It is nice to see Ryan agree with us that  innovation and economic growth are important.  This clip would make him welcome at the orphanage.  Unfortunately, for us orphans, he soon reverses course and smears the orphanage by saying:

The aftermath of the Great Recession, followed by Trump’s 2016 election, produced a new group of pro-worker conservatives [let’s call them reform cons] who advocate a combination of protectionism and industrial policy, expanded wage subsidies, new forms of unionizing, and new family benefits such as paid parental leave and more generous child tax credits and cash allowances. They have arisen in opposition to those—let’s call them the “traditional Reaganite conservatives” [the capitalistic orphans]—who endorse low taxes, limited government, and other policies [we are unsure what these other policies are but the previous sentence suggests free markets and free trade] that favor CEOs and managerial elites ostensibly in the name of economic growth.  [Emphasis added]

This is the paragraph that took us weeks to get over.  We haven’t read every issue of the National Review but we doubt there was ever a paragraph quite this misleading in the history of that august journal.  And, yes, that is our reaction after calming down.

Sidebar Two: Reagan, like all politicians, is not a pure free marketer.  He is, however, fairly regarded as a free marketer despite his occasional lapses.  We think Ryan fairly identifies him and his followers as free market and free trade folks we call capitalistic orphans.  End Sidebar Two.

The third person we have invited into the room is Richard M. Reinsch II from National Affairs.  He sets the story straight in his published comments from debating another reform con,  Oren Cass:

We are all consumers, but we are not all manufacturing workers [or any other favored group]. The need to serve the consumer is key to the dynamism and creativity that epitomizes a market economy. While meeting this need can be challenging — and the price can be steep for those who fail — a market economy nonetheless provides the best jobs program on offer. After all, the choices of consumers determine which products or economic actions will work to our comparative advantage and which will not. Through this process of discovery, investors ultimately learn where to invest, workers learn where to work, and producers learn what resources they will need to bring goods and services to the market. This is how millions of new jobs are created — jobs in industries that previously did not even exist. This is not a neoliberal conspiracy or a degraded form of American consumerism, but a crucial feature of how trade increases the wealth of a country.

As Richard’s comments show, Ryan mischaracterizes both his group, reform cons, and the orphans in one short paragraph.  The reform cons are not pro-worker.  They are strongly supportive of a few workers while harming most of them.  They also have little to offer the entrepreneurs that Ryan extolls in the first quote.   Protection and industrial policy hurts most workers while helping some.  Contrary to what Ryan says protectionism and other market restrictions are exactly what the CEOs and managerial elite want.  That is one of the reasons they spend so much money trying to influence governmental policy.

Free markets and free trade is what consumers want.  CEO’s and the managerial elite fight against them both because they don’t want it.  Capitalistic orphans want free markets and free trade because it helps consumers.  Yes, it also leads to economic growth that Deirdre reminds us is crucial to our current well-being and that of our children and grandchildren.  We should see the reform cons like Ryan for what they are.  They are trying to build a majority by giving big benefits to some while hoping that the damages to the majority will go unnoticed.  It is an old formula and one that, unfortunately, often works.

 

 

 

As We All Know

As we all know capitalism is the solution to most problems.  COVID-19 is a big problem.  You probably know about the Pillow guy, Michael Lindell:

My Pillow CEO Michael Lindell, a self-made former crack addict, is going to transform 75 percent of his manufacturing capacity to make 10,000 cotton face masks per day by the end of the week, ramping up production to 50,000 a day in a month.

If you don’t you should read the rest of the storyby David Harsanyi at NRO.  Of course, Michael is being pilloried in the press because he said something nice about The Donald and his contributions get ignored except on NRO.  Oh, and NRO is doing a fundraiser.  It is great to help out friends in trouble.

But Rick Kline, jr. at the WSJgives us many more examples and details.  You should read the whole thing twice but it is behind a pay wall so here is the headline and subhead: “Manufacturers are already fighting the corona virus; They don’t need Washington to tell them to pump out ventilators.”  Here is a paragraph of examples Rick gives beyond David’s Michael:

Mr. Trump’s one formal use of the act so far was also predated by private ingenuity. The president last Friday ordered General Motors to produce ventilators, saying that the automaker was “wasting time.”GM had already voluntarily teamed up with Washington-based Ventec Life Systems, offering its manufacturing resources to help Ventec rapidly scale up ventilator production. Businesses ranging from household names—GM, Ford, Honeywell and 3M—to thousands of lesser-known manufacturers are working to meet America’s needs swiftly and efficiently.

Rick explains why, with an example, that capitalism is the solution:

These efforts are too sophisticated to be directed from Washington, as they require contributions from across the supply chain. When a key component was holding up production of Ventec ventilators, a die-cast shop in Minneapolis handed the project over to a shop in Wyoming, Mich., that has since been working to get the job done—condensing the part’s turnaround from the usual eight weeks to five days. In another supply-chain success story, a Michigan-based plastics processor rushed to modify a line that was making auto-seat covers to produce and convert film for nonsurgical isolation gowns.

There are things that government can do.  Mostly they can prevent things like concerts and baseball games.  They need to let capitalism do what it does best.  Make stuff.  We agree with Michael that it is a good time for The Donald to be president.

 

What To Think About

We rarely find common ground with David French.  He likes basketball.  We don’t care about it.  He is an avid theist.  We are much more low key about being an atheist.  He is a never The Donald.  We are OK with The Donald.  But the other day in French Press (it is a newsletter but this link might have it) he had an interesting message from a friend that was very interesting.

Covid-19 is like that—a small “Memento Mori” inserted into the corner of great prosperity and comfort. It is the skull that is warning us, “Think on this. Think hard.”

Of course, he and his friend are theists so they are thinking about Lent, God, and so on.  We are not.  We like it because of two very different things.  First, we are in great prosperity and comfort.  We are there because of capitalism.  We need to maintain it to prosper after COVID-19.  Second, we need our government to think hard about other skulls.  Our federal government needs to be better prepared for the next VID wherever it comes from.  Our federal government should be worried about other big dangers like planet killing asteroids.  It should be less worried about common issues like obesity where the government’s efforts are redundant.  Think hard and throw deep should be two mantras for our federal government.

Fighting Dishonesty And Foolishness

Fighting socialism is a battle that is never won.  The following post came up on Facebook.  The format of the post would not allow copy and paste so we have tried to reproduce it exactly but typing is not our best skill.  We have bolded items that were in red in the original.  Items in [] are our comments.  The opening post was:

And nobody is advocating Communism. [We’re not sure but we know that The Bernie is a big fan.]

Then there was a link to this post:

This explains the differences perfectly! Spread the word to your non-believer friends/acquaintances.  It needs to perpetuated en masse …

The this is:

Socialism: The government owns most of the major industries. This is an extreme system that seems to fail. [To be more precise: The government owns all the means of production and this system always fails.]

Corporate Socialism: (our current system) The government mostly benefits wealthy corporations.  Most major industries are privately owned (capitalism),  but still receive massive handouts, bailouts [Bankrupt corporations are not wealthy], and other benefits at the expense of the tax payer. [it is important to remember that the poor pay little in taxes and the rich pay large amounts.] It is driven by the corporations’ ability to influence the laws with large amounts of money that results in legislation that favors their ability to make even larger amounts of money.  In this system, the wealthy become more wealthy at the expense of the lower classes.  [Well that is untrue]  This system is essentially a Plutocracy (ruled by the wealthy).

Democratic Socialism: The government mostly benefits the citizens.  [Well, some of them.]  Most major industries are privately owned (capitalism). but they have to stand on their own without handouts from government. [The previous sentence has to be among the most dishonest ever written. The only way to to Green New Deal is extremely large handouts.] The tax burden previously funneled to the wealthy corporations is used to improve the lives of citizens instead.  [Well, at best some of them.  You will need to be in the 51 percent if this is going to be democratic.]  This enables the government to fund improvements to public services such as: Police, Firemen, Libraries, roads and Interstates [Ah, good to see they included a federal item] , Education, and Healthcare.  This system is driven by the people working together and lifting each other up.  In this system the middle class thrives and poverty decreases [as much as under capitalism?] .  This system is more Democratic (ruled by the people) than our current system.

Here is a link to The Bernie’s proposals.  The paragraph about Democratic Socialism is inconsistent with his proposals.  There are many but the first three are: Medicare For All, Green New Deal, and [free} College For All.   You should find out more but we will discuss them very briefly.  It is hard to think of three more divisive proposals.  Medicare for all means if you have insurance you lose it and get what The Bernie is willing to you.

The Green New Deal means among other things the end of fossil fuels.  Related to that The Bernie says:

Ensure a just transition for communities and workers, including fossil fuel workers.

How do you think that will work?  We don’t think it will happen but if it were to happen we would expect substantial violence.  The question that socialism almost always comes to is: will the troops fire on other citizens?

Last is [free] College For All.  Do you think everyone should go to college?  Do you think it should be free?  If it is who does it benefit? Who will it benefit the most? We know the answer to the last two: The wealthy.  It is a very odd way to help the poor.

Become informed and spread the word. The good news is that nominating The Bernie will lead to many MWG posts.  Capitalism works and socialism doesn’t  It doesn’t matter what modifier you attach to socialism.  It is a perennial bad idea.

 

Two Cheers For Nikki

We agree 100 percent with Nikki Haley’s title at the WSJ, “This Is No Time To Go Wobbly On Capitalism.”  We also love the connection to Mrs. Thatcher in the title.  Us capitalistic orphans think that there never is a time to go wobbly on capitalism.  We like her history and her criticism of business.  We do, however, have a couple of bones to pick with Nikki which is why we can only give her two cheers.

First, is her discussion of income inequality.  She says:

Finally, it’s true that income inequality exists [in a capitalistic system]. But that’s infinitely better than the alternative. Under socialism, everyone is equal—equal in poverty and misery—except for those who control the government.

Yes, she is right that income inequality exists in a capitalistic system.  In a capitalistic system income is connected to what you create.  It is not connected perfectly and you might not like what the market values, e.g., the Kardashians.  She is wrong that everyone is equal in a socialistic system.  Inequality is not limited to those who control the government.  The difference is that in a socialistic system income is not connected to what you create.

Second, we do not see the current president as a capitalistic orphan.  Nikki says:

The socialist and hyphenated capitalist “solutions” will make these problems worse and lead to less freedom. The better answer is to double down on capitalism. [The Donald] has done that. Unemployment is at a 50-year low. Wages are rising at the fastest rate in a decade. Welfare is shrinking. Millions of Americans have found good new jobs. The stock market boom is helping millions of retirees. It’s time to embrace capitalism, not abandon the values that make America the envy of the world.

We entirely agree with the three sentences that are in bold.  What we don’t agree with entirely is that The Donald has done that.  He has made progress on corporate taxes and regulation.  He has made steps backwards on international trade and other areas. On the other hand, compared to his immediate predecessor, his opponent in 2016, or the folks running for the current Democrat nomination for president he is by far the best choice.