Is Obama Really To Blame For Weak Economic Growth?

Editor’s note: This article first appeared at Forbes.com.

A political science colleague sent me an article documenting President Obama’s dismal economic record, and he asked me for added details and perspective. Here goes:

True, economic growth under Obama has been sluggish, fitful, faltering, historically weak, etc. However, if you look at the charts in the article—especially the second and third—you can see that U.S. economic growth has been trending downward for several decades. Conclusion: Our economic woes did not begin with Barack Obama. However, he has done nothing to reverse the trend; on the contrary, he has doubled down on the very policies that have hampered economic growth.

The headwinds opposing economic growth are generated by what Ronald Reagan referred to as “the government disease.” No president has advocated, championed, and imposed more harmful government intervention than Barack Obama.

Here’s a short list of those interventions:

1.) Government spending. Economists as far back as Adam Smith have noted that the true burden of government is what it spends, not what it taxes. When political decisions about where to allocate scarce economic resources supplant market decisions, production inevitably is diverted from the most highly valued needs to less valued things. Thus, less wealth is produced, economic growth is suboptimal, and the people are poorer than they otherwise would be.

While not having increased federal spending by as large a percentage as his predecessor, Obama undeniably has presided over more market-distorting government spending that any of his predecessors. To be fair, some of this spending was already baked into the cake—particularly the rising spending on Social Security and Medicare. Because federal entitlements operate on a “pay as you go” basis, these increasing expenditures to seniors do not consist of real economic returns on capital invested. Instead, they transfer hundreds of billions of dollars from current workers to mostly retirees. Entitlement expenditures artificially inflate GDP and overstate the real wealth of the country because those dollars represent purchasing power that does not arise from the production of actual goods or services.

2.) Rising debt. The greater the debt load, the more present income is diverted from present consumption to pay for past consumption. After a brief downturn following the 2008-9 financial crisis, total debt has risen by over 15 percent to a shade over $59 trillion, according to the Federal Reserve. Over half of the $7.35 trillion increased (some $4.84 trillion) is government debt stemming from Obama’s budgets.

Obama’s policy of encouraging and facilitating loans to college students has seen student debt soar to over $1 trillion with devastating economic consequences for the recipients. Young graduates struggling under the burden of debt have delayed marriage, child bearing, home buying, etc. In too many cases, college debt has stunted young American lives.

3.) Suffocating regulation. The Obama administration has burdened Americans with a record amount of federal regulation as measured by the number of new rules promulgated and pages in the Federal Register. The annual cost of the federal regulatory burden is now approximately $1.9 trillion (only nine countries’ GDPs are larger). As reported in Investor’s Business Daily, “the cost of enforcing federal economic regulations is … up 31 percent since Obama took office, and the ‘Code of Federal Regulations’ is 17,294 pages longer.”

Furthermore, as noted by Obama’s Council on Jobs and Competitiveness, the Sarbanes-Oxley law (which Obama inherited, but has not revised) and Dodd-Frank (which a Democratic Congress passed in 2010 with Obama’s approval) have “placed significant burdens on the large number of small companies.” Consequently, we are in the unusual and worrisome situation of businesses closing at a faster rate than they are opening, thereby shrinking employment opportunities and slowing economic growth.

4.) Tax policy. Business tax rates have remained unchanged under Obama, and that has had negative consequences in a world that has been shifting toward lower corporate profit taxes. By allowing the United States to have the highest corporate tax rate in the developed world, American businesses are migrating abroad via the corporate inversion maneuver.

5.) The war on work. While constantly professing concern for workers, Obama has consistently supported and implemented policies—ranging from a higher minimum wage to federal jobs programs to anti-business policies—that have shrunk the number of jobs (see the Labor Force Participation Rate). Obama’s prize legislative achievement, the Affordable Care Act, has shrunk the number of hours worked (and consequently the amount of wealth created) by incentivizing employers to reduce the number of full-time jobs. According to David Stockman, the United States has two million fewer full-time workers now than it did in 2007.

Bottom line: President Obama’s policies have crippled the American economy.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Memorial Day: Remembering Loyce Deen Of Altus, Oklahoma

I’ve written in the past about how my Pop carried with him a haunting memory from his time aboard the aircraft carrier Essex in World War II. Anti-aircraft fire had killed a turret gunner during a sortie. Pop, whose job it was to repair and prepare planes for the next mission, went up to inspect the plane as soon as it landed and saw the gunner’s body. At Pop’s recommendation, the captain of the Essex gave the order to bury the man in the plane in which he had given his life for his country. This burial at sea was unique. It was the only time during World War II that a valuable plane was ordered to be used as a coffin.

The burial itself was filmed and included in the 1950s series, “Victory at Sea.” Pop saw it for the first time when it was rebroadcast 20-25 years ago. Seeing that on the Essex dredged up disturbing memories of what Pop had seen on that long-ago day, and for years afterward he would retell that vivid story many nights after consuming copious quantities of Jim Beam.

The story didn’t end for me with Pop’s passing in 1999, because several years later, I stumbled onto a website about the airman who was buried in his plane. Suddenly, I knew many more details. His name was Loyce Edward Deen of Altus, Oklahoma. The fatal flight took place on November 5, 1944 in the Battle of Manila. The three-crew plane was the Grumman TBM (torpedo bomber) V-15.

The website provides interesting and touching details about the young Oklahoman. Loyce was his parents’ seventh child. He was followed four years later by one last sibling, a brother with Down’s Syndrome. Loyce was very close to his kid brother, who sadly died when Loyce was in eighth grade. Three years later, his mom had a stroke. Loyce helped care for her until she passed away about a month later.

In 1942, Loyce joined the Navy. On October 24, 1944, his foot was wounded by shrapnel in the Battle of Leyte Gulf. Heroically, he simply wrapped his foot and continued to fight on both the 24th and 25th. At the end of the month, Loyce had the option of recuperating on a hospital ship until his foot mended, but he insisted on staying with his two crewmates, pilot Lt. Robert Cosgrove and Radioman Digby Denzek. Character, courage, loyalty and love—Loyce Deen had them in spades. It was people like him who made the USA great.

The next week, at the age of 23, Loyce was killed instantly when [this is graphic folks, so you may wish to skip to the next paragraph] anti-aircraft fire decapitated him. It was that jarring, gruesome image that haunted my Pop. One memorable detail is the stoicism of Loyce’s crewmates. Denzek reported to Cosgrove over the intercom that “Deen was hit bad.” “Hit bad”—what a compassionate and wise euphemism. Denzek didn’t want to grieve or distract Cosgrove with the 24-year-old pilot already facing the nerve-wracking task of flying a damaged aircraft two anxious hours back to the Essex.

I feel like I knew Loyce Deen, even though our lifespans didn’t overlap and I’ve never met anyone who knew him. “Knowing” him has made a significant difference in my life. The most important male relatives in my life all saw combat in either World War II or Vietnam, but (thank you, Lord) none were killed in action, so for me, Memorial Day was always more of a general than a specific remembrance. That all changed when I found the Loyce Deen website. My Memorial Days are now fuller and more meaningful than before because Loyce crossed paths with Pop.

I‘m sure the descendants of Loyce’s brothers and sisters know what a good man and great hero their great-uncle was. Through this article, I hope many more people will know about him. On Memorial Day 2015, this solemn, reverential holiday, may all patriotic Americans honor the memory of tens of thousands of America’s best—people like Loyce Deen—who gave their lives that we and countless others might live in liberty. God bless them all.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Negative Interest Rates: A Brilliant Concept!

Editor’s note: This article first appeared at Forbes.com.

I have to admit that initially I was uninterested, even close-minded, about the negative yield being offered on a growing share of European sovereign debt. “It must be a short-term aberration,” I thought at first. “Completely nutso,” I sniffed dismissively as the phenomenon spread. “Who in their right mind would invest in a financial instrument that would guarantee a loss of principal?” Upon calmer reflection, I would shrug and think, “Well, to each his own, but none of those topsy-turvy debt instruments for me.”

More recently, I have taken a more tolerant attitude toward negative-yield debt. As I teach my Econ 101 students, the key to success in the economic marketplace is to set aside your own preconceptions and preferences and to acknowledge that the consumer is always right. If some of my fellow human beings want investment products that repay them less than their principal, who am I to find fault?

In fact, the more I think about it, I find myself attracted to the idea of offering such a service to satisfy this unfathomable consumer appetite for negative yields. Maybe I should announce that anybody out there who would like to send me money on the condition that I return less than all of it to them in the future is free to do so (as long as they include payment for any incidental transaction costs). From that perspective, negative interest rates are quite ingenious.

Actually, (I’m going to attempt to be serious now) what really got me thinking about the growing phenomenon of negative-yield debt was how to explain the concept to my 101 students. The traditional introduction to interest rates involves three basic components. The first is the “originary” rate of interest—the time preference between the present and the future. In years of teaching economics, I’ve never yet had a student express a preference for a hundred dollars next year over the same amount today; and I doubt I would get a different response if I lowered the payoff in the future to $99.90. Conclusion: The time preference of humans doesn’t account for the increasingly common negative-yield phenomenon.

Perhaps, then, we can solve the mystery by examining the second component of interest rates—the risk factor. Students readily grasp the rationality of lenders adding a risk premium to interest rates to compensate for lending to higher-risk borrowers. Traditionally, the primary function of financial intermediation has been to assess the creditworthiness of borrowers. That isn’t always the case at present, with government citing “disparate impact” and penalizing lenders who dare to consider risk before issuing loans. I can get my head around a risk premium of zero for government debt, since central banks can use QE and other techniques to ensure that governments have unlimited ability to return to its creditors however many monetary units it has borrowed. But a negative yield? One could certainly argue that nongovernmental borrowers, not having their own central banks, can’t give 100 percent guarantees that they’ll be able to repay what they borrow, while governments do; therefore, some creditors feel safer contracting for a negative yield from a government than a positive yield from a private entity. The problem with this line of thinking, though, is that creditors could lock cash in secure storage and know that they would get all of it back, rather than paying government to borrow their money.

The third component of interest rates is the inflation premium, which creditors sometimes demand to protect against currency depreciation. The late Franz Pick used to call bonds “guaranteed certificates of confiscation” because, between depreciation of the monetary unit and government taxation of interest income, bondholders’ purchasing power was systematically and ruthlessly transferred to government. Even today, in the bizarro world of central banks trying to “achieve” positive inflation (i.e., currency depreciation), one would think that creditors would insist on an inflation premium to offset the targeted depreciation. Instead, we have the spectacle of widespread acceptance of a nominally negative return on paper denominated in a currency that the relevant central bank is actively trying to depreciate.

In sum, elementary interest rate theory doesn’t solve the puzzle of why there are negative-yield instruments, so we need to look elsewhere. Perhaps the holders of negative-yield sovereign debt instruments anticipate earning capital gains due to increased demand for negative-yield securities in the future. This seems like a bet on the “greater fool theory” with central banks playing the part of the “fool.” I suppose it’s possible that in our strange new world of unlimited QE, chronic ZIRP, negative interest rates, etc., yields may become even more negative in the future, thereby rewarding those who solved earliest this counterintuitive riddle. Such a race deeper into the rabbit hole of negative yields may happen, but timid (blind?) little me won’t be on the buy side of those deals.

One other possible explanation for the phenomenon of negative interest rates is that central banks are trying to make their currency less attractive in currency exchanges. This is what makes the most sense to me—central bankers hope that negative interest rates will be an effective tool of currency manipulation in a world of competitive devaluations.

Negative interest rates are a weird and alarming symptom of profound economic dysfunction. In a healthy economy, interest rates coordinate production between the present and the future according to people’s composite time preferences. Today, those vitally important market signals are mangled, broken, shattered. Maybe negative-yield instruments will pay off in ways I don’t yet perceive, but I’m content to keep my distance from them and let others play that bizarre game. I’d rather preserve my sanity.

This post originally appeared on Western Journalism – Equipping You With The Truth

A Salute To Fathers Who Are REAL Men

This isn’t going to be one of those sentimental Father’s Day articles, even though that is what I would prefer. This article will have a bit of an edge to it. Please excuse my bluntness, but fatherhood is serious business; and for me to sugarcoat or evade the truth about it would benefit nobody.

Here goes: What does my peculiar title mean? Aren’t all fathers men? No, they are not. All fathers are male, but not all fathers are men. Maleness is a biological identity, a physical reality, a matter of hormones and organs. Manliness, on the other hand, is a matter of character, an intangible quality, a demonstrated achievement of maturity that not all adult males attain.

Several years ago, I wrote about an appalling situation in our country—the fact that the second leading cause of death of pregnant women in the U.S. is homicide, usually perpetrated by the father of the unborn child. Some males are so selfish and antisocial that they reduce their lover to an object that they will destroy, rather than allow her to give birth to the precious life that they have conceived together.

It is a socioeconomic fact that one of the two leading causes of long-term poverty in America is for women to bear children out of wedlock. (The other leading cause is failing to complete high school.) For a male to use a lover for a few moments of pleasure and then abandon her to a lifetime of poverty because he doesn’t want the responsibilities of fatherhood is cruelly selfish. Don’t do it, fellows.

Fatherhood is one of life’s most momentous choices. Males can become men by accepting the responsibilities of fatherhood, by marrying and committing themselves to full-time partnership in raising, teaching, and financially supporting their offspring. Alternatively, males can opt for bachelorhood–“freedom” (from responsibility)–and let their lover bear the psychological and financial cost of intimacy.

Let us salute the fathers who are men—those who have accepted the responsibilities of raising their children. These are the men who become genuine dads to their children—loving them, spending their hard-earned pay on them, and most importantly of all, being there for them both in times of joy and times of need.

I can vouch for the irreplaceable role a dad plays in a child’s life. “Pop,” my uncle, gave my mother and me a home in the absence of my biological father. Pop was a man in the fullest sense of the word—hardworking, unselfish, and always willing to serve above and beyond the call of duty. In addition to giving more than a decade of his life in hazardous military and military-related service to his country (no desk jobs for Pop!), he also committed himself to raising me. Many males would have balked at raising another man’s son. Pop’s thought process would have been this (he never told me, but I know how he thought): Here’s a boy who, through no fault of his own, doesn’t have a father. His mother, my sister-in-law, even though we don’t get along, has neither the income nor skill set nor emotional capability to raise him by herself. Ergo, they’ll live with us; and I’ll help raise the boy.

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The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom

The Ultimate Sacrifice: Remembering American Heroes

Last year on Memorial Day, my wife, daughter, and I were touring Cambridge, England. We took a bus ride three miles out of the city to the U.S. military cemetery there–one of 25 American burial grounds administered by the U.S. government on foreign territory. Cambridge University showed their deep gratitude for their American ally in World War II by donating 30 acres to serve as a final resting place for 3,812 Americans stationed in England who lost their lives in the war.

There is also a wall in this cemetery. Inscribed on it are the names of 5,126 additional American servicemen whose bodies were never recovered, including President Kennedy’s older brother, Joseph Jr., and the famous American bandleader, Glenn Miller.

There is nothing quite like the solemnity and unique peacefulness that pervades the atmosphere of military cemeteries. These hallowed places, consecrated to the memory of fallen soldiers, sailors, and airmen, touch the soul. These military cemeteries elicit the same otherworldly feeling, whether in the English countryside or at Arlington National Cemetery across the river from Washington. I have never visited the vast cemetery at Normandy, France, where 9,387 Americans are buried; but friends who have were moved to tears there.

Over the course of our country’s history, tens of thousands of Americans–most of them young and with decades of life still ahead of them–made the ultimate sacrifice. Some were killed by enemy fire; others, tragically, by friendly fire. Some succumbed to accidents, such as a young man who was in boot camp with my Pop in 1923: He was joking around; mockingly jumping to attention, he jammed the butt of his rifle to the ground, and the rifle discharged a fatal bullet into his head. Many others perished from diseases, most notably the masses of doughboys killed by typhus in the trenches of World War I.

As we remember all those premature deaths resulting from service to their country, we must ask ourselves the inevitable questions about military service: Why? Or, more specifically: For what and whom?

First, the “what for”: In a word, liberty. As articulated in the immortal words of founding father Patrick Henry, “Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take, but as for me, give me liberty or give me death!” This is the value system that millions of Americans have shared.

Millions who have served in the U.S. military have at least glimpsed that if there is nothing worth dying for, then there isn’t much worth living for. None of pagan philosopher Bertrand Russell’s cowardly cynicism “better red than dead” has befogged the hearts and minds of America’s heroes. From the Revolutionary War, through the problematic era of westward expansion and “manifest destiny,” through the bloody 20th century conflicts in which Americans fought to help French, British, Korean, and Indochinese people resist tyranny, liberty has been the animating principle, the raison d’être, of America’s armed services.

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The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom