The Reagan Consensus - Part 3

The Reagan Consensus and the Trojan Horse -

There are several threats to the Consensus that are substantive.

The first I discussed before - the Trojan Horse. The Opposition knows that it cannot get up on its hinds and hope to gain and hold power by attacking the Consensus head-on. This was proven by the disastrous Labour-Corbyn leadership and campaign of last December. So, like Biden and to some extent Trudeau, they pretend to be "moderate". But, as pointed out before, the biggest threat comes from the unelected - whether in the form of a Black Lives Matter, a CNN or a Brookings. They all have one thing in common - they masquerade their otherwise unpalatable agenda by calling themselves "disinterested, objective non-partisans".

The worst and most dangerous example of this change to the Consensus camouflaged as "legitimate discussion of progressive change" comes from something that Davos and other of its minions and peers are promoting ever more aggressively - something called "corporate governance". It represents the dawning realization of the Opposition that the best way to undermine and at least "control" Capitalism without appearing to touch the red lines of the Consensus is from within. 

What is the meaning of "corporate governance" in this context? Well, as the Davos official suggested in referring to it recently, it means weighing "short term profits against long term". It sounds good doesn't it? How many times have the gurus of finance told us that short term investment usually results in long term disaster? But, what they really mean by this will ultimately mean no or less profits in both the short and long term. All this is done in the name of "Social Justice", Climate Change, COVID or other of the latest cause celebre of the Left. But it's all just cover for their most important objective - their controlling people and shaming capitalists into reaching that goal.

How would it work? Normally, the "stakeholders" in a company are the owners or shareholders, the executives, the workers, the customer and the corporate entity, itself.  In other words, the people and entities that actually take part in the company financially in some way. The Capitalist system assumes that these natural interested parties will thereby run the company, work for it or buy or sell to it and operate according to their interests and the interest of the company at all times. If they do not, particularly if the Directors of the company fail in this regard or workers illegally strike, the law could be used to punish the malfeasant. Good business under the Rule of Law thus creates untold benefits for all.

The Davos Corporate Governance or "Reset of Capitalism" scheme would open this up to people and institutions that don't necessarily have any skin in the game of the company - governments, interest groups, the general public who may not even buy a single thing from the company, etc. Worse, the new stakeholders would not necessarily act on the interests of the company but according to the nebulous concept of "the public interest" that could theoretically change depending on who last had the microphone at the latest "stakeholders' " meeting. The result  would be that, as the Davos flack freely admits, profit would no longer be the first consideration of the company. 

If such a system took hold - two things would happen: (1) the laws would have to be changed so that stockholders in the company would no longer be allowed to sue if the New Age Agenda enforced on the Directors of the company led to ruin and malfeasance; and (2) many companies would be less profitable and maybe even go bankrupt and many more companies would not be formed as entrepreneurs fleed the jurisdiction that adopted this approach or simply refused to incorporate (although, one has to imagine that attempts would be made to have this apply to private companies, too) creating jobless and hurting consumer choice, price and service. 

Another ironic result of this approach is that many companies that could have done some real good for their communities (as they do already) beyond "simply" investing millions and employing thousands, would be far less able to do so or not be able to do this at all as they were stifled by such a disastrous concept. But the threat is real and dangerous precisely because of how it is dressed up with touchy feely titles like "corporate citizenship" and how it goes for everyone's apparent dislike of profits (especially, those made by others not ourselves). In other words, if Smith was right that, when people act in their own interest in the market, they are being directed by an invisible hand guiding them to a public interest as well, then this scheme would once and for all kill that blessing of free enterprise and multiply the curse of the reverse happening - people purporting to act in the "public interest" being guided by an invisible (and sometimes all too visible) hand of some private interest they did not know, most likely the megalomaniacal, the rent-seeker and the corrupt.

Certainly, like with other regulatory schemes, this, too, could easily be "captured" by big business and used by them to dominate their markets and exclude up and coming competitors that could not afford to support the new system. This in turn would be to the loss of consumers in increasingly monopolistic markets. It is also reminiscent of the ironic result of so-called anti pollution laws - they gave a license to companies and individuals to pollute by abolishing the right of individuals or companies to sue if their property was polluted by someone in return for compliance with regulation and fines from the authority. Similarly, in return for effectively surrendering control over the management of their companies, directors and executives will be able to compromise the interests of the shareholders without fear of lawsuit and maybe even get a gong from an organization like Davos for doing it!

Conservatives need to be on their guard against these types of schemes and always call them out for what they are - the back door to undoing the Consensus of economics, finance and governance that has been the basis for the incredible progress, prosperity and freedom of the human race in the past 40 years. The best way of doing this is public governance. Make it clear that the biggest threat to our welfare and liberty comes not from rapacious companies but from an overweaning state. I say we conservatives put forward our own set of "governors' governance" rules that would check any intrusion into the markets such as the corporate governance scheme and check their "freedom" to intervene in the economy.

This could be achieved by statutory rules restricting spending, taxation and debt to certain levels (such as those set by the EU for "convergence" by its members albeit hardly observed) and forbidding baseline budgeting. Regulations of any sort would be closely audited for their true cost benefit by outside audit and cut at least three for every one made. The government would be expelled from the remaining areas of the economy they "manage" like dairy, poultry, telecomms, airlines and banking here in Canada. Outdated practices and procedures, waste fraud and abuse and other monopolistic and corrupt practices in government everywhere would be stamped out. 

Above all, the state would be shrunk in size gradually in proportion to the GNP. The smaller the government, the less chance of corruption, waste and the threat of megalomaniacs perpetrating insidious and calamitous ideas like "corporate governance." A Grand Bargain could be offered to Davos-wannabe business and entrepreneurs - in return for you staying away from these bossy schemes and giving up the bribery (e.g.: subsidies) that so often comes with them, we'll get rid of the corporate tax (which only consumers pay anyway) and streamline regulation. With the resultant savings, you can visit pompous but hopefully feckless gabfests like Davos all you want and donate to the causes of your choice with all the munificence you desire (and we'll let you deduct that, too! seriously, is there any better example of Rube Goldberg than Corporate Governance as a way to save the World? One big company or entrepreneur's 100% charity write-off will do far more to save the World than CG ever will for a whole nation)...

Expanding the freedom to choose of the millions while limiting the freedom of the ideologue few and the state to dominate us with their siren song causes all the while building on the Consensus - now that's a real plan for a better future for us all.

But there are other threats to the Consensus and I will deal with them tomorrow.

The Reagan Consensus Part Two

Or:  The Enemies of the Reagan Consensus and Why We Should Not be Afraid of Them -

The enemies of the Reagan Consensus ( established since at least 1990, I say) are nothing if not absurd but sometimes sublime. The absurd both in substance and in form has to be shallow, demagogic, dissonant Joe Biden. He is the less apparently noxious specimen of the "moderate" Left. They only attack the Consensus if they know it is "unpopular" and only in incremental steps that can be dangerous only if you let it go so far.

 Perfect example: Biden announced that, while Trump's reduction in the US corporate tax rate from 35% (where by the way it had been even during Reagan's time) to 21% was "disastrous", it would be just right, Goldilocks, if it was at, say..., 28%. Notice that is so arbitrary as to literally be a trial lawyer's "splitting of the difference" to settle a fact that only 3 years ago was the "consensus": that the US should have a 35% corporate tax rate. This tells us one narrow thing and one broad thing. The narrow is that the so-called policy "ratchet" that Thatcher warned about can actually work in our favour and was in fact what the Reagan Consensus did - to change the way we are required to look at major areas of economic, financial and government policy fundamentally and hopefully forever (more on that later).

The broad thing it teaches us is that our opposition works with fear. It uses it to try to get its way on a wide range of issues from Climate Change to Gun  Control to COVID. But those who fearmonger are themselves the captive of fear. This leads to my first point about why the New Consensus will last long - its enemies are generally afraid to challenge it as they still perceive it is too unpopular to do so. As long as we mount a decent defence of the Consensus and remind people why they like it 24/7, we've nothing to fear from our fearful opponents for the most part.

That brings us to the more sublime enemies of the Consensus whose insidious, subtle attack on it is far more dangerous to us in the long run. They often come from academia or the media or the "expert class", the fabulously wealthy or, worst of all, the PONGO class. Above all, they present themselves as "apolitical" to cover for some pretty far out ideas. Examples include Bill Gates, Arletty, the French economist, the editorial boards and producers of most media as well as most of the pertinent and even impertinent faculties of most major colleges. The most recent example - the plaintive cry, in scheduling the World Economic Forum in Davos, in 2021, for a "Reset" of world economic and government policies. Translation - the general adoption of their pet unpopular socialistic and post-capitalist policies for controlling us more under the cover of COVID.

Their greater threat comes from the fact that they are not accountable to anyone but themselves (and sometimes, in light of their lifestyles of unchecked capitalism, conspicuous consumption and garish carbon emissions, not even themselves). The "Fear Factor" therefore of being timorous about implementing or even proposing radical changes is non-existent (witness how much more socialist an ex-politician, even one who was supposed to be a conservative, becomes once they leave office). It is also harder to fight this element of the opposition as it is ever more exclusive in admitting or tolerating those of a truly different political attitude into or in their precincts and indeed have exiled many who have transgressed against their evermore detailed PC code.

How to fight them? Well, one way is to keep the pressure on the elected and remind them how dangerous it will be politically to go against the Consensus. We need to campaign for, organize for and ultimately run as candidates who will guard and build on the Consensus. But candidates can come and go and ask you to :"read their lips"!

That is why another method is to fight for our causes and to organize our own forums and that is historically at a great peak compared to other eras. Before the 1950's, there were no conservative magazines. Before the 1960's, there were no conservative politicians. Before the 1970's, there were no conservative thinktanks. Before the 1980's, there was no conservative radio and before the 1990's, no conservative TV. We now have a great network of all these elements on our side although still outnumbered by the Left, especially in academia and the media. Worse, all these too can be ephemeral and thus may not always guard against the Left's threat to the Consensus (witness the apostasy of the likes of Bolton, Crystal and Kasich).

The real answer is Insulation. No, I am not talking about installing asbestos around Donald Trump. I am saying that the Consensus has survived as long as it has because it has certain in-built conditions and developments many of which no one, including Reagan, could have predicted that have ensured we never go back to confiscatory taxes, nationalization, wage and price controls and other extreme regulation and even re-regulation. These include:

1. Low inflation. Ironically, the excuse the governments used for controls was due to a phenomenon they helped to stoke through profligate fiscal policy. The Great Moderation removed this issue and thus the premise for intervening in the first place. It never came back even as taxes were slashed which many of the same "experts" said would also ramp up inflation. It also has undermined the rationale for related reregulations (for example, when energy was deregulated, the price of oil and gas went down);

2. The coming of the Computer Age. This sector has been critical to the renovation of the Rustbelt economies, to prosperity and improvement of the standard of living generally and for the most part has never been broadly regulated. Indeed, it has only known the New Consensus economically. As long as this is the case for it and most every other sector that depends on it (which is now practically every sector and industry and activity), the New Consensus will abide with this massive ally;

3. The same can be said for Telecomms and Social Media (also like Computing, areas of the economy that arguably would not be what they are today or even exist at all but for the New Consensus). Our lives have been changed and liberated irretrievably and in a good way that will be hard if not impossible and painful for a state to undo (yes, I'm going to use the cliche - the GENIE IS OUT OF THE BOTTLE!);

4. The collapse of the Soviet Union and thus the end of a huge and pervasive moral, intellectual and even material support for the enemies of the New Consensus around the World;

5. The crushing of poverty, disease and starvation worldwide mainly sue to the capitalistic and innovative forces unleashed by the New Consensus. In turn, this has also ushered in an extended period of peace; and,

6. The lack of a world crisis that invites the so-called "resetting" of the Consensus. And no, the "Great Recession" and COVID and Climate Change did not and will not do it. They are all materially and existentially far less threatening than the Great Depression, the World Wars and the Cold War that were all used to one degree or another to justify the Old Consensus, that is state intervention. Deep down even the most publicly committed to trying to alter the Consensus know that these are only perceived threats at best that will not compel people to return to the Old Consensus that not only is proven not to work BUT does not even have a relevant application to whole parts of our lives today.

There are many more reasons for the "immunity"of the New Consensus to the "virus" of its' enemies efforts to kill it. But over all, while many of us long for the "Good Old Days" or rail at "Social Injustice" as if it were invented in 2001 or 2017, we still live lives that are incomparably better, safer and more enjoyable and agreeable than any we had before the new Consensus was built. That is why our politicians will always (except incrementally which must still be definitely fought hard) back off substantively changing it as long as we stand up to them and get the right people to protect the Consensus and the freedoms it has given us all.

In short, Reagan's warning, that we can lose in a generation the freedom and prosperity it took centuries to build, still holds. Complacency and not improving (for instance, deregulating MORE areas of the economy and real tax reform) is not an option for us no matter how comfortable we are.  But, as long as we remain diligent, we're never going to go back to truly "Big Government" anymore than we are going back to platform shoes, bellbottom pants and disco.

I Have A Plan

The real problem is how do we:

1. Raise Defence spending to 2%;

2. Lower spending overall to balance the budget by the end of the first term from at least a deficit of 250B$; and,

3. Cut and simplify taxes and remove tariffs to spur high economic growth.

Anyone without a plan to do that is blowing smoke and condemning the whole country, even Max, to the whirlwind.

First, must come sharp deregulatory reform to boost economic growth without any cost to the treasury and to get more revenue for the treasury from the growth and put more money into Canadians' pockets from the price and cost savings that will result - the sectors would include telecomms, banking, airlines, energy and agriculture. This should also make steps 1. and 2. easier and support step 3.

Second, a 20% reduction in spending for savings of 60 billion dollars per year. For example, All regional development programs (this Plan is all the development we will need) and direct corporate subsidy would be eliminated. More savings would come from standardizing EI. More perennial targets like the CBC and Heritage grants and the like would also be cut. But, no mistake should be made - this will hurt. BUT it should be possible to do this so that, with attrition and other measures, there is no layoff or reduction in benefit to the truly needy. (All COVID programs would be eliminated immediately if not already gone)

Third, eliminate all indirect corporate welfare and cut all tax expenditure by 1/3 and thus save at least 50 billion dollars per year to apply to eliminate all taxes on savings and investment whatsoever (a large part of which would be capital gains already forgiven now by the TFSA , RESP's, RRSP's and RRIF's.) as well as all tariffs and to reduce the top income tax rate to 25% and the total brackets to two - 15 and 25. The corporate tax would be reduced to 10% so that every province's total business rate would be no higher than even tax free US States.

With the new revenue from the economic growth generated by the lower or zero tax rates and greater tax efficiency and the savings from general spending cuts and erasing corporate welfare and broadly lowering tax expenditures, it should be more than possible to increase Defence spending gradually, or 4 billion per year (x4 years for a total of 16 billion more) to hit the 2% target.

(A long term decision should also be made to increase the HST by one percent for every one percent the income taxes are further reduced to move the couhtry inexorably away from the income taxing business and to consumption. The above are the best steps to take first in this direction.)

The growth would further enable this effort by bringing in some $3 billion dollars more to the general revenues for every 1% of new economic growth WITHOUT raising or changing taxes in any way.

All non-OSHA Federal regulation would be reduced further (three cut for every one new promulgation) thus cutting the cost of compliance for all and spurring further economic growth. This should also save more spending as the civil servants needed to administer it and their establishments are eliminated by attrition (thus all you essential Fed CS would not lose a single job and maybe even get a raise for your superb performance!). And, by all means, introduce the Federal Government to 21st Century business practices for more economy and service.

Except for the Tax and Excise Codes and the enabling statutes and ordinances for the reductions, privatizations, regulation and deregulation, there is no need for new spending, programs, orders or other initiatives in this Plan. It can all be done (except for the Defence Plan and the budget balance) in one budgetary cycle. The rest can be done in 1 term.

This my Plan for Economic Recovery and Growth and Long Term Sustainability.  Or at least it is a start to a better future than our past. The others can't see the forest for the trees or have no plan or both or don;t want to tell us the truth about what will be necessary. Their dawdling will only bring us more pain. Oh, poor Max!

BTW, only one of Peter's "Eight Points" is important and is met by this Plan - creating the conditions for prosperity. The rest is up to the Canadian People. I bet on them!

Two steps forward...

The Good News - O'Toole would deregulate airlines and telecoms...but not milk! (Bad News - last time I checked we don't all eat airplane tickets and cellphones)

Also, if he wants to remind people of the importance of balancing the budget, show them the study I read about recently that found that nations with "fiscal rules" preferably statutory (that is, to balance the budget), saw their economic growth go up at both national and regional levels. Also, the work of a Harvard economics prof by the name of Belina (I think) who found that deficits are best fought by spending cuts and control not taxes and tax increases.

Oh, and in another sop to Quebec, he says that Quebec's proportion in the HOC will never drop no matter what. A rather marginal issue I think even for Quebeckers (and do we really need to make it so that the Bloc is as large as ever no matter how small the PQ gets?) but hardly a democratic spirit shown there.

Fits and starts, for sure, are to be expected in a platform, and the deficit in particular is a big unknown right now. But, even now, just running for leader, he would not provide a timeline for balancing the budget. Worse, I do not hear so far (except for a broad pledge to lower and simplify taxes) any suggestion about how to generate economic growth (aside from the pipelines). HINT: it's going to be difficult to balance the budget without some serious growth.

BTW, if corporate welfare is bad (in both tax expenditure and direct forms) for oilsands, why not for everything else?

The Ultimate Test

I just recalled what the ultimate test for how serious a pandemic really is: (in descending order) Level 1 - Do you know someone who died from it? Level 2 - DO you know someone who knows someone who died from it? Level 3 - Do you know someone who has it? Level 4 - Do you know someone who knows someone who has it? Perhaps, it is pretty UN-serious when I do not answer "yes" to any of those questions. it also suggests that the reports of infection or death might be exaggerated.

It certainly suggests that the warlike, draconian, extra-constitutional, dislocating measures being taken, to combat a disease that may have as low as a 0.1 % (one out of a 1000) chance of death ONCE infected of course, may likewise be exaggerated.

And if I hear one more jackass say it is an "inconvenience" to lose your job from this or "greedy" to want that job back asap, I am going to have a primal scream!

WHO and COVID and China continued...

WHO also backed up the Chinese in not adopting flight restrictions on Jan 10 and backed up their numbers at that time, too.

The Chinese knew that COVID could be communicated human to human on December 14-21. While WHO continued to support their position it could NOT on Jan. 14.

Dr. Tedros, the Director,  his number 2, Bruce Allward, and the Chinese nationals in the WHO need to resign.

Taiwan and one of WHO's own experts knew it was communicable by humans to humans in December and the WHO ignored these reports.

,

If now's mot the time to reform the WHO and call out China, when is it? Whether they are punished now or later does not take the blood off their hands.

(by the way, China pays 10% of what the US pays for the WHO even though they are the same size of economy and they appear to own the organization!)

China and Covid and WHO

January 4 - the WHO praises China's "transparency" in dealing with COVID

January 14 - while the XChinese come to shake hands on the US trade deal, the WHO states that COVID is not spread by human contact

March 11 - after 100 nations are infected with it, the WHO declares COVID a Global Health Emergency

A Southampton University study finds that if China had come clean about this a week earlier, 50% of patients would have not been infected, 2 weeks, 66% and 3 weeks...95%

Because of the WHO and their Ethiopian stooge of China Director and the Chinese, millions were and will be sickened and 100's of thousands died or will die.

They should be glad that all that has happened is a halt in funding for WHO, cancelled flights and finally some new insight and awareness into the clear and present danger China's "diplomacy" and complete disregard for the Rule of Law poses to the West. More will need to be done to loosen their grip on our debate, especially among our elites.