You Will Buy This

In my book Never Allow A Crisis To Go To Waste, I discuss how German industrialist, Walther Rathenau, attempted to create a third way socialism called Zwangswirtshaft (controlled economy) where the government did not own the means of production, but rather used its regulatory, taxing and spending power to achieve the socialist goals of directing the economy to redistribute wealth. Under Zwangswirtshaft, the state would tell industry what to make and then eliminate competing goods to compel the citizens of Germany to buy the government directed goods and services.

Barack Obama’s “clean energy economy” and Obamacare policies are implementations of German Zwangswirtshaft socialism.

Obamacare directs the health insurance industry to issue policies designed by the Department of Health and Human Services and then requires you and I to buy these policies or pay a fine.

One of the elements of Obama’s “clean energy economy” is to promote the use of “renewable” ethanol based fuels. The promotion started with the government compelling the oil industry to produce the E10 blend of 10% ethanol and 90% gasoline, which the government subsidizes to make it cheaper than straight regular gasoline.

When American consumers in a free market declined to buy enough E10 to suit the Obama administration, the EPA compelled oil refineries to produce an E15 blend with 15% ethanol in it. When the bureaucracy realized that a 15% ethanol blend was so corrosive that only certain more expensive cars and trucks made after 2001 could run on the stuff and almost no other vehicles and appliances, the EPA like true commissars then decided to correct their mistake by imposing a regulation requiring you to buy a minimum of four gallons if you made a purchase of E15 fuel.

It is doubtful that American consumers will take too kindly to being ordered to buy more of a product they do not want. Sometimes the dogs just do not like the dog food.

Then next step will be for the Obama EPA to command us all to buy ethanol blends of gasoline like we are being commanded to buy Obamacare insurance policies. Unless we run the commissars out of Washington first, that is.

The Myth Of War Socialism

Perhaps the most persistent and pernicious myth of economics is that the government can create a recovery in the private economy by taking over the economy, borrowing massive amounts of money and spending it drafting soldiers and building war materials. The Germans called this Zwangswirtshaft or “war socialism.” Economist and New York Times op-ed writer Paul Krugman likes to claim that the Keynesian “stimulus” of massive war spending during WWII pulled us out of the Great Depression.

The argument that rationing goods and services to the citizenry and borrowing more than the GDP to finance slaughtering a quarter million Americans and destroying billions of dollars of gross domestic product in war materials on battlefields across the world is an economic plan we should emulate is morally obscene and factually wrong. In fact, WWII deepened and prolonged the Great Depression and the American private economy did not full recover until the late 1940s.

In a long overdue article for the Weekly Standard entitled “The Ultimate Stimulus,” Arthur Herman notes:

* Under Keynesian economic theory, for every $1.00 the government borrows and spends, the GDP is supposed to grow by $1.50 or more. During WWII, the United States GDP grew less than the increase in military purchases because the private economy was forced into a recession to redirect production to build war goods.

* The over twenty million men and women drafted into the armed services produced nothing of value to the economy and instead were paid with borrowed money to destroy war goods bought with borrowed money to lay waste to the economies of former trading partners.

* It was only after our nearly insolvent government sharply reduced government spending after WWII that the American private GDP rebounded and absorbed over 10 million new workers returning from military service. Under Keynesian theory, the reduction of government borrowing and spending should have slowed down economic growth and increased unemployment.

* Keynesians have theorized that post-WWII economic growth was driven by Americans spending their wartime savings. In fact, savings increased from $151 billion in 1945 to $168.5 billion in 1948 as the “Greatest Generation” scarred by a 16 year depression socked away money against the return of that long rainy day.

Government borrowing and spending used to direct the economy did not create economic growth during wartime and is not doing so today.

Airbrushing History

Inside a cover Newsweek bluntly entitled Why Are Obama’s Critics So Dumb?, self-admitted Obama groupie Andrew Sullivan begins the left’s airbrushing of Obama into a mainstream moderate.

After repeating the usual Dem spin of Obama’s first recovery-less recession since the Great Depression as the prevention of a Second Great Depression and then blaming Bush three years after he left office, Sullivan tries to transform the socialist Obamacare into a moderate Republican proposal.

As I describe in my book Never Allow A Crisis To Go To Waste, Obamacare faithfully applies the principles of German Zwangswirtshaft socialism – government creation of a health care monopoly which will be limited to selling a handful of government designed policies, to be sold and marketed in government designed venues, whose administrative expenses are designated and capped by the government, and whose product we are mandated to purchase. As Vice President Joe Biden assured administration supporters: “You know we are going to control the insurance companies.”

Instead of addressing what Obamacare actually mandates, Sullivan instead engages in the false syllogism that: (1) then Massachusetts Governor Romney designed the template for Obamacare, (2) Romney can’t be a socialist because he is a Republican, thus (3) Obama and Obamacare cannot be socialist.

The sad truth is that GOP leaders are hardly immune to the recent temptation to dabble in socialist command economics and their ideas do not make Obamacare any less socialist. Nomination front runner Mitt Romney’s Frankenstein creation Romneycare is undeniably socialist, something that should give his supporters serious pause as they consider their nomination vote in South Carolina and the later primary states. Indeed, I spend an entire chapter in Never Allow A Crisis To Go To Waste describing how George W. Bush’s lawlessness with TARP and other “bailouts” provided Barack Obama with the tools to nationalize General Motors and Chrysler, and put teeth in his attempts to direct the banks.

2012 is a pivotal election and we all need to look beyond the obvious media propaganda and closely scrutinize the records of both Mr. Obama and his would be GOP rivals.