Wednesday, January 27, 2010

Losing the freedom to fight for freedom, Part II

More from Lew Rockwell's piece on The Misesian vision

"Totalitarianism is merely an application of the principle of the "banality of evil."-Hannah Arendt

With this phrase, Arendt meant to draw attention to how people misunderstand the origin and nature of evil regimes. Evil regimes are not always the products of fanatics, paranoids, and sociopaths, though, of course, power breeds fanaticism, paranoia, and sociopathology. Instead, the total state can be built by ordinary people who accept a wrong premise concerning the role of the state in society.

If the role of the state is to ferret out evil thoughts and bad ideas, it must necessarily become totalitarian. If the goal of the state is that all citizens must come to hold the same values as the great leader, whether economic, moral, or cultural, the state must necessarily become totalitarian. If the people are led to believe that scarce resources are best channeled in a direction that producers and consumers would not choose on their own, the result must necessarily be central planning.

On the face of it, many people today do not necessarily reject these premises. No longer is the idea of a state-planned society seen as frightening. What scares people more today is the prospect of a society without a plan, which is to say a society of freedom. But here is the key difference between authority in everyday life — such as that exercised by a parent or a teacher or a pastor or a boss — and the power of the state: the state's edicts are always and everywhere enforced at the point of a gun.

"It begins in a seemingly small error, a banality. But, with the state, what begins in banality ends in bloodshed."

It is interesting how little we think about that reality — one virtually never hears that truth stated so plainly in a college classroom, for example — but it is the core reality. Everything done by the state is ultimately done by means of aggression, which is to say violence or the threat of violence against the innocent. The total state is really nothing but the continued extension of these statist means throughout every nook and cranny of economic and social life. Thus does the paranoia, megalomania, and fanaticism of the rulers become deadly dangerous to everyone.

It begins in a seemingly small error, a banality. But, with the state, what begins in banality ends in bloodshed.

Losing the freedom to fight for freedom, part I

The Misesian Vision by Llewellyn H. Rockwell Jr.

It would appear that the more liberty we lose, the less people are able to imagine how liberty might work. It's a fascinating thing to behold.

People can no longer imagine a world in which we could be secure without massive invasions of our privacy at every step, and even being strip searched before boarding airplanes, even though private institutions manage much greater security without any invasions of human rights. People can no longer remember how a true free market in medical care would work, even though all the problems of the current system were created by government interventions in the first place. People imagine that we need 700 military bases around the world and endless wars in the Middle East, for "security," though safe Switzerland doesn't. People think it is insane to think of life without central banks, even though they are modern inventions that have destroyed currency after currency. Even meddlesome agencies like the Consumer Products Safety Commission or the Federal Trade Commission strike most people as absolutely essential, even though it is not they who catch the thieves and frauds, but private institutions. The idea of privatizing roads or water supplies sounds outlandish, even though we have a long history of both. People even wonder how anyone would be educated in the absence of public schools, as if markets themselves didn't create in America the world's most literate society in the 18th and 19th centuries.

This list could go on and on. But the problem is that the capacity to imagine freedom — the very source of life for civilization and humanity itself — is being eroded in our society and culture. The less freedom we have, the less people are able to imagine what freedom feels like, and therefore the less they are willing to fight for its restoration.

The psychology of our President

Excerpts: Victor Davis Hansen, Obama vs. Obama

If we do not know who Barack Obama is, that may be because Barack Obama does not know who Barack Obama is. Barry Dunham? Barry Soetoro? Barack Soetoro? Barry Obama? Barack Obama?

Is he the racial healer who called his own ailing grandmother a “typical white person”? The white middle-class prep-schooler, or the authentically African-American community organizer?

The hip, yuppie multicultural agnostic — or the devotee of the them/us wacky old-time religion of
Trinity Church?

The working-class populist who ridiculed the culture of rural

The modern-day Cicero who needs a teleprompter?

The Harvard Law graduate and
Chicago law professor who gets confused about everything from Cinco de Mayo to the number of states? The Chicago progressive who regularly voted present? The reformist Senate candidate whose rivals in both the primary and general elections mysteriously found their divorce records leaked?

By pleasing his immediate audience with his mellifluous rhetoric and clichés about his racial transcendence, Obama has always charmed his way up his cursus honorum. Why worry about the nonexistent record, broken promises, empty platitudes, and self-contradictions when his mesmerized audiences believed that he believed in them, and lapped up the inexpensive absolutions for their assorted past sins?

The only catch is that Barack Obama no longer navigates among gullible Ivy League deans, naïve philanthropists, and inept organizers and bureaucrats. No, he is running a country that still has millions of no-nonsense truckers, teachers, small-business owners, and general skeptics who don’t give a damn about either Harvard or Chicago. And in their eyes, after a year, the game is about up.

Yet in a weird sort of consistency, Obama remains what he always was. Whatever we choose to see in this glass mirror, he will sorta, kinda reflect our vision.

Obama is our first everything-and-nothing president.

Tuesday, January 26, 2010

Bernanke failed history

Excerpts: It's Time for Ben Bernanke to Resign By John Tamny

Bernanke should step aside for the simple reason that the Fed which he oversees has failed miserably. Indeed, while in a rational world the Fed's sole mandate would involve it overseeing a dollar-price rule in terms of gold (thus making it largely irrelevant) to the exclusion of all other policies, it is presently charged with maintaining full employment, low inflation and a sound banking system. It has done none of those things.

Though unemployment was in the 4.8% range at the time of his nomination, the government's calculation of unemployed Americans has more than doubled since he took over. The dollar price of gold has similarly more than doubled on the Bernanke Fed's watch, and while Treasury policy under Presidents Bush and Obama is not given nearly enough credit for the dollar's collapse, Bernanke certainly didn't bolster the greenback with his frequent suggestions that inflation was quiescent. As for the banking system, its decline while under the allegedly watchful eye of the Bernanke Fed is well documented.

Perhaps worst of all, Bernanke is captive to the impoverishing notion that economic growth itself is inflationary. No evidence supports such a claim, and with good reason: in an economy comprised of individuals, it would be hard to find one who feels there's such thing as prospering too much. A top-down economic thinker at best, Bernanke's view of the world learned on campus has made him blind to inflation's true nature, while in thrall to mere theory that's never jibed with reality. . .

Some would say that the government's various interventions pre-crisis helped create these commercial mistakes such that bailouts were warranted, and while true in the sense that government error is always at the heart of downturns, it's not a proper defense of the bailouts. Simply put, not all banks bought into the weak-dollar "money illusion" in such a way that they made horrific housing loans to those unable to pay them back, not all banks housed mortgage-backed securities set to wither in value, and not all insurance firms failed to properly account for looming credit defaults. No matter the government's role here, the prudent shouldn't be forced to subsidize the imprudent. . .

if Bernanke were the depression expert that so many assume, he would know well that any understanding of the 1930s downturn must be measured against and include an understanding of the economic collapse of the early 1920s. The brutal 1920-21 recession was of course met with spending cuts, a commitment to the dollar's soundness and the very kind of non-intervention that made it so short, and which led to a huge economic rebound.

Looking at the 1930s, it's increasingly understood that Washington's failure to follow the non-interventionist ‘20s playbook gave us the Great Depression for the ‘30s economy suffering from all manner of mandates, currency devaluation, heavy spending/taxation and broad "regime uncertainty" such that the individuals who comprised the ‘30s economy were production averse. Bernanke's plan to fix that which he helped break shows that far from an expert on the Great Depression, he learned nothing from that decade as evidenced by his desire to repeat many of its same policy mistakes.

Of course it is due to "uncertainty" as to who might replace Bernanke that some who aren't pleased with his tenure say he should be kept around. No doubt they have a point, but by this logic every failed CEO and coach in business and sports should be retained to maintain the same failed certainty.

Back in the real world, failures should be replaced. Bernanke was a flawed choice as Fed Chairman right from the beginning, and now it's time for President Obama to put his stamp on the Fed so that he can be held accountable for future policy emanating from the world's most important central bank.

A picture is worth about $1.3 trillion words--I mean dollars

Booms and Busts are not new

Excerpts:The Panic of 1819 by Mark Skousen from: [Libertarian Review, August 1975.]

The Panic of 1819 was an unforgettable nightmare for early Americans. Banks throughout the country were unable to make good on customers' claims for specie and were forced to close their doors. Creditors foreclosed on deeply indebted farmers, city dwellers, and speculators who had bought cheap public land. Wages as well as prices dropped precipitously. Interest rates climbed and people moaned over the "scarcity of money." Utmost in the minds of American leaders and influential journalists was the question, "Why did the boom die?"

The panic and depression were a result of a huge monetary inflation. After the War of 1812, the economy flourished, as loosely chartered State banks issued redeemable notes far beyond specie. The quantity of money multiplied rapidly. In 1815 alone, bank notes increased from $46 million to $68 million.

Eventually, bank notes began selling at a discount, as foreigners and money brokers profitably claimed the notes for specie. In addition, the Bank of the United States' began to call on branches to redeem other bank obligations. The monetary expansion ended abruptly and a wave of bankruptcies ensued.

Although the 1819–1821 depression was relatively short-lived, . . . the panic served as an important training ground for future American leaders. It was during this period, for example, that General Andrew Jackson grew extremely suspicious of banks. . . . Other important contemporary figures, such as Martin Van Buren, William Henry Harrison, and Davy Crockett (who called the banking system a "swindling"), also gained prominence at this time as a consequence of their opposition to wildcat banking. . .

Thomas Jefferson is referred to as the "most thorough-going opponent of bank credit," favoring the "eternal suppression of bank paper." Jefferson believed that only specie should be allowed to circulate. . . James Madison regarded banks as "harmful" institutions. And John Adams, whose views on banks were nearly identical with Jefferson's, regarded paper money beyond specie as "theft." Although such views as the 100 percent specie standard are considered repugnant and taboo to most economists today, it is interesting and significant that such views were generally held by the founding fathers. . .

debate [that] raged between the inflationists and the hard-money advocates during the depression. Some public figures spoke out for public works projects and relief for the poor. Some states enacted legislation to keep creditors from foreclosing on debtors (stay laws and minimum appraisal laws). Others blamed the depression on the contraction of the money supply and enacted laws to "prime the pump" in an effort to reduce interest rates and stimulate business. On the national level, vain efforts were made to issue a currency unbacked by gold or silver. Finally, some blamed the depression on foreign imports and sought a high protective tariff.

But unlike today, the deflationists and hard-money men had the upper hand. As a result, the depression ended rather quickly (by 1821) when confidence in currency was restored and currency once again was redeemable in specie.

The public sector union scam

Excerpts: Majority of Union Members Now Work for the Government By JAMES SHERK

New data from the Bureau of Labor Statistics (BLS) show that a majority of American union members now work for the government. The pattern of unions adding members in government while losing members in the private sector accelerated during the recession. The typical union member now works in the Post Office, not on the assembly line.

Representing government employees has changed the union movement's priorities: Unions now campaign for higher taxes on Americans to fund more government spending. Congress should resist government employee unions' self-interested calls to raise taxes on workers in the private sector. . .

What is newsworthy, however, is another figure reported by the BLS: 52 percent of all union members work for the federal or state and local governments, a sharp increase from the 49 percent in 2008.[5] A majority of American union members are now employed by the government; three times more union members now work in the Post Office than in the auto industry. .

In 2009, government employees came to constitute the majority of union members for two reasons. First, union membership rates fell in the private sector. Unionized companies do poorly in the marketplace and lose jobs relative to their nonunion competitors. . . Competition undermines unions.

Government employees, however, face no competition as the government never goes out of business. As a result, government employees organize at far higher rates. A full 37.4 percent of government employees belonged to unions in 2009, . .

This shift has transformed the labor movement. Some historians argue that unions were created to prevent profit-minded employers from exploiting workers and to win workers a share of business profits.[10] However, neither of these purposes makes sense in government. . .

Collective bargaining gives government employees the power to tell voters how to spend their tax dollars instead of the other way around. . .

Not until the 1960s did federal, state, and local governments change the law to permit government employees to collectively bargain with taxpayers. Now unions primarily represent the government--a development that has shifted the labor movement's focus from redistributing business profits to getting more from taxpayers.

Representing government employees has turned unions into determined supporters of tax increases and more government spending. Higher taxes mean the government can hire more workers and pay higher wages. As a result, public-sector unions have become a potent force lobbying for higher taxes and against spending reductions across America: . .

Quote of the day

"A society that values price level stability should not entrust the control of its money to people who benefit from inflation."-H.D. Thoreau

Monday, January 25, 2010

What is inflation?

EXCERPTS: The True Meaning Of Inflation John Tamny

The Federal Reserve is empowered by Congress to keep inflation in check, but its definition is even more wanting than the monetarist view. According to the Fed's leading lights--including Chairman Ben Bernanke--inflation is a function of too much economic growth. This impoverishing definition is even easier to discredit than the monetarist description. . .

So what is true inflation? It seems the answer resides in the price of gold. Used as a money measure for thousands of years, gold achieved its purely monetary role precisely because its role in the productive economy is so minuscule. As a result, nearly every ounce of gold ever mined is still with us, which means gold's real price is hard to alter thanks to a great deal of gold stock in existence relative to new discoveries.

When the price of gold moves, gold's price isn't moving; rather it is the value of the currencies in which it's priced that is changing. Gold is the objective indicator of inflation: When its price in any currency rises substantially, that means the unit of account is weakening and that we're inflating.

What does this mean for the economy? Broadly it means that when the dollar weakens such that the price of gold spikes, what is limited capital seeks safe-haven in hard, unproductive assets like gold, oil, art and property. Physical assets least vulnerable to monetary debasement win out over less tangible investments of the innovative or knowledge variety. In that sense it's no surprise that technology investments thrived in the '80s and '90s when the dollar was strong.

Getting back to inflation, rather than a measure of prices that change for various reasons that have nothing to do with currency policy, inflation is at its core the painful process by which capital flows to the hard assets of the earth and away from innovative, wage-creating industries. As individuals we don't so much hate inflation for the rising prices as much as we balk at it because our chances to capture good jobs and good wages are compromised for capital essentially hiding.

As the rising price of gold has revealed throughout the decade we've been inflating, no matter what the more quiescent government measures of consumer prices have been telling us. A weak dollar explains our economic unhappiness because a weak dollar is what has made capital disappear. . .

In short, inflation is about capital going on strike. And the political party that catches on to inflation's true meaning will thrive. The problem, however, at least for now, is that politicians and economists on both sides of the aisle are captive to false inflation definitions that have blinded them to the true inflation that is very much with us, and that weighs on the economy more than any other policy today.

Thursday, January 21, 2010

Year one spend-a-thon

From the Wall Street Journal Editors
In the past year they have passed: a $447 billion omnibus spending bill for fiscal 2009, a $787 billion stimulus, $3 billion for cash for clunkers, $75 billion in mortgage assistance, $34 billion for children's health care (Schip), $30 billion in anticipated auto bailout losses, with another nearly 11% spending increase teed up for fiscal 2010 for domestic programs.
Total = 1,376,000,000,000 or 1.376 trillion dollars in one year!

Wednesday, January 20, 2010

Mises on Economics

Excerpt from Ludwig von Mises' Human Action:

"Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man's human existence."

The Danger of National Debt

According to the website, the national debt for the United States is $12.3 trillion and the unfunded liabilities totals $107.08 trillion.

The 20 January 2010 evening headline of Drudge Report states that the Democratic Party may raise the official government debt ceiling by another $1.9 trillion, surpassing $14 trillion.

In 1788, the Anti-Federalists debated the merits of the Constitution. One problem that they foreshadowed was the limitless amount of power granted the Congress to borrow money upon the credit of the United States (Article 1, Section 8).

In a letter titled "Brutus," the seventh work of that series, the author warned of the danger posed by a national debt that couldn't be repaid.

Brutus wrote: "The power to borrow money is general and unlimited...Under this authority, the Congress may mortgage any or all the revenues of the union, as a fund to loan money upon, and it is probable, in this way, they may borrow of foreign nations, a principal sum, the interest of which will be equal to the annual revenues of the country.--By this means, they may create a national debt, so large, as to exceed the ability of the country ever to sink."

Brutus understood that in times of emergency, it may be necessary to borrow money, but it must be under the most extreme of circumstances. Brutus said, "It may possibly happen that the safety and welfare of the country may require, that money be borrowed, and it is proper when such a necessity arises that the power should be exercised by the general government.--But it certainly ought never to be exercised, but on the most urgent occasion."

Brutus recommended that the Constitution include a provision that restricted the power of Congress to perform the aforementioned borrowing. "The constitution should therefore have so restricted, the exercise of this power as to have rendedred it very difficult for the government to practise it. The present confederation requires the assent of nine states to exercise this..."

Brutus summarized this unchecked power by stating "that the general government have unlimitted authority and controul over all the wealth and all the force of the union."

Today, America finds itself at a crossroads. We have a budget deficit that is not contained. We have unfunded liabilities that dwarf the immense budget deficit. We have a national debt that has almost no prospect of ever being sunk. The Anti-Federalists, although they have been marginalized and forgotten by today's school text books, passionately believed in liberty and foretold of the potential abuse of power capable in the Constitution.

America can heed the warning from Brutus and retire the debt and ensure that the government cannot create a large debt again in the future. Or America can continue to drive itself further into debt, a debt that it may never recover from, and jeopardize the security and financial well-being of future citizens.

Save Haiti, change a culture

Excerpts: Tough Love Needed for Haiti
Emergency relief won’t cure Haiti’s poverty culture. By Jonah Goldberg

It’s hardly news that poverty makes people vulnerable to the full arsenal of Mother Nature’s fury. The closer you are to living in a state of nature, the crueler nature will be — which is one reason why people who romanticize tribal or pre-capitalist life . . . tend to do so from a safe, air-conditioned distance and with easy access to flushing toilets, antibiotics, dentistry, and Chinese takeout.

The sad truth about Haiti isn’t simply that it is poor, but that it has a poverty culture. Yes, it has had awful luck. Absolutely, it has been exploited, abused, and betrayed ever since its days as a slave colony. So, if it alleviates Western guilt to say that Haiti’s poverty stems entirely from a legacy of racism and colonialism, fine. But Haiti has been independent and the poorest country in the hemisphere for a long time. Even if blame lies everywhere except among the victims themselves, it doesn’t change the fact that Haiti will never get out of grinding poverty until it abandons much of its culture.

When Haitians leave Haiti for the U.S. they get richer almost overnight. This isn’t simply because wages are higher here or welfare payments more generous. Coming to America is a cultural leap of faith, physically and psychologically. Arnold Kling and Nick Schulz note in their phenomenal new book, From Poverty to Prosperity, that low-skilled Mexican laborers become 10 to 20 times more productive simply by crossing the border into the United States. William Lewis, former director of the McKinsey Global Institute, found that illiterate, non-English-speaking Mexican agricultural laborers in the U.S. were four times more productive than the same sorts of laborers in Brazil.

Why? Because American culture not only expects hard work, but teaches the unskilled how to work hard. It’s true that Haiti has few natural resources, but neither does Japan or Switzerland. What those countries do have are what Kling and Schulz call valuable “intangible assets” — the skills, rules, laws, education, knowledge, customs, expectations, etc. that drive a prosperous society to generate prosperity. That is where the real wealth of nations is to be found — not in factories, oil deposits, and gold mines, but in our heads and in the habits of our hearts. Indeed, a recent World Bank study found that 82 percent of America’s wealth could be found in our intangible assets.

Haiti’s poverty stems from its lack of intangible capital. It shares the island of Hispaniola with the Dominican Republic, and yet the Dominicans have six times the GDP (and are far better stewards of their environment). . . So I say this with the best of intentions. Once the dead are buried, the wounded and sick healed, and the rubble cleared, it’s time for some tough love. Otherwise, Americans will just be back to clear the debris after the next disaster.

2010 Economic freedom index

Economic freedom = greater standards and quality of life
Haiti is 141...

source: Wall Street Journal

Where are people moving? Follow the money.

From the Wall Street Journal.

United Van Lines moved nearly seven families to the federal city last year for every three it moved out. As always when the feds gear up the income redistribution machine, the imperial city and its denizens get a big cut of the action.

As in ancient Rome, the provinces are being required to send tribute to subsidize those living in the capital, which produces few services save transfer payments. No wonder the provincials are starting to rebel—even in Massachusetts.

Tuesday, January 19, 2010

What if European countries became U.S. States?

This chart shows America's dominance in economic growth and quality of life.
click on chart to enlarge.

Source: Thanks to Mark Perry, Carpe Diem Blog

Haiti, once the suffering subsides, what do they really need for long term economic viability?

Excerpts: To Help Haiti, End Foreign Aid For Haitians, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity. By Bret Stephens

Kindness comes to Haiti, but too much kindness can kill.

All this works to salve the consciences of people whose dimly benign intention is to "do something." It's a potential bonanza for the misery professionals of aid agencies and NGOs, never mind that their livelihoods depend on the very poverty whose end they claim to seek.

For actual Haitians, however, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity. It will benefit the well-connected at the expense of the truly needy, divert resources from where they are needed most, and crowd out local enterprise. And it will foster the very culture of dependence the country so desperately needs to break.

How do I know this? It helps to read a 2006 report from the National Academy of Public Administration, usefully titled "Why Foreign Aid to Haiti Failed." The report summarizes a mass of documents from various aid agencies describing their lengthy records of non-accomplishment in the country.

Here, for example, is the World Bank—now about to throw another $100 million at Haiti—on what it achieved in the country between 1986 and 2002: "The outcome of World Bank assistance programs is rated unsatisfactory (if not highly so), the institutional development impact, negligible, and the sustainability of the few benefits that have accrued, unlikely."

Why was that? The Bank noted that "Haiti has dysfunctional budgetary, financial or procurement systems, making financial and aid management impossible." It observed that "the government did not exhibit ownership by taking the initiative for formulating and implementing [its] assistance program." Tellingly, it also acknowledged the "total mismatch between levels of foreign aid and government capacity to absorb it," another way of saying that the more foreign donors spent on Haiti, the more the funds went astray. . .

A better approach recognizes the real humanity of Haitians by treating them—once the immediate and essential tasks of rescue are over—as people capable of making responsible choices. Haiti has some of the weakest property protections in the world, as well as some of the most burdensome business regulations. In 2007, it received 10 times as much in aid ($701 million) as it did in foreign investment.

Reversing those figures is a task for Haitians alone, which the outside world can help by desisting from trying to kill them with kindness. Anything short of that and the hell that has now been visited on this sad country will come to seem like merely its first circle.

The fate of the nation

Thomas Sowell in todays op-ed.

The stakes in this fall’s elections go far beyond the fate of either the Republican party or the Democratic party. The fate of America is on the line. The Republicans need to understand that — and to understand that they are not simply “due” after 2006 and 2008.

They have a job to do, and what will happen to our children and grandchildren will depend on how well they do it.

What is Freedom?

Excerpts: Universal Questioner By Peter Berkowitz

The core of freedom is making choices and living in accordance with them.

So understood, freedom is not a recent invention. Men and women have always dreamed of it. But they have not always understood freedom as a human right, as a great good that all human beings should enjoy, by virtue of their shared humanity, as a vital element of human dignity.

According to the great nineteenth-century German philosopher Wilhelm Friedrich Hegel, our understanding of freedom developed in three historical stages. In the first, the despotisms of distant antiquity, one person, the despot, was free. He treasured his freedom; to preserve it, he ruthlessly subjected all others to his will.

In the second, at the high point of classical Greece, in democratic Athens, a few were free. Those fortunate few—the citizens—took pride in their freedom and put it to good, even grand, use. Athenians produced enduring achievements in literature, the arts, politics, and philosophy. But the citizens, who constituted a minority of the city, generally felt no inconsistency between their precious freedom and the second-class status or servitude of the many on whose labor their freedom depended.

According to Hegel, it was only with the spread of the biblical teaching that all men and women are created in God’s image that the beautiful idea took root that all human beings are meant to be free and therefore are, in a most important respect, equal. In the fullness of time, philosophers restated the teaching in secular terms and developed new political forms to respect it. The universal claims of this third, and Hegel believed final, stage in freedom’s history resounded in 1776 in America’s Declaration of Independence and in 1789 in France’s Declaration of the Rights of Man and of the Citizen. . .

(Aleksandr) Solzhenitsyn showed, lies and violence were inseparable from communism because communism conflicted with human nature. Communism sought to subject man to the will of the party. But the human spirit seeks freedom to preserve the wisdom embodied in tradition and to live in accordance with justice. . .

he (Solzhenitsyn) warned of the dangers to freedom that emanated from the Enlightenment: erosion of the distinction between liberty and license; obsession with material goods; neglect of obligations; loss of courage; failure to take seriously the enemies, old and new, of freedom. . .

“Dwell on the past and you’ll lose an eye.” They omitted, Solzhenitsyn ruefully noted, the remainder of the proverb: “Forget the past and you’ll lose both eyes.”

Monday, January 18, 2010

The Dangers of Unlimited Taxation

During the ratification debates that took place between the conclusion of the Constitutional Convention and the final ratification of the Constitution, many Americans debated the merits and demerits of the proposed new government. The Articles of Confederation had multiple defects and the new Constitution sought to remedy the lack of power to lay and collect taxes. Under the Constitution, "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States." Article 1, Section 8.

One of the debates during the ratification period foreshadowed the current state of affairs in the country. The original system of federated powers between the states and general government has been supplanted by a system where the states are mere appendages of the general government. One need look no further than states like California looking to the federal government for a bailout due to its inability to manage its internal budget and accomplish the mandates placed upon it by the general government.

In the New York Journal, from December 27, 1787, an article titled "Brutus" VI was published. In it, the author argued that the power granted the general government would ultimately make the states dependent upon the general government.

The article states:

"It is an important question, whether the general government of the United States should be so framed, as to absorb and swallow up the state governments? or whether, on the contrary, the former outh not be confined to certain defined national objects, while the latter should retain all the powers which concern the internal police of the states."

"In my last number I called your attention to this subject, and proved, as I think, uncontrovertibly, that the powers given the legislature under the 8th Section of the 1st article, had no other limitation than the discretion of the Congress. It was shewn, that even if the most favorable construction was given to this paragraph, that the advocates for the new constitution could wish, it will convey a power to lay and collect taxes, imposts, duties, and excises, according to the discretion of the legislature, and to make all laws which they shall judge proper and necessary to carry this power into execution. This I shewed would totally destroy all the power of the state governments."

"There is no way, therefore, of avoiding the destruction of the state governements, whenever the Congress please to do it, unless the people rise up, and with a strong hand, resist and prevent the execution of constitutional laws. The fear of this, will, it is presumed, restrain the general government, for some time, within proper bounds; but it will not be many years before they will have a revenue, and force, at their command, which will place them above any apprehensions on that score."

Wednesday, January 13, 2010

Global warming and mans arrogance

Excerpts: Global Warming Is a Religion, by Walter E. Williams

Manmade global warming, for many, is an Earth-worshipping religion. The essential feature of any religion is that its pronouncements are to be accepted on the basis of faith as opposed to hard evidence. Questioning those pronouncements makes one a sinner. No one denies that the Earth's temperature changes. Millions of years ago, much of our planet was covered by ice, at some places up to a mile thick, a period some scientists call "Snowball Earth." Today, the Earth is not covered by a mile of ice; a safe conclusion is that there must have been a bit of global warming. I don't know the cause of that warming, but I'd wager everything I own that it was not caused by coal-fired electric generation plants, incandescent light bulbs and SUVs tooling up and down the highways.

The very idea that mankind can make significant parametric changes to the Earth has to be the height of arrogance. How about a few questions because temperature is just one characteristic of the Earth. The Earth's orbit is another. If all 6.5 billion of us, all at once, started jumping up and down for a little while, do you think we'd change the Earth's orbit or rotation? Do you think mankind could change the direction and timing of the ocean's tides? Is there anything that mankind can do to stop or start a tsunami or hurricane? You say, "Williams, it's stupid to suggest that mankind could change the Earth's orbit or rotation, ocean tides or cause or stop a tsunami or hurricane!" You're right and it's also stupid to think that mankind's activities can make globalized changes in the Earth's temperature. . .

One of the most dangerous features of the global warming religion is its level of intimidation of heretics or would-be heretics.

A few years back, Dr. Heidi Cullen, the Weather Channel's climatologist, advocated that the American Meteorological Society (AMS) strip their seal of approval from any TV weatherman expressing skepticism about the predictions of manmade global warming. Scott Pelley, CBS News "60 Minutes" correspondent, compared skeptics of global warming to "Holocaust deniers." Former Vice President Al Gore called skeptics "global warming deniers." But it gets worse. On one of her shows, Dr. Cullen featured columnist Dave Roberts, who, in his Sept. 19, 2006, online publication, said, "When we've finally gotten serious about global warming, when the impacts are really hitting us and we're in a full worldwide scramble to minimize the damage, we should have war crimes trials for these bastards -- some sort of climate Nuremberg."

As a result, many climatologists have been intimidated into silence. That means the public is not informed about counter-alarmists facts such as: Over long periods of time, there is absolutely no close relationship between C02 levels and temperature. Humans contribute approximately 3.4 percent of annual C02 levels compared to 96.6 percent by nature. There was an explosion of life forms 550 million years ago (Cambrian Period) when CO2 levels were 18 times higher than today. During the Jurassic Period, when dinosaurs roamed the Earth, CO2 levels were as much as nine times higher than today. Contrary to what educators are brainwashing our children with, polar bear numbers increased dramatically from around 5,000 in 1950 to as many as 25,000 today, higher than any time in the 20th century.

Monday, January 11, 2010

FED loans money for free, the goverment borrows from the banks to give out freebies, the banks make a handsome profit and the people get the shaft.

A real economic enema.

Excerpts: Obama vs. the banks. From the Wall Street Journal

Wall Street fat cats are always a convenient political target, but bankers are responding to the incentives generated by the economic policies of the Treasury and the Federal Reserve. First and foremost is the Fed's policy of near-zero interest rates.

What this means is that banks can raise short-term money at very low interest rates and buy safe, 10-year Treasury bonds at around 3.5%. The Bernanke Fed has promised to maintain its policy for "an extended period." That translates into an extended opportunity for banks to engage in this interest-rate arbitrage.

Why would a banker take on traditional loans, which even in good times come with some risk of loss? In today's troubled times, only the best credits will be bankable. Meanwhile, financial institutions are happy to service their new, best customer: the U.S. Treasury. That play on the yield curve is open to banks of all sizes.

The Fed's policy makes sense if the goal is restoring bank profitability by generating cash flow. It is a terrible policy if the goal is fueling small business, the engine of economic growth and job creation. Large, nonfinancial corporations have access to banks. They can also tap the public credit markets and have access to internally generated funds. Not so for small business, which depends heavily on banks for credit...

The central bank and inflation.

Excerpts: Free Banking and Contract Law by Ludwig von Mises, from chapter 17 of Human Action

Those Americans who twice succeeded in doing away with a central bank were aware of the dangers of such institutions; it was only too bad that they failed to see that the evils they fought were present in every kind of government interference with banking. Today even the most bigoted étatists cannot deny that all the alleged evils of free banking count little when compared with the disastrous effects of the tremendous inflations which the privileged and government-controlled banks have brought about. . .

What is needed to prevent any further credit expansion is to place the banking business under the general rules of commercial and civil laws compelling every individual and firm to fulfill all obligations in full compliance with the terms of the contract. If banks are preserved as privileged establishments subject to special legislative provisions, the tool remains that governments can use for fiscal purposes. . . If an administration and the party backing it want to increase expenditure without jeopardizing their popularity through the imposition of higher taxes, they will always be ready to call their impasse an emergency. Recourse to the printing press and to the obsequiousness of bank managers, willing to oblige the authorities regulating their conduct of affairs, is the foremost means of governments eager to spend money for purposes for which the taxpayers are not ready to pay higher taxes.

Free banking is the only method available for the prevention of the dangers inherent in credit expansion. It would, it is true, not hinder a slow credit expansion, kept within very narrow limits, on the part of cautious banks which provide the public with all information required about their financial status. But under free banking it would have been impossible for credit expansion with all its inevitable consequences to have developed into a regular—one is tempted to say normal—feature of the economic system. Only free banking would have rendered the market economy secure against crises and depressions.

Looking backward upon the history of the last hundred years, one cannot help realizing that the blunders committed by liberalism in handling the problems of banking were a deadly blow to the market economy. There was no reason whatever to abandon the principle of free enterprise in the field of banking. The majority of liberal politicians simply surrendered to the popular hostility against moneylending and interest taking. They failed to realize that the rate of interest is a market phenomenon which cannot be manipulated ad libitum by the authorities or by any other agency. They adopted the superstition that lowering the rate of interest is beneficial and that credit expansion is the right means of attaining such cheap money. Nothing harmed the cause of liberalism more than the almost regular return of feverish booms and of the dramatic breakdown of bull markets followed by lingering slumps. Public opinion has become convinced that such happenings are inevitable in the unhampered market economy. People did not conceive that what they lamented was the necessary outcome of policies directed toward a lowering of the rate of interest by means of credit expansion. They stubbornly kept to these policies and tried in vain to fight their undesired consequences by more and more government interference.

Friday, January 8, 2010

The Next President?

Just a thought for the Tea Party

Retired Army 3 star general Jerry Boykin for president.

Time to start vetting.

Terrorism realities

Excerpts: Beating the Dead Terrorist Horse: September 11 taught us many lessons. To our peril, we have forgotten them. By Victor Davis Hanson

Most of the current acrimony over counterterrorism is stale. The debate is simply a rehash of issues that were discussed and, in fact, resolved early last decade. Let us review them one more time.

September 11 taught us that a Mohammed Atta or a Khalid Sheikh Mohammed does not commit mass murder out of hunger, want, illiteracy, or Western oppression. No doubt Middle Eastern poverty contributes to religious violence. But the poor in Palestine, Saudi Arabia, Egypt, and Yemen are no more impoverished than those in the slums of São Paulo, Mexico City, Ho Chi Minh City, or Johannesburg. And the latter, despite their frequent claims against the West, do not feel a need to murder in mass in the name of their particular religion.

A Major Nidal Hasan or an Umar Farouk Abdulmutallab wishes to kill Westerners not because he is poor or even on behalf of the poor, but rather out of a warped sense of pride, hurt, and anger.

Such passions derive from a radical religious creed that insists that comparative failure in the modern Middle East is not self-induced — much less a product of fundamentalism, anti-Enlightenment thinking, autocracy, gender apartheid, tribalism, corruption, and statism. Instead the fact that there is no longer an intercontinental caliphate of rich and powerful believers is due to some sort of contemporary Jewish or Western oppression.

The wealthier, better educated, and more Westernized the radical Muslim, often the greater the sense of shame, alienation, and anger that he and his religion are not shown proper deference. . .

Hasan hated American soldiers not because our system had discriminated against him, much less because of “secondary post-traumatic-stress syndrome,” or any of the other wacky excuses that followed his crime. Instead, in part he sensed that the American military had bent over backwards for him and accommodated his extremism — and was therefore, in his own distorted worldview, weak, decadent, and deserving of what he would dish out.

Radical Islam’s anger is irrational. It is not predicated on the degree of outreach shown by the United States. A contrite and compliant Jimmy Carter, after all, prompted the creation of the slur “The Great Satan.” The year 2009 saw the greatest number of foiled terrorist plots against America since 9/11. Indeed, one-third of all such attempts in the last eight years happened last year — the time of the Obama Al Arabiya interview, the Cairo speech, the bowing to Saudi royals, the promises to close Guantanamo Bay, and the ritual trashing of the Bush anti-terrorism policies.

We need not be gratuitously rude. There surely is a role for sober diplomacy and soft speech. But the degree to which radical Islam will be aggressive toward the West hinges a lot on what it imagines will be our reaction — in terms both of military responses, and of the sense of confidence we project about our own civilization.

Islamists, after all, ignore past American help to, and support for, Islamic peoples in Afghanistan, Bosnia, Chechnya, Indonesia, Iraq, Kosovo, Kuwait, and Somalia — only to pay far more deference to the Chinese and Russians, who have systematically oppressed and often butchered fellow Muslims. . .

The popularity of bin Laden and the tactic of suicide bombing itself plummeted throughout the Middle East between 2001 and 2009. . . the change of heart developed because bin Laden and his epigones were considered to be losing in Afghanistan and Iraq. They were endangering those who supported them, and murderously turning on their own — even as the United States was projecting both an image of confidence and readiness to extend support for consensual government and personal freedom.

In contrast, the current policy of apology and kowtow — coupled with a cynical realism (albeit cloaked in nonjudgmental, multicultural relativism) and presented abroad with a sense of hesitation and self-doubt — is, in fact, a prescription for reviving radical Islam. . .

Much of radical Islam’s posture is predicated on our expected response. When we did nothing during the Iranian hostage crisis, more or less whined after the Marine-barracks bombing, sent a few cruise missiles after the East African embassy attacks, litigated the 1993 World Trade Center bombing, and forgot the USS Cole, bin Laden concluded that the West was the “weak horse” and pressed on.

To some degree, Afghanistan and Iraq changed that impression, especially the devastating defeat of al-Qaeda in al-Anbar province in 2006–2008. But that costly progress was accompanied by more recrimination against the Bush administration than anger directed at radical Islam.

Equally important, the Western world said very little about the Danish-cartoon threats, the killing of Theo Van Gogh, and various premodern Muslim actions like rioting after the Pope’s Byzantine exegesis and the false stories of Koran burning in Guantanamo. Had Europe and the United States shown a united front on behalf of freedom of expression, rather than a fear of Islamic reaction, such incidents would have been written off as the lunacy they were.

Instead of reacting to perceived Muslim grievances, we should be continually directing questions to Islam: Why are there numerous mosques in the West, but few churches in Islamic countries? Why are Korans freely disseminated in the West, but Bibles not so under Islamic rule? Why do Muslims enjoy more freedom and rights under Western secular law than in their own countries? The aim of such interrogatories is not to score points, but to suggest to radical Muslims that we hold them to the same standards as we hold ourselves. . .

There are now proven protocols for dealing with terrorism that work and are not at odds with the Constitution. For all the talk of al-Qaeda’s resilience, it has lost thousands of its top echelon. The regime in Iran is shaky — and shakier still for the continuance of a constitutional system in neighboring Iraq. Europe is shedding its politically correct appeasement of Islam, and several countries have already enacted statutes about Islamic dress and mosques unthinkable in the United States.

“Bush did it” is becoming ironic, and having the unintended consequence of reminding us how well we once defended ourselves — and how risky it is not to appreciate why and how.