A foretaste of mob rule

Victor Davis Hanson

COMMENTARY:

In the last three months, we've been reduced to something like the ancient Athenian mob - with opportunistic politicians sometimes inciting, sometimes catering to an already angry public.
The Greek comic playwright Aristophanes once described how screaming politicians - posing as men of the people - would sway Athenian citizens by offering them all sort of perks and goodies that the government had no idea how to pay for.

The historian Thucydides offers even more frightening accounts of bloodthirsty voters after they were aroused by demagogues ("leaders or drivers of the people"). One day, in bloodthirsty rage, voters demanded the death of the rebellious men of the subject island city of Mytilene; yet on the very next, in sudden remorse, they rescinded that blanket death sentence.
Lately, we've allowed our government to forget its calmer republican roots. We've gone Athenian whole hog.

Take the American International Group Inc. (AIG) debacle. The global insurance and financial-services company is broke and needed a federal loan guarantee of $180 billion to prevent bankruptcy. Some $165 million (about one-thousandth of the loan guarantee sum) was previously contracted as bonuses for its derelict executives.

That set off a firestorm in Congress. Politicians rushed before the cameras to demand all sorts of penalties for these greedy investment bankers. Soon, they passed an unprecedented special tax law just to confiscate 90 percent of these contracted bonuses.

Those who shouted the loudest for the heads of the AIG execs had the dirtiest hands. President Obama was outraged at their greed. But he alone signed their bonus provisions into law. And during the recent presidential campaign, no one forced him to accept over $100,000 in AIG donations.

Rep. Charles B. Rangel, New York Democrat, was even more infuriated at such greed and, as chairman of the House Ways and Means Committee, he helped pass the retroactive tax bill. Yet for years, the populist Mr. Rangel - who is in trouble over back taxes owed and misuse of his subsidized New York apartments - had tried to entice AIG executives to fund his Charles B. Rangel Center for Public Service at the City College of New York.

Sen. Christopher J. Dodd, Connecticut Democrat, was the fieriest in his denunciations of Wall Street greed. Yet he was the very one who inserted the bonus provision into the bailout bill, despite later denying it. And Mr. Dodd has taken more AIG money than anyone else in Congress - in addition to getting VIP loan rates from the disgraced Countrywide Financial Corp. mortgage bank.

Then there is the matter of blowing apart the budget. Mr. Obama inherited from former President George W. Bush a $500 billion - and growing - annual budget deficit and a ballooning $11 trillion national debt. Mr. Obama nevertheless promised us an entirely new national health plan, bigger entitlements in education and a vast new cap-and-trade energy program.
But there is a problem in paying for the $3.5 trillion in budgetary expenditures Mr. Obama has called for in the coming fiscal year. Proposed vast additional taxes on the "rich" still won't provide enough revenue to avoid tripling the present budget deficit - and putting us on schedule during the next decade to add another $9 trillion to the existing national debt.

During the Clinton years, we got higher taxes but eventually balanced budgets. During the recent Bush administration, we got lower taxes but spiraling deficits. But now, during the era of Mr. Obama, we apparently will get the worst of both worlds - higher taxes than under Mr. Clinton and higher deficits than under Mr. Bush.

In other words, we - through our government - are spending money that we don't have. We're told the rich will pick up the tab, even though there are not enough rich with enough money to squeeze out the necessary amounts. Our new demagogues, though, argue this is the only fair course of action.

Meanwhile, these leaders - who have taken so much Wall Street money in the past - are driving us into fury to punish the guilty on Wall Street. This is truly the age of mindless mob rule.
Of course, we probably won't hear any candidate in four years issue the following assurance to voters: "I won't take any more money from Wall Street and will give back any that I already got. And if elected, I promise four consecutive years of budget cuts to achieve each year $1.5 trillion in annual budget surpluses. Only that way can we get the national debt back down to the past 'manageable' 2008 sum of $11 trillion."

We need such a Socrates in Washington right now, who would dare tell the American mob the truth of how we are descending into financial serfdom. But in this present mood, the aroused mob would first make him drink the hemlock.

Victor Davis Hanson is a classicist and historian at Stanford University's Hoover Institution and author of "A War Like No Other: How the Athenians and Spartans Fought the Peloponnesian War."

Financial Crisis Explained In Simple Terms

*Wendy is the proprietor of a bar in Washington. 

In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.

She keeps track of the drinks consumed in a ledger, thereby granting the customers loans.

Word gets around, and as a result increasing numbers of customers flood into Wendy's bar.

Taking advantage of her customers' freedom from immediate payment constraints, Wendy increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Wendy's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and BOOZEBONDS.

These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed; nevertheless, their prices continuously climb, and the securities become top-selling items.

One day, although the prices are still climbing, a risk manager of the bank (subsequently fired due to his negativity) decides that the time has come to demand payment of the debts incurred by the drinkers at Wendy's bar.

But the drinkers cannot pay off their debts -- they're unemployed and they're alcoholics!

Wendy in turn can't fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. BOOZEBOND performs better, stabilizing in price after dropping by 80%.

The suppliers of Wendy's bar, having granted her generous payment due dates and having invested in the securities, are faced with a new situation: they must write off her accounts as uncollectable and suffer the loss of their investments. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties. Wendy, her suppliers, and all the investors who bought DRINKBONDs, ALKBONDs and BOOZEBONDs are left holding the bag.

The funds required for saving the bank - here's the good part! - are obtained by a tax levied on all non-drinkers.

Now do you understand?

Obama on education: right talk, wrong walk

Obama on education: right talk, wrong walk
Star Parker
Monday, March 02, 2009

I share President Obama's concerns about education. We certainly need to do a better job, particularly in our low-income communities.

But, from what I see so far, we're on very different pages regarding how to think about the problem.

For Obama, the solution to everything seems to be government and spending. But in improving education, more of neither seems to work.

According to Department of Education data, reported by the Cato Institute, K-12 spending per student, adjusted for inflation, went from $5,393 in 1970 to $11,470 in 2004. Over the same period, there were tiny increases in math scores among 17-year-olds and no improvement in reading scores.

In his address to Congress, Obama was clear that he understands it's not just money but how it's spent. " ...our schools don't just need more resources, they need more reform," he said.

But can we really believe that over the thirty-five years that per pupil spending doubled it did not dawn on any educator that reform was in order? There are endless new ideas about how to spend money to manipulate kids into learning.

The problem with professional bureaucrats is that they think we learn about human beings in laboratories and academic studies. It never occurs to them the problem is a bankrupt culture, which they themselves often reflect, and what's needed is a return to traditional values.

I recently watched the made-for-television movie, "Gifted Hands."

It's based on the book by the same name by Dr. Ben Carson about his remarkable life. I read it years ago when it was published and made my daughters read it.

Dr. Carson is one of the world's few black pediatric neurosurgeons, world renowned for his professional accomplishments. He is a professor and department head at Johns Hopkins Medical Institutions.

In his own words, he was an "at risk" child -- a black male raised in poverty by a young, poorly educated single mother.

According to Carson, "My mother worked as a domestic, two, sometimes three jobs at a time because she didn't want to be on welfare. She felt very strongly that if she gave up and went on welfare, that she would give up control of her life and of our lives, and I think she was probably correct about that."

When Carson was failing in school as a young boy, she laid down the law to him and his brother. Both of them would read two books a week and give her a book report (they had no idea she couldn't read). And, they'd be limited to three television shows per week.

Carson's young mother changed his life.

It's also relevant to mention that Carson's mother is a Christian woman of deep faith - a faith he shares. She redirected her boys' lives out of religious inspiration.

Ben Carson, of course, is an exceptional man. But his story verifies what existing studies show. The main predictor of a child's educational success is the parental guidance and involvement that the child gets at home.

Central to this also must be values. The problem is that these values - the traditional values that Ben Carson's mother taught him - are off limits in our public schools.

This is why throwing money at a government school monopoly is not going to change education realities. We need freedom, not money. Freedom to allow parents - certainly inner-city parents - to choose their child's school.

President Obama often uses the right words. He says that "responsibility for our children's education must begin at home." But then he will not allow parents' school choice and the option to choose a religious school.

Ben Carson's mother didn't need Harvard education theorists to know what her child needed.

We need more common sense and freedom in K-12 education -- not more government programs and money.