Tilting at Windmills

November/December 2010 Mad money… Regulation by milquetoasts… Pulp this item…

By Charles Peters

On a less lofty level, Gates also pointed out that the number of people in military bands now exceeds the number of foreign service officers serving in the State Department in Washington and throughout the world. The Marines alone have thirteen bands, with some 730 musicians. The Army, according to the Washington Post’s Walter Pincus, is spending $4 million to construct a new home in Alabama for the forty members of the Army Material Command band. This seems a bit excessive, since that command has a grand total of only 5,000 officers and enlisted men spread throughout the world. There are, Pincus adds, thirty-six other Army bands, plus eighteen Army Reserve bands, and fifty-three Army National Guard bands. And remember, we haven’t even gotten to all the Air Force and Navy bands serving in the United States and abroad.

Fewer trombonists, more inspectors

On the other hand, at one regulatory agency after another, we see the need for more, not less enforcement personnel. The SEC, the FDA, and the Consumer Products Safety Commission are examples. More recently, the pipeline explosion in San Bruno, California, exposed a need throughout the country either for more inspection or for more rigorous requirements that defective pipes discovered by inspection are repaired or replaced.

Regulation by milquetoasts

Of course, sometimes when there is an adequate number of inspectors, they are conditioned not to make trouble for the inspected. When the Department of Agriculture inspected Wright County Egg in Iowa, later found to be a major source of salmonella, they discovered, according to the Wall Street Journal, “[d]rain clogged, full of shells,” “bugs everywhere,” “cooler floor was dirty, lots of trash,” and “the dry storage area had lots of trash, cartons on the floor everywhere.” These reports came from inspections that occurred from April 1 through August 17 of this year. But the DOA failed to tell the FDA, which is responsible for egg safety, about these problems. The salmonella outbreak occurred a few weeks later. Why didn’t the DOA say anything? “The conditions at the egg plant packing facility were routine.” In other words, the plant has always been a mess, so why speak up now?

The Lipitor loophole

When the Obama administration was working on health care reform, the drug companies reached a deal with the White House to fend off legislation granting government the power to negotiate drug prices. The drug companies promised that when seniors reached the so-called “donut hole”—the point after which seniors must pay full price for drugs otherwise paid for by Medicare—the drug companies would offer a 50 percent discount on name-brand drugs.

But there is a loophole to which seniors should be alert: 50 percent of what? The drug companies are already increasing retail prices. They could continue to do so to the point that a discount of 50 percent off the new price would be equal to 100 percent of the old price. Remember the lesson of history is that private enterprise can do great things, but you have to watch it like a hawk. If you’re not looking, far too many businesses, including drug companies, have proved willing to screw us on the assumption that they can get away with it.

Nothing ventured, nothing gained

If our purpose in aiding small business is to create jobs, then we should concentrate on the startups. They are the ones that produce the new jobs, according to recent research reported by Steve Loher in the New York Times. Loans do them little good. What they need, according to Josh Lerner, a professor at Harvard Business School, is equity investment. As I found out when I started this magazine, if you don’t have enough friends willing to bet on you, the sources for that money are the people that Wall Street calls “venture capitalists.” If Wall Streeters truly believed in the pieties they recite about helping the economy, far more of them would be venture capitalists instead of parasitic traders.

War without end, Amen

To me, the most frightening of many frightening quotes from Obama’s Wars by Bob Woodward is this from General Petreaus about the war in Afghanistan:

“You have to recognize also that I don’t think you win this war. I think you keep fighting. It’s a little like Iraq, actually … Yes, there’s been enormous progress in Iraq. But there are still horrific attacks in Iraq, and you have to stay vigilant. You have to stay after it. This is the kind of fight we’re in for the rest of our lives.”

This explains why presidents need to bring plenty of skepticism to the table whenever they seek the military’s advice. Generals think primarily in terms of military solutions to problems. They would have kept us in Vietnam indefinitely, even though it also was a war we could not win. They boxed in Lyndon Johnson just like they boxed in Obama, giving him no option other than escalation.

In 1964 General Maxwell Taylor, alone among the military, briefly stood up against the Pentagon’s desire to escalate. But by 1965 he too was converted. In the case of Afghanistan, only Lt. General Douglas E. Lute is a skeptic, and he is outside the Pentagon, serving as Obama’s deputy national security advisor. 

Ignoring the yellow lights

Before Obama finally went along with the limited escalation, Lute warned him, as Woodward explains, of the following risks:

Charles Peters is the founding editor of the Washington Monthly and the author of a new book on Lyndon B. Johnson published by Times Books.

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