Thursday, February 12, 2009

President Obama Insults Las Vegas and Himself: Central Planning Contradictions, Winners, and Losers

Yesterday, the mayor of Las Vegas asked President Barack "World" Obama to apologize, because President Obama said that corporate executives should not "use a corporate jet to go to Las Vegas on the taxpayer dime". The economy of Las Vegas hapens to be hurting, and this hardly helps.

Obama, of course, said that the mayor misunderstood what what he said. That is what Obama always says when he is caught out saying something because it sounds good, without thinking it through.

The mayor understood exactly what Obama was saying, and was right to be outraged. Obama was saying that corporations receiving taxpayer bailout money should not be going on expensive pleasure junkets to Las Vegas under the guise of a business expense.

The problems with this statement are manifest, and illustrate the morass you get into when you start to centrally plan the entire economy. First, Obama really was saying that corporations should not be holding conventions ni Las Vegas. How else can you interpret it? If there is no legitimate business purpose to these conventions or "retreaats" in Las Vegas, why should the IRS (under tax cheat Geitner) allow those expenses as a business expense? Further, why is it better for executives to waste the "shareholder dime" on what Obama seems to be saying is a personal extravagance? wait, it gets worse.

If these corporations needed to be bailed out witht he "taxpayer dime" because of waste and bad business decisions, like going to Las Vegas to party on the "shareholder dime", is it not a total mistake to bail these people out with the "taxpayer dime". Of course it is. Obama himself just, in effect, told you so,. Wait, it gets worse (believe it or not).

Individuals are being told to spend, even though excess credit got us into this mess. Corporations are being told to lend (by implication, suggesting that they should not apply strict credit standards), even though excess lending got us into this mess. Indiviuals and orporations are both being told to build liquidity and reduce credit, on the grounds that excess credit leverage got us into this mess, at the same time the Federal Government is advocating the exact opposite to get us out of this mess ("loosening credit" being the mantra of the central planners, including Larry Kudlow, CNBC, and the other Wall Street fascists/Communists).

This is what happens when you embrark on central planning. You contradict yourself, because the economy is too complex to centrally plan. You doubt me? Don't.

Remember that Merrill Lynch executive who used more than a million dollars to remodel his office, even though Merrill Lynch has needed to be bailed out (and has helped Bank of America need a bailout)? You could see that as a wasteful extravagance, and it probably was. But, does it help the economy to tell corporations that they should not spend money except on absolutely essential things? Don't be silly. That HURTS the economy. In fact, it directly contradicts the other message that people need to spend again, and get credit flowing again. In fact, why should a bank finance either individual or corporate spending that appears extravagant? If banks tigten lending standards, and individuals and corporations cut spending to the bone, where is the economy? Right. It is in the soup, which is exactly where it is.

Is the "solutioin", however, to put the economy back into the soup by repeating the same mistakes--only worse, with the "taxpayer dime"? Is the "solution to send out contradictory messages, as you try the impossible (central planning the whole economy)? Don't be silly again.

Further, Obama's comment indicates that he believes, as everyone seems to believe, that the "taxpayer dime" entitles Obama to tell corporations and individuals exactly what to do--down to the smallest detail. There is not even a pretense that this is not socialism Again, if a Las Vegas junket does not help a business (which should be acceptable, even on the "taxpayer dimme"), then why should a coproation ever do it? Has Obama not just told all corporations in America to avoid Las Vegas--thereby making the people of Las Vegas losers in the central planning game of winners and losers being determined by the whim of the central plannners?

Looked at correctly, Obama condemned the entire structure of our lurch into massive central planning, with one offhand comment that he thought "sounded good". What more can you ask of a President than to condemn his own bad policies and intelligence out of his own mouth?

No comments: