Corporate Fois Gras

I probably should have posted something about the bailout ages ago, but more influential people than I have been saying pretty much everything I wanted to say... and the bailout still passed. Nevertheless, this has to piss off any principled, free-market conservative:

Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.

But regulators said some banks will be pressed to take the taxpayer dollars anyway. Others banks judged too sick to save will be allowed to fail.

It is bad enough that the government decided to create a bailout on this scale to begin with. But forcing banks that don't want the help to take it anyway in order to legitimize the program is positively Orwellian. Here is some detail from page two, just to show that I am not exaggerating:

Federal regulators said they did expect some banks to volunteer, though none stepped forward yesterday. But they added that they would not rely on volunteers. Treasury will set standards for deciding which banks can be helped, and the regulatory agencies will triage the banks they oversee: The institutions faring best and worst will not receive investments. The institutions in the middle, whose fortunes could be improved by putting a little more money in the bank, will be pushed to accept the money from the government.

[...]

Peter Fitzgerald, chairman of Chain Bridge Bank in McLean, said he was "much chagrined that we will be punished for behaving prudently by now having to face reckless competitors who all of a sudden are subsidized by the federal government."

At Evergreen Federal Bank in Grants Pass, Ore., chief executive Brady Adams said he has more than 2,000 loans outstanding and only three borrowers behind on payments. "We don't need a bailout, and if other banks had run their banks like we ran our bank, they wouldn't have needed a bailout, either," Adams said.

I realize that some sort of intervention was pretty much inevitable, given the leftward migration of the country in recent years and the abysmal ignorance of financial principles shown by even conservative politicians. But is it too much to ask that at least some of the lessons of history might be learned? Apparently so:

President Bush, in introducing the plan, described the interventions as "limited and temporary."

"These measures are not intended to take over the free market but to preserve it," Bush said.

Mr. Bush showed quite clearly that he did not understand judicial conservatism when he appointed Harriet Miers to the Supreme Court. His comment here shows that he does not understand the words "free market" any better.

The initial bailout was justified on the grounds that we need to prevent a second Great Depression. As noted below, government intervention was one of the chief factors in exacerbating the problem in the '30s. Hoover, an ineffective, interventionist, Republican president was replaced by Roosevelt, an even more aggressive Democratic interventionist. If recent polls are correct, we may be following exactly the same pattern in replacing Bush with Obama.

Chinese Christians may outnumber Communists

According to The Economist:

The government says there are 21m (16m Protestants, 5m Catholics). Unofficial figures, such as one given by the Centre for the Study of Global Christianity in Massachusetts, put the number at about 70m. But Mr Zhao is not alone in his reckoning. A study of China by the Pew Forum on Religion and Public Life, an American think-tank, says indirect survey evidence suggests many unaffiliated Christians are not in the official figures. And according to China Aid Association (CAA), a Texas-based lobby group, the director of the government body which supervises all religions in China said privately that the figure was indeed as much as 130m in early 2008.

If so, it would mean China contains more Christians than Communists (party membership is 74m) and there may be more active Christians in China than in any other country. In 1949, when the Communists took power, less than 1% of the population had been baptised, most of them Catholics. Now the largest, fastest-growing number of Christians belong to Protestant “house churches”.

It is worth noting that even if the optimistic 130 million figure is true, that only represents about 10% of China's 1.3 billion population. Still this is much better than about 1% in 1949 or the current official count of 1.6%. Some further interesting points:

Private meetings in the houses of the faithful were features of the early Christian church, then seeking to escape Roman imperial persecution. Paradoxically, the need to keep congregations small helped spread the faith. That happens in China now. The party, worried about the spread of a rival ideology, faces a difficult choice: by keeping house churches small, it ensures that no one church is large enough to threaten the local party chief. But the price is that the number of churches is increasing.

Of course, doctrinal depth and regularity are hard to maintain in an illegal movement:

Abundant church-creation is a blessing and a curse for the house-church movement, too. The smiling Mr Zhao says finance is no problem. “We don’t have salaries to pay or churches to build.” But “management quality” is hard to maintain. Churches can get hold of Bibles or download hymn books from the internet. They cannot so easily find experienced pastors. “In China”, says one, “the two-year-old Christian teaches the one-year-old.”

Because most Protestant house churches are non-denominational (that is, not affiliated with Lutherans, Methodists and so on), they have no fixed liturgy or tradition. Their services are like Bible-study classes. This puts a heavy burden on the pastor. One of the Shanghai congregation who has visited a lot of house churches sighs with relief that "this pastor knows what he is talking about."

Even more interesting:

All this amounts to something that Europeans, at least, may find surprising. In much of Christianity’s former heartland, religion is associated with tradition and ritual. In China, it is associated with modernity, business and science. “We are first-generation Christians and first-generation businessmen,” says one house-church pastor. In a widely debated article in 2006, Mr Zhao wrote that “the market economy discourages idleness. [But] it cannot discourage people from lying or causing harm. A strong faith discourages dishonesty and injury.” Christianity and the market economy, in his view, go hand in hand.

This doesn't surprise me a bit, nor would it surprise people such as Vishal Mangalwadi who has been pointing out for years that the superiority of the West is due largely to its Christian legacy.

Via: Christian Freedom International.

NOTE: When searching for the article (CFI did not provide a link) I found this article on the decline of capitalism in China. So the news is not all good. However, as Christianity continues to advance, expect to see both the doctrinal issues noted above and the residual economic and social issues become less severe.

Vindication

For years conservatives have been arguing that the Great Depression was extended not fixed by Roosevelt's policies. A study by two economists at UCLA finally demonstrates this numerically:

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

Biden's Bumbles

Many people were expecting Biden to win the Vice Presidential debates last night due to a few missteps on the part of Sarah Palin during recent interviews. That that expectation was misguided is amply proved by Palin's spectacular performance last night and by the relative silence on the subject by the mainstream media. As anyone who has done a little research would know, Palin is quite an effective debater and her blunders with the media have been largely in response to gotcha questions that were not relevant to her experience and were certainly not visited on any of the other candidates.

But Biden's performance is another matter entirely. He has been touted as the foreign policy expert of the Democratic team, and has been in the Senate longer than either of the other two candidates. (Actually, longer than McCain and Obama combined.) So you would think that he would be supremely prepared or at least be able to get the basic facts straight. On the contrary, many of his responses to Palin's jibes were obvious falsehoods or distortions which he seemed to make up on the spot.

Here are three gaffes that I noticed while watching the debate:

1. US & France kicked Hesballah out of Lebanon but failed to follow up with a NATO presence. It was Syria that was kicked out and it was Lebanon that did the kicking, albeit with US and French assistance. Hesballah is still there and no one ever suggested putting NATO troops in Lebanon to keep them out.

2. The commander in Afghanistan said that the surge would not work in Afghanistan (contrary to McCain's policy). What David McKiernan actually said was, "the word I don't use in Afghanistan is the word surge." This is a more subtle point, and I think, on the whole, I agree with Biden here.

3. VP has no authority in the Senate, excpet when there is a tie. What the article actually says is: "The Vice President of the United States shall be President of the Senate, but shall have no Vote, unless they be equally divided." So the VP is always President of the Senate, he just doesn't get to vote on Legislation most of the time. This would count as a mere misstatement if the question weren't specifically focused on Dick Cheney's interpretation of this clause and if Biden hadn't said that the role of the VP is clearly specified. The whole point of Cheney's argument is that the non-voting part of the VP role is not clear.