Obama vs. Romney: A Basic Error with the Private Equity Debate Point

Obama stated in a recent speech that having a background in private equity [Romney] is basically a disqualifier to be president:

“The main goal of a financial firm like Governor Romney's is not to create jobs. And, by the way, the people who work at these firms will tell you that's not their goal. Their main goal is to create wealth for themselves and their investors. When maximizing short-term gains for your investors rather than building companies that last is your goal, then sometimes it goes the other way. Workers get laid off, benefits disappear, pensions are cut, factories go dark. Now, that may be the job of somebody who's engaged in corporate buyouts. That's fine. But that's not the job of a president.” - Des Moines, Iowa, state fair grounds speech, 05/24/2012

Hmmm.

Upon further review, Obama's minions are simultaneously putting forth a message, and not being corrected by the White House and hence implicitly advocated by the White House,  stating Obama is the real private equity guy with the most common examples pointed to as GM and Chrysler. (1)

That is, that Obama‘s restructuring of GM and Chrysler [abrogating bondholder rights], layoffs and termination of auto worker positions, plant closures, and dealership contract terminations, etc. and the semi-recovery of GM and Chrysler make Mr. Obama the king of private equity based on the sheer size of the GM and Chrysler bail out.


Upon closer examination of the Mr. Obama's debate point and his associated intelligentsia argument:

(1) government bailouts and private equity procedures are mutually exclusive, yet both are equated in the minions message. That is, a notional proposition is put forth as fact with no empirical evidence,


(2) Romney, with a private equity background, with his background held forth as an automatic disqualifier of Romney for the job as president (being Obama‘s implicit and explicit message and definition of disqualifiers),


(3) carrying forward Obama’s very own definition and applying it to those associated with private equity and simultaneously seeking the position of president,


(3a) synthesizing Obama's debate point with the minions argument,


(4) Mr. Obama is defined as the private equity king and hence disqualified by his own background- disqualifier-definition. Ops!

Ah, the evil of it all!


Notes:

(1) http://www.washingtonpost.com/opinions/barack-obama-private-equity-king/2012/05/23/gJQAFolLkU_story.html

Private Equity vs. Corporate Welfare: Obama is Bain Capital?

“The first thing to appreciate is that Barack Obama is the real private equity king in this race, not Mitt Romney. Obama’s restructuring of the auto industry displayed, on a much grander scale, precisely the kind of tough-minded business calls Romney says are private equity’s specialty.” Matt Miller, 05/23/2012, Washington Post (1)

Interestingly enough, on 05/22/2012, the day before the Washington Post published the above article, Matt Miller, senior fellow at The Center for American Progress (CAP) a Progressive think tank, made the same notional argument on The Kudlow Report [7PM EDST 05/22/2012]. His notional debate points are put forth at the 4:45 mark in the link below:

http://video.cnbc.com/gallery/?video=3000091847

　

The immediate rebuttal to Miller’s notional debate points appears at the 5:10 mark: “He [Obama] oversaw the largest corporate welfare program in American history.” - Kevin Williamson

Better yet, Don Boudreaux of George Mason University applies economics to Matt Miller’s notional proposition and we find Miller‘s notional debate point is ludicrous:

“Here’s a letter to the Washington Post:



Matt Miller asserts that “Obama’s restructuring of the auto industry displayed, on a much grander scale, precisely the kind of tough-minded business calls Romney says are private equity’s specialty…. Obama fired management, shed workers, slashed costs, revamped operations, restructured the balance sheet and fashioned new strategies. When the dust cleared, Obama had positioned General Motors and Chrysler to move forward as viable firms” (“Barack Obama, private equity king,” May 23).Ludicrous. Unlike any actions that could be taken by Bain Capital and other private-sector investors, Pres. Obama

- arbitrarily suspended established bankruptcy procedures;

- flipped the priority of creditors so that secured creditors were forced to accept fewer cents on the dollar than were received by lower-priority (but politically more useful) creditors;

- staked none of his own wealth on this restructuring;

- strengthened the morally hazardous precedent of “too big to fail.”

Uncle Sam’s auto bailout is to privately financed restructurings as, say, Debbie Does Dallas is to Citizen Kane: in both cases, only the most facile observers focus on the superficial similarities between the two while missing the many, hulking, and fundamental differences.

Sincerely,

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030” (2)　
Notes:

(1) http://www.washingtonpost.com/opinions/barack-obama-private-equity-king/2012/05/23/gJQAFolLkU_story.html


　
　
(2) http://cafehayek.com/2012/05/but-both-are-successful-movies.html
　
　
　
　
　
　

And About Those Reusable Grocery Bags….

Russ Roberts, economist at George Mason University and Stanford’s Hoover Institute, in a recent episode of EconTalk, interviewed Tyler Cowen, economist at George Mason University regarding his new book An Economist Gets Lunch: New Rules for Everyday Foodies. Notable items of interest are the economics of plastic grocery bags, the phenomena of buying local and “plastic” in general.


Many times mantras based on belief systems become mainstream as the notional idea seems intuitive. For example, reusable grocery bags seem more economical and environmentally friendly than plastic grocery bags. Some local politicos through the mechanism of government have even applied the notional proposition to new heights by levying a five cent tax for those opting to use plastic grocery bags, imposed as a supposed behavior incentive to switch to reusable bags (although one could clearly argue the tax is merely a disguised revenue measure). But not all is as it seems when the economics of the notional proposition is examined.

In the case of plastic grocery bags Cowen examined the proposition and the result is:

“Plastic can even be better than having those reusable cloth bags. If you re-use those cloth bags, say, 200 times and up, and don't lose the bag, don't have to buy a new one if the bag gets torn, don't misplace the bag--then the reusable cloth bag does seem to be better. But that's hard to do; and even then you are just at the break-even point. So, the environmental virtues of plastic relative to a lot of alternatives are somewhat under-rated.”

At this point in the interview Russ Roberts adds some interesting observations:

“ Yeah. My county, Montgomery County, has recently put a nickel charge on plastic bags. If you want a plastic bag, you have to pay a nickel. And it's been fascinating to watch what people have done in response to that. My view is I like to pay the nickel. I kind of enjoy paying the nickel, even though I don't like where the nickel goes--which is to fund my county's activities. I kind of like the idea that I am not going to change my bag habit for a nickel. There is some pride left in me. My wife's very different. My wife has cluttered the back of her car with cloth bags and various other mechanisms. I think she usually remembers to bring them in. But, I talk to the cashiers; some people forget to bring them in. Other people, their protest, is to clutch all of the groceries to their bosom and carry them out to the car and sacrifice their time, loading them one by one into the back of their car; and then when they get home--something akin to Costco, by the way. They don't make it easy for you to get the goods en masse into your car. You've got to box them up in difficult ways. But I find that--it's a fascinating thing. You are suggesting that you'd have to use the cloth bag a great number of times.”

Cowen adds:

“That's right. The more effective way to help Planet Earth is just to take fewer trips to the supermarket. Buy more when you are there. Save up; your car will burn less gas; you are more likely to have some beneficial impact that way than trying to clutch it all to your chest and then eventually making more trips to the store.”

　

The interview then goes to the subject of the somewhat recent phenomena of “buy local”. Critics of buy local have named the phenomena “Buy Loco”. Which way is more economical and environmentally friendly?

The obvious draw back of “buying local” is the failure to take advantage of the concept of comparative advantage. That is, you can grow bananas locally in a green house at an astronomical cost as well as an increased environmental cost or you can allow the bananas to be grown and shipped from those areas that easily grow bananas at low cost and low environmental cost. Further, if one produces an abundance of items that local people consume but still creates a surplus, and if everyone only purchased local, what would happen to the surplus? Another item is how does one buy a washer/dryer, a vehicle, tractor, roofing shingles and so on if the items are not made locally? Obviously trade over a wide geographic area solves many of the immediate draw backs of buying local.

However, beyond the basic items mentioned above, other consequences of buying local are examined by Cowen:

Roberts: “What about eating local--the locavore movement, the idea that we should eat locally grown foods, fruits, vegetables--is gaining in popularity quite a bit. What's your take on that?”

Cowen: “Local food often tastes better, as I mentioned before. But transporting food is 10-15% of the energy cost of food. So to think that by making a stand on eating local, you are addressing the main problem--you are not. A lot of the environmental impacts, the negative ones from food, come from eating meat. A lot of local farmers aren't very efficient. They make a lot of trips in their truck. They don't have economies of scale. Imagine you live in Albuquerque. Try eating local food there and think through your local water policy, and that's an environmental disaster. So, eating local food can be environmentally better, but lots of times it's environmentally worse. And it's in any case not the biggest issue.”

Finally, Cowen makes a very interesting observation regarding “plastic”:

　

“We are programmed to reject plastic, to think it's corporate. The adjective "plastic" is negative: He's a plastic personality. So, you feel good rejecting plastic. It's a way in which we pursue what I call mood affiliation rather than actually trying to be effective.” (1)


Updates:

Reusable grocery bag carried nasty norovirus, scientists say, JoNel Aleccia, NBC News

http://vitals.nbcnews.com/_news/2012/05/09/11604166-reusable-grocery-bag-carried-nasty-norovirus-scientists-say?lite

What's in your shopping bag? Bacteria. But, hey, it's natural!, Chicago Tribune.

http://www.chicagotribune.com/health/sns-green-bacteria-in-shopping-bags,0,4837500.story


Scientists:Reusable bags found to have same bacteria as dirty underwear, KSPR.com

http://www.kspr.com/news/kspr-scientistsreusable-bags-found-to-have-same-bacteria-as-dirty-underwear-20121101,0,4834730.story



Update 01/24/2013

ARE PLASTIC GROCERY BAG BANS BAD FOR PUBLIC HEALTH? -perc‏

http://perc.org/blog/are-plastic-grocery-bag-bans-bad-public-health


Notes:

(1) Cowen on Food, EconTalk, 04/23/2012

http://www.econtalk.org/archives/2012/04/cowen_on_food.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+econtalk%2FxmOW+%28Econ+Talk%29

　

　















　

　



　

　

Political Dupery and Consequential Austerity: a participation sport?

Defining the popular term austerity: the managing response to the known long-term cascading unintended consequences of politico policy.

It’s a known-known that first stage economic consequences, the short term effects thereof, match politico time horizons i.e. the next election. Second, third, and so on economic consequences of politico policy yield long-term cascading unintended consequences, much of which are unfunded politico promises, ending in a reversal of the “promise”. The action phase of reversing the unfunded promises being “austerity“.

Assume for a moment that the anti-austerity mantra within Greece is basically the public's reaction to politicos having put them [the public at large] in the current situation. That is, the public was duped.

Further, a new set of politicos can easily draw upon the mantra that the public was duped and that somehow, and in some way, the public should not have to pay for such dupery.

OK. Someone else is at fault, responsibility is transferred, and someone else should have to pay the price.

However, the dupery of politico policy yielding positive first stage economic consequences are in fact benefits accruing to certain individuals and groups. That the politico, benefited individuals and benefiting groups believe the dupery is transferred to a third party [taxpayer]. Stated alternatively, the benefiting individuals and groups participate in the dupery in that they happily welcome the benefits and think someone else will pay the price of dupery.

Going back to the Greek public’s reaction to austerity, let us examine a counter factual. Assume for a moment that Greece was still on the upward slope of an accumulating debt spiral. That the accumulating debt spiral was still funding an extremely liberal early retirement, fat public sector pensions, bloated government with fat pay, government owned enterprises producing non-competitive items with workers garnering fat pay, etc., etc. Would we hear calls of dupery?

The benefiting groups were not duped. The debt spiral and the false benefits thrown off by the spiral became a "participation sport". Any dupery is that the benefiting groups thought they had transferred dupery, when in fact, all parties were duped for the exception of the politico.




　

Upon Further Review: a residential housing market with shadow market of foreclosures -or- a total eclipse of foreclosures?

John B. Taylor in his book Getting Off Track : How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis makes the grand observation that the financial crisis was a government lead failure. That government policy, or more succinctly politico policy, set the stage for shenanigans that occurred in the private sector leading to the financial crisis. (1)

Morgenson and Rosner in their book Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon write a detailed account, stretching back decades, and names-names regarding politico policy and the actors that set the stage for shenanigans. (2)

In an essay entitled Upside Down Economics Thomas Sowell writes a concise time line regarding politico policy setting the stage for shenanigans. (3)

M. Jay Wells essay Why the Mortgage Crisis Happened also provides a very good chronological history of politico policy from 1933 to 2008 which set the stage for shenanigans. (4)

Regardless of history and empirical study, certain individuals want to notionally blame the private sector or the market or banks for the financial melt down when in fact the case is politico failure of the first degree. The “market failure” mantra regarding the financial crisis is, of course, carried forward and lauded by politicos themselves to deflect the true case of politico failure.

One then arrives at today’s aftermath, a murky quagmire of residential home values falling and few new homes being built, a deflationary spiral of value if you will. The declining values fueled, in part, by abundant foreclosures with a pipeline full of foreclosures yet to come to market. One might find that the shadow inventory of foreclosures yet to come to market, depicted as a “pipeline”, may well be much bigger than advertised. How so?

Roger Arnold, chief economist for ALM Advisors, writes in an essay entitled U.S. Housing Market Cannot Recover:

“The most important issues to consider are:

　


How many foreclosures have there been?
How many more will there be?
What do the banks plan to do with them?
　
Properties received by banks through the process of foreclosure are carried and accounted for as Other Real Estate Owned (OREO). The three primary categories of OREO are 1-4 Unit Residential, Commercial, and Construction and Development.

In this column, I will only address 1-4 Unit Residential properties, which represent 25% of all OREO at U.S. banks. I will discuss the others in future column or in the comments section below if readers are interested.

There are about 7,000 banks in the U.S. and OREO affects all of them. The principal value of mortgages tied to the OREO at the four largest institutions, JPMorgan Chase(JPM_), Bank of America(BAC_), Citigroup(C_), and Wells Fargo(WFC_) is much lower as a percentage of outstanding loans than at the smaller institutions below them. This is because the smaller banks have foreclosed on non-performing mortgages while the larger institutions have not.

The result of this is that the outstanding value of non-performing mortgages held by the four largest money centers are much higher than at the smaller banks. The money centers have simply not been foreclosing.

The value of the loans attached to OREO, the properties already foreclosed on by the four largest money centers, is only 3% of the value of the non-performing loans they hold; the properties that have yet to be foreclosed on but most probably will be.

The 97% of mortgage loans that have not been foreclosed on but probably will be makes up the largest percentage of what is known as shadow inventory. This number is so horrifically high that even the pundits aware of the issue won't discuss it publicly -- probably because their own livelihoods could be at stake for doing so.” (5)

Arnold goes on to make this statement:

“Just think of the damage that has been done to the housing sector, as well as the national and global economies and financial markets, with only 3% of the probable foreclosures required as a result of the U.S. housing crash having been completed to date.” (6)

Hence the pipeline of foreclosures on their way to market is nothing in comparison to the reservoir of foreclosures feeding the pipeline. Hence it’s not so much a shadow inventory of foreclosures as it is a total eclipse of an inventory.

Notes:

(1) John B. Taylor, Getting Off Track : How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis.

http://www.hooverpress.org/productdetails.cfm?PC=1342

(2) Morgenson and Rosner, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.

http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203

(3) Upside Down Economics, Thomas Sowell.

 http://townhall.com/columnists/thomassowell/2009/02/18/upside_down_economics/page/full/

(4) M. Jay Wells essay Why the Mortgage Crisis Happened.

http://www.americanthinker.com/2008/10/what_really_happened_in_the_mo.html

　
(5) U.S. Housing Market Cannot Recover, Roger Arnold


http://www.thestreet.com/story/11533664/2/us-housing-cannot-recover.html

　

　

Providing a Public Good or a Public Bad?

Robert Higgs of the Independent Institute published a very insightful essay recently regarding “hatred” in politics and hatred among politicos entitled The Systematic Organization of Hatreds:

“In view of the foregoing, we are well advised to consider that whenever we seek to move a type of decision-making from private life to the realm of politics and government, we are very likely moving it from a world in which hatred is incidental and avoidable to a world in which hatred is central and inescapable. Because a government imposes one rule, one outcome, one state of affairs on everyone subject to its rule, the hatreds that go into the making of that outcome become generalized and infused throughout the entire society. Thus, what economists label a “public good” is often, in the most substantive way, a “public bad.” Even if a person does not share any of the component hatreds that politic actors express and deploy, no one can avoid living in a politicized world fashioned in such large part by the organized expression of hatred. It is, therefore, small wonder that some of us view the entire apparatus of politics and government as the living embodiment of evil.”

The link to the entire essay appears below:


http://blog.independent.org/2012/05/05/the-systematic-organization-of-hatreds/

April 2012 Jobs Report: a jobs situation which is an abysmal failure of monumental proportions.

‘Mr. Obama argues that the economy is recovering slowly from a deep recession, and Congress should do more to spur growth. On Friday, he noted that the report continued more than two years' worth of job growth, while acknowledging the lingering weakness.

"After the worst economic crisis since the Great Depression, our businesses have now created more than 4.2 million new jobs over the last 25 months—more than one million jobs in the last six months alone," he told students at a suburban Virginia high school. "But there's still a lot of folks out of work, which means that we've got to do more."

He said he would urge Congress to "take some actions on common-sense ideas that can accelerate even more job growth." He didn't say what he would propose. Most of the ideas he has put forth in the past have gone nowhere, including more infrastructure spending and aid to states to keep public employees such as teachers employed.’ - Jobs Engine Sputters Again in April, WSJ, 05/05/2012 (1)

　

Robert Higgs of the Independent Institute has been pointing out that one should by-pass the “unemployment number” and focus on “total employed”. Total employed has not changed since the official end of the recession [06/2009]. Hence if one argues “..have now created more than 4.2 million new jobs over the last 25 months…” then somewhere in the vicinity of 4.2 million jobs have been destroyed. In the famous words of Billy Preston: nothing from nothing equals nothing.

Then we see the wonderful political phenomena of do something appear: ‘He said he would urge Congress to "take some actions on common-sense ideas that can accelerate even more job growth." ‘ That is, politicos need to show the voting public they are “doing something”.

Hence we have nothing to show for doing something [stimulus, cash-for-clunkers, extended unemployment benefits, etc., etc.] therefore we need to do something about the something. -Or- “Government is the only enterprise on earth, that when it fails, it merely does the same thing over again, just bigger”. - Don Luskin

Then we have “how you feel about it today” economics:

“The job market was soft in April, given the tepid payroll job gain and the decline in labor force participation. But it isn't as soft as the data suggest, as it reflects payback from the very warm winter, which juiced up job gains earlier in the year,” said Mark Zandi, the chief economist for forecaster Moody's Analytics. “Underlying job growth, abstracting from the temporary effects of the weather, is over 175,000 per month. This isn't boom times, but it is solid enough to bring down unemployment further.”

“The decline in unemployment also reflects the expiration of the emergency unemployment-insurance program in an increasing number of states. Older workers losing unemployment insurance are leaving the workforce, contributing to the decline in labor force participation, and younger workers that were slow to take a job now have no choice,” Zandi said. “I expect the job market to reaccelerate later this summer and fall.” - The Sun News, Myrtle Beach, SC, 05/05/2012 (2)

　

　

Beyond Zandi being Zandi, think for a moment what he is alluding to when he states: “The decline in unemployment also reflects the expiration of the emergency unemployment-insurance program in an increasing number of states. Older workers losing unemployment insurance are leaving the workforce…”. That means that these older workers that were collecting unemployment benefits were only doing so to bridge to retirement with no intention of looking for/find a job in many, many cases. That is, he is confirming what many believe i.e. extremely extended unemployment benefits are a disincentive. However he is also raising the phenomena of “strategically unemployed” (akin to strategic default). That some of the unemployed remained strategically unemployed to gain maximum benefits before they qualified for yet another program e.g. social security.

If one takes job creation, plots it on a graph, and takes the twenty year historical trend, projects the trend forward from the end of the recession until today, we are 4.1 million jobs below trend. That is, one would need to create 4.1 million jobs today, right now, instantly to return to the twenty year job creation trend line! Then one would need to continue the job growth to continue on the trend line. Stated alternatively, the lack of job creation has created a very deep hole from which to climb out.

One finds oneself 4.1 million jobs below trend, finds an army of discouraged workers approaching 4 million, finds still millions counted as unemployed actively seeking jobs, extended unemployment benefits causing disincentives as well as shenanigans and the same number are employed today as the number employed at the end of the recession [06/2009] .....all of which exists despite the political maneuvers of "doing something" over and over again. In other words, the political mantra of “the economy recovering slowly” is political speak for a jobs situation which is an abysmal failure of monumental proportions.

Notes:

(1)http://online.wsj.com/article/SB10001424052702304743704577383713904032818.html

　

(2)
http://www.myrtlebeachonline.com/2012/05/04/2810374/april-jobs-report-suggests-slowing.html









　

Upon Further Review: The ObamaCare Argument of Private Health Insurance Monopolies Rebuked

Please recall for a moment an argument used during the ObamaCare debate: There is a serious lack of competition among health insurers within the differing and several states. That is, the debate point implicitly and explicitly alluded to many [if not all] states having one insurer dominating the market. Examples such as Hawaii, Maine, Vermont, Alabama and Arkansas were mention where one insurer controls 70% or more of the market place . That more competition was needed and government provided health insurance would create a competitor.


Upon further review, the argument/debate point mentioned above made for a good story albeit fantasy. As the story goes, a monopoly exists [the villain] and the white knight on the stallion [politico through the mechanism of government] will charge in and vanquish the evil doer. Problem is, the statistics used to frame the monopoly position of particular private insurers, and the supposed lack of competition thereof, is incorrectly portrayed and merely so much political theater. How so? (1)


The Obama Administration and other advocates of government provided insurance used a single study made in 2008 by the American Medical Association (AMA) entitled Competition in Health Insurance to frame their argument of the existence of wide spread private insurance monopoly in the differing states. Problem is, the study based its statistical outcomes on less than one half of the health insurance market.  Ops! That is, the study did not include employer provided coverage that are self insured plans. 

Not included in the study were plans where the firm acts as the insurer through self-insurance and pays the bills from the firm’s resources. The self-insured plans hire an administrator (many times an insurer) to handle the every day administration of the plan such as claim payments, enrollment processing, etc. however the firm itself acts as the third party payer i.e. the insurer. Employer provided self insured plans make up over half, approximately 55%, of the health insurance provided in the United States. (2) (3)


Economist John R. Lott, Jr. crunched the numbers and found that the 70% (or even higher claim) of the market controlled by a single company in the differing states is really 36 percent when the entire insurance market is taken into consideration:


“We can look at the 43 states for which the AMA compiled data ranking them with market share held by the two larges insurance companies. That pattern is fairly similar. On average, over 53 percent of people with insurance in those states get their insurance from companies that self-insure. For Alabama, instead of the “[Obama] almost 90 percent is controlled by just one company,” as the president claims, the correct number is just 36 percent. And the second-largest company has 2.1 percent of the market.


Even with the “almost 90 percent” number, it is worth noting that the president rounded that up from the actual share in the full insurance market of 83 percent. The president just wasn’t happy to claim that the largest insurance company in Alabama had an 83 percent share when the right number was 36 percent, but he had to go further and raise it to “almost 90 percent”. On top of that, in his attacks on for-profit insurance companies, he couldn’t even acknowledge that Alabama’s largest insurer was a non-profit company [Blue Cross Blue Shield].” (4)

Notes:


(1) President Obama, weekly address, 08/22/2009,

http://www.whitehouse.gov/the-press-office/weekly-address-president-obama-debunks-phony-claims-about-health-reforem-emphasizes-

　

(2) American Medical Association, 2007, “Competition in Health Insurance”,


http://www. Ama-assn.org/ama1/pub/upload/mm/368/comp study_52006.PDF


(3) John L. Lott, Jr., Debacle, pages 141-145


(4) John R. Lott, Jr., Debacle, page 143.

　

　

“Social Darwinism”: The Political Spectrum’s Fungible Taking Point

“In remarks later Tuesday, President Barack Obama will slam the Republican budget plan put forward by Rep. Paul Ryan (R-Wis.) as "nothing but thinly veiled Social Darwinism."

"It's a Trojan Horse," Obama will say during remarks at an Associated Press Luncheon, according to excerpts released by the White House.

"Disguised as [a] deficit reduction plan, it's really an attempt to impose a radical vision on our country. It's nothing but thinly-veiled Social Darwinism. It's antithetical to our entire history as a land of opportunity and upward mobility for everyone who's willing to work for it -- a place where prosperity doesn't trickle down from the top, but grows outward from the heart of the middle class. And by gutting the very things we need to grow an economy that's built to last -- education and training; research and development -- it's a prescription for decline," the president will say.” (1)

　

One might ask oneself what does social Darwinism mean? That is, the phrase “social Darwinism” is not a common phrase. Matter-of-fact, the phrase is used so infrequently that it prompted a Washington Post article entitled What Obama meant by ‘social Darwinism’:

　

"Simply put, it means applying the ideas of Charles Darwin — that species adapt over time — to human society, arguing that competition over resources helps humanity evolve for the better as the weak are weeded out and the strong survive and thrive.

But social Darwinism is seen as more as an epithet than a useful description, because the idea is so malleable.

Social Darwinism gained some popularity early on among British landowners and American capitalists, who saw in it a justification for their own wealth.

Imperialism was
justified on Darwinist grounds as strength honed through warfare, with stronger races overtaking weaker ones. But peace was too, on the grounds that the fittest members of society should not be wasted in war. 

“The concentration of capital is a necessity for meeting the demands of our day, and as such should not be looked at askance, but be encouraged,” Carnegie wrote in his autobiography after reading social Darwinist theory. “There is nothing detrimental to human society in it, but much that is, or is bound soon to become, beneficial.”

Social Darwinism is also seen in eugenics, the idea that certain races and physical traits should be weeded out of the general population. It played a role in the American progressive movement and in Nazi Germany — both movements that went against laissez-faire capitalism, in very different ways. In this interpretation, the weak must be culled so that the society as a whole can evolve more quickly.

Thus “social Darwinism” can be used to attack all sorts of enemies.”

　

“While the term “social Darwinism” was used as early as 1877, it did not gain widespread popularity except in retrospect, and mostly as an insult.” (2)

　

　

Hence one finds oneself with a seldom used phrase, used as an epithet, a phrase that is highly malleable which can only mean one has arrived once again at the intersection of politics-and-talk otherwise known as political talking points. That is, Mr. Obama does not like Mr. Ryan’s’ plan. Rather than empirically disproving Mr. Ryan’s plan Mr. Obama merely relies on a political talking point that attempts to vilify by denying legitimacy to the plan and the plan’s sponsor through a malleable epithet. Moreover, if one is out to disparage without evidence, one might reconsider using a political talking point phrase that doesn’t prompt everyone to run to textbooks to find the meaning of the vilifying talking point.

Furthermore, the disparaging political talking point of social Darwinism, as a political short cut attempt to avoid evidence to empirically refute, and the subsequent attempt by others to explain what the heck the political taking point means, still leaves us with no insight regarding social Darwinism. That is to say, we still are left with: why is it a political talking point and why is it considered disparaging and why can all corners of the political spectrum use the talking point against one another?

For those seeking some grand insight into the political talking point “social Darwinism” one may find that Thomas C. Leonard offers such insight. Leonard’s 2007 essay Origins of the myth of social Darwinism: The ambiguous legacy of Richard Hofstadter’s Social Darwinism in American Thought appeared in the Journal of Economic Behavior & Organization.

One very, very odd point that Leonard uncovers is that the phrase “social Darwinism” was hardly ever used prior to Richard Hofstadter’s 1944 book Social Darwinism in American Thought. Moreover, Hofstadter basically declared “social Darwinism” as dead at the end of World War One. However, after Hofstadter’s 1944 book, the use of the phrase “social Darwinism” skyrocketed. Hence we have a very obscure concept, rarely referred to and when the rarely mentioned obscure concept is pronounced dead, it suddenly skyrockets in its use. Odd to say the least.

A link to Leonard’s essay appears below:

　

http://www.princeton.edu/~tleonard/papers/myth.pdf

　

Notes:

(1) Obama: Paul Ryan's Budget is 'Nothing But Thinly Veiled Social Darwinism', Huffington Post, 04/03/2012,
http://www.huffingtonpost.com/2012/04/03/obama-paul-ryan-budget-social-darwinism_n_1399080.html

　

　

(2) What Obama meant by ‘social Darwinism’, Washington Post, 04/04/2012,
http://www.washingtonpost.com/blogs/the-fix/post/what-obama-meant-by-social-darwinism/2012/04/04/gIQAKlZLvS_blog.html#comments