Friday, March 27, 2015

Easy Answer: Too Damn Big

The great Robert Higgs asks (and answers) How Big Is Government in the United States?:
How big is government in the United States? The answer depends on the concept used to define its size. Although many such concepts are available, and several are used from time to time, by far the most common measure, especially in studies by economists, is total government spending (G) as a percentage of the gross domestic product (GDP).

Using official data available at the online repository maintained by the Federal Reserve Bank of St. Louis and data available online for the Bureau of Economic Analysis’s National Income and Product Accounts, I have calculated that for the five-year period 2010-14, this measure of the size of government—including all levels of government, not simply the federal government, and all types of spending, not simply purchases of currently produced goods and services—was 35.8 percent.

On reflection, however, one might well wonder why G has been “normalized” so often by measuring it relative to GDP. One reason this practice is questionable is that GDP includes a large part—equal in recent years to about 10 percent of the total—known as the capital consumption allowance. This is an estimate of the amount of spending that was required simply to maintain the value of the nation’s capital stock as it depreciated because of wear and tear and obsolescence. Given that GDP is defined to include only “final” goods and services, it is questionable that expenditures made solely to maintain the capital stock should be included at all, rather than excluded as “intermediate goods,” as a large volume of the economy’s total output is already excluded (e.g., steel sold the manufacturers of machinery, wheat sold to flour mills).

One way around this difficulty is to measure G not relative to GDP, but relative to net national product, which, except for a statistical discrepancy, is the same as the accounting concept known as national income (NI). Using NI as the denominator, for the same period 2010-14, we find that size of government in the United States was 41.4 percent. This figure, however, may still give a misleading impression of the relative size of government because NI includes elements that are more or less remote from the economic affairs of individual households.

After some adjustments to NI, including several deductions (e.g., for contributions to government social insurance) and several additions (e.g., for personal income receipts on assets), we arrive at the accounting concept designated personal income (PI), which, because the foregoing deductions and additions have been almost offsetting, has been approximately the same as NI in recent years. From the total PI, individuals pay taxes, spend a portion (designated personal consumption, C), and save the rest. PI is the income concept that accords most closely with ordinary people’s notion of their income.

Personal consumption outlays, which currently amount to about 95 percent of disposable (that is, after-tax) personal income, are an arguably superior denominator for the measurement of the relative size of government. If we use it as such, we find, for the same period 2010-14, a figure of 52.2 percent. Thus, by a more meaningful measure, total government spending is equivalent not to a little more than a third of the economy (G/GDP) nor to a little more than four-tenths of it (G/NI), but rather to a little more than half of the part of the economy that affords immediate satisfaction to consumers (C/PI).

Even this measure fails to indicate how great the government’s presence in our lives really is, however, because governments at every level impose a vast number of legal and regulatory requirements that must be met out of the people’s own resources. Such outlays are not included in any government’s budget even though they are made only because governments require that private parties make them. Where private businesses meet the costs of compliance with such government requirements, the effect is to increase the businesses’ operating costs and hence to cause the prices of their products to be greater than they otherwise would be. The resulting diminution of consumers’ purchasing power constitutes a hidden tax, and there is good reason to suppose that the amount of this tax—whose complications preclude precise estimation—is tremendous.

According to Wayne Crews, who makes an annual estimate of the cost of compliance with federal regulations alone, “Costs for Americans to comply with federal regulations reached $1.863 trillion in 2013”—which is equivalent to more than 13 percent of national income. Compliance with state and local government regulations surely adds a large amount to Crews’s estimate for federal compliance alone. No one needs to tell Americans, however, how onerous and exasperating the entire mass of government regulations and related red tape has become. Virtually every part of economic and social life now bears these heavy burdens, and any truly meaningful appraisal of the size of government today must take them into consideration along with the amounts the various governments are spending.

ADDENDUM: An additional problem, distinct from those discussed above, is that any normalization of government spending that uses GDP or one of its components as the denominator of the ratio makes the ratio smaller because a large part (about 55 percent in the years 2010-14) of total government spending—namely, spending for currently produced final goods and services—is included in the denominator as well as the numerator of the ratio. Thus, for the past five years, if we computed total government spending relative to the private part of GDP, rather than the entire GDP, we would find the size of government to be 44.6 percent, rather than 35.8 percent; and if we computed total government spending relative to the private part of NI, rather than the entire NI, we would find the size of government to be 53.7 percent, rather than 41.4 percent.

Of course, the root problem here is that government spending is defined as a component of GDP in the first place. It never should have been included—and it might never have been included had the government not established a command economy during World War II. Government spending either is completely wasteful, merely transfers income, purchases an intermediate rather than a final good, or purchases valuable final services whose value cannot be ascertained because the transaction is not made by private parties exchanging their own resources in a market setting.

Couldn't Agree More: Barack Obama Is a Failed President

“How’s that hopey-changey stuff working out for ya?” It was Sarah Palin, in her classic folksy way, who first articulated what was then a heretical scepticism about Barack Obama’s performance as President of the United States that is now mainstream, both in America and globally. Obama has not so much crashed and burned as fizzled out. After all the hype (“Yes we can”) the former messiah is now a failed president. He is down there with Jimmy Carter.

When an individual who holds high office and of whom great expectations have been entertained turns out to be a failure, the temptation for commentators is to cite Greek or Shakespearean tragedy as a metaphor for the current debacle. In Obama’s case there is no justification for dramatising his decline in such terms. This is not a great man laid low by the fates, simply a mediocre politician hyped by a massive machine who was never fit for the job to which he aspired.

The most striking feature of Obama’s failure is its predictability. A Chicago politician turned into a myth by an election machine glutted with cash and, appropriately, supported by Hollywood, the ultimate dream factory, was always going to look good up until his inauguration. Thereafter, when the job of President of the United States had to be done, it was downhill all the way. Diehard Obama worshippers – and they constitute a rapidly dwindling cult – point to “achievements” such as taking America out of the Iraq war. If Democrats want the present state of Iraq to be chalked up as a credit to Obama they can only make the Tea Party very happy.

The great totem, for those who put ideology before reality, is Obamacare. For British liberal commentators in particular, this attempt to graft onto America some aspects of the UK’s welfare system is regarded as an achievement to be applauded. Leaving aside the empirical argument that Britain’s dependency culture and big government provide a cautionary tale rather than a constructive template, the social engineering disaster that is Obamacare will indeed become the memorial to this presidency and it will not be an enviable one.

The crashed website for those registering for Obamacare might have been a parable of the whole fiscally destructive charade. As early as 2008 the then presidential candidate Obama made this project the keystone of his whole hope-and-change hype: “In an Obama administration, we’ll lower premiums by up to $2,500 for a typical family per year.” In reality, Obamacare will increase health spending for a typical family by $7,450 between 2014 and 2022, on the basis of calculations by experts working for Medicare’s actuary, according to a report in Forbes magazine, who estimated $621bn extra would need to be spent.

Obamacare is a ticking fiscal time bomb. But this ruinous scheme has another feature beyond unaffordable costs that is still more ominous. It is part of the one transformation that Barack Obama has managed to inflict on America: the conversion of the nation that pioneered capitalism into a socialist, dependent society with a growing instinct to nestle on the teat of Big Government.

Of course, the United States remains a giant capitalist economy, still breeding entrepreneurs in large numbers, still furnishing its citizens with the dream of journeying from rags to riches by means of personal endeavour and still cherishing ideals of self-reliance. But among the plenteous wheat of self-sufficiency and capitalist aspiration Obama has sown the cockle of dependency and socialism. There is now in America a significant portion of the electorate imbued with the feckless sense of entitlement that has so badly debilitated British and European society.

That is not solely attributable to Obama. The roots of this malaise go back to the presidency of Bill Clinton when crazed notions of positive discrimination in favour of minorities and politically correct dogma imposed a duty on lenders to hand out mortgages to borrowers who had no prospect of repaying them, eventually provoking the sub-prime crisis. But the double-term presidency of Obama has allowed anti-capitalist “progressive” forces to gain considerable traction across society.

Obama’s most widely acknowledged failure has been in foreign policy. He has contrived to reduce the global influence of the most powerful nation on earth to negligible status. Iran has run rings round him: the ayatollahs saw Barack coming. So far from retreating from the infatuated delusion of the Bush administration that America had a remit to impose its own order on the world, overthrowing Middle Eastern tyrants who were the only people capable of confining the jihadist genie within the bottle, Obama supported further regime change and was only frustrated from pursuing a course that might have overthrown the Assad government in Syria and left an open goal for Isis by the resistance of Congress.

Obama’s relationship with Congress is not just bad, it is simply not the conduct of an American president who understands and respects the Constitution. In his second term, when facing opposition from Congress his instinct has been to rule by presidential decree: in some areas his governance has been more autocratic than that of George III. While constantly proclaiming an irenic, across-the-aisle desire to work with his political opponents in the national interest, his actions have been unvaryingly partisan.

This man who seven years ago was thought by the gullible to embody extravagant hopes for the future has achieved nothing and will leave no monument, apart from Obamacare, an initiative that will become ever more discredited as the years pass – unless, of course, the Republicans muster the courage to repeal it, which does not seem likely, due to the GOP’s lack of political will..

When Barack Obama leaves office, in the absence of achievements to hymn it is predictable that commentators will busy themselves instead with crafting sombre reflections on unfulfilled greatness. That will be extremely ill-judged. There never was the faintest whiff of greatness about Barack Obama. All that has happened is that America, the nation that pioneered advertising, sold itself a mediocre commodity via a glitzy but utterly false sales campaign and the product is now provoking consumer dissatisfaction.

Bubble Headlines

New:  Are We In A Biotech Bubble? You Decide

New:  Why Yellen & The Feds Are Bubble Blind - They Apparently Believe Wall Street’s EPS Scam 

New:  US Housing Bubble 2.0 In One Chart: Home Prices Outpace Wage Growth 13:1 

New:  It’s Not Different This Time: The Biotech Bubble Is The New Dotcom

How Governments Worked WIth the Banks to Create the $555 Trillion Interest Rate Bubble

Why The Dollar Is Rising As The Global Monetary Bubble Craters

Massive Malinvestment Eviscerating Global Iron Ore Industry—–Prices Heading Toward $30/Ton

The $1.2 Trillion Student Loan Bubble - The Ultimate Subprime Debacle

Subprime Auto Market Begins To Crack - Delinquencies At 2008 Highs 

NFIB Chief Economist Warns "Bubble In US Net Worth Has Reached Unsustainable Heights"

Thanks For The Corporate Bond Bubble, Fed

Why This Tech Bubble is Worse Than the Tech Bubble of 2000

Alan Greenspan Warns Stocks Are "Without Doubt Extremely Overvalued"  [this from the man who was the master bubble maker!]

No Laughing Matter: Fed Laughed As Bubble Burst

Mandatory Voting: An Idea So Offensive That Only Obama Could Suggest It (and then back down)

Here's Scott Shackford's Mandatory Voting Is a Terrible - And Insulting -Idea:  [emphasis mine]
Toward the end of a speech and Q&A session (about an hour and 10 minutes in) in Cleveland yesterday, President Barack Obama spoke a bit about reforming elections, complaining about money in politics, gerrymandering, and the Citizens United decision. One "short term" solution he floated was to make voting mandatory, holding up Australia as an example.

"It would be transformative if everybody voted," he said. "That would counter money more than anything."

No, it wouldn't, not really. Well, first of all, let's backtrack to the idea. Mandatory voting is a violation of our civil rights, just as denying a citizen a right to vote is a violation. Casting a vote is speech. It is showing support or opposition to a candidate or proposal. Making voting mandatory means voting is no longer a right. It's an obligation. It's forced speech. If we were forced to attend a church, but had a choice of several churches, we would still (most of us, anyway) recognize that this is a violation of our freedom to decline to practice religion at all. Not voting isn't just an expression of apathy. It's also a form of protest.

Second, when it comes to campaigning, mandatory voting would indeed probably make the race cheaper—but only for incumbents and entrenched politicians. Institutional inertia benefits incumbents tremendously, and they're rarely tossed out of office. Obama complained about all the television ads during election season. Imagine what it would be like to attempt to challenge an incumbent as an outsider in an environment where you have to assume that everybody is going to vote. How much more money would challengers have to spend to try to reach even more people to counter the natural advantages of incumbents? It's the same problem with attempting to restrict campaign spending. Because incumbents have a history and years of essentially free press covering his or her work in office, challengers sometimes have to be able to raise and spend more to compete against them, assuming the incumbent doesn't have a history of failure, scandal, and incompetence. There's a reason the phrase "the devil you know" gets invoked so frequently when talking about politicians and elections.

Third, Australia's parliamentary system is completely different from America's. They have a proportional voting system, not a "winner takes all" system. Their voting process is very complicated, with voters ranking candidates by preference. Australia has more than two political parties with representation in its parliament, and the voting system sometimes results in the creation of ruling coalitions (right now it's a group of center-right political parties). Comparing America's voting system to Australia's is as silly as comparing it to North Korea's, but for different reasons.

Australia's complicated voting system helped lead to the election of Australia's first libertarian senator, David Leyonhjelm. Despite nominally benefiting from mandatory voting and a prime spot near the top of the ballot, Leyonhjelm blasted mandatory voting in an interview with Reason: "We argue that we have a right to vote, and it's not a right if you get fined for not doing it. So it becomes an obligation, like paying your taxes. You don't have a right to pay your taxes; you have an obligation to pay your taxes, and you get penalized if you don't do it. Voting is in the same category: To pretend it's a right when you can be prosecuted for not doing it is ridiculous."

Here in America, the Democrats and Republicans do everything in their power to keep candidates like Leyonhjelm off the ballots, which would make mandatory voting the equivalent of finding your local convenience store coolers stocked with nothing but Coke and Pepsi. In California, the state has instituted a top-two-only run-off open primary system for many races, and in November's election, in six Congressional races, voters in those districts only had the choice between two candidates from the same party. Would you like Coke or Diet Coke?

Obama would have us believe that mandatory voting somehow gives more power to the citizenry, but in fact, it treats the citizenry as the servants of the political parties. Recall last fall when operatives for political parties sent out sinister messages to voters warning them that whether they voted or not was a public record and that they would be "interested to hear" why somebody might not have voted. As I said at the time, these methods absolve the political parties of having to find better candidates that would actually inspire people to go to the polls. Imagine what sort of insipid, lackluster candidates we'll get in mandatory elections and what they'll say or do or promise to try to get the support of people who currently do not feel enough interest to even bother.

To bounce back to Australia for a moment, today Leyonhjelm is reintroducing his bill to try to legalize gay marriage recognition down under. Part of the process of getting this legislation passed in Australia is convincing one of the coalition parties to allow its legislators to have a conscience vote, meaning these men and women will decide how to vote rather than the party. Even though polls show Australians are in favor of gay marriage recognition in higher numbers than here in the United States, Leyonhjelm has to lobby for members of one party to vote how they want to vote, not how the party tells them they have to vote.

And finally, for obvious reasons, Obama fails to engage in why special interests spend so much money on elections in the first place: The federal government is very, very powerful, and it has grown in size and scope under him. The federal government has its hooks in every single thing we do as citizens and in every single thing every business does as well. Election turnouts aren't going to change this. It might even heighten it if candidates end up promising all sorts of new programs to appeal to voters who would have otherwise not even bothered under the current system. The Obama administration and its agencies' willingness to regulate just about anything under the sun fosters an environment where not only does it pay off for labor and corporate interests to spend money to influence incomes, sometimes it's -well - mandatory.
When I first read the headlines about Obama's comment, my first thought was that it's unconstitutional to make someone vote, which is pointed out in Shackford's piece.  My second was that it would do nothing to "counteract" special interest, sorry, "campaign money".  But one thought that rose above all was this very scary one: I couldn't imagine people who lacked even a scintilla of awareness of today's issues, actually pulling a lever.  The thought of a person who cannot name the three branches of government being forced to make a choice is terrifying.

Additional Readings:

Peak Idiocy – Obama Suggests Making Voting Mandatory

Hours After Hinting At Mandatory Voting, Obama Talks Down "Suggestion" Following Backlash [be sure to check out the chart]

Mandatory Voting Guarantees Ignorant Votes :
Compulsory voting is not just unwise, it is unconstitutional
Why Mandatory Voting Is a Bad Idea by Sheldon Richman


Not "Our" Foreign Policy, But I Agree: It Is a Mess

Seeing "our" in any context when associated with government is just about as bad as seeing "we" used by politicians.  Americans accept as fact, much too much, when supposed leaders and representatives preface their pronouncements with "we believe" or "we should".  Politicians understand all too well that to get most Americans to accept any position, just first wrap it in the flag, associate it with patriotism and sprinkle some nationalism on it as well.  Likewise, when a member of the political class state something like "our nation must ...", they take advantage of the general level of gullibility so evident in the narrative of today's American republic.  Be that as it may, I am a fan of Christopher Preble, so I'll excuse his use of the pronoun in his latest piece entitled Our Unrealistic Foreign Policy, for while I accept no part of being included in "our", I agree that America's foreign policy is an unmitigated failure of epic proportions!:
U.S. foreign policy is crippled by a dramatic disconnect between what Americans expects of it and what the nation’s leaders are giving them. If U.S. policymakers don’t address this gap, they risk pursuing a policy whose ends don’t match with the means the American people are willing to provide.

What is our foreign policy? Leadership. That word appears 35 times in President Obama’s latest National Security Strategy.

His predecessors have all wanted the same thing, although most managed to work in a few more synonyms.

At the dawn of the post-Cold War era, officials in the George H.W. Bush administration aspired for the United States to be the sole global power. Now that the nation’s long-time rival had disappeared, the object of U.S. foreign policy, according to an early draft of the Defense Planning Guidance, was to “prevent the re-emergence of a new rival” capable of challenging U.S. power in any vital area, including Western Europe, Asia, or the territory of the former Soviet Union. To accomplish this task, the United States would retain preponderant military power, not merely to deter attacks against the United States, but also to deter “potential competitors” — including long-time U.S. allies such as Germany and Japan — “from even aspiring to a larger regional or global role.”

Echoing those sentiments a few years later, Bill Kristol and Robert Kagan characterized the proper U.S. role in the world as “benevolent global hegemony.” “The aspiration to benevolent hegemony,” they conceded in their famous Foreign Affairs essay from 1996, “might strike some as either hubristic or morally suspect. But a hegemon is nothing more or less than a leader with preponderant influence and authority over all others in its domain.”

Kristol and Kagan claimed, “Most of the world’s major powers welcome U.S. global involvement and prefer America’s benevolent hegemony to the alternatives.” Indeed, they continued, “The principal concern of America’s allies these days is not that it will be too dominant but that it will withdraw.”

That latter point has never been tested: U.S. troops have remained in Europe and Asia, and the U.S. military presence expanded in other regions. But whether it is good for others doesn’t necessarily make it good for us. For the most part, American taxpayers, and especially American troops, have borne the burdens of “benevolent hegemony,” while U.S. allies have been content to focus their attention on domestic spending, while their underfunded defenses languish.

Modern-day advocates of our current foreign policy opt for a less grandiose name — “deep engagement” — but the substance is the same as that advocated by Kristol and Kagan from nearly two decades ago. And the fact that U.S. foreign policy encourages other countries to neglect their defenses continues to be its key selling point.

“By reassuring allies and actively managing regional relations,” Stephen G. Brooks, G. John Ikenberry and William C. Wohlforth explain, “Washington dampens competition in the world’s key areas, thereby preventing the emergence of a hothouse in which countries would grow new military capabilities.”

According to this view, the fact that U.S. allies have chosen not to invest in their own defenses is the clearest sign that the strategy is working as intended. “Since 1991,” Brooks and his co-authors enthuse, U.S. allies “have kept their military expenditures as a percentage of GDP to historic lows.”

Curb Your Enthusiasm

Because U.S. security guarantees to wealthy allies have caused them to under-provide for their own defense, they also have less capacity to deal with common security challenges, from ethnic violence in the Balkans in the late 1990s to combatting terrorism and piracy in the Middle East, South Asia, or the Horn or Africa today.

But that isn’t the main flaw underlying U.S. foreign policy today. Cheerleaders for benevolent hegemony contend that Americans are inclined to carry these burdens indefinitely, a function of American exceptionalism combined with a pervasive culture of weakness among our allies.

“The American people can be summoned to meet the challenges of global leadership,” Kristol and Kagan concluded in 1996, “if statesmen make the case loudly, cogently, and persistently.”

American “statesmen” have typically opted for a different approach. They tend to sell U.S. foreign policy through misdirection and subterfuge to the extent that they ever talk about it at all.

Astute observers of U.S. foreign policy understand why elites have neglected to make the case loudly, cogently, or persistently; the American people haven’t bought into this ambitious global mission, and they are unlikely to ever do so. Nor is it clear that other countries welcome U.S. leadership as much as the advocates of global hegemony contend.

The key problem with “benevolent hegemony,” Francis Fukuyama explained in his book, America at the Crossroads, is that it “rests on a belief in American exceptionalism that most non-Americans simply find not credible.” He continued, “The idea that the United States behaves disinterestedly on the world stage is not widely believed because it is for the most part not true and, indeed, could not be true if American leaders fulfill their responsibilities to the American people.”

Even strong advocates of global hegemony concede that it might not be realistic to expect Americans to bear the burdens of global governance indefinitely.

For Americans, Michael Mandelbaum grudgingly admitted in his book, The Case for Goliath, our own “nation’s interests have priority.” This “does not bespeak unusual financial stinginess or moral callousness: Americans approach the world much as other people do….For the American public, foreign policy, like charity, begins at home.” For that reason, above all others, Mandelbaum predicted, “the American role in the world may depend in part on Americans not scrutinizing it too closely.”

Clearer Than the Truth

The inclination to conceal the true object of U.S. foreign policy has a long pedigree. When the Truman administration was pondering ways to rally public support for the nascent Cold War, Senator Arthur Vandenberg of Michigan advised Secretary of State Dean Acheson to “scare hell out of the American people” by painting a picture of the global communist menace that was, in Acheson’s telling, “clearer than the truth.”

It isn’t necessarily wrong to believe that U.S. foreign policy can be sustained by obfuscation, threat inflation, and the hope that the public won’t pay attention. Americans are “rationally ignorant” about most public policies, and especially so when it comes to foreign policy.

There are occasions, however, when the public rises up — as it did in the late summer of 2013, when nearly everyone in Washington was making the case for strikes against Bashar Assad’s government and military in Syria, and nearly everyone outside of the Beltway’s pleasant environs was screaming “Hell no.”

Still, on the whole, information asymmetry works to the advantage of those calling for a hegemonic global posture and frequent foreign intervention. The explosion on the USS Maine in 1898 and a curious episode involving U.S. naval vessels in the Gulf of Tonkin in 1964, were sufficient to rally the public to the war hawks’ cries. The truth about those incidents was revealed long after. We can expect similar murky incidents to serve as the rationale for attacks on any number of modern-day boogeymen: from Iran’s mad mullahs to North Korea’s crazy Kims.

But foreign policy should be communicated honestly and openly to the people who will pay its costs.

For example, can we create and sustain occasional alliances with less-than-perfect allies, without having to claim falsely that they are, in fact, perfect? And that their interests always align perfectly with our own?

Can our leaders make the case for a hegemonic grand strategy without resorting to threat inflation? Or must every tin-pot dictator (at least the ones we don’t actively support) be the next Adolf Hitler? Must every possible cyber-/bio-/WMD-incident be the equivalent of Pearl Harbor? Must every negotiation be Munich?

Can U.S. elites credibly claim that the economic benefits of U.S. foreign policy greatly outweigh the costs? The assertion that U.S. hegemony delivers a net gain to the U.S. economy was always on shaky ground – and is shakier still.

In short, if the core rationale of our grand strategy remains, as it has been, to discourage other countries from defending themselves, can our leaders explain it that way to the American people and sustain popular support?

And if there is a risk that a particular policy or military operation abroad, undertaken primarily to defend allied interests, will undermine U.S. security or prosperity, or threaten major restrictions on Americans’ domestic liberty, can our leaders definitively demonstrate that the risks are heavily offset by the rewards?

Strategy = Ends + Ways + Means

In the debate over military spending that is now raging, it is generally assumed that our foreign policy, and thus the roles and missions that we assign to our military, will remain unchanged — or at least will not become less onerous. It is unreasonable to expect our military to do the same, or more, with less. It is unfair to the troops and their families. Thus the current push to dramatically increase the Pentagon’s budget. It would be shameful, write Sen. John McCain (R-AZ) and Rep. Mac Thornberry (R-TX) in a Wall Street Journal op-ed, to ask “the country’s military men and women to do their jobs with shrinking resources.” The respective chairs of the Senate and House Armed Services Committees, citing the statements of senior military leaders, declare that the military “cannot execute the National Military Strategy” “with defense spending at sequestration levels.”

That broader point bears repeating: the military says that it cannot execute the National Military Strategy under the current resource constraints. And the only alternative, McCain and Thornberry imply, is to remove those constraints.

But political elites assign roles and missions for the military. They are not handed down from heaven. They are not carved on stone tablets. They are a function of a nation’s grand strategy and informed by the dominant intellectual paradigms at a given point in time.

That grand strategy must take account of the resources that can be made available to execute it. Bryan McGrath contends with emphasis that “it is the job of the grand strategist” to make the case for more resources if current spending is insufficient “to achieving the desired ends” — suggesting again that those “desired ends” are immutable. Wise strategists, McGrath explains, would call on the public to “re-allocate resources away from less critical uses to more critical uses” in order to close the means-ends gap.

As a practical matter, this entails telling the American people to accept cuts in popular domestic programs, higher taxes, or both, so that our allies can maintain their bloated domestic spending and neglect their defenses. Some politician might attempt such a feat, but he or she is unlikely to prevail. Americans have grown tired of waging wars on behalf of other nations. They are unwilling to pay the costs of being the world’s policeman. The logical recourse, therefore, would be to reconsider that global policing role, encourage other countries to defend themselves and their interests, and bring the object of our foreign policy in line with the public’s wishes.

“Defending our allies’ security” ranked near the bottom of Americans’ foreign policy priorities, just one percentage point above “Strengthening the United Nations,” in the Chicago Council on World Affairs most recent poll (Figure 2.4, p. 22). A core object of U.S. foreign policy since the end of World War II has been to reassure nervous allies, and thus discourage them from acquiring military capabilities that they might want for defense were we not there. And yet more Americans believe in “limiting climate change” than in limiting our allies’ desire to defend themselves.

It’s no wonder, then, that elites don’t want Americans to scrutinize our foreign policy more closely. But the worst thing that they could do is persist with that policy and refuse to ask the public to pay for it.

And yet, that is precisely what they appear to be doing.

Agreed! We Should Be Astonished!

Alberto Mingardi's Truly Notable and Quotable:
The Wall Street Journal often provides its readers with eye-opening arguments in the "Notable and Quotable" column hosted in its editorial page.

On March 13, the WSJ quoted William Baumol, Robert Litan, and Carl Schramm, "Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity". The argument won't sound new to EconLog readers, but it is quite well and succinctly put:

The most astonishing thing about the extraordinary outpouring of growth and innovation that the United States and other economies have achieved over the past two centuries is that it does not astonish us. Throughout most of human history, life expectancy was about half what it now is, or even less. We could not record voices or speech, so no one knows how Shakespeare sounded or how "to be or not to be" was pronounced. The streets of the greatest cities were dark every night. No one traveled on land faster than a horse could gallop. The Battle of New Orleans took place after the peace treaty had been signed in Europe because General Andrew Jackson had no way of knowing this. In Europe, famines were expected about once a decade and the streets would be littered with corpses, and in American homes, every winter the ink in the inkwells froze.

Quote of the Day

Don Boudreaux' Quotation of the Day ... :
… is from page 256 of William Easterly’s excellent 2006 book, The White Man’s Burden:
It is the job of economists to point out trade-offs; it is the job of politicians and Planners to deny that trade-offs exist.

Thursday, March 26, 2015

Lewis Black Eviscerate the NCAA (Well Deserved I Might Add)

Solution To California's Water Shortage: Charge More For It!

Shortages: well, one can simply bemoan them and wish "someone" would "do something about it".  Let's take California's drought problem: it's bad.  What to do about it?  One can pray that it rains, or can take the steps necessary to ensure that first, what water is left is conserved and secondly, what is used is appropriately priced for its use.  What's that you say?  Are you implying you can "fix" the situation by economics alone?  I won't go so far as to say "economics alone", however, it is the best tool on hand.  Want to conserve water?  Charge more for it.  If it's cheap to use, it will be used cheaply.  Remember the rules of economics: tax something, you get less of it; subsidize it, you get more of it.  Back to water: charge more for it (which acts like a tax) and less of it will be used.  Make it cheap (which acts like a subsidy) and more of it will be used.  For decades, various "experts" have stated the world will reach "peak" x, where "x" has been oil, water, natural gas, etc., meaning that "x" is running out and the threat exists where oil for example, will no longer be had.  "Bullshit".  First, entrepreneurs are always looking to discover or create alternatives, and secondly, as something becomes more scarce, the price goes up.  So it is with water.  While people should, by nature, consume and conserve all things wisely, many do not.  Granted, most may just be lazy or not even think about what they're doing.  However, there are those who know better and because the penalty of consumption is often less than the benefit gained from doing so, the poor behavior continues.  With respect to water: it's cheap.  Too cheap.  So, in my honest opinion, California would do well to raise their water rates, not necessarily in a "one size fits all" approach, however, so long as water is cheap, people will use it for purposes other than what is necessary.  Think about it: what makes gold and diamonds expensive?  Answer: they're both relatively rare and expensive to mine.

Below are some of the best writings on this very subject.  Enjoy!

The Economics of the California Water Shortage by Alex Tabarrok

The Misallocation of Water by Alex Tabarrok

Offensive Speech: Offensive Yes, But Valuable As Well

Personally, I care not about speeches that are considered hateful and/or offensive.  Why?  Because they the tell me about the speaker!  I get to know who I am associated with or not, that is, the speaker's views are out in the open, and awareness, transparency if you will, is invaluable!  Driving speech, however offensive and repugnant, underground and behind closed doors, serves no useful purpose.  We the people, do not possess a right "not to be offended".  Protecting the freedom of speech does not protect the speaker from a response, preferably non-physical.  So let all the ignorant speak and be heard! As the rational among them now associate a face, an organization, with their words, the disassociation and socioeconomic embargoes that will naturally occur will first marginalize then de-legitimize the ignorant.  For someone who can say it so much better than I can, please read Trevor Burrus' Why Offensive Speech Is Valuable.

Bail-Ins: They're Coming

Bail-ins are not a question of "if", they're only a question of "when". 

Don't know what a bail-in is?  You better! Check out:  What is a bail-in? and What-Is-A-Bail-in-and-How-Does-It-Work

Remember, keep in mind that a bank's creditors include its depositors, in other words, you! In plain language that neither of the links above use, your money can be used to pay off the bad debts of the bank.

March 23, 2015:  EU and Greece Running Out of Time – As Bank Runs Intensify, Bail-Ins Likely

Boys and Their Toys: The Great Pissing Contest Continues

Obama and Putin: real charmers they are! The both of them and their minions continue to act like spoiled children as they escalate their "who's is bigger?" campaign, putting the lives of their respective armed forces in harm's way simply because each lacks the balls to show real courage and back away, especially Obama.  This cannot end well: Washington Retaliates: Shifts Anti-Missile Battery Into Poland, Begins Rapid-Response Drills which was in response to Russia Escalates Military Posture: Deploys Strategic Bombers To Crimea, Launches Massive Drills Across Nation.

Update [3/21/2015]:

And so it continues:  NATO Launches "Wide-Scale" War Games Near Russian Border, Creates "Line Of Troops"

Update [3/26/2015]:

Escalation defined: US House Votes 348-48 To Arm Ukraine, Russia Warns Lethal Aid Will "Explode The Whole Situation"

Quote of the Day

"A war based on lies cannot be fixed by launching another war. We must just march home. And stay home." - Ron Paul, After a Twelve Year Mistake in Iraq, We Must Just March Home

Quote of the Day

“If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” - Thomas Jefferson

A Great Question On What Regulates Corporations

George Mason University economics professor Don Boudreaux asks What really regulates corporations, and of course, he provides a concise answer: [emphasis is mine]
Among the strangest notions ever to be believed by large numbers of adults is the “progressive” notion that private corporations wield vast and socially destructive powers to the extent that they aren't regulated in fine detail by government. This notion is exactly the opposite of the truth. Yet I know from countless discussions with friends on the left that it is sincerely believed to be true.

But it's bizarre. A corporation operating in the market can only make offers to consumers and to suppliers. Consumers and suppliers — including suppliers of labor (workers) — are free to accept or to reject these offers. With no coercion involved, consumers and suppliers accept only those offers that they estimate will make them better off. Corporations that consistently have too few of their offers accepted must make their offers more attractive. If they fail to do so, they go bankrupt.

Also, corporations have no power to prevent other corporations and entrepreneurs from competing with them. And as the history of market economies makes clear, such competition is unending and intense. The only “power” a corporation can exercise to enhance or to maintain its market share is to continually produce better mousetraps and offer them to consumers on terms that consumers judge to be better than those of other companies.

Consumers' and suppliers' abilities to reject corporations' offers, along with the incessant struggle of corporations and entrepreneurs to take business away from each other by making better offers to consumers and suppliers, regulates the market. This regulation is far more reliable, objective and fast-acting than are the government edicts and bureaucratic supervision that are today called “regulation.” Regulation by the market is far more sensitive to the actual wishes of consumers and suppliers. Market regulation is also immune to the many political pressures that infect regulation by government.

There's more: Corporations exist side by side, each serving different consumers simultaneously. Bill doesn't like beer, so he buys wine. But Bill's neighbors fill their fridges with beer. To get wine, Bill doesn't have to persuade his neighbors also to choose wine over beer. Each consumer gets what he or she wants.

Government policies, in contrast, are one-size-fits-all. The woman who would take a chance on a miracle drug can't do so if the FDA deems that drug too risky. Also, unlike with private corporations, if you disapprove of some government policy, it's impossible for you to reject that policy unless you move out of the government's jurisdiction.

Progressives object to this claim by pointing to the right to vote. Yet the ability to vote is of no practical use to any individual.

“Heresy!” the progressive replies. But ask yourself how useful your vote is for avoiding government policies you dislike. Unlike in the market, you are in reality a slave to the will of the majority, with no practical ability to avoid “consuming” policies that you find objectionable.

Why progressives believe that an imperious one-size-fits-all government, ruling from a distant capital and always prone to favor politically powerful elites, is somehow necessary to protect ordinary people from corporations is a deep mystery.

Wednesday, March 25, 2015

$400B Just Doesn't Get You What It Used To!

What a clusterfuck!  This can only happen with government: Stealth Jet’s Slow, Half-Blind Debut.  This abomination is needed for what, fighting ISIS in the desserts of the Middle East?  What a mess.  President Eisenhower is rolling over in his grave.

Tuesday, March 24, 2015

Thomas Sowell on Hillary Clinton's Accomplishments ... Well, There Aren't Any, But ....

I too have asked anyone who tells me they like Hillary this one simple question: what has she accomplished?  I point out that she was the First Lady, then a senator and then the Secretary of State.  What did she accomplish?  What's her record?  To this day, not one person can point out a single item.  Not one.  Notice the word people use: "like", that is, they "like" Hillary Clinton.  Well, sorry, the presidency, contrary to seemingly most inane Americans, is not a popularity contest - well, it shouldn't be anyway, but it has been evolving to "American Idol" status.  A few people who like Hillary have the courage to state they like her because "it's time we have a woman president".  Really?  Think about that for a moment I reply, and then add: "so you're fine with electing a person simply because someone's a woman, a man, black, white, Asian, gay, whatever - and simply disregard qualifications?  Most reply, rather defensively, "yes".  As I gasp (internally), I nod in acknowledgement, as I contemplate the erosion of this once great republic.  It is the price a nation pays for having a policy of developing ignorance in the name of political expediency.  Anyway, I took pride for at least being on the same page as Thomas Sowell, as he too asks A Simple Question: [emphasis mine]
It is amazing how a simple question can cause a complex lie to collapse like a house of cards. The simple question was asked by Bill O'Reilly of the Fox News Channel, and it was addressed to two Democrats. He asked what has Hillary Clinton ever accomplished.

The two Democrats immediately sidestepped the question and started reciting their talking points in favor of Hillary. But O'Reilly kept coming back to the fact that nothing they were talking about was an accomplishment.

For someone who has spent her entire adult life in politics, including being a Senator and then a Secretary of State, Hillary Clinton has nothing to show for all those years -- no significant legislation of hers that she got passed in the Senate, and only an unbroken series of international setbacks for the United States during her time as Secretary of State.

Before Barack Obama entered the White House and appointed Mrs. Clinton Secretary of State, Al Qaeda operatives in Iraq had notified their higher ups, stationed in Pakistan, that their cause was lost in Iraq and that there was no point sending more men there.

Hosni Mubarak was in charge in Egypt. He posed no threat to American or Western interests in the Middle East or to Christians within Egypt or to Israel. But the Obama administration threw its weight behind the Muslim Brotherhood, which took over and began terrorizing Christians in Egypt and promoting hostility to Israel.

In Libya next door, the Qaddafi regime had already given up its weapons of mass destruction, after they saw what happened to Saddam Hussein in Iraq. But President Obama's foreign policy, carried out by Secretary of State Clinton, got Qaddafi removed, after which Libya became a terrorist haven where an American ambassador was killed, for the first time in decades.

The rationale for getting rid of Middle East leaders who posed no threat to American interests was that they were undemocratic and their people were restless. But there are no democracies in the Middle East, except for Israel. Moreover, the people were restless in Iran and Syria, and the Obama-Clinton foreign policy did nothing to support those who were trying to overthrow these regimes.

It would be only fair to balance this picture with foreign policy triumphs of the Obama-Clinton team. But there are none. Not in the Middle East, not in Europe, where the Russians have invaded the Crimea, and not in Asia, where both China and North Korea are building up threatening military forces, while the Obama administration has been cutting back on American military forces.
[Semper Ratio: For the record, I do not agree with Mr. Sowell on his view of China and especially North Korea.  Also, the clusterfuck that is the Middle East is not entirely his doing, though he has certainly exacerbated the situation.]

Hillary Clinton became an iconic figure by feeding the media and the left the kind of rhetoric they love. Barack Obama did the same and became president. Neither had any concrete accomplishments besides rhetoric beforehand, and both have had the opposite of accomplishments after taking office.

They have something else in common. They attract the votes of those people who vote for demographic symbolism -- "the first black president" to be followed by "the first woman president" -- and neither to be criticized, lest you be denounced for racism or sexism.

It is staggering that there are sane adults who can vote for someone to be President of the United States as if they are in school, just voting for "most popular boy" or "most popular girl" -- or, worse yet, voting for someone who will give them free stuff.

Whoever holds that office makes decisions involving the life and death of Americans and -- especially if Iran gets a nuclear arsenal -- the life and death of this nation. It took just two nuclear bombs -- neither of them as powerful as those available today -- to get a very tough nation like Japan to surrender.
[Semper Ratio: Again, I disagree with Mr. Sowell's irrational fear of Iran's potential nuclear capability.  Also, Japan would have surrendered without the use of two nuclear weapons, and Mr. Sowell is simply repeating the same tired view of American Exceptionalism]

[Semper Ratio:  I wish he had ended his piece above.  While I agree with the lack of a record by Hillary Clinton, this continued dive into history to support his point is tiresome and in my opinion, improper]
Anyone familiar with World War II battles in the Pacific knows that it was not unusual for 90 percent of the Japanese troops defending Iwo Jima or other islands to fight to the death, even after it was clear that American troops had them beaten.

When people like that surrender after two nuclear bombs, do not imagine that today's soft Americans -- led by the likes of Barack Obama or Hillary Clinton -- will fight on after New York and Chicago have been reduced to radioactive ashes.

Meanwhile, ISIS and other terrorists are giving us a free demonstration of what surrender would mean. But perhaps we can kick the can down the road, and leave that as a legacy to our children and grandchildren, along with the national debt.

Walter Williams Asks A Great Question ...

The Economist magazine recently published "What's gone wrong with Democracy ... and what can be done to revive it?" The suggestion is that democracy is some kind of ideal for organizing human conduct. That's a popular misconception.

The ideal way to organize human conduct is to create a system that maximizes personal liberty for all. Liberty and democracy are not synonymous and most often are opposites. In Federalist Paper No. 10, James Madison explained, "Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority." Democracy and majority rule confer an aura of legitimacy and respectability on acts that would otherwise be deemed tyrannical.

Let's look at majority rule, as a decision-making tool, and ask ourselves how many of our life choices we would like settled by majority rule. Would you want the kind of car you own to be decided through a democratic process, or would you prefer purchasing any car you please? Ask that same question about decisions such as where you shall live, what clothes you purchase, what food you eat, what entertainment you enjoy and what wines you drink. I'm sure that if anyone suggested that these choices be subject to a democratic process, we would deem it tyranny.

Our Founders saw democracy as a variant of tyranny. At the 1787 Constitutional Convention, Edmund Randolph said, "...that in tracing these evils to their origin every man had found it in the turbulence and follies of democracy." John Adams said, "Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide." Alexander Hamilton said, "We are now forming a Republican form of government. Real Liberty is not found in the extremes of democracy, but in moderate governments. If we incline too much to democracy, we shall soon shoot into a monarchy, or some other form of dictatorship."

By the way, the word democracy appears in none of our founding documents.

The Founders of our nation recognized that we need government, but because the essence of government is force, and force is evil, government should be as small as possible.

The Founders intended for us to have a limited republican form of government where human rights precede government and there is rule of law. Citizens, as well as government officials, are accountable to the same laws. Government intervenes in civil society only to protect its citizens against force and fraud, but does not intervene in the cases of peaceable, voluntary exchange. By contrast, in a democracy, the majority rules either directly or through its elected representatives. The law is whatever the government deems it to be. Rights may be granted or taken away.

Alert to the dangers of majority rule, the Constitution's framers inserted several anti-majority rules. In order to amend the Constitution, it requires a two-thirds vote of both houses, or two-thirds of state legislatures to propose an amendment, and it requires three-fourths of state legislatures for ratification. Election of the president is not done by a majority popular vote, but by the Electoral College.

Part of the reason for having two houses of Congress is that it places an obstacle to majority rule. Fifty-one senators can block the wishes of 435 representatives and 49 senators. The Constitution gives the president a veto to thwart the power of 535 members of Congress. It takes two-thirds of both houses of Congress to override the president's veto.

If you don't have time to examine our founding documents, just ask yourself: Does our pledge of allegiance to the flag read to the democracy, or to the republic, for which it stands? Or, did Julia Ward Howe make a mistake in titling her Civil War song "The Battle Hymn of the Republic"? Should it have been "The Battle Hymn of the Democracy"?

Monday, March 23, 2015

The Utter Stupidty of Government

Just read this one: New York Creates Massive Cigarette Black Market, Wants Virginia to Fix It.  New York creates an ideal black market in cigarettes which of course, makes it very lucrative to participate in said market, and yet it wants the state of Virginia to do something about the smuggling of illegal smokes into New York!  Really?  Nothing demonstrates the utter incompetence of government and the one immutable truth about politicians: they're but pigs at a trough. 

Actually, It's Long Past Time

Maybe Israeli politicians will act more responsibly if they don’t have the American people to fall back on.

The Benjamin Netanyahu on display in the days before and after Tuesday’s Israeli election is the same one who has been in power all these years. Right along, he was there for all to see, so no one should have been surprised by his performance. I seriously doubt that anyone really is surprised. Americans who slavishly toe the Israeli and Israel Lobby line may act surprised, but that’s really just their embarrassment at having to answer for the prime minister of the "State of the Jewish People."

Democrats especially are in a bind. They can’t afford to distance themselves from Netanyahu and alienate Jewish sources of campaign donations, yet they are visibly uncomfortable with his so openly racist fear-mongering about Israeli Arab voters—"The right-wing government is in danger. Arab voters are heading to the polling stations in droves. Left-wing NGOs are bringing them in buses." The Democrats' defense of that ugly appeal as merely a way to get the vote out is disgraceful. (Imagine something equivalent happening in the United States.)

Democrats are also nervous about Netanyahu’s declaration that no Palestinian state will be established as long as he heads the Israeli government. (His post-election attempt to walk it back somewhat was not well-received.) Life was so much simpler for people like Hillary Clinton when Netanyahu didn’t say things like that in public. Meanwhile, hawkish Republicans—that’s redundant— are unfazed.

For anyone paying close attention, Netanyahu’s racism and ruthless opportunism are not news at all. A few years ago a candid video from 2001 surfaced in which he cynically described Americans as "easily moved," i.e., manipulated. The Israelis, he said, can do what they want with the Palestinians because the Americans "won't get in their way." These are the same Americans who are forced to send Israel $3 billion a year in military assistance so that it can regularly bomb and embargo Palestinians in the Gaza Strip prison camp and oppress Palestinians in a slightly more subtle manner in the shrinking West Bank and East Jerusalem.

With Netanyahu, you really do know what you get, which arguably makes him a better choice to run Israel than the left-of-center Zionist Union because the Laborites share most of Likud’s beliefs about the Palestinians; they’re just more circumspect and therefore more comforting to so-called Americans "liberals." Saying you support negotiations toward a Palestinian state is not the same as actually being for a viable Palestinian state. Palestinians have little left of the walled-off West Bank and East Jerusalem because of Jewish-only towns built over the years by the two dominant parties, Likud and Labor. And Gaza is a bombed-out disaster area. (Even for many two-state advocates, justice is not the concern. Rather, demographic circumstances make one state untenable for these pragmatists because out-and-out apartheid, which the world would frown on, would be seen as the only alternative to a genuinely democratic state with a Jewish minority. The one-staters have their own solution to the Palestinian problem, the one used in 1948: transfer.)

The prime minister is a sophist extraordinaire; he says whatever he needs to say to gain his objective of the moment. When he ruled out a Palestinian state before the election, in a bid to shore up his right-wing base, he was interpreted as reversing a commitment he made in 2009, after he had returned to power, the same year that Barack Obama took office. The campaign reversal put Obama and Secretary of State John Kerry in a most uncomfortable position, since they had made the fraudulent "peace process" a top priority, until talks broke down last spring, a failure they pinned at least in part on Netanyahu. Once the election was over and some reconciliation with the U.S. government was required, Netanyahu "clarified" his remarks, saying his 2009 position had not really changed; only the environment has.
I don't want a one-state solution. I want a sustainable, peaceful two-state solution, but for that, circumstances have to change. I was talking about what is achievable and what is not achievable. To make it achievable, then you have to have real negotiations with people who are committed to peace.

I never changed my speech in Bar Ilan University six years ago calling for a demilitarized Palestinian state that recognizes the Jewish state. What has changed is the reality.
What has changed? Netanyahu probably has a few things in mind. The Palestinians reject a new demand that they formally recognize Israel as the state of the Jewish people (everywhere). Decades ago the Palestinian leadership accepted Israel’s existence within the pre-1967-war borders—that is, it relinquished claim to 78 percent of pre-1948 Palestine. (Even Hamas has said it was willing to defer to the secular Fatah and the Palestinian Authority). But in a goalpost-moving action, Netanyahu recently added the new demand, something he knows the Palestinian leadership cannot accept if it is to maintain legitimacy (or whatever legitimacy it still has). Such a concession would be prejudicial to Israel’s non-Jewish Arab citizens and would favor Jews who have never set foot in the country over native-born Palestinian Arabs who were driven out of their ancestral home and who are forbidden to return.

In other words, Netanyahu knowingly placed an impossible precondition on the negotiations. But it is he who has insisted there be no preconditions whatever. When the Palestinians demanded that Israel stop seizing Palestinian-owned land on the West Bank and in East Jerusalem to make room for Jewish-only neighborhoods, Netanyahu refused on the grounds that this was a precondition. (The Palestinians relented and gave talks a chance, no doubt under American pressure.) But it was not so much a precondition as a recognition that the land being seized was precisely the subject of the negotiation. In what universe is it reasonable for two parties to negotiate over territory while one is busy annexing it and building permanent settlements?

It is this sort of thing that exposes Netanyahu’s bad faith regarding the Palestinians. He sabotages the "peace process," then blames the Palestinians for failing to be an earnest partner for peace. (Now he’s trying to sabotage multilateral talks with Iran. See a pattern?)

Netanyahu may also be saying the timing is wrong for a Palestinian state—which would be a rump state completely at the Israeli government's mercy—because ISIS is creating turmoil in nearby Iraq and Syria, and Iran is expanding its influence in the region. The sophistry here is that much trouble in the Middle East can be traced to Israel’s injustice against the Palestinians and belligerence toward its neighbors, especially the repeated devastating invasions of southern Lebanon. Ethnic-cleansing, massacres perpetrated by Zionist militias at the time of independence, unrelenting occupation of the West Bank since 1967, the repression and impoverishment of the Gazans, and the routine humiliation of Israel’s Arab second-class citizens have created deep grievances that are only made worse by Netanyahu and those who support him.

This of course has spilled over onto the United States, since Democratic and Republican regimes stand by Israel no matter what and no matter how many times its government humiliates American rulers. When former Gen. David Petraeus told a Senate Armed Services Committee in 2010 that the U.S.-Israeli relationship "foments anti-American sentiment," he was merely repeating what many other officials had acknowledged before. "Meanwhile," Petraeus added, "al-Qaeda and other militant groups exploit that anger to mobilize support. The conflict also gives Iran influence in the Arab world through its clients, Lebanese Hizballah and Hamas..." The attacks of 9/11 were in part motivated by anger over America’s relationship with Israel. Osama bin Laden’s 1996 declaration of war makes clear that this relationship was at the heart of his hostility toward the United States. Mohammed Atta, one of the 9/11 hijackers, joined the cause after Israel’s 1996 assault on Lebanon, James Bamford writes in The Shadow Factory. (Open discussion of these facts is discouraged by spurious charges of antisemitism against anyone who raises it.)

So, again, Netanyahu cites reasons for not making peace that he himself helped create or is now perpetuating. That he is taken seriously in American politics is a testament to the power of the Israel Lobby.

Netanyahu’s apparent reelection and the egregious circumstances under which it was accomplished should prompt a reconsideration of the special relationship. Although it should have happened long ago, now would be a good time for the U.S. government to end the relationship and start seeing Israel as a rogue and aggressor nuclear power. (Of course the United States is hardly one to talk.) No more excuses. The Palestinians had nothing to do with the Holocaust. Let's have one moral standard for all.

Not that I think it has a chance of happening, but the U.S. government should cease all taxpayer aid to the Israeli government, stop vetoing UN Security Council resolutions that condemn Israel for its daily violations of human rights, and stop impeding Palestinian efforts to set up an independent country (with membership in the International Criminal Court, etc.). The United States should withdraw from the Middle East and enter into a detente with Iran (which is not developing a nuclear weapon). This would have an immediate dividend: we would not be driven to war with Iran by Netanyahu, the Lobby, and its neoconservative Republican and Democratic stooges in Congress.

Maybe Israeli politicians will act more responsibly if they don’t have the American people to fall back on. Probably not. But we know the Palestinians will get no justice under the status quo. Meanwhile, U.S. policy puts Americans at risk. This must stop.

Just In From the Department of WTF: Italy Is Taxing Shadows

The global financial unraveling continues as In Italy, They're Now Taxing Shadows.  Seriously! WTF!!  Maybe blood cannot be had from a stone, but in Italy, money can be had from the shade.  Just another sign of just what happens when governments run out of other people's money (aka socialism).

The Federal Reserve Bank Must Be Destroyed!

I simply could not agree more with Patrick Barron and his post The Federal Reserve Bank Must Be Destroyed!  Central banking is the root of all evil, especially The Federal Reserve of the United States.  Of course, when I say "destroyed", I mean the institution, not the people:
“Delanda est in Susidium Foederatum Bank”
(The Federal Reserve Bank Must be Destroyed)

During the years of the Roman Republic, Cato the Elder ended every speech with the phrase “Delanda est Carthago” (Carthage must be destroyed). Rome had fought two wars with Carthage, yet the threat to the Republic remained. Cato saw Carthage as an existential threat and concluded that Rome would not be secure as long as Carthage existed. So fervently did he hold this view that he ended every speech, even about completely different subjects, with the famous phrase. I believe that we Austrians need to adopt a similar phrase to remind the American people that the US faces an existential threat from the machinations of the Federal Reserve Bank. “Delanda est in Susidium Foederatum Bank”…The Federal Reserve Bank must be destroyed. Like Carthage, the Federal Reserve Bank cannot be controlled or restrained. Either it or our republic will survive, but not both. For the sake of our nation, the Fed must be destroyed.

Founding the Fed Instead of Ending Fractional Reserve Banking

The Fed was founded under false economic premises–to prevent bank runs by providing temporary liquidity to banks which found themselves unable to redeem their certificates and demand deposits for cash and/or specie. The real cause of illiquid banks–fractional reserve banking–was never seriously addressed. It was assumed that banks had the legal right to invest their customers’ demand funds in loans and that runs were caused by over indulging in this practice. But as Murray N. Rothbard explain in What Has Government Done to Our Money?, loaning demand funds instantly places  the bank in an insolvent position, for it cannot redeem all of its demand accounts for cash or specie. Through the process of lending demand funds, the banks have created fiduciary media out of thin air, reducing their reserve ratio below one hundred percent. If the banks do this on a very modest basis, the public may not be aware of the fraud. However, once the rumor starts that the bank is illiquid, there is a literal “run” to the bank to withdraw demand funds. In such a case, even a bank that only modestly lent its demand funds might find itself unable to honor all withdrawal claims and would be forced to close its doors.

(NOTE: Central Banking was established to legitimize counterfeiting fraud, aka – Fractional Reserve Banking)

The Federal Reserve Bank, as the lender of last resort, was supposed to prevent such occurrences by providing temporary, penalty rate loans to struggling banks. Note that there is nothing that a central bank could provide that could not be provided by another private bank. In fact the banking panic of 1907 was stemmed by private bank interventions led by J. P. Morgan. However, Morgan realized that such private bailouts were very risky and presented a case of moral hazard; i.e., that bankers, confident of a bailout by the Morgan banking empire, might  book riskier, higher yielding loans. So rather than face the real cause of banking crises and lobby to outlaw fractional reserve banking, the Morgans, Rockefellers, etc.–who did not want to forego the financial benefits of lending demand deposits–lobbied instead for government to create a lender of last resort, a central bank, which we named the Federal Reserve Bank.

Fed Policy Causes Depressions and Then Prevents Recovery

Over time this entity, new to Americans, would expand its role in fruitless attempts to cure crises caused by ITSELF. The Fed caused and exacerbated crises by allowing, facilitating, and expanding the practice of fractional reserve banking. In the 1920’s the Fed began to expand the money supply to prevent prices from falling, justifying its new role as one of maintaining a stable price level. But printing money to prevent falling prices caused malinvestment in the structure of production and led to a depression by the end of the decade.

Rather than do nothing and allow the purging of bad investments and liquidation of malinvestment, which would re-establish a sustainable structure of production, as it had done at the beginning of the decade in the depression that no one remembers, the Fed intervened monetarily to pump up reserves while the Hoover administration intervened fiscally to prevent price deflation and maintain high spending levels. All this is well documented in Murray N. Rothbard’s America’s Great Depression.

Yet even an interventionist Fed could not prevent the massive bank failures of the 1930’s, due to many factors which included restrictive bank branching laws. But the primary cause of the bank failures was *again* the banks’ adherence to fractional reserve banking practices which resulted in  their inability to honor all demand deposit redemption requests for specie and/or cash.

In the Roaring Twenties fractional reserve banking had expanded the money supply well beyond the ability of banks to stem all the runs. Again the banks and the politicians refused to dig deeper into the real cause of the problem. Rather than separate banking into deposit and loan functions–the former would require one hundred percent reserves and the latter would require strict asset-liability management to ensure that loans matured on the same schedule as time deposits, what is commonly known as funding loans out of savings–the government suspended specie redemption and eventually formed the FDIC to “ensure” bank deposits.

However, the FDIC’s “insurance” program was nothing more than an explicit promise that the Fed would print enough money to redeem all ensured deposits, thus insuring the continuation of fractional reserved banking, the very problem that was used as the excuse to establish the Fed; the very problem–bank instability–the Fed was sold to the public to solve. So, once again, a solution to cure a problem caused by the Fed itself resulted in even more power for the increasingly government run banking system.

The Monetary Genie Was Out of the Bottle

Once the politicians realized that the Fed could print money at will, the genie was out of the bottle. Money growth did expanded at a modest rate for a few decades, due mainly to the efforts of prudent men such as Fed Chairman William McChesney Martin (1951 to 1970) and fiscally conservative politicians such as President Dwight Eisenhower (1953 to 1961). However, it was inevitable that less prudent men, such as President Lyndon Johnson and all Fed chairman with the exception of Paul Volcker, would rise to power on their promises to fund all manner of government programs with what was now seen to be unlimited money.

This was the key revelation!

Money printed in unlimited quantities could cure all ills, or so it was claimed, and to its everlasting shame the economics profession provided sufficient “academic” cover to support these spurious assertions. Now everyone understood that the Fed could monetize–i.e., purchase government debt itself–any amount of government spending. The economics profession refused to consider the inevitable consequences of these irresponsible monetary policies. Instead it cherry picks historic price data to prove them to be non-inflationary and endorses changes to unemployment calculations to prove them to be fiscally sound, too. These whores, these house economists have their eyes glued to the rear view mirror of spurious government statistics as the race car of state hurtles toward an economic cliff of depression and perhaps even hyperinflation.

Money Production and Banking Subject to Commercial and Criminal Law

It matters not who is in charge of the Fed or what rules Congress may insist that it adopts. Once money printing, via fiat or fractional reserve credit creation, is seen to be both feasible, justified, and legal nothing and no one can stop it. The political pressure to fund government programs will be irresistible. Everyone knows that the Fed seemingly has the ability to solve their problem by monetizing the federal debt. Should it refuse to do so, we would see riots in the streets similar to what is happening in Europe as protesters target the European Central Bank.

The only solution is to destroy the monster that makes it all possible, the Fed. Without the ability to sell its debt to its own central bank, government would be forced to live within the means set by the will of the people through their elected representatives. The scales would eventually fall from the eyes of both politicians and public as its becomes clear that what government spends comes at the expense of the private economy. The public would no longer be fooled by government propaganda that its spending spurs the private economy, when it is clear that the only way government can spend is to tax the people or suffer the crowding out effect of private investment by government borrowing. Money production must be moved to private hands that are subject to normal commercial and criminal law, where money printing is nothing more than counterfeiting. Banks, too, must be subject to normal commercial and criminal law, which requires them to treat a demand deposit as a bailment for which they must keep one hundred percent reserves. Loan banking would be subject to the normal principles and well understood practices of sound asset-liability management, whereby loans are funded by real savings and the maturities of both loans and deposits must be coordinated in order for lending banks to honor their liquidity commitments. The path to the destruction of our nation through endless wars and welfare would end with the destruction of the Fed.

Delanda est in Susidium Foederatum Bank!

A New American Political Order?

Yes; unquestionably yes.  Buffalo Springfield's song best describes it:
There's something happening here
What it is ain't exactly clear
What captured me in Tom Engelhardt's The New American Order were his thoughts about a 2016 presidential race between another Clinton and another Bush, which reflect my own very closely.  In my opinion, a Clinton-Bush race is a reflection of three things: the intellectual laziness and generally poor education/awareness of an apathetic electorate; the cult of personality that has become endemic of political office in general, but most specifically in the office of the president and lastly, the amount of money required to simply run emphasizes that politics in general is the casino of the American crony-political oligarchy.  I likewise draw the same conclusion as Engelhardt: I cannot name the system/order that is emerging, however, I can see it happening and I know that ultimately, it will not end well. 

Friday, March 20, 2015

Great Point

"If you only support free speech for ideas you agree with, you're a hack." from Nick Gillespie: [emphasis mine]
In a fiery column for USA Today, Glenn Reynolds, the Instapundit and a law prof at University of Tennessee, tears into the University of Oklahoma's president David Boren, who expelled the idiot frat brother caught singing racist songs. Yes, those kids are douchebags, argues Reynolds, but
Though some ignorant people argue that "hate speech" is unprotected under the First Amendment, that is not the law and never has been. Nor should it be. The test of our commitment to free expression, after all, isn't our willingness to tolerate speech that everyone likes. If you only support free speech for ideas you agree with, you're a hack. If you only support free speech for ideas that everyone agrees with, you're a coward. And if poisonous hateful speech could be banned, communists and the Westboro Baptist Church wouldn't have won so many First Amendment cases.

Boren's behavior was not only illegal — and clearly so — it was also a betrayal of the duty of fairness that he, as a university president, owes to every student enrolled in his university. To have acted so hastily, in violation of OU's own student conduct code, bespeaks a dishonorable willingness to throw students to the wolves in order to avoid bad publicity — accompanied, perhaps, by the sort of generalized hostility to fraternities that seems all too common among university administrations these days. (That hostility, based on a general dislike of fraternities as bastions of "white male privilege," is itself racist and sexist, of course.)
Reynolds highlights the weird sense of justice that prevails OU's campus:
As Reason's Robby Soave notes, OU administered lighter punishment to a football player who punched a girl so hard it broke four bones in her face than it meted out to the SAE fraternity for singing a song. After this assault, caught on camera, Joe Mixon was suspended from playing, but allowed to remain on campus, attending classes with other students as usual. No expulsion there.
Read the whole col here.

She Doesn't Give a Shit

Sorry Judge, but it's not a question of "if" - she doesn't give a shit about anyone but herself.  This being said though, she will be this nation's next president.  Here's Andrew Napolitano's What if Hillary Doesn't Care?:
What if Hillary Clinton's emails were hacked by foreign agents when she was the secretary of state? What if persons claiming to have done so are boasting about their alleged feats on Internet websites and in chat rooms traditionally associated with illegal or undercover activities? What if this is the sore underbelly of an arrogant and lawless secretary of state who used her power to exempt herself from laws that govern executive branch employees and didn't care about national security?

What if the law required Clinton to swear under oath on her first day as secretary of state that she would comply with all laws governing the use of federal records? What if the principal governing law—the Federal Records Act of 1950—makes it clear that when you work for the feds all the records you receive and generate belong to the government and you cannot lawfully conceal them from the government?

What if she refused to sign such a promise because she knew she'd be violating that law?

What if the State Department has an inspector general whose job it is to assure the public and the attorney general that the secretary of state is complying with federal law? What if agents of the inspector general signed documents swearing that Clinton told them she agreed to abide by the law, and so they permitted her to have access to federal records? What if they did this because Clinton refused to sign an oath herself since she had no intention of complying with it, and because she ordered them to sign in her place?

What if the law required Clinton to swear an oath at the time she left office that she had no federal records in her possession or control? What if she signed that oath knowing that nearly all of her records were in her possession and not the government's? What if she refused to sign that oath because she knew she possessed federal records contrary to law? What if she blamed her failure to sign that oath on her own inspector general? What if the law requires the inspector general to report her refusal to sign this oath to the attorney general? What if that report was made and the attorney general looked the other way?

What if the president has known since 2009 that Clinton has concealed government records from the government? What if his assertion that "Hillary has given her emails back" to the State Department is a trick based on the slippery use of words? What if the emails of the secretary of state do not and never did belong to her, but rather to the federal government? What if her diversion of government records away from the government and onto her husband's computer server is a criminal act? What if Clinton is a lawyer who knows the law and knows when she is breaking it?

What if the whole premise of the law governing the records of federal employees is that the government owns and possesses all emails and documents used by the employee, and if the employee, upon leaving the government, wants any of her records, she must ask for them, and the government then reviews her records and decides which are personal?

What if Clinton turned that law on its head by keeping all of the government's records and having her own representatives review them? What if after that review she decided which records to return to the government and which ones to destroy? What if this amounted to the destruction of government property? What if we are not talking about destroying meaningless scraps of paper, but rather 33,000 emails over the course of four years in office?

What if Clinton seriously exposed classified secrets that could affect national security by discussing them on an email system owned by her husband and not secured by a mature Internet service provider or by the government? What if she did this because she didn't want anyone in the government or the public to see her records? What if the real reason for her theft of records was not personal convenience, as she has claimed, but fear of exposure of her true thoughts and unguarded behavior? What if she feared she could not publicly account for her concealed behavior, and so she kept it from the government?

What if when she claimed her husband's email server had never been hacked she didn't know what she was talking about? What if victims can't always tell when they've been hacked? What if the persons with whom she has been emailing have been hacked? What if one of her former aides—with the lurid nickname of the "prince of darkness" (real name: Sid Blumenthal)—was hacked? What if among the hacked emails of the Prince of Darkness were some to and from Clinton strategizing about the way to portray her role at the time of the assassination in Benghazi of the American ambassador to Libya?

What if all this lawlessness and secrecy was orchestrated by Clinton herself—a person devoid of a moral compass and disdainful of compliance with law and a habitual stranger to the truth? What if she is presently the leading candidate for the Democratic nomination for president? What if the Democrats don't care?