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Show A7 The Emery County Review, Tuesday, December 16, 2008 VIEWPOINT Opinion and Letters to the Editor My View Lessons of the Great 20th Century Challenge Jerry Stotler With the defeat of Hitler at the end of World War II, the Allied Powers gathered and decided to divide Europe roughly in half, returning the western nations to their original owners while the eastern nations would be left under the control of Soviet Russia. Philosophically and politically it became Free Europe and the U.S. versus Communist Europe and Asia. About the same time the U.S. single handedly defeated Japan, which remained occupied by the United States for several years after the end of the war, with General MacArthur in charge of the restoration of the nation. (I gave my daughter our set of Noritaki China that is stamped on the bottom “Made in Occupied Japan.”) After a few years the United States withdrew from free Japan, and it continued to flourish through- out the next 50 years to become one of the world’s great economic powers. During the same period the Soviet block nations languished in poverty and despair. Realizing it or not, the great challenge between the controlled society (welfare states) of communism/ socialism and free society was on. The Soviet Union had vast economic and natural resources, minerals, fertile lands, oil, etc., yet was unable to sustain itself. Meanwhile, Japan, a tiny spec on the planet compared to the USSR, with very limited resources, grew marvelously with great abundance for its people. The same comparison can be made with North and South Korea and North and South Vietnam. When divided between north and south, both northern countries had the advantage with more industry, natural resources and arable land. The southern nations, though having the dis- advantage, flourished while their northern neighbors languished. Please note that both pairs of nations had all things cultural in common, including the starting date, except for the politico-economic system imposed on them. Add to the mix the challenge between China and Taiwan, again with the exact same starting date and language. The tiny island of Taiwan became an economic giant during the next 60 years while 40 million people died in China. The 20th Century will be known as the Century of the Great Economic Challenge between the controlled societies of the welfare states versus the free societies. Two thirds of the world was living in the welfare states involved in that challenge. Today there is only one significant nation left in the controlled society group, China. To China’s credit, since they have discovered “profit” and competitive enterprise, they are emerging from the doldrums and are overcoming poverty that has so long engulfed their people, though they have yet a long way to go before they reach freedom. With all this evidence to look at, it amazes me that there so many socialists in academia. With communism/socialism having been tried for 50 years (actually 90) and having failed miserably, what compels these strange beings to continue pressing for socialism in America? It just doesn’t make any intellectual sense, unless of course they don’t do their own thinking (and that may well be the case). Let me finish with this. America has no philosophical allies, only political ones. Though we won the 20th century challenge, we are still at risk of losing our freedoms. So be on guard. (Stotler resides in Ferron.) Commentary Where to Draw the Bailout Line? to 6.7 percent from 6.5 percent, a number that’s going to get worse as the volume of discouraged workers continues to rise. So here’s the painful choice for both Republicans and Democrats in Congress: Will the political class risk a Detroit-carmaker bankruptcy that might lead to catastrophic liquidation -- including, realistically, a couple million car-related jobs -- all while the recession deepens and job losses mount (1.2 million in just Lawrence Kudlow The bailout-nation saga continued this week, as the little-three carmakers from Detroit drove to Washington to plead for a $34 billion federal package to save themselves from bankruptcy and insolvency. Hot on their heels was a devastating report of 533,000 lost jobs in November. Actually, it’s a loss of 732,000 jobs, including downward revisions from the prior two months. Unemployment moved up Established January 2, 2007 James L. 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Letter’s and opinion articles can be sent to jldavis@theemerycountyreview.com, mailed to The Emery County Review, P.O. Box 487, Orangeville, UT. 84537 or faxed to 435-748-2543. the past three months)? It’s a tough choice -- especially for Republicans, most of whom want to vote against bailout nation and stop big-government encroachment on our freemarket economy. That’s the right theory. But are the economic risks simply too great to employ it? Various polling surveys say bailout nation, and a federal rescue for autos in particular, is very unpopular. At least 60 percent are polling against a bailout. The TARP bailout of banks is increasingly unpopular. Meanwhile, the pressure for more bailouts grows daily. The Avis rental-car company wants a bailout from TARP. A company called BlueFire Ethanol wants a bailout. The trade association for equipment-leasing companies wants a bailout. There’s no end to it. And if we keep going down this path, we’ll make a mockery of freemarket capitalism. Where to draw the line? That’s the huge political question. Coming back to Detroit, there may be a pragmatic solution, one that takes some of the apocalypse-now threat of major economic decline out of play. Sen. Bob Corker and others have proposed a federal oversight board that would in effect become a bankruptcy court. Strict conditions would be imposed on the carmakers, especially regarding compensation -- the singlebiggest reason for Detroit’s decades-long decline. Corker wants Detroit to have the exact same compensation levels as the Japanese transplants in the non-union Southern states. That means moving hourly labor costs down from roughly $70 to $48. It means reopening the UAW contracts that have created the huge pay gap between Toyota and GM. It means putting an end to excessive pension and health-care benefits. According to professor Mark Perry of the University of Michigan, GM healthcare benefits add $1,500 to the price of every vehicle, while pension costs add another $700 per car. That will have to end. The lucrative jobs bank that pays laid-off workers 95 percent of their compensation also will have to stop. And bondholders will have to be satisfied with a complete renegotiation of GM’s $62 billion in debt, including the union retiree health-care fund that is underfunded by $30 billion. There still will be considerable job losses for downsized Detroit carmakers. They’ll have to cut a huge chunk of their dealer networks. Domestic brands will have to be sharply reduced. But essentially, as would be the case under Chapter 11 bankruptcy, the federal government will provide short-term financ- ing while Detroit goes through its radical restructuring. It looks like bankruptcy lite, and it will completely change the direction of the former Big Three. It’s probably too much to ask, but tough federal action under the aegis of oversight-board enforcement also should relieve the CAFE fuel standards that have plagued U.S. automakers. At the very least, worldwide standards should be substituted for domestic ones. Making expensive small green cars is an unprofitable business. Ironically, with oil and retail gasoline prices plunging, it’s not unreasonable to expect something of an auto-sales recovery. Gas prices have dropped all the way to $1.75 from over $4. This tax cut will help revive the whole economy, along with auto sales. But if Washington can put this car-bailout business behind it, perhaps Congress can move on to the ultimate solution: restoring economic growth. President-elect Obama has been cagey about the details of his massive $700 billion infrastructure spending plan and whether he’ll raise taxes on successful earners. But this new New Deal, including Obama’s middle-class tax credits, will not create permanent economic growth incentives. What will? A genuine supply-side growth agenda to reduce tax rates across the board. If the Republican Party wants to put bailout nation to rest, it should campaign for lower corporate, individual and investment tax rates. It should make clear that the Democrats are the government-spending party, while the Republicans are the tax-cutting party. We will not bail out our way into prosperity. Nor will we spend our way into prosperity. Somebody has to stand up and yell: It’s time to cut tax rates on the supply side. That will reinvigorate growth and infuse new spirit into a demoralized economy. (Copyright 2008 Creators Syndicate Inc.) |
