excessive debt, the new administration is urging more
hair of the dog that bit us: borrowing another $820 billion
The rationalizations for the stimulus keep
changing. Obama`s latest featured money pit—wind
and solar energy!—being a desperate throwback to last
summer when gasoline prices were twice as high.
Sure, none of it makes much sense. But for
Obama, politically, it`s a no-lose proposition. Either the
economy gets better and he takes credit; or the
economy flatlines and he demands more fiscal defibrillation.
In either case, he gets to give huge
sums of other people`s money to the politically
well-positioned. The taxpayers will eventually have to pay
for all the new borrowing, but most of the bill will likely
come due after the 2012 election.
Our economic problem, though, is more
severe than a temporary downturn. We now know that our
purported wealth as of July 1, 2007 was illusory, based on a
mountain of leverage teetering on the unquestioned
assumption that some
drywallers in Palmdale would actually pay off their
half-million dollar mortgages.
From 2001 onward, there was
no real economic growth in
ginned up by
home equity withdrawals. Our
trade balance, for example, averaged
over 5 percent of GDP throughout Bush`s second term.
So, the real question is not how do we
stimulate consumption once again to unsustainable heights,
but: How do we become more productive? How do we make more
stuff that people want to buy? How do we get better at
creating more wealth?
The nation turns its eyes to Barack Obama,
whose single year of working for a for-profit corporation
feel like “a
spy behind enemy lines“ (as I point out in my book
Prince: Barack Obama`s “Story of Race and Inheritance.”
) Obama has no experience in creating wealth, just in
extracting it from others to spend for his political
But, needless to say, the Republicans
have no clue what alternatives to offer.
The triumph of the globalist ideology
means that the globalists` vaunted playbook is exhausted.
Free trade? Tariffs have already been cut
almost to nothing—to
1.3 percent on average!
The globalist recipe—outsourcing and insourcing once
well-paid jobs away from American citizens—has been followed
for decades. The plan was to drive wages down but keep
consumption up by offering Americans lots and lots of debt.
How`s that working out lately?
It took us a long time to get to this
dismal point, and it will take us a long time to get back on
the right path. So, let`s discuss long-term strategies for
how Americans can make enough money to pay the taxes on all
the debt the government has suddenly taken on.
The most obvious way for the government to
help Americans become more productive is to junk
government-required extravagances. Sure, these demands may
have seemed affordable when
homes were "worth"
a median half million, but now they must be reassessed with
a jaundiced eye.
The most obvious reform for boosting
productivity: end the national anti-discrimination
The assumption that lower economic
achievement by a minority must be the fault of the majority
has created costs vaster than previously imagined. For
example, VDARE.com economist
Rubenstein`s recent report
Cost of Diversity for the National Policy Institute
estimates the price of affirmative action, immigration, and
multiculturalism at eight percent of the GDP, or $1.1
Brimelow and Leslie Spencer
the shortfall at 4 percent of GNP in 1993, something that
no one else wanted to do, and anonymous statistician La
Griffe de Lion wrote Affirmative
Action: The Robin Hood Effect in 1999, in which he pointed out
someone gets preferential access to a job or a promotion
because of his race or ethnicity, someone else of a
different race or ethnicity gets displaced. In the
displaced person is usually a non-Hispanic white. ")
The costs, direct and (especially)
indirect, of affirmative action are seldom properly
conceptualized. The public has been trained to assume that
racial preferences are common only in
college admissions. But in fact the vast
anti-discrimination industry causes
corporations to impose quotas on themselves as
prophylaxis against discrimination lawsuits.
In 1978, the federal government adopted
Guidelines“ that declared:
“A selection rate for any race, sex, or ethnic group which is less than
four-fifths (or eighty percent) of the rate for the group
with the highest rate will generally be regarded by the
Federal enforcement agencies as evidence of adverse impact
In other words, if your hiring procedures
mean that any
legally protected minority is hired at a rate less than
80 percent of the rate of the group that does best, then you
are presumed guilty of discrimination unless you can prove
Racial quotas are, thus, the
by-products of our anti-discrimination laws and regulations.
anti-discrimination laws undermine productivity even when
only whites apply for the job—because they make it dangerous
to use objective measures of competence.
example, when I was at Dun & Bradstreet, I needed to
hire a computer programmer. I asked the human resources
department for the standard D&B written test for
said they would never, ever create such a thing
because they would be
certain to be sued over it as discriminatory. However,
they assured me, I was free to ask orally all the
programming questions I wanted—as long as I never wrote
Additionally, the costs of the
current assumption that only discrimination can explain
inequality are even greater than Ed Rubinstein`s report
Consider the mortgage meltdown that
launched the global economic crisis. Both the
degraded credit standards so
minorities could get their fair share of the American
Dream. Team Obama whistles the same tune. The catastrophic
expansion of subprime loans was justified by Obama`s
economics` expert Austan Goolsbee [email
him] in 2007 on the grounds that
“`Irresponsible` Mortgages Have Opened Doors to Many of the
study, however, by Boston Fed economists Kristopher S.
Gerardi and Paul S. Willen,
Subprime Mortgages, Foreclosures, and Urban Neighborhoods,
has revealed that minorities in
default at about twice the white rate on subprime
Previously, I noted that data from the
federal Home Mortgage Disclosure Act database has shown that
minorities, who make up one-third of the population, took
twice as many dollars per capita as whites in subprime
mortgages during the Housing Bubble years of 2004-2007.
A back-of-an-envelope calculation says
that if the national foreclosure rates are similar to those
accounted for approaching two-thirds of the subprime
mortgage dollars defaulted.
(There`s a great
irony here: it was a 1992 Boston Fed study purporting to
show mortgage discrimination, authored future Clinton
appointee Alicia H. Munnell, that provided the rationale for
the feds` forcing the banks to make these risky loans. The
then-president of the Boston Fed,
Richard F. Syron, who greeted it with the glad cry of
"Comports with common
sense, no more studies needed",
went on to bigger and better
things as…CEO of Freddie Mac, one of two federally-sponsored
monsters“. Yet it was
refuted at the time
in Forbes magazine (January 4, 1993) by Peter Brimelow and Leslie
Spencer, who pointed
precisely to differential default rates.)
Racial quotas might be necessary for some
institutions, typically local monopolies such as utilities
police forces, that aren`t disciplined by the market to
maximize efficiency. But clearly, it`s time to lift the dead
weight of the anti-discrimination regime from firms in
The Republican leadership would of
course whisper back to us that we can`t possibly talk in
public about boosting the economy by eliminating racial
preferences because that involves … race. And, President
Obama is, you know …
Of course, that`s the kind of thinking
made Obama President.
My advice to the GOP: At the moment, the
media is proclaiming that a black man being President is the
greatest thing that ever happened in the history of the
world. So use ju-jitsu.
Go with the flow. Say that Obama being President shows that
racial preferences were successful—and that it`s time to
pare them back to help the economy get out of the ditch.