The State of the Union and Obama's Game of Risk

Obama’s State of the Union address revealed a failure to understand the role that risk plays in the free market, meaning that his administration will only create unsustainable bubbles, and not successful businesses.

We are being told by the mainstream media that Obama’s State of the Union address was one in which he flexed his free market credentials.  The HuffPo’s Rachel Maddow even went so far as to describe the address as a “prayer to the free market”.  There can be no doubt that we were supposed to draw this conclusion - Obama spoke favorably of corporate profits, thriving small businesses, competition, innovation and even Google and Facebook (see how “hip” he is!)  Specifically, Obama spoke of how his administration was investing in small businesses trying to get off the ground.

However, pumping struggling small businesses with taxpayer’s dollars is not the same as being an advocate of the free market.  Despite what our left-wing friends will tell us, the free market is not so much pro-business as it is pro-consumer.  The reason we on the right advocate the free market is because it ultimately benefits the worker, the consumer and society as a whole, by creating wealth, jobs and delivering goods and services efficiently at low cost.

One of the ways the free market encourages the private sector to deliver such efficiencies is through the concept of risk.  The left sees risk as one of those bad and nasty things that they should “protect” vulnerable small businesses from.  Yet as Milton Friedman was so fond of reminding people - the free market is not just a profit system; it is a profit and loss system.  It is through the risk of loss, and the incentives and disincentives that it brings, which encourages efficiency and wise decision making.

In the free market, risk acts as a cleansing fire that burns away poor business ideas, as well as burning away inefficiencies and problems in good ideas.  This is because when the owner of a business bears the risks attached to failure, it encourages him or her to be as efficient as possible and to take care with decision making in order to minimize those risks.    To quote Thomas Sowell, “In a capitalist enterprise, the owner is an unmonitored monitor; self interest takes over from external monitors.”[i] 

Additionally, those wishing to start a business will be all the more careful about their business plan if it is their money that they are investing, as it will be they who will bear the consequences if the plan is not sustainable.  External investors in new businesses will also be careful how they invest their own money, and will either not invest in a bad venture at all, or will spend time examining the plan and pushing the owners to make changes before they take a risk and invest.  This means that the only businesses that start up are those in which people are prepared to risk their money.

The above is fairly simple economics, but for the left, risk brings to mind only negative images of scared small business owners and shattered dreams.  It is for this reason that Obama and similarly minded leftists have been quite happy to “minimize” the risk of starting up a business by providing loans and grants to small businesses that they deem to be politically expedient. 

The State of the Union address was therefore filled with examples of how government had funded the startup of various “green” businesses, such as the business owned by Robert and Gary Allen, who used their government loan to expand and to manufacture solar shingles.  Here in England we already have a whole rainbow of government grants and loans, such as the “Community Development Finance Initiative”, “The Carbon Trust” (if your business is “green”) and the “Mayor’s Economic Recovery Loan Fund” in London.

While these may sound lovely and compassionate, as well as being great ways of encouraging businesses to start up, they are not free market solutions, and are therefore misguided.  For what such loans and grants do is not to minimize risk, but simply to transfer that risk from the business owners and investors to the taxpayer.

This is unfair not only because the taxpayer is forced to bear the risk of loss without the prospect of profit, but also because they have become investors in businesses in which neither the owners nor private sector investors were prepared to put their money.

Also, although it may be wonderful for Robert and Gary Allen that they are selling their solar shingles in the short term, it may not be so lovely for them in the long term.  For if they had failed to attain investment through the usual private sector paths, they may have taken their ideas back to the drawing board and either jettisoned the ideas for better ones, or they may have ironed out the kinks in the current ideas to attract investors.  This would be better for their long-term prospects.

Such a grant is not good for the business (Robert and Gary may be working with a dud) nor is it good for the investing taxpayer – who gains nothing from the risky investment even if that business turns profitable.  The only group it benefits are Obama’s Democrats, who get to pat themselves on the back for encouraging green businesses and jobs, and who will then pat themselves on the back again when they “save jobs” by bailing out the industry after the green bubble they are creating by funding bad businesses eventually bursts.

Ultimately risk is seen by the left as bad as it discourages businesses from starting up.  This is inaccurate – risk only discourages bad or imperfect businesses from starting up.  Obama’s plan for more government funding for businesses is not a free market solution, and it is not pro-business.  All it will do is create unsustainable bubbles that will hurt efficiency, hurt workers, hurt consumers and hurt American society as a whole – and that is a risky plan.

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[i] T Sowell, Basic Economic: A Citizen’s Guide to the Economy (New York: Basic Books 2000) p.75

Another Attempt by Obama to Force Britain into the EU.

Thanks to my fellow Anglo American commentator Nile Gardiner for picking this story up, that has gone almost entirely unnoticed by the mainstream media on both sides of the Atlantic.  Apparently the Obama administration has started another push to get America's once strongest ally further into the quicksand of the European Union.  This time it is diplomat Louis Susman (American ambassador to the UK) who has been running his mouth off.  In a private meeting with British MEPs this week in the European Parliament, Susman called for a stronger commitment to the failing EU by Great Britain.

"Speaking in parliament on Tuesday, Susman signalled that Washington wants a clearer British commitment to remain in the EU, saying “I want to stress that the UK needs to remain in the EU.

“The US does not want to see Britain’s role in the EU diminished in any way.

“The message I want to convey today is that we want to see a stronger EU, but also a stronger British participation within the EU.

Susman, who took up his current post a year ago, added, “This is crucial if, together, we are going to meet all the global challenges facing us, including climate change and security."

Although it is most certainly not unheard of for allies to express opinions on various international issues that effect the other nation, to push for something that every single opinion poll shows that the British public are against is distasteful at best, and at worst it is downright insulting.  America should be supporting its allies, not challenging them at every possible opportunity.

The statement is also quite wrong.  I will ignore the vagueness of "dealing with climate change", as we already know that for the Obama administration the science is unquestionable and "dealing" with the problem involves as much big government as is humanly possible.  However, the idea that if Britain hands over its sovereignty to the hard-left, anti-American, pacifist EU then this will be excellent for "security", then Mr Susman is either delusional or a fool.

When will the Obama administration understand that the EU is not America's friend.  It is filled with American hating lefties, and it doesn't change just because they have a Democrat in office.  If America wants an ally in Europe, then Britain (as always) is its best hope.  Trying to push Britain into the EU will only make Britain weaker, and damage Anglo-American relations, which will ultimately harm America.

While creating an European megastate may fit in with Obama's left-wing view of the world, it will do nothing for America's interests.  It is for this reason that America should oppose this pushy new attitude towards their best ally, and stop Obama from doing even more harm to the national interest of America, and the interests of her allies.

Obama is America's New Sputnik Moment

Apologies for the scarce blogging over the last week  - I have been hit by whatever bug it is that is currently circling around Manchester, and it has pretty much taken me out.  So no podcast and obviously there has been very little blogging over this week.

In my cough syrup haze I ventured to watch the State of the Union/State of Obama address in the middle of night a few days ago.  Perhaps it was the fact that it was nearly 4 in the morning British time by the time he finished, maybe it was the fact that I had mixed Scotch with my Beechams Flu Plus in order to soothe the pain of all the buzzwords and cliches, but all I could think throughout the entire thing was, "What the hell are you talking about you strange little man?"

There are so many things wrong with that speech it would take countless posts to go through them all, but I don't think I would be doing my duty if I didn't refer to the "Sputnik moment".  If you were lucky enough to ignore the SOTU address (as we kool kidz call it on Twitter...yo!) then you may be surprised to learn that Obama's plan to "Win the Future" (the blood curdling slogan for the speech) is for America to have a "Sputnik moment", which should encourage America to fire up and work to something amazing - government sponsored and controlled naturally!

Apart from the obvious fact that he chosen a Communist success story with which to encourage America, he doesn't quite seem to understand what Sputnik represented for America.  Sputnik was a moment that helped America to see how threatened it was, it showed how in danger it was of being destroyed, and how delicate the American dream ultimately was.  Sputnik itself was almost completely useless, it just circled around the globe, making noise until the novelty wore off.  Yet it awoke America out of its post-war slumber and encouraged it to rediscover itself and begin the drive into prosperity - not only with the Apollo program, but in general as well.

It is for this reason that I am going to take Obama's little metaphor and turn it on its head.  America has had its Sputnik moment already - that moment was Obama!  Obama is the useless little machine that buzzes around the globe making lots of useless noise.  Obama is the novelty that everyone is beginning to get bored of.  Sputnik was supposed to be a epoch defining moment, and really it just made noise - just like Obama.  Sputnik was also a product of socialist initiative, as is Obama!

Yet, the more serious lesson of Sputnik is also the lesson of Obama's election and presidency.  Obama's presidency, like the launch of Sputnik, has awoken America to the malaise that it finds itself in.  Obama's failed presidency shows just how far away from the American dream that nation has drifted, how threatened the American dream is once again, and it is through movements like the Tea Party where the response to the Sputnik program - one might call it a  modern Apollo program - is being conducted.

Obama is wrong to suggest that "winning the future" will come from more government "investment" and initiatives.  Instead it will come from Americans reasserting their rights to life, liberty and the pursuit of happiness, and expressing America's greatness through efficiency and private sector prosperity.

The Apollo success was a response to the defeat of America that was represented by the Sputnik moment.  It is for this reason that the modern Apollo movement is well under way in the conservative movement, and it is responding to the defeat represented by the election of Obama - America's modern Sputnik moment.

Left-Wing Policies Have Destroyed Britain's Youth

Take a glance through the British media in a given week, and you will see the usual anti-business, pro-tax rhetoric permeating throughout most of it.  Want some money for a "scheme" or "initiative"?  Tax "the rich" - after all, they have heaps of money that they don't need, right?  Want to blame someone for an economic crisis?  How about those bankers we just love to hate?  Want to campaign against something?  How about those evil corporations who are only out to crush the little guy?

Well, such actions have consequences, and this has been shown in Britain's enormous, devastating youth unemployment.  The figures can be seen in the attached link here. (H/T The Sun)

What surprised me about the figures is just how unsurprised I was.  My nearest city of Salford has a 30.8% youth unemployment, and it is very easy to believe.  The concept of a welfare culture is very much alive in these places, leading to entire welfare towns where initiative, independence etc. are all very much dead.  The welfare culture has been fostered in families for a few generations now, and many of these young people who are unemployed have been born into families where none of the other members have ever worked - having a job is simply foreign to these people.

The tragic thing about all this is that in most cases it is not their fault.  Policies designed to "help" the poor and the unemployed have been the policies that have destroyed their lives the most.  Before these young unemployed people were even born there was already a welfare system in place that does not encourage marriage, that encourages families to live apart and that rewards parents who are on benefits, and punishes parents who do not receive benefits.  Then, we give the child lousy schooling at state run, union controlled, ideologically driven schools that focus on making kids "feel good" as opposed to giving them a proper education.

When they finally do enter the jobs market they find that there are no jobs available, as Britain's high tax, anti-business policies have either scared business abroad, or has discouraged it from even growing in the first place.  Then, if there are any jobs available, the young person will find themselves priced out of a job by high minimum wage laws that by their nature discriminate against the less qualified, meaning they cannot get a job, meaning that they eventually stagnate on welfare.

Yet no major political figure in Britain is challenging this.  Labour wants to push this hard left agenda further, and the present Coalition that is in power seems to be rearranging deckchairs on the Titanic - and even that causes ideologue leftists to scream that the deckchair rearranging will leave the "poor and vulnerable" without a place to sit.

Brits reading this should be depressed - this is our reality.  Americans reading this should be terrified - this is your future under Obama if he is not stopped.

Now Calling Muslims "Moderate" is Offensive!

The onslaught of censorship dressed up as civility and tolerance goes on - but this time from a so-called "conservative"!

That's right, Baroness Warsi has been off spouting nonsense once again!  Having called Britain a police state in the past, and only last week slating the right-wing of the Tory party for daring to question the electoral policy of throwing the election so the Lib Dems can win, Baroness Warsi has now come out and has basically said that it is bigoted to refer to "moderate and "extremist" Muslims!  Here are the various extracts from her speech to Leicester University,

"Indeed, it seems to me that Islamophobia has now crossed the threshold of middle class respectability.

For far too many people, Islamophobia is seen as a legitimate – even commendable – thing. You could even say that Islamophobia has now passed the dinner-table-test.

The drip feeding of fear fuels a rising tide of prejudice. So when people get on the tube and see a bearded Muslim, they think “terrorist” …when they hear “Halal” they think “that sounds like contaminated food”…and when they walk past a woman wearing a veil, they think automatically “that woman’s oppressed”. And what’s particularly worrying is that this can lead down the slippery slope to violence.

We need to think harder about the language we use. And we should be careful about language around religious “moderates”. This is something I’ve been thinking about a lot. It’s not a big leap of imagination to predict where the talk of “moderate” Muslims leads: In the factory, where they’ve just hired a Muslim worker, the boss says to his employees: “not to worry, he’s only fairly Muslim”. In the school, the kids say “the family next door are Muslim but they’re not too bad”. And in the road, as a woman walks past wearing a Burkha, the passers-by think: “that woman’s either oppressed or making a political statement”."

Remind me again - Why is this woman a high ranking member of the Conservative Party?  This is not the speech of a sound minded right-winger, this is the sort of nonsense we would hear from the uber socialist diversity officers encouraging us to spend billions of pounds of taxpayers money on "diversity initiatives" and whatnot!

It is difficult to know what is most galling about Baroness Warsi's comments.  Is it the blatant putting down of her own country as bigoted, when it is in fact one of the most tolerant countries in the world?  Is it the condescending assumptions of what the masses "really think" about Islam (When they hear "Halal", they think "contaminated food")?  Or is it the cynical attempt to shut down free speech on the implied threat of "racism" and "Islamophobia"?  Yes, I think it is that last one!

Under this vague banner of "Islamophobia", people in America and especially Britain have been hushed into not discussing one of the most important issues of our time - the spread of Islam and its violent tendencies.  As a consequence of this tip-toeing around, we now often speak of "moderate" Muslims - those who are peaceful and do not advocate violence, and "extreme" Muslims who do.  This is a fair distinction as it forms the middle ground between tarring all Muslims as evil, and ignoring the problem altogether by burying one's head in the politically correct sand.

However, Baroness Waris would say that we are not even allowed to do this anymore - for even this too is offensive.  She is concerned that this sort of speaking has "passed the dinner-table-test."  Well, yes it has Baroness, it has passed the dinner-table-test because it is true.  There are indeed a majority of Muslims who are peaceful and on Britain's side, and then there are a significant minority of nutters who are violent and pose one of the biggest threats to British and American safety since the war!  So whether we make a distinction between "moderates" and "extremists" "soft" and "hard" Islam, or whatever we call it, there is a distinction to be made.

The problem is with people like Baroness Warsi is that that reality of a situation does not fit in with their blinkered view of the world, where all that matters is "diversity" and "tolerance" and not the fact that there may be some legitimate questions and concerns that need answering.  Ultimately it is this false "diversity" and "tolerance" that leads to the most ardent campaigns for censorship and blatant intolerance of those who disagree with the views of the politically correct classes.

It is not racist or bigoted to have concerns about Islam, nor is it bigoted or racist to distinguish between those who are violent and those who are not.  If Baroness Warsi does not like the conversations people are having, perhaps she should ask why they are having them, as opposed to just smearing everyone she doesn't like as a bigot.

The Conservative Party needs to sack this woman as soon as is physically possible - she is not a conservative, but a power hungry authoritarian leftist, and she will do great harm to the party if her inane ramblings are allowed to continue.

Americans Should Take Note of Cameron's Attempts to Reform the NHS

It may seem that in the last week or so I have been rather harsh to Britain's Prime Minister David Cameron.  Certainly I am frustrated by the fact that we seem to have a Conservative Prime Minister who appears to be scared of conservative principles, but at the same time he is significantly better than the previous few incumbents.  Indeed, there may be an argument to say that he is the best Prime Minister that we have had since Margaret Thatcher.

So I was cheered somewhat by the announcement today of the new offensive against the NHS, designed to reform the monolith of our National Health Service somewhat so that it offers either better service, or costs less - preferably both.

The problem that Cameron and the Tories have is that reforming the NHS by introducing market principles is like trying to make an elephant do ballet - it is simply not in its nature.  You can have a privatised system or a nationalised system, trying to get a nationalised system with privatised efficiency is just dreamland, not reality.   In addition, the NHS is a government controlled, unionised monopoly, with enormous amounts of public sector special interests who have vested interests in the status quo.  That means that whenever there is even the slightest mention of reform, those vested interests cause hell.  It is for this reason that Thatcher was able to defeat the Soviet Union, she was able to defeat the Argentinians, she was even able to defeat the Scargillian uprising - but she was not able to defeat the vested interests in the NHS.  They are simply too powerful, and have been since the 1940's, when the NHS was started.

We have seen a similar result today.  Cameron's major speech today on the issue has already been hijacked by those claiming to be "outraged" after Cameron (rightly) described the NHS as "second rate", which has been declared to be an insult to "millions of NHS staff" by Labour and the rest of the union cronies that follow them around.  This is the common tactic used to smear anyone who fails to follow the dogma that the NHS is the greatest, besterest everest system of healthcare in the entire world!!! (except for Cuba of course!)

Unfortunately Cameron has already backed down and has apologised for describing it as "second rate", instead modifying it to say that patients should not be given treatment that is "second best".  Cameron has fallen into the left's trap.  The problem Cameron has is that he is trying to work within a government-run, nationalised monopoly, which ultimately will never be efficient, and he is trying to do it with the co-operation of vested interests.  He has chosen not to tackle the fundamental problem of the nationalised system, and is instead trying to make the existing system less inefficient.  But the vested interests have no interest in making the system more efficient, and therefore attempts at diplomacy will fail.  If Cameron wants to reform the NHS, he must fight.  If he is not prepared to fight, then he will fail.

Already we have seen that reform of the NHS may prove to be an almost impossible task, and this is something for Americans to take note of when it comes to the effects of Obamacare. Once you have nationalised health care, it is impossible to revoke.  Attempts to make it smoother will mostly fail, and any attempt to modify the system in any way will be met by a tide of anger from vested interests keen to preserve the status quo.  Every smear from "you are insulting nurses" to "you want poor people to die on the streets" will be aimed at you.  From a political perspective, this makes it impossible to touch, and this is why the British Conservative Party has been unable to propose any significant NHS reforms time and time again.  So, if Obamacare is allowed to be established, America will never get rid of it.

It is for this reason that repealing Obamacare as soon as possible is the highest priority for Republicans and conservatives in America.  Boehner and co are right to make that their main target, and it should also be the focus of the 2012 Republican Presidential Campaign.  Because if this thing gets settled, you will never get rid of it.  Look at Britain, we have had the NHS since 1945, and we still have the same problems now that we had back in the 40's!  If America does not want to still be struggling with nationalised health care in the 2070's, then it needs to repeal Obamacare - fast!

The Conservative Party's Current Strategy is a Disgrace

Cameron dropping the Manifesto in the skip - maybe.

If you are going to sacrifice your political principles and form an alliance that makes a lot of your own party turn against you and label you a traitor, then you had better make damn sure that the party you are forming an alliance with is worth it.  If it is worth it, then you can declare yourself to be a political genius, and your opponents to be backward numptys who do not know the meaning of the word 'compromise'.

However, if the party you form an alliance with turns out to be a waste of space, then all you have done is destroy both the opportunity of getting your agenda through Parliament, and your chances of getting re-elected in the future.  This is exactly what has happened with the Conservative/Liberal Democrat Coalition that we currently have in power in Great Britain - and I use the term "power" very loosely, because surely there has never been a Prime Minister in recent history with less power than David Cameron?

Last night was the first by-election since the formation of the dreaded Coalition, and it was hoped by both Lib Dems and sell out Tories that the Lib Dems could pinch the election and gain another seat, of which they already have precious few.  This required the Conservative Party to refuse to fight, and essentially throw the election by putting out only a symbolic campaign for the Tory candidate, allowing the Lib Dem to pick up the Tory votes and beat the Labour candidate.

But it failed.  In fact, looking at that sentence doesn't do it justice so let me try again - IT FAILED!!!  That's better.  Labour won by an enormous margin, and the Tory strategy is in tatters.  For this strategy to work, the Conservative Party had to leave its dignity and its principles behind in order to throw this election to the Lib Dems, and yet the useless Lib Dems still lost.  As much as Tory cronies such as Baroness Warsi are laughably scolding us that they fought a great campaign and that the "Tory Right" should stop complaining, I am yet to meet one independent voice who actually believes her.

I wouldn't be a fan a Coalition with the Liberal Democrats even if the Dems had 20% support, because I believe that politics should be fought on principles and ideas, not slogans and opportunism.  But, the fact that the support of the Lib Dems is as low as 7% in some polls, and their leader Nick Clegg - once the Obama of Britain - is now hated by many of his own party, turns this whole Coalition into a complete and utter farce.

So, we have thrown our principles and dignity into the trash, and do the voters respect us for it?  Do they admire our sense of "compromise" and our ability to "work together for the common good"?  Of course not.  The polls put Labour - who less than a year ago were suffering from catastrophic levels of unpopularity - ahead by 8%, we lost the by-election last night, and there seems no sign of this turning around any time soon. The effects of this strategy in the Oldham East and Saddleworth by-election last night will have far reaching consequences with the electorate nationally as well.  The message was clear, "Don't vote for us", and this means that next time the Tories do want people do vote for them, many will just see a party that doesn't value their vote, and will choose to vote for someone else.

Unless we abandon the Coalition
 this man may be your next Prime Minister

The standard call from Tory HQ is that cuts are always unpopular, and this explains the dip in popularity.  This is nonsense.  Yes, cuts are unpopular, but you can prevent it being as bad if you come out and passionately argue for why we need them, and what the conservative vision is for the future - a vision that most people actually agree with when you flesh it out.  However, our big spending Lib Dem partners don't like any of this,  and don't believe in the conservative vision, which puts a muzzle on the Coalition.  Cuts are made without explanation, which allows Labour to come in and say anything they want, and create their own narrative about "evil, rich Tories vs poor, voiceless people" with no Conservative voice coming out and fighting for the cause in fear of offending our wishy washy Liberal Democrat friends.

This whole Coalition is a disaster, and the only way out is not a new strategy, but to abandon this pathetic Coalition at once, drop the dead weights that are the Liberal Democrats, and fight the next election on principle.  Yes, an election next May might be one we lose, but it might also be one we win off our own backs, and the longer we carry out this charade, the harder it will be to lose the image of a party that is happy to sacrifice its own beliefs for power.  If we don't shake that image soon, we might find ourselves under another 13 year Labour government, led by Prime Minister Ed Miliband - a Prime Minister who would make Blair look like Thatcher.