Fiatch

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The proliferation of czars across the federal government symbolizes the fatal conceit that has taken hold.

Katherine Mangu-Ward writes in “The Lure of the Czars:”

President Barack Obama is taking the practice of naming czars to new heights. As Foreign Policy points out, with the selection of “border czar” Alan Bersin, the Obama administration surpassed the Romanovs in its production of czars. It took those old Russkies 300 years to produce 18 czars. It took Obama less than 100 days.

The czar is a perfect techocratic role—appealing to Obama, who has been much praised for “surrounding himself with smart people.” The appeal of the czar rests on the belief that if we could just figure out the right smart, competent, well-intentioned person to put charge, everything would go more smoothly.

Would you believe we now have a TARP Czar, a Stimulus Czar, and a Car Czar?  We do.

This czarist approach is both conceited and futile.  It will necessarily underperform markets.  Free enterprise simply, clearly does a better job.

It is amazing that our officials idolize the czar position.  It is even more startling that American citizens tolerate such arrogant, expensive folly.

Of course, it must feel intoxicating to become a czar.  Note the full title of Russian sovereign rulers:

“…according to the article 59 of the Russian Constitution of April 23, 1906, ‘the full title of His Imperial Majesty is as follows: We, ——— by the grace of God, Emperor and Autocrat of all the Russias, of Moscow, Kiev, Vladimir, Novgorod, Tsar of Kazan, Tsar of Astrakhan, Tsar of Poland, Tsar of Siberia, Tsar of Tauric Chersonesos, Tsar of Georgia, Lord of Pskov, and Grand Duke of Smolensk, Lithuania, Volhynia, Podolia, and Finland, Prince of Estonia, Livonia, Courland and Semigalia, Samogitia, Belostok, Karelia, Tver, Yugra, Perm, Vyatka, Bulgaria and other territories; Lord and Grand Duke of Nizhni Novgorod, Sovereign of Chernigov, Ryazan, Polotsk, Rostov, Yaroslavl, Beloozero, Udoria, Obdoria, Kondia, Vitebsk, Mstislavl, and all northern territories; Sovereign of Iveria, Kartalinia, and the Kabardinian lands and Armenian territories - hereditary Lord and Ruler of the Circassians and Mountain Princes and others; Lord of Turkestan, Heir of Norway, Duke of Schleswig-Holstein, Stormarn, Dithmarschen, Oldenburg, and so forth, and so forth, and so forth.’”

Now read about US Auto Czar Ron Bloom who:

according to his not being embroiled in a state-pension-kickback scandal like his predecessor and despite his union ties; by the grace of President Obama, Regulator and Technocrat of all the Automakers, of General Motors, Buick, Cadillac, Chevrolet, Tsar of Chrysler, Tsar of Dodge, Tsar of Jeep, Tsar of Ford, Tsar of Pontiac, Tsar of Hummer, Lord of GMC, and Grand Duke of Autoparts Makers Visteon, Delphi, Williams Controls, AutoZone, and PepBoys, Prince of CarMax, Penske, AutoNation and Advance Auto Parts, US Auto Parts, O’Reilly, Pick-Ups Plus, and other Auto-Parts Retailers; Lord and Grand Duke of Genuine Parts Company, Sovereign of LKQ Corporation, The Coast Distribution System, and All Wholesale Auto-Parts Distributors; Sovereign of Conrad Industries, Harley-Davidson, and the Michigan lands and union territories - Heir of Hoffa, Duke of Washington, D.C., Ohio, Indiana, and so forth, and so forth, and so forth.

It is also worth noting that the Obama administration placed a 31-year-old Yale Law School student with no auto industry experience in charge of restructuring GM.  Reportedly, he is a very smart guy.

These arrogant officials should get over themselves and get out of the way.  Entrepreneurship is hope and change that yields an open tomorrow.  Centralized power is an old, sad, terrible road that leads to a dead end.

And so, forth.

[image source]

Reality is the ultimate intervention:

• USA: Bloomberg reports that “The U.S. Treasury is considering taking stakes in insurers, as it prepares a new round of capital injections to target regional banks and other financial companies.  The Treasury, which had planned to announce investments in about 20 banks, reversed course and will let firms disclose their own share sales in coming days, the person said…
  
  “Some life insurers have asked the government to make the participation of life companies mandatory because firms don’t want to identify themselves as needing funds, the person said…
  
  “AIG may need more than the $122.8 billion available, Chief Executive Officer Edward Liddy said Oct. 22 on PBS’s “The NewsHour With Jim Lehrer.”

• France: Bloomberg reports that “Since the era of Charles de Gaulle, France has rebelled against the American-style capitalism that put a ‘Made in U.S.A.’ stamp on the world economy.  Now, as convulsions on Wall Street shake the global financial system, French President Nicolas Sarkozy is seizing the opportunity to remake the free-enterprise model along more state-managed Gaullist lines.  Emboldened by the U.S. pursuit of a European-style bailout, Sarkozy has packed his wish list for an upcoming international summit with calls for everything from stiffer bank supervision and limits on executive pay to state aid for hand-picked industries.”
  
  “Official French antagonism to global speculative capitalism is sometimes difficult to disentangle from a standoffish attitude toward the U.S., the country that invented it. De Gaulle spent a decade chafing at the dollar-based post- World War II monetary system, complaining in 1965 that it gave American businesses an unfair edge by allowing them “to take out foreign debt at no cost.”
  
  “While tipping his hat to a ‘capitalism of entrepreneurs,’ Sarkozy reads from a similar script, with a preference for more state intervention in the economy, a weaker euro, greater political influence over the European Central Bank and greater freedom to subsidize industries.  The French model has failed to deliver growth that keeps up with its European peers… Sarkozy is promoting ‘a French statist approach toward society,’ says Charles Calomiris, a Columbia University professor in New York who was on a U.S. congressional commission that studied the global financial system in 2000. The result would be an ‘extremely damaging Frenchification’ of the world economy.

• Pakistan: Business Week reports that “This is what it feels like when a country faces bankruptcy. The electricity goes out for as much as 12 hours a day, the gasoline lines get longer, and depositors rush to banks to pull out their meager savings. After weeks of begging in vain for help from the international community, Pakistan’s foreign exchange reserves have dropped to just $4.3 billion, down nearly 75% in the past year because of soaring prices for commodities, particularly oil, which accounts for about one-third of imports.
  
  “The country presently has only enough cash to pay for about 45 days of imports at current rates. Already the country has cut its oil imports so it holds no more than 10 days’ supply at any given time. Inflation is raging at more than 24%…”

• Russia: The Telegraph reports that “Russia’s financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.” 
  

• Hungary, Ukraine, Belarus, and Romania: The same article from the Telegraph also relates that “Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe.  Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe’s ERM crisis in 1992. The CDS spreads on Ukraine’s debt have topped 2,800, signalling total revulsion by investors.”

These terrible developments extend a dreadful line that has not yet reached conclusion.  Unfortunately for people at the mercy of their leaders’ mounting mistakes, consequences ignore intentions.  Action and principles matter. 

As such, it could be worse.  Much, much worse.  Aided and abetted by a willing and inept media, our government exploits this crisis to accumulate more power.  Thankfully, though, here not all is lost.  Imagine surviving this deepening crisis from within a communist disaster:

• Venezuela: Reuters reports that “Despite having some of the world’s largest energy reserves, Venezuela is increasingly struggling to maintain basic electrical service, a growing challenge for leftist President Hugo Chavez. The OPEC nation has suffered three nationwide blackouts this year, and chronic power shortages have sparked protests from the western Andean highlands to San Felix, a city of mostly poor industrial workers in the sweltering south… The problem suggests that Chavez, with his ambitious international alliances and promises to end capitalism, risks alienating supporters by failing to focus on basic issues like electricity, trash collection and law enforcement. “

• North Korea: The Times Online reports that “North Korea is clamping down on mobile phones and long distance telephone calls to prevent the spread of news about a worsening food crisis…
  
  On Tuesday, [World Food Programme] announced that some 2.7 million people on North Korea’s west coast will run out of food in October, and that, because of the worsening food situation, it was increasing from 1.9 million to 6.5 million the population which it seeks to help with food aid.
  
  “Rumours have been swirling that Kim Jong Il, the supreme leader, has been treated for serious illness, although this has been officially denied and there is no way to independently confirm either claim. Whatever the truth, the Government is still in firm control of the country and its grip on the lives of citizens shows no signs of easing.”

Reconsider these recent themes:

• In the long run at least, crime does not pay.

• What builds trust?  What destroys it?  Whom do you trust?

• Not all is lost.

• Study the ideas and insights of the Austrian school of economics.

• Begin and become the recovery.  The government simply cannot be the rescue.

The magnitude of value destruction boggles the mind.  Bring the market to the Russian countryside, and let this land reach the market, and the whole world benefits tremendously:

“The fields around this little farming enclave are among the most fertile on earth. But like tens of million of acres of land in this country, after the collapse of the Soviet Union, they literally went to seed. Now that may be changing. A decade after capitalism transformed Russian industry, an agricultural revolution is stirring the countryside, shaking up village life and sweeping aside the collective farms that resisted earlier reform efforts and remain the dominant form of agriculture. The change is being driven by soaring global food prices (the price of wheat alone rose 77 percent last year) and a new reform allowing foreigners to own agricultural land. Together, they have created a land rush in rural Russia.

“…These investments are also a gamble in a country accustomed to government control of business. Some officials have hinted at the prospect of a government takeover of the farming industry reminiscent of the Soviet era.

“…Russia occupies an unusual niche in the global food chain. Before the Russian Revolution and the subsequent forced collectivization of farming under Stalin, it was the largest grain exporting nation in the world.  Today, roughly 7 percent of the planet’s arable land is either owned by the Russian state or by collective farms, but about a sixth of all that agricultural land — some 35 million hectares — lies fallow. By comparison, all of Britain has 6 million hectares of cultivatable land.

“…Yields in Russia, however, are tiny. The average Russian grain yield is 1.85 tons a hectare — compared with 6.36 tons a hectare in the United States and 3.04 in Canada.

“…Some trade and agriculture experts say there is still a danger that a country like today’s Russia, which jealously guards its natural resources, could one day renationalize farms or form a cartel that dictates to landowners.

“…The rural population has declined precipitously as young people fled to the cities. The title to land, after the failed decollectivization of the Yeltsin era, is often unclear. Rural Russians’ work ethic has been shaped by decades on collectivized farms that offered little reward for individual effort.

“…This latest headlong wave of privatization has gone too far and too fast for some in government here. Officials, as is often the case these days, have floated the idea of forming a state monopoly. They would create a Soviet-style grain trading company out of an existing regulatory agency, a notion that has alarmed agricultural experts, though the seriousness of the idea is unclear.  Such a monopoly could control domestic grain prices by limiting exports, benefiting low-income consumers but discouraging investment in agriculture.”

“The Food Chain - Russia’s Collective Farms - Hot Capitalist Property” via the NYT.  The photo is not directly related to this story.

Russia extinguishes more voices:

“The owner of an opposition Internet news site in Russia’s volatile Ingushetia region was shot and killed Sunday after being detained by police.

“Magomed Yevloyev, owner of the www.Ingushetiya.ru Web site, was arrested at Nazran airport in southern Russia after disembarking a flight, according to a statement by media watchdog Reporters Without Borders. Yevloyev was later found dumped on the side of the road, suffering from a gunshot wound to the head, the news site’s deputy editor, Ruslan Khautiyev, told the Associated Press. Yevloyev later died at a hospital, Khautiyev said.”

“Russia Web site owner killed after arrest” via CNET.  Find more via Wikipedia.

The above audio supplements this story:

“Russian President Dmitri Medvedev says he wants to make Russia a leading global financial center. But a series of state crackdowns on private companies have plunged Russian markets into turmoil and sent foreign investors fleeing…

“Analysts say this amounts to the latest chapter in a Kremlin campaign to impose order upon the commanding heights – strategic sectors – of Russia’s economy, which began with the destruction of the Yukos oil empire and the arrest of its politically disobedient owner, Mikhail Khodorkovsky, five years ago. As usual, opinion is starkly divided over the government’s intentions, with defenders arguing that the goal is to enforce the law in Russia’s unruly business jungle. Critics, pointing to past cases, suggest that when the dust settles, assets formerly held by private interests are likely to be transferred to Kremlin-controlled companies.”

“Kremlin corporate crackdown sends markets tumbling” via the CSM