Published in Economy

Apparently Michael Moore is less of a union man than he claims to be:

The porcine provocateur is promoting his anti-Wall Street jeremiad by giving free tickets to unions, but the American Federation of Teachers has turned them down because Moore didn't hire any members of the International Alliance of Theatrical Stage Employees.

And I thought he stayed out of the gym because someone told him it was a sweat shop!

Poor boy made good, Michael Moore says "capitalism did nothing for me, starting with my first film."  In fact, he says, " I had to pretty much beg, borrow and steal," he said. "The system is not set up to help somebody from the working class make a movie like this and get the truth out there."

Hard work, individual initiative, and compeition, isn't that what capitalism is about? 

Moore's comments remind me of this essay on "Capitalism After the Crisis," by Luigi Zingales, who writes that:

In a recent study, Rafael Di Tella and Robert MacCulloch showed that public support for capitalism in any given country is positively associated with the perception that hard work, not luck, determines success, and is negatively correlated with the perception of corruption. These correlations go a long way toward explaining public support for ​­America's capitalist system. According to one recent study, only 40% of Americans think that luck rather than hard work plays a major role in income differences. Compare that with the 75% of Brazilians who think that income disparities are mostly a matter of luck, or the 66% of Danes and 54% of Germans who do, and you begin to get a sense of why American attitudes toward the free-market system stand out.

Moreover, ZIngales notes that:

When the government is small and relatively weak, the way to make money is to start a successful private-sector business. But the larger the size and scope of government spending, the easier it is to make money by diverting public resources. Starting a business is difficult and involves a lot of risk -- but getting a government favor or contract is easier, and a much safer bet. And so in nations with large and powerful governments, the state tends to find itself at the heart of the economic system, even if that system is relatively capitalist. . . .

The situation is very different in nations that developed capitalist economies after World War II. These countries (in non-Soviet-bloc continental Europe, parts of Asia, and much of Latin America) industrialized under the giant shadow of American power. In this development process, the local elites felt threatened by the prospect of economic colonization by American companies that were far more efficient and better capitalized. To protect themselves, they purposely built a ­non-transparent system in which local connections were important, because this gave them an inherent advantage. These structures have proven resilient in the decades since: Once economic and political systems are built to reward relationships instead of efficiency, it is very difficult to reform them, since the people in power are the ones who would lose most in the change.

Finally, and this is the point that gets us back to Moore:

The United States was able to develop a pro-market agenda distinct from a pro-business agenda because it was largely spared the direct influence of Marxism. It is possible that the type of capitalism the United States developed is the cause, as much as the effect, of the absence of strong Marxist movements in this country. But either way, this distinction from other Western regimes was significant in the development of American attitudes toward economics.

Moore doesn't recognize that distinction between supporting the free market and supporting businesses.  The danger, of course, is that the more government does, the more conncetions, rather than talent, hard work, and intelligence matter.

Some in that group will even get additional money from the government because they qualify for refundable tax breaks. The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise. The center's original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks."  Only some of the implications of this are touched on in the story.  Interesting, no?

Wapo claims:  "Supermarket prices are plunging as the global downturn drives down the cost of staples such as wheat, corn and milk and grocers fight for the wallets of penny-pinching consumers"

Works for me.  True for you? 

Ahmed Hamad Algosaibi & Brothers Co., a family-owned Saudi company known as Ahab, filed a lawsuit accusing Maan Al-Sanea, the billionaire owner of the Saad Group, of ``massive fraud,'' the Financial Times reported.

The suit, filed in New York, alleges that Al-Sanea ``misappropriated approximately $10 billion'' by obtaining loans and then diverting the funds received for his own use, the FT said.

Saad Group, also based in Saudi Arabia, told the newspaper it hasn't seen the claim and, if served with it, will respond vigorously.

Why don't we refer to it as the "Post Office Medical Plan"?

For a quick hit on how Obamacare and the clunkers program dovetail, see Brewster Rocket, August 18.

The Department of Transportation triples the number of bureaucrats who process "Cash for Clunkers" claims:

The government is tripling the number of contractors and federal employees helping to process claims in the "Cash for Clunkers" vehicle trade-in program, a Transportation Department official said.

By the end of the week, there are expected to be up to 1,100 people processing paperwork on vehicles that have been traded in for vouchers towards the purchase of new cars. At the end of last week there were roughly 350 workers dealing with the applications, but many dealers have complained of backups on the computer system. (Italics added.)

Boycotting the entire product line to be offered by the new Chrysler is a happy occasion where duty and self-interest coincide. You can be a good patriot and a smart shopper at the same time. Refusing to reward the United Auto Workers and the government that bestowed Chrysler upon them will uphold the rule of law and the principles of private enterprise. (One of the "concessions" the UAW made to Chrysler - that is, to itself - is that overtime will, henceforth, be paid only to employees who work more than 40 hours a week. Huh? Under the old contract, the one that turned Chrysler and GM into vegetables, workers started drawing overtime as soon as they met production targets, even if it was after they had worked 35, 30 or even 25 hours in a week.)

"Chrysler by Fiat" is the perfect name for America's first eminent domain manufacturing concern, one being created by arbitrary government actions that jettison law when it is inconvenient for policy goals and political coalitions. As The Economist says, "In effect Chrysler and the government have overridden the legal pecking order to put workers' health-care benefits above more senior creditors' claims, and then successfully argued in court that the alternative would be so much worse for creditors that it cannot be seriously considered. . . . The collapse of Detroit's giants is a tragedy, affecting tens of thousands of current and former workers. But the best way to offer them support is directly, not by gerrymandering the rules. The investors in these firms are easily portrayed as vultures, but many are entrusted with the savings of ordinary people, and in any case all have a legal claim that entitles them to due process. In a crisis it is easy to put politics first, but if lenders fear their rights will be abused, other firms will find it more expensive to borrow, especially if they have unionized workforces that are seen to be friendly with the government. It may be too late for Chrysler's secured creditors and if GM's lenders cannot reach a voluntary agreement, they may face a similar fate. That would establish a terrible precedent. Bankruptcy exists to sort legal claims on assets. If it becomes a tool of social policy, who will then lend to struggling firms in which the government has a political interest?"

Thankfully, refusing to buy any new Chryslers means that you will be depriving yourself of the chance to ride the next iteration of the worst cars on the road, at least on those intermittent occasions when they can be coaxed out of the garage and on to the road. Consumer Reports does not recommend a single vehicle manufactured by any Chrysler brand. A company so fouled up that it could not be salvaged by Mercedes-Benz is not likely to be transformed by the combined expertise of Fiat, union officials and government experts.

The sooner Chrysler by Fiat is driven into a bankruptcy from which it cannot be bailed out, the sooner will we repudiate the lousy products and lawless processes of thugocratic capitalism.