EU – USSR: Bleeding Utopias by Alexander Maistrovoy

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After the Brexit and recent attacks against migrants in Britain, I can’t get rid of a deja vu feeling. As if I’ve already watched this movie a quarter century ago. I know its end, and it’s not a happy one.

In summer of 1989, the Lithuanian Sejm decided to withdraw from the Soviet Union and establish Lithuanian laws in the country. It was the beginning of the end for USSR — a giant corrupt monster, which for 70 years bullied the world and its people under the pretense of communist ideology.

Intimidation and sanctions could not prevent the collapse. A fabricated artificial entity, thoroughly impregnated with falsehood and lies, fell apart like a house of cards.

It came out of the clear blue sky, but the collapse was inevitable, due to the very nature of the “Red empire” — as was the inevitable disintegration of the EU.

Set aside the scenery and the nuances. Without a doubt, EU’s bright and vivid facade does not resemble the meager greyness of the Soviet entourage. Of course, EU hasn’t the power, assertiveness and strict centralization that USSR had. However, supporting structures and the foundation were made from the same materials with the same guidelines.

Lenin_Stalin

Lenin with Joseph Stalin.

One can easily find numerous and fundamental similarities between these two entities.

  • The Soviet Union created a planned, controlled, and unsustainable economy managed by bureaucratic apparatus. The EU did the same, has tried to regulate economy artificially. USSR has redistributed wealth on an equal basis — the EU has been wasting money on benefits to those who refuse to work.
  • The USSR and the EU had imposed an artificial universalist ideology on their people that promised a paradise on earth for next generations. In the USSR it was called Communism. EU calls it “postmodernism”. Using this slogan — “Let’s denounce the old world!” — Soviet apparatchiks, like the European bureaucrats, drove their people to hell.
  • The USSR created a huge bureaucratic machine, dictated ideology in all spheres of life — from politics to theater, architecture and fashion. This bureaucracy was completely cut off from the reality and the citizens. The same happened in the EU.
  • The USSR instituted most severe censorship with persecution of dissidents. By subjugating governments, national media, the academy and the judicial system, the EU has established a cultural totalitarianism. The pursuit of dissidents has been more sophisticated, thus more efficient, veiled by concepts of “tolerance”, “human rights” and “cultural diversity” — a demonic invention.
  • The Soviet Union cultivated a new “formation of people” — the “Soviet people”. Like the unskillful Gnostic Demiurge, the EU cultivated “post-modern people” – consumers without roots, values and moral compass, unable to see the difference between good and evil, fact and fiction. In order to create a “Soviet man”, the USSR deliberately carried out migration of nations, while destroying homogeneous historical communities and arbitrarily creating alien enclaves in the social body of other republics: Ukraine, Baltic States, Moldova, the Caucasus and in Central Asia. EU has intentionally flooded its countries with masses of migrants from Third World countries and Muslim countries to destroy national cultures — labeling the process “multiculturalism”.
  • Communists created the fussy, worthless and senseless art of “Socialist realism”, symbolized by “Worker and Kolkhoz Woman”. Postmodernists invented infantile “postmodern art” with cult of primitivism, rafting archaic forms, meaningless set of sounds and wall paintings.
  • The USSR intimidated its people with the threat of a nuclear apocalypse to distract them from poverty. EU frightens Europeans with environmental apocalypse; promulgating doubtful ideas about global warming by suppressing the real threat of global terrorism, the clash of civilizations and the collapse of the national states.
  • The USSR drained the resources of wealthy republics — the Baltic States and Ukraine — to feed the weak, unproductive South. The EU doesn’t fall behind.
  • The USSR treated the Jews with the “fifth column”, regardless of their contribution to science and medicine. The EU has betrayed the European Jews while obstinately undermining Israel, despite its contribution to science and medicine, only to appease Muslims. The USSR had created the “Palestinian people” and the PLO, coining “anti-Zionism” to ram through its “anti-imperialist” policies. The EU has turned the creation of “a Palestinian state” into “the sacral dogma” of its foreign policy, ignoring the geopolitical reality, Islamic fanaticism and the Middle East chaos.
  • The USSR has been limitlessly and greedily wasting resources to feed its various regimes until it had ultimately collapsed from exhaustion. In its greediness and unscrupulousness, the EU is infinitely expanding by association with Turkey, North Africa and the Caucasus.
  • The USSR had dispersed the miasma of its pseudo-ideology throughout the world under the pretense of “fighting for the freedom of peoples” and “social justice.” The EU is operating in a similar manner.

Wasn’t it a cruel mockery of History that the European Union that was on the verge of collapse virtually awarded itself the Nobel Peace Prize, as it was done by senile Soviet leaders?

I’ve claimed that I know the end of this “movie”. At first, the collapse will occur alongside the borders of “Pink Empire” countries. After that, the very fabric of the social organism of the countries will start to decay. Alien and hostile enclaves already exist in European cities in the form of extraterritorial “Sensitive Urban Zones”, with laws of sharia or clan and tribal law codes. They will expand and become quasi-states inside states. Territorial entities will appear in Europe similar to Abkhazia, South Ossetia, Nagorno-Karabakh, Transnistria and Chechnya, the republic of Donetsk and Luhansk Republic. In the former USSR, these entities get the support of Russia. In the EU, they will get support from giant Islamic world.

Timeworn grievances will flare up. The body of the crumbling “United Europe” will be covered with ulcers and bleeding wounds. European states (including perhaps new ones such as Scotland, Catalonia, Wallonia and so on) will have to regain power with force, to declare states of emergency, to carry out repressive measures. Dictatorship will be the alternative for chaos, and it will be the end of democracy. Bellum omnium contra omnes (“The war of all against all”) will bring Western Europe back to the “Social Contract” of Hobbes, i.e. to voluntary tyranny. Ironically, hundreds of thousands of migrants will become victims of “multiculturalism”.

The elite will either flee or will “adapt”, like Soviet apparatchiks after “Perestroika” who became oligarchs and Orthodox nationalists.

One more experiment comes to an end, leaving behind anarchy and ruin. The EU-SSR elite has destroyed prosperous countries just in a few decades – ironically, they’ve achieved even more than geriatric Soviet elite.

Alexander Maistrovoy is the author of Agony of Hercules or a Farewell to Democracy (Notes of a Stranger), published recently by Xlibris, Available at Amazon and Barnes & Noble.

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During his acceptance speech Donald Trump draws 61 lines in the sand

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Donald Trump “humbly and gratefully” accepted the Republican Party nomination for the presidency of the United States on July 21st, 2016.

The theme of Mr. Trump’s acceptance speech was to show the differences between him, Hillary Clinton, Barack Obama and the Democratic Party’s platform. Trump summed it up by saying:

My opponent asks her supporters to recite a three-word loyalty pledge. It reads: “I’m with her.” I choose to recite a different pledge. My pledge reads: “I’m with you the American people.”

During his acceptance speech Mr. Trump drew clear domestic and national security policy lines in the sand. Here are the lines in the sand from Mr. Trump’s acceptance speech:

  1. [W]e will lead our country back to safety, prosperity, and peace.
  2. We will be a country of generosity and warmth.
  3. [W]e will also be a country of law and order.
  4. The crime and violence that today afflicts our nation will soon — and I mean very soon come to an end.
  5. We cannot afford to be so politically correct anymore.
  6. The problems we face now — poverty and violence at home, war and destruction abroad — will last only as long as we continue relying on the same politicians who created them. A change in leadership is required to produce a change in outcomes.
  7. [O]ur plan will put America first.Americanism, not globalism, will be our credo.
  8. The American people will come first once again.
  9. My message is that things have to change and they have to change right now.
  10. I have no patience for injustice. No tolerance for government incompetence.
  11. I know that corruption has reached a level like never ever before in our country.
  12. I have joined the political arena so that the powerful can no longer beat up on people that cannot defend themselves.
  13. Nobody knows the system better than me, which is why I alone can fix it. I have seen firsthand how the system is rigged against our citizens, just like it was rigged against Bernie Sanders.
  14. [W]e are going to fix the system so it works fairly and justly for each and every American.
  15. We will bring the same economic success to America that [Governor and Vice President nominee] Mike brought Indiana.Hi
  16. The first task for our new administration will be to liberate our citizens from the crime and terrorism and lawlessness that threatens their — our communities.
  17. When I take the oath of office next year, I will restore law and order to our country.
  18. I am the law and order candidate.
  19. I will work to ensure that all of our kids are treated equally, and protected equally.
  20. We are going to defeat the barbarians of ISIS. And we are going to defeat them bad.
  21. I will do everything in my power to protect our LGBTQ citizens from the violence and oppression of a hateful foreign [Islamic] ideology.
  22. We must have the best, absolutely the best, gathering of intelligence anywhere in the world.
  23. We must abandon the failed policy of nation- building and regime change that Hillary Clinton pushed in Iraq, Libya, in Egypt, and Syria.
  24. we must work with all of our allies who share our goal of destroying ISIS and stamping out Islamic terrorism and doing it now, doing it quickly.
  25. We’re going to win. We’re going to win fast. This includes working with our greatest ally in the region, the state of Israel.
  26. [W]e must immediately suspend immigration from any nation that has been compromised by terrorism until such time as proven vetting mechanisms have been put in place. We don’t want them in our country.
  27. I only want to admit individuals into our country who will support our values and love our people. Anyone who endorses violence, hatred or oppression is not welcome in our country and never ever will be.
  28. We are going to have an immigration system that works, but one that works for the American people.
  29. We are going to build a great border wall to stop illegal immigration, to stop the gangs and the violence, and to stop the drugs from pouring into our communities.
  30. By ending catch-and-release on the border, we will stop the cycle of human smuggling and violence.
  31. Peace will be restored by enforcing the rules for the millions who overstay their visas, our laws will finally receive the respect they deserve.
  32. We are going to be considerate and compassionate to everyone. But my greatest compassion will be for our own struggling citizens.
  33. I have a different vision for our workers. It begins with a new, fair trade policy that protects our jobs and stands up to countries that cheat — of which there are many.
  34. I’m going to make our country rich again. Using the greatest business people of the world, I’m going to turn our bad trade agreements into great trade agreements.
  35. I am going to bring our jobs back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America and I am not going to let companies move to other countries, firing their employees along the way, without consequences.
  36. I pledge to never sign any trade agreement that hurts our workers, or that diminishes our freedom and Independence. We will never ever sign bad trade deals. America first again. American first.
  37. I will make individual deals with individual countries. No longer will we enter into these massive transactions with many countries that are thousands of pages long and which no one from our country even reads or understands.
  38. We are going to enforce all trade violations against any country that cheats. This includes stopping China’s outrageous theft of intellectual property, along with their illegal product dumping, and their devastating currency manipulation.
  39. I have proposed the largest tax reduction of any candidate who has run for president this year, Democrat or Republican. Middle-income Americans will experience profound relief, and taxes will be greatly simplified for everyone. I mean everyone.
  40. Excessive regulation is costing our country as much as $2 trillion a year, and we will end and it very quickly.
  41. We are going to lift the restrictions on the production of American energy.
  42. We will build the roads, highways, bridges, tunnels, airports, and the railways of our tomorrow.
  43. We will rescue kids from failing schools by helping their parents send them to a safe school of their choice.
  44. We will repeal and replace disastrous Obamacare. You will be able to choose your own doctor again.
  45. [W]e will fix TSA at the airports, which is a total disaster.
  46. We are going to work with all of our students who are drowning in debt to take the pressure off these young people just starting out in their adult lives.
  47. We will completely rebuild our depleted military.
  48. [T]he countries that we protecting at a massive cost to us will be asked to pay their fair share.
  49. We will take care of our great veterans like they have never been taken care of before.
  50. We will guarantee those who serve this country will be able to visit the doctor or hospital of their choice without waiting five days in a line and dying.
  51. We are going to ask every department head and government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.
  52. We are also going to appoint justices to the United States Supreme Court who will uphold our laws and our constitution.
  53. My opponent wants to essentially abolish the 2nd Amendment. I, on the other hand, received the early and strong endorsement of the National Rifle Association. And will protect the right of all Americans to keep their families safe.
  54. An amendment, pushed by Lyndon Johnson, many years ago, threatens religious institutions with a loss of their tax-exempt status if they openly advocate their political views. Their voice has been taken away. I will work hard to repeal that language and to protect free speech for all Americans.
  55. [M]y sole and exclusive mission is to go to work for our country, to go to work for you. It is time to deliver a victory for the American people. We don’t win anymore, but we are going to start winning again. But to do that, we must break free from the petty politics of the past.
  56. I will be a champion.Your champion.
  57. I am your voice. So to every parent who dreams for their child, and every child who dreams for their future, I say these words to you tonight: I’m with you, and I will fight for you, and I will win for you
  58. We will make America strong again.
  59. We will make America proud again.
  60. We will make America safe again.
  61. And we will make America great again!

Here is the video of Donald Trump’s acceptance speech:

It Isn’t ‘The Economy, Stupid’

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ATLANTA, Georgia /PRNewswire-USNewswire/ — The parties have their presumptive presidential nominees. Now, as with elections past, handicappers are looking at possible predictors of the outcome. They are trotting out all the usual factors: economic growth, inflation, unemployment—even the stock market. Beware: This year, none of them will help call the winner.

Back in 2012, researchers at the Socionomics Institute released a comprehensive study showing that major economic factors—namely, inflation and unemployment rates—have had no statistically significant bearing on presidential election results.

Study shows economy and markets cannot predict this year's election. Even a strongly improving GDP does not guarantee incumbent party success. (PRNewsFoto/The Socionomics Institute)

Study shows economy and markets cannot predict this year’s election. Even a strongly improving GDP does not guarantee incumbent party success. (PRNewsFoto/The Socionomics Institute)

“These findings are counter-intuitive, but there they are,” said Matt Lampert, the Institute’s director and one of the study’s authors. The authors did find an abiding, strong and statistically significant relationship between presidential election results and the stock market’s performance leading up to Election Day – but only when an incumbent ran.  When no incumbent ran, even the stock market was an ineffective barometer of which party’s candidate would win.

The authors also tested economic variables specifically when no incumbent was running. GDP, inflation and unemployment rates likewise had no statistically significant correlation to these election outcomes.

The study carried its analysis all the way back to 1824, the first year for which there are reliable popular vote data. Its analysis of unemployment begins in 1940, the first year for which those data are available.

In 2012, the Institute’s study became the third-most-downloaded paper of the year on the Social Science Research Network. Today it remains in SSRN’s top 2/100ths (0.02%) of all time. The paper is downloadable from SSRN’s website at http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=1987160.

Surprisingly, then, it is never “the economy, stupid,” as Bill Clinton’s campaign strategist James Carvillefamously intoned. And the stock market is useful for predicting elections only when an incumbent is running.  Since no incumbent is running in 2016, neither the economy nor the stock market can help you forecast who’s going to win the White House.

“Sometimes knowing what won’t work is just as valuable as knowing what will,” said Lampert.

ABOUT THE SOCIONOMICS INSTITUTE:

The Socionomics Institute studies social mood and its impact on social events.

Hawaii: Obama’s favorite Democrat run state ranks 50th in Cost of Doing Business

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CNBC: America’s Top States for Business 2016

49. Hawaii

Quality of life in the Aloha State can’t be beat. But neither can costs, which are the highest in the nation.

Category
Score
2016 Rank
2015 Rank
Workforce 165 48 46
Cost of Doing Business 45 50 50
Infrastructure 116 46 49
Economy 181 25 42 (Tie)
Quality of Life 295 1 1
Technology & Innovation 90 38 36 (Tie)
Education 74 43 45
Business Friendliness 27 46 44
Cost of Living 2 50 50
Access to Capital 14 37 37
Overall 1009 49 50

Economic Profile

  • Governor: David Ige, Democrat
  • Population: 1,431,603
  • GDP growth: 1.7 percent
  • Unemployment rate (May 2016): 3.2 percent
  • Top corporate tax rate: 6.4 percent
  • Top individual income tax rate: 8.25 percent
  • Gasoline tax: 60.39 cents/gallon
  • Bond rating/outlook: Aa2, positive
  • Major private employers: Bank of Hawaii, Corp., Hawaiian Electric Industries Inc.

Economic profile sources: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Federation of Tax Administrators, American Petroleum Institute, Moody’s Investor Service, S&P

Venezuela Has Made It Impossible to Run a Business by Rachel Cunliffe

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Businesses in Venezuela have a problem.

Actually, almost everyone in Venezuela has a great many problems. Starvation, for example. Shortages of basic goods. Dysfunctional and understaffed hospitals, which lack medications. A corrupt and increasingly militarised government determined to protect the incumbent president, Nicolás Maduro, at all costs.

Shortages, inflation, and protectionism cripple the economy.But businesses, especially factories, face another, more specific problem. As Venezuela’s economy has ground to a halt and its currency has depreciated by nearly two thirds in the past year, the raw materials needed for manufacturing have become prohibitively expensive, or simply impossible to come by. This is not helped by the government’s steep import tariffs and currency restrictions, nor by the rock-bottom price controls, which make operating a business an utterly unprofitable enterprise.

This disaster is entirely of President Maduro’s own making. But rather than acknowledge that 17 years of Chavismo socialism have been a terrible mistake that have wrecked Venezuela, Maduro is tightening the iron fist of state control.

The BBC reports that the Venezuelan government has seized a factory that makes hygiene products like toilet paper, owned by the US company Kimberly-Clark. Kimberly-Clark’s crime? Closing the factory, due to an inability to obtain raw materials.

The Venezuelan Labour Minister, Oswaldo Vera, has called the closing of the factory “illegal,” and promised that the factory will continue to operate “in the hands of the workers.” To which the obvious question must be: with what materials? How does the government think the factory can re-open without the raw materials it needs?

The president there is then the issue of the chilling authoritarianism of declaring that a privately-owned company broke the law by ceasing business. In May, President Maduro threatened to arrest and jail the owners of factories that stop producing, saying Venezeula’s productive capacity was “being paralysed by the bourgeoisie.”

Who would open a business where it’s illegal succeed and illegal to fail?In actual fact, it is being paralysed by the government’s radically anti-business policies, which include such threats. What company, whether domestic or international, will want to set up a factory in Venezuela under such tyrannical conditions, knowing it is impossible to make a profit and that owners risk arrest by trying?

Maduro has blamed the latest crisis, as he has all previous crises, on an economic war being waged against his regime by the opposition, in collusion with US forces. The simple fact is he has left business owners no options, creating a climate in which it is impossible to operate. The daily protests against food shortages across the country show that Venezuelans are getting desperate. Nicolás Maduro’s socialist regime is running out of time.

This article first appeared at CapX.

Rachel Cunliffe

Rachel Cunliffe

Rachel Cunliffe is the Deputy Editor of CapX.

Americans Say 2016 Election ‘More Important Than Any Other In Recent History’

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WASHINGTON, D.C. /PRNewswire/ — Weary of political gridlock in Washington, but determined to find solutions to the nation’s most pressing issues, Americans hope a collaboration between entities closer to home – state and local governments, businesses, nonprofits or individuals – will move the country forward, according to a new Heartland Monitor Poll released today by The Allstate Corporation (NYSE: ALL) and Atlantic Media.

As the 2016 general election campaign kicks off, the 26th Allstate-Atlantic Media Heartland Monitor Poll gauges Americans’ opinions on current trends shaping the country, including our most important issues, our greatest opportunities and challenges and where we look for solutions. The results reveal an engaged citizenry that believes key national issues such as political gridlock, education and national security make this election more important than past contests (63 percent).

A growing disillusionment with the federal government’s effectiveness, however, means people aren’t waiting for D.C. to address their everyday issues.

“We’ve been asking Americans for eight years which issues are most important to them, and we heard loud and clear in Heartland 26 they believe it’ll take non-traditional partnerships at the local level to move the country forward,” said Bill Vainisi, senior vice president and deputy general counsel, Law and Regulation, Allstate. “While people continue to look to the federal government for large-scale change, we realize that takes time. As a network of small businesses in nearly every community in America, Allstate knows how critical local innovators are to improving lives from the ground up.”

Americans believe partisan politics are impeding progress when it comes to the nation’s most concerning problems, though there is an overall belief in the resiliency of the American people.

  • Nearly all Americans (92 percent) say the political system in Washington isn’t working well enough to produce solutions to the country’s problems.
  • The gridlock in Washington is a problem felt by everyone, regardless of party lines: Eighty percent of both Republicans and Independents, as well as 63 percent of Democrats, say it’s a serious problem.
  • Almost half of Americans (47 percent) are looking beyond the federal government, saying it will take a new, innovative partnership between some combination of businesses, local governments, non-profits and individuals to move the country forward.

While Americans are frustrated by inaction in Washington and remain uncertain about the country’s economic future, they feel more optimistic toward their personal financial situations.

  • Most Americans think their current personal financial situation is good (39 percent) or fair (35 percent). One-in-10 (9 percent) say they have an excellent personal financial situation, while 14 percent label their financial situation as poor.
  • More Americans believe their personal financial situation will improve (39 percent) than become worse (9 percent) over the next year. Nearly half believe their finances will stay the same (46 percent).
  • Twenty-two percent expect the national economy to improve over the next year, while 25 percent think it will worsen over that same period. Thirty-eight percent expect it to stay the same.
  • Americans are enthusiastic about some trends they’re seeing:
    • Americans are saving more money than they did before the economic crash of 2008 (37 percent mostly positive impact on the country); and
    • Americans are becoming increasingly self-employed, including working in flexible positions through the sharing economy (34 percent mostly positive impact on the country).

The political division on the national level is driving engagement among Americans, many of whom perceive the upcoming election as more important and potentially more impactful than past elections.

  • Nine-in-10 Americans (90 percent) believe this election will affect America’s standing in the world. Only 4 percent believe it will not have much impact, and 3 percent think it will have no impact at all.
  • Among registered voters and those planning to register before the general election, three-quarters (75 percent) say they will definitely cast a ballot in November. Another 9 percent say they will probably vote, and 7 percent say there’s a 50/50 chance they will make it to the polls.
    • Six-in-10 registered voters who did not vote or participate in their state’s primary or caucus (62 percent) say they will definitely make it to the polls in November. More than a quarter are considering casting a ballot (16 percent probably vote and 11 percent 50/50 chance of voting).
    • More than eight-in-10 registered voters who did vote or participate in their state’s primary or caucus (84 percent) say they will definitely make it to the polls in November.
  • Despite their beliefs about the importance of the election, Americans largely feel only incremental change, if any, will occur if their preferred candidate is elected: Forty percent foresee minor progress and 19 percent predict no change.
  • The prospect of the election’s impact on personal quality of life is expected to be much less than the impact made on the world.  Four-in-10 (41 percent) say it will have a great deal of impact on their personal life, and another 29 percent say it will have a moderate impact. A quarter (25 percent) believe the election will have either little or no impact.
    • There is a stark age and gender divide when it comes to Americans’ perceptions of the impact of the upcoming election:
      • Women and Americans 50 years and older are more likely than their counterparts to say they will see a great deal of impact caused by this election.
      • Eighty-five percent of women 50 years and older say this election will have a great deal of impact on America’s standing in the world. Slightly less confident, 73 percent of the other gender and age combinations, (men 18-49, women 18-49, men 50+) believe the election will have a great impact.
      • Half of women 50 years and older (51 percent) say the election will have a great deal of impact on their personal quality of life. The other gender and age combinations are less likely to say it will have a great impact on their life (for example, 31 percent of men and 41 percent of women ages 18-49, as well as 44 percent of men ages 50+).

“These findings signal that after years of stalemate and partisan paralysis in Washington, most Americans’ first instinct now is to look for change instigated from the bottom up rather than the top down,” said Ronald Brownstein, Atlantic Media’s editorial director for strategic partnerships. “The political credo the poll suggests might be summarized as: argue nationally, act locally.”

To see in-depth poll data for the 26th Allstate/Atlantic Media Heartland Monitor Poll, please visit HeartlandMonitor.com. The Atlantic is reporting on the poll results and their implications in a series at TheAtlantic.com, where the full topline findings are also available.

Survey Methodology
The 26th installment of the Allstate/Atlantic Media Heartland Monitor Poll, conducted June 19-24, 2016, comprises questions asked in the final months leading up to the 2016 presidential election: How do Americans view the current trends shaping the country? What are the biggest problems and who do we look towards to fix the issues? Will the 2016 Presidential election make a difference? The survey was conducted among a national sample of 1,000 American adults age 18+, with 500 reached via cell phone and 500 reached via landline. The margin of error for a sample of 1,000 is +/- 3.1 in 95 out of 100 cases.

About Allstate Corporation
The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer, protecting approximately 16 million households from life’s uncertainties through auto, home, life and other insurance offered through its Allstate, Esurance, Encompass and Answer Financial brand names. Now celebrating its 85th anniversary as an insurer, Allstate is widely known through the slogan “You’re In Good Hands With Allstate®.” Allstate agencies are in virtually every local community in America. In 2015, The Allstate Foundation, Allstate, its employees and agency owners gave $36 million to support local communities.

About Atlantic Media
Atlantic Media is dedicated to equipping opinion leaders with breakthrough ideas and original insights. Its powerful brands, including The Atlantic, Government Executive, National Journal,  Quartz, and Defense Onereach leaders across all sectors—consumer, business, media, and government. Strategically designed to meet the unique needs of this community, Atlantic Media’s innovative portfolio of digital, print, event, social, and mobile platforms engages an influential audience of over 30 million worldwide each month.

About FTI Consulting
FTI Consulting, Inc. (NYSE: FCN) is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,600 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The company generated $1.78 billion in revenues during fiscal year 2015. For more information, visit www.fticonsulting.com and connect with us on Twitter (@FTIConsulting), Facebook and LinkedIn.

The Concorde Coalition says it’s the Budget Stupid!

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WASHINGTON, D.C. /PRNewswire-USNewswire/ — Sobering 30-year projections that the Congressional Budget Office (CBO) released today underscore the need for the 2016 presidential and congressional candidates to provide voters with credible plans to put the federal budget on a more responsible course, according to The Concord Coalition.

cbo long term spending revenues

“If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country” – Congressional Budget Office.

“Americans like to think we put a high priority on strengthening the country and looking out for the next generation, but the CBO’s latest long-term projections show once again that we are falling far short on both counts,” said Robert L. Bixby, Concord’s executive director. “Those who aspire to national leadership should take a good look at these projections and explain to the public how they intend to avoid the intense budget pressures and grave economic consequences toward which current policies are leading us.”

Bixby added:

“If candidates for federal office over the next few months ignore the CBO’s warnings of severe trouble ahead, whoever wins in November will not have a clear mandate for the reform measures needed to rein in the federal debt, strengthen the economy and protect our children’s future.”

The federal deficit has been dropping in recent years, creating a sense of complacency in Washington about the need for such reforms. Yet under current law the deficit is rising again this year and the debt will continually grow more quickly than the economy — a trend that is ultimately unsustainable.

Today’s CBO report looks out over the next three decades and projects even greater government debt and fiscal pressures after 2026.

The federal debt held by the public, which was only 39 percent of GDP at the end of Fiscal 2008, has climbed to 75 percent. That is already high by historical standards. The budget office projects that under current law, that debt would rise to 86 percent of GDP in 2026 and to 141 percent in 2046 — far exceeding the historical peak of 106 percent shortly after World War II.

As the CBO points out, such high levels of public debt would reduce national savings and income, increase interest costs that would put more pressure on the rest of the budget, limit the nation’s ability to respond to unforeseen problems and increase the likelihood of a fiscal crisis in which investors would demand extremely high interest rates on further loans to the government.

“The changes needed to bring about a sustainable fiscal policy are substantial and the costs of delay are profound, yet so far the 2016 presidential candidates have said nothing that comes close to addressing the challenges identified in CBO’s report,” Bixby said.

According to CBO, simply keeping the debt-to-GDP ratio from rising above its current level, would require spending cuts and/or tax increases totaling 1.7 percent of GDP in every year through 2046. That would amount to $330 billion in 2017.

Waiting until 2022 would require annual changes totaling 2.1 percent of GDP, and procrastinating until 2027 would require annual changes totaling 2.7 percent of GDP.

The choice about when to make policy decisions also has different generational impacts. As CBO says: “Reducing deficits sooner would probably require today’s older workers and retirees to sacrifice more and would benefit today’s younger workers and future generations. By contrast, reducing deficits later would require smaller sacrifices by older people and greater sacrifices by younger workers and future generations.”

An aging population and rising health care costs are key factors in the government’s growing financial problems. As more people retire, the government must spend more just to maintain current levels of service. Health care costs rise as more treatments become available and demand for them increases.

CBO says federal spending on Social Security, the government’s major health problems and other “mandatory” programs would rise from 13.2 percent of GDP today to nearly 16.9 percent in the decade starting in 2037.

The budget office also warns that interest payments on the federal debt are expected to rise rapidly as government borrowing continues and low interest rates return to normal levels. Net interest costs now amount to only 1.4 percent of GDP but that figure is expected to rise to 5.1 percent after 2037.

The CBO report shows other areas in the federal budget — even those that may prove critical to the nation’s future — being squeezed harder and harder in the coming years. CBO projects that over the next 30 years spending on national defense, infrastructure, research and development,  and everything else other than health care, Social Security and interest payments would drop to 5.2 percent of GDP, down from 6.5 percent today.

In addition to more thoughtful spending decisions in Washington, reasonable reforms in the federal tax system could help boost the economy and reduce federal borrowing.

“As in past years, CBO’s long-term projections are a valuable reminder that the federal budget is not on a sustainable course,” Bixby said. “Interest payments and a few spending programs, no matter how important, cannot be allowed to squeeze other national priorities out of existence. Voters this year would do well to look for candidates who understand this and are prepared to do something about it.”

ABOUT THE CONCORD COALITION

The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating generationally responsible fiscal policy. The Concord Coalition was founded in 1992 by the late former Senator Paul Tsongas (D-Mass.), late former Senator Warren Rudman (R-N.H.), and former U.S. Secretary of Commerce Peter Peterson. Former Senator Sam Nunn (D-GA) serves as co-chair of the Concord Coalition.

RELATED ARTICLE: The 15th Obamacare Co-Op Has Collapsed. Here’s How Much Each Failed Co-Op Got in Taxpayer-Funded Loans.

Refugee Resettlement System Rigged: Favors Muslims over Christians

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We have told you about a zillion times that the United Nations is now choosing the majority of refugees admitted to the US and here is one more confirmation of that (if we needed it!).

Fillipo Grandi

Fillipo Grandi

Patrick Goodenough, a reporter at CNS News, tells us every month what the stats look like for the number of Syrians entering the U.S. and what their ‘religious’ persuasion is and here is his June update which includes these few paragraphs well into the report.

Sunnis make up the vast majority of the refugees admitted to date – 5,099 (98.3 percent) of the 5,186.

The proportion of Syrian refugees admitted this year who are Christians – 0.38 percent – is much smaller than the roughly 10 percent of pre-war Syrians who were Christian.

Refugee advocacy groups say this anomaly is at least partly the result of the fact Christians among the fleeing Syrians are loathe to enter U.N. camps in surrounding countries for fear of their safety – something the U.N. refugee agency itself concedes is happening.

Because the U.N. refers applicants at the beginning of the process of seeking refugee status in the U.S., this may mean fewer Christians are referred in the first place.

[….]

Christians, Yazidis and Shi’a have been specifically targeted by the Sunni jihadists of the Islamic State of Iraq and Syria (ISIS/ISIL), in what the U.S. government has determined is a campaign of genocide.

So, we are taking the Sunni persecutors in to the U.S. (makes sense! NOT!).

More here and see their excellent graph [below].

refugees-fiscal2

Chart based on U.S. State Department data. Courtesy of CNS News.

There is nothing in refugee law to stop the US State Department from seeking out Syrian Christians/minorities. It is simply that we are now being led by the nose by the United Nations!  (which we largely support with your money!)

RELATED ARTICLES:

New Hampshire: Are they priming Laconia for a new resettlement site?

More on Obama and his crony corporate pals doing an end-run on refugee program

Syrian Refugees Admitted to U.S. More Than Doubled in June; 0.3 Percent Were Christians

Sweden: Muslim migrant mob sexually assaults children as young as 12 at festival

Don’t miss more on the Somali roving gang in Minneapolis suburb; Governor says love it or leave it

If Syrians safely go home (to Syria!) today for EID, are they still legitimate refugees?

Get Our Jobs Back Inc. Ramps Up its $50 Million Dollar Digital Marketing Campaign

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NEW YORK, New York /PRNewswire/ — Get Our Jobs Back Inc., ramps up its$50 Million Dollar Digital marketing campaign to millions of emails per week until the 2016 Presidential Trump election.

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The answer and choice is clear – Donald Trump is the jobs President, who will provide the US looted jobs, back to the American voters.

Now is the time and opportunity to get your jobs back. President Donald Trump has the businessman expertise to deliver the voters jobs: Join us now to elect President Donald Trump to Get Your Jobs Back.

Muslim refugee resettlement is about Money and Slave Labor!

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And, it informs us about one reason why Donald Trump says the Chamber of Commerce is no friend of America!

I had to laugh this morning as CNN talking heads were scratching theirs about why Trump would go after the Chamber of Commerce which they described as reliably Republican and conservative. No longer!

The Chamber at the national level and in many cities and counties is being run by Democrats or Open Borders Republicans.

Chobani twin falls plant

Chobani brags that it built this massive $450 million plant in 326 days.

The most important points you need to know about what refugee resettlement is all about comes together in the wake of that awful sexual assault of a little girl in Twin Falls, Idaho by migrant boys (they still refuse to call them refugees).

Local government officials lashed out at citizens who wanted answers because they needed to shut them up—why? Because this city is invested in Chobani Yogurt’s largest plant in the world which is in turn dependent on cheap refugee/immigrant labor (some call it slave labor!).

By suggesting that a large refugee population may not be good for your town, you ruin their carefully crafted narrative.

Refugee resettlement is about MONEY and power and to hell with whether it changes the social, economic and cultural makeup of your home town or threatens your security. So-called humanitarian compassion is the cover for a lot of very dirty business.

Calling you hateful or racist is how they shut up anyone who dares to look more deeply into the scheme that includes foreign interests (many of the big meatpackers drawing refugee labor are foreign owned!), the UN, the US State Department, Dems looking for voters and everyone involved, including the so-called ‘religious charities, looking to line their pockets while telling themselves they are doing God’s work!

In another Hohmann/WND investigation on the situation there we learn that the Mayor of Twin Falls, who gave a sanctimonious speech when citizens became emotionally enraged by the bits of the story that were leaking out about the sexual assault of the little girl (were the accused boys’ family members working at Chobani, that is what I would like to know!), is also the President of the Chamber of Commerce and was instrumental in bringing the massive Chobani Yogurt plant to the city.

We have previously told you about Chobani, and that its CEO and founder Hamdi Ulukaya, is from Turkey.  Yesterday, he responded to Obama’s call for large corporations to hire more refugees with a ‘yes sir’ happy to do it!   See that news, here.

Now, here is what Hohmann learned (read this story, recognize the pattern!):

WND has learned that Barigar was instrumental in recruiting Chobani to Twin Falls back in 2011, and he now plays a dual role of elected official and president/CEO of the local Chamber of Commerce.

Barigar, a Democrat, has been in leadership roles with the Chamber for 11 years. During that time he has also served two stints on the city council, with a gap between January 2008 and January 2012 in which he was not part of the city government.

It was during that gap, but while he was running for office in 2011, that he was busy working to lure Chobani to Twin Falls.

“I was a member of the recruitment team that recruited Chobani to Twin Falls in 2011,” Barigar told WND in a phone interview Thursday.

Read the whole thing, see the pattern as clear as I’ve ever seen it, and look for this happening in your town!  Citizens of Rutland, VT, Missoula, MT, Asheville, NC, Reno, NV, Charleston, WV, etc. read this. 

People ask me all the time what they should do, and frankly after doing your homework and getting your facts (including info. on campaign contributions), you are going to have to work to remove elected officials who are working to change America by changing the people and are worshiping the all-mighty dollar while they do it!

End Note: When I looked at that photo and reflected on the speed with which this plant was built, I’m thinking someone with an investigative bent could write a book about this whole project, how it came to be, and how it has changed the town of Twin Falls forever. You can visit our Twin Falls archive, here, to start your research. Be sure to see this older post here at RRW about the expanding mosque there (who is paying for it?).

Corruption: Millions in business loans to Muslim refugees not tracked by Obama administration

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I’m dashing out the door and cannot do this incredible work by Judicial Watch justice, but wanted to get it up now hot off the presses!

For years I’ve wondered how you get at this information on special loans for special peopleand now I know—someone does a Freedom of Information Act request (a specialty of JW as Hillary knows so well!).

Here is how the story begins:

The U.S. government gives refugees on public assistance special “loans” of up to $15,000 to start a business but fails to keep track of defaults that could translate into huge losses for American taxpayers, records obtained by Judicial Watch reveal. The cash is distributed through a program called Microenterprise Development run by the Department of Health and Human Services (HHS) Office of Refugee Resettlement.

Since 2010 the program has granted thousands of loans to refugees that lack the financial resources, credit history or personal assets to qualify for business loans from commercial banks. Most if not all the recipients already get assistance or subsidies from the government, according to the qualification guidelines set by the Microenterprise Development Program. It’s a risky operation that blindly gives public funds to poor foreign nationals with no roots in the U.S. and there’s no follow up to assure the cash is paid back. The idea behind it is to “equip refugees with the skills they need to become successful entrepreneurs” by helping them expand or maintain their own business and become financially independent.

You gotta read this, continue here.

If you are looking for an organization to donate to—Judicial Watch is it!

Afterthought:  Repeatedly you see news stories that refugees are opening new businesses at record rates and thus boosting the local economy.  (Opening businesses with your financial help.)  This information makes me wonder how many of those new businesses survive for even a year or two?

Capitalism Is Good for the Poor by Steven Horwitz

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Critics frequently accuse markets and capitalism of making life worse for the poor. This refrain is certainly common in the halls of left-leaning academia as well as in broader intellectual circles. But like so many other criticisms of capitalism, this one ignores the very real, and very available, facts of history.

Nothing has done more to lift humanity out of poverty than the market economy. This claim is true whether we are looking at a time span of decades or of centuries. The number of people worldwide living on less than about two dollars per day today is less than half of what it was in 1990. The biggest gains in the fight against poverty have occurred in countries that have opened up their markets, such as China and India.

If we look over the longer historical period, we can see that the trends today are just the continuation of capitalism’s victories in beating back poverty. For most of human history, we lived in a world of a few haves and lots of have-nots. That slowly began to change with the advent of capitalism and the Industrial Revolution. As economic growth took off and spread throughout the population, it created our own world in the West in which there are a whole bunch of haves and a few have-more-and-betters.

For example, the percentage of American households below the poverty line who have basic appliances has grown steadily over the last few decades, with poor families in 2005 being more likely to own things like a clothes dryer, dishwasher, refrigerator, or air conditioner than the average household was in 1971. And consumer items that didn’t even exist back then, such as cell phones, were owned by half of poor households in 2005 and are owned by a substantial majority of them today.

Capitalism has also made poor people’s lives far better by reducing infant and child mortality rates, not to mention maternal death rates during childbirth, and by extending life expectancies by decades.

Consider, too, the way capitalism’s engine of growth has enabled the planet to sustain almost 7 billion people, compared to 1 billion in 1800. As Deirdre McCloskey has noted, if you multiply the gains in consumption to the average human by the gain in life expectancy worldwide by 7 (for 7 billion as compared to 1 billion people), humanity as a whole is better off by a factor of around 120. That’s not 120 percent better off, but 120 times better off since 1800.

The competitive market process has also made education, art, and culture available to more and more people. Even the poorest of Americans, not to mention many of the global poor, have access through the Internet and TV to concerts, books, and works of art that were exclusively the province of the wealthy for centuries.

And in the wealthiest countries, the dynamics of capitalism have begun to change the very nature of work. Where once humans toiled for 14 hours per day at backbreaking outdoor labor, now an increasing number of us work inside in climate-controlled comfort. Our workday and workweek have shrunk thanks to the much higher value of labor that comes from working with productive capital. We spend a much smaller percentage of our lives working for pay, whether we’re rich or poor. And even with economic change, the incomes of the poor are much less variable, as they are not linked to the unpredictable changes in weather that are part and parcel of a predominantly agricultural economy long since disappeared.

Think of it this way: the fabulously wealthy kings of old had servants attending to their every need, but an impacted tooth would likely kill them. The poor in largely capitalist countries have access to a quality of medical care and a variety and quality of food that the ancient kings could only dream of.

Consider, too, that the working poor of London 100 years ago were, at best, able to split a pound of meat per week among all of their children, which were greater in number than the two or three of today. In addition, the whole family ate meat once a week on Sunday, the one day the man of the household was home for dinner. That was meat for a week.

Compare that to today, when we worry that poor Americans are too easily able to afford a meal with a quarter pound of meat in it every single day for less than an hour’s labor. Even if you think that capitalism has made poor people overweight, that’s a major accomplishment compared to the precapitalist norm of constant malnutrition and the struggle even 100 years ago for the working poor to get enough calories.

The reality is that the rich have always lived well historically, as for centuries they could commandeer human labor to attend to their every need. In a precapitalist world, the poor had no hope of upward mobility or of relief from the endless physical drudgery that barely kept them alive.

Today, the poor in capitalist countries live like kings, thanks mostly to the freeing of labor and the ability to accumulate capital that makes that labor more productive and enriches even the poorest. The falling cost of what were once luxuries and are now necessities, driven by the competitive market and its profit and loss signals, has brought labor-saving machines to the masses. When profit-seeking and innovation became acceptable behavior for the bourgeoisie, the horn of plenty brought forth its bounty, and even the poorest shared in that wealth.

Once people no longer needed permission to innovate, and once the value of new inventions was judged by the improvements they made to the lives of the masses in the form of profit and loss, the poor began to live lives of comfort and dignity.

These changes are not, as some would say, about technology. After all, the Soviets had great scientists but could not channel that knowledge into material comfort for their poor. And it’s not about natural resources, which is obvious today as resource-poor Hong Kong is among the richest countries in the world thanks to capitalism, while Venezuelan socialism has destroyed that resource-rich country.

Inventions only become innovations when the right institutions exist to make them improve the lives of the masses. That is what capitalism did and continues to do every single day. And that’s why capitalism has been so good for the poor.

Consider, finally, what happened when the Soviets decided to show the film version of The Grapes of Wrath as anticapitalist propaganda. In the novel and film, a poor American family is driven from their Depression-era home by the Dust Bowl. They get in their old car and make a horrifying journey in search of a better life in California. The Soviets had to stop showing the film after a short period because the Russian audiences were astonished that poor Americans were able to own a car.

Even anticapitalist propaganda can’t help but provide evidence that contradicts its own argument. The historical truth is clear: nothing has done more for the poor than capitalism.

Steven HorwitzSteven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions.

He is a member of the FEE Faculty Network.

Democratic Socialism Debunked: The rhetoric and the reality never changes [+Videos]

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Socialist rhetoric changes very little over time. It turns out to be rather easy to juxtapose refutations from decades ago against the blather you hear on the news today.

As with economics generally, the fallacies of collectivist statism must be refuted in every generation. So here we have video of Milton Friedman dealing with the fallacies of Bernie Sanders.

For your convenience for sharing, here are other versions of the video.

Short versions:

RELATED ARTICLE: Socialist Self-Deception: Einstein and the USSR to Bernie Sanders and Venezuela

EDITORS NOTE: The below graphic summarizes socialism by one of its primary proponents.

HitlerSocialist-1024x535

 

5 Ideas at the Heart of Socialism by Lawrence W. Reed

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The good news is that more millennials are skeptical of economic intervention than trust the government to improve anything. The bad news is that a growing minority of young voters embrace the term socialism, which has an increasingly positive connotation even with those who don’t identify as socialist. The popular candidacy of Bernie Sanders has fueled the S-word’s redemption, but the process was already well underway in the last presidential election. A 2012 Gallup poll found that 53 percent of Democrats and 39 percent of Americans more generally had a positive reaction to the word socialism.

Political labels aside, the real danger of socialism lies neither in its formal definition nor in its evolving connotation in the rising generation. The danger lies in the ideas at the heart of socialism.

As FEE’s president Larry Reed writes in this 2011 essay, “If socialism comes, it will come because men choose to embrace its principles.”

A century ago, those principles were openly called socialism by their American advocates, but that term fell out of favor, first when the Socialist Party of America steadfastly opposed US involvement in World War I (resulting in a vicious crackdown by the federal government, including the illegal imprisonment of Socialist Party leader Eugene Debs), then later when Bolshevik revolutionaries seized power in Russia and the word socialist came to describe America’s authoritarian enemies in the Cold War.

The First World War is now a distant memory, and ever more voters were born after the fall of the Soviet empire. Historical amnesia is taking the sting out of the word socialism. Meanwhile, Senator Sanders has presented “a democratic socialist program,” according to emeritus history professor Lawrence S. Wittner, “in tune with the views of many Americans: universal healthcare (Medicare for All); tuition-free public college; a $15/hour minimum wage; increased Social Security benefits; higher taxes on the wealthy; big money out of politics; and a less militaristic foreign policy.”

Many antisocialists embrace the opposition to militarism (see, for example, Larry’s own “Antiwar Hero”), but despite the foreign policy positions of Debs and Sanders, the main ideas of socialism, whether under that name or any other, are about growing the government’s power and reach into the economy and reducing individuals’ freedom to decide the fate of their own property in voluntary exchange.

If the ideas at the heart of socialism are “in tune with the views of many Americans,” then identifying and challenging those ideas are essential to the struggle for liberty.

— B.K. Marcus

A belief that I stress again and again is that we are at war — not a physical, shooting war, but a war capable of becoming just as destructive and just as costly.

Ideas have had earthshaking consequences.

The battle for the preservation and advancement of liberty is a battle not against personalities but against opposing ideas. The French author Victor Hugo declared, “One resists the invasion of armies; one does not resist the invasion of ideas.” This statement is often rendered as “More powerful than armies is an idea whose time has come.”

Ideas have had earthshaking consequences. They have determined the course of history.

Feudalism existed for a thousand years in large part because scholars, teachers, intellectuals, educators, clergymen, and politicians propagated feudalistic ideas. The notion “once a serf, always a serf” kept millions of people from ever questioning their station in life.

Under mercantilism, the widely accepted concept that the world’s wealth is fixed prompted men to take what they wanted from others in a long series of bloody wars.

The publication of Adam Smith’s The Wealth of Nations in 1776 is a landmark in the history of the power of ideas. As Smith’s message of free trade spread, political barriers to peaceful cooperation collapsed, and virtually the whole world decided to try freedom for a change.

Marx and the Marxists would have us believe that socialism is inevitable, that it will embrace the world as surely as the sun will rise in the east tomorrow. As long as men have free will (the power to choose right over wrong), however, nothing that involves human volition can ever be inevitable. If socialism comes, it will come because men choose to embrace its principles.

Socialism is an age-old failure, yet the socialist idea constitutes the chief threat to liberty today. As I see it, socialism can be broken down into five ideas:

1. The Pass-a-Law Syndrome

Passing laws has become a national pastime. Business in trouble? Pass a law to give it public subsidies or restrict its freedom of action. Poverty? Pass a law to abolish it. Perhaps America needs a law against passing more laws.

Almost invariably, a new law means: (a) more taxes to finance its administration, (b) additional government officials to regulate some heretofore unregulated aspect of life, and (c) penalties for violating the law. In brief, more laws mean more regimentation, more coercion. Let there be no doubt about what the word coercion means: force, plunder, compulsion, restraint. Synonyms for the verb form of the word are even more instructive: impel, exact, subject, conscript, extort, wring, pry, twist, dragoon, bludgeon, and squeeze.

When government intervenes in the free economy, bureaucrats and politicians spend most of their time undoing their own handiwork. To repair the damage of provision A, they pass provision B. Then they find that to repair provision B, they need provision C, and to undo C, they need D, and so on until the alphabet and our freedoms are exhausted.

The pass-a-law syndrome is evidence of a misplaced faith in the political process and a reliance on force, which are anathema to a free society.

2. The Get-Something-from-Government Fantasy

Government by definition has nothing to distribute except what it first takes from people. Taxes are not donations.

Perhaps America needs a law against passing more laws.

In the welfare state this basic fact gets lost in the rush for special favors and giveaways. People speak of “government money” as if it were truly free.

One who is thinking of accepting something from government that he could not acquire voluntarily should ask, “From whose pocket is it coming? Am I being robbed to pay for this benefit, or is government robbing someone else on my behalf?” Frequently, the answer will be both.

The result of this fantasy is that everyone in society has his hands in someone else’s pockets.

3. The Pass-the-Buck Psychosis

Recently, a welfare recipient wrote her welfare office and demanded, “This is my sixth child. What are you going to do about it?”

An individual is victim to the pass-the-buck psychosis when he abandons himself as the solver of his problems. He might say, “My problems are really not mine at all. They are society’s, and if society doesn’t solve them and solve them quickly, there’s going to be trouble!”

Socialism thrives on the shirking of responsibility. When men lose their spirit of independence and initiative, their confidence in themselves, they become clay in the hands of tyrants and despots.

4. The Know-It-All Affliction

Leonard Read, in “The Free Market and Its Enemy,” identified “know-it-allness” as a central feature of the socialist idea. The know-it-all is a meddler in the affairs of others. His attitude can be expressed in this way: “I know what’s best for you, but I’m not content to merely convince you of my rightness; I’d rather force you to adopt my ways.” The know-it-all evinces arrogance and a lack of tolerance for the great diversity among people.

In government, the know-it-all refrain sounds like this: “If I didn’t think of it, then it can’t be done, and since it can’t be done, we must prevent anyone from trying.” A group of West Coast businessmen once ran into this snag when their request to operate barge service between the Pacific Northwest and Southern California was denied by the (now-defunct) Interstate Commerce Commission because the agency felt that the group could not operate such a service profitably.

The miracle of the market is that when individuals are free to try, they can and do accomplish great things. Read’s well-known admonition that there should be “no man-concocted restraints against the release of creative energy” is a powerful rejection of the know-it-all affliction.

5. The Envy Obsession

Coveting the wealth and income of others has given rise to a sizable chunk of today’s socialist legislation. Envy is the fuel that runs the engine of redistribution. Surely, the many soak-the-rich schemes are rooted in envy and covetousness.

Civilizations have been known to crumble under the weight of envy and the disrespect for property it entails.

What happens when people are obsessed with envy? They blame those who are better off than themselves for their troubles. Society is fractured into classes and faction preys on faction. Civilizations have been known to crumble under the weight of envy and the disrespect for property it entails.

A Common Thread

A common thread runs through these five socialist ideas. They all appeal to man’s darker side: the primitive, noncreative, slothful, dependent, demoralizing, unproductive, and destructive side of human nature. No society can long endure if its people practice such suicidal notions.

Consider the freedom philosophy. It is an uplifting, regenerative, motivating, creative, exciting philosophy. It appeals to and relies on the higher qualities of human nature, such as self-reliance, personal responsibility, individual initiative, respect for property, and voluntary cooperation.

The outcome of the struggle between freedom and serfdom depends entirely on what percolates in the hearts and minds of men. The jury is still deliberating.

Lawrence W. Reed

Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Follow on Twitter and Like on Facebook.

It’s Time to Put the Market Back in Housing Finance

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Today’s government-centric housing finance system is an “economics free zone” indifferent to supply and demand. Composed of an alphabet soup of agencies, this system has fostered a massive liberalization of mortgage terms and provided countless trillions of dollars in lending in up and down markets. At the same time, other government polices constrain supply. As a result, housing has become less, not more affordable or accessible. Here’s why.

“[In a seller’s market] it is more likely that the liberalization of mortgage terms will increase both price and the amount of the debt, with debt service remaining approximately unchanged. … Thus, the liberalization of terms easily becomes capitalized in higher prices.” (Fisher 1951).

Because of a reliance on excessive leverage, US homeownership policy has failed to broaden homeownership access, failed to achieve wealth accumulation for low- and middle-income homeowners, and led to 11 to 12 million foreclosures since 1973.

US multifamily policy failed to promote plentiful rental housing opportunities at rents accessible to low- and moderate-income tenants (Fisher 1975; Jakabovics et al. 2014). With the supply of unsubsidized, economical, workforce housing stagnating, there are calls for large expansions in subsidies.1 Building hundreds of thousands of high-cost apartment units—with inflated costs because of federal, state, and local regulations as well as layers of subsidies to lease to extremely low and very low income households—is not viable (Fisher 1975).

The Case against Current US Homeownership Policy

For 60 years, policymakers have loosened mortgage lending standards ostensibly to promote broader homeownership and wealth accumulation, particularly for low- and moderate-income households.

  • In 1954, Federal Housing Administration (FHA) borrowers had an average loan-to-value of 79.9 percent, an average loan term of 21.4 years, and an average housing debt-to-income ratio of 15 percent.
  • By 1964, these metrics had risen to 92.8 percent, 29.9 years, and 16.5 percent, respectively.
  • Today, the average figures are 96 percent, 29.5 years, and 28 percent, respectively.

Today’s FHA borrowers spend nearly twice as much of their income—2.15 times the debt, for a home at 1.79 times the price, with 6 times the default risk under stress—compared with typical 1954 FHA borrowers with the same nominal income.

It not surprising that the FHA has experienced 3.4 million foreclosures from 1973 to 2014 (one in eight purchase borrowers) compared with a near-zero rate in its first 25 years.2 For the 25 percent of FHA borrowers living in the highest default rate zip codes, an estimated one in five lost their homes, with untold neighborhood devastation (Pinto 2012).

Fact 1: The US homeownership rate is no higher today than in the early 1960s and is only marginally higher than in 1956, before FHA loans with low down payments or 30-year terms became broadly available.3

Fact 2:  Homes are less affordable today, standing at a multiple of 3.32 times median home price and median income compared with 2.95 times in 1979 or 2.86 times in 1992.  A new round of increasing loan leverage began after 1992, the year Congress imposed government-sponsored enterprise (GSE) affordable housing mandates. This helped drive home prices to unsustainable levels (4.05 times in 2006). After hitting a trough of 3.03 times in 2012, the ratio now stands at 3.32 times.4

Fact 3: Low- and middle-income households have lost wealth since 1989.

Fact 4: Liberalizing credit terms during a seller’s market inflates home prices and sets up future price volatility and higher default rates under stress.5 Extended periods of increasing leverage fuel a price boom that makes homes unaffordable, promotes price volatility, and leads to unforgiving mean reversion.6

Figure 2 confirms FHA’s first chief economist Ernest M. Fisher’s 1951 prediction that in a seller’s market, liberalized credit terms easily translate into higher prices. During the current up cycle, real home prices are up 16 percent.

In January 2015, the FHA announced a mortgage insurance premium cut during a seller’s market. It had the effect predicted by Fisher: nearly three-quarters of the additional buying power was absorbed by price (18 percent) and quality/quantity (55 percent) effects.7 Because the price effect increased the cost for all FHA buyers, the marginal cost of attracting each new first-time buyer was high ($82,000).8

Fact 5: Averages are misleading, and home prices are volatile.

National averages are misleading because they mask price volatility (figure 3) and price dispersion at the metro, zip code, and neighborhood levels (figures 4 and 5).

Lower-priced homes, generally owned by low-income and minority households, experience higher price volatility and lower nominal gains. In figure 5, the bottom price tier of all 28 cities had a lower nominal price increase per year than the top tier (computed over 18 years). These borrowers also experience higher default rates because of the higher leverage.9

Fact 6: Post crisis credit is not tight;10 underwriting and regulatory changes promote rather than constrain a boom.11 Whether leverage is exotic is less relevant than the relative change in buying power generated by increasing leverage, which drives deviation from the price mean.

Fact 7: Federal, state, and local policies increase home-building costs (Jakabovics et al. 2014).  The 10 metros with the lowest multiples of 2013 median home price and 2013 median household income had less restrictive land-use regulations.  The 15 metros with the highest multiples had more restrictive land-use regulations.12 Even California has recognized that public policies are largely responsible for it being the most expensive housing market in the country (Taylor 2015). Burgeoning impact fees have a disproportionate impact by constraining the construction of entry-level homes. 13

The Case against Current US Multifamily Policy

Fact 1: Rents are increasingly less affordable. In 1979 (earliest Zillow data available), median rents nationally stood at 24 percent of median incomes (Los Angeles rents stood at 30 percent of median incomes).  Today, the national rate stands at 30percent with Los Angeles at 49 percent.

Fact 2: Federal, state, and local policies increase apartment construction costs.  Eight of the 10 metros with the lowest multiples of 2015 median rent and median household income had less restrictive land-use regulations.  Thirteen of the 15 metros with the highest multiples of 2015 median rent and median household income had more restrictive land-use regulations.14

Fact 3: Multifamily debt (in 2010 dollars) is rising much faster than the number of total units because of liberal financing from Fannie Mae, Freddie Mac, FHA, and Ginnie Mae, as well as highly accommodative monetary policy.15

Fact 4: While the Low-Income Housing Tax Credit (LIHTC) is the primary means of promoting the construction of “affordable” apartments, it’s expensive and opaque.

New LIHTC credits total $10 billion annually, funding about 100,000 LIHTC units.

  • These units have high construction costs (estimated $175,000 to $200,000 per unit).
  • These units serve few low-income tenants; 80 percent are either extremely low income (area median income less than or equal to 30 percent) or very low income (area median income from 31 to 50 percent); only 7 percent have an area median income greater than 60 percent but less than or equal to 80 percent (Furman Center 2012).
  • These units benefit from layers of subsidies, driving subsidy costs to $12,000 per unit, raising questions about unfair distribution of scarce resources. These subsidies include government-aided financing, state and local subsidies, and rental assistance (e.g., Section 8 and Housing Choice Vouchers) targeted to very low and extremely low income households.
  • This tax credit risks repeating same errors as previous housing subsidy programs.
    • Tenants are overwhelmingly minority households (61 percent), and nonelderly units are concentrated in metropolitan statistical area census tracts with high minority concentrations (Office of Policy Development and Research 2016).
    • Many developments face fiscal challenges to avoid blight that sets in after 16 to 20 years.

Market-Based Solutions to Bring Home Prices Back in Line with Median Incomes and Improve Accessibility

Objective: A more stable housing finance market that provides a reliable path to wealth building and broader low- and middle-income access to homeownership.

  • Repeal Title XIV (qualified mortgage) and section 941 (qualified residential mortgage) provisions of Dodd-Frank (Pinto 2016) (legislative action needed)
  • Require the FHA and GSEs to adopt sound underwriting, pricing, and capital standards (legislative and administrative action needed)
  • Repeal the GSE affordable housing goals (see replacement Low-Income First-Time Buyer tax credit below) to end destabilizing competition between the FHA and the GSEs (legislative action needed)
  • Adopt policies to support market stability by ensuring a high preponderance of good-quality mortgages (administrative action needed)
  • Help low- and middle-income families with wealth-building strategies
    • The American Enterprise Institute’s Wealth Building Home Loan offers such a path, but the 30-year mortgage does not.16(administrative action needed)
  • Enact the Low-income First Time Homebuyer (LIFT Home) tax credit (legislative action needed)
    • This credit would allow low-income,17 first-time buyers to forgo the interest deduction and receive a one-time refundable tax credit.
    • This credit is equal to 4 percent of the mortgage loan ($10,000 maximum) and can be used to buy down the loan’s interest rate for at least seven years on loans with terms of 20 years or less.
    • The legislation would funnel $4.5 billion per year to fund 500,000 LIFT Home buyers, 250,000 of whom would be incremental low-income, first-time buyers. This assumes that 150,000 live in apartments (freed-up units would be a bonus).
    • Funding LIFT Home would require the following:
      • Reductions in the US Department of Housing and Urban Development’s budget
      • Repurposing other budgeted amounts that support affordable housing to push tax dollars directly to homebuyers instead of having the money siphoned off by bureaucracies and advocacy groups
      • Restructuring home mortgage interest deductions to promote wealth, not debt accumulation
        • For future homebuyers, this restructuring would
          • limit interest deductions to purchase loans and exclude second mortgages and cash-out refinances (also for existing homeowners) and
          • cap mortgage interest deductions to amounts payable on a loan with a 20-year amortization term.
      • For existing home loan borrowers, the restructuring would
        • grandfather current interest deductions, ameliorating impact of change on current home prices; and
        • direct any interest savings (from refinancing an existing loan at a lower rate) toward shortening the loan term.

Over 10 years, these solutions would reduce capital needs by 60 percent and allow weaning off the federal government’s overwhelming loan guarantee role. Outstanding debt would be reduced by approximately 20 percent, and risk-absorbing capital per loan would be reduced by 50 percent.

  • With less interest rate risk and lower capital requirements, these loans would be safer and easier for depository institutions to hold in portfolio.  Today, these institutions hold about 50 percent of total single-family mortgage debt.

Market-Based Rental Housing Solutions to Bring Rents Back in Line with Median Incomes and Improve Accessibility: the “Blight Preventer” Loan

Objectives: Shift from the current debt- and government-centric finance system to a rental housing market where supply is permitted and encouraged to meet demand; establish life cycle underwriting18and the “Blight Preventer” Loan as best practices in financing subsidized multifamily housing.

  • Repeal GSE affordable housing policies and the Community Reinvestment Act
  • Increase supply of unsubsidized economical workforce and entry-level apartments
  • Use lifecycle underwriting and 15- and 20-year self-amortizing first mortgage—the “Blight Preventer” Loan (White and Wilkins 2016):
    • Excessively long loan terms used to finance affordable multifamily properties leave many properties unable to fulfill affordability commitments without additional public subsidies and leaves those properties poorly maintained, leading to blight and urban decay.
    • Most affordable multifamily housing is located in lower-income neighborhoods, leaving public funders to accept blight or throw good money at bad investments.

Bending the Cost Curve to Increase the Supply of Unsubsidized Economical Workforce and Entry-Level Houses and Apartments

  • Local and state governments should
    • authorize expedited permitting and “just-in-time” building inspections;
    • identify building code interpretations to reduce cost impact;
    • review and amend density and parking requirements, height maximums, size minimums, and other provisions that increase barriers and raise costs;
    • expand permitted uses in a zoning district that are not subject to special review and approval by local government;
    • review and amend building codes that dictate costs and amenities that put economical workforce developments at a disadvantage;
    • reduce regulatory complexity and include staff flexibility in applying and interpreting burdensome requirements (direct staff to be as flexible as possible);
    • adjust impact and permitting fees to reflect any reduced impact of such housing;
    • establish a “good enough to be economical” standard; and
    • reduce the expenses calculated as a percentage of costs.
  • Designers and  builders should implement innovative and economical techniques for
    • design and construction,
    • sustainability,
    • utilizing existing infrastructure,
    • repurposing existing structures, and
    • management.

Notes

  1. “Cantwell Launches National Campaign to Increase Federal Resources for Affordable Housing,” press release, March 24, 2016, https://www.cantwell.senate.gov/news/press-releases/cantwell-launches-national-campaign-to-increase-federal-resources-for-affordable-housing; Peter Dreier, “How to House the Working Poor,” How Housing Matters, last updated April 7, 2016, http://howhousingmatters.org/articles/house-working-poor/.
  2. FHA Actuarial Studies and author. See Pinto (2012).
  3. Edward J. Pinto, “Housing finance fact or fiction? FHA pioneered the 30-year fixed rate mortgage during the Great Depression?” AEIdeas (blog), June 24, 2015,http://www.aei.org/publication/housing-finance-fact-or-fiction-fha-pioneered-the-30-year-fixed-rate-mortgage-during-the-great-depression/.
  4. Zillow and author.
  5. Liberalization of credit terms takes many forms, including smaller down payments, higher debt-to-income ratios, longer loan terms, lower interest rates, quantitative easing, and reduced mortgage insurance premium.
  6. Mean reversion is a theory suggesting prices and returns eventually move back toward the mean.
  7. The 0.50 percent decrease in premium increased buying power by 6 percent. This could be “spent” in three ways: price effect (seller raises price), quality/quantity effect (buyer purchases larger or better-quality home), or expanded access (attracts new buyers).
  8. Forthcoming research to be published by Stephen Oliner, Edward Pinto, and Tobias Peter.
  9. Default risk increased in zip codes where median family income and median home prices are low. See Pinto (2012).
  10. First-time buyer credit metrics are follows: 69 percent of buyers have a combined loan-to-value ratio less than or equal to 95 percent, 97 percent have a 30-year loan, 29 percent have a debt-to-income ratio less than 43 percent, and 22 percent have a FICO score below 660. See “Mortgage Risk Index Release of March 2016 Data,” American Enterprise Institute’s International Center on Housing Risk, last updated April 26, 2016.  As an up real estate cycle ages, credit maximums usually become minimums, thus leading to calls for even more liberal credit terms, including less traditional ones. See Fisher (1951).
  11. For example, income leverage (measured by borrower debt-to-income ratio) is largely unconstrained by Dodd-Frank’s qualified mortgage regulation. Its 43 percent limit is swallowed by agency exemptions (Fannie, Freddie, FHA, the US Department of Veterans Affairs, and the Rural Housing Service guarantee some 85 percent of all primary home purchase loans). An effective income leverage limitation operates to “take the punch bowl away” before a leverage-fueled price boom goes too far.
  12. Demographia.com and author. “Regulations Add a Whopping $84,671 to New Home Prices,”NAHBNow (blog), May 9, 2016, http://nahbnow.com/2016/05/regulations-add-a-whopping-84671-to-new-home-prices/.
  13. Nick Timiraos, “How City Hall Exacerbates the Entry-Level Housing Squeeze,” The Wall Street Journal, May 5, 2016, http://blogs.wsj.com/economics/2016/05/05/how-city-hall-exacerbates-the-entry-level-housing-squeeze/.
  14. Demographia.com and author.
  15. Paul Bubny, “CRE Debt Increase Hits 8-Year High,” Law.com, March 15, 2016,http://www.law.com/sites/paulbubny/2016/03/15/cre-debt-increase-hits-8-year-high/?slreturn=20160419120431.
  16. Edward Pinto and Stephen Oliner, “WBHL,” American Enterprise Institute’s International Center on Housing Risk, accessed May 19, 2016, http://www.housingrisk.org/category/wealth-building-home-loan/.
  17. Incomes below 80 percent of the area median income.
  18. Lifecycle underwriting considers a property’s ability to cover its long-term capital needs (e.g., replacing worn-out roofs, air conditioners, and appliances) over the property’s life cycle. See Brennan and colleagues (2013).

References

Brennan, Maya, Amy Deora, Ethan Handelman, Anker Heegaard, Albert Lee, Jeffrey Lubell, and Charlie Wilkins. 2013. “Lifecycle Underwriting: Potential Policy and Practical Implications. Working paper. Washington, DC: Center for Housing Policy.http://media.wix.com/ugd/19cfbe_891b4788e2e64d0cb71a75940a101f2f.pdf.

Fisher, Ernest M. 1951. “Financing Home Ownership.” In Urban Real Estate Markets: Characteristics and Financing, edited by Ernest M. Fisher, 61–90. Cambridge, MA: National Bureau of Economic Research. http://www.nber.org/chapters/c3180.pdf.

———. 1975. Housing Markets and Congressional Goals. Westport, CT: Praeger Publishers Inc.

Furman Center for Real Estate and Urban Policy. 2012. “What Can We Learn about the Low-Income Housing Tax Credit Program by Looking at the Tenants?” New York: New York University.http://furmancenter.org/files/publications/LIHTC_Final_Policy_Brief_v2.pdf.

Jakabovics, Andrew, Lynn M. Ross, Molly Simpson, and Michael Spotts. 2014. Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals. Washington, DC: Urban Land Institute.http://uli.org/wp-content/uploads/ULI-Documents/BendingCostCurve-Solutions_2014_web.pdf.

Office of Policy Development and Research. 2016. Data on Tenants in LIHTC Units as of December 31, 2013. Washington, DC: US Department of Housing and Urban Development.https://www.huduser.gov/portal/sites/default/files/pdf/LIHTC-Tenants-2013.pdf.

Pinto, Edward J. 2012. How the FHA Hurts Working-Class Families and Communities. Washington, DC: American Enterprise Institute. http://www.nightmareatfha.com/how-the-fha-hurts-working-class-families-and-communities/.

———. 2016. “Repealing Dodd-Frank’s Qualified Mortgage and Qualified Residential Mortgage.” InThe Case Against Dodd-Frank: How the “Consumer Protection” Law Endangers Americans, edited by Norbert J. Michel, 31–38. Washington, DC: The Heritage Foundation. http://thf-reports.s3.amazonaws.com/2016/The%20Case%20Against%20Dodd-Frank.pdf.

Taylor, Mac. 2015. California’s High Housing Costs: Causes and Consequences. Sacramento, CA: Legislative Analyst’s Office. http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf.

White, Tom, and Charlie Wilkins. 2016. “‘Blight Preventer’ Loan: Property Lifecycle Underwriting and 15–20 Year Self-Amortizing First Mortgage Debt as a Best Practice for Financing Subsidized Multifamily Housing.” Washington, DC: American Enterprise Institute.http://www.housingrisk.org/wp-content/uploads/2016/05/White-Wilkins-MF-debt-paper-final.pdf.

EDITORS NOTE: This column originally appeared on the Urban.org website.