Sunday, April 29, 2012

Erik Larson’s In The Garden of Beasts - A Cautionary Tale


US Ambassador to Germany was not exactly a plum position in 1933, and President Franklin D. Roosevelt had to get to his fifth choice, four months after his inauguration, before finding a reluctant taker.  William E. Dodd was a historian, a conservative and sober student of Germany and its language, who accepted the job and saw and documented Germany’s transformation, in a 12 month period, from a militarily weak and downtrodden nation, led by 85 year old President Hindenburg, who had appointed a young Adolph Hitler to the position of chancellor and who retained the power to remove him from that position, into a Hitler dictatorship and military regime of terror focused on Aryan domination of the European continent. 

Dodd moved his family to Berlin in July 1933 and began his personal four and a half year struggle with the US-Germany relationship.  Even as he saw what was going on in Germany, he had to deal with US apathy and a general belief that Hitler was leading a “historic rebirth,” posed little military threat, and was working hard to solve “The Jewish Problem” for which the Jews, after all, in the opinion of many, in Germany and in the US, bore some responsibility.  The Jews had, after all, demonstrated a disturbing tendency to achieve wealth and power and move into the top 1% of society in both countries.  It is an interesting bit of trivia that of the German population of 65 million, only about 1% were Jewish.

By the time Dodd had begun his service as ambassador, the strategy that became known as “Coordination,” was already underway with terrorizing and imprisoning of German citizens of questionable loyalty, establishment of the first concentration camp, employment restrictions on non-Aryans, and establishment of a culture that might make one think of the “See Something, Say Something Act of 2011” passed by our own federal government or even of the US Political Correctness movement, including media and political demonization of violators.  The phrase used in Larson’s book is “culture of surveillance,” and it makes one think of the current proliferation of cameras in public and private places in the USA.  Bugging of phones was standard practice, and, for a confidential conversation, Dodd had to take walks in the park with associates and visitors. 

Abortion was outlawed, except for Jews and other minorities and those with some possibility of genetic faults.  Killing of “incurables” was deemed justified.  The Law for the Prevention of Disease approved involuntary sterilization.  The Editorial Law banned Jews from employment by newspapers and publishers.  David, Samuel, and other Jewish names were banned for use in spelling.  No more “D as in David.”  It had to become “D as in Dora.”  Inter-racial marriage was banned, and ancestor searches were done to be sure that all with Jewish blood were appropriately identified and dealt with.  On a more positive note, cruelty to animals was absolutely forbidden. 

The most ominous and visible sign of Hitler’s success with “Coordination” was proliferation of the Hitler salute accompanied by a robust “Heil Hitler.”  It’s dominance of German personal interactions beginning in 1933 is the source of the only funny line in Larson’s book: “The German public had so avidly embraced the salute as to make the act of incessantly saluting almost comical, especially in the corridors of public buildings where everyone from the lowliest messenger to the loftiest official saluted and Heiled one another, turning a walk to the men’s room into an exhausting affair.”  Even school children were required to “Heil Hitler” their teachers several times a day.  Americans, exempt by German law from the salute, were sometimes beaten in the streets for failing to follow the custom.  That conformity, achieved by Hitler, might be considered a cautionary tale for US citizens prone to look at presidents as saviors rather than servants, writing songs about them for school children, and putting their images on American flag replicas.  Power was no more claimed by Hitler than it was ceded to him by a populace giving up personal freedom for security while turning a blind eye to atrocities going on around them.

There is no clearer evidence of citizen compliance than the November, 1933, election in which Hitler sought approval of his decision to abandon the League of Nations, an essential element of the World War I settlement, and aggressively rearm Germany.  He ran an ambitious get-out-the-vote campaign, with underlying threats, and got a 96.5% turnout with 95.1% of those voting as he had requested.  The 4.9% who voted “NO” were courageously risking their lives.  Even in the prison that had been established at Dachau, 96% of the prisoners voted as Hitler requested. 

With that victory behind him, Hitler openly declared that the German people needed more space and, while promising that he was interested only in peace, insisted on equality of armament.  That has a familiar ring.  In July, 1934, he ordered the immediate death of at least seventy German officials and officers of whose loyalty he was unsure.  In defense of that action, he declared, “…at the moment I was responsible for the German nation; consequently it was I alone who, during those twenty-four hours, was the Supreme Court of Justice of the German People.”  Hitler closed the deal for good when President Hindenburg died in August and Hitler assumed the duties of President as well as Chancellor.  Many believed and accepted and treated Hitler as a god.  “Women cried as he passed near; souvenir hunters dug up parcels of earth from the ground on which he stepped.”  Speaking to a crowd, Hitler claimed, “That you have found me…among so many millions is the miracle of our time!

Ambassador Dodd had little impact on the course of history but was one of the few who realized where it was leading, told the truth as he understood it to both Hitler and Roosevelt, and left a gift of immeasurable value in his letters and papers which documented the moral decline and military advance of Germany and served as primary sources for In the Garden of Beasts.  Dodd was replaced and returned home at the end of 1937, less than two years before Hitler invaded Poland.  After the 1939 invasion, he wrote Roosevelt an “I told you so” letter and died a few months later, in February, 1940. 

So we are reminded of the wisdom of our founding fathers who established a government of the people, by the people, and for the people, with three branches, power balanced among them, and a guarantee of rights to life, liberty, and the pursuit of happiness.  Let us remain vigilant, never selling out for a false promise of security and leaving our children and grandchildren to fight to reclaim those freedoms.

This is just a sampling of Larson’s text.  Read the book!

Sunday, April 22, 2012

Don't Make Me Mad!

"If it turns out that some of the allegations that have been made in the press are confirmed, then of course I'll be angry." - President Obama

I've been stewing over this silly statement for a few days but figured that it must have been some media person who planted the "angry" word and that the president just got sucked in by it. Joe Reporter might have said, "Mr. President, doesn't this behavior by the Secret Service make you angry?" And the president might have thoughtlessly responded using the same word. But apparently he came up with it on his own, implying that we should be concerned about the possibility of an angry president...that an angry president might be something to be feared. An that, after we have all been taught that responsible persons, teachers, parents, leaders, presidents, etc., never respond in anger. That is where that silly rule  about counting to ten came from, isn't it?

I wish President Obama had just said, "Such behavior does not meet our standards and will not be tolerated and any found guilty of doing or allowing it will be fired immediately with no benefits and no compensation."

One of the news stories is here.

 

Friday, April 20, 2012

States' Rights and Wrongs


Much has been said and written about the Massachusetts health care legislation passed under Mitt Romney and the similarity to it of the infamous federal Patient Protection and Affordable Care Act passed under President Obama.  So long as the plan established in Massachusetts complies with the Massachusetts constitution and does not violate federal laws, it may be fine for Massachusetts, but that doesn’t mean the Federal Government has a right to impose a similar plan on all fifty states, or even that it would be wise to do so.

This principle is the essence of the tenth amendment to our constitution: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Competition among states and the ability of people and companies to move freely among them are key US national strengths.  If the Massachusetts health care legislation provides affordable access and high quality medical care to all its citizens, companies and people will move to Massachusetts, and its economy will thrive.  If it turns out to be an unaffordable and unmanageable mess, companies and people will move out of Massachusetts and the state will go bankrupt.   In either case, the United States of America, land of the free, home of the brave, refuge of choice for people around the world seeking opportunity, can survive and thrive.  If, on the other hand, the Patient Protection and Affordable Care Act follows the well-established pattern of Medicare, Medicaid, and Social Security and becomes just one more huge unfunded liability, we can forget the American dream, (which of course has nothing to do with home ownership).

Economics and employment reveal another clear example of the advantage of states’ rights.  If the foolishly destructive California economic and environmental regulations and tax structure were imposed by the Federal Government on all fifty states, the motto of all businesses but laundries and fast food would be China, China, China.  Fortunately that has not happened, and businesses can still start up successful operations in South Carolina, Texas, and other business friendly states.  There is a complimentary article in today’s WSJ about the manufacturing corridor that has been established in Greenville-Spartanburg South Carolina, now US home of Michelin, BMW, and Electrolux for example.   And, in spite of attempted meddlesome federal intervention at the behest of union forces, South Carolina now has a Boeing factory in Charleston.

Of course the states cannot do whatever they want.  We fought a costly war a hundred and fifty years ago to establish the principle that individual states do not have a right to allow ownership of slaves or to secede from the union in order to do so.  Still, hopefully reserved to the states, are the rights to establish health care systems, education systems, environmental and financial regulations, taxes, etc. and, to the people and companies, the right to move to another state if they don’t like the one they currently reside in.  Failures and inefficiencies of attempts at tight federal control of our vast geography, large and expanding population, and growing diversity have convincingly demonstrated the futility of such an approach.  So, let the fifty states compete and may we all learn and grow and improve as a result.


FOLLOW BUTTON

Tuesday, April 17, 2012

Washington Fiddles While Government Burns

So now we have the news that Congress has not supported the president’s proposal of the Buffett Rule, a trivial pursuit that stands in stark contrast to the revolutionary, government-expanding approach to health care pushed through by the same president just two years ago.  If only he could be as courageous in his approach to our out-of-control federal debt as he was to the problem of 15% of the population lacking, not medical care, but medical insurance. 

The Buffett Rule, a class-warfare escalating, vote-getting, success-punishing, equity market-crushing idea based on a nonsense statement by billionaire Warren Buffett, claiming to pay lower taxes than his secretary, would require that everyone earning more than $1M pay at least 30% of that income in federal income tax even if it is only from dividends and capital gains.  The president wants everyone to pay his or her fair share, whatever that is.  And in spite of the fact that, early in the debate, he suggested this rule would put the nation on a firmer financial foundation, current estimates are that it would have no significant impact on federal tax revenue or on the projected annual deficits. 

And even that glum outlook ignores the fact that, if dividends are to be taxed at a higher rate, less will be paid out in dividends and fewer shares of dividend paying stocks will be purchased in the coming years, companies will instead just repurchase shares with profits not needed for investment, and retirement funds of rich and middle-class and poor alike will suffer.

Of course the president knew the Buffett Rule would never pass but apparently wanted to be able to use its defeat to attack the opposition for favoring the rich.  We can expect The Buffett Rule to be a frequent topic of Democrat campaign ads and media-driven debate questions over the next few months. 

The president had a much better option, one crafted at his own request not too many months ago.  He could have put all his weight and political capital behind the Simpson-Bowles proposal for a wide range of deficit reducing proposals covering taxation and spending.  Instead he is fiddling away time on trivialities, trying to assure his re-election, after which he assumes he will have more flexibility.  He may or may not be re-elected, but surely we cannot allow him more flexibility.  This government is neither a monarchy nor an empire after all, and it needs neither king nor emperor.


There is more explanation on the Buffett tax bill and his proposal here, here, and here.  And one I took some heat for here.  








Friday, April 6, 2012

Inflation: Why Not?

In a New York Times Op Ed, Paul Krugman argues that the Fed is worrying too much about inflation and not enough about unemployment and should therefore goose the US economy with more artificial stimulation. Here is a quote from the article: “At this point, inflation is once again running a bit below the Fed’s self-declared target of 2 percent.” Based on that, Krugman wonders, and then concludes, “…would a rise in inflation to 3 percent or even 4 percent be a terrible thing? On the contrary, it would almost surely help the economy.”

The thing that puzzles me is that inflation is already at 3%, averaging 3.2% for 2011 and 2.9% for the first two months of this year. Mr. Krugman must be using a different set of numbers or a different method of calculation, but the numbers I am quoting are based on the Bureau of Labor Statistics Consumer Price Index. You can see them here.

Mr. Krugman is ideologically consistent of course in favoring inflation as a way out of our current crisis because it is an excellent way to transfer wealth from people who are lenders, the wealthier, to those who are borrowers, the less wealthy. In his column, Krugman acknowledges this misguided goal and questionable benefit openly.

I know how that works. In the 1960’s, 70’s, and 80’s I enjoyed and benefited from inflation as it shrunk my mortgage relative to my income since I was fortunate in usually getting raises greater than the inflation rate. However, when inflation exceeded 13% during the Carter administration, the economy was in serious jeopardy, business was difficult because nobody would establish contract prices, and 30 year mortgages were being offered at around 16%.

I’m inclined to agree with Mr. Krugman that inflation of 3% to 4% is not a terrible thing, but, if we take his advice and further goose the economy, even though the inflation rate is already 50% higher than he says, I’m thinking we will be in serious danger of once again experiencing double digit inflation rates. And what I am really thinking is that we are going to get there anyway even without further stimulus. And if we do, we will see true economic misery.




Tuesday, April 3, 2012

Lest We Forget (As Elections Approach)


This chart pretty well speaks for itself.  Our current situation cannot be blamed solely on the "Bush" tax cuts of almost a decade ago though the cuts may have contributed to the size of the government-inflated real estate bubble which burst in 2008, precipitating the current crisis.  Clearly, the projected revenues that motivated those "Bush" tax cuts should have been allocated to debt reduction.  Keynesianism only works when surpluses are generated and debt reduced in good times to allow the prescribed stimulus spending in bad times.  

Now we need higher tax revenues through lower marginal rates combined with elimination of all special treatment for tax payers.  That will help pay off the debt while increasing motivation, through the lower marginal rates, for business and employment growth in the USA.  And we need Social Security and Medicare reform to redefine those programs as safety nets for those who truly need them and not as entitlements for everybody.  And we need corporate tax reform that will motivate companies of all nations to invest and produce in the USA rather than elsewhere.

And of course we need a free market with transparent pricing and open competition for routine health care and guarantees of the right to buy coverage for catastrophic medical expense.  Tax revenue will have to buy that coverage for low income folks, but let it be bought in a free market open to all.  We can think about that as we await the Supreme Court ruling on the PPaACA.  Unfortunately they cannot vote on whether it is a good law but only on whether it is constitutional.  I think the same answer will suffice for both questions.