President Obama was a whirlwind last week, espousing the Buffett Rule and dodging comments from Hilary Rosen. There were several aspects of the stump speech that should have raised red flags, and I mentioned several in commentaries, but the line "Social Darwinism" to describe Paul Ryan's budget and the mentality of Republicans is most telling. Essentially President Obama is saying it shouldn't come down to the survival of the fittest as to how one gets the spoils. Instead the spoils should be divided among the collective. But this idea, which has been around since the mid 1800s, has always had inherent flaws.
First is the common sense aspect of this idea that "we" are building the safety net for all when in fact too many Americas are mostly taking from that so-called safety net with little and often zero contributions. That wouldn't be so awful if the takers weren't painted so heroically while those that pump in more than they'll ever take out are being called every dirty name under the sun. In many ways all of us are examples of the fittest, which is why we roam the earth today. The notion that the meek shouldn't inherent the earth but instead be handed it on a silver platter doesn't inspire greatness. On the contrary, we are talking about punishing and stamping out the notion extraordinary.
I realize President Obama sees this struggle in the same way Joseph Fisher saw the struggle of ordinary people when he used the term "Social Darwinism" for the first time in print when he authored "The History of Landholding in Ireland" in 1877. But it is beyond the pale nuts to compare the current system of capitalism in America to the plight of the Irish in 1877. Yet, there is no doubt that the message we are going to hear suggests the rich are not doing their fair share while commercials from the administration implore more and more people to get on food stamps. I would love to see them keep it real.
> Let's hear commercials saying if you stop smoking weed you could get a job.
> Let's hear commercials about using the Internet for learning not the latest Kanye video.
> Let's hear commercials about not dropping out of school because more than likely you will be a serious drag on society.
> Let's hear commercials about God and America being great, not about how weak the nation is unless our government spends even more money.
It's time to shake up those that have quit on society. It's time to push people to do more and to be accountable. If this is all about a social contract then it's time to have one that seeks demands from all rather than a certificate of servitude in which winners spilt the prize with the quitters. If we are preaching a social contract what are the obligations for those with no skin in the game? Bellum Omnium Contra Omnes
This idea of a social contract goes back to Thomas Hobbes, the English philosopher and author of "Leviathan."
His idea of a social contract saw as its central tenet the heavy hand and unaccountable rein of government. Just as liberals have taken the meltdown of the financial system as an opening that capitalism cannot police itself so, too, did Hobbes believe government must supersede individual and businesses rights. This was hammered home last week when President Obama said we tried capitalism in the eight years before he took office and it didn't work. (I'm not sure what he thinks we practiced in the four years of his presidency, although it hasn't been pure free markets or risk-taking as the calculation resulted in a lose-lose situation.)
When I hear " ... so everyone can take risk" I take it as a direct shot at businesses and entrepreneurs, and that somehow risking it all is a luxury and somehow if the government scoops in more money it can be the sugar daddy for everyone to have risk-free adventures including dropping out of the workforce. Even if you are in the camp of higher taxes, there has to be concern that as Hobbes believed that without an omnipotent government there would be "war of all against all" as citizens wouldn't cede to common sense, religious beliefs and simply doing the right thing as they ripped each other apart.
For Hobbes and Obama the population was beneath the sovereign authority, which could even abuse its power in return for protecting the same people that it's taken rights from. Birds do it and Bees do it
"All things for all men, since all men have need of them, since all men worked to produce them in the measure of their strength, and since it is not possible to evaluate everyone's part in the production of the world's wealth." —Peter Kropotkin
I would never take communism or socialism seriously as an economic policy, but I have a lot more respect for the ideas from Peter Kropotkin, zoologist, philosopher, economists, writer, and revolutionary whose ideas challenged Vladimir Lenin. He felt mankind could take its cue from the animal kingdom where it wasn't about the fittest but instead the collective. He advocated for communism but without a central government. His book "Mutual Aid-a law of Nature and chief factor of progressive evolution" Kropotkin gave example after example of nature fending off predators using teamwork, including this passage about activities in the lakes of Russian and Siberian Steppes:
And here are the robbers -- the strongest, the most cunning ones, those "ideally organized for robbery." And you hear their hungry, angry, dismal cries as for hours in succession they watch the opportunity of snatching from this mass of living beings one single unprotected individual. But as soon as they approach, their presence is signaled by dozens of voluntary sentries, and hundreds of gulls and terns set to chase the robber. Maddened by hunger, the robber soon abandons his usual precautions: he suddenly dashes into the living mass; but, attacked from all sides, he again is compelled to retreat. From sheer despair he falls upon the wild ducks; but the intelligent, social birds rapidly gather in a flock and fly away if the robber is an erne; they plunge into the lake if it is a falcon; or they raise a cloud of water-dust and bewilder the assailant if it is a kite. And while life continues to swarm on the lake, the robber flies away with cries of anger, and looks out for carrion, or for a young bird or a field-mouse not yet used to obey in time the warnings of its comrades. In the face of an exuberant life, the ideally-armed robber must be satisfied with the off-fall of that life.
I suppose businesses, the profit-motivation, patents, and ownership are the robbers in the human world, but it's the exact opposite. Clean food makes its way to the masses as a result of the profit motive. Wonderful architecture and cozy homes are the reward for those willing to work hard for ownership. Excessive materialism can be nauseating, but a Picasso in your living room would be a nice exclamation point for a life of hard work. A Patek Philippe to leave your son or daughter is grand. A small plot of land to call your own is joyous. The point is our system is the best, and field mice have the tools to beat the robbers.
I do find it interesting the left never talks about Kropotkin because in the end it's about power for them and indentured servitude for the masses. There is something innate about competition among animals and mankind. For human beings competition and reward help push the boundaries and have yielded remarkable things that make life more enjoyable. Artificially suppressing these urges creates a downward spiral that mask a deterioration of economic safety and the importance of pushing the boundaries. It's been tried and failed miserably in several parts of the planet including modern day European nations.Pain in Spain
Bond yields on Spanish and Italian debt spiked this morning and are sending sirens throughout the trans-Atlantic financial community. The action in the bond market underscores the legitimacy of worries that these two nations could be time bombs. By the same token we could see the ECB (Europe's version of the Federal Reserve) swing into action with more free money via LTRO3. (The LTRO program is long term repurchase operations that see dirt cheap cash pumped into European banks in hopes it saves them and even sees some trickle onto Main Street. It hasn't been the success many say it has or we wouldn't be talking about doing it for a third time. The threat is one day it doesn't trickle out of the banks but comes gushing out and drowns those countries with so much money that inflation is inevitable).
Key ten-year yields.
> Germany 1.73
> Spain 6.14
> Italy 5.63
I find it amazing that Spain did everything President Obama says would spark the US economy and few talk about the flawed game plan that now has that nation with 26% official unemployment and more than 50% for its young adults. Considering how much work, sweat, and panic were exhausted in saving Greece (for now) I can't see how could the "powers that be" allow this situation to falter further. Of course the real cure has less to do with bailouts and more to do with recouping that notion of competition, greed, pride and achievement.
The official red flag would be a move above 7.0% for the ten year yield. I say everyone should already be seeing red.