Thursday, September 23, 2010

Recent Exchange with Some Tea Party Friends on Facebook

My friend Mark Rennie recently posted a Tea Party-inspired quote on his Facebook page. I felt obligated to respond and subsequently had a very intense conversation with some of his Tea Party friends who I do not know in real life. I love the fact that we were able to have such a civil and polite dialogue, as opposed to the insult-hurling and shouting you typically find on political blogs and forums.

Mark Rennie: "If you would not confront your neighbor and demand his money at the point of a gun to solve every new problem that may appear in your life, you should not allow the government to do it for you." –William E. Simon

Tuesday at 7:35am ·

Niki-Nicole Mesco and 2 others like this..

Tuesday at 7:35am · Monte Collins: Amen Brother. Ready for some TEA?

Tuesday at 8:42am · Tom Freeman: Amen!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tuesday at 9:38am · Eric Forst:  Mark, I like that you and I can have a very civil dialogue on Facebook around our political differences. The problem I have with the Simon quote is that it implies that taxation with representation, which is what we have in our democracy, is somehow the same as pointing a gun at someone's head and asking for their money.

Tuesday at 10:06am · Mark Rennie: I see what you mean Eric. However, in today's political climate, I can say that I interpret and posted Simon's quote in the context that taxes and death are a given certainty. But to do so in the name of redistribution of wealth is of a socialist idealogy to which I am adamantly opposed. In this case, I see Socialsm/redistribution as the pointed gun.

Tuesday at 12:30pm · Monte Collins: We do not have taxation with 'equal' representation. We have taxation with selective representation and progressive redistribution.

If you want to be part of the select that is represented, either join a public employees union or hire a corporate lobbyist.

Tuesday at 1:28pm · Eric Forst: We'll probably never agree on the extent to which we should have a safety net (Social Security and Medicare), welfare-to-work and strong public education that is equally funded in every district. I believe that not only can we have that, but we can also have market-based solutions for just about every other industry. In other words, I think we can have some social programs without become a Socialist country. In fact, the history of this country is limited government that steps up when needed and then dials it back. Here's a passage on this from a recent essay by David Brooks, a leading conservative commentator:

"The story Republicans are telling each other is an oversimplified version of American history, with dangerous implications.

The fact is, the American story is not just the story of limited governments; it is the story of limited but energetic governments that used aggressive federal power to promote growth and social mobility. George Washington used industrial policy, trade policy and federal research dollars to build a manufacturing economy alongside the agricultural one. The Whig Party used federal dollars to promote a development project called the American System.

Abraham Lincoln supported state-sponsored banks to encourage development, lavish infrastructure projects, increased spending on public education. Franklin Roosevelt provided basic security so people were freer to move and dare. The Republican sponsors of welfare reform increased regulations and government spending — demanding work in exchange for dollars.

Throughout American history, in other words, there have been leaders who regarded government like fire — a useful tool when used judiciously and a dangerous menace when it gets out of control. They didn’t build their political philosophy on whether government was big or not. Government is a means, not an end. They built their philosophy on making America virtuous, dynamic and great. They supported government action when it furthered those ends and opposed it when it didn’t.

If the current Republican Party regards every new bit of government action as a step on the road to serfdom, then the party will be taking this long, mainstream American tradition and exiling it from the G.O.P."

Tuesday at 4:00pm · Monte Collins: Eric, not sure about the validity of your American history or the NY times article but to your last point, it's not just the Repulican party that regards with suspicion everything government is doing right now.... it's the whole country.

I left the Republican party last year because I'm even suspicious of their actions. I regard them all as narcissistic elitists who enjoy creating problems so they can ride in and be the legislative saviors.

I understand the need for ebb and flow in government oversight and governance. However I don't think anyone can justify the outrageous intrusion into our daily lives in this moment in time. They like to spout 'social justice' but in the end it's just robbery with a fancy name.

Tuesday at 8:33pm · Eric Forst:   Monte, I agree both the Democrats and Republicans are awash with special interest money that causes a lot of policy to be made that is not in the public interest. As broken and corrupt as our government is, I'd rather reform it than try to starve the beast. I agree that the Patriot Act passed under Bush in 2001 was an enormous intrusion by government into our private lives, but I'm not aware of an enormous intrusion of government into my daily life at this moment in time. What intrusion are you experiencing? Raising the income tax rate on the top bracket to levels that are still lower than under Reagan hardly seems like robbery in the name of social justice. Someone has to start paying for our multi-trillion dollar wars that were put on the credit card. Remember all the debt that Bush handed to Obama? The stimulus debt was necessary to keep the economy from spiraling into a depression. I do not see it as an attempt to implement permanent socialism. There is no evidence that is what Obama or most Democrats want. In fact what Obama has consistently stated and what the small-business tax credits recently signed into law by Obama show, is that Obama and the vast majority of Democrats want private industry to thrive. And we know that business can thrive even when tax rates rise on the top bracket, just as they did in the 1990s, when the economy boomed and Clinton was able to hand a large surpluss over to Bush.

Tuesday at 9:15pm · Monte Collins:  Redistribution = social justice = progressivism = theft. Plain and simple.

Yes, wars and social programs cost money. However, why is it the top wage earners are solely responsible? Last time I checked, the upper income earners pay the most but take the least when it comes to those services (excluding military).

Also, the stimulus package that just added 2 trillion dollars to our debt had nothing to do with any of the above. It was a nice slush fund for Democrats and their union sidekicks.

Lastly, I'm a small business owner that is responsible to meet payroll every week. I'm not one of those too big to fail guys so it's pretty much up to me to make sure we survive. As the years have gone by, we have been visited and audited by more government acronyms (EPA, CARB, EDD, OSHA, AQMD, SCAQMD, DOT, ETC, ETC, ETC) than you can possibly imagine. What do they all have in common? Layers and layers of paid bureaucrats with nice fat pensions that will never ever go away. What else do they have in common? Everyone of them shows up to our door with an invoice in their hand because I need to meet another criteria just to stay in business. Maybe to some this is just the price of doing business but to me it's excessive and it's 'intrusive'. It's also about time it stops...

Then when I do squeeze out a profit, I'm told that I need to contribute more because it's good to spread the wealth around.

Sorry but I stand with Mark and John Galt on this one...

Tuesday at 9:40pm · Eric Forst:  All that regulation is intrusive and costly and your politics naturally reflect your economic interests. I do not own a business or have all that overhead to deal with, so am not feeling the yoke of government as much. But, as a Democrat, I do have a natural tendency to believe that some groups of people in this country deserve social justice, even if that means I have to pay more for it than people in lower tax brackets.

Tuesday at 9:57pm · Monte Collins:  I hear ya Eric. I guess I just have more of a 'don't feed the strays' attitude than most. My philosophy is to teach the man to fish rather than give him the fish.... if you know what I mean. I think a man has more dignity when he has the opportunity to provide for himself rather than relying on someone else.

Yesterday at 8:41am · Eric Forst: I totally respect your point of view on that, Monte, and I agree with that point of view. I just happen to think that vision can not only co-exist with some limited social welfare, but is in fact supported by it, especially if we could refo...rm the teacher's unions and make big investments in public education. I get nervous when I see taxes equated with robbery or theft, even if you are only talking about the portion that might go to welfare programs, as it paints a picture of the Obama administration as illegitimate or socialist, which it is not. As corrupt and bad as both parties may be, I think we have one of the best political systems in the world. I just think that if you reduce government's role to simply defense and criminal justice, then the most rich and powerful interests will continue exploit and manipulate the middle class to the point where we become a feudalist country. During the Bush years, with low taxes and much more limited government regulation and oversight, the middle class saw real wages decline from 2000-2008 for the first time in the last 60 years while the richest 2% got massively wealthier.See More

Yesterday at 10:08am · Earick Ward: Nobody opposes a "safety net". It's only that some have turned it into a "hammock" Further, on the taxation issue, the current structure penalizes achievement, and promotes non-productivity. Classes (in America) are not FIXED. Incentivize achievement and you will get achievement.

7 hours ago · Earick Ward:  Eric - you make a couple mistakes in your "During the Bush years" discussion.

1) Your focus on "real wages" is a common mistake. While wages may have gone down, buying power went up. Cost of goods were less, relative to wages. This meant ...that for every dollar you earned you were able to buy more.

2) Also, while wages were down, SIGNIFICANTLY more people had JOBS. This is spreading the wealth. All classes benefit(ed) when more people are able to draw a paycheck.

3) The richest 2% got wealthier. Again, that richest 2% is not a fixed class. Many more citizens moved into the 2% class, as a result of wealth development. Further, the JOBS issue outlined above is, in part due to the wealth that was created, which created JOBs in the middle and lower classes in order to service the needs of the upper 2%.

4) You reference limited government regulation and oversight. The regulations were in place. Unfortunately, they were tweaked to mandate that banks and lending institutions make loans to people, who had no means to pay back their loans. Under the guise of "everyone has a right to own a home" I seem to recall seeing testimony by Barney Frank, that he wanted to "roll the dice" one more time. Well, snake eyes.

Incentivize achievement and you will get achievement.

7 hours ago · Earick Ward:   Eric - Respectfully, please obtain a copy of F.A. Hayek's: The Road to Serfdom. Non-politically, he lays out the fallacy of Collectivism.

7 hours ago · Eric Forst:   Earick,

We hardly have a hammock. We only spend 2% of our budget on social welfare for working-aged citizens as compared to 7% in Western Europe. And, I do not adovacte that level of welfare. But I do think we should spend much more on publi...c education and "teach a man to fish." As for your other arguments:

1) "Real wages" is an economic term that measures the hourly wage adjusted against the cost-of-living. Yes, the cost of some goods like electronics declined, but housing, energy, healthcare and education all went up significantly, and overall, the cost-of-living rose relative to wages in the US, which is what I mean by a decline in "real wages." (

Here is a good article on the real wages trend:

It shows that Americans had to use credit cards and home equity lines of credit to maintain their standard of living during the 2000s and it also shows that real wages have declined and remained flat ever since the late '70s. So, I was factually wrong in stating that they declined for the first time in 60 years, rather they have been declining steadily since Carter, although they made a slight recovery under Clinton. Trickle-down economics of the past 30 years clearly hasn't worked.

2) While the unemployment rate was low in the 2000s, the underlying economy remained weak and job growth relative to other economic recovery periods was much weaker:

From the article:"In fact, the average job creation rate for 2006—6.7%—is the lowest annual rate on record going back to 1990". The underlying economy was weak as most job creation was related to the housing bubble -- construction and financial services industry jobs -- rather than to long-term sustainable industries like manufacturing, technology or alternative energy.

3) By all measures, the income gap in this country has been steadily widening since 1980:

4) Fannie Mae and Freddie Mac were simply one part of very big problem that involved many irresponsible moves by the entire banking and financial services industry. Their purpose was to make loans available to lower income Americans previously shut out of home-ownership due to racist lending practices, and it was the responsibility of banks and homeowners to manage their own lending and borrowing practices. The subsequent lack of enforcement of SEC rules by the Bush administration, predatory lending practices, corruption within Moody’s and the ratings agencies along with the 2004 removal of limits on banks' asset-to-borrowing ratio:

all accelerated the housing bubble and financial crisis. If anything it was the Bush Administration that promoted the culture of irresponsible lending and borrowing with its "Ownership Society" economic policy, not Barney Frank.

We have plenty of incentives for achievement in this country as income tax rates continue to remain at their lowest levels in 80 years (except for 1988 to 1990):

The bottom line for me is that I think government can be too big and it can also be too small, and we are currently coming out of a period in which government was too small. While Obama definitely moves things to the left, none of the policies he or the Democrats have implemented could be considered socialist. The stimulus was Keynesian (not socialism) and the health insurance reform bill has no public option and no new government run services. A moderate rise in income taxes for the top 2%, to what can still be considered a historically low level, hardly smacks of socialism. I think we need to avoid both Libertarianism and Socialism as each would be equally disastrous in its own ways. I simply want mainstream economic policies that are based on the historical evidence of what is good for the average, middle-class worker. I do not want radical income distribution or policies that destroy incentives for entrepreneurs and private industry. I believe America is at its best when we have an effective balance between government and private-industry.

3 hours ago · Eric Forst:  Respectfully, on Hayek: He wrote his book at a time when the ills of the Soviet Union and mid-20th century socialism were ghastly and current. I agree that unfettered collectivsim can lead to tyranny, but I also agree with this quote by George Orwell:

"collectivism gives tyrannical powers to a minority...[yet a] return to 'free' competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the state."

That is why I think we need to avoid going to far to the left or the right.

2 hours ago · Monte Collins:   Eric, there is no way we are coming out of a period where government was too small. Just because it was the republicans in charge doesn't mean it was smaller government. Government has been growing more than the private sector for quite some time. Look at Sacramento over the last 10 years. I believe between our two idiot governors (Davis and Swarzanegger) government has grown 40%. That's astounding when you consider that unemployment in the state is well over 10% in the private sector.

Government needs to be cut and cut substantially. Not just a reduction in the amount of increases (which is what usually happens). Some agencies need to be phased out and the ones that remain need to be audited and put under a strict budget just like the private sector. Maybe easier said that done but a necessity nonetheless...

Pensions need to be reformed and regulations need to streamlined and, in some cases, eliminated. Tax rates should be equalized with a flat tax rate for all which raises some lower income earners up to the fair rates that the upper income earners pay. Additionally, we need to get away from the desire to model ourselves after these semi-socialist european countries. It is wrecking them and it will wreck us.

I'm not for the elimination of government just a government that works for all of us and not just someone who relies on grant money, welfare, subsidies, or the SEIU.

about an hour ago · Earick Ward:   On Hayek: Yes, the timing of his writing was relative to the ills of the (Collectivist) Soviet Union, and Germany and China. That that lesson appears to have not (still) been learned is disappointing (and frightening).

On Orwell: Hakek points out (and I'll paraphrase) that in a Collectivist society, you have to entrust that those who control the distribution of resources have everybody's best interest at heart. What is everybody's best interest? Well, there is no such thing. Therefore (the Planner) must decide who's needs they will serve, and therefore who's resources and how much another must contribute. In every Collectivist society (to date) the production of resources gradually and necessarily is reduced. In America, going back to Governor Bradford in Massechussets, within a close-knit Christian collectivist society, they determined that production didn't meet the needs of society. Upon providing and securing the rights to private property and following free market principles, production thrived, to the betterment of society.

Orwell asserts that society (collectively) is tyrannical. Two problems with this. 1) I tend to believe that most people (in society) are good. Republicans donate a significantly greater amount of their (remaining income) to charity. 2) Society doesn't act in a collective manner. Individuals spend their money on things that they deem important to them individually. Even if the most generous, smartest planner were placed in charge of collecting of resources from one, in order to provide for another, the production of [one] would necessarily and certainly diminish.

You can have equality of opportunity, or equality of results. You cannot have both.

Redistributive policies will certainly make things more equal, at the expense of everyone.

about an hour ago · Eric Forst:   Monte: The facts contradict this statement you wrote: “Government has been growing more than the private sector for quite some time.” Here are the facts on the growth of California’s GDP compared to the California state budget. From 2000 to... 2010:

GDP in California rose by 45% - from $1.29 trillion to $1.87 trillion

California’s state budget and expenditures rose by 26% - from $78 billion to $98.2 billion

In 2010, state government is about 1/20th the size of private industry in California.

Where are you getting your information? If you look at some of the links I posted above, they show the history of our income tax rates, GDP growth and our state and federal spending and indicate that the size of government in this country is at a historical low-point.

Earick: We hardly have redistributive policies in this country. In fact, we are in fourth to last place on spending on social services as a percentage of net national income, and we are in third place, only behind Mexico and Turkey, for having the most inequality in our society:

Notice Mexico has the lowest spending on social services and the greatest inequality. Chart indicates we should increase social spending slightly and try to reduce inequality similar to levels in Canada or Australia, where they spend only slightly more than we do and have much lower inequality with very high degrees of first-amendment style freedoms and social mobility. Instead, the policies you advocate will likely make us more like Mexico.

All of the countries on this list (China and Russia aren’t on list) are able to spend more than we do on social services without becoming tyrannical dictatorships. So, some spending on social programs does not necessarily lead us to socialism or put us on the “road to serfdom.” Rather, I believe serfdom is more likely when government invests too little in public education and some basic social services. Respectfully, I think the vast majority will be living like serfs if we try to implement a Libertarian utiopia. I think the role of our government should be to keep the pendulum from swinging too far one way or the other.

Monday, July 5, 2010

Vote for Unemployment Benefits: An Open Letter to my Congressman, the Honorable Edward R. Royce, (R-CA)

To the Honorable Edward R. Royce,

I am disappointed in your recent vote against the extension of unemployment insurance and I urge you to vote for any new bills that provide not only unemployment benefits, but any short-term stimulus measures such as infrastructure projects and state budget relief that helps schools and state services. We recently pulled our kids out of Los Alamitos public schools and put them in private school because class-sizes are getting too big.

Without appropriate investments in our public schools and in new industries that create sustainable job growth, we may never completely recover from this recession. Endless tax-cuts and a failure to adequately invest in public services will certainly relegate California and the U.S. to second-tier nation status as China and India rise.

The free-market has no conscience and no rudder, and cannot solve all our problems. Government must sometimes step forward to help solve big problems and adequately serve the interests of the people. Deficit-reduction and austerity measures can wait until we get this economy back on its rails. I urge you to vote for more stimulus spending until private industry is able to create enough innovation and the long-term jobs necessary to grow the economy.

Eric Forst

Friday, June 4, 2010

Where are the Jobs?

Robert Reich's recent post, "Why We're Falling Into a Double-Dip Recession" gives the short-term reason, but doesn't give the long-term explanation. The end of the stimulus spending is partly to blame for the impending double-dip, which Paul Krugman predicted at the beginning of the year. The real question is why is it taking so long for the economy to create sustained job growth? I think the main reason jobs are not returning is because for the past 10 years neither our industries nor our universities nor our government agencies (like NASA) have generated enough significant innovation or new technology to create the kind of growth that allows jobs to keep up with population growth.

This happened partly because investors were gun-shy after the tech bubble burst, but mostly it happened because the elimination of Glass-Steagall in 1999 opened the flood gates for the creation of new financial products like credit default swaps and rampant derivatives markets. So, instead of our nation’s best and brightest creating alternative energy or new software or biomedical breakthroughs, they were busy creating toxic assets and new hedge funds. And instead of the government investing in science and education, it was busy spending the country into trillion dollar deficits while playing Elmer Fudd chasing those wascally terrorists all over Iraq and Afghanistan. Creating the world's largest prison population didn't help either.

In addition to a new stimulus that puts people to work on short-term repair projects, the US needs to scale back its prison and military expenditures and invest in people and industries in ways that create long-term economic growth and jobs. We need a new New Deal. Lets bring home most of the troops and put them in the Army Corps of Engineers building wind farms and solar fields. Energy security not only means environmental security, but also lessens the need for overseas military adventures. That is true national security. It will make Japan happy, too. Their Prime Minister had to resign last week, largely because he could not fulfill his campaign promise to move a US military base out of Okinawa. We also need a new New Deal to correct for the past 30 years of conservative neglect. In the business world we call it human capital. And in his speech on the economy last week, Obama called it "A new foundation":

"It’s a foundation based on investments in our people and their future; investments in the skills and education we need to compete; investments in a 21st century infrastructure for America, from high-speed railroads to high-speed Internet; investments in research and technology, like clean energy, that can lead to new jobs and new exports and new industries."

Saturday, April 17, 2010

The New Value

Michael Hiltzik hits the nail on the head in his LA Times column today. "Pointless deals line Wall St. pockets" illustrates what Chris Hayes at The Nation was talking about a few weeks ago when he described all the money sloshing around in the upper echelons -- but none of it is trickling down. Shows how hedge fund managers and investment bankers have been getting rich because they make good bets for their wealthy clients, but their activity does not add any value to the economy, and in the case of Goldman Sachs, one particular hedge actually helped make the damage for average consumers worse. They are professional gamblers helping the rich get richer, while the ....well, you know how it goes.

It shows that the free market has no values and simply lets the rich and powerful swoop in and game the system. When the government used to try and do big things - think NASA or fuel efficiency standards - those programs actually spurred innovation and technology that led to enormous growth in the private sector. But during the Bush years, de-regulation and small government policies ruled the day and instead of the economy creating growth and wealth based on innovation and technology, it created a housing bubble and "financial instruments" that have created vast wealth for small numbers of people without creating value or making life better for the average consumer. The wonderful free market of the past decade lured thousands of our best and brightest students and math minds away from inventing alternative energy or smarter computers and instead they have become stewards of vast empires of wealth.

Monday, April 12, 2010

"The Road to Serfdom"

One of the best examples of how Glenn Beck and Fox News mangle and distort their facts and why they are so dangerous is in this quote from one of Mr. Beck's recent shows:

"We will resist the total transformation of our country but we will do it peacefully. Yes. People did it under [Woodrow Wilson] and people did that here. Well, not so much because the people who are in [President Obama's] administration hated [Richard Nixon] and they didn't resist peacefully; they were setting bombs off. But we will resist peacefully."

How is giving the private insurance industry 30 million new customers, somehow a total transformation of our country? Where is the socialism? Where is the communism? There is none. The health care bill was really a health insurance bill that imposed much needed regulation on an industry that makes money by denying coverage to as many people as possible. And in the name of free-markets, that industry has made our country less competitive while our citizens have worse health outcomes than nearly every country with socialized medicine.

Beck uses the fear of Communism in exactly the same way Senator McCarthy did -- as a way to implement conformity and control -- and ultimately to incite people to violence, despite his non-violent rhetoric. Here's another quote from Mr. Beck's 4/8/10 show:

"Is it a coincidence that all of the above are or were advisers to the president? By the way, [Van Jones] was an adviser to the president and now he's with George Soros' group. Is it possible that maybe, by pointing out every night that there are radicals, Marxists and communists in the White House, maybe that struck a nerve?"

Sounds like something straight out of a House Committee on Un-American Activities meeting from 1950. Beck and his viewers are the shoeshine boys of the ruling elite and they don't even know it. By reducing every argument to a battle between Libertarianism and Communism, they eliminate the possibility of having a discussion that includes complexity or the reality of our hybrid government that combines democracy with a primarily capitalist, market-based economy and adds in a few social programs like Medicaid, Medicare and Social Security. This is hardly a centrally planned economy now that the health insurance reform bill has passed. Mr. Beck, please tell me: where is there a movement by Democrats or any other group to impose a centrally planned economy in the U.S.? Where is there an attempt by the current administration to roll-back constitutional rights?

George Orwell perhaps summarized it best in his critique of Friedrich Hayek's 1944 best-seller, The Road to Serfdom:

"in the negative part of Professor Hayek's thesis there is a great deal of truth. It cannot be said too often — at any rate, it is not being said nearly often enough — that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamt of". Yet he also warned, "[A] return to 'free' competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the state."

Hayek believed central planning and state control would inevitably lead to tyranny and totalitarianism, like it had in the Soviet Union. And that is what Beck and the Tea Partiers are worried is going to happen under Obama. Yet, the past 30 years of conservative dominance of U.S. politics and the stripping out of most New Deal financial regulation has led to exactly the kind of tyranny that Orwell warned against. And that was the tyranny against truth, justice and fairness in our governance and in our markets, which reached its pinnacle under the administration of George W. Bush and Dick Cheney. And it is that tyranny, which Mr. Beck continues and enables through his Tea Party movement.

Saturday, April 3, 2010

Top Lies about the Health Insurance Reform Bill recently posted an article, "True or false? Top 7 health care fears" in which they do a good job debunking some of the Fox News and Tea Partier hysteria about health care. However, they somehow managed to not include these two fears, which seem like the top two:

1. My taxes will go up!
2. It's Socialism in America!

Of course, neither of things are true, unless you are in the 1.5% of American households that make more than $250k per year -- then your investment income will be taxed at a higher rate.

With no new government run health system being put in place and no pubic option, there isn't much in this bill that could be considered socialist, except for a slight expansion of Medicaid. Mostly, this bill is the opposite of Socialism, funneling 30 million new customers into the private insurance industry.

It will be interesting to see if this bill helps expand coverage and lower costs. Certainly, it seems like we have a much better chance with this bill than letting the previous status quo of continually rising costs and decreasing coverage continue. Not sure how the Republicans think they can win in November by trying to repeal the expanded benefits and the bill's tough new regulations on the insurance industry!