See Obama go to Detroit.

See Obama put the cost of bailing out GM/Chrysler at $60 billion (underestimate)

See Obama claim the “auto industry” created 55,000 jobs after losing 335,000.

Poor Obama. He does not see (say)

*Ford grew the most and received no bailout (some of those 55,000 jobs are Ford’s).

*$1.1 million per job: the cost of every job created (even by Obama’s math).

Give me $1.1 million and I will create TWO jobs!

At the press conference, Mr. Obama took the artificial recovery of Old Detroit as another opportunity to say “we” (government and workers) must “roll up our sleeves and create clean energy jobs.”

This guy is like Al Gore on Red Bull.

His focus on Green jobs — windmills and solar panels — borders on the obsessive. Throughout the whole address he spoke of

1. Green Jobs

2. The Invincibility of the American Worker (paraphrase of speech):

“AMERICAN workers can do ANYTHING!” (applause).

“AMERICAN workers can be the best at everything with ‘targeted investment.'” (Pinch the fingers and point at audience).

“AMERICAN workers deserve all the credit for turning around GM and Chrysler (taxpayers, what taxpayers?)

“American workers can do the same EVERYWHERE.”

(Obama waxes nostalgic about World War II production lines).

“I will put the first AMERICAN worker on the moon!”

(OK, I made that one up, but you get where he is going).

No mention of risk-taking

No mention of private investment

No mention of entrepreneurs

No mention of markets.

Oddly enough, President Obama discussed those things while visiting . . . Africa.

Government and nationalism and workers. Sounds like national socialism to me, although Robert Higgs prefers “participatory fascism.” Fascism is a loaded term. National socialism is simple and accurate on both counts–the state takeover of various sectors is national and is socialism by (or near) the classic definition.

The policy is not working (at this phase of the Reagan recovery, GDP was growing near 10% and the Great American Job Machine was back at work. Does any one feel that 2010 is “Morning in America?”)

Obama’s strategy has been tried before — in Mussolini’s Italy.

It worked so well that Chrysler, that lovable ward of the State, is now creating 200 Fiat dealerships. Furthermore, in an apt twist of fate, Chrysler is using the design of Alfa Romeo, the company bailed out by Mussolini in the 1930s.

I cannot wait: Who can forget that great car built on a Fiat model . . . the Yugo? How I miss that car. This is a Yugo moment in the Obama presidency.

“God bless America!” On that, Mr. President, I agree with you.

God bless all Americans (not just UAW workers).

To follow up on my earlier posting, “The Climate-Industrial Complex,” award-winning meteorologist Brian Sussman has a helpful, new article at American Thinker, “Carbon Cronyism: Why Cap-and-Trade Is Not Dead Yet.” Author of the new book, Climategate: A Veteran Meteorologist Exposes the Global Warming Scam, Sussman details some of the key, interlocking business and government interests behind the push for cap-and-trade, including Goldman Sachs, Fannie Mae, Chicago Climate Exchange, EPA, Kleiner-Perkins, European Climate Exchange, Al Gore’s Generation Investment Management, etc.

Fortunately, the climate alarmism upon which this entire scam depends has increasingly come under attack as based on junk science, environmental religion, and fraud.

That’s what Paul Volker says in this interview.  I don’t always find myself in agreement with Mr. Volker, but he’s surely got it right in his assessment of Fannie and Freddie.  An excerpt:

“The mortgage market now is almost a wholly owned subsidiary of the United States government. Almost all the mortgages made now are insured by the government, bought by the government, and the guys at Fannie Mae and Freddie Mac are the market. Not much exists without the government running it. I don’t think that’s what we want. A lot of problems surround the whole mortgage market. It’s clear Fannie Mae and Freddie Mac need to go. We don’t need these hybrid institutions.”

Mr. Volker’s ideas seem to be pretty popular with the president and Congress.  Maybe this one will catch on.

A new study from Pepperdine University’s Davenport Institute has exposed the fraud continually perpetuated upon the taxpaying public—and visited upon the poor families trapped in criminally failed government schools—that if the state (in this case, California) just had more money it could deliver a good education.

The study concludes that, notwithstanding all the talk of “education budget cuts,” while school spending steadily increased between the 2003-04 and 2008-09 budget years, overall, direct classroom expenditures declined.

Indeed, California spending on education has not been “cut” at all—but, rather, radically increased during the period:

During the five year period, total school spending per capita (not including capital spending) increased by 25.8 percent, which was far greater than the growth in per capita personal income or inflation. During the same period, direct classroom expenditures statewide went from 59 percent of total expenditures to 57.8 percent. These statewide totals reflect a very wide range of variance among individual school districts, whose classroom expenditure ratios ranged from more than 70 percent to less than 45 percent.

Meanwhile, the 2009 National Report Card, produced by the U.S. Department of Education’s Institute of Education Sciences, shows California public school students ranking almost last in the country: the average 4th grader’s math score in California ranked 47th, higher only than those in Mississippi, Alabama and Washington D.C., while the average 8th grader’s score ranked even lower—48th—higher only than those in Mississippi and Washington D.C.

The failed Oakland school district is a case study example of the public school system’s top-loaded cost structure, with 152 students per administrator, versus a statewide average of 250. In a district with a budget of nearly $13,000 annually per student, doesn’t anyone wonder why the Oakland school board is considering placing a $195 per parcel tax on the November ballot to raise $20 million a year to raise teachers and staff salaries?

Unfortunately, it’s very rare for such ballot measures to fail. Time and again, voters are extorted for more and more taxes on themselves in the name of the children. And, time and again, every “budget crisis” is visited only upon students, with class sizes increased while the number of school hours, and arts, sports, and library programs are cut.

Meanwhile, while families across California have tightened their own belts in response to economic hard times:

Certificated supervisors and administrators enjoyed a 28% pay hike per student over the five-year span. Pay for classified supervisors and administrators shot up 44% over that time.

It’s time to learn the lesson once and for all: competitive, private enterprise results in the efficient provision of products and services for consumers—even poor, disenfranchised, politically powerless consumers. Government monopolies produce ever-worse services for which they extort ever-greater payola.

When President Obama demanded that BP turn over $20 billion to the federal government to compensate those harmed by the oil spill, some people called the president’s demand extortion, but BP quickly agreed, and it should have.  Everything about that arrangement is beneficial to BP, and ultimately a liability for President Obama.

BP knew their liability for damages would be at least $20 billion, so it will cost BP nothing to turn that money over to Obama’s team to administer the payouts, rather than being responsible for doing it itself.  The $20 billion will go into an escrow account that will be overseen by Kenneth Feinberg, who will decide who will be compensated, and how much.  Any disputes about compensation will now be disputes between the claimants and the Obama administration, rather than between the claimants and BP, as would have been the case without the escrow account.

Compensation for damages is a no-win situation, from a public relations and political perspective.  In my local paper there was an article today about a man who buys seafood in Apalachicola, drives it to Jacksonville, and sells it on the street, making about $2500 a week.  No oil has come near Apalachicola, but he says his business fell off because people don’t want to buy seafood from the gulf, so he’s quit that business.  Is he entitled to compensation?

There was another article about a beach volleyball tournament scheduled for the Fall in St. Petersburg that was canceled because the organizers were concerned that the beach could be oiled.  No oil has come near St. Petersburg.  Are the businesses that suffered those cancellations entitled to compensation?

Another article discussed the fall in sales tax revenues in tourist cities on the gulf.  How much should they be compensated?

The point is, lots of people are going to claim financial harm, and lots of them are not going to be compensated as much as they think they deserve.  It’s human nature to think you deserve more than you’re getting, especially when you believe someone has harmed you.

Without President Obama’s $20 billion escrow account, those people would be angry at BP for undercompensating them.  But the Obama administration has more than taken responsibility for the compensation—they’ve demanded that BP turn that responsibility over to them.  So, people will see that BP paid the money President Obama demanded, and it’s the Obama administration that isn’t giving them the compensation they deserve.

From a political point of view, it seems crazy that President Obama  has agreed—no, demanded—to turn an adversarial relationship between gulf coast residents and BP into an adversarial relationship between gulf coast residents and the president’s administration.

One might argue that regardless of its political merits what President Obama did was in the public interest.  But that is a difficult argument to make.  There are well-established legal procedures for determining the liability for damages, and that has always been the province of the judicial branch of government.  It’s hard to see the argument that it is in the public interest to transfer judicial functions of government to the executive branch.

This appears to be a tactical error made by the president.  Trying to look tough in a difficult situation, President Obama assumed for himself a responsibility that should have been BP’s.  In the process, he has put his administration in the line of fire, and shielded BP.

Christopher Coyne and I are working on a couple of papers and a short book about the Memphis riot of 1866. The first paper appeared in the Mercatus Center’s Working Papers Series today and is available here; the second paper and the book manuscript will be available…sometime. One of the general themes that’s emerging from this project is a critique of government provision of security services. Coercion short-circuits the social learning process that would otherwise emerge in the market. The 1866 riot in Memphis is a particularly gruesome example of what happens when heavily-armed racists have no accountability.

Here’s the abstract for the first paper:

To what extent can outsiders impose sustainable change on insiders acting within existing institutional arrangements? This paper explores this question in the context of the American Reconstruction experience in Memphis, Tennessee. Employing the framework of social orders developed by North, Wallis, and Weingast (2009), we contend that Memphis was a limited access order on several important margins. Reconstruction policies failed to appreciate the realities in Memphis, resulting in the 1866 riots. We provide insight into the reasons for the Memphis Riot and offer implications for current and future efforts by outsiders to engage in institutional change.

The larger project is very much a work in progress. Comments and suggestions are most welcome. Cross-posted at The Mises Economics Blog.

This week’s Lighthouse (available online here) touches on the Gulf oil gusher (William F. Shughart II); political reform in Cuba (Alvaro Vargas Llosa); F. A. Hayek on the limits of constitutional design (Scott A. Boykin); and Israel’s blockade of Gaza (Ivan Eland).

Here are links to the individual items:

1. How to Prevent an Oil Spill
2. Will Cuba Be Freed?
3. Hayek and the Constitution of Liberty
4. Lifting the Gaza Embargo

The Lighthouse is emailed on Monday evenings, Pacific Time. You can receive a free subscription by adding your email address to the distribution list by clicking here.

As with everything else about the U.S. police state that is often associated with Republicans and the right, the Obama administration has pushed the envelope and showed itself to be as draconian as Bush. Deportations of illegal aliens—as in, people without the federal government’s permission to be here—have increased under Obama, including deportations of those whose only crime was to violate unconstitutional immigration law. It seems like it’s been since the Reagan years that we’ve had a president willing to move in a more humane direction on this issue. Perhaps Bush offered some hope, but that was before 9/11 swept away any establishment interest in normalizing illegals or doing anything that would undermine federal power.

Jeff Tucker points out how truly astounding internet language translation technology is. This is how truly unbelievable our world is: we can get automatic translations via the Google Labs “translate this message” command, and people barely notice. In her ongoing series of books on the Bourgeois Era, Deirdre McCloskey argues that one of the things that helped create modern economic growth was a change in rhetoric whereby it was recognized that people can do good by doing well. At the beginning of the year, I wrote an article on some of the progress we made during the 2000s. The advances we’ve made since that article was published at the beginning of January have been astounding. Apple has introduced the iPad and a new iPhone, Droid phones are advancing by leaps and bounds, I’ve started running Chrome on all my computers, and I synchronize documents across my computers with Dropbox. The Dell computer in my office runs Windows 7, and I can transfer files from Windows to my Mac laptop and my Mac at home with no trouble at all. Our baby daughter was born on June 16, and we’re able to share pictures and information with family and friends around the world without giving it a second thought. All of this emerges not from the central plans of a benevolent despot, but from the innumerable interactions of people interacting voluntarily.

Back in February 2008, I satirized George W. Bush’s $150 billion stimulus checks in “The Power of Numbers: Simplify! Simplify! I broke down the costs of Big Government for a family of four and showed how pitifully small $150 billion was in comparison to the $5 trillion then spent by local, state and federal governments. Of course, Big Spenders (Paul Krugman crowd) called for deficit spending ten times that amount.

Well, Mr. Krugman, your solution has come to pass (with no recovery in site):

The White House announced that the 2011 deficit will be $1.4 trillion.

This money-we-do-not-have produced a mouse of a recovery (if we can call high joblessness and continued declines in government revenue a “recovery”). As government revenue declines, politicians will simply borrow more: the Obama administration projects a similar deficit for next year with modest cuts to the minuscule programs that fall under “discretionary spending.”

It’s not just the lawful plunder in Washington. State governments spent most of the past 10 years spending like, well, politicians. When the bust came, no one could make the proverbial “hard choices”: cut spending (the horror!), raise taxes (in a bust?!) and so they borrow year to year.

Example: The state of Illinois has a $13 billion current deficit and a population of 13 million people. That is another $1,000 per capita of borrowing per capita.

What does this all mean? Recall the principle of “Simplify! Simplify! :

The federal deficit (this year only) amounts to $4,000 per capita (every man, woman and child)

My state deficit amounts to $1,000 per capita

Total bill: $5,000 per capita. For those of us who recklessly married, have two children and pay taxes the bill is $5,000 X 4 = $20,000 for this year only plus interest.

Even worse, 40% of the population pays nothing in income taxes. The rest of us must pay much more than $20,000. Think of it as a deferred tax bill with interest due.

Yes, yes, the Left reminds us that those people pay FICA but that money is in a “lockbox,” right? “Contract between generations” and all that?

Here we come to the grand irony of the Keynesian worldview: Keynes saw the Great Depression and declared that there is no contract between generations. Spend the next generation’s money! As my state lottery commission chants: “Go for it! ” Live for today because “in the long run we are all dead” (J.M. Keynes). But once the really big spending is locked in as an entitlement, the Left dreams up a “contract between generations” on the spending side.

Bastiat would remind us of “what is not seen”: The Keynesians pooh-pooh the “contract between generations” on the tax side: In the long run we all die, but we leave children behind. If the Left believes in its “contract,” then what about the unborn? If we (the living) are X generation, they are Y generation in this “contract between generations.” A modern-day Jonathan Swift might pen this “Modest Proposal”: a 100% abortion rate could eliminate this obligation to the unborn. However, even NOW isn’t that radical; and our government would lose the power to mortgage future generations.

The fallout of this fiscal disaster, if it persists, will mean fewer children as taxes rise higher and higher. Another alternative is the hidden tax of inflation (rather than direct taxation) but that would have the same effect: couples could no longer afford two or more children. Welcome to Eastern European demographics:

America, the Incredible Shrinking Nation.

All of this reminds us that economics does matter to every aspect of people’s lives. Keynes never had children (some writers blamed his short term view on his childlessness). But those of us with children ought to be doubly concerned.

A popular left-liberal slogan is that “It takes a village [government] to raise a child.”

Alas, their policies are burning the (unborn) child’s bank book to save those currently living in the village.

Shame on our Village.