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The True Origins of This Financial Crisis

Com­ment by J Perry:  There is a very plau­si­ble argu­ment that efforts to redis­trib­ute wealth to improve home own­er­ship rates among lower income and minori­ties were han­dled in such a way that when com­bined with some rather inno­v­a­tive secu­ri­ti­za­tion of sub-prime mort­gages, the result was a toxic con­coc­tion of leg­is­la­tion and risk.  I con­tend that lenders have not all of the sud­den become more greedy.  Rather, with a Fed­eral man­date to make risky loans and a profit vehi­cle in place for them to reap good prof­its, they did what lenders have always done…make loans.  In other words, the banks become will­ing dupes in a delib­er­ate plan which resulted in a very clever and mas­sive redis­tri­b­u­tion of wealth amount­ing to tril­lions of dol­lars from hard­work­ing Amer­i­cans into the hands of these risky bor­row­ers.  Yet the aver­age “Joe” still walks around scratch­ing his head or blam­ing it on the “failed poli­cies” and “loose reg­u­la­tion” of the last admin­is­tra­tion.  Iron­i­cally, it was the reg­u­la­tion of the wrong kind that cre­ated the mess and the strong defense of these reg­u­la­tory poli­cies by lib­eral or “pro­gres­sive”  mem­bers of Con­gress that thwarted attempts to pre­vent the disaster.

PLEASE READ THIS CAREFULLY AND FORWARD TO A FRIEND.  If you don’t agree then please comment…

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THE ARTICLE:

The True Ori­gins of This Finan­cial Crisis

By Peter J. Wal­li­son from the Feb­ru­ary 2009 issue

Two nar­ra­tives seem to be form­ing to describe the under­ly­ing causes of the finan­cial cri­sis. One, as out­lined in a New York Times front-page story on Sun­day, Decem­ber 21, is that Pres­i­dent Bush exces­sively pro­moted growth in home own­er­ship with­out suf­fi­ciently reg­u­lat­ing the banks and other mort­gage lenders that made the bad loans. The result was a bank­ing sys­tem suf­fused with junk mort­gages, the con­tin­u­ing losses on which are drag­ging down the banks and the econ­omy. The other nar­ra­tive is that gov­ern­ment pol­icy over many years–particularly the use of the Com­mu­nity Rein­vest­ment Act and Fan­nie Mae and Fred­die Mac to dis­tort the hous­ing credit sys­tem– under­lies the cur­rent cri­sis. The stakes in the com­pet­ing nar­ra­tives are high. The diag­no­sis deter­mines the pre­scrip­tion. If the Times diag­no­sis pre­vails, the pre­scrip­tion is more reg­u­la­tion of the finan­cial sys­tem; if instead gov­ern­ment pol­icy is to blame, the pre­scrip­tion is to ter­mi­nate those gov­ern­ment poli­cies that dis­tort mort­gage lending.

There really isn’t any ques­tion of which approach is fac­tu­ally cor­rect: right on the front page of the Times edi­tion of Decem­ber 21 is a chart that shows the growth of home own­er­ship in the United States since 1990. In 1993 it was 63 per­cent; by the end of the Clin­ton admin­is­tra­tion it was 68 per­cent. The growth in the Bush admin­is­tra­tion was about 1 per­cent. The Times itself reported in 1999 that Fan­nie Mae and Fred­die Mac were under pres­sure from the Clin­ton admin­is­tra­tion to increase lend­ing to minori­ties and low-income home buyers–a pol­icy that nec­es­sar­ily entailed higher risks. Can there really be a ques­tion, other than in the fevered imag­i­na­tion of the Times, where the push to reduce lend­ing stan­dards and boost home own­er­ship came from?

The fact is that nei­ther polit­i­cal party, and no admin­is­tra­tion, is blame­less; the hon­est answer, as out­lined below, is that gov­ern­ment pol­icy over many years caused this prob­lem. The reg­u­la­tors, in both the Clin­ton and Bush admin­is­tra­tions, were the enforcers of the reduced lend­ing stan­dards that were essen­tial to the growth in home own­er­ship and the hous­ing bubble.

THERE ARE TWO KEY EXAMPLES of this mis­guided gov­ern­ment pol­icy. One is the Com­mu­nity Rein­vest­ment Act (CRA). The other is the afford­able hous­ing “mis­sion” that the government-sponsored enter­prises (GSEs) Fan­nie Mae and Fred­die Mac were charged with fulfilling.

As orig­i­nally enacted in 1977, the CRA vaguely man­dated reg­u­la­tors to con­sider whether an insured bank was serv­ing the needs of the “whole” com­mu­nity. For 16 years, the act was invoked rather infre­quently, but 1993 marked a deci­sive turn in its enforce­ment. What changed? Sub­stan­tial media and polit­i­cal atten­tion was show­ered upon a 1992 Boston Fed­eral Reserve Bank study of dis­crim­i­na­tion in home mort­gage lend­ing. This study con­cluded that, while there was no overt dis­crim­i­na­tion in banks’ allo­ca­tion of mort­gage funds, loan offi­cers gave whites pref­er­en­tial treat­ment. The method­ol­ogy of the study has since been ques­tioned, but at the time it was highly influ­en­tial with reg­u­la­tors and mem­bers of the incom­ing Clin­ton admin­is­tra­tion; in 1993, bank reg­u­la­tors ini­ti­ated a major effort to reform the CRA regulations.

In 1995, the reg­u­la­tors cre­ated new rules that sought to estab­lish objec­tive cri­te­ria for deter­min­ing whether a bank was meet­ing CRA stan­dards. Exam­in­ers no longer had the dis­cre­tion they once had. For banks, sim­ply prov­ing that they were look­ing for qual­i­fied buy­ers wasn’t enough. Banks now had to show that they had actu­ally made a req­ui­site num­ber of loans to low– and moderate-income (LMI) bor­row­ers. The new reg­u­la­tions also required the use of “inno­v­a­tive or flex­i­ble” lend­ing prac­tices to address credit needs of LMI bor­row­ers and neigh­bor­hoods. Thus, a law that was orig­i­nally intended to encour­age banks to use safe and sound prac­tices in lend­ing now required them to be “inno­v­a­tive” and “flex­i­ble.” In other words, it called for the relax­ation of lend­ing stan­dards, and it was the bank reg­u­la­tors who were expected to enforce these relaxed standards.

The effort to reduce mort­gage lend­ing stan­dards was led by the Depart­ment of Hous­ing and Urban Devel­op­ment through the 1994 National Home­own­er­ship Strat­egy, pub­lished at the request of Pres­i­dent Clin­ton. Among other things, it called for “financ­ing strate­gies, fueled by the cre­ativ­ity and resources of the pri­vate and pub­lic sec­tors, to help home­own­ers that lack cash to buy a home or to make the pay­ments.” Once the stan­dards were relaxed for low-income bor­row­ers, it would seem impos­si­ble to deny these ben­e­fits to the prime mar­ket. Indeed, bank reg­u­la­tors, who were in charge of enforc­ing CRA stan­dards, could hardly dis­ap­prove of sim­i­lar loans made to better-qualified borrowers.

Sure enough, accord­ing to data pub­lished by the Joint Cen­ter for Hous­ing Stud­ies of Har­vard Uni­ver­sity, from 2001 through 2006, the share of all mort­gage orig­i­na­tions that were made up of con­ven­tional mort­gages (that is, the 30-year fixed-rate mort­gage that had always been the main­stay of the U.S. mort­gage mar­ket) fell from 57.1 per­cent in 2001 to 33.1 per­cent in the fourth quar­ter of 2006. Cor­re­spond­ingly, sub-prime loans (those made to bor­row­ers with blem­ished credit) rose from 7.2 per­cent to 18.8 per­cent, and Alt-A loans (those made to spec­u­la­tive buy­ers or with­out the usual under­writ­ing stan­dards) rose from 2.5 per­cent to 13.9 per­cent. Although it is dif­fi­cult to prove cause and effect, it is highly likely that the lower lend­ing stan­dards required by the CRA influ­enced what banks and other lenders were will­ing to offer to bor­row­ers in prime mar­kets. Need­less to say, most bor­row­ers would pre­fer a mort­gage with a low down pay­ment require­ment, allow­ing them to buy a larger home for the same ini­tial investment.

The prob­lem is summed up suc­cinctly by Stan Liebowitz of the Uni­ver­sity of Texas at Dallas:

From the cur­rent hand­wring­ing, you’d think that the banks came up with the idea of looser under­writ­ing stan­dards on their own, with reg­u­la­tors just asleep on the job. In fact, it was the reg­u­la­tors who relaxed these standards–at the behest of com­mu­nity groups and “pro­gres­sive” polit­i­cal forces.… For years, ris­ing house prices hid the default prob­lems since quick refi­nances were pos­si­ble. But now that house prices have stopped ris­ing, we can clearly see the dam­age done by relaxed loan standards.

The point here is not that low-income bor­row­ers received mort­gage loans that they could not afford. That is prob­a­bly true to some extent but can­not account for the large num­ber of sub-prime and Alt-A loans that cur­rently pol­lute the bank­ing sys­tem. It was the spread­ing of these looser stan­dards to the prime loan mar­ket that vastly increased the avail­abil­ity of credit for mort­gages, the spec­u­la­tion in hous­ing, and ulti­mately the bub­ble in hous­ing prices.

IN 1992, AN AFFORDABLE hous­ing mis­sion was added to the char­ters of Fan­nie and Fred­die, which–like the CRA–permitted Con­gress to sub­si­dize LMI hous­ing with­out appro­pri­at­ing any funds. A 1997 Urban Insti­tute report found that local and regional lenders seemed more will­ing than the GSEs to serve cred­it­wor­thy low– to moderate-income and minor­ity appli­cants. After this, Fan­nie and Fred­die mod­i­fied their auto­mated under­writ­ing sys­tems to accept loans with char­ac­ter­is­tics that they had pre­vi­ously rejected. This opened the way for large num­bers of non­tra­di­tional and sub-prime mort­gages. These did not nec­es­sar­ily come from tra­di­tional banks, lend­ing under the CRA, but from lenders like Coun­try­wide Finan­cial, the nation’s largest sub-prime and non­tra­di­tional mort­gage lender and a firm that would become infa­mous for con­sis­tently push­ing the enve­lope on accept­able under­writ­ing standards.

Fan­nie and Fred­die used their afford­able hous­ing mis­sion to avoid addi­tional reg­u­la­tion by Con­gress, espe­cially restric­tions on the accu­mu­la­tion of mort­gage port­fo­lios (today total­ing approx­i­mately $1.6 tril­lion) that accounted for most of their prof­its. The GSEs argued that if Con­gress con­strained the size of their mort­gage port­fo­lios, they could not afford to ade­quately sub­si­dize afford­able hous­ing. By 1997, Fan­nie was offer­ing a 97 per­cent loan-to-value mort­gage. By 2001, it was offer­ing mort­gages with no down pay­ment at all. By 2007, Fan­nie and Fred­die were required to show that 55 per­cent of their mort­gage pur­chases were LMI loans and, within that goal, 38 per­cent of all pur­chases were to come from under­served areas (usu­ally inner cities) and 25 per­cent were to be loans to low-income and very-low-income bor­row­ers. Meet­ing these goals almost cer­tainly required Fan­nie and Fred­die to pur­chase loans with low down pay­ments and other defi­cien­cies that would mark them as sub-prime or Alt-A.

The decline in under­writ­ing stan­dards is clear in the finan­cial dis­clo­sures of Fan­nie and Fred­die. From 2005 to 2007, Fan­nie and Fred­die bought approx­i­mately $1 tril­lion in sub-prime and Alt-A loans. This amounted to about 40 per­cent of their mort­gage pur­chases dur­ing that period. More­over, Fred­die pur­chased an ever-increasing per­cent­age of Alt-A and sub-prime loans for each year between 2004 and 2007. It is impos­si­ble to fore­cast the total losses the GSEs will real­ize from a $1.6 tril­lion port­fo­lio of junk loans, but if default rates on these loans con­tinue at the unprece­dented lev­els they are show­ing today, the num­ber will be stag­ger­ing. The losses could make the $150 bil­lion S&L bailout in the late 1980s and early 1990s look small by comparison.

The GSEs’ pur­chases of sub-prime and Alt-A loans affected the rest of the mar­ket for these mort­gages in two ways. First, it increased the com­pe­ti­tion for these loans with private-label issuers. Before 2004, private-label issuers–generally invest­ment and com­mer­cial banks–specialized in sub­prime and Alt-A loans because GSEs’ finan­cial advan­tages, espe­cially their access to cheaper financ­ing, enabled them to box private-label com­pe­ti­tion out of the con­ven­tional mar­ket. When the GSEs decided to ramp up their pur­chases of sub-prime and Alt-A loans to ful­fill their afford­able hous­ing mis­sion, they began to take mar­ket share from the private-label issuers while simul­ta­ne­ously cre­at­ing greater demand for sub-prime and Alt-A loans among mem­bers of the orig­i­na­tor community.

Sec­ond, the increased demand from the GSEs and the com­pe­ti­tion with private-label issuers drove up the value of sub-prime and Alt-A mort­gages, reduc­ing the risk pre­mium that had pre­vi­ously sup­pressed orig­i­na­tions. As a result, many more mar­gin­ally qual­i­fied or unqual­i­fied appli­cants for mort­gages were accepted. From 2003 to late 2006, con­ven­tional loans (includ­ing jumbo loans) declined from 78.8 per­cent to 50.1 per­cent of all mort­gages, while sub­prime and Alt-A loans increased from 10.1 per­cent to 32.7 per­cent. Because GSE pur­chases are not included in these num­bers, in the years just before the col­lapse of home prices began, about half of all home loans being made in the United States were non-prime loans. Since these mort­gages aggre­gate more than $2 tril­lion, this accounts for the weak­ness in bank assets that is the prin­ci­pal under­ly­ing cause of the cur­rent finan­cial crisis.

In a very real sense, the com­pe­ti­tion from Fan­nie and Fred­die that began in late 2004 caused both the GSEs and the private-label issuers to scrape the bot­tom of the mort­gage bar­rel. Fan­nie and Fred­die did so in order to demon­strate to Con­gress their abil­ity to increase sup­port for afford­able hous­ing. The private-label issuers did so to main­tain their mar­ket share against the GSEs’ increased demand for sub-prime and Alt-A prod­ucts. Thus, the grad­ual decline in lend­ing standards–beginning with the revised CRA reg­u­la­tions in 1993 and con­tin­u­ing with the GSEs’ attempts to show Con­gress that they were meet­ing their afford­able hous­ing mission–came to dom­i­nate mort­gage lend­ing in the United States.

FEDERAL HOUSING INIATIVES are not the only cul­prits in the cur­rent mort­gage mess–state-based res­i­den­tial finance laws give home­own­ers two free options that con­tributed sub­stan­tially to the finan­cial cri­sis. First, any home­owner may, with­out penalty, refi­nance a mort­gage when­ever inter­est rates fall or home prices rise to a point where there is sig­nif­i­cant equity in the home, enabling them to extract any equity that had accu­mu­lated between the orig­i­nal financ­ing trans­ac­tion and any sub­se­quent refi­nanc­ing. The result is so-called cash-out refi­nanc­ing, in which home­own­ers treat their homes like sav­ings accounts, draw­ing out funds to buy cars, boats, or sec­ond homes. By the end of 2006, 86 per­cent of all home mort­gage refi­nanc­ings were cash-outs, amount­ing to $327 bil­lion that year. Unfor­tu­nately, this meant that when home prices fell, there was lit­tle equity in the home behind the mort­gage and fre­quently lit­tle rea­son to con­tinue mak­ing pay­ments on the mortgage.

The will­ing­ness of home­own­ers to walk away from their “under­wa­ter” mort­gages was increased by the des­ig­na­tion of mort­gages as “with­out recourse” in most states. In essence, non-recourse mort­gages mean that default­ing home­own­ers are not per­son­ally respon­si­ble for pay­ing any dif­fer­ence between the value of the home and the prin­ci­pal amount of the mort­gage oblig­a­tion, or that the process for enforc­ing this oblig­a­tion is so bur­den­some and time-consuming that lenders sim­ply do not bother. The homeowner’s oppor­tu­nity to walk away from a home that is no longer more valu­able than the mort­gage it car­ries exac­er­bates the effect of the cash-out refinancing.

Tax laws fur­ther ampli­fied the prob­lems of the hous­ing bub­ble and dimin­ished lev­els of home equity, espe­cially the deductibil­ity of inter­est on home equity loans. Inter­est on con­sumer loans of all kinds–for cars, credit cards, or other purposes–is not deductible for fed­eral tax pur­poses, but inter­est on home equity loans is deductible no mat­ter how the funds are used. As a result, home­own­ers are encour­aged to take out home equity loans to pay off their credit card or auto loans or to make the pur­chases that would ordi­nar­ily be made with other forms of debt. Con­se­quently, home­own­ers are encour­aged not only to bor­row against their homes’ equity in pref­er­ence to other forms of bor­row­ing, but also to extract equity from their homes for per­sonal and even busi­ness pur­poses. Again, the reduc­tion in home equity has enhanced the like­li­hood that defaults and fore­clo­sures will rise pre­cip­i­tously as the econ­omy con­tin­ues to contract.

Bank reg­u­la­tory poli­cies should also shoul­der some of the blame for the finan­cial cri­sis. Basel I, a 1988 inter­na­tional pro­to­col devel­oped by bank reg­u­la­tors in most of the world’s devel­oped coun­tries, devised a sys­tem for ensur­ing that banks are ade­quately cap­i­tal­ized. Bank assets are assigned to dif­fer­ent risk cat­e­gories, and the amount of cap­i­tal that a bank holds for each asset is pegged to the asset’s per­ceived risk­i­ness. Under Basel I’s tiered risk-weighting sys­tem, AAA asset-backed secu­ri­ties are less than half as risky as res­i­den­tial mort­gages, which are them­selves half as risky as com­mer­cial loans. These rules pro­vided an incen­tive for banks to hold mort­gages in pref­er­ence to com­mer­cial loans or to con­vert their port­fo­lios of whole mort­gages into an MBS port­fo­lio rated AAA, because doing so would sub­stan­tially reduce their cap­i­tal requirements.

Though the banks may have been ade­quately cap­i­tal­ized if the mort­gages were of high qual­ity or if the AAA rat­ing cor­rectly pre­dicted the risk of default, the grad­ual decline in under­writ­ing stan­dards meant that the mort­gages in any pool of prime mort­gages often had high loan-to-value ratios, low FICO scores, or other indi­ca­tors of low qual­ity. In other words, the Basel bank cap­i­tal stan­dards, applic­a­ble through­out the world’s devel­oped economies, encour­aged com­mer­cial banks to hold only a small amount of cap­i­tal against the risks asso­ci­ated with res­i­den­tial mort­gages. As these risks increased because of the decline in lend­ing stan­dards and the bal­loon­ing of home prices, the Basel cap­i­tal require­ments became increas­ingly inad­e­quate for the risks banks were assum­ing in hold­ing both mort­gages and MBS portfolios.

PREVENTING A RECURRENCE of the finan­cial cri­sis we face today does not require new reg­u­la­tion of the finan­cial sys­tem. What is required instead is an appre­ci­a­tion of the fact–as much as law­mak­ers would like to avoid it–that U.S. hous­ing poli­cies are the root cause of the cur­rent finan­cial cri­sis. Other players–greedy invest­ment bankers; incom­pe­tent rat­ing agen­cies; irre­spon­si­ble hous­ing spec­u­la­tors; short­sighted home­own­ers; and preda­tory mort­gage bro­kers, lenders, and borrowers–all played a part, but they were only fol­low­ing the eco­nomic incen­tives that gov­ern­ment pol­icy laid out for them. If we are really seri­ous about pre­vent­ing a recur­rence of this cri­sis, rather than increas­ing the power of the gov­ern­ment over the econ­omy, our first order of busi­ness should be to cor­rect the destruc­tive hous­ing poli­cies of the U.S. government.

top­ics:
Global Finan­cial Cri­sis, Hous­ing Bubble

Peter J. Wal­li­son is the Arthur F. Burns Fel­low in Finan­cial Pol­icy Stud­ies at the Amer­i­can Enter­prise Insti­tute. Karen Dubas of AEI assisted Mr. Wal­li­son in the prepa­ra­tion of this article.


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What is a “Culture of Democracy”?

by John Perry

That is not the same ques­tion as “What is democ­racy”, or “What is a demo­c­ra­tic soci­ety”.  Rather I mean to ask, “What is the psy­che of a pop­u­la­tion that desires free­dom?   I like the descrip­tion ten­dered by George Will that the cre­ation of democ­racy is an organic process.  In Mr. Will’s char­ac­ter­i­za­tion, you can no more build a democ­racy than you can  build an orchid.  It will only occur if the right con­di­tions exist and then it must grow from a pop­u­la­tion of peo­ple.  It’s not some­thing to be constructed.

Con­sider for a moment the pro­found suc­cess of the founders of the United States.  Why was this group of men so suc­cess­ful in cre­at­ing a form of self-government that is unmatched in the his­tory of all human endeavor?  What inspired them to cre­ate a sys­tem of gov­ern­ment which pro­vides lib­erty and pros­per­ity not only to its cit­i­zenry but also improves the stan­dard of liv­ing in many other coun­tries, many which hold quite dif­fer­ent views of human rights and eco­nomic free­doms?  I think the answer lies in the cen­turies of events that con­di­tioned a group of com­mon men to seize an oppor­tu­nity to throw off the shack­les of tyranny and to cre­ate a sys­tem that would rec­og­nize that all men are created equal.

Could it be the req­ui­site ele­ments for a cul­ture of democ­racy are the love of lib­erty and the fear of tyranny?  And what hap­pens when a healthy fear of gov­ern­ment power is miss­ing from a soci­ety?  After more than 200 years, generations of Amer­i­cans have enjoyed the pro­tec­tion and secu­rity of liv­ing under a con­sti­tu­tion­ally lim­ited gov­ern­ment.  Con­sid­er­ing human nature, isn’t it under­stand­able or even pre­dictable that most of our pop­u­la­tion would become com­pla­cent, unwor­ried or unaware that the great­est threat to lib­erty is from those whom we elect to govern?

The wis­dom of our fore­fa­thers was borne not from genius.  It was borne from a prac­ti­cal fear of rulers and despots.  Our sys­tem of gov­ern­ment was con­structed to ensure that no per­son or party would dom­i­nate the gov­er­nance of the peo­ple in order to guar­an­tee the max­i­mum pos­si­ble indi­vid­ual lib­erty in a free society.

Like air and water are needed to sus­tain life,  so it is that a love of lib­erty and fear of oppres­sion are nec­es­sary to sus­tain a democracy.

More on Foreign Aid

Expert: Africa Needs More than For­eign Aid

RENEE MONTAGNE, host:

Debt relief and aid to Africa are among the most impor­tant issues under con­sid­er­a­tion at that G8 Sum­mit. Still, some ques­tion whether aid promised to African nations will find its way to the peo­ple who need it most. George Ayittey is from Ghana, now a pro­fes­sor of eco­nom­ics at Amer­i­can Uni­ver­sity in Wash­ing­ton, DC. Keep in mind, he says, that African coun­tries have already squan­dered bil­lions of dol­lars of aid.

Pro­fes­sor GEORGE AYITTEY (Amer­i­can Uni­ver­sity): Well, we all know that in the past, giv­ing aid to African gov­ern­ment sim­ply didn’t help. I mean, much of the aid dis­ap­peared into the pock­ets of cor­rupt African gov­ern­ments, but it is some­thing that’s not polit­i­cally cor­rect to talk about that because a lot of peo­ple don’t want to crit­i­cize black African lead­ers for fear of being labeled as racist, but you just can’t, you know, give aid to Africa using the old approach.

MONTAGNE: Now just to put it in per­spec­tive, what would you call the old approach? Where would the aid have gone?

Prof. AYITTEY: Let me give you an exam­ple. Back in 1999, Uganda, for exam­ple, received debt relief equiv­a­lent to some­thing like $790 mil­lion, and when Uganda got that debt relief, the first thing that Pres­i­dent Musev­eni did was to buy him­self a new pres­i­den­tial jet. Africa’s beg­ging bowl leaks hor­ri­bly. The old Africa seeks to put more money into this leaky bucket. A new approach will seek to plug the leaks.

MONTAGNE: Plug­ging leaks would sug­gest fight­ing corruption…

Prof. AYITTEY: Yes.

MONTAGNE: …which is quite a tall order.

Prof. AYITTEY: Yes. But in the past, you know, the West­ern donors sort of cast a blind eye to this mas­sive cor­rup­tion with–you know, this was dur­ing the Cold War. The West was more inter­ested in look­ing for Cold War allies. One exam­ple being Mobutu Sese Seko of Zaire, for exam­ple, where every dol­lar that went into Zaire Mobutu skimmed 20 cents off the top just for his own per­sonal use. There was very lit­tle account­abil­ity, and a lot of peo­ple are say­ing that, ‘No, we need a new approach.’

MONTAGNE: You’ve talked and writ­ten about help­ing Africa pros­per through its indige­nous struc­tures and tra­di­tions. How do you mean that? What exactly do you mean?

Prof. AYITTEY: Africa’s sal­va­tion doesn’t lie in beg­ging and beg­ging for more aid, and as an African, I find it very, very humil­i­at­ing. We’re talk­ing about a con­ti­nent which is tremen­dously rich in min­eral resources. You name the mineral–gold, dia­monds, titanium–you find all that in Africa and our lead­ers have mis­man­aged the resources. Look, the sal­va­tion of Africa lies in Africa going back to its roots and build­ing upon its own indige­nous insti­tu­tions. There were mar­kets in Africa. There was free trade in Africa. If you go to our vil­lages, you’ll find par­tic­i­pa­tory democ­racy there. The prob­lem that hap­pened after inde­pen­dence was that our lead­ers rejected the mar­ket sys­tem as a West­ern insti­tu­tion and tried to destroy it and they also rejected democ­racy. This is why the con­ti­nent started its road to ruination.

MONTAGNE: Inter­est­ing and good goals–where to begin, though, with that?

Prof. AYITTEY: Well, if you take a look at any African econ­omy, there is the mod­ern sec­tor. Then there is the rural and the tra­di­tional sec­tor and stuck in between them is the infor­mal sec­tor. You can­not develop Africa by ignor­ing the tra­di­tional and the infor­mal sec­tors because that’s where the vast major­ity of the African peo­ple live, but these two sec­tors are pre­cisely those two sec­tors which the elites ignored or neglected. This is why I’m stress­ing African civil soci­ety and African com­mu­nity based organizations.

MONTAGNE: If the G8 lead­ers emerge from their meet­ing and made two or three par­tic­u­lar announce­ments, what would you like to hear?

Prof. AYITTEY: Well, what I’d like them to say is, ‘Sure, we want to help Africa,’ but they say they must dis­tin­guish between African gov­ern­ments or lead­ers and the African peo­ple so that they them­selves will insti­gate reform from within. The solu­tions to Africa’s prob­lems lie in Africa, not in Live Aid concerts.

MONTAGNE: George Ayittey is a pro­fes­sor of eco­nom­ics at Amer­i­can Uni­ver­sity and pres­i­dent of The Free Africa Foun­da­tion speak­ing with us from Edinburgh.

Thanks very much.

Prof. AYITTEY: Thank you very much, Renee, for hav­ing me.

MONTAGNE: You’re lis­ten­ing to MORNING EDITION from NPR News.

Copy­right ©2009 National Pub­lic Radio®. All rights reserved. No quotes from the mate­ri­als con­tained herein may be used in any media with­out attri­bu­tion to National Pub­lic Radio. This tran­script is pro­vided for per­sonal, non­com­mer­cial use only, pur­suant to our Terms of Use. Any other use requires NPR’s prior per­mis­sion. Visit our per­mis­sions page for fur­ther information.

The Shift Age

by John Perry

I recently met and heard the futur­ist David Houle dis­cuss his views on our chang­ing world and the end of the Infor­ma­tion Age and tran­si­tion to the next Age in the time­line of the human con­tin­uum.  He doesn’t pre­tend to be a prophet nor a psy­chic, but is the exec­u­tive respon­si­ble for the cre­ation of MTV, VH1, and Nick­elodeon.  His “gift” is the abil­ity to infer future devel­op­ments from cur­rent events, tech­nol­ogy, med­i­cine, eco­nom­ics, pol­i­tics,  and soci­etal val­ues.  In other words, he’s a smart guy that makes a point to be well informed with an above aver­age sense of how to con­nect the dots.

It’s taught that the Agri­cul­tural Age lasted about 10,000 years.  The Indus­trial age fol­lowed last­ing about 150 years.  the 1970’s was a tur­bu­lent decade of tran­si­tion to the Infor­ma­tion Age.  From 2000 to present we’ve expe­ri­enced the tran­si­tion again.  Each age shorter than the last, The Shift Age is upon us.

This is no small thing.  An “Age” is not just a gen­er­a­tional change but indi­cates global changes in val­ues, cul­ture, geopo­lit­i­cal influ­ence and power.  It’s a game changer and I don’t mean the old game with new rules but rather, a whole new game.  The tech­no­log­i­cal devel­op­ments of the last age cre­ate entirely new dynam­ics going forward.

Gov­ern­ments will have an increas­ingly dif­fi­cult time ral­ly­ing it’s cit­i­zenry to fol­low cen­trally directed gov­ern­ment doc­trine.  Broad­band and wire­less com­mu­ni­ca­tion allow now even peo­ple in the most remote areas to share opin­ion and com­mu­ni­ca­tion.  A “global con­scious­ness” will emerge as geo­graphic and polit­i­cal bar­ri­ers dis­solve through elec­tronic exchange of not just ide­ol­ogy but recipes, work-out tips, pho­tos, and commerce.

The under­stand­ing of peo­ple unlike us pro­motes com­pas­sion and empa­thy.  David Houle pointed out how every coun­try in the world reached out to help Haiti in some way imme­di­ately after the quake.  Just 20 years ago the aver­age Amer­i­can may or may not have read about it on page 7 of the daily news­pa­per.  Today we see stream­ing inter­net video and com­pre­hen­sive cov­er­age on tele­vi­sion caus­ing even the most indif­fer­ent of per­sons to pause and reflect.

This inter­con­nec­tiv­ity will impact for­eign pol­icy, trade, global treaties, war, and most impor­tantly, global pub­lic opin­ion of world events.  Even con­sumer choices will be shaped as moral and social con­sid­er­a­tions will emerge to shape buy­ing power and human rights prac­tices in devel­op­ing nations want­ing to par­tic­i­pate in global prosperity.

Blogs, Face­book, Twit­ter and such are just the begin­ning of what will soon become inte­grated in the lives of every­one.  For bet­ter or worse, we will soon become world with­out bor­ders where ideas are con­trolled not by gov­ern­ments, theoc­ra­cies, cor­po­ra­tions, & mar­ket­ing depart­ments  but by people.

What a Liberal says about Conservatives…

by JOHN PERRY

I’ve posted this because it should be read by any­one refer­ring to them­selves as a con­ser­v­a­tive. This com­men­tary artic­u­lates well the opin­ion that pre­vails among many lib­er­als and mod­er­ates alike. “Con­ser­v­a­tives” have all been lumped together in the mind of many to mean wealthy, oppres­sive, anti-government, white & racist, homo­pho­bic, impe­ri­al­is­tic, reli­gious fanat­ics. There are those neo-conservatives and lob­by­ists from the reli­gious right that have cre­ated much of the con­fu­sion today that Barry Gold­wa­ter warned about.

While talk radio and con­ser­v­a­tive media stars have ral­lied con­ser­v­a­tives on issues, the mes­sage is often unclear and is indeed con­tra­dic­tory indi­cat­ing that not all con­ser­v­a­tives are alike, or indeed, even Repub­li­can. Con­ser­v­a­tivism is about pro­tect­ing the indi­vid­ual from col­lec­tivism and gov­ern­ment tyranny. It is not about oppress­ing the poor or minori­ties. It is the oppo­site. The pro­tec­tion of indi­vid­ual lib­erty should be of con­cern to all peo­ple regard­less of race, creed, gen­der, reli­gion or sex­ual ori­en­ta­tion. I know hard core con­ser­v­a­tives rep­re­sent­ing the full spec­trum of diver­sity. Nor would a con­ser­v­a­tive go out of his way to pro­tect “big busi­ness”. Cor­po­ra­tions have cre­ated vast wealth and pros­per­ity for our cit­i­zens how­ever where cor­po­rate goals con­flict with the rights of the indi­vid­ual a con­ser­v­a­tive will go with the individual’s rights.

There is alot that con­ser­v­a­tives could learn from here…but also note that much of it is just plain wrong too. It fails to address the basic con­ser­v­a­tive argument…that true con­ser­vatism is the pro­tec­tor of indi­vid­ual lib­erty, and wel­farism, or sta­tism, demeans human beings to the sta­tus of live­stock, to be lead and cared for, and min­i­miz­ing the oppor­tu­nity of each human to achieve.

________________________________________________________

An open let­ter to con­ser­v­a­tives from a left-wing blog­ger
March 22, 2010, 3:16PM

Dear Con­ser­v­a­tive Americans,

The years have not been kind to you. I grew up in a pro­foundly Repub­li­can home, so I can remem­ber when you wore a very dif­fer­ent face than the one we see now. You’ve lost me and you’ve lost most of Amer­ica. Because I believe hav­ing respon­si­ble choices is impor­tant to democ­racy, I’d like to give you some advice and an invitation.

First, the invi­ta­tion: Come back to us.

Now the advice. You’re going to have to come up with a plat­form that isn’t built on a foun­da­tion of cow­ardice: fear of peo­ple with col­ors, reli­gions, cul­tures and sex lives that dif­fer from your own; fear of reform in bank­ing, health care, energy; fan­tasy fears of Amer­ica being trans­formed into an Islamic nation, into social/commun/fasc-ism, into a dis­armed pop­u­lace put in intern­ment camps; and more. But you have work to do even before you take on that task.

Your party — the GOP — and the con­ser­v­a­tive end of the Amer­i­can polit­i­cal spec­trum have become irre­spon­si­ble and irra­tional. Worse, it’s tol­er­at­ing, pro­mot­ing and cel­e­brat­ing prej­u­dice and hatred. Let me pro­vide some exam­ples — by no means an exhaus­tive list — of where the Right as got­ten itself stuck in a swamp of hypocrisy, hyper­bole, his­tor­i­cal inac­cu­racy and hatred.

If you’re going to regain your stature as a party of ratio­nal, respon­si­ble peo­ple, you’ll have to start by drain­ing this swamp:

Hypocrisy

You can’t flip out — and threaten impeach­ment — when Dems use a par­lia­men­tary pro­ce­dure (deem and pass) that you used repeat­edly (more than 35 times in just one ses­sion and more than 100 times in all!), that’s cen­turies old and which the courts have sup­ported. Espe­cially when your lead­ers admit it all.

You can’t vote and scream against the stim­u­lus pack­age and then take credit for the good it’s done in your own dis­trict (hap­pily hand­ing out enor­mous checks rep­re­sent­ing money that you voted against, is espe­cially ugly) — 114 of you (at last count) did just that — and it’s even worse when you secretly beg for more.

You can’t fight against your own ideas just because the Dem pres­i­dent endorses your proposal.

You can’t call for a pay-as-you-go pol­icy, and then vote against your own ideas.

Are they “unlaw­ful enemy com­bat­ants” or are they “pris­on­ers of war” at Gitmo? You can’t have it both ways.

You can’t carry on about the evils of gov­ern­ment spend­ing when your fam­ily has accepted more than a quarter-million dol­lars in gov­ern­ment handouts.

You can’t refuse to go to a sched­uled meet­ing, to which you were invited, and then blame the Dems because they didn’t meet with you.

You can’t rail against using teleprompters while using teleprompters. Repeatedly.

You can’t rail against the bank bailouts when you sup­ported them as they were happening.

You can’t be for immi­gra­tion reform, then against it .

You can’t enjoy social­ized med­i­cine while con­demn­ing it.

You can’t flip out when the black pres­i­dent puts his feet on the pres­i­den­tial desk when you were silent about white pres­i­dents doing the same. Bush. Ford.

You can’t com­plain that the pres­i­dent hasn’t closed Gitmo yet when you’ve cam­paigned to keep Gitmo open.

You can’t flip out when the black pres­i­dent bows to for­eign dig­ni­taries, as appro­pri­ate for their cul­ture, when you were silent when the white pres­i­dents did the same. Bush. Nixon. Ike. You didn’t even make a peep when Bush held hands and kissed lead­ers of coun­tries that are not on “kiss­ing terms” with the US.

You can’t com­plain that the undies bomber was read his Miranda rights under Obama when the shoe bomber was read his Miranda rights under Bush and you remained silent. (And, no, Newt — the shoe bomber was not a US cit­i­zen either, so there is no difference.)

You can’t attack the Dem pres­i­dent for not per­son­ally* pub­licly con­demn­ing a ter­ror­ist event for 72 hours when you said noth­ing about the Rep pres­i­dent wait­ing 6 days in an eerily sim­i­lar inci­dent (and, even then, he didn’t issue any con­dem­na­tion). *Obama admin­is­tra­tion did the day of the event.

You can’t throw a hissy fit, sound alarms and cry that Obama freed Gitmo pris­on­ers who later helped plan the Christ­mas Day undie bomb­ing, when — in fact — only one for­mer Gitmo detainee, released by Dick Cheney and George W. Bush, helped to plan the failed attack.

You can’t con­demn blam­ing the Repub­li­can pres­i­dent for an attempted ter­ror attack on his watch, then blame the Dem pres­i­dent for an attempted ter­ror attack on his.

You can’t mount a boy­cott against singers who say they’re ashamed of the pres­i­dent for start­ing a war, but remain silent when another singer says he’s ashamed of the pres­i­dent and falsely calls him a Maoist who makes him want to throw up and says he ought to be in jail.

You can’t cry that the health care bill is too long, then cry that it’s too short.

You can’t sup­port the indi­vid­ual man­date for health insur­ance, then call it uncon­sti­tu­tional when Dems pro­pose it and cam­paign against your own ideas.

You can’t demand tele­vi­sion cov­er­age, then whine about it when you get it. Repeatedly.

You can’t praise crim­i­nal tri­als in US courts for ter­ror sus­pects under a Rep pres­i­dent, then call it “trea­so­nous” under a Dem president.

You can’t pro­pose ideas to cre­ate jobs, and then work against them when the Dems put your ideas in a bill.

You can’t be both pro-choice and anti-choice.

You can’t damn some­one for fail­ing to pay $900 in taxes when you’ve paid nearly $20,000 in IRS fines.

You can’t con­demn crit­i­ciz­ing the pres­i­dent when US troops are in harms way, then attack the pres­i­dent when US troops are in harms way , the only dif­fer­ence being the president’s party affil­i­a­tion (and, by the way, armed con­flict does NOT remove our right and our duty as Amer­i­cans to speak up).

You can’t be both for cap-and-trade pol­icy and against it.

You can’t vote to block debate on a bill, then bemoan the lack of ‘open debate’.

If you push anti-gay leg­is­la­tion and make anti-gay speeches, you should prob­a­bly take a pass on hav­ing gay sex, regard­less of whether it’s 2004 or 2010. This is true, too, if you’re tak­ing GOP money and giv­ing anti-gay rants on CNN. Tak­ing right-wing money and GOP favors to write anti-gay sto­ries for news sites while work­ing as a gay pros­ti­tute, dou­bles down on both the hypocrisy and the pros­ti­tu­tion. This is espe­cially true if you claim your anti-gay stand is God’s stand, too.

When you chair the House Cau­cus on Miss­ing and Exploited Chil­dren, you can’t send sexy emails to 16-year-old boys (ille­gal any­way, but you made it hyp­o­crit­i­cal as well).

You can’t crit­i­cize Dems for not doing some­thing you didn’t do while you held power over the past 16 years, espe­cially when the Dems have done more in one year than you did in 16.

You can’t decry “name call­ing” when you’ve been the most con­sis­tent and out­ra­geous at it. And the most vile.

You can’t spend more than 40 years hat­ing, cut­ting and try­ing to kill Medicare, and then pre­tend to be the defend­ers of Medicare

You can’t praise the Con­gres­sional Bud­get Office when it’s analy­sis pro­duces num­bers that fit your polit­i­cal agenda, then claim it’s unre­li­able when it comes up with num­bers that don’t.

You can’t vote for X under a Repub­li­can pres­i­dent, then vote against X under a Demo­c­ra­tic pres­i­dent. Either you sup­port X or you don’t. And it makes it worse when you change your posi­tion merely for the sake obstructionism.

You can’t call a rec­on­cil­i­a­tion out of bounds when you used it repeatedly.

You can’t spend tax­payer money on ads against spend­ing tax­payer money.

You can’t con­demn indi­vid­ual health insur­ance man­dates in a Dem bill, when the man­dates were your idea.

You can’t demand every­one lis­ten to the gen­er­als when they say what fits your agenda, and then ignore them when they don’t.

You can’t whine that it’s unfair when peo­ple accuse you of exploit­ing racism for polit­i­cal gain, when your party’s for­mer leader admits you’ve been doing it for decades.

You can’t por­tray your­self as fight­ing ter­ror­ists when you openly and pas­sion­ately sup­port terrorists.

You can’t com­plain about a lack of bipar­ti­san­ship when you’ve rou­tinely obstructed for the sake of polit­i­cal gain — threat­en­ing to fil­i­buster at least 100 pieces of leg­is­la­tion in one ses­sion, far more than any other since the pro­ce­dural tac­tic was invented — and admit­ted it. Some admis­sions are unin­ten­tional, oth­ers are made proudly. This is espe­cially true when the bill is the result of decades of com­pro­mise between the two par­ties and is filled with your own ideas.

You can’t ques­tion the loy­alty of Depart­ment of Jus­tice lawyers when you didn’t object when your own Repub­li­can pres­i­dent appointed them.

You can’t preach and try to leg­is­late “Fam­ily Val­ues” when you: take nude hot tub dips with teenagers (and pay them hush money); cheat on your wife with a secret lover and lie about it to the world; cheat with a staffer’s wife (and pay them off with a new job); pay hook­ers for sex while wear­ing a dia­per and cheat­ing on your wife; or just enjoy­ing an old fash­ioned non-kinky cheat­ing on your wife; try to have gay sex in a pub­lic toi­let; autho­rize the rape of chil­dren in Iraqi pris­ons to coerce their par­ents into pro­vid­ing infor­ma­tion; seek, look at or have sex with chil­dren; replace a guy who cheats on his wife with a guy who cheats on his preg­nant wife with his wife’s mother;

Hyper­bole

You really need to dis­as­so­ci­ate with those among you who:

* assert that peo­ple mak­ing a quarter-million dol­lars a year can barely make ends meet or that $1 mil­lion “isn’t a lot of money”;
* say that “Com­rade” Obama is a “Bol­she­vik” who is “tak­ing cues from Lenin”;
* ignore the many times your bud­dies use a term that offends you and com­plain only when a Dem says it;
* liken polit­i­cal oppo­nents to mur­der­ers, rapists, and “this Mus­lim guy” that “offed his wife’s head” or call then “un-American”;
* say Obama “wants his plan to fail…so that he can make the case for bank nation­al­iza­tion and vin­di­cate his dream of a social­ist econ­omy”;
* equate putting the good of the peo­ple ahead of your per­sonal for­tunes with ter­ror­ism;
* smear an entire major reli­gion with the actions of a few fanat­ics;
* say that the pres­i­dent wants to “anni­hi­late us”;
* com­pare health care reform with the bomb­ing of Pearl Har­bor, a Bol­she­vik plot the attack on 9/11,or reviv­ing the ghosts of com­mu­nist dic­ta­tors (update: it’s also not Armaged­don);
* equate our disease-fighting stem cell research with “what the Nazis did”;
* call a bill passed by the major­ity of both houses of Con­gress, by mem­bers of Con­gress each elected by a major­ity in their dis­tricts, an uncon­scionable abuse of power, a vio­la­tion of the pres­i­den­tial oath or “the end of rep­re­sen­ta­tive gov­ern­ment”;
* shout “baby killer” at a mem­ber of Con­gress on the floor of the House, espe­cially one who so fought against abor­tion rights that he nearly killed health care reform (in fact, a lit­tle deco­rum, a lit­tle respect for our national insti­tu­tions and the peo­ple and the val­ues they rep­re­sent, would be refresh­ing — cut out the shout­ing, the swear­ing and the obscen­i­ties);
* prove your machismo by claim­ing your going to “crash a party” to which you’re offi­cially invited;
* claim that Obama is push­ing America’s “sub­mis­sion to Shariah”;
* ques­tion the patri­o­tism of peo­ple uphold­ing cher­ished Amer­i­can val­ues and the rule of law;
* claim the pres­i­dent is mak­ing us less safe with­out a hint of evi­dence;
* call a major­ity vote the “tyranny of the minor­ity,” even if you meant to call it tyranny of the major­ity — it’s democ­racy, not tyranny;
* call the president’s sup­port of a crim­i­nal trial for a ter­ror sus­pect “trea­so­nous” (espe­cially when you sup­ported the same thing when the pres­i­dent shared your party);
* call the Pope the anti-Christ;
* assert that the con­sti­tu­tion­ally man­dated cen­sus is an attempt to enslave us;
* accuse oppo­nents of being backed by Arab slave-drivers or of being drunk and sui­ci­dal;
* equate fam­ily plan­ning with eugen­ics or Nazism;
* accuse the pres­i­dent of chang­ing the mis­sile defense program’s logo to match his cam­paign logo and reflect what you say is his secret Mus­lim iden­tity;
* accuse polit­i­cal oppo­nents of being total­i­tar­i­ans, social­ists, com­mu­nists, fas­cists, Marx­ists; ter­ror­ist sym­pa­thiz­ers, McCarthy-like, Nazis or drug push­ers; and
* advo­cate a trai­tor­ous act like seces­sion, vio­lent rev­o­lu­tion , mil­i­tary coup or civil war (just so we’re clear: sedi­tion is a bad thing).

His­tory

If you’re going to use words like social­ism, com­mu­nism and fas­cism, you must have at least a basic under­stand­ing of what those words mean (hint: they’re NOT synonymous!)

You can’t cut a lead­ing Found­ing Father out the his­tory books because you’ve decided you don’t like his ideas.

You cant repeat­edly assert that the pres­i­dent refuses to say the word “ter­ror­ism” or say we’re at war with ter­ror when we have an awful lot of video­tape show­ing him repeat­edly assail­ing ter­ror­ism and using those exact words.

If you’re going to invoke the names of his­tor­i­cal fig­ures, it does not serve you well to white­wash them. Espe­cially this one.

You can’t just pre­tend his­tor­i­cal events didn’t hap­pen in an effort to make a polit­i­cal oppo­nent look dis­hon­est or to make your side look bet­ter. Espe­cially these events. (And, no, repeat­ing it doesn’t make it better.)

You can’t say things that are sim­ply and demon­stra­bly false: health care reform will not push peo­ple out of their pri­vate insur­ance and into a government-run pro­gram ; health care reform (which con­tains a good many of your ideas and very few from the Left) is a long way from “social­ist utopia”; health care reform is not “repa­ra­tions”; nor does health care reform cre­ate “death panels”.

Hatred

You have to con­demn those among you who:

* call mem­bers of Con­gress n*gger and f*ggot;
* elected lead­ers who say “I’m a proud racist”;
* state that Amer­ica has been built by white peo­ple;
* say that poor peo­ple are poor because they’re rot­ten peo­ple, call them “par­a­sitic garbage” or say they shouldn’t be allowed to vote;
* call women bitches and pros­ti­tutes just because you don’t like their pol­i­tics ( re — pea –ted — ly );
* assert that the women who are serv­ing our nation in uni­form are hook­ers;
* mock and cel­e­brate the death of a grand­mother because you dis­agree with her son’s pol­i­tics;
* declare that those who dis­agree with you are shown by that dis­agree­ment to be not just “Marx­ist rad­i­cals” but also mon­sters and a deadly dis­ease killing the nation (this would fit in the hyper­bole and his­tory cat­e­gories, too);
* joke about blind­ness;
* advo­cate euth­a­niz­ing the wife of your polit­i­cal oppo­nent;
* taunt peo­ple with incur­able, life-threatening dis­eases — espe­cially if you do it on a syn­di­cated broad­cast;
* equate gay love with bes­tial­ity — involv­ing horses or dogs or tur­tles or ducks — or polygamy, child molesta­tion, pedophilia;
* casu­ally assume that only white males look “like a real Amer­i­can”;
* assert pres­i­den­tial power to autho­rize tor­ture, tor­ture a child by hav­ing his tes­ti­cles crushed in front of his par­ents to get them to talk, order the mas­sacre of a civil­ian vil­lage and launch a nuclear attack with­out the con­sent of Con­gress;
* attack chil­dren whose moth­ers have died;
* call peo­ple racists with­out pro­duc­ing a shred of evi­dence that they’ve said or done some­thing that would even smell like racism — same for invok­ing racially charged “dog whis­tle” words (repeat­edly);
* con­demn the one thing that every major reli­gion agrees on;
* com­plain that we no longer employ the tac­tics we once used to dis­en­fran­chise mil­lions of Amer­i­cans because of their race;
* blame the vic­tims of nat­ural dis­as­ters and ter­ror­ist attacks for their suf­fer­ing and losses;
* cel­e­brate vio­lence , joke about vio­lence, pre­pare for vio­lence or use vio­lent imagery, “fun” polit­i­cal vio­lence, hints of vio­lence, threats of vio­lence (this one is rather explicit), sug­ges­tions of vio­lence or actual vio­lence (and, really, sug­gest­ing anal rape with a hot piece of metal is beyond the pale); and
* incite insur­rec­tion telling peo­ple to get their guns ready for a “bloody bat­tle” with the pres­i­dent of the United States.

Oh, and I’m not alone: One of your most respected and dec­o­rated lead­ers agrees with me.

So, dear con­ser­v­a­tives, get to work. Drain the swamp of the con­spir­acy nuts, the bald-faced liars unde­terred by demon­stra­ble facts, the overt hypocrisy and the hatred. Then offer us a calm, respon­si­ble, grownup agenda based on your val­ues and your vision for Amer­ica. We may or may not agree with your val­ues and vision, but we’ll cer­tainly wel­come you back to the Amer­i­can main­stream with open arms. We need you.

(Antic­i­pat­ing your ini­tial response: No there is noth­ing that even comes close to this level of wingnut­tery on the Amer­i­can Left.)

Writ­ten by Rus­sell King

Drive-thru

Q: Have you heard about McDon­alds new Obama Value Meal?
A: Order any­thing you like and the guy behind you has to pay for it.

Outsourcing Poverty

by J Perry

Min­i­mum wage laws should be abol­ished. These laws are both absurd and hyp­o­crit­i­cal to any­one giv­ing it a moment’s hon­est reflec­tion. What pos­i­tive effect does it have to help our econ­omy or improve the human con­di­tion? I’ve heard it argued as a moral imper­a­tive that we estab­lish and main­tain a gov­ern­ment man­dated min­i­mum wage. Of course, if there are no jobs avail­able at or above this wage that has been arbi­trar­ily deter­mined by politi­cians to buy votes, then a per­son who would be oth­er­wise will­ing to work is barred from the work­force and handed some­thing for noth­ing in exchange for his dig­nity. If you would argue that it would be wrong to allow that per­son to work at a lower wage then let’s be hon­est with ourselves.

No one I know has any prob­lem buy­ing goods from China or any of the other coun­tries with lower wages than ours. In fact, it is vital to our country’s econ­omy, health­care, tech­nol­ogy, and even defense. We have and will con­tinue to out­source any­thing that can be made more cheaply else­where. How much dis­cus­sion is there about the moral dilemma of buy­ing goods made by peo­ple earn­ing less than min­i­mum wage beyond U.S. bor­ders? Does any­one care? Would it not be bet­ter to allow these goods to be made within the U.S. where at least these work­ers’ civil lib­er­ties have the pro­tec­tion of the U.S. Con­sti­tu­tion? What we have done is say that the bot­tom ech­e­lon of our econ­omy will be out­sourced for no appar­ent rea­son than to buy the votes of labor union mem­bers. It has noth­ing to do with moral­ity and one could eas­ily say that min­i­mum wage laws them­selves are immoral. I sup­pose it does allow us to enjoy an arti­fi­cially clean soci­ety. It allows us to pre­tend that these work­ers don’t exist while the truth is we’ve only out­sourced poverty beyond our sight.

The costs on soci­ety are immense. Much of the wel­fare cost in this coun­try is unnec­es­sary. We pay peo­ple to do noth­ing, even restrict them from work­ing, while we hap­pily pay low income work­ers in third world coun­tries to make the goods and com­po­nents that we need.  How much sense is this?  Does this seem right to you?

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Money, Greed, and God: Why Capitalism is the Solution and Not the Problem

(Harper­One, 2009)

BOOK FORUM
Wednes­day, Novem­ber 4, 2009
Noon

Fea­tur­ing the author, Jay Richards, with com­ments by Doug Bandow, Senior Fel­low, Cato Insti­tute, and author, Beyond Good Inten­tions: A Bib­li­cal View of Pol­i­tics. Mod­er­ated by Daniel Gris­wold, Direc­tor of the Cen­ter for Trade Pol­icy Stud­ies, Cato Insti­tute, and author, Mad about Trade: Why Main Street Amer­ica Should Embrace Glob­al­iza­tion.

The Cato Insti­tute
1000 Mass­a­chu­setts Avenue, NW
Wash­ing­ton, DC 20001


 

The fall of com­mu­nism con­clu­sively demon­strated that cap­i­tal­ism is the bet­ter eco­nomic sys­tem. Free mar­kets are unsur­passed in their abil­ity to pro­vide mate­r­ial bounty, but in the after­math of the eco­nomic cri­sis some ask, are they moral? Even Pope Bene­dict is said to have retreated from his predecessor’s strong sup­port for the mar­ket econ­omy in the lat­est papal encycli­cal, Car­i­tas in Ver­i­tate. 

Jay Richards takes on the crit­ics of cap­i­tal­ism in his new book, Money, Greed, and God: Why Cap­i­tal­ism Is the Solu­tion and Not the Prob­lem. He argues that mar­kets, though imper­fect, are a nat­ural out­growth of God’s cre­ation and an impor­tant tool for help­ing the poor and dis­ad­van­taged. Com­ment­ing on Richards’ pre­sen­ta­tion is Cato Insti­tute Senior Fel­low Doug Bandow, also the author of Beyond Good Inten­tions: A Bib­li­cal View of Pol­i­tics. Mod­er­at­ing the dis­cus­sion is Daniel Gris­wold, the Cato Institute’s direc­tor of the Cen­ter for Trade Studies.

You may learn more about CATO by vis­it­ing  http://www.cato.org

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