Jobs Picture

From the Wall Street Journal - April 12, 2010

By ROBERT REICH

The U.S. economy added 162,000 jobs in March. That sounds impressive until you look more closely. At least a third of them were temporary government hires to take the census—better than no job but hardly worth writing home about. The 112,000 real new jobs were fewer than the 150,000 needed to keep up with the growth of the U.S. population. It's far better than it was—we're not hemorrhaging jobs as we did in 2008 and 2009—but the bleeding hasn't stopped.

Since the start of the Great Recession in December 2007, the economy has shed 8.4 million jobs and failed to create another 2.7 million required by an ever-larger pool of potential workers. That leaves us more than 11 million jobs behind. (The number is worse if you include everyone working part-time who'd rather it be full-time, those working full-time at fewer hours, and people who are overqualified for the jobs they're in.) This means even if we enjoy a vigorous recovery that produces, say, 300,000 net new jobs a month, we could be looking at five to eight years before catching up to where we were before the recession began.

Given how many Americans are unemployed or underemployed, it's hard to see where we get sufficient demand to support a vigorous recovery. Outlays from the federal stimulus have already passed their peak, and the Federal Reserve won't keep interest rates near zero for very long. Although consumers are beginning to come out of their holes, it will be many years before they can return to their pre-recession levels of spending. Most households rely on two wage earners, of whom at least one is now likely to be unemployed, underemployed or in danger of losing a job. And even households whose incomes have returned are likely to be residing in houses whose values haven't—which means they can't turn their homes into cash machines as they did before the recession.

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Martin Kozlowski

While consumers have been shedding their debts like mad—often simply by defaulting on loans—their remaining burdens are still heavy. At the end of last year, debt averaged $43,874 per American, or about 122% of annual disposable income. Most analysts believe a sustainable debt load is around 100% of disposable income, assuming a normal level of employment and normal access to credit—neither of which we are likely to have for some time.

Some economic cheerleaders say rising stock prices are making consumers feel wealthier and therefore readier to spend. But most Americans' biggest asset is their homes. The "wealth effect" is felt mainly by the richest 10%, whose net worth is largely stocks and bonds. The top 10% accounted for about half of total national income in 2007. But they were only about 40% of total spending. A vigorous jobs recovery can't be based on 40% of what was spent before the economy collapsed.

Also in OpinionJournal:

Shultz: From Reagan to Obama
Wolfowitz: What About Iran and North Korea?
Schlesinger: The Policy Is Better Than the Rhetoric
Perle: A Dangerous, Short-Sighted Policy
Iklé: Numbers Aren't the Key Issue
Burt: The Goal Remains Nuclear 'Zero'

What's likely to slow the jobs recovery most, however, is the indubitable reality that many of the jobs that have been lost will never return.

The Great Recession has accelerated a structural shift in the economy that had been slowly building for years. Companies have used the downturn to aggressively trim payrolls, making cuts they've been reluctant to make before. Outsourcing abroad has increased dramatically. Companies have discovered that new software and computer technologies have made many workers in Asia and Latin America almost as productive as Americans, and that the Internet allows far more work to be efficiently moved to another country without loss of control.

Companies have also cut costs by substituting more computerized equipment for labor. They've made greater use of numerically controlled machine tools, robotics and a wide range of office software.

These cost-cutting moves have allowed many companies to show profits notwithstanding relatively poor sales. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. It managed this largely by cutting 28,000 jobs, 32% of its work force. But for workers, there's no return. Those who have lost their jobs to foreign outsourcing or labor-replacing technologies are unlikely ever to get them back. And they have little hope of finding new jobs that pay as well. More than 40% of today's unemployed have been without work for over six months, a higher proportion than at any time in 60 years.

The only way many of today's jobless are likely to retain their jobs or get new ones is by settling for much lower wages and benefits. The official unemployment numbers hide the extent to which American workers are already on this downward path. But if you look at income data you'll see the drop.

Among those with jobs, more and more have accepted lower pay and benefits as a condition for keeping them. Or they have lost higher-paying jobs and are now in new ones that pay less. Or new hires are paid far lower wages than the old. (In January, Ford Motor Co. announced that it would add 1,200 jobs at its Chicago assembly plant but didn't trumpet that the new workers will be paid half of what current workers were paid when they began.) Or they have become consultants or temporary workers whose pay is unsteady and benefits nonexistent.

This shift also helps explain why the unemployment rate for Americans with college degrees is now only 5%, while it is 10.5% for those with only a high-school degree, and 15.6% for Americans with less than a high-school diploma. The jobs of well-educated Americans, although hardly immune to foreign outsourcing and technological displacement, have been less vulnerable to these trends than the jobs of Americans with fewer years of education.

The likelihood, therefore, is that as the economy struggles to recover and today's jobless begin to find work, the median wage will continue to fall—as it did between 2001 and 2007, during the last so-called recovery.

More Americans will be working, but for pay they consider inadequate. The approaching recovery will be tepid because so many people will lack the money needed to buy all the goods and services the economy can produce.

Americans will once again be employed, but they will also be back on the downward escalator of declining pay they rode before the Great Recession.

Mr. Reich, professor of public policy at the University of California at Berkeley and former secretary of labor under President Clinton, is author of the forthcoming "Aftershock: The Next Economy and America's Future" (Alfred A. Knopf).

Re-Learning Thrift

from city journal:

__________________________________________________

GERALD J. RUSSELLO

Thriving with Thrift

Americans must recapture their old habits of frugality and restraint.

12 February 2010

Thrift: Rebirth of a Forgotten Virtue, by Theodore Roosevelt Malloch (Encounter, 238 pp., $16.95)

Waste not, want not. A penny saved is a penny earned. A bird in the hand beats two in the bush. Phrases like these were once part of America’s common economic wisdom. Especially in the twentieth century, Americans learned, through the Great Depression and two world wars, that it was better to hold on to your resources and use them wisely than to spend them recklessly or to gamble with them in the hope of making a greater gain. Indeed, the 1920s saw the rise of the National Thrift Movement, which took its inspiration from our nation’s thriftiest Founder, Benjamin Franklin. Many Americans who grew up in that era never forgot its privations, which imposed at least a partial check on their characteristic economic optimism.

These venerable phrases haven’t been heard much over the last 20 years, however. First came the Internet era, which seemed to suggest that there was no limit to the Dow Jones Index or to our personal fortunes; then the subprime-housing bubble, in which overly easy credit was joined to an unrealistic view of the free market and a failure of nerve in Washington. Traits like frugality and thrift were regarded as arcane ideas from another time, as if those practicing them wore the top hats and frock coats of somber Victorian burghers.

In his new book, Thrift, the impressively named Theodore Roosevelt Malloch seeks to return thrift to its place among commercial society’s respectable virtues. After all, the word “thrift” is cognate to the verb “thrive,” and it is Malloch’s view that thrift, properly understood, should be joined with a constellation of other characteristics that make society more just and ultimately more prosperous. Thrift does not mean poor, and its opposite is not wealth but waste. Tracing its roots to the Scottish Enlightenment, Malloch describes thrift as “a matter of the wise use of assets—accumulating where this was possible, investing where this promised a return, and avoiding waste.” Thrift is, in a sense, a principle of good stewardship and could apply to caring for the environment as well as to tending one’s bank account. It requires judgment, reflection, and the forging of sound habits that will lead to happiness. One can be generous and thrifty; the term need not, as Malloch makes clear, be equated with stinginess.

Thrift ranges widely across intellectual history, from Aristotle to the Enlightenment, from George Weigel’s reflections on European malaise to the policies that the developed world should adopt toward less developed nations, from economic theory to debates over the religious causes of prosperity. The result is a sometimes-chaotic ride through several complex subjects. Malloch is concerned, among other things, with the transition into a new kind of capitalist economy: “Instead of an economy based on saving and thrift, which launched Europe on its path of growth and prosperity, . . . we have an economy based on consumption, debt, and credit, in which saving is discouraged not only by the culture of affluence but also by the fiscal policies of governments.” Economic policy, he argues, should be directed toward reinforcing good habits of saving and proper consumption.

That doesn’t mean greater government involvement or expenditure. The rise of the welfare state over the last century, for example, has contributed to the corrosion of thrift. A government that promises everything eventually convinces the populace that it need not save or prepare for anything. This position becomes ultimately untenable, Malloch argues, sapping people’s ability to develop the habits necessary to maintaining a free society. Reliance on the government also masks the reality that government resources ultimately derive from a prosperous populace; if government action reduces those resources, its own effectiveness becomes limited. It’s curious, though, that Malloch offers not a word of complaint against the private institutions that helped further our economic troubles. While it’s true that Washington failed to restrain debt spending or to inculcate thrift, the boom and inevitable bust in housing wouldn’t have been possible without thousands of private, profit-seeking individuals and firms seeking to cash in on the frenzy.

No doubt Malloch would say that an emphasis on virtue and community-building would help lessen such destructive private actions. He notes that in a society focused on consumption, “the insatiable urge to acquire things, whether or not they are needed, has reached epidemic proportions” and “has caused severe social and cultural dislocations and warped the basic values of American society.” His shorthand solution for restoring the balance is “spiritual capital.” Michael Novak and others have long argued that a disciplined capitalism requires a complex structure of social sanction, education, and often, if not always, religious belief. While Malloch concedes that calculating spiritual capital is difficult, he brings to bear an impressive array of data that shows a correlation between prosperity and traditional religion.

Shifting at times from diagnostician to sectarian, Malloch may lose some readers, but his analysis addresses the fault lines of our current predicament. A nonjudgmental secularism combined with an amoral economic system is a recipe for economic loss and cultural degradation. Perhaps it is time to bring Franklin back into the picture.

Gerald J. Russello is a fellow of the Chesterton Institute at Seton Hall University.

A Non-Delirious New York

From Wall St Journal:

• OPINION
• JANUARY 22, 2010, 10:06 A.M. ET

By MARK HELPRIN

Midway between the first intoxications of borrowed money that does not exist, and the red-hot bearings of presses that roll to correct such inconsistencies, lies a wonderland in which human nature can become a subsidiary of the making and spending of money. Not steadily and honorably in furtherance of well being, charity, and art, but at the speed of summer lightning and for its own sake.

When pay-out exceeds pay-in, balance is maintained only by the weight of illusion—as in real-estate bubbles, or welfare states in which benefits vastly exceed contributions. Within such failing systems one finds nevertheless highly visible concentrations of wealth, like lumps in tapioca, that persist in setting a tone that has long gone flat.

Take Manhattan, but first take the Hamptons, where symptoms are readily apprehended, just as the pulse at the wrist is a telltale of the heart. Mere multimillionaires cannot afford anymore to go where within living memory actual people made a living from the farms, clam beds, and sword-fishing grounds. Now the potato fields are covered with houses that look like the headquarters of Martian expeditionary forces, ice-cream factories, vacuum cleaners on stilts, the Seagram building on its side, or shingled New England cottages monstrously swollen into something you might see after eating a magic mushroom. In simple and quiet towns that once deferred to the majesty of the ocean, the streets are now clogged with a kabuki theater of Range Rovers and $35,000 handbags.

In Manhattan the knock-the-wind-out-of-you rich used to be a relatively silent freak of nature who could easily be ignored, but of late they are so electrically omnipresent, jumping out of every flat screen and magazine, that they indelibly color the life of the city. Having multiplied like Gucci-clad yeast, they have become objects of impossible envy.

You cannot ignore them as you sit in your $2,000 a month 7 x 10 "efficiency," eating your $5 street pretzel. Or when private schools—where scholarships are reserved for peasants who subsist on $300,000 or less, and where if you haven't been admitted by the time you're an embryo you're toast—have become like the class redoubts of Czarist Russia.

Or when Mayor Michael Bloomberg spends a hundred million of his own money, $175 per vote, to crown himself like Napoleon, perhaps forgoing the purchase of the presidency because at that rate he would have to fork over $22 billion. What if he had spent comparably to his predecessors—Fiorello La Guardia, or even Jimmy Walker, whose corruption when compared to Mr. Bloomberg's well-established honesty seems nonetheless like the innocence of a fawn? (It is possible that he would not have won on his own merits.)

Ostentation has always been a hallmark of mankind, and part of the price of freedom and power in ascendant nations. But the day the baubles shine most brilliantly is the day when the civilization, distracted from what made it, begins to go down the drain. This is not an argument for restricting economic liberties, but rather a lamentation of circumstance and a condemnation of taste. The right may envy by competition and the left by expropriation, but the objects of such envy are not worthy of its ruinous influences, and the city is at its best when the fury of acquisitiveness is least.

Now that New York may be exiting yet another of many eras of irrational exuberance, it presents an opportunity in the midst of defeat, for when it is quiet it is far more lovely and profound than when it is delirious. For a long, clear moment, September 11 blew the dross away and the real city appeared. When such things arrive, as they always have and always will—whether in the form of conquest, riots, depression, epidemics, or war—they and their aftermath should be the cause of reflection.

Whenever New York has endured a blow, its real strengths have emerged. If it is now on the verge of a long-term diminution of wealth, or at least a roughly attained sobriety, all the suffering should not be for nothing. Recovery should mean not just a return to the fascination with excess that betrayed so many. For one, excess is too limited a thing to be genuinely satisfying. Grab the first billionaire you see (it should be easy) and he will tell you that stuff simply doesn't do the trick.

This is why New York has for too long been a city in which even the rich are poor. To the contrary, it should be a place in which even the poor are rich. How to accomplish this is a riddle to which public policy often proves inadequate and is anyway just a distant follower of forces of history that assert themselves as far beyond its control as the weather. As the waves of history sweep through the present what they leave will depend in large part upon how they are perceived and how each individual acts upon his perceptions, which law and regulation follow more than they shape.

How things will turn out is anyone's guess, but it would be nice if, as in the quiet during and after a snow storm, Manhattan would reappear to be appreciated in tranquility; if cops, firemen, nurses, and teachers did not have to live in New Jersey; if students, waitress-actresses, waiter-painters, and dish-washer-writers did not have to board nine to a room or like beagles in their parents' condominia; if the traffic on Park Avenue (as I can personally attest it was in the late 1940s) were sufficiently sparse that you could hear insects in the flower beds; if to balance the frenetic getting and spending, the qualities of reserve and equanimity would retake their once honored places; if celebrity were to be ignored, media switched off, and the stories of ordinary men and women assume their deserved precedence; and if for everyone, like health returning after a long illness, a life of one's own would emerge from an era tragically addicted to quantity and speed.

From WSJ; November 4, 2009

_______________________

Obama and the Liberal Paradigm

The sheep are quite capable of looking out for themselves. Someone tell the Democrats.

By JOHN STEELE GORDON

Valerie Jarrett, senior adviser to President Barack Obama, recently explained the White House war on Fox News as an example of "speaking truth to power." Much of the American political world collapsed in laughter, pointing out that her boss was president of the United States, the most powerful man on earth. His every word is news around the world. Fox News is a cable channel rarely watched by more than a few million people at a time. How could she have so blithely said something completely out-of-sync with reality?

Simple: She's a liberal.

As a liberal she carries around in her head the liberal paradigm of how the world works and what needs to be done to make it work better. There's nothing wrong with that. We all use paradigms to make sense of what we see around us and couldn't get along without them. Unfortunately, the basic liberal paradigm hasn't shifted in a hundred years, while the world we live in has changed utterly since the late 19th century, when modern liberalism was born.

What is that paradigm? The basic premise is that the population is divided into three groups. By far the largest group consists of ordinary people. They are good, God fearing and hard working. But they are also often ignorant of their true self-interest ("What's the matter with Kansas?") and thus easily misled. They are also politically weak and thus need to be protected from the second group, which is politically strong.

The second group, far smaller, are the affluent, successful businessmen, corporate executives and financiers. Capitalists in other words. They are the establishment and it is the establishment that, by definition, runs the country. They are, in the liberal paradigm, smart, ruthless and totally self-interested. They care only about personal gain.

And then there is the third group, those few, those happy few, that band of brothers, the educated and enlightened liberals, who understand what is really going on and want to help the members of the first group to live a better and more satisfying life. Unlike the establishment, which supposedly cares only for itself, liberals supposedly care for society as a whole and have no personal self-interest.

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Martin Kozlowski

Thus the liberal paradigm divides the American body politic into sheep, wolves, and would-be shepherds. The shepherds must defeat the efforts of the wolves.

This paradigm, while never wholly accurate and, of course, always self-serving (as political philosophies tend to be), had a basis in reality in the late 19th century. Then, industrial capitalism was being born and the rules needed to ensure that it worked for all, not just the capitalists, were only beginning to evolve.

A few lived at an incredible level of affluence, such as can be seen in the summer "cottages" in Newport, R.I., and had disproportionate influence with government. In 1900 one-third of the Senate were millionaires at a time when a million dollars made you very, very rich. But millions of Americans lived in abject poverty, toiling long, dangerous hours as industrial workers or as sharecroppers in the impoverished South. These millions were indeed ignorant and weak.

Even as late as 1937, Franklin Delano Roosevelt, in his great second inaugural address, could quite accurately note the fact that he could "see one-third of a nation ill-housed, ill-clad, ill-nourished."

But by that time, liberals had stormed—and taken—the citadel of power. Between 1896 and 1932, the Republicans had been the majority party in this country and the conservatism of that day the ruling doctrine. Then, in 1932, Democrats swept into control of both Congress and the White House. They were now the establishment, as liberalism became the dominant American political philosophy, a status it kept for more than 40 years.

A liberal revolution from the top began as the New Deal created a safety net for American families and reformed the banking and financial systems by greatly enlarging the government and what it regulated. At the end of World War II, college education became far more affordable, thanks to the GI Bill and other measures. The GI Bill also fostered home ownership, which for the first time became the norm among nonfarm families, giving them significant wealth. The sheep were becoming capitalists too.

Between 1947 and the mid-1960s, the civil-rights movement overturned centuries of racial discrimination and greatly narrowed the gap between American claims of liberty and equality and American reality.

By the 1970s, the percentage of Americans living in poverty had been greatly reduced and those still below the poverty line were receiving assistance such as food stamps, housing assistance, and refundable tax credits that lifted most of them above the line. Race was no longer a barrier to accomplishment. The majority of American families now lived at a level of affluence and financial security known only to a few in the early 20th century.

The liberal revolution of the middle third of that century was, in short, one of the greatest—and most peaceful—political triumphs in history. And because of it, most of the sheep are now more than able to look out for themselves, having the means and education to do so. The wolves have been fitted for electric collars that largely keep them from straying into the wrong fold.

Now if only someone would tell the shepherds about their own success.

Ms. Jarrett still sees herself and her political allies as being on the outside, speaking truth to power, even when speaking from the Oval Office. The Congressional Black Caucus still routinely sees a pervasive racism, even though both the president of the United States and the chairman of the Republican National Committee are black. The rich are still looked upon by liberals as enemies of the poor and disadvantaged, even though Mr. Obama not only carried a majority of voters earning less than $50,000 but also a majority of those earning over $200,000. He did, in other words, as well among the wolves as he did among the sheep.

Not only does the liberal paradigm not even come close to agreeing with the social and economic reality on the ground today, worse, it has largely congealed into a political religion, especially in the nearly 30 years since Ronald Reagan shifted the nation's political center of gravity, just as FDR had done 48 years earlier. Since liberals care about the sheep, all who disagree with liberalism must not, making them morally inferior if not downright immoral. Thus the nastiness in American politics is largely on the left. Whatever you think of Sarah Palin, her treatment in the liberal press was ugliness personified.

The conservatives of today bear little resemblance to those of the 1930s that cartoonist Peter Arno immortalized heading down to Manhattan's Trans-Lux theater to hiss newsreels of FDR. They are instead abubble with ideas to reform aspects of American politics and economics that badly need reform, such as the tax and legal systems, and the impending entitlements crisis. They want to utilize the great power of markets to force efficiency, drive down costs, and drive up yields. But liberals refuse to engage those ideas, simply because they are not liberal ideas and must, therefore, be wrong if not the latest plot by the wolves to exploit the sheep.

But in a world where a majority of Americans work at white-collar jobs, have high-school and college degrees, own their own homes, and hold financial securities in their own right, the so-called wolves are now a majority. If liberals don't begin to take that fact into account in formulating policy, the Obama administration will not only be an unsuccessful liberal administration, it may well be the last liberal administration.

Mr. Gordon is the author of "Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt," out in a revised edition by Walker & Co. early next year.

A "Clunker" of A Plan

WSJ Op ED-- OCTOBER 4, 2009

________________________________

Remember "cash for clunkers," the program that subsidized Americans to the tune of nearly $3 billion to buy a new car and destroy an old one? Transportation Secretary Ray LaHood declared in August that, "This is the one stimulus program that seems to be working better than just about any other program."

If that's true, heaven help the other programs. Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.

Cash for clunkers had two objectives: help the environment by increasing fuel efficiency, and boost car sales to help Detroit and the economy. It achieved neither. According to Hudson Institute economist Irwin Stelzer, at best "the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day's gasoline use." Burton Abrams and George Parsons of the University of Delaware added up the total benefits from reduced gas consumption, environmental improvements and the benefit to car buyers and companies, minus the overall cost of cash for clunkers, and found a net cost of roughly $2,000 per vehicle. Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.

The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard. As the journalist Henry Hazlitt wrote in his classic, "Economics in One Lesson," you can't raise living standards by breaking windows so some people can get jobs repairing them.

In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices. The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.

Dr. Plan for Lawyers

From WSJ; Sep 3, 2009:

By RICHARD B. RAFAL

Since we are moving toward socialism with ObamaCare, the time has come to do the same with other professions—especially lawyers. Physician committees can decide whether lawyers are necessary in any given situation.

At a town-hall meeting in Portsmouth, N.H., last month, our uninformed lawyer in chief suggested that we physicians would rather chop off a foot than manage diabetes since we would make more money doing surgery. Then President Obama compounded his attack by claiming a doctor's reimbursement is between "$30,000" and "$50,000" for such amputations! (Actually, such surgery costs only about $1,500.)

Physicians have never been so insulted. Because of these affronts, I will gladly volunteer for the important duty of controlling and regulating lawyers. Since most of what lawyers do is repetitive boilerplate or pushing paper, physicians would have no problem dictating what is appropriate for attorneys. We physicians know much more about legal practice than lawyers do about medicine.

Following are highlights of a proposed bill authorizing the dismantling of the current framework of law practice and instituting socialized legal care:

• Contingency fees will be discouraged, and eventually outlawed, over a five-year period. This will put legal rewards back into the pockets of the deserving—the public and the aggrieved parties. Slick lawyers taking their "cut" smacks of a bookie operation. Attorneys will be permitted to keep up to 3% in contingency cases, the remainder going into a pool for poor people.

• Legal "DRGs." Each potential legal situation will be assigned a relative value, and charges limited to this amount. Program participation and acceptance of this amount is mandatory, regardless of the number of hours spent on the matter. Government schedules of flat fees for each service, analogous to medicine's Diagnosis Related Groups (DRGs), will be issued. For example, any divorce will have a set fee of, say, $1,000, regardless of its simplicity or complexity. This will eliminate shady hourly billing. Niggling fees such as $2 per page photocopied or faxed would disappear. Who else nickels-and-dimes you while at the same time charging hundreds of dollars per hour? I'm surprised lawyers don't tack shipping and handling onto their bills.

• Legal "death panels." Over 75? You will not be entitled to legal care for any matter. Why waste money on those who are only going to die soon? We can decrease utilization, save money and unclog the courts simultaneously. Grandma, you're on your own.

• Ration legal care. One may need to wait months to consult an attorney. Despite a perceived legal need, physician review panels or government bureaucrats may deem advice unnecessary. Possibly one may not get representation before court dates or deadlines. But that' s tough: What do you want for "free"?

• Physician controlled legal review. This is potentially the most exciting reform, with doctors leading committees for determining the necessity of all legal procedures and the fairness of attorney fees. What a wonderful way for doctors to get even with the sharks attempting to eviscerate the practice of medicine.

• Discourage/eliminate specialization. Legal specialists with extra training and experience charge more money, contributing to increased costs of legal care, making it unaffordable for many. This reform will guarantee a selection of mediocre, unmotivated attorneys but should help slow rising legal costs. Big shot under indictment? Classified National Archives documents down your pants? Sitting president defending against impeachment? Have FBI agents found $90,000 in your freezer? Too bad. Under reform you too may have to go to the government legal shop for advice.

• Electronic legal records. We should enter the digital age and computerize and centralize legal records nationwide. All files must be in a standard, preferably inconvenient, format and must be available to government agencies. A single database of judgments, court records, client files, etc. will decrease legal expenses. Anyone with Internet access will be able to search the database, eliminating unjustifiable fees charged by law firms for supposedly proprietary information, while fostering transparency. It will enable consumers to dump their clunker attorneys and transfer records easily.

• Ban legal advertisements. Catchy phone numbers such as 1-800-LAWYERS would be seized by the government and repurposed for reporting unscrupulous attorneys.

• New government oversight. Government overhead to manage the legal system will include a cabinet secretary, commissioners, ombudsmen, auditors, assistants, czars and departments.

• Collect data about the supply of and demand for attorneys.Create a commission to study the diversity and geographic distribution of attorneys, with power to stipulate and enforce corrective actions to right imbalances. The more bureaucracy the better. One can never have too many eyes watching these sleazy sneaks.

• Lawyer Reduction Act (H.R. -3200). A self-explanatory bill that not only decreases the number of law students, but also arbitrarily removes 3,200 attorneys from practice each year. Textbook addition by subtraction.

Enthusiastically embracing the above legal changes can serve as a "teachable moment" and will go a long way toward giving the lawyers who run Congress a taste of their own medicine.

Dr. Rafal is a radiologist in New York City.

Higher Taxes for Middle Class

From WSJ (Aug 4th, 2009)

Few of President Obama’s 2008 campaign pledges were more definitive than his vow that anyone making less than $250,000 a year “will not see their taxes increase by a single dime” if he was elected. And he was right, very strictly speaking: It’s going to be many, many, many billions of dimes.

Asked about raising taxes on the middle class on Sunday on CBS’s “Face the Nation,” White House economist Larry Summers wouldn’t repeat Mr. Obama’s pre-election promise. “It is never a good idea to absolutely rule things out no matter what,” Mr. Summers said—except, apparently, when his boss is running for office. Meanwhile, on ABC’s “This Week,” Treasury Secretary Timothy Geithner also slid around Mr. Obama’s vow and said, “We have to bring these deficits down very dramatically. And that’s going to require some very hard choices.”

These aren’t even nondenial denials. The Obama advisers are laying the groundwork for taxing the middle class while claiming the deficit made them do it.

The liberal establishment is even further along in finally admitting that Mr. Obama wasn’t, er, telling the truth. A piece in the New York Times over the weekend declared in a headline that “the Rich Can’t Pay for Everything, Analysts Say.” And it quoted Leonard Burman, a veteran of the Clinton Treasury who now runs the Brookings Tax Policy Center, as saying that “This idea that everything new that government provides ought to be paid for by the top 5%, that’s a basically unstable way of governing.” They’re right, but where were they during the campaign?

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Associated Press

Treasury Secretary Timothy Geithner

In an editorial on February 26, “The 2% Illusion,” we wrote that the feds could take 100% of the taxable income of everyone in America earning more than $500,000 and still have raised only $1.3 trillion even in the boom year of 2006. The rich are fewer and less rich now, while the Obama budget is nearly $4 trillion.

Democrats already plan to repeal the Bush tax cuts, but that won’t raise enough money. So they’re proposing an income tax surcharge on “the wealthy,” but that won’t raise enough either. Democrats have no choice but to soak the middle class because only they have enough money to finance the liberal dream of yoking the middle class to cradle-to-grave government entitlements.

Democrats have already taxed the middle class by raising cigarette taxes to pay for the children’s health-care expansion. They’re also teeing up average earners with their cap-and-tax energy bill. Mr. Obama had hoped that cap-and-tax would raise some $646 billion over a decade, but Democrats in the House had to give most of that away in bribes to business to pass their bill. To finance ObamaCare, they’re also proposing another 10-percentage-point increase in the payroll tax on firms and individuals that don’t purchase health insurance. But this won’t raise enough money either.

So waiting in the wings is the biggest middle-class tax increase of them all: a European-style value added tax, or VAT. This tax would apply to every level of production or service, and it is beloved by politicians in Europe because it raises so much money so easily without voters noticing. Ezekiel Emanuel, a White House aide and brother of Chief of Staff Rahm Emanuel, has advocated a 10% VAT to finance national health care. Look for a VAT to be one of the prominent options when Mr. Obama’s tax reform commission issues its report later this year.

The undeniable reality is that you can’t run a European-style welfare-entitlement state without European-style levels of taxation on the middle class (and eventually without low European-style growth and high jobless rates). It’s looking more and more like Mr. Obama’s no-middle-class-tax pledge was one of the greatest confidence tricks in American political history.