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Thursday, September 20, 2012

Setting the Record Straight

The Democrat, liberal, media narrative in regard to the financial crisis goes something like this.  The Republicans recklessly let the financial institutions run without oversight or regulations and that brought on the financial crisis.  The only trouble with this narrative is that it is 180 degrees opposite of the truth.  The same folks have a narrative in regard to foreign policy that is equally false.  It runs like this:  As a neo-colonist nation, the United States of America raped and plundered the natural resources of foreign nations and unfairly got prosperous on the back of the poor and underprivileged.  The real story is set forth below…

Economic Crisis

1977—The roots of the economic crisis go back to President Jimmy Carter.  His administration proposed and a strong Democratic majority in Congress passed the Community Reinvestment Act (CRA) whose stated goal was to increase home ownership among the poor.  The premise (now proven false) was that the poor could not get loans to purchase homes from marketplace governed institutions—banks, Savings & Loans, Credit Unions, etc.  The liberal narrative was that these institutions were unfairly denying loans to people because of racism.  Later studies proved this to be untrue, but the stigma of racism was feared to be so damaging that many of these banking institutions went along with the scheme.  The fact is that anyone in business or any lending institution only looks at the soundness of the investment.  There is only one color they are interested in—green.  But liberals, who have no understanding of or faith in the free market, decided that government should intervene.  Initially, the act was not strong enough to compel lending institutions to make loans to individuals who had no capacity to repay such loans.

1999—Bill Clinton muscled up the CRA and bragged about it.  He pressured Fannie Mae to lower "the credit requirements on loans that it will purchase from banks and other lenders.With this step, President Clinton laid the foundation of the financial crisis.  It did not go unnoticed.  The New York Times warned…

"In moving, even tentatively, into this new area of [subprime] lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

With this one step, Bill Clinton put all risk directly on the backs of the American taxpayer.  Fannie Mae was created in 1938 under the Roosevelt Administration and Freddie Mac was started in 1970 under the Nixon Administration.  Both were created under the false premise that the marketplace is not fair and therefore government intervention is necessary.  Of course, the exact opposite is true.  All government intervention into the marketplace distorts and corrupts the economic process.  Government created financial entities are financially unsustainable and subject to exploitation by politicians and bureaucrats who do not answer to the financial realities of the marketplace, but only to other bureaucrats and politicians.

2000—George W. Bush was elected president and although he was a profligate spender in the vein of Nelson Rockefeller, he officially advised Congress on three separate occasions that Fannie Mae and Freddie Mac were on the verge of a financial implosion.  However, when his White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Congressman Barney Frank asserted that the administration was more concerned about financial safety than about housing.

2003—the Republicans in Congress introduced legislation to rein in Fannie Mae and Freddie Mac.  Had this legislation passed it is likely the financial crisis could have been avoided, but when this bill was introduced it ran into a Democrat opposition.  Democrats like Barney Frank and Senator Chris Dodd totally dismissed the idea that there could be any problems whatsoever with the financial stability of Fannie Mae and Freddie Mac.

Ranking Democrat on the Financial Services Committee, Barney Frank responded…

"I want to begin by saying …I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis.  I do not think at this point [think] there is a problem with a threat to the Treasury…"

"The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see.  I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios.  And even if there were a problem, the Federal Government doesn't bail them out.  But the more pressure there is there, then the less I think we see in terms of affordable housing."

What Representative Frank did not say was that he and other members of Congress were getting campaign money, financial benefits for themselves, jobs for friends, and other perks.  The chief offender was Freddie Mac as is clearly documented in the New York Times bestselling book, Reckless Endangerment, written by Gretchen Morgenson and Joshua Rosner.  Morgenson, a Pulitzer Prize winning writer and a financial columnist at the New York Times, and Rosner, a recognized expert on housing finance, detail the political and financial corruption at Freddie Mac that led to the financial collapse of that institution.  No one should be surprised at the corruption at Freddie Mac—corruption, bribery, pay-to-play are inherent in government institutions that are out of the public view and that do not have to answer to the demands of competition in the free market.

As Freddie Mac encouraged lending institutions to make loans to individuals that were not justified on the basis of normal risk evaluation.  The executives at Freddie Mac and at the lending institutions made millions of dollars until the financial bubble burst.  There was no shortage of greed on either side of the bargain.  Without Fannie Mae and Freddie Mac and the Community Reinvestment Act, and irresponsible politicians like Barney Frank, the financial crisis would never have happened.  No lending institution is going to make loans to individuals or companies which have a doubtful ability to repay such a loan.  When your money is on the line, you are careful in lending it out.  It is only when government intervenes and guarantees repayment that such foolish and dangerous loans are made.

It is not the free market that was responsible for the financial meltdown, it was government intervention into the marketplace knowingly guaranteeing bad loans that pushed the United States of America to the brink of financial collapse.  The solution is not Dodd-Frank legislation that gives the Government more control over lending institutions.  The solution is to get government out of the marketplace so that such disastrous financial decisions and fraud cannot exist in the first place.

Foreign Policy

Today the Middle East is blowing up before our eyes.  An American Ambassador has been killed, US property has been destroyed, and radical Islam has successfully taken over once stable governments.  President Obama said the problem with Arabic anger toward the US was caused by George Bush.  Perhaps he remembered the words of his pastor, Jeremiah Wright, who said of the 9-11 attack, "America's chickens have come home to roost."  It was America's fault, not the fault of bad people in the world.

On June 4, 2009, President Obama traveled to Cairo, Egypt and apologized to the Arab world for the actions of the United States.  He said…

"We meet at a time of tension between the United States and Muslims around the world – tension rooted in historical forces that go beyond any current policy debate.  The relationship between Islam and the West includes centuries of co-existence and cooperation, but also conflict and religious wars.  More recently, tension has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were too often treated as proxies without regard to their own aspirations.  Moreover, the sweeping change brought by modernity and globalization led many Muslims to view the West as hostile to the traditions of Islam."

In Cairo our President set forth a policy of weakness and appeasement that strengthened the hand of the radicals.  He condemns and apologizes for minor American excesses, while ignoring the violence and hatred that causes an American Ambassador to be killed.  When pro freedom demonstrators pushed hard for freedom in Iran, risking their lives, our President was silent, saying not a word for fear that he would offend Iranian dictator Mahmoud Ahmadinejad.  In Russia he "hit the reset button," reducing our nuclear force from 1,500 to 350, and promising that he will do more after being re-elected.  He denied Poland anti-missile missiles for fear of offending Russian dictator Vladimir Putin.  He set forth a date for leaving Afghanistan without setting forth any objectives to be met prior to leaving.  His foreign policy is based on weakness, vacillation, apology and appeasement.

The reason the Middle East is in a state of conflict today is not because of some movie, it is because the radicals there have gotten Obama's message—we will do nothing, the field is yours, do whatever you want.  Weakness, vacillation and appeasement always lead to one thing—war.  When Britain did not stand up to Hitler, but instead made a deal to give away Poland, Prime Minister Neville Chamberlain promised "Peace in our time."  What was actually inevitable was war in our time, a war that killed millions of people, both combatants and noncombatants. 

But Obama did not originate the crisis in the Middle East, his ideological twin, President Jimmy Carter deserves that distinction.  Before Jimmy Carter, America had a strong ally in the Middle East besides Israel—it was Iran.  The government of the Shah of Iran was powered by military might supplied by the US.  Iran was stable and powerful, but no one would argue that Iran was free.  The reality is that Islam is both a religion and a form of government.  It is a theocracy and a theocratic form of government that is incompatible with democracy.  They can never coexist.  That's why from America's point of view the best we can hope for in the Middle East is a government that is friendly to the United States.  There will be no free and prosperous governments friendly to the US as long as the citizens are committed to a theocracy.  Only a secular government can have some form of limited freedom.  The idea of nation building pursued by President Bush, though commendable, is a fool's errand in the Middle East.  As long as the vast majority of the population are committed to theocracy, there is no room for freedom.  When Jimmy Carter withdrew his support for the Shah, that nation collapsed and the entire Middle East was destabilized.  The result is what we see today, encouraged and exacerbated by the feckless policies of the Obama Administration.

And while we are at it, let's not leave out what President Carter's policies did to Latin America.  In Nicaragua, Jimmy Carter set his sights on deposing strong man Anastasio Somoza, a strong American ally.  President Carter not only succeeded in getting rid of Somoza, he also succeeded in destabilizing the entire region and making it possible for Communist dictator Daniel Ortega to come to power.  In both the Middle East and in South America unrealistic, soft-headed and weak policies traded a pro American strongman for an anti-American dictator.

President Obama has eagerly pursued those policies, seeing the United States as the problem, not dictators like Hugo Chavez, who he addressed as "mi amigo."  If given four more years, there is no doubt that his encouragement of dictatorships in Latin America will only make the situation worse for the US.


The Carter to Obama record is clear on both economic and foreign policy.  It has been a dismal and dangerous failure.  Through misguided government intervention into the free market, the Democrats caused the current financial crisis.  And through apology, appeasement and weakness, the world has been made a much more dangerous place by President Obama.  Standing firmly on the shoulder of another failed President, Jimmy Carter, and pursuing similarly failed policies, the Democrats have led the nation into an economic morass and have endangered the national security of the United States.

Tuesday, September 11, 2012

The 2012 Election: A Conflict of Two World Views

The 2012 election isn't just another presidential election.  Of course, people have said that about nearly every presidential election, but this time that assertion is totally true.  For many years the two major political parties—Republicans and Democrats—have had contrasting views in regard to the size and power of government, spending, taxes and other issues.  However, never before has either one of the two parties rejected the Founder's view that a limited, Constitutional government is necessary to maintaining freedom and to avoiding a decline into an autocratic state. 

Yes, beginning with Woodrow Wilson and continuing on with Franklin Roosevelt and Lyndon Johnson, a greater emphasis was placed on government involvement into the lives of American citizens, but never before has a major political party endorsed policies, values, morals, and ideas that undermine the foundation of American society. 

How exactly does today's Democratic Party reject the principles enumerated by our Founders?  Consider these comparisons…

Founders Principles

2012 Democratic Party Principles

Limited Government.  The Founders understood the fallen state of man, his inability to resist seeking power over others.  That was why they created a federal government with very limited powers and had expressly enumerated powers.  George Washington summed up the Founder's view when he said, "Government is not reason, it is not eloquence, it is force. Like fire it is a dangerous servant and a fearsome master."


Limited Government.  Today's Democratic Party rejects the idea that all men live in a fallen state.  They believe that there are men and women who have "progressed" to a higher state of ethics and are thus capable of ruling over others to their benefit.  They see no problem or danger in unlimited, all-powerful government, providing they are the ones in charge.

The US Constitution.  The Founders worked hard to limit the powers of the Federal government as they drafted the United States Constitution.  They intentionally left the vast amount of powers to the states and to the people, knowing that it was the states that created the federal government, not the federal government that created the states.  Even with all that effort, the Founders were worried about the ability of corrupt men to compromise their efforts to limit the power of government in the Constitution.  That's why Benjamin Franklin responded to a question about what type of government they had created this way, "A republic if you can keep it.

The US Constitution.  The Democrats have intentionally and successfully eroded the idea of limited government.  With the passage of Obamacare they have severed any limitations which the Constitution placed on the actions of government.  During a radio interview as a candidate, Barack Obama said, "…the Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society.  …[the Warren Court] didn't break free from the essential constraints that were placed by the founding fathers in the Constitution, …that generally the Constitution is a charter of negative liberties. Says what the states can't do to you. Says what the Federal government can't do to you, but doesn't say what the Federal government…must do on your behalf."  Obama went on to call that restraint a tragedy.


A Government of Laws.  The Founders' belief in a government of laws can be traced back to the protection as Englishmen they received from the Magna Carta.  It was in the Magna Carta that the King agreed that the law was superior and above any monarch.  The Founders believed strongly in a government of laws that were to be superior to the whims and actions of men and women in power.  They knew that a government of men (and women) always leads to tyranny.  But a government in which men are constrained by laws preserves freedom.


A Government of Laws.  Democrats now believe in a government of men, not a government of law.  They believe that whoever is in power has the right to do whatever they want to achieve their ends.  That's why Speaker Nancy Pelosi responded with such vehemence to a question asking if the Obamacare insurance mandate was constitutional.  She responded, "Are you serious?  Are you serious?  That's not a serious question.  That's not a serious question."  According to the Democrats, laws, even the Constitution cannot get in the way of government power.


America is Exceptional.  Those who founded America, from John Winthrop to George Washington, understood that America was a special place blessed by God.  Its prosperity and freedom were not an accident, but an act of Providence, a blessing from God.  Since the founding of our nation, every schoolboy and every schoolgirl was taught that America was a unique place, a unique nation in history.  They learned and believed that there had never been a nation before or since that cherished freedom and justice as much as the United States of America.  It was not perfect, but it was exceptional.

America is Exceptional.  Not only President Obama, but a consensus of the Democratic Party leadership rejects the idea that America is an exceptional nation in the annals of history.  They reject the idea that God has blessed America and indeed, as their 2012 party platform presented to their convention delegates shows, they want nothing to do with God or even to mention God.  To the Democrats, America is just another nation, no better or worse than any other nation.  Or, as President Obama put it, "I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism."  In other words, in President Obama's view, the United States of America is just another nation, no better and no worse.


America's Goodness, Generosity and Compassion.  The Founders knew that America's greatness was inextricably tied to America's goodness.  The Founders were generous and yet today, Americans are exceedingly generous, freely donating more than $300 billion per year to charity.  America has always been the first to help in time of need.  Voluntarily, without coercion, Americans have given generously as no other people on earth have given to help others.  Since the beginning, Americans have proven themselves to be the most generous people in the history of the world and they still are today.


America's Goodness, Generosity and Compassion.  Democrats do not see America as good, generous or compassionate.Democrats do not define compassion or generosity as individuals giving voluntarily to help others.  They define compassion as raising taxes on others and then having the government give the money away (with strings attached) to fix some real or imagined need.   Of course such compassion always comes at the cost of individual freedom as the scope and power of government grows.  The reality is that Democrats believe Americans are the most stingy and uncompassionate people in the world. 


America is Accepting and Tolerant.  The Founders understood the fallen state of man, but also realized that man could do great things when exercising the self-restraint that comes from acknowledging there is a God who rules over all.  America has been affected by many ills including slavery, but after many years of striving, all government condoned slavery and discrimination has been eliminated.  Today, the United States serves as an example of being the most tolerant and accepting nation in the world regardless of origin, sex, nationality or race.  In no other nation in the world can a man or woman from any station in life, of any color or creed, become the President of their country.


America is Accepting and Tolerant.  Democrats reject that idea completely.  The very idea of the USA as a tolerant nation makes them angry.  They see America as a totally flawed nation, founded on flawed principles that have enabled our nation to flourish by impoverishing other nations and oppressing minorities in our own land.  They see America as incurably corrupt and evil.  They see no way to make our nation better than to tear it down and start all over again.  That's why President Obama went on a world apology tour, apologizing for our success and power and bowing to dictators.  He even called Venezuelan dictator, Hugo Chavez, "mi amigo."

America is the Land of Opportunity.  From William Bradford to John Winthrop to George Washington to Booker T. Washington, traditional American leaders have always seen America as the land of opportunity.  Since our founding, men and women of meager means have climbed the ladder of opportunity and achieved success regardless of their background.  The Founders rejected the idea that any American is entitled to special privileges or to government ensuring a higher standard of living.  They wanted government to stay out of the way of free citizens who were to be left to succeed or stumble according to their efforts, their initiative, their risk taking, and the blessings of God.


America is the Land of Opportunity.  Today's Democratic Party believes that America has never been or ever will be the land of opportunity.  They think the game is rigged, providing opportunity to only a privileged few.  President Obama has advocated the redistribution of wealth by the force and power of government.  The entire Democratic leadership sees people as groups, not as individuals.  They intentionally pit one group against another for political gain—men vs. women, young vs. old, rich vs. poor, employees vs. employers, black vs. white, etc.  They see each American as in one camp or another, either they are among the oppressors or they are among the oppressed.


America is a Beacon of Freedom to the World.  This was the view of America's Founders.  From all over the world, men and women and their families came to America to pursue the American dream of freedom and the opportunity to succeed or fail as they were blessed by God.  Even today there is a clamor to get to America just to experience freedom.  The Founders saw America as a beacon of freedom to the world, and people all over the world hearkened to that beacon.


America is a Beacon of Freedom to the World.  Democrats believe just the opposite is true.  They ignore the stream of people trying to get to America and only see the flaws and imperfections of America.  They detest what America stands for.  Many believe that the United States of America is the source of all problems in the world and if they can only take America down a notch, peace and harmony in the world would thrive. 


America is Just.  The Founders sought to not only create a free nation, but a just nation where every citizen had equal access to justice under the law.  As long as slavery was in existence those protections were denied to all Americans, but today their dream of equal justice under the law is as close to reality as human institutions are capable of.  No other nation prior to the United States of America attempted to make every citizen equal under the law and to an amazing degree that goal has been reached.


America is Just.  The opposite is true according to the Democrats.  They believe America was built on injustice and oppression and it still exists today on that basis.  They have no faith in the law and they believe in retribution, rather than equal justice under the law.  The irony is that they themselves do not seek justice, but rather revenge.  That's why the Civil Rights Division of the US Department of Justice under Attorney General Eric Holder is so unbalanced in their treatment of different citizens under the law.  They believe the system is rigged against minorities and the poor.


Freedom Works.  The Founders strongly believed in freedom.  They didn't see freedom as a guarantee of happiness or success, but the right of every American to seek success and to pursue happiness.  This is what they fought and died for.  This is why they risked everything they had to secure freedom for themselves and for all generations to come.  Pilgrim leader, William Bradford, found out that freedom works and socialism does not.  It was not until he abandoned socialism (during which time they suffered through two years of starvation) and instituted what we now know as free enterprise that the Pilgrims at Plymouth Rock prospered.


Freedom Works.  The platform of the Democrat Party makes it clear that they do not believe this.  They believe that government works and that freedom fails.  They believe in a powerful, centralized government that takes care of people from cradle to grave.  They see economics as a zero sum game.  Every dollar you earn is a dollar someone else did not earn.  They do not believe in the marketplace as the fairest and most productive way of distributing goods and services.  That's why President Obama scolded businessmen by saying, ""if you've got a business, you didn't build that."  They believe in government, not in freedom or free enterprise.


Religious Freedom.  By and large, the Founders were religious men.  Nearly half of the signers of the Declaration of Independence had formal seminary training.  That's why the First Amendment of the Bill of Rights protected freedom of religion.  They were well aware that many of the first colonists came to America to escape persecution by the state for practicing their faith in God as they saw fit.  The first phrase of the First Amendment says, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…"  There was one purpose for this Amendment, to protect religious freedom from encroachment and persecution by government, not to protect government from religion.


Religious Freedom.  Democrats have no problem with religion as long as it is quiet and does not affect public policy.  From their perspective, religion has no place in the public square.  They find the religiousness of the Founders embarrassing.  They don't like the references to God in the Declaration of Independence, nor do they like the fact that the Treaty of Paris that concluded hostilities between England and the United States begins, "In the name of the most holy and triune God…"  If left to their desires they would outlaw prayer, even silent prayer, in public.  That's why President Obama is using the power of government to force Christian hospitals and other religious organizations and individuals to pay for abortions under Obamacare.  Religious freedom is clearly of no importance to the Democratic Party of today.


Free Speech.  The Founders placed their protection of free speech immediately behind the right to practice freedom of religion in the first amendment of the Constitution.  They knew that freedom cannot exist without either freedom of religion or freedom of speech.  They understood that when government begins to censor free speech it crosses the line to a dictatorship.  As messy as it is, the Founders would have never tolerated campaign finance laws that suppress the freedom of speech of those out of office, but provide protection to those in office.  They understood that any encroachment on freedom of speech was a walk down a dangerous road.


Free Speech.  For years Democrats championed free speech, but that is no longer true.  Political correctness has replaced free speech.  Government now decides what is hate speech and what is not.  Groups like Focus on the Family are now labeled "hate groups" by those closely allied with the Democratic Party.  The Democrats no longer believe in free speech, they believe in free speech only for themselves.  One of their goals is to take talk radio off the air because they cannot control it.  Democrats also hate the freedom of speech that is embodied in the Citizens United decision of the Supreme Court.  The more they can control free speech, the more powerful they will be.


The Right to Keep and Bear Arms.  The Founders understood that the last resort of free men is the cartridge box.  They knew that free men and women owning firearms would always serve as a deterrent to the creation of a dictatorship.  They knew that if free men no longer have the right to own and use firearms then only the state and criminals will have firearms and that neither can be trusted.


The Right to Keep and Bear Arms.  The Democrats believe that the right of an individual to own firearms does not exist.  Obama was a member of a group whose primary purpose was to outlaw the private ownership of firearms.  Many people believe that the White House originated "Operation Fast and Furious" and that it had one purpose, to curtail the right to purchase firearms.  The President admitted as much when asked if he was doing anything to enact gun control and answered, "Yes, but under the radar."


Self-Reliance.  The Founders understood that government can't guarantee anything.  They put their reliance in God and they expected every citizen to take advantage of their freedom and take care of their families and themselves.  They didn't believe in government doing anything for its citizens other than to stay out of their way.  This approach led to unprecedented prosperity and economic advancement.  As a result, the prosperity of the United States of America became the envy of the world.


Self-Reliance.  While the Democrats gave lip service to self-reliance, their policies and platform tell a different story.  They want to take care of every American because they don't believe people are smart enough or wise enough to take care of themselves.  Every problem or make believe problem calls for a new government program that further reduces individual freedom and gives the ruling politicians and bureaucrats more power over our lives. 


Traditional Values.  The Founders were men of strong moral character.  They never believed that the ends justified the means and they never condoned immorality of any kind.  They would be shocked that America is willing to kill babies in the womb just because they are inconvenient.  They would never condone foul language or adultery.The Founders were men of good character and strong moral principles.  It's not that they did not fail from time to time, but they never advocated or accepted immoral behavior.


Traditional Values.  Today's Democrats reject the entire idea of traditional moral values.  In their view, the rights of a woman are more important than the life or rights of an unborn baby.  They see no problem with adultery or with homosexuality.  They reject traditional moral values entirely, relying on their own wisdom, and rejecting that of God.

The table shown above provides a clear picture of the difference between today's Democratic Party and the values and views of America's Founders, from John Winthrop to George Washington.  In essence, today's Democratic Party leadership rejects the entire idea of America as envisioned by our Founders.  Their philosophy of government, of morals, or freedom is the antithesis of the beliefs of our Founders.

Take a look.  Decide for yourself whose side you agree with.  Do you agree with the Democrats that the United States of America must be torn down and rebuilt from scratch?  Do you believe it must be replaced with an all-powerful centralized government that governs every aspect of our lives?  If you believe in socialism and an all-powerful government that keeps every citizen in the same state of misery, then you should vote for the re-election of President Barack Obama on November 6th.  If, on the other hand, you are in agreement with the vision of our Founders, then it's your job to not only vote on November 6th, but to show others the difference between the Founder's vision and the Democrat's vision of America before election day.  This will truly be an election day like no other.

Thursday, September 6, 2012


When I grew up, Detroit meant one thing—Automobiles.  People didn't talk about the automobile industry—they just said Detroit and everyone knew they were talking about the car business.  Incorporated in 1806, Detroit quickly grew into a large, important American city, but it was automobiles that put Detroit on the world map.  And really, it was one man who made that happen, Henry Ford.  Ford didn't invent the automobile or the internal combustion engine, in fact he didn't start building automobiles until 1899.  But the most important thing Henry Ford did was to put America on wheels.  At one point in time there were more than 400 different automobiles companies in the United States.  Each one essentially building custom built automobiles.  Every one of these automobiles was outside the financial reach of the average American, but every American wanted to own an automobile.  It was Henry Ford that brought the price of an automobile within the reach of the average American by inventing mass production.  By making each part identical, limiting choices and establishing the world's first assembly line, Henry Ford eventually brought the price of a Model T down to just $134!  Fifteen million Model T Fords were built between 1908 and 1927, making it by far the best-selling car in the world.  Sturdy, reliable and priced so that everyone could afford one, the Model T literally put the world on wheels.  And as one Associate Justice of the US Supreme Court said, "Henry Ford gave Americans more freedom than any of our founders."  Indeed, Americans now began driving everywhere, moving everywhere and spreading out all across the land. 

Others, including a company called General Motors, emulated the mass production techniques of Ford and began building automobiles in Detroit.   They were joined by the Chrysler Corporation, American Motors and others.  Detroit as motor city to the world became a reality.  But it wasn't just cheap, reliable cars that Henry Ford built; he also created the first 10 hour work day (all work days were 12 hours prior to that).  He also created the first six day work week and he was the first to pay $5 dollars a day to his workers.  Ford, a man of humble beginnings, considered himself to be a man of the people and he wanted to make cars people could afford and pay wages that allowed the working man to live a economically secure life.  He succeeded beyond his wildest expectations.

Before and immediately after World War II Detroit bustled with drive and energy.  It was the capital of the automobile industry and in many ways the world capital of manufacturing.  When I first attended Missouri School of Mines and Metallurgy in 1963 I had the pleasure of attending a weekly lecture by Professor Emeritus Vernon Kilpatrick.  Professor Kilpatrick was already well past the age of retirement, but was still a brilliant engineer and an incredible machinist.  In one of his lectures he told us that he had been with Henry Ford the day the first Model T slid down the greased iron rail.  I was astounded.  I have always looked up to the builders and creators and inventors of society, the people that made things that in turn made the lives of Americans easier and better.  Edison, Ford, Firestone and the Wright Brothers were the Steve Jobs and Bill Gates of the first part of the 20th Century.  They invented and created and dreamed and designed things that no one else had done before. Together they made the life of the average American better.  It was these and other men who improved the lot of the average American, not some politician in Washington, DC.  The folks in Washington did not build anything or create anything or design anything or invent anything, they just got in the way of those who did.  They still do it today.

The Edisons and Fords and Jobs and Gates of the world succeeded because they had great, innovative minds, but most importantly they succeed because they served others better than they have ever been served before.  They became rich, but becoming rich was never their goal in life or the driving force in their life.  Each one of them was simply enamored of the idea of creating something better and different than anyone in the entire world had ever built before.  They wanted to build something that everyone would want to have.  They all liked the idea of helping others by creating and building products that would benefit the buyer.  These were and are great Americans.  They are the embodiment of the American dream and they provide empirical evidence that the American system of free markets and free enterprise works to the benefit of all Americans.

But in Detroit something happened that imperiled its prosperity.  Perhaps, in the very beginning, it was a good thing.  It was the development of unions that were created to defend the rights of workers and to bargain for fair and honest wages.  The wonderful relationship that existed between Henry Ford and those who worked for him vanished.  By adapting laws that forced all workers to join a union as a condition of employment with Ford and the other automobile manufacturers, government created a labor monopoly that artificially drove up the cost of labor.  Monopolies are always bad for the consumer and all monopolies originate with government.  The beginning of a labor monopoly by the United Auto Workers union, led by far left radicals Walter and Victor Ruther, was the beginning of the end of Detroit as the automobile capitol of the world.  After World War II the marketplace expanded beyond the United States to the entire world.  That change doomed manufacturers subjected to labor monopolies.  The world marketplace cannot be ruled by or controlled by one country and certainly not by one union.  Detroit now had to compete with Germany and Japan and it could not.

It wasn't just a problem with mediocrity, which Detroit certainly had.  The problem was much, much greater than that.  In fact mediocrity was simply a symptom of the labor monopoly that jeopardized the entire American automobile industry.  Without competition quality suffers.  Monopolies, labor or business, can never compete in a fair and open marketplace.  They will always collapse unless bailed out by government, thus perpetuating mediocrity and non-competitiveness.  Monopolies diminish drive and innovation, encourage complacency, and hinder growth and profitability.  Government bail outs only delay the inevitable—financial insolvency.  On August 15, 2012 Forbes ran a headline with this warning, General Motors is Headed for Bankruptcy—Again.  The story that followed summed up the situation with this line, "The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market."  If you are surprised, you shouldn't be.  Not only is GM going bankrupt, but you as a tax payer are going to take another financial bath.  Only monopolies try to force non-market products like the Chevy Volt and the East German Trabant on the public.

Ford, that declined to take a government handout and resisted a government takeover, has increased market share, but Ford is not out of the woods.  The union labor monopoly is still forcing Ford to spend nearly twice as much for labor as companies like Toyota that have manufacturing plants in Japan and in Southern states that ban labor monopolies.  The fact is, Detroit is paying far above the sustainable market rate for labor.  Business monopolies hate it when they have to compete in an open marketplace.  It forces them to be lean and efficient business machines, instead of fat and sloppy operations.  Similarly, Detroit can't compete paying monopolistic wages when other manufacturers are paying true marketplace wages.  And by the way, the artificially high wages paid to workers who are part of a labor monopoly simply lower the standard of living of all Americans.  Those who are a part of the labor monopoly profit while those buying the products they produce pay more than the item should cost.

Detroit is headed downhill.  It will not recover unless the union monopoly on labor rates is ended.  That is not going to happen.  In fact the Detroit labor unions have decided to accelerate their demise.  This fall, Michigan voters will have an opportunity to vote for or against a union backed bill that makes labor monopolies a permanent part of the Michigan State Constitution.  Michigan, a once incredibly prosperous state, was on the verge of bankruptcy prior to the election of the current governor, Rick Snyder.  But instead of raising taxes like California and Illinois, making the situation worse, Snyder cut state spending, cut waste, and made a sensible change from defined benefit retirement plans for state workers to a defined contribution plan.  He even required those state workers to make some contribution to their own retirement.  Of course, this is what those in private business have gone to years ago and it has worked wonderfully for both companies and for the workers.  What does this have to do with automobile workers?

Just this—the new constitutional amendment put on the ballot by the unions, outlaws any law, past or future that would "abridge, impair or limit" collective bargaining.  This law would not only throw out the sensible and fair change made by the Michigan legislature to a defined contribution plan, it would institutionalize every labor monopoly in the state of Michigan.  It is the absolute death knell for the once great industrial giant of Detroit.

Population hasn't just been declining in Detroit, it has been plummeting.  As USA Today put it in March of 2011, "Detroit's population plunged 25% in the past decade to 713,777, the lowest count since 1910, four years before Henry Ford offered $5 a day to autoworkers, sparking a boom that quadrupled the Motor City's size in the first half of the 20th century."  The article goes on, "Fueled by the implosion of the domestic auto industry, the Motor City's 237,493-resident decline helped make Michigan the only state to experience a net population loss since 2000.  Overall, the state's population fell by about 54,000, a 0.6% decline at a time when the nation's population grew about 9.7%.  Michigan's population in the decade peaked in 2006 and has been declining since, according to Census figures."

Detroit is not just declining, it is dying.  It is an unnecessary death brought on by the union labor monopoly itself.  And now that monopoly seeks to hasten the demise of this once great city by institutionalizing the union labor monopoly.  Much unnecessary hardship has been brought on by the labor union bosses.  Working hand in hand with the government, labor unions have destroyed jobs by driving manufacturing overseas and down South.  Instead of dealing with reality and allowing workers the right to decide if they want to join a union or not, the union bosses are doubling down.  Their first answer was to get the federal government to force manufactures in every state to accept compulsory unionism.  Thankfully that effort failed.  Of course, all that would have done is to drive up the price of all products, and it would have accelerated the exodus of all manufacturing overseas.  Unions would then have insisted on high tariffs to maintain their union monopoly.  And high tariffs, like Smoot Hawley, would turn the current recession into another great depression.

Detroit is finished.  It's over.  Even Ford cannot survive forever.  It will either move South or it will become a memory like many other automobile companies of the past.  If the new constitutional amendment in Michigan passes, the process will only speed up Detroit's demise.  Free markets always prevail, even when they are called black markets.  Government controlled markets always fail.  There are no exceptions.  Monopolies bred and spread by government, whether of labor or of business, lose their competitive edge.  Only those companies who are forced to compete in a fair and open marketplace deliver the best products at the best prices to the benefit of the consumer, the seller, and those that are employed by the seller.  Until Americans and politicians in particular, understand this truism, the United States will not regain its stature as the economic leader of the world.