Monday, January 23, 2012

Hypocrisy Right and Left

In a recent editorial appearing in a major newspaper right after the NH primary, and before Newt's big SC win, "Mitt Romney's free market success draws Newt Gingrich's attacks," the editors lectured Newt Gingrich as follows:

Let’s see if we have this straight: Newt Gingrich, the Reagan conservative, and his patron Sheldon Adelson, a billionaire casino owner, want us to believe that Mitt Romney is evil because he practiced capitalism when he ran Bain Capital.

We have entered strange new territory. With Romney’s win in New Hampshire, the race now moves to South Carolina, where Adelson has purchased enough TV time to hammer this message home. The emotional punch comes from testimony by individuals who are said to have lost their jobs as a result of buyouts by Bain.

So ask yourself this: Is it inherently wrong for an investor to purchase a firm and then reduce its staff?

Suppose the investor finds a way to do the same work with fewer people. Or that diminished demand for the firm’s product means that it must shrink to survive.

In those conditions, the only rational answer is to lay off employees. Because if you don’t, more efficient competitors will grind the overweight firm into dust. And at that point, all the firm’s jobs will be lost.

That’s the logic of a market economy. And yes, what the economist Joseph Schumpeter called 'creative destruction' takes a human toll. It’s important to have a safety net to soften the blow with unemployment benefits, job training programs and other help. But to suggest that Romney is somehow a force for evil because Bain’s buyouts resulted in layoffs is pure demagoguery.

Bain’s business model was to make leveraged purchases of firms, bring in new management to make them more efficient, and then sell them. Economists say that leveraged buyouts like this typically cost jobs in the short run, but position the firms to create more jobs in the long run.

...But for a conservative like Gingrich to vilify Romney based on the simple fact that jobs were lost is beyond hypocritical. And it’s a reminder, as if one were needed, that he is not fit to be president.

The Wall Street Journal? Investors Business Daily? Nope. That was none other than NJ's largest newspaper - the left-leaning Star-Ledger, on 1/12/12. Perhaps this editorial can be explained by the paper's late encounter with economic reality. Like most newspaper corporations, the Star-Ledger has had to brutally downsize in recent years to survive, cutting many jobs along the way. In any event, when liberals begin sounding more like capitalists than a leading presidential candidate of the allegedly pro-capitalist GOP, it's all the proof we need to show how desperately the party needs new blood ... and ideas.

But just three days earlier, on 1/9/12, the same NJ Star-ledger exposed a bit of its own hypocrisy, blasting an innocuous sounding bill scheduled for a vote near the end of the lame duck legislative session - since shelved - that would "allow local governments to stop posting legal notices in newspapers." The editors wrote:

The cover story is that this will save local governments money by allowing them to post the information online instead.

That’s not true, because towns would have to build and maintain secure computer sites for this purpose.

The sponsors of the bill haven’t bothered to calculate that cost, but the Legislature’s non-partisan researchers warn that the bill could actually increase costs to local governments.

The bosses don’t care about the costs, though, because saving money is not the real purpose. And they don’t care that many poor and elderly people don’t use computers, either.

The real purpose is to give them a tool to bully newspapers. Under this bill, a local mayor or county executive could retaliate against newspapers by pulling these advertisements. The bill is an attempt to turn watchdogs into lapdogs.

Coming from a major supporter of the regulatory welfare state, this editorial is almost laughable. Businesses are routinely bullied by antitrust crusaders; developers by local zoning boards and environmental protection agencies; medical doctors by Medicare/Medicaid price controllers. ObamaCare will bully every individual and every business into government-approved health insurance policies. Antitrust laws, government zoning, governement-run medicine, and other regulatory welfare-state schemes are all forms of government bullying of private Americans that the Star-Ledger supports.

The Star-Ledger may have a point about this proposed law, but their sob story rings hollow considering their philosophical love affair with statism. Sooner or later, chickens will come home to roost.

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