In the spring of 1997 economist Robert Higgs wrote an article for the Independent Review titled:  “Regime Uncertainty; why the Great Depression lasted so long and why prosperity resumed after the war.”  The thesis of the article is that the “regime uncertainty” of Roosevelt’s New Deal prolonged the Great Depression (which would otherwise have ended around 1935) another six years, to 1941.

According to Higgs, Roosevelt and his lieutenants “created an outpouring of business-threatening laws, regulations, and court decisions toward investors as a class.”  Furthermore, “The anti-business zealots who composed the strategists and administrators of the New Deal from 1935 to 1941 could hardly have failed to discourage some investors from making fresh long-term commitments.  Last, Higgs says that “there exists a great deal of direct evidence that investors did feel extraordinarily uncertain about the future of the property-rights regime between 1935 and 1941.”

History may be repeating itself today.  There seems to be no question that the movers and shakers in the Obama administration are anti-business and anti-property rights.  They are unapologetic advocates of blatant income redistribution, but more than that they seek a massive cultural shift away from free market capitalism to more direct government control of the economy.  Having bailed out Wall Street due to an irrational expansion of private credit, the government has opted for an irrational expansion of public credit as the cure.

Regime uncertainty matters most in the small business sector, which is the engine of job creation in this country.  Small business owners have suffered from slacking sales, non-existent profits, pillaged balance sheets, and non-payment by bankrupted customers.  Meanwhile, property rights are in complete limbo; anything can change during any weekend with the Obama administration.  Small business owners are asking what will happen with healthcare.  Will there be card check?  What specific types of businesses will the Obama administration select as its preferred choice for government subsidies or tax breaks?  What is going to happen to energy costs and when?  What will be the administration’s response to (so called) global warming and how will taxes or energy use restrictions affect small business?  What taxes is the administration going to raise or lower, and by how much?  When the Fed monetizes the huge deficits of the Obama administration, when will we see the inflation and how bad will it be?

When a small business owner knows what he or she is facing, even when it is bad, adjustments can be made.  Uncertainty, however, is an investment killer.  Uncertainty makes us sit on our hands and wonder what to do next.  In my opinion, without the extreme “regime uncertainty” of the Obama Administration, we would have already seen lower unemployment rates and more job creation in the US economy.  Barack Obama; meet Franklin Roosevelt.

Last night my wife and I attended a play at a local theater in our little town of Winona, Minnesota.  Locally written and produced, it represented the conflict between recent immigrants of Polish and German ancestry during World War I.  It was a delightful performance, complete with a love story, yet laced with the realization that life isn’t perfect as we struggle to make sense of it.  Today the religious and ethnic conflicts that existed in 1914 in a small Minnesota town seem laughable, but they weren’t trivial at the time.  Indeed, the short-run view is often bleak, but in the long run everything works out for the best.

Speaking of short run bleakness, while I slept last night eighty Chinese miners were killed in a gas explosion, an over-loaded ferry sank in a squall in Indonesia, and sixty Democratic senators in Washington decided to debate a proposed health care bill that could portend a medical and economic nightmare.  Meanwhile, this week we learned that US Attorney General Eric Holder is going to conduct the show trial of the century in the heart of New York City by giving Khalid Sheikh Mohammed a world stage to blaspheme against democracy, the United States, and Islam.  We know this will be a show trial because President Obama has predicted the outcome and the Attorney General himself has stated that “failure is not an option” with respect to the conviction of these suspects.

The preceding paragraph represents just one week of bad news.  It occurred to me this week that all of us might be better off to look at the positive (long run) side of life, rather than to be bogged down by crisis after crisis.  As shadowed by comments of White House Chief of Staff Rahm Emmanuel, it is the purpose of the Obama administration to continually foster an atmosphere of disaster, calamity and emergency to achieve its political ends.   After all, even the most wrong-headed legislation can be passed during a crisis.  Throughout history the world’s most notorious despots and dictators have used short-term crisis and panic as a reason to convince their fellow countrymen to abandon individual freedom and liberty.

Free men and women, be of good cheer!  Be vigilant.  If your local congressmen have partaken of the purple cool-aid served to them by Commissar Barack, you have no choice but to use your financial resources and persuasive skills to abruptly end their congressional careers in 2010.  Be not discouraged!  Remember that discouragement and hopelessness are precisely what the Obama administration depends upon to control its subjects.

When I look into the faces of my students at the University I’m not prepared to tell them that their future will be one of energy shortages, unemployment and futility as they struggle to exist on a doomed planet.  I’m not one to tell them that they won’t have the incentives or capital to start their own businesses and they should instead aspire to some dead-end government job.  You’ll not hear that pessimistic garbage from me.  I want them to be entrepreneurs, inventors, captains of industry and proponents of freedom and prosperity!  Don’t preach pessimism.  While we are now in a dark valley that our (elected) masters have created, we need not stay there long.  The dawn of a new day begins on Tuesday, November 2, 2010!

Monday, November 9, 2009 I was privileged to join four other people who shared their stories about their history with the infamous Berlin Wall.  It was the 20th anniversary of the fall of the wall.  Many of the students in our audience at Winona State University were still unborn on the day the Wall fell.  For them it was a history lesson; for Lilian Ramos, George Bolon, Chops Hancock and Maria Grunz it was vibrant testimony that few present will ever forget.

My story isn’t nearly as poignant as that of Lilian, who had a dear friend tortured and beaten by the Stasi (East German Intelligence Service).  None of our stories could ever compare to the story of Maria Grunz, who suffered through the occupation and rule of the Nazi’s, the Russians, and the East Germans before she was even eleven years old.  Nevertheless, I promised to share my story with you today and so I shall.

On Sunday, July 25, 1971 my college friends Greg Savage, Les Blanchard and I walked through the Berlin Wall at Checkpoint Charlie.  Within a few minutes we bought lunch in a little eatery.  There we were approached by Manfred Tekla, a young resident of East Berlin.  Thin, with scruffy facial hair, he was wearing black pants and a grey shirt with sleeves rolled up.  With my two years of high school German and his limited English we were able to communicate quiet effectively as he served as our unofficial tour guide of East Berlin.  (See Photo I took of Manfred Below)

At the time the United States was involved heavily in the Vietnam War.  Lt. William Calley was being detained for allegedly killing over 500 Vietnamese civilians during the My Lai Massacre.  Charges had not yet been filed against Calley and it looked like he might never be punished.  Meanwhile, black activist Angela Davis was in jail awaiting her trial for murdering a Federal Judge Harold Haley in Marin County California.  Within minutes our young host started hammering me with the “injustice” of the capitalist system in the United States.  After all, Calley was getting away with killing hundreds of Vietnamese civilians, while Davis was probably going to get executed for killing one white judge.  This was proof positive that the United States was a cruel regime where only white lives were valued.  As the Calley and Davis cases played out, Calley was indeed incarcerated by the Army for several years (not nearly enough years) but Davis was acquitted.

As the day with Soviet-brainwashed Manfred continued, he seemed increasingly eager to point out to us every piece of US “dirty laundry” that had been aired by the international press over the past few years.  He was incredibly knowledgeable of even the slightest bit of political scandal or corporate greed present in the United States and he hammered us for hours with these “facts”.  Meanwhile, Tekla seemed oblivious to the fact that a guarded, barb-wired, 16 foot wall kept him from leaving one of the greyest, depressing, demoralizing cities I had ever seen.

As we walked back to Checkpoint Charlie to cross the wall and enter booming and prosperous West Berlin, I had finally taken enough criticism from my communist friend.  I asked Manfred if he had attended any universities in East Germany.  He replied that he had graduated as an art major.  Upon learning this, I said to him “Oh how wonderful for you!  You Europeans are so fortunate!  While we Americans have to fly over the Atlantic Ocean, the Louvre in Paris is only a few hundred kilometers from here. How did you enjoy the paintings and sculpture in the Louvre?”  Of course, he then had to admit that he had been privy only to art work in Warsaw and Moscow.  I asked him why he had not been to the Louvre.  He sullenly admitted that he could not cross the wall.

Then I hammered Manfred with the ultimate fact.  I pulled out my US passport and stuck it in front of his face.  Then I said, “Manfred, in five minutes I’m going to take this passport, walk up to that wall and cross it.  You are not.  If I want to come back here tomorrow, I will.  I will come and leave as I wish; you can’t cross that wall.  I am a free man and you are not.  Now tell me some more bad things about the United States.”

Manfred’s previously machismo shoulders slumped in defeat.  For the first time that afternoon I felt pity for this young, 26 year-old man trapped behind a cruel wall.  For an instant, I even felt somewhat guilty for playing the “passport” card, but he had angered me and I had responded accordingly.

As we left him standing alone, he informed me that his brother worked on an East German merchant marine vessel.  He thought it possible that his brother might be able to get him a job on one of those East German ships, which sometimes traveled to Cuba.  His last words to us were phrased as a question:

Manfred said, “If I am on one of those ships and I jump off between Miami and Havana and am lucky enough to survive and be rescued, would I be able to live in the United States?”

When the Berlin Wall fell on November 9, 1989, I thought of Manfred, who was 44 years old by the time he witnessed freedom.  Now, at age 64, I hope he has been able to salvage some happiness and joy in the years of freedom that he has been granted.  God bless freedom.  God bless America.

Manfred Tekla in East Berlin July 1971

The following subjects have been banging around in my head over the past few weeks, so I thought I would deal with them this Sunday.

Privileged Few: The Wall Street Firm of Goldman Sachs, where average salaries are about $90,000 a year, got 200 doses of the H1N1 vaccine from the government to treat their “high risk” employees.  That’s the same number of doses provided to Lenox Hill Hospital in NYC.  Yeah!  Government health care!  Power to the people!

“Saved Jobs”: The official unemployment rate has now risen to 10.2 percent, yet the Obama administration is continually talking about the jobs it has created and “saved.”  Nowhere in labor economics terminology has the term “saved job” ever been used.  Plenty of government jobs have been “saved” with taxpayer stimulus funds, but a review by the Associated Press found the government’s early report overstated the number of public sector jobs “saved.”  For example, the report indicated that 114 customer service and meter reader jobs were saved in the Palm Beach (Fla) Water Department, but only 57 people are employed in that department.

“Jobless Recovery”: As long as we’re talking about Obama-isms, why don’t we examine the term “Jobless Recovery.”  As a labor economist I consider this the most ridiculous and incredulous term that the administration has ever tried to sell.  When an economy recovers unemployment falls.  Increased employment is THE definition of an economic recovery.  There is no such thing as a “jobless recovery”.

Coattails: Last month Obama went to Copenhagen representing the city of Chicago, which won 4th place in its bid to host the Olympic Games.  Last week he went to New Jersey to stump for the re-election of Governor John Corzine, who was defeated by Republican Chris Christie.  Anybody else want to jump on those Obama coattails and take a ride?

Clueless Man Child: Rush Limbaugh now calls Barak Obama a “man child”.  This is insulting to the President and a bit bold, even for Rush.  But the longer I think about it, the more it fits Obama.  His knowledge about the economy is indeed “child like.”  I was hopeful that Barak knew something about economics.  Bubba Clinton understood economics.  Barak is clueless.  Virtually every policy he has proposed (cap and trade, health care tax penalties, new regulatory agencies) are job and enterprise killers.  If Obama’s not clueless, he’s purposely trying to destroy the American economy.

Obama Terminology: Terrorists are now “Enemy Combatants.” The “War on Terror” is now referred to as “overseas contingency operations”.  The State Department and the Joint Chiefs of Staff no longer use the term “bad guys”.  It has been replaced with “the ostensibly malefic.”

Government Healthcare: Why would any sane person want to expand Government’s role in healthcare?  Our existing government health care system, known as Medicare, has $78 TRILLION worth of unfunded liabilities.  Meanwhile, the government is currently in the middle of bungling the delivery of the HINI vaccine, which will cost hundreds if not thousands of lives.

Phony Liberal Peaceniks: Two weeks before the 2008 election I took my grandson on a 16-block stroller ride in highly liberal south Minneapolis.  I counted over 120 Obama signs and one McCain sign (which had been vandalized several times).  There were also roughly 50 anti-war signs (“Get out of Iraq”, “War is not the Answer”, “Peace not War”, etc.).  Last week I walked the same 16 blocks and saw ONE anti war sign.  The “silence” of our liberal friends in south Minneapolis is both horrendous and hypocritical.   They ought to be ashamed of themselves.  Our young men are dying in greater numbers in Afghanistan today than they were before Obama was elected.  Apparently south Minneapolis liberals believe that the political career of their great leader is more important than their (alleged) opposition to war.

On July 25, 1971 I was a 22 year old economics graduate of Graceland College in Lamoni, Iowa.  It was a Sunday morning as I walked into the infamous shack on Berlin’s Friedrichstrasse with my friends Les Blanchard and Greg Savage.  We got our final instructions from US Army forces before crossing the Berlin Wall at Checkpoint Charlie.  We would be in East Berlin only 6 or 7 hours, but it would be a day that would change my life forever.

Once we passed through the wall we had to enter the office of the East German (DDR) authorities.  They checked our passports and told us that it was illegal to exchange money with East Berliners.  They also told us that we could not take photos of any military installations or military vehicles of the DDR.  There was only one spot where it was legal to photograph the Mauer (wall) from the East German side…a non-intimidating, grassy field that was void of the usual tank traps, barbed wire and guard towers.

While showing our passports at the border control building, I asked the DDR authorities if they had a restroom.  They did.  Being 22 years old, naive and a bit foolish, I went into the restroom and, in an act of defiance, took my first illegal photo of the wall through the restroom window of the DDR border control building.  Due to some posting problems, that photo won’t appear in the blog today, but it will appear on November 15th, when I tell the full story of my day in East Berlin.  That photo DOES appear in my Sunday morning subscriber email.  If you want to see the photo today, just email me at bbwinona@charter.net and ask to be added to my Sunday morning email list.  There is no cost, no obligation, no passwords, and you may unsubscribe any time.

On Monday, November 9, 2009 we will celebrate the 20th Anniversary of the Fall of the Berlin wall in Somsen Auditorium on the campus of Winona State University.  The event starts at 7pm, is open to the public, and there is no admission charge.  Joining me will be Foreign Language Professor Lilian Ramos and Physics Professor George Bolan who crossed at Checkpoint Charlie in 1971 and 1964 respectively.  Marie Grunz, who grew up in East Germany and survived the Nazi’s and the Russians, will complete our panel, along with award-winning photographer Chops Hancock, who took two famous photos on the day the Wall came down.

On Monday the ninth of November, there will be stories; personal reflections with a lot of emotion.  Lilian will tell you about her friend who was on the last subway train to cross from East Berlin to West Berlin before they tore up the tracks.  I’ll tell you about young East German Art student I met on the bad side of the wall.  Trapped in a totalitarian prison, he had never seen the Louvre or the British Museum of Art and wouldn’t until the Wall came down 18 years later.  By then he was a 44-year old man.  George and Maria will have their stories too, along with Chops, who was shooting photos for National Geographic when the Wall fell on November 9, 1989.

That Monday evening, I’ll share a story you’ll never forget, but I’m not going to blog it until November 15th.  If you’re in or around Winona, Minnesota on the evening of Monday, November 9, 2009 please come to Somsen Auditorium.  You won’t forget that night, just like I’ll never forgot that Sunday Morning when I crossed from the bright, colorful city of West Berlin to enter a drab, black and white hell known as East Berlin.