The Senate is having hearings on Elena Kagan for a seat on the Supreme Court. She has been prominent in the news and the topic of discussion on all the talk shows just like the previous nominee Sonia Sotomayor. There was a poll about whether Americans could identify the justices of the Supreme Court. Hardly anyone could. However, more named Clarence Thomas than any other justice. So here is a test. Who are Peter Diamond, Sarah Raskin, and Janet Yellen? They too have been nominated by Obama and will have hearings before the Senate. They are in some ways just as important and maybe more important that Kagan and Sotomayor but hardly a word has been written on their confirmation hearings. No talk show host has been ranting and railing about them. No lobbying group has organized a campaign against them. The senate has not threatened a filibuster. Talk about being under the radar! So who are they? They are nominees to the Federal Reserve's Board of Governors!
Light beer sales are down. Miller Lite is off 7.5% and Bud Light is off 5.3% this year. I thought beer was recession proof? I know that the American beer consuming public has not suddenly discovered taste. "Light" beer was invented to get college coeds to drink beer. To make it acceptable to college males, Miller ran adds of ex-jocks arguing whether it was "less filling" or whether it "tastes great". If truth be told, it was neither. When I met my beloved Connie fifteen years ago, she said with horror "You don't like wine? You drink beer?" I thought that was the end of a promising relationship. What cultured person didn't like bordeaux or chardonnay and preferred beer? Obvious I had inferior genes. Then she tried porter (I drink mainly porters and stouts and an occasional IPA) and said "That's beer?" Then after her first IPA she was hooked. You know after I first tasted light beer I sent it to the lab for analysis. The report said "Dr Black, We are afraid your horse has diabetes."
After classes ended the campus was overrun with hundreds of young kids - something called Destination Knoxville. I don't know what they were being taught but one day when I went into the student union, there were the kids milling around. Most were dressed in lime green t-shirts while others were in costumes looking like trees, the sun and flowers. One was yelling "I can save the rain forest!" Oh boy - indoctrination. I doubt very seriously if they were given a balanced view of the environment. But of course I doubt if their teachers know anything about science or even the scientific method. As a matter of fact, one of my pet peeves is the existence of colleges of education within the universities. Unless things have changed, traditionally education majors are the poorest academic students at the university by any quantitative measure. Do you realize that after I retire, if I wanted to go to some inner city high school and teach economics, I would be unqualified? That's because I have never had a class in education and have not gotten the proper certification to teach in the public schools. My feeling has always been that education should not be an undergraduate major. It should be only for graduate education. If you want to teach math, then you should be a math major as an undergraduate. If you want to teach economics, you should be an economics major. Surely you can't expect someone who could not get a degree in math to teach math to our kids, could you? Now don't get me wrong, for a number of years I have been asked to guest lecture in a doctoral seminar in education. I have always been impressed by the quality of the students. However, I have been just as unimpressed by the quality of the majority of the undergraduate education majors. So for that kid who said that he could save the rain forest? No he can't nor can his teachers. Yet neither have a clue about the environment and the impact of humans on it.
To celebrate my 50th and 60th birthdays I took my ST-1100 and did a 4 corners ride. You leave home and go to the southernmost city in Florida (Key West) to the southernmost city in California (San Ysidro) to the northernmost city in Washington (Blaine) to the northernmost city in Maine (Madawaska) and go home. Not only are you struck by the beauty of the country and just how massive it is, you are also struck by the differences in the people. The first thing you notice is that at every stop in the south and the southwest, someone would ask you where were you from and where you were going. The second stop for gas was in Enoree, SC. At the gas station, a man asked me “long trip or short trip”? I said “long trip” and told him about the 4 corners. He went inside to pay and when he came out he said “be safe”. When I went inside the woman behind the counter said “You are going around the country?” I told her yes. She said “it must be expensive living in all those hotels”. I said that most of the time I would stay with friends. She said “You mean you know people all over the country?" She shook her head and said “I don’t know anyone outside of Enoree.” When I rode off, I looked back and she had her face pressed up against the window. However, from California through the northwest, upper midwest and Canada no one even spoke to me. I was expecting the cold shoulder from those in Maine but they were as open and friendly as southerners. When I got back someone asked what was my lasting impression of the trip. After thinking about all the different people, I wondered why we are not Bosnia? What binds us Americans together? We are so different. I truly felt like an alien after leaving Texas, into California and through New England (but not including Maine) and New York. The upper far west was weird. Imagine speaking to people and being ignored. Imagine not being served at a restaurant in South Dakota (was it because of my color or because they didn’t like motorcyclists?). The only thing that we obviously have in common is our nationality. Why is that enough? Or is it enough? During the presidential campaign there was a guest column in JazzTimes that linked jazz to liberal causes and listed the left's favorite heroes - murderers all (Che, Mao and the like). The author pleaded for the election of Obama because he said it would heal all of the divisions created by George Bush. I replied and said that I bet him that the election of Obama would cause greater divisions than had existed during Bush. It would be because the divisions he felt were only felt by the far left fringe while an Obama administration would alienate not only the far right fringe but everyday mainstream Americans. I won the bet but he has yet to pay (typical of his ilk). My worry is that Obama is causing such a rift that we may be in danger of becoming Bosnia. I can envision the less liberal states resisting the additional federal mandates to support socialized medicine, the destructive cap and trade legislation, card check, and all the rest of the Obama agenda. They realize that they are simply subsidizing New York and California. The suit of the AGs against the feds over healthcare may only be the beginning. There is even serious talk of succession by those who are not loons. I am starting to conclude that whatever it is that has linked us together despite our differences is now being threatened. It is not a good feeling. Hopefully, we will once again be united in what unites us (freedom, individual liberty, free markets, the profit motive, individual responsibility) and keep Bosnia at bay.
Sometimes you get a revelation. The heavens open up, the angels sing and you now know the truth. I have always wondered why the Obama Administration is full of smart people giving bad advice. This seems true in every area - now highlighted with the missteps on the Gulf oil spill - but is especially true regarding the economy. Few would doubt the brain power of Larry Summers, Christina Romer and their team. Yet they appear to be ignorant of basic economic principles and especially micro economics. It is if they have never heard of Adam Smith or if they have do not believe in him or economic principles. Then I heard an interview with a "democratic strategist" who said that we (meaning the administration) need to get the budget under control. There was way too much spending. But now was the wrong time to decrease spending. What was needed was to keep spending and even increase it while we were in the recession. I went Hallelujah! That explains it! You see I - and those like me - believe that government spending makes matters worse. The other side believes that it makes things better - or at least keeps things from getting worse. The other side does not believe in "crowding out". That is where government spending substitutes for private spending rather than augments it. When the government goes into the markets to borrow money in order to increase spending, it drives out private investment and borrowing. This reduces capital expenditures and translates into slower economic growth. This crowding out is highlighted by a recent study by Harvard economists who found that earmarks increased government spending but reduce sales, payrolls and capital expenditures by local companies. This means that government spending substitutes rather an complements local private expenditures. I have pointed out before how stimulus packages have failed to stimulate, how the trillion dollar increase in government spending has prolonged the recession, how government inhibits economic growth through disincentives and increases uncertainties. However, these are facts. Getting the economists on the other side to accept facts when it impinges on their faith has proved futile in the past. I doubt seriously if a study even by a bunch from Harvard is likely to change their minds.
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com