The Freedom Factory

Politicians love to preach about the virtues of an industrial base. They do it for three reasons: Industrial firms are great sources of subsidies and political patronage, such patronage buys support from organized labor union voting blocks, and it actually does make sense for countries to produce real things of value. Since WWII America’s industry has steadily declined as a percentage of GDP, but the winds of change are blowing. Continue Reading

Sen. Rockefeller proposes bill that would give government sweeping powers to control, monitor, and regulate the Internet, ACLU demands public schools stop blocking gay web sites on public computers, Rep. Jane Harman calls incriminating NSA wiretap “abuse of power,” National Service legislation signed into law that will cost $6 billion over 5 years by hiring “paid volunteers,” government will need to issue $2.4 trillion in new Treasury securities in 2009 to meet budget shortfalls and bailout program requirements, and U.S. to give another $5.5 billion to automakers… Continue Reading

Obama continues Bush policy of surveillance secrecy despite campaign promises, tax protests spark conservative insurgency online, submit video footage of your tax woes to CNN and you might be aired nationally, Fed historian and political economist predicts worse inflation than 1970s, consider real estate as an inflation hedge, municipal bond market shows signs of life, older workers 45 years and older face brunt of recession, and flood of government debt crowds out private economy… Continue Reading

Treasury Secretary Geithner warns that if you accept government money you must accept government control, Obama tries to force limits on tourism to Antarctica, some travel and financial restrictions with Cuba eased, Obama calls on U.N. Security Council to punish North Korea over missile launch… Continue Reading

In a speech to the European Parliament, British Conservative MEP Daniel Hannan confronts Prime Minister Gordon Brown:

In the last 12 months a 100,000 private sector jobs have been lost and yet you’ve created 30000 public sector jobs. pm, you cannot carry on forever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt.

Hannan is furious with Britain’s response to the financial downturn, decrying the borrowing, spending, currency devaluation, and increased Socialization of the economy as destructive. It turns out that everything Britain is doing wrong is being done in the U.S.

Check out Daniel Hannan’s book, The Plan: Twelve Months To Renew Britain.

President Obama forces General Motors CEO to resign, tallying up the spending binge-Federal Reserve and Treasury dump $13 trillion into financial system over last 16 months, bureaucrats begin turf battle over $1 trillion carbon credit market, and Global Socialism is on the way with tripling of IMF budget… Continue Reading

Republicans block spending bill in Senate over earmarks, Federal Reserve refuses to disclose identify of aid recipients-Senate challenges disclosure, America now has its first CIO, Obama says there is no time to delay Socialized health care, lawsuit attacks Craigslist in challenge to Web privacy, Chinese central bank sees signs of recovery, Germany in uproar of GM mismanagement…just the latest in your Freedom Under Fire Report! Continue Reading

Does Obama have a double standard with earmarks? The Reagan Era is officially over, economy falls much more than initial estimates, and unemployment reaches 10.1% in California…just the latest in your Freedom Under Fire Report! Continue Reading

With a new plea to the Obama administration, the steel industry has become the latest lobbying group looking to get their hands on taxpayer funds. The CEO of Nucor Corporation (NUE)-one of the largest steel conglomerates-is lobbying the incoming Obama administration to advance a $1 trillion infrastruture package that has “in every provision a ‘buy America’ clause.”

This is nothing new. The steel industry has lobbied for and received special treatment for decades. With trillions in bailout and stimulus money floating to anyone who begs the most convincingly, the industry is stepping to the plate to take some of the spoils. Here’s a great explanation taken from the Cato Institute’s Center for Trade Policy Studies:

Over the past three decades, U.S. steel producers have been shielded from foreign competition by quotas, voluntary export restraints, minimum price undertakings, and hundreds of antidumping, countervailing duty, and safeguards measures. Yet the industry’s problems persist. Why? Because rather than strengthen the industry, protectionism fosters uneconomic capacity and discourages unsuccessful firms from the otherwise rational decision to exit the market. Continued operation of inefficient mills produces excess output, which suppresses prices, and jeopardizes prospects for healthier firms and their employees.

No matter what government does to give special treatment to steel, no matter how much money they give any of these companies, the industry will end up right where they are now, begging for more money in the future. No amount of money or artificial restriction to foreign competition will fix the industry’s problems.

With every new beneficiary stepping up to the federal trough we must remember we are weakening the long run health of our country. The federal government has assumed unprecedented liabilities and its balance sheet is becoming embarrassingly weak; this will have implications for our currency, which affects everyone. Corporate welfare has the same bad effects on business as social welfare does for individuals: we reduce incentives to alter inefficient behavior and keep doing the same bad things.

It started with financials-insurance companies, banks, investment banks-moved to retailers, automotives, commercial real estate developers, municipal governments, and has now moved to steel. Where is this corporate welfare theft going to end? With America’s bankruptcy.

This is the first time I can recall disagreeing with economist Ben Stein. In “Reflate the Economy – Now,” Stein presents an extremely desperate plea for the government to do all it can to prevent deflation. To put it another way, Stein is calling on Congress, the coming Obama adminstration, and the Federal Reserve, to do all they can to pump money into the economy. The method is irrelevent, Stein states; what is important is that money be printed and thrown as fast as possible into the remnants of a crumbling economy. Call me crazy, but this is the exact opposite of what should be done! Continue Reading