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Taxpayers Pay $91 Million for Surplus Milk Powder

“Millions of pounds of government-owned milk powder stored in a warehouse in Fowler, Calif.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) FOWLER, Calif. — The long economic boom, fueled by easy credit that allowed people to spend money they did not have, led to a huge oversupply of cars, houses and shopping malls, as recent months have made clear. Now, add one more item to the list: an oversupply of cows.
And it turns out that shutting down the milk supply is not as easy as closing an automobile assembly line.
As a breakneck expansion in the global dairy industry turns to bust, Roger Van Groningen must deal with the consequences. In a warehouse that his company runs here, 8 to 20 trucks pull up every day to unload milk powder. Bags of the stuff — surplus that nobody will buy, at least not at a price the dairy industry regards as acceptable — are unloaded and stacked into towering rows that nearly fill the warehouse.
Mr. Van Groningen’s company does not own the surplus milk powder, but merely stores it for the new owners: the taxpayers of the United States. To date, the government has agreed to buy about $91 million worth of milk powder.
. . .
(p. B5) Government price supports provide a price floor for agricultural products as a way of keeping farmers afloat during hard times and ensuring an adequate food supply.
The Agriculture Department has committed to buying 111.6 million pounds of milk powder at 80 cents a pound, for roughly $91 million, which includes some handling fees. . . .
. . .
. . . the agency has not decided what to do with the cache of milk powder in California.
Some critics of farm subsidies argue that price support programs are antiquated and allow farmers to continue producing even when the economics make no sense, as taxpayers will always buy up the excess production.
“They don’t want to downsize or respond to the market signal. They want to keep producing,” said Kenneth Cook, president of the Environmental Working Group, a Washington research organization that has long been critical of the government’s farm policy. “Once you get in a jam like this, it becomes our collective problem.”

For the full story, see:
ANDREW MARTIN. “Awash in Milk and Headaches; Cows Keep Producing Despite Drop in Demand.” The New York Times (Fri., January 1, 2009): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the article is dated January 1, 2009, and is entitled “As Recession Deepens, So Does Milk Surplus.”)

“Arthur Machado, a dairy farmer in Fresno, Calif., has to keep feeding his herd of more than 300 cows. He plans to sell them and take up a more stable commodity.” Source of caption and photo: online version of the NYT article quoted and cited above.

“The Whole Point of Camp is to Dethrone the Serious”

(p. W1) The 2000 film “Billy Elliot” was a surprise hit. It’s an absorbing drama about personal transformation and the power of art to ennoble the human spirit. “Billy Elliot: The Musical” — the noise is supplied by Sir Elton John — is a depressing spectacle about partisan politics and the ephemeral power of schlock.
. . .
The musical, a campy, anticapitalist confection, is just one of the latest prepackaged exercises in “transgression.” Maybe it’s “Corpus Christi,” Terrence McNally’s play about a gay Jesus Christ. Maybe it’s “The Goat,” Edward Albee’s play celebrating bestiality, or a production (p. W4) of “The Flying Dutchman” in which the heroine sports posters of Che Guevara and Martin Luther King on her bedroom wall. The point about these unpleasant offerings is not how outrageous but how common they are.
. . .
In the film, there was one extended reference to Margaret Thatcher. Mrs. Wilkinson’s middle-class drink-sodden husband (tellingly made “redundant” — that is, laid off) praises the prime minister for showing down the miners. He is hardly a sympathetic figure, but he had a point: If it costs more money to get the coal out of the ground then you make from selling it, why keep the pit open?
If there were truth in advertising, the musical would have been called “Billy Elliot, The Musical, Featuring Margaret Thatcher as the Incarnation of Evil.” She is roundly abused by several characters in the opening scenes, is the object of casual calumny throughout the show, and features in a Christmas children’s song — replete with gigantic scary Thatcher masks and puppets — whose refrain is “Merry Christmas, Maggie Thatcher. We all celebrate today because it’s one day closer to your death.” Nice stuff, eh?
In one sense, “Billy Elliot: The Musical” represents a growth enterprise. Everywhere you turn these days, you are met not only with celebrations of the vulgar but also entertainments that pretend to be brave, challenging “interrogations” of established taste which in fact are simply reflections of established taste. The little sermons about Thatcher and capitalism and bigotry are presented as if they were fresh thoughts designed to disturb the dogmatic slumbers of the audience. In fact, they simply reinforce the left-liberal clichés audiences everywhere internalized decades ago. It’s an odd phenomenon. In theaters and museums across the Western world you find audiences applauding sentiments that, were they translated into the real world, would spell their demise.
Perhaps it’s an instance of what Lenin was talking about when he said that the bourgeoisie was so rotten that it would sell the rope with which it was to be hanged. The matinee I attended was packed to the last emergency exit with a cheery crowd of nice, middle-class folks who cheered and clapped and whistled and bravoed.
. . .
The impressive thing about “Billy Elliot” the film is its dramatic enactment of serious questions. “Billy Elliot: The Musical” spoofs and sentimentalizes those questions, replacing them with a series of political sermons and distracting gymnastic exhibitions. In 1964, Susan Sontag famously said that the “ultimate Camp statement” was “It’s good because it’s awful.” Sontag wrote as an enthusiast for Camp. I have no doubt that she would have emerged happy from “Billy Elliot: The Musical.” “The whole point of Camp,” she wrote, “is to dethrone the serious.”

For the full commentary, see:
ROGER KIMBALL. “Culture; A Clumsy Mix of Art and Politics; Broadway turns subtle themes into simplistic fare in shows like ‘Billy Elliot’.” Wall Street Journal (Sat., DECEMBER 13, 2008): W1 & W4.
(Note: ellipses added.)

Czech Republic’s Sly Cerny Humorously Skewers European Foibles

“David Cerny’s artwork “Entropa” is a symbolic map of Europe depicting stereotypes attributed to the individual member countries.” Source of the caption and photo: online version of the WSJ article quoted and cited below.

(p. A6) . . . , an enormous mosaic installed in the European Council building over the weekend, was meant to symbolize the glory of a unified Europe by reflecting something special about each country in the European Union.

But wait. Here is Bulgaria, represented as a series of crude, hole-in-the-floor toilets. Here is the Netherlands, subsumed by floods, with only a few minarets peeping out from the water. Luxembourg is depicted as a tiny lump of gold marked by a “for sale” sign, while five Lithuanian soldiers are apparently urinating on Russia.
France? On strike.
The 172-square-foot, eight-ton installation, titled “Entropa,” consists of a sort of puzzle formed by the geographical shapes of European countries. It was proudly commissioned by the Czech Republic to mark the start of its six-month presidency of the European Union. But the Czechs made the mistake of hiring the artist David Cerny to put together the project.
Mr. Cerny is notorious for thumbing his nose at the establishment. . . .
. . .
Before the hoax was discovered, the Czech deputy prime minister, Alexandr Vondra, said “Entropa” — whose name alone should perhaps have been a sign that all was not as it seemed — epitomized the motto for the Czech presidency in Europe, “A Europe Without Borders.”
“Sculpture, and art more generally, can speak where words fail,” he said in a statement on Monday. “I am confident in Europe’s open mind and capacity to appreciate such a project.”
But he does not feel that way now.

For the full story, see:

SARAH LYALL. “Art Hoax Unites Europe in Displeasure.” The New York Times (Thurs., January 14, 2009): A6.
(Note: ellipses added.)

Car Bailout Destroys Dynamism of Process of Creative Destruction

(p. A29) Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.
This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.
Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. . . .
. . .
But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.

For the full commentary, see:
DAVID BROOKS. “Bailout to Nowhere.” The New York Times (Fri., November 18, 2008): A29.
(Note: ellipses added.)

“Atlas Shrugged is a Celebration of the Entrepreneur”

“The art for a 1999 postage stamp.” Source of image: online version of the WSJ article quoted and cited below.

(p. W11) Many of us who know Rand’s work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that “Atlas Shrugged” parodied in 1957, when this 1,000-page novel was first published and became an instant hit.
Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated “Atlas” as the second-most influential book in their lives, behind only the Bible.
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.
. . .
Ultimately, “Atlas Shrugged” is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand’s political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear — leaving everyone the poorer.

For the full commentary, see:
STEPHEN MOORE. “DE GUSTIBUS; ‘Atlas Shrugged’: From Fiction to Fact in 52 Years.” Wall Street Journal (Fri., JANUARY 9, 2009): W11.
(Note: ellipses added.)

Multiplier: Is it 1.5 as Team Obama Hopes; or Zero, as Barro Estimates?

(p. A17) Now we have the extreme demand-side view that the so-called “multiplier” effect of government spending on economic output is greater than one — Team Obama is reportedly using a number around 1.5.

To think about what this means, first assume that the multiplier was 1.0. In this case, an increase by one unit in government purchases and, thereby, in the aggregate demand for goods would lead to an increase by one unit in real gross domestic product (GDP). Thus, the added public goods are essentially free to society. If the government buys another airplane or bridge, the economy’s total output expands by enough to create the airplane or bridge without requiring a cut in anyone’s consumption or investment.

The explanation for this magic is that idle resources — unemployed labor and capital — are put to work to produce the added goods and services.
. . .
What’s the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.

John Maynard Keynes thought that the problem lay with wages and prices that were stuck at excessive levels. But this problem could be readily fixed by expansionary monetary policy, enough of which will mean that wages and prices do not have to fall. So, something deeper must be involved — but economists have not come up with explanations, such as incomplete information, for multipliers above one.
. . .
There are reasons to believe that the war-based multiplier of 0.8 substantially overstates the multiplier that applies to peacetime government purchases. For one thing, people would expect the added wartime outlays to be partly temporary (so that consumer demand would not fall a lot). Second, the use of the military draft in wartime has a direct, coercive effect on total employment. Finally, the U.S. economy was already growing rapidly after 1933 (aside from the 1938 recession), and it is probably unfair to ascribe all of the rapid GDP growth from 1941 to 1945 to the added military outlays. In any event, when I attempted to estimate directly the multiplier associated with peacetime government purchases, I got a number insignificantly different from zero.

For the full commentary, see:
ROBERT J. BARRO. “Government Spending Is No Free Lunch.” Wall Street Journal (Thurs, JANUARY 22, 2009): A17.
(Note: ellipses added.)

Even Dogs “Have a Sense of Fairness”

For the full commentary, see:

Page, Clarence. “Vouchers and Obama Daughters.” Omaha World-Herald (Sat., Nov. 15, 2008): 7B.
(Note: ellipsis added.)

“This series of photos from the National Academy of Sciences shows a dog being asked for its paw and obeying, left. In the second photo, the dog watches its partner in the experiment receive a food reward that it didn’t receive. In the third photo, the dog refuses to give its paw and avoids looking at the experimenter.” Source of caption and photos: online version of the Omaha World-Herald article quoted and cited below.

(p. 2A) Ask them to do a trick, and they’ll give it a try. For a reward, they’ll happily keep at it.

But if one dog gets no reward and then sees another dog get a treat for doing the same trick, just try to get the first one to do it again.
Indeed, the animal may turn away and refuse to look at you.
Dogs, like people and monkeys, seem to have a sense of fairness.
. . .
In the experiments described in today’s edition of Proceedings of the National Academy of Sciences, Range and colleagues experimented with dogs that understood the command “paw” to place a paw in the hand of a researcher. It’s the same game as teaching a dog to “shake hands.”
. . .
The dogs sat side by side with an experimenter in front of them. In front of the experimenter was a divided food bowl with pieces of sausage on one side and brown bread on the other.
The dogs were asked to shake hands and could see what reward the other dog received.
When one dog got a reward and the other didn’t, the unrewarded animal stopped playing.

For the full story, see:
Associated Press. “It’s a Dog’s Life Only When Someone Else Gets Treat.” Omaha World-Herald (Tues., Dec. 9, 2008): 2A.
(Note: ellipses added.)

Bernanke Praised FDR’s “Willingness to Be Aggressive and to Experiment”

Bernanke apparently endorsed FDR’s policy volatility. To the contrary, Amity Shlaes has persuasively argued that the policy volatility increased uncertainty, and discouraged entrepreneurial ventures, thereby lengthening and deepening the Great Depression.
Bernanke taking FDR as a mentor, is deeply disturbing. (And I regret an earlier entry in which I placed trust in Bernanke’s judgment.)

(p. A2) While Ben Bernanke was teaching economics at Princeton University in late 1999, he admonished officials in Japan for doing too little to get their country out of its economic funk. Their model, he said, should be Franklin D. Roosevelt.

“Roosevelt’s specific actions were, I think, less important than his willingness to be aggressive and to experiment — in short, to do whatever was necessary to get the country moving again,” Mr. Bernanke said in a paper on Japan’s paralysis.

Nearly a decade later, Mr. Bernanke, now the Federal Reserve chairman, is trying to follow his own advice.
. . .
Mr. Bernanke’s choices could damage several objectives that the Fed holds sacrosanct. Low interest rates and an exploding balance sheet could some day cause inflation. With so much slack in the economy and commodities prices tumbling, that looks like a far-fetched risk today. But the Fed’s novel new lending programs could be difficult to unwind quickly if the economy turns around unexpectedly, potentially leaving the financial system with more stimulus than it needs — along with inflation.
Mr. Reinhart notes that Mr. Bernanke’s approach also could open the Fed to political intrusion, something central bankers have fought for decades to avoid.
The recent debate about an auto-industry bailout was one example of the risk. Earlier this month, Sen. Christopher Dodd wrote to Mr. Bernanke asking if the central bank could help Detroit. Mr. Bernanke politely responded that he wanted to stay out of industrial policy. But after Senate action failed, the Connecticut Democrat raised the prospect of Fed involvement again at a news conference Friday.
“When the Federal Reserve is involved in more markets, more instruments and is seen to have an unlimited balance sheet and flexibility to use that balance sheet, it will be subject to political pressure,” Mr. Reinhart said.
. . .
Then there’s the biggest risk of all: the economy might not turn around. History was kind to Mr. Roosevelt because the economy got moving again on his watch, though of course it didn’t really turn around until the U.S. became enmeshed in a world war. Mr. Bernanke will be a hero if the economy rebounds. But if it doesn’t, the judgment is certain to be much tougher.

For the full commentary, see:

JON HILSENRATH. “THE OUTLOOK; Bernanke’s Fed, Echoing FDR, Pursues Ideas and Action.” Wall Street Journal (Mon., DECEMBER 15, 2008): A2.
(Note: ellipses added.)

Amity Shlaes’ wonderful book, is:
Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

“Black Parents Favor Vouchers By Larger Majorities than White Parents Do”

Pulitzer-Prize-winning Chicago Tribune columnist Clarence Page. Source of photo: http://www.dartmouth.edu/~montfell/biographies/o_z/page.html

(p. 7B) The question of vouchers as an alternative to public schools crosses color lines. But it is particularly appropriate for the nation’s first black president.

African-American students disproportionately find themselves in underperforming schools. In fact, opinion polls by think tanks like the Joint Center for Political and Economic Studies have found that black parents favor vouchers by larger majorities than white parents do.
Yet teachers unions fight such alternatives, even though studies like a 2004 Thomas B. Fordham Institute report find that big-city public-school teachers are more likely than the general population they serve to have their own children in private schools.
In Obama’s Chicago, for example, 38.7 percent of public-school teachers sent their children to private schools, the Fordham study found, compared with 22.6 percent of the general public.
In Washington, D.C., 26.8 percent of public-school teachers did so, versus 19.8 percent of the public.
. . .
As a parent who reluctantly moved my own child to private school after the fifth grade, I appreciate the value of school choice. But what about the kids left behind in failing schools?
Michelle Obama offered a clue to what her family’s choice will be. She flew to Washington Monday, ahead of her husband, and toured the private Georgetown Day School. Another clue: Their daughters currently attend a private school in Chicago.
Private school also was the choice of Bill and Hillary Clinton for their daughter, Chelsea. The most recent presidential child to attend a D.C. public school was Jimmy Carter’s daughter, Amy, in the late 1970s.

For the full commentary, see:

Page, Clarence. “Vouchers and Obama Daughters.” Omaha World-Herald (Sat., Nov. 15, 2008): 7B.
(Note: ellipsis added.)

A Salute to the Sudanese Medicine Men

One might expect that the Sudanese medicine men mentioned below, might have undermined the British physicians, as potential competition. So either there is more to the story than is sketched below, or else these Sudanese medicine men in 1939 placed the mission of saving lives, above their own narrow short-run self-interest. If it was the later, then they deserve our belated salute.

(p. 236) Meningitis was a vicious disease. The death rate had always been high, and nothing they did had much effect. The British physicians concentrated on nursing the sick and trying to limit the spread of the disease. The only thing different this year came in the form of three small sample bottles of sulfa that had been sent to their clinic for the treatment of strep diseases and pneumonia. Strep diseases were not the problem of the moment in Wau. This meningitis was caused not by strep but by the more common cause, a related germ called meningococcus. Still, they had the new medicine, they had nothing else, and they had nothing to lose. Someone decided to try it on a meningitis patient.
. . .
(p. 237) . . . There were twenty-one patients in the first group. The doctors hoped to save at least a few of them.
A few days later, all but one were still alive. The physicians immediately wired for more sulfa. Once it arrived, one of the British doctors stayed at the hospital while the other two went village to village, administering sulfa to every meningitis patient they could find. They asked the help of local “medicine men,” as they called them, tribal healers whose dispensation was needed before the natives would accept treatment. The Sudanese healers knew how deadly the disease was. They told their people that the physicians had “magic in a bottle.” They told them to take the shots. The physicians traveled day and night, injecting patients in grass huts, under trees, and along roadsides, The results, they wrote, were “spectacular.” Within a few weeks, they treated more than four hundred patients. They saved more than 90 percent of them. They knocked out the epidemic before it could get started.

Source:
Hager, Thomas. The Demon under the Microscope: From Battlefield Hospitals to Nazi Labs, One Doctor’s Heroic Search for the World’s First Miracle Drug. New York: Three Rivers Press, 2007.
(Note: ellipses added.)

Capitalism’s Defenseless Fortress

Photograph by Art Diamond.

(p. 143) . . . capitalism creates a critical frame of mind which, after having destroyed the moral authority of so many other institutions, in the end turns against its own; the bourgeois finds to his amazement that the rationalist attitude does not stop at the credentials of kings and popes but goes on to attack private property and the whole scheme of bourgeois values.

The bourgeois fortress thus becomes politically defenseless. Defenseless fortresses invite aggression especially if there is rich booty in them. Aggressors will work themselves up into a state of rationalizing hostility—aggressors always do.

Source:
Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper and Row, 1950.

Photograph by Art Diamond.