“Wisconsin Recall and the Stock Market”

Sydney M. Williams

Thought of the Day

“Wisconsin Recall and the Stock Market”

June 8, 2012

The news media attributed Wednesday’s surge in stock prices to rumors of money being thrown at Spanish banks and to the possibility of QE3 - odd explanations in my opinion, as such actions confirm that current fiscal and monetary policies are not working. I wonder if something more fundamental is going on. Wisconsin, in my opinion, may provide a clue.

William Buckley once alleged that he would rather be governed by the first 400 people in the Boston phone directory than the Harvard faculty. In essence, that is what happened in Wisconsin. Mr. Buckley distrusted supercilious elitists, especially when they appeared masked as altruists. (We’re from the government and we’re here to help.) He did, however, trust the people to collectively do what is right. In Wisconsin, I believe, they did. Governor Walker’s victory was impressive. Consider this: Tom Barrett received 158,482 more votes in 2012 than he did in 2010 when he lost to Scott Walker. Mr. Walker received 205,509 more votes than he did in 2010. And think of this: Mr. Walker, accused of being the anti-union guy, received 38% of all household union votes, better than his showing in 2010. Kevin Kennedy, Executive Director for the Government Accountability Board (State of Wisconsin) said that the turnout was the highest in the state’s history for a gubernatorial election.

The New York Times credits the Walker victory to the millions of dollars spent by the Republican Committee and conservative PACs. In a bit of twisted logic, the lead editorial in Thursday’s Times claimed that Mr. Walker did not take on the unions to “save the state money” (which in fact he has done) but to “break the unions by ‘demonizing’ their bosses.” Whether he “demonized” them I don’t pretend to know, but he did show them to be the charlatans they are. Had they continued to have their way, they would have bankrupted cities and towns across the state. The Times, incredibly and audaciously, stated that Mr. Walker’s goal was to end the ability of the bosses “even to collect dues.” Keep in mind, prior to Governor Walker’s rescission of the practice, union dues were collected automatically and preemptively by the state. Workers had no choice. Even if one chose not to be a union member, each employee had to pay dues amounting to several hundred dollars a year. Forcing workers to pay union dues, regardless of their individual preference, is part of Leftist theology.

The left feels they are entitled to the votes of the working class and minorities. They feel that way because over the decades they have redistributed wealth downwards, seemingly unconscious of the demeaning and patronizing aspect of so doing. In contrast, classical liberalism, common to fiscal conservatives, believes in the upward mobility of people based upon talent, aspiration and hard work.

Redistribution relies on a progressive tax code, which we have had for almost 100 years. All conservatives support some form of a progressive tax code. But redistribution does subtract from a nation’s wealth, and that is a price we are all willing to pay – up to a point. And it is a game that has a terminus. At some point the money runs out. That was the sad truth facing voters in Wisconsin, as well as in San Diego and San Jose where votes favoring public union pension reform won by 66% and 70% respectively. Mr. Walker’s victory was not, Mr. Sulzberger, a function of money – though that helped – it was indicative of the common sense of the voters (Mr. Buckley’s 400) who realized they were on a path to oblivion if they did not alter direction.

The Left has been shackled by a belief that only they are the true guardians of students, the poor, the elderly, immigrants and minorities. They believe in their perceived superior abilities. They believe that those on the Right are tools of big business and the rich. What balderdash! The wealthiest counties in this country have voted Democratic for decades. Their influence is seen along America’s east and west coasts. Mr. Obama outspent his Republican rivals in 2008, and received far more money from Wall Street than did John McCain. Barack Obama regularly returns to New York and Hollywood chumming for dollars. His visit this coming week will be his 41st of this season. How many fund raising trips to New York did President Bush make? Not many. How many has Mr. Romney made? Fewer than Mr. Obama.

The Right appeals to the aspirational, while the Left encourages dependency. The Right believes in the ‘Self”: that responsibility and self-reliance are critical to an individual’s self-worth and success. Jonathon Haidt, a professor of psychology at New York University’s Stern School of Business wrote recently in The Guardian that “the Left has a tendency to place caring for the weak, sick and vulnerable above all other moral concerns.” Professor Haidt identified a total of six moral concepts: care/harm, fairness/cheating, liberty/oppression, loyalty/betrayal, authority/subversive and sanctity/degradation.” There are others that perhaps could have been included: respect/disrespect and, simply, right/wrong. But Professor Haidt failed to note that at times the desire to “care” has unintended and unfortunate consequences, as we learned from the housing policies of President Clinton and the willingness of Congressmen like Chris Dodd and Barney Frank to provide mortgage financing (and now student loans?) to those with little ability to repay. When one sends millions of people into personal bankruptcy, it makes little difference that one’s intentions were honorable, when the results were devastating.

The lesson from Wisconsin is important – that the era of endless spending on programs we can ill afford is coming to an end. They are neither fair to the majority nor to those they purport to help. It is a lesson, however, that has yet to be learned in many state capitals, including Sacramento, despite the clear message from San Jose and San Diego. It certainly has not been learned by those in Washington. Nevertheless, in my opinion, the die has been cast. The process began eight years ago when Mitch Daniels was elected governor of Indiana. He was the first in an expanding group of reformers. In my opinion, we are on the road to recovery. It may take a few more years and there will be setbacks. Cronyism, union leaders and other special interest groups will fight hard to retain their grip on power. But I believe we have made the turn (or are in the process.) And that, at least in part, was the message from the market when it rallied Wednesday, up almost 2.5% on good volume.