Semper Ratio

Primer on the Euro and Political Currency

2012-01-30T00:34:00.001-05:00

Absolutely superb article on the euro and the impact of having a 'political currency' by Robert P. Murphy entitled The Euro: The Folly of Political Currency. The euro is a fiat currency, much the same as most currencies in the world, that is, its value is not directly linked to a standard, such as gold or silver, rather, it's value is determined by the monetary policy of the issuing country, and more importantly, to that country's perception, by others, to its solvency, government spending policies, current and future (and past) economic performance and so on. The euro took the practice of fiat currency to the next level, i.e., to a currency based on politics, and as if that's not bad enough, it's based on the politics of multiple nations attempting to act as one 'European Union.'

The Banker Tax & Ending the Federal Reserve

2012-01-30T00:23:00.000-05:00

Superb post on ZeroHedge by Tim McCormick: The Banker Tax. The opening paragraphs serves their purposes well, i.e., the goal of making you continue to read the rest:

Is it ok with you if we starve poor people to bail out Citibank again? Will you stand by and do nothing while seniors struggle to afford heating oil just to keep Bank of America solvent? The fundamental structure of our monetary system creates a multifaceted regressive tax. Only when we come to view this complex confiscation of wealth as a tax, will we be able to summon the political force to defeat it.

Nobody likes to pay taxes, but some taxes are more treacherous than others. An open and simple tax can be opposed because it is vulnerable to "sound-bite politics". The worst taxes are hidden by the complexity of their indirectness. Hidden regressive taxes imposed without the representation of the payer are most unjust. We are now paying a banker tax or subsidy. It is hidden, it is regressive and we have little political control over it.

The concluding two paragraphs are biting as well:

Campaign finance reform is our only hope of avoiding violent revolution. The most devastating usurpation of all is the near century long stealth corruption of our monetary system.

Because our political system is corrupted by corporate lobbyists, it leaves the people with few choices. Those who do not wish for a violent revolution are left with the one alternative of taking control of their own money. Money can be anything two parties in a transaction choose it to be. Precious metals is one good choice. Converting ones savings from Federal Reserve Notes into precious metals is not some kooky survivalist ploy. It is empowering a person to vote against the immoral monetary system. Hoarding food is not a kooky survivalist ploy, it is hedging against an immoral banker tax. We all have the moral obligation not to pay the banker tax. Refuse to deposit your funds into a money center bank. Support efforts to end the Federal Reserve System.

While I don't have an answer, I'm not sure I agree with the goal of campaign finance reform as being a means to the end, however, I certainly agree that we should end the Federal Reserve System and that must start with a full and open audit. Peace.

Key to Ending a Recession or Depression? Simple, Less Government

2012-01-30T00:00:00.000-05:00

Warren G. Harding, one of America's 'forgotten' presidents and when he is remembered, is ranked among the lowest. Simplicity just doesn't get its due today, that is, people are conditioned to think that 'answers' to 'big' problems must be either as big or complicated (or both) as the problem itself. Nonsense. Politicians, as I have stated before, revel and thrive in, and making, all things complex.

Read James Grants' How Austerity Cured a Depression. It's quite simple really, as this is what Harding did:

In 1922, under the unsung stewardship of the president best remembered for his underlings’ scandals and his own early death in office, the unemployment rate fell from 15.6 percent to 9 percent (on its way to 3.2 percent in 1923), while constant-dollar output leapt by 16 percent. After which the 1920s proverbially roared.

And how did the administration of Warren G. Harding, in conjunction with the Federal Reserve, produce these astonishing results? Why, by raising interest rates, reducing the public debt and balancing the federal budget. Let 21st-century economists rub their eyes in disbelief. Eighteen months after the depression started, it ended.

HT: David Boaz

States Dependency on Federal Government

2012-01-29T23:51:00.000-05:00

"State officials have become addicted to federal subsidies because they allow them to spend money taken from taxpayers across the country instead of having to ask their voters to pony up the funds."

- Tad DeHaven, State Dependency on the Federal Government

I find it as interesting as I do disturbing, just how few people know and/or understand the amount of money transferred from the federal government to the states, and the implications behind any change, especially downward, in this largess. Also little understood are the underlying politics of this arrangement.

American Debt To Americans: Still Debt, Still a Problem and Still Significant

2012-01-29T23:29:00.001-05:00

GMU Econ professor Don Boudreaux explains how debt we owe ourselves, i.e., the money our government 'borrows' from us and thereby 'owes' us, is, contrary to politicians, is still debt and is a problem. In Spending Other People's Money, Boudreaux reminds us of the age-old, and true maxim that nothing is free. One very clear point worth repeating (emphasis is mine):

Buchanan reasoned that the burden of the debt isn't borne by the lenders: They lend voluntarily in hopes of receiving an attractive return. Had they not loaned to the government, they would have used their money in other ways, likely as loans to private investors.

Nor is the burden of the debt borne by today's taxpayers. It's precisely to avoid raising taxes today -- to avoid burdening today's taxpayers -- that government borrows.

10 Best Milton Friedman Quotes

2012-01-20T00:20:00.000-05:00

Courtesy of John Hawkins comes 10 Of The Best Economics Quotes from Milton Friedman. They're all classics! My favorite is #10:

"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand."

George Will on Government Redistribution

2012-01-20T00:15:00.000-05:00

George Will again, at his best, in Government: The Redistributionist Behemoth:

Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.

Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.

His conclusion:

The issue of inequality has become more salient as affluence has increased. Which suggests two conclusions:

People are less dissatisfied by what they lack than by what others have. And when government engages in redistribution in order to maximize the happiness of citizens who become more envious as they become more comfortable, government becomes increasingly frenzied and futile.

Obama, Like all Presidents, Is a Liar

2012-01-19T21:21:00.000-05:00

A Policy of Lying by Jacob Sullum. I can add nothing to the perspective - well, maybe I can - all politicians are liars - but convince themselves, some more easily than others, that lying is acceptable when charged with running the town, city, state, nation.

Opposing Imperialism is Not Isolationism

2012-01-19T21:12:00.000-05:00

Long have I said that my opposition to dropping bombs on others does not mean I'm an isolationist, a label the weak of mind as well as those that know better use with thoughtless abandon. Think for a moment of what the opposite side of the coin of this argument means: to be a nation among other nations is only accomplished by militaristic policies. Sheldon Richman addresses the question of interventionism vs. isolationism in his piece Opposing Imperialism is Not Isolationism.

Iran and the United States: Is War Inevitable?

2012-01-19T20:49:00.000-05:00

I am afraid that Obama and his minions will escalate the Iranian 'crisis' or 'situation' to an actual confrontation sometime in 2012. This being said, the neo-conservatives will vocally denounce the situation yet privately commend it, they being the guardians of the military-industrial-congressional complex (the Conservatives version of the liberal/Dems 'social welfare' redistribution mechanism). War is America's answer to 'foreign policy' and given our government's Keynesian predilections and thus the belief in the fallacy that WWII 'saved us from the Great Depression', war will continue to be viewed as a valid economic policy. With this in mind, I found Soviet America Empire’s Suez? How the Persian War will play out in 2012, especially:

The Iranian government wants a nuclear weapon to protect itself from U.S. military adventure.

The U.S. government (in the style of Genghis Khan) wants the Iranian government to remain defenceless from U.S. military adventure, therefore it must stop the Iranian government’s nuclear weapon.

Iran has witnessed what has happened to those nations that have not had a nuclear deterrence capability, namely Iraq and Libya: surrender or stopping a nuclear WMD program and not only doesn't America leave you alone, it becomes more aggressive. I do not condone the policies and practices of Iran, Iraq and Libya, however, I can understand the actions of their governments, if not their motivations.

A Primer on SOPA and American Censorship

2012-01-19T20:17:00.004-05:00

Stop Online Piracy Act (SOPA): sounds reasonable right? Who after all doesn't want to stop piracy? But there is more, much more, to this legislation than meets the eye and it is full of unintended (though in my opinion, very much intended consequences). It is the product of powerful lobbying groups, primarily in the entertainment industry, but the government benefits greatly from the act as well. The bottom line is this: it is a violation of our freedom of speech. Don't like a website and what it says? Use SOPA to shut it down. Julian Sanchez says it best in SOPA: An Architecture for Censorship when he states:

The practical effect of SOPA will be to create an architecture for censorship—both legal and technological—that will radically alter the costs of engaging in future censorship unrelated to piracy or counterfeiting.

There's more:

SOPA is a 70 page statute establishing a detailed legal process by which the Justice Department can initiate blocking of supposed pirate domains by ISPs and search engines, and by which private parties can seek orders requiring payment processors and ad networks to sever ties. After flying largely below the radar of public attention for many months, we’re finally seeing sustained scrutiny and fierce debate over the bill. But the portion of the bill laying out the specific types of criminal conduct that trigger this Rube Goldberg censorship machine occupy just a couple of paragraphs. With the legal framework in place, expanding it to cover other conduct—obscenity, defamation, “unfair competition,” patent infringement, publication of classified information, advocacy in support of terror groups—would be a matter of adding a few words to those paragraphs. One sentence slipped in as a rider on some must-pass omnibus bill would do it: “Section 102(2)(B) is amended to add ‘or civil action under 17 USC §271′.”—voila, a nuclear weapon for patent trolls.

The conclusion is chilling:

These twin architectures will obliterate major institutional barriers to Internet censorship generally, not just censorship for antipiracy purposes. Political actors—or special interest groups—who want to expand the scope of blocking will no longer have to justify putting in place a wholly new system of Internet blocking. Instead, the rhetorical question will become: Now that we’ve got this whole filter architecture in place for music and movie pirates, how can we possibly justify not using it for sites that host terrorist propaganda or classified documents, for sites that implement a patented business model without permission, for sites enabling speech some U.S. court has held libelous, and for whatever new moral panic is gracing the cover of Time in five years. Surely you’re not suggesting that illicit downloads of Norbit are a bigger problem than whatever outrage Joe Lieberman is fulminating against this week, are you?

Changing legal and technological architectures also changes the costs of future political decisions that make use of those architectures. Speech is more likely to stay free when censorship isn’t. The cheaper the muzzle, the dimmer the prospects for online expression

Read the entire piece by Sanchez and judge for yourself. I will be using this entry to post other SOPA-related articles.

Wikipedia to shut down on Wednesday to protest anti-online piracy legislation by Brendan Sasso

Op-Ed: SOPA Is a Threat to NYC’s Growing Tech Industry by Brad Burnham

8 Political Reasons to Stop SOPA & PIPA by Ron Davis

What's Next for SOPA and PIPA? by Julian Sanchez

The Internet is Not .gov's to Regulate by Jim Harper

Internet Regulations & the Economics of Piracy by Julian Sanchez

Salman Kahn on SOPA and PIPA:

Some Views on SOPA and PIPA by Nick Gillespie

The Top Ten Things Santa Claus Forgot to Give Me

2012-01-17T00:19:00.000-05:00

Superb article from Cato's Doug Bandow: The Top Ten Things Santa Claus Forgot to Give Me

Santa Claus came and went. Truth be told, I'm a bit disappointed. He didn't leave me even one of my ten favorite gifts. I guess I have to wait another year. Maybe after next year's election Santa will be more forthcoming:

"Top of my list is for Americans to stop confusing Uncle Sam with Santa Claus.'
"Next, I wish the people of the world would stop confusing Uncle Sam with Joan of Arc. It seems everyone everywhere expects America to show up and save them.'
"Number three is that Washington stop lecturing other nations about democracy while sucking up to corrupt thugs who jail anyone foolish enough to support democracy there."
"My fourth wish is for my conservative friends who claim to believe in individual liberty and limited government to stop campaigning to toss people in jail for smoking marijuana and stop glorifying participation in deadly and destructive wars. It may be stupid to use drugs — though not obviously more so than to use alcohol and tobacco — but that's not a good reason for filling America's prisons."
"Number five on the unfulfilled Christmas list is that my liberal friends who say they believe in "choice" apply the same principle to issues other than sex. Like choosing to engage in economic acts among consenting adults."
"Coming in sixth place is my desire that conservative Republicans who have trouble staying married or staying faithful to their wives — and especially who have trouble doing both — shut up about family, marriage, fidelity, religion, morality, and especially Western civilization."
"At seven is my hope that my fellow Christian believers will get over their feelings of persecution."
"In eighth place is my wish is that members of the bipartisan War Party stop smearing their opponents as isolationists. There is something strange about people who joyously propose bombing, invading, and occupying nations around the globe claiming to be internationalists. The real internationalists are those who argue that the best forms of global involvement are not slaughtering other peoples."
"Wish number nine: partisans of all stripes should stop demonizing their opponents.'
"Last but not least, to paraphrase that great political philosopher Michael Jackson, everyone should look at the person "in the mirror" before rushing off to demand some politician somewhere do something."

Income Inequality: A Primer

2012-01-17T00:11:00.000-05:00

Income inequality. Much has been written on the subject, resulting in one simple observation: it's a topic dominated by passion and irrationality and a burning desire to vilify those above some arbitrary economic demarcation on wealth. It was none other than Thomas Sowell who explained in his work Economic Facts and Fallacies that what is missing from the discussion on supposed income inequality is the movement through the various measures of income, i.e., those that bemoan the "income gap" continually miss the point that those people within each category of income change constantly, meaning that people focus on the category, not the people that have moved through it. They assume those in the the lowest categories have been the same, which is not the case at all.

The debate on income inequality presumes that there should be some measure or degree of equality in the first place. This position is untenable. First, as Sowell points out, when individuals begin to earn income, they are typically young and vary in education for example. Some start out in entry-level positions, some in blue collar jobs and others in white collar jobs. Some live at home, others do not. Some are married young, others not, some have children, some do not, all factors that impact the income-earning realities. However, over time, these same people move onto other jobs, acquire more education and so on. Some go up, some go down, and while the categories of income stay the same, those that move in and out do not. Those that find the 'gap' disturbing think in static terms, while those that understand just the basics of economics, think in terms of change. Passion rules the former, while reason and rationality serves the latter.

Let's assume a 'static' gap does exist for a moment in time. Am I somehow any less wealthy than say Bill Gates or Warren Buffet? In money terms, yes, but in all other measures, I believe not. First, I have access to the same health care services they do (leave aside the economics of the system for the time being); I can fly anywhere in the world for a reasonable price, and the fact that they can fly in a private jet makes no difference really: I can still get to Shanghai for example, not in the same level of comfort, but I can do today what was once reserved only for the elite. I begrudge nothing that Gates or Buffet have earned or have. Both have created thousands of jobs. I believe that I live in a country where I too have the opportunity to further improve my lot in life and I do not want to do so at the expense of anyone.

In conclusion, I believe in the equality of opportunities, not the equality of outcomes.

Additional readings:

Income inequality can be explained by household demographics by Mark J. Perry

Fed study finds three decades of ‘broad-based’ U.S. income gains by James Pethokoukis

5 reasons why income inequality is a myth — and Occupy Wall Street is wrong by James Pethokoukis

The 1% Ain't What It Used To Be by Megan McArdle

Equally Poorer by Michael D. Tanner

7 reasons why Obama is wrong on income inequality by James Pethokoukis

Op-Ed: Don’t mind the gap: Occupiers blast economic inequality but fail to notice growing mobility by Shikha Dalmia

On the CBO’s Income-Differences Report by Don Boudreaux

Tracking the same households over time shows significant income mobility by Mark J. Perry

Does U.S. Economic Inequality Have a Good Side? PBS Video with Richard Epstein

The Growing Wealth Gap? Fortune Makes up the Numbers by Alan Reynolds

The Real Story Behind "Rising" U.S. Income Inequality

"Time-Lapse Analysis" Instead of Snapshot Shows That 57% of Top 1% in 1996 Weren't There in 2005 by Mark J. Perry

Don't Mind the Gap: What matters is income mobility, not income inequality by Shikha Dalmia

You Want More Equality? Support More Capitalism: Free markets are the real source of economic opportunity by David Harsanyi

For liberals, income inequality is the new global warming by James Pethokoukis

Income Inequality vs. Wealth Inequality by David Weinberger

Poverty Measure a Gimmick to Equalize Incomes by Robert Rector

Numbers Games by Thomas Sowell

IRS Data from 1992-2008 on the Top 400 Show Significant Turnover: 73% Remain for Only 1 Year by Mark J. Perry

The Real "1 Percent" by Michael D. Tanner

Liberal Programs Deserve Blame for Income Inequality by Shikha Dalmia

Getting Past the Emotional Gripes to the Real Debates About Inequality by Anthony Randazzo

Should the Rich Be Condemned? by Walter Williams

Thinking About Inequality: Living By Our Desires Rather Than Our Needs by Trevor Burrus

Ending Income Inequality? by Walter Williams

Tax Rates, Inequality and the 1% by Alan Reynolds

Income Inequality Data Has Flaws by Chris Edwards

The Income-Inequality Myth by Michael D. Tanner

The Latest from Don Boudreaux

2012-01-16T23:51:00.000-05:00

The latest work from my favorite economics professor, Don Boudreaux of George Mason University:

Some Sins of Textbook Economics

We Don't Owe It To Ourselves

Of both articles, the second is the most important, as he addresses this fallacy promoted by the ignorant and/or the shills of the Progressives that we Americans should not be concerned about the size of our national debt because 'we owe it to ourselves.' Boudreaux does his usual superb job at debunking this nonsense.

The Rest of Obama's Missing Hope Poster

2012-01-09T09:46:00.002-05:00

Source: BoingBoing

Really? We Need These?

2012-01-09T09:24:00.000-05:00

Here's a peek at the single most expensive piece of military hardware, ever: the USS Gerald R. Ford at $11.5B. Of course, we can't just have one such aircraft carrier - no - we must have three, with a total budget north of $40B. The military-industrial-congressional complex at its best. Not a surprise really, given that anything can be done today simply by associating the word 'terrorism' with any project. Likewise not a surprise is the construction of the Ford is estimated to already be 21% over budget. And so our search for enemies continues unabated and surely we will find them (or make them ... or both) as surely as pigs are drawn to the trough.

How The Debt Crisis Will End

2011-12-15T17:06:00.000-05:00

From Richard W. Rahn's How the Debt Crisis Will End:

The existing political class will be thrown out — peacefully or violently. Governments will then start over and explicitly disavow all of the previous promises for entitlements. New monies will be created by both private parties and governments, and things will begin anew without the yoke of unpayable debt. The transition will be dreadful. But with luck, the new political orders and economies that will emerge can get mankind back on a rapid economic and individual-liberty growth track.

I agree with with Rahn's conclusion, especially the observation that "The transition will be dreadful." Welcome to the jungle.

December 15th: Bill of Rights Day

2011-12-15T16:55:00.003-05:00

Bill of Rights Day: What's Left of Them? by Nat Hentoff

So You Think You Know Your Rights? by Julia Shaw

Today is Bill of Rights Day by Tim Lynch posted below in its entirety:

Today is Bill of Rights Day. So it’s an appropriate time to consider the state of our constitutional safeguards.

Let’s consider each amendment in turn.

The First Amendment says that “Congress shall make no law… abridging the freedom of speech.” Government officials, however, have insisted that they can gag recipients of “national security letters” and censor broadcast ads in the name of campaign finance reform.

The Second Amendment says the people have the right “to keep and bear arms.” Government officials, however, make it difficult to keep a gun in the home and make it a crime for a citizen to carry a gun for self-protection.

The Third Amendment says soldiers may not be quartered in our homes without the consent of the owners. This safeguard is one of the few that is in fine shape — so we can pause here for a laugh.

The Fourth Amendment says the people have the right to be secure against unreasonable searches and seizures. Government officials, however, insist that they can conduct commando-style raids on our homes and treat airline travelers like prison inmates by conducting virtual strip searches.

The Fifth Amendment says that private property shall not be taken “for public use without just compensation.” Government officials, however, insist that they can use eminent domain to take away our property and give it to other private parties who covet it.

The Sixth Amendment says that in criminal prosecutions, the person accused is guaranteed a right to trial by jury. Government officials, however, insist that they can punish people who want to have a trial—“throwing the book” at those who refuse to plead guilty—which explains why 95 percent of the criminal cases never go to trial.

The Seventh Amendment guarantees the right to a jury trial in civil cases where the controversy “shall exceed twenty dollars.” Government officials, however, insist that they can impose draconian fines on people without jury trials.

The Eighth Amendment prohibits cruel and unusual punishments. Government officials, however, insist that a life sentence for a nonviolent drug offense is not cruel.

The Ninth Amendment says that the enumeration in the Constitution of certain rights should not be construed to deny or disparage others “retained by the people.” Government officials, however, insist that they will decide for themselves what rights, if any, will be retained by the people.

The Tenth Amendment says that the powers not delegated to the federal government are reserved to the states, or to the people. Government officials, however, insist that they will decide for themselves what powers they possess, and have extended federal control over health care, crime, education, and other matters the Constitution reserves to the states and the people.

It’s a disturbing snapshot, to be sure, but not one the Framers of the Constitution would have found altogether surprising. They would sometimes refer to written constitutions as mere “parchment barriers,” or what we call “paper tigers.” They nevertheless concluded that having a written constitution was better than having nothing at all.

The key point is this: A free society does not just “happen.” It has to be deliberately created and deliberately maintained. Eternal vigilance is the price of liberty. To remind our fellow citizens of their responsibility in that regard, the Cato Institute has distributed more than five million copies of our pocket Constitution. At this time of year, it’ll make a great stocking stuffer.

Let’s enjoy the holidays but let’s also resolve to be more vigilant about defending our Constitution. To learn more about Cato’s work in defense of the Constitution, go here. To support the work of Cato, go here.

People and "Rights"

2011-12-15T16:25:00.000-05:00

With a HT to Newmark's Door, comes this link to Theodore Dalrymple's article "Barbarians on the Thames: A Postmortem of the British riots." I'll post the same excerpts from Newmark's Door:

One rioter told a journalist that his compatriots were fed up with being broke all the time and that he knew people who had absolutely nothing. It is worth pondering what lies behind these words. It is obvious that the rioter considered being broke not merely unpleasant, as we all would, but unjust and anomalous, for it was these qualities that justified the rioting in his mind and led him to suggest that the riots were restitution. Leave aside the Micawberish point that one can be broke on any income whatever if one’s desires fail to align with one’s financial possibilities; it is again obvious that the rioter believed that he had a right not to be broke and that this right was being violated. When he said that he knew people with “nothing,” he did not mean that he knew homeless, starving people left on the street without clothes to wear or shoes on their feet; none of the rioters was like this, and many looked only too fit for law-abiding citizens’ comfort. Nor did he mean people without hot and cold running water, electricity, a television, a cell phone, health care, and access to schooling. People had a right to such things, and yet they could have them all and still have “nothing,” in his meaning of the word. Somehow, people had a right to something beyond this irreducible “nothing” because this “nothing” was a justification for rioting. So people have a right to more than they have a right to; in other words, they have a right to everything.

Tangible benefits, on this view, come not as the result of work, effort, and self-discipline: they come as of right. This inflated doctrine of rights has turned into a cargo cult as primitive as that in New Guinea, where the natives thought, after a laden airplane crashed in the jungle, that consumer goods dropped from the sky. Apparently, all that is necessary for people like the rioters to live at a higher standard of living, equal to that of others, is for the government to decree it as their right—a right already inscribed in their hearts and minds.

Rights are what we are born with, and not something conferred to us by a government. I grow so tired, as tired as Dalrymple is, of people who believe they have a right to everything from a job, to healthcare, to vacations. It's the product of a welfare state in which a government redistributes wealth from those that can and do, to those that chose not to and contribute nothing, and when the money runs out, the inmates run the asylum. Welcome to the jungle.

Related Readings on Rights:

You don’t have ‘Constitutional Rights’ by Mike Maharrey:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness

Unalienable: not capable of being repudiated.

Advice I Wish I Had Taken: Homeownership - Don't Do It!

2011-12-11T17:51:00.000-05:00

The housing bust in the United States was the tipping point for me, and I suppose it was for many others as I pondered the question about whether owning a home is truly an 'investment' or not. I was coming in on the side of 'no' and when the market crashed, I finally crossed the 'no' line altogether. James Altucher's Why I Am Never Going to Own a Home Again is clear and concise declaration against owning a home.

Related Readings:

The New Housing Sensibility by Douglas French

Bernanke to Congress: We're Not Corrupt Because I Say So

2011-12-11T17:46:00.001-05:00

The Fed is corrupt. Period. On the heels of the recent article from Bloomberg's in which it was discovered that banks made $13B in profit from loans from the Fed, and that the full price of the bailouts is up to $7.7T (that's "T" as in "Trillion"), Ben Bernanke has sent a letter to congress informing our political class that everything the Fed has done is fine, basically his version of a cop's line at a crime scene: "Nothing wrong here - move on." The level of arrogance, hubris and condescension knows no bounds. I shared my views on Bloomberg's report here but don't take my word for it, no, read instead the work of others much more qualified than me!

Trillion Dollar Bailouts Equal Crony Capitalism: The Federal Reserve is supposed to be a lender of last resort, not an ATM for Wall Street by Anthony Randazzo

Dear Congress: Bernanke Just Lied to You by EB (from Zero Hedge)

Bailout Total: $29.616 Trillion Dollars by Barry Ritholtz

Thoughts on Effecting Real Change in the American Political Process

2011-12-11T16:45:00.000-05:00

The American "experiment" as we know it today, is coming to an end. Though how and when are unknown, that it will happen is without a doubt. The financial crisis of 2008, the current recession and continued high unemployment and low growth, the election of a progressive president in 2008, the current debt crisises around the world and here, our ongoing involvement in, and deterioration of the situations in Iraq and Afghanistan, our equally deteriorating relationship with a nuclear-powered Pakistan, the seemingly longed-for confrontation with Iran, the Arab spring movement, loss of liberties and freedoms in America as evidenced in the Patriot Act, the TSA, the militarization of the police, the "Occupy" movement, Tea Party movement, the failure of the drug war, the military-industrial-congressional complex, all these and many more are exposing the cracks in the American government as it is constructed today. It cannot and will not sustain the pressure and, given that 81% of Americans are dissatisfied with how they're being governed, a trend that has been growing steadily for the last ten years according a Gallup poll, change will come.

Another certainty about this inevitable change is that our current political elite will inevitably do all they can to preserve the status quo, resulting in only a postponement of the day of reckoning. This self-preservation is, and will continue to be, a bipartisan effort highlighted by the immense sense of cooperation between those on both sides of the aisle. Those on the left will continue to grow the welfare state and advance its dependency agenda, while those on the Right feign resistance. While on the Right, the continued expansion of the military-industrial-congressional complex resulting in a permanent warfare state as well as the militarization of domestic police departments takes place, with those on the Left likewise feigning resistance. This tacit bipartisan agreement to carve up the spoils of government continues and it will do all it can to ensure nothing changes this formulation. Despite their best attempts, change will come.

I'll come back and work on this again soon, but in the meantime, I will provide links to related reading on this topic of change. Peace - long may it last.

Related Readings:

How Will Change Come About by Michael S. Rozeff

The USPS: Monopolies Aren't All They're Cracked Up To Be

2011-12-11T07:16:00.000-05:00

Jeff Jacoby on the latest travails of the USPS in E-mail Isn't Killing the Post Office:

The Internet Age may be wreaking havoc with the post office and its mail-delivery business, but what industry in America isn't going through the same wrenching experience? And not many institutions enjoy the benefits that federal law confers on the Postal Service: It pays no income or property taxes, it's exempt from vehicle licensing requirements and parking fines, and it has the power of eminent domain. Most significant of all, it has a legal monopoly on the delivery of mail: The federal Private Express statutes make it a crime for any private carrier to deliver letters. The only exception is for "extremely urgent" letters, and even those may be delivered by a private company only if it's willing to charge a much higher rate than the Postal Service would have charged.

The sooner the USPS is put out of its misery the better, for them and us.

Post-9/11 World: Created in the Pre-9/11 World

2011-12-10T22:55:00.000-05:00

Very interesting read is George Washington's post Help Prevent Tyranny by Educating People:

Everything Happening Now Was Planned Before 9/11

Special preface to my friends in the military, law enforcement and intelligence and other government servants: You are sworn to defend and uphold the Constitution, and the facts below may help you do so.

We’ve been told that "9/11 changed everything" and that we're living in "a post-911 world".

We've been told that what our government is doing now has been rendered necessary by the urgent post-9/11 threat from terrorists.

In reality, however, virtually everything happening now was planned before 9/11. Please see for yourself: [open the link above and read ... it does make you think]

Long before Rahm Emanuel, then Obama's Chief of Staff stated that "no good crisis should go wasted" meaning of course, the new administration would use the financial crisis to accomplish a broad range of goals, GWB used the tragedy of 9/11 to usher in an entire array of legislation and involve America in two wars. Of course, FDR used the Great Depression and World War II to do the same. Here's hoping that education and awareness prevents yet another repeat of history. Peace.

Economic Recovery: Get Government Out of the Way

2011-12-10T22:40:00.000-05:00

How Bad Economies Recover Fast When Governments Get out of the Way by Jim Powell is a thorough, superbly crafted article that provides historical examples of economic recoveries made possible as a result of less government intervention, i.e., when government "got out of the way." He concludes by stating:

So, there really isn't any secret about what needs to be done [less government]. There is, however, a huge political challenge about how to do it.

I don't have much hope for change though, as politicians are addicted to the power of government and the access to the money printing press. However, I am confident that change will ultimately come, it's just the nature and timing of that change that is up for question.

The Destructive Power of Fiat Money

2011-12-10T19:26:00.000-05:00

To understand the destructive nature of currencies without a commodity-based system such as the gold read Tim Kelly's The Debt Crisis and Fiat Money:

The fiat-money system has created a corrupt and unstable political economy. The Fed’s ability to monetize government debt (inflation) has enabled the expansion of the parasitical public sector, which now appears to have overwhelmed the productive private sector.

Debt and inflation have distorted the economic structure of the country. The U.S. economy, rather than being based on production financed through equity, is now based on consumption financed through debt.

Kelly highlights Europe's problems and warns us that America's problem with debt could be worse, given the scale of our nation's unfunded liabilities at all levels of government. His quote from an article by Charles Biderman on what has to happen to debt is scary in its simplicity:

Debt has to be reckoned with one way or another. It either has to be repaid, or someone has to bear the losses on what cannot be repaid, either through default or inflation and currency debasement. If it were otherwise, everyone could be rich.

There you have it: repay it or debase (monetize the debt, i.e., print more money) your currency and being that politicians are at the heart of any nation's monetary policy, they will chose the latter: start the presses. Of course, this only postpones the inevitable, failure, which is what politicians do best (well, after stealing that is):

Debt monetization sets in motion the destructive process whereby overvalued sovereign debt enables governments to spend more, which creates more debt, which inevitably leads to a fiscal crisis when tax revenues are no longer sufficient to maintain the level of government spending and service of the debt. This is where the governments of Greece, Italy, Portugal, and Spain find themselves today.

The root of all evil is a fiat-based money system, i.e., the value of a nation's currency is whatever its central bank wants it to be.

The fiat-money system has created a corrupt and unstable political economy. The Fed’s ability to monetize government debt (inflation) has enabled the expansion of the parasitical public sector, which now appears to have overwhelmed the productive private sector.

Debt and inflation have distorted the economic structure of the country. The U.S. economy, rather than being based on production financed through equity, is now based on consumption financed through debt.

His conclusion:

The global economy will only truly recover when governments contract to a fraction of their current gargantuan size. So-called austerity measures need to be implemented and, most importantly, the “too-big-to-fail” megabanks need to be allowed to fail. These institutions are parasitical, corrupt, and obviously incompetent.

Currencies need to be stabilized within a commodity-based monetary system (i.e., gold and silver) and those institutions that devalue them must be shut down. This means abolishing central banking and introducing full-reserve free banking.

I do not expect this to happen anytime soon. The global elite are likely to resort to almost anything to preserve their central-banking and fiat-money system. Thus, we are likely to see more inflationary bailout schemes, diversionary international crises, wars, and further encroachments on civil liberties.

So much for hope.

Obama Comes Out of the Closet: He IS a Socialist (no surprise really)

2011-12-10T18:50:00.000-05:00

President Obama recently gave a speech in Kansas in which he informed us that market capitalism is a "theory" that has never worked. No surprise really, but it is critical that he outed himself in advance of the presidential election next year. The finest summary of Obama's speech and a subsequent rebuttal comes from Peter Schiff in Obama Gets Real. My first instinct upon reading of the speech was that Obama is aligning himself with the OWS crowd and Schiff agrees:

Based on the growth of the Occupy Wall Street movement, and the recent defeat of Republicans in special elections, he has perhaps sensed a surge of left-leaning sentiment; and, as a result, he finally dropped the pretense.

Schiff's summary of Obama's thesis:

According to our President’s new view of history, capitalism is a theory that has “never worked.” He argues that its appeal can’t be justified by results, but its popularity is based on Americans’ preference for an economic ideology that “fits well on a bumper sticker.” He feels that capitalism speaks to the flaws in the American DNA, those deeply rooted creation myths that elevate the achievements of individuals and cast unwarranted skepticism on the benefits of government. He argues that this pre-disposition has been exploited by the rich to popularize policies that benefit themselves at the expense of the poor and middle class.

His conclusion:

History has proven time-and-again that capitalism works and socialism does not. Taking money from the rich and redistributing it to the poor does not grow the economy. On the contrary, it reduces the incentives of both parties. It lowers savings, destroys capital, limits economic growth, and lowers living standards. Maybe Obama should take his eyes off the teleprompter long enough to read some American history. In fact, he could start by reading the Constitution that he swore an oath to uphold.

The stage has been set for 2012.

Progressivism Defined: Part II

2011-12-09T21:08:00.000-05:00

In my post, Progressivism Defined, I introduced a definition of progressivism from George Will. From John Goodman, we obtain a further elaboration in his post What is a Progressive? in which he in turn quotes Jonah Goldberg who provides a history of the movement, starting with Teddy Roosevelt, followed by the modern architect of the movement, Woodrow Wilson, whose work was escalated by FDR and of course, we have the current incarnation in Barack Obama. Quite a cast of characters. I firmly believe that just as history is written by the victors, American history is written by intellectual progressives. The facts that make up the administrations and actions of TR, WW and FDR are purposely ignored by the liberals who write textbooks. The current liberal media is performing a fine job of doing the same for BHO.

American Citizens Asleep at the Wheel: The National Defense Authorization Bill

2011-12-09T16:24:00.001-05:00

Jon Stewart at his best, yet again, as he uses humor to highlight to the federal government in effect, taking away our constitutional rights - and yet few know and those that do, seem to care little. The National Defense Authorization Act (NDAA) places Americans in danger of being detained indefinitely by their own government without formal charges! In Washington, mention 'terrorism' and/or 'Al-Qaeda' and anything goes, including the taking away of our civil liberties. Read more about the bill in Jason Pye's Congress Must Shoot Down the Defense Authorization Bill. This is a disgrace and no one appears to care.

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Not So New News: The Fed is Corrupt

2011-12-09T16:18:00.000-05:00

Bloomberg has, in the words of Professor Russ Roberts, a "frightening" story of corruption at the Federal Reserve. Nothing but a full transparent audit would satisfy me. Secret Fed Loans Gave Banks $13 Billion is indeed a frightening read, and this excerpt alone makes me ill:

"And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse"

Insider trading by a private citizen is a crime; insider trading by a politician is called 'policy.' Time for a bit of sedition.

Jon Stewart at his best:

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Against War with Iran

2011-12-08T23:38:00.001-05:00

I see absolutely no reason to go to war with Iran. Period.

Regardless of whether they have, or will have, nuclear weapons, we should not attack or otherwise use force in any way, e.g., a Libya-style circumvention around the War Powers Act and the U.S. Constitution via an 'authorization' from the U.N., using NATO as the vehicle and "leading from behind" as a strategy.

Not one American armed service member should be involved in any way, shape or form, in any physical attack on Iran. Period.

America must stop its continued search for enemies as well as our continued existence in a state-of-war, one in which most Americans are either simply not aware of or simply choose not to care about.

I could go on and on, but will not (at this point anyway).

Below are some excellent references on why we as a nation should simply not use force against Iran.

Neocons Don’t Believe Their Own Anti-Iran Propaganda by Sheldon Richman

Ignore the Hawks on Iran, Too by Malou Innocent

The Drug War: A Failure on All Counts

2011-12-08T03:24:00.001-05:00

With the 40th anniversary of America's futile "war on drugs" I share with you the best posts on the subject, including the calls to end this wasteful and pointless "war."

Drug War Cost Clock updated for 2011

More On the Ordered Liberty Allegedly Promoted by the 'Drug War' from GMU professor Don Boudreaux. The entire civil-asset-forfeiture aspect of the 'Drug War' is in itself a crime against the citizens of the United States.

Some 'Drug War' Links and Some Links both again from Don Boudreaux who provides many excellent links in this post.

Neither Order Nor Liberty by Don Boudreaux (yes, I enjoy his work immensely).

Addicted to an Immoral Substance: Power by Don Boudreaux (there are others to follow, I promise)

Thanks to War on Drugs, U.S. is World's #1 Jailer by University of Michigan at Flint Econ Professor, Mark J. Perry

Call Off the Global Drug War by former president Jimmy Carter.

Because You Can Never Have Too Much Criticism of the War on Drugs an assembly of links by Reason's Jacob Sullum

Reason.tv: 40 Years of Drug War Failure - LEAP's Neill Franklin

The War on Drugs Is as Foolish as the War on Poverty by Dan Mitchell

Repost: Anyone Who Believes America is Winning the Drug War Must Be High by Stephen Littau

The Cost of the War on Drugs The inaugural video of FEE.tv, the Foundation for Economic Education

What Pills are these Guys Popping? by Don Boudreaux

Collars for Dollars by Peter Moskos

The Drug War: What is It Good For? by Art Carden

NAACP Says End the "War On Drugs"

Group of Black Government Employees Calls for End to the Drug War by Mike Riggs

The War on Drugs is Useless by Laurence M. Vance

Mexico's Felipe Calderón Admits Drug War Is Failing by Mike Riggs

Drug Decriminalization Has Failed? by David Boaz

Interesting Quotes from the National Drug Threat Assessment Report by Juan Carlos Hidalgo

It's Time to Declare Peace in the War against Drugs by Doug Bandow

A little legalizing, a big peace dividend by Neil Reynolds

Mexico Sours on Drug War by Ted Galen Carpenter

Endless Evil: The Drug War’s Continuing Collateral Damage, Part 1 by Radley Balko

Endless Evil: The Drug War’s Continuing Collateral Damage, Part 2 by Radley Balko

Driven By Drug War Incentives, Cops Target Pot Smokers, Brush Off Victims Of Violent Crime by Radley Balko

Violence Tests U.S. Prohibition by Ted Galen Carpenter

Much-Deserved Praise for Ron Paul on Ending the Drug War by Daniel Mitchell

Milton Friedman on Drug Legalization:

On Detroit

2011-12-08T03:21:00.001-05:00

The ghost readers of this blog know I have a special affinity for Detroit. There is much to lament about the once-great Motor City, and while much of its demise is often attributable to the American auto industry's demise, in my opinion, it's only a small part of the reason. In my opinion, two other forces are responsible for its current state: government and public-sector unions, neither entity of which wants anything to do with 'change.' I had hope for the current mayor, David Bing, but he appears to be yet another failed reformist, an outsider (a former basketball player) not a politician, who had dreams and aspirations for a better Detroit yet could not overcome the government largess and public-sector unions that refuse to accept reality.

Shikha Dalmia has penned an excellent article on the city, worthy of repeated reads. One day I hope to see the city transform itself and become the model of what is possible if we can only overcome our addiction to government.

Detroit Needs a Regime Change

History Lesson on Rich Nations (That Went Broke By Spending Too Much)

2011-12-08T02:57:00.000-05:00

"Runaway spending repeatedly has contributed to the downfall of the high and mighty." - Jim Powell, Rich Nations That Went Broke by Spending Too Much.

Combination history lesson and warning - a superb read that once again proves the adage that those that do not learn from history are condemned to repeat it. It also serves as a reminder of one of the Seven Principles of Freedom: a government that is large enough to give you everything you want, is large enough to take away everything you have. When this government of ours finally runs out of money, they'll come looking for more.

Markets: A Primer

2011-12-08T00:30:00.001-05:00

Let me begin this post by stating that we do not have truly free markets in this country. There still remains a liberal degree of interventionism, protectionism and many other anti-market-isms which act as constraints on "the market." Of course, the biggest impact on the market is "the government" - in all its forms, and at the root of all government is "politics" - and where there are politics, there are rent-seekers, and the selection of "winners and losers" that go beyond the power of the markets.

Steven Horwitz has penned three superb pieces on markets, and will thus serve as the foundation for a primer on markets.

Markets Are Messy

Markets Are Messy, Part 2: The Errors of the Economists

The Failure of Market Failure

A Primer on the European Debt Crisis

2011-12-08T00:22:00.000-05:00

Another superb post from Doug Bandow, this time on the Euro debt crisis. Everything you wanted to know about the situation in Europe can be found in Hurtling Over a Fiscal Cliff. It's the perfect mix of history and current events, with just enough finance and economics for anyone to understand. His conclusion is both a warning to Americans, that Europe's fate could be ours, and a bit of simple reality:

Americans may be tempted by schadenfreude, but the U.S. debt-to-GDP ratio is worse than that for the Eurozone. Washington already has taken many steps down Europe's path to fiscal perdition. Moreover, the Europeans are seeking to enlist the aid of the International Monetary Fund, which would toss good American Dollars after bad European Euros.

The Eurozone may survive the current crisis, but the dream of Europe as Weltmacht is kaput. Ultimately it is up to the European people, not the Eurocrats, to save Europe.

Peace.

Rolling Back the Myth of Good Government

2011-12-07T23:59:00.000-05:00

The opening paragraph from Laurence M. Vance's Rolling Back the Myth of Good Government succinctly summarizes my perspective on the U.S. government:

The government of the United States has secured the confidence and consent of the American people through myths of its benevolence, provision, innovation, achievements, scientific advances, educational system, and protection. It takes credit for everything good that happens in the economy and society, accepts no responsibility for its failures, and proposes more government as the cure for every bad thing that takes place.

I have little hope this will ever change, especially as the government continues to perpetuate an agenda of dependency, especially through the expansion of the welfare state. The more the government creates dependence, the less likely those dependents will seek a change in the size, scope, scale and structure of government.

Occupy Wall Street: Some Perspectives

2011-12-07T23:48:00.001-05:00

From The Occupy-Wall-Street Crowd and Political Humor by Dan Mitchell:

Indeed, I’m very sympathetic to their outrage about corrupt bailouts and crony capitalism.

But these people don’t draw the right conclusions. They complain about the problems caused by government, yet they generally think the solution is…you guessed it…even more government. [emphasis is mine]

Obviously, they are not familiar with Mitchell’s Law.

Dear Occupy Wall Streeters by The Unbroken Window

I certainly agree with some of your concerns about the cozy relationship between Wall Street and DC is problematic. So, pray tell, when will you stage your demonstration outside of Solyndra and General Electric and all of the other “private” companies getting boatloads of subsidies, loan guarantees, use mandates and other goodies from our masters in DC? Is it cool when “green” capitalists get the same treatment as the Wall Street people? A lot of what I am hearing is, “well, you bailed out Wall Street, so why aren’t you bailing US out too?”

That strikes me as an awful line of argument. I’ll maintain this position until I see the Occupy the Green Street movement arise.

Occupy Public Employee Union Street! by The Unbroken Window

Occupy Wall Street: The Young and the Clueless by Louis DeBroux

Op-Ed: Don’t mind the gap: Occupiers blast economic inequality but fail to notice growing mobility by Shikha Dalmia

The Audacity of Occupy Wall Street by Richard Kim

Memo to the Occupy Protestors: Here are Ten Things We Evil Capitalists Really Think by MEP Daniel Hannan

What Have the Politicians in Washington Given Us? by Michael D. Tanner

Two Thoughts on Occupy Wall Street by Steven Horwitz

It's Time to Occupy Capitol Hill and Fight Political Greed by Doug Bandow

Obama's Top 10 Constitutional Violations

2011-12-07T23:44:00.000-05:00

From Ilya Shapiro's President Obama's Top 10 Constitutional Violations:

The individual mandate
Medicaid coercion
The Independent Payment Advisory Board
The Chrysler bailout
Dodd-Frank
The deep-water drilling ban
Political-speech disclosure for federal contractors
Taxing political contributions
Graphic tobacco warnings
Health care waivers

I would have added our nation's involvement in Libya to the list. Something to keep in mind next November.

Security Theater

2011-12-07T23:37:00.000-05:00

The conclusion from The Security Theater Cycle by Julian Sanchez:

Security theater, then, isn’t only—or even primarily—about making us feel safer. It’s about making us feel we wouldn’t be safe without it. The more we submit to intrusive monitoring, the more convinced we become that the intrusions are an absolute necessity. To think otherwise is to face the demeaning possibility that we have been stripped, probed, and made to jump through hoops all this time for no good reason at all. The longer we pay the costs—in time, privacy, and dignity no less than tax dollars—the more convinced we become that we must be buying something worth the price. Hence, the Security Theater Cycle: the longer the ritual persists, the more normal it comes to seem, the more it serves as psychological proof of its own necessity.

The key point is this: "It's about making us feel we wouldn't be safe without it." This is the key to understanding one simple fact and that is, we will never go back to pre-9/11 levels of security. The truth is simply this: the Department of Homeland Security in general, and the TSA specifically, will only become bigger, spend more money to "protect us" and become more invasive of our privacy, and, the real shame is that we will all agree that "we wouldn't be safe without it."

An Update on GM (Government Motors)

2011-12-07T23:27:00.000-05:00

Contrary to what many people think, the US government has not sold all its shares of GM, as explained by Daniel Ikenson in his post entitled Let's Divest of GM Yesterday. The government still holds 500 million shares of GM stock:

Just to recap: the Treasury recouped $23 billion of taxpayers’ $50 billion outlay when it sold GM shares to the public in an IPO in November 2010; the outstanding 500 million shares in government coffers must be sold at an average price of $54 to recover the remaining $27 billion; the IPO price was $33; today’s price is $21.69. If all 500 million shares could be sold at today’s price, the Treasury would raise $10.8 billion, leaving taxpayers at a loss of just over $16 billion. (Of course, the sale of such a large number of shares would drive the average selling price way below today’s price, resulting in a much larger taxpayer loss.)

While Ikenson argues against one proposed method of selling the stock (basically, by forcing GM to buy it) he agrees that the government should sell its stake:

GM should not be entitled to any favors or exceptional treatment by virtue of its ownership structure. To be certain of that, it should be 100 privatized yesterday. But likewise, GM should not be subject to compensatory or otherwise countervailing policies designed to punish or remove any perceived advantage. For starters, it is impossible to measure the benefits received or the penalties suffered with any precision. Demanding that GM not be exposed to special treatment goes in both directions.

He points out as well how very unhealthy GM is, and I believe, as do many others, the bailout only postponed the inevitable.

Digging Our Grave in Afghanistan and Pakistan

2011-12-07T18:16:00.000-05:00

Another superb piece by CATO's Malou Innocent on America's continued missteps in Afghanistan and Pakistan entitled Digging Our Grave in Af-Pak. I become dismayed when I contemplate just how most Americans have become inured to the ongoing war underway in Afghanistan and the impact our actions have on bringing about that which we least can afford, let alone desire: a further destabilized Pakistan. We take it for granted that it's acceptable to spend billions of dollars a month in Afghanistan, put our troops in harms way on a daily basis, use drones to target and kill 'terrorists' along with innocent civilians (not to mention American citizens too) and simply go on with our lives here in the States, each and every day. Growing accustomed to war is antithetical to the principles of democracy. When the price of peace is thought higher than that of war then surely as night follows day, democracy, especially the American Experiment, will die.

Innocent's conclusion is worth repeating here:

Only America’s hubris can explain why officials continue to believe that they can win a war in which the neighboring state—with legitimate security interests—actively assists elements of the insurgency, denies transit routes for delivery of war supplies, and uses its leverage to increase the costs of America’s military presence. The 10-year war’s latest casualty is the ongoing effort to bring insurgent networks into a broader power-sharing arrangement in Kabul. U.S. militarism has deprived diplomatic efforts of a key regional player. Absent the cooperation of Pakistan, the United States continues to dig its own grave.

We are digging our grave and the sad fact is: few can see it.

Malou Innocent on Ignoring the Hawks on Iran

2011-12-07T18:02:00.000-05:00

Malou Innocent's closing sentence in Ignore the Hawks on Iran, Too is simply the best advice to the many undecided Americans when analyzing their position on what we should or should not do, when it comes to Iran:

As I’ve written before, those and others who years ago had the gall to argue that Iraq would be a “cakewalk” are today worthy only of being ignored.

It's simple: ignore the hawks. Too often, no in fact, all the time, have they been listened to and reflect on exactly what their aggression has done to our our country as well as many others: the civilians in Iraq and Afghanistan have paid a price as dear as that of America.

Quotation for the Day

2011-12-07T17:20:00.002-05:00

“When words lose their meaning, people will lose their liberty.”

– Friedrich Hayek

Christopher Hitchens at His Best: Trial of the Will

2011-12-07T17:00:00.000-05:00

Trial of the Will is Christopher Hitchens at his best, as he puts to rest the nonsense that "anything that doesn't kill you makes you stronger." As he is dying from esophageal cancer, he knows only too well that nothing that he's going through now is in any way shape or form, making him stronger. Personally, another such saying that I find disgusting is the phrase "There but for the grace of god go I" which my mother would often say when seeing a handicapped person, a homeless person, or any other such downtrodden fellow human being. Hitchens succinctly addresses this equally nonsensical statement as well:

But really, that’s to say no more than “There but for the grace of god go I,” which in turn is to say no more than “The grace of god has happily embraced me and skipped that unfortunate other man.”

So true.

I will raise a glass of Johnnie Walker Black to his honor. I wish it could be to 'good health' but the grace of god has already decided not to skip him this time.

Government Spending Since the Great Society Programs

2011-11-29T20:26:00.001-05:00

Over at The Unbroken Window, wintercow20 brings us his Government Since the Great Society, A New Series. Taken together with my previous post on our nation's culture of dependency on the government, a trend is evident: the federal government is much too big and the inflection point was LBJ's Great Society program.

War with Iran = Madness, But Not Ruled Out By Our Political Class

2011-11-28T15:28:00.000-05:00

In a previous post I stated that the one thing the federal government does exceedingly well was to create dependency on its largess (well, our tax money, their largess). What it also does well is to endlessly seek to involve us in war and send our nation's youth to its death, all in the name of "God and country" and the idea of "protecting and defending our freedoms and liberty." Bullshit. In War with Iran Would Be Madness, Sheldon Richman articulates what I have been saying for the last several years with respect to how the United States chooses its 'enemies' and how the president chooses to use the R2P (Responsibility to Protect) Doctrine: the least likely to fight back, especially with nuclear weapons, is the first target. For example, it was 'easy' to choose Iraq (which never had WMD yet wouldn't deny it as a protection against American attack), Afghanistan, Libya (via NATO). Notice we didn't choose North Korea. Is it any surprise then that Iran, noticing what has happened to its neighbors who either disavowed nuclear weapons (Libya) or did not have them (Iraq) were attacked, then would it not make sense to at least claim to have them, if not actively develop them as a deterrent? As Richman points out:

If Iran were developing a nuclear weapon, it would clearly be in order to deter the sort of regime change that occurred in Iraq and Libya. The difference between how the U.S. government treated those countries and how it treats North Korea, which has a nuclear weapon, is hard to miss.

The bottom line is still simple: politics and the sheer lunacy and lack of courage on the part of politicians to send young people to go and die. Going to war with Iran would be madness, but then again, politicians need some distraction from our economic woes, so the death of a few thousand Americans, perhaps tens of thousands of Iranians and not to mention Israelis would be acceptable.

6 Ideas for the Ash Heap of History

2011-11-28T15:12:00.000-05:00

6 Ideas for the Ash Heap of History by GMU Economics Professor, Tyler Cowen. As he says in his subtitle: "The just-plain-wrong notions that (hopefully) bit the dust this year." Given how government is rarely a student of history, I won't count on it.

The six are listed below. Read the article for details on each:

Illegal Mexican immigration is a growing threat.
Green energy will save us.
Bank runs are a thing of the past.
The eurozone is pretty much everyone in Europe.
Bailouts should be incremental.
Fiscal stimulus should be "temporary, targeted and timely."

The Welfare State Effect: Creating Dependency

2011-11-28T14:49:00.000-05:00

The Federal government does but one thing extremely well: it creates addiction to its largess. The more people that become dependent upon the government for much, and in some cases all of their income, the less likely they will be to seek a change to the status quo. As George Will describes it, this "dependency agenda" is unsustainable and in the end, it all boils down to simple arithmetic: the numbers will not add up, nor can they be made to add up. It is important to remember one of the seven principles of economics: a government that is big enough to give you everything you want, is large enough to take away everything you have.

Robert Higgs articulates well our nation's culture of creating dependency in his article entitled The Welfare State Neutralizes Potential Opponents by Making Them Dependent on Government Benefits. His conclusion is as accurate as it is chilling:

As the ranks of those dependent on the welfare state continue to grow, the need for the rulers to pay attention to the ruled population diminishes. The masters know full well that the sheep will not bolt the enclosure in which the shepherds are making it possible for them to survive. Every person who becomes dependent on the state simultaneously becomes one less person who might act in some way to oppose the existing regime. Thus have modern governments gone greatly beyond the bread and circuses with which the Roman Caesars purchased the common people’s allegiance. In these circumstances, it is hardly surprising that the only changes that occur in the makeup of the ruling elite resemble a shuffling of the occupants in the first-class cabins of a luxury liner. Never mind that this liner is the economic and moral equivalent of the Titanic and that its ultimate fate is no more propitious than was that of the “unsinkable” ship that went to the bottom a century ago.

Unless we as a nation, alter our course, we will all go down with the ship.

Perspectives on American Intervention in Uganda

2011-11-27T20:28:00.000-05:00

For a Nobel Peace prize recipient, Barack Obama certainly gets into his share of dust ups, starting first with continuing our failed interventions in Iraq and Afghanistan, moving onto his ignoring the Constitution and the Presidential War Powers Resolution (in of itself a surrendering of war-making decisions from Congress to the imperial presidency) on his foray into Libya and now, we have Uganda. Spare me any talk about the "small" number of American military personnel involved, as the size of any intervention is pointless, for if just one soldier dies, that's one too many. Secondly, spare me the talk about how Libya was a 'success.' First off, we have yet to see if Libya will ultimately be a success. Granted, Qaddafi was scum and the Libyan people are to be commended for overthrowing the tyrant in their midst, however, validating a wrong based on a successful outcome is wrong. However, the post-Qaddafi Libya (or a partitioned Libya) that evolves as a result of the Libyan uprising is a work-in-progress, so it's a bit premature to know if it's a success or failure. Yes, it is a success that Qaddafi's gone, however, unless a truly free Libya emerges, their moment will have been wasted.

Now we have Uganda. President Obama has notified House Speaker Boehner, by letter, that he is deploying 100 "combat-ready" troops to essentially capture or kill Joseph Kony. From Cato's Gene Healy and his article And Now for Obama's Ugandan Military Adventure, we learn:

The LRA, a grotesque death-cult led by Joseph Kony, a self-proclaimed "spokesperson" for God, has, as Obama put it, "murdered, raped and kidnapped tens of thousands of men, women and children in central Africa" over the last 20 years.

Our soldiers aren't supposed to engage LRA forces, except in self-defense, and, given that LRA lore holds that anointing yourself with shea nut oil will make you bulletproof, U.S. special forces can probably handle any trouble they get into.

But, following on the heels of Libya — a war in a country the president's own secretary of defense admitted is "not a vital interest for the U.S." — Obama's Ugandan adventure raises the question, what in the world does he think the American military is for?

The LRA is surely a horrible bunch, but, equally surely, they're no threat to American national security. The president's decision — in the midst of two ongoing wars — to involve U.S. soldiers in another fight where America has no possible stake, suggests a disturbingly incontinent approach to military intervention.

If so, the incontinence is bipartisan. Obama's letter to Boehner, intended to serve as notification under the War Powers Resolution, invokes the Lord's Resistance Army Disarmament and Northern Uganda Recovery Act of 2009. That act, which endorsed "military and intelligence support" for efforts to neutralize the LRA and capture the movement's crazed leader, passed by a wide margin, with 64 co-sponsors in the Senate, 201 in the House.

So once again, America searches for an enemy and finds one. Go figure. Great news for the military-industrial-congressional complex, especially in advance of an election year. Just imagine the humanitarian spin Obama's speechwriters can place on this maneuver. First the Iraqis, then the Afghans, then the Haqanni network and now the LRA, and, let's not forget the Pakistanis and all those we can label as 'terrorists.'

Healy mentions the Responsibility to Protect doctrine which I have commented on before:

The Obama team has embraced the U.N. doctrine known as "Responsibility to Protect," which holds that the "international community" has an obligation to protect civilians from crimes against humanity — by force, if necessary — when their own governments cannot or will not.

That doctrine is at odds with the U.S. Constitution, which empowers Congress to set up a military establishment for the singular end of "the common defence ... of the United States."

Even so, the emerging Obama Doctrine reflects a fondness for feel-good "humanitarian interventions," through which we prove our nobility by putting blood and treasure at risk when there's nothing in it for us.

These expeditions tend to go OK — until they don't. Recall that it was the hunt for Somali warlord Mohamed Farrah Aidid that led to the "Black Hawk Down" incident, with 18 U.S. soldiers killed and 80 wounded in 1993.

His conclusion:

A similar disaster seems unlikely here, and our Ugandan incursion may well do some for the LRA's long-suffering victims. Yet success breeds boldness, and with each new intervention, our defense establishment is becoming further unmoored from its constitutional purpose: national defense. Before long, we may have cause to regret that shift.

This is yet another American farce that puts our treasured military in harms way. I don't want them to go.

Additional Readings:

Interventionist Addiction: U.S. Troops in Central Africa by Ted Galen Carpenter

Time to Gut, Not Cut, the Federal Government

2011-11-27T20:21:00.003-05:00

It's Time to Gut, Not Cut, the Federal Government by Doug Bandow informs us that changing the current trajectory of our nation's debt-ridden future is not easy. We can't do it by eliminating "fraud, waste and abuse" for there is no line-item in the budget to do so. Next, pork (discretionary spending) represents just 15% of the budget at best. Given that politicians are cowards at heart, interested only in the next election, they focus on these easy fixes, that in reality, are neither easy nor fixes. No, the real culprits are the entitlements and even the word itself, "entitlement", renders a level of protection not afforded to any other item in the federal budget. Not until courage makes a comeback and politicians focus on Medicare, Medicaid, Social Security, Military Spending and the Debt (Interest) will our country once again be great. It will neither be easy nor painless, but one thing is for sure: cuts will happen, willingly and planned, or not. What would a plan to change our future look like? Try this:

First, Social Security and Medicare should be narrowed to focus on the poor. No more middle class welfare. If you can afford to care for yourself, you collect no more federal checks. And the young should be allowed to opt out of the programs, putting money aside for their own retirement and health care. Over the long-term this will cut trillions of dollars in unfunded liabilities.

Second, Medicaid should be turned into a competitive voucher program that shares cost savings with frugal recipients. It will never be cheap to provide health care for the poor, but only by changing the program's underlying incentives can much money be saved. Reforming Medicaid is important for state governments as well as Washington.

Third, the U.S. government should focus defense spending on defense. No more social engineering around the world. No more subsidies for rich states and nation-building in poor ones. No more interventions here, there, and everywhere for no good purpose. Then military outlays could be cut substantially.

Fourth, take these steps and the government would borrow less, reducing interest payments naturally. That would create a "virtuous cycle" of falling outlays, deficits, and debts.

Fifth, toss in big reductions in domestic discretionary spending for good measure. Let people spend their own money for their families and communities. Then government would be left doing the few things that it really should do.

Solving Washington's budget crisis is simple, but not easy. Only if the American people demand that Uncle Sam do less will he spend less. Ultimately we, not the super committee or anyone else, are responsible for our fiscal future.

"Defense" Spending and "Defense" Strategy - 2

2011-11-27T20:01:00.001-05:00

On the heels of my previous post on military spending, Cato's Christopher Preble once again reminds us in Cutting Military Spending, Rethinking Grand Strategy that 1) the proposed defense budget 'cuts' are anything but cuts and 2) " we should not cut military spending without rethinking our strategic ends." He goes on to state:

Leaving the fiscal constraints on military spending to one side, the underlying strategic logic to my argument that we can responsibly cut military spending still holds. Cuts on the order of $800 billion, or even $1 trillion, would not pose a grave risk to U.S. security. Panetta’s claim that it would rests on the dubious assumption that a nation’s strategic ends are fixed. They are not. What the United States chooses to do to advance its security are just that: choices. Some are wise in retrospect. Others are foolish. Some are understood to be foolish before they are undertaken. But it need not be so ad hoc.

His conclusion is right-on-the-mark:

Most of us who believe that we can responsibly reduce military spending without undermining U.S. security argue that point from the perspective that our strategy is flawed, and, therefore, that our resources are misallocated. The alternative claim—that our strategy is sound, but we can achieve the same ends with fewer means—is not tenable.

"Defense" Spending and "Defense" Strategy

2011-11-27T19:51:00.001-05:00

From How Cutting Pentagon Spending Will Fix U.S. Defense Strategy by Benjamin H. Friedman: [emphasis is mine:]

The Pentagon's boosters are right that big cuts will limit military capabilities. But that would actually be a good thing for the United States. Shrinking the U.S. military would not only save a fortune but also encourage policymakers to employ the armed services less promiscuously, keeping American troops — and the country at large — out of needless trouble. For the last two decades, the United States' considerable wealth and fortunate geography have made global adventurism seem largely costless. The 2011 U.S. military budget of nearly $700 billion is higher in real terms than at any point during the Cold War. But for the American public (except the members of the military and their families, that is), the only real impact of such spending has been marginally higher taxes, which have lately been subsidized by deficits. As a result, leaders confuse needs and ambitions. Going beyond the demands of the White House and the Budget Control Act and cutting the non-war military budget by at least 20 percent would be a first step toward addressing this problem.

Austerity is an efficient auditor. It forces Washington to scrutinize expenses and to prioritize. Recall that the George W. Bush administration, with little controversy, cut taxes, fought two wars, expanded non-war defense spending, and added an expensive prescription drug benefit to Medicare — all at roughly the same time. Deficit concerns have now made such fiscal imprudence impossible. Politicians eager to avoid tax increases and entitlement cuts have finally begun questioning Pentagon largesse, and for the first time since the late 1990s, military reductions are on the table. [emphasis mine]

It gets better:

Far bigger savings are possible if the Pentagon is recast as a true defense agency rather than one aimed at something far more ambitious. And cuts would force U.S. officials to prioritize. For starters, they would have to recognize that the U.S. military is currently structured to exercise power abroad, not provide self-defense. The U.S. Navy patrols the globe in the name of protecting global commerce, even though markets easily adapt to supply disruptions and other states have good reason to protect their own shipments. Washington maintains enormous ground forces in order to conduct nation-building missions abroad — despite the fact that such missions generally fail at great cost. Garrisons in Germany and South Korea have become subsidies that allow Cold War-era allies to avoid self-reliance.

Read the entire piece. It's well worth the time.

Thinking About Inequality: Living By Our Desires Rather Than Our Needs

2011-11-27T19:43:00.000-05:00

Trevor Burrus has penned an excellent piece on inequality, the specific lamentation of the OWS crowd. It's a thought-provoking piece, free of the moralizing, irrationality and emotion so common and in vogue today:

Ultimately, productivity made these choices available to them. Perhaps the simplest way of stating my point is this: a world with more choices is a world with more possibilities for divergence (i.e. inequality) along many different metrics. In feudal Europe, where the choices were essentially “work or starve,” there was a lot of equality, both in misery and poverty. As productivity increased, the number of possible life-paths increased and so emerged the ability to maximize one type of inequality—for example, the personal satisfaction received from singing—without starving to death. Thus, inequality and productivity travel together. Having more choices means that people can maximize particular inequalities based on subjective valuations.

The Sham that is the Fed

2011-11-27T15:33:00.000-05:00

From The God That Failed blog comes: Jim Rickards: Who Will Bail Out the Fed & How High for Gold?;

Essentially, government prints money out of thin air on a continual basis, which costs it nothing, and then spends those printed monies on itself and its own self-aggrandisement. Every penny printed is a penny stolen from the rest of us. Indeed, with fractional reserve practices, every one pence printed is ten pence stolen from the rest of us.

The post makes references to this actual Jim Rickards post by the same title. I elected to use The God That Failed post first since it contains a few interesting charts on the circular nature of our current debt mess.

The bottom line is this: we're all fucked. There's no other way to put it.

"Drone Mentality"

2011-11-27T15:26:00.000-05:00

The Drone Mentality by Glenn Greenwald is a superb read on yet another subject, the use of drones, of which I have become passionate about over the last several months. While I abhor their use on foreign soil, I absolutely detest their potential use domestically, and trust me, the day will soon come, when their use within the US will be accepted as the norm, unless we do something, now. One thing we can do is not become victim of the "drone mentality" as Greenwald describes the condition by which we Americans accept the substitution of technology in the place of rationality and careful deliberation when it comes to taking lives.

Faith in Government: One Question, Why?

2011-11-27T15:09:00.000-05:00

Over the last several years, I have become increasingly puzzled by the faith that most people seem to place in government, at all levels, and are likewise so quickly to dismiss the power of the individual and undervalue liberty and freedom. Government, at all levels, has done a fantastic job of doing just one thing: convincing the electorate that all the failure so much in evidence all about us, is the fault of everyone and anyone other than government! Why the Titanic is Sinking by James L. Payne is the first article I've come across that begins to question this inexplicable faith in government and bureaucracy, this substitution of government for the individual, this acceptance of subsidizing failure while privatizing gains. Remember one of the Seven Principles of Economics: A government big enough to give you everything you want is big enought to take away everything you have. Time to put less faith in government and more faith in ourselves and each other. Peace.

More Interesting Articles on the Topic:

What Have the Politicians in Washington Given Us? by Michael D. Tanner

Walter Williams on Income Inequality and Class Warfare

2011-11-27T14:51:00.000-05:00

Should the Rich Be Condemned? by Walter E. Williams:

Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there's a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they "give back." Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners.

Ten Things We Evil Capitalists Really Think

2011-11-27T14:47:00.000-05:00

MEP Daniel Hannan responds to the Occupy crowd with his Memo to the Occupy Protesters: Here Are Ten Things We Evil Capitalists Really Think. The ten things are:

Free-marketers resent the bailouts.
What has happened since 2008 is not capitalism.
If you want the rich to pay more, create a flatter and simpler tax system.
Those of us who believe in small government are not motivated by the desire to make the rich richer.
We are not against equality.
Nor, by the way, does state intervention seem to be an effective way to promote equality.
Let's tackle the idea that being on the Left means being on the side of ordinary people, while being on the Right means defending privileged elites.
Capitalism, with all its imperfections, is the fairest scheme yet tried.
Talking of fairness, let's remember that the word (fairness) doesn't belong to any faction.
Let's not forget ethics, either.

I agree with all ten (and I could add a few more, but I must give Daniel Hannan his day!)

Eminent Domain Reform

2011-11-27T14:36:00.000-05:00

A. Barton Hinkle's Eminent Domain Reform Is a Bipartisan Opportunity is an excellent read on one of my favorite topics on government abuse. Just remember one of Seven Principles of Economics: A government big enough to give you everything you want, is big enough to take away everything you have. Be aware of eminent domain abuses.

The Latest from George Will and the Sage, Thomas Sowell

2011-11-27T14:00:00.001-05:00

Alice in Liberal Land by Thomas Sowell:

"The history of the 20th century is a painful lesson on what happens when collective choices replace individual choices. Even leaving aside the chilling history of totalitarianism in the 20th century, the history of economic central planning shows it to have been such a widely recognized disaster that even communist and socialist governments were abandoning it as the century ended.

Making choices "as a country" cannot be avoided in some cases, such as elections or referenda. But that is very different from saying that decisions in general should be made "as a country" -- which boils down to having people like Timothy Geithner taking more and more decisions out of our own hands and imposing their will on the rest of us. That way lies madness exceeding anything done by the Mad Hatter in "Alice in Wonderland."

That way lie unfunded mandates, nanny state interventions in people's lives, such as banning circumcision -- and the ultimate nanny state monstrosity, ObamaCare.

The world of reality has its problems, so it is understandable that some people want to escape to a different world, where you can talk lofty talk and forget about ugly realities like costs and repercussions. The world of reality is not nearly as lovely as the world of Liberal Land. No wonder so many people want to go there."

Failure or Success? by Thomas Sowell

"Many people are lamenting the failure of the Congressional "Super Committee" to come up with an agreement on ways to reduce the runaway federal deficits. But you cannot judge success or failure without knowing what the goal was.

If you think the goal was to solve the country's fiscal crisis, then obviously the Super Committee was a complete failure. But, if you think the goal was to improve the chances of the Obama administration being re-elected in 2012, it was a complete success."

No Time Like Our Own by George Will. Classic George Will in which he provides a list of items to be grateful for in 2011.

Privatize The Nation's Mail Delivery by George Will:

Today, the U.S. Postal Service, whose financial condition resembles that of the federal government, of which the USPS is another ailing appendage, is urging cancellation of Saturday deliveries, perhaps en route to three-days-a-week delivery. The USPS lost $5.1 billion in the latest fiscal year — after serious cost-cutting. Total 2012 losses may exceed $14 billion, a figure larger than the budgets of 35 states.

Books Everyone Should Have

2011-11-27T13:45:00.000-05:00

The Best of the Free Man’s Library by Nicholas Snow provides a list of classic economics books that are essentials in any library. Included are:

Economics in One Lesson by Henry Hazlitt
Essentials of Economics by Faustino Ballve
Economics of the Free Society by Wilhelm Ropke
The Road to Serfdom by F.A. Hayek

These four will do much to eliminate rational ignorance on economics, and open the door to understanding the impact of government on society.

Is the U.K. the Next Domino to Fall in Europe?

2011-11-27T13:32:00.000-05:00

According to Tyler Durden's post on Zero Hedge, the U.K's total debt is at 497% of GDP. The debt includes government debt, bank and business debt and household debt:

The "Crumbling Infrastructure" Myth ... Still a Myth

2011-11-18T05:45:00.000-05:00

There are a multitude of things that bother me during an election cycle, the very first being that we always seem to be in an election cycle. The second item that bothers me as much as fingernails down a blackboard is a politicians claim of a "crumbling infrastructure." Seriously, think about it, after all, who is responsible for the allocation of our substantial tax dollars collected with the purpose of the construction and maintenance of they very infrastructure they claim is 'crumbling?' Why they are of course, and yet the electorate always them to get away with this nonsense! Infrastructure spending is like cheese to a mouse, i.e., politicians get to shower money, our money, on powerful unions. Charles Lane's The U.S. infrastructure argument that crumbles upon examination is worthy of just that, an examination. I actually disagree with his conclusion, however, his review of the statistics and data upon which proponents of the "crumbling" build their foundation is worth the read.

Crumbling Bridges and Infrastructure Fearmongering by Chris Edwards

The Price of Government

2011-11-09T00:39:00.000-05:00

"The greatest threat to the established political order is for people to fully realize that whenever the force of government is used to obtain special privilege, it is done at the expense of our neighbors, friends, and family. All that would be required to end political plunder would be to cease asking politicians to do for us what we would never ourselves do to our friends. The system of voluntary exchange offered by the free market does not claim to offer utopia or immediate gratification of all of society’s wants, but it is the only sure bet for incremental progress toward human flourishing."

The Best Bet is Freedom, Jason Riddle

America: A Permanent Warfare State?

2011-11-09T00:29:00.000-05:00

To answer my own question, yes, I believe so.

We cannot say we were not warned about the dangers associated with the military-industrial complex acquiring significant influence within the government, as President Eisenhower did just that back on January 17th, 1961. His original plans were to add "congressional" to the "complex" as he had aimed to deliver the speech to a joint session of congress.

I have stated before that I believe the United States continues to be a nation that purposely searches the world for enemies and finds them everywhere and this is most evident today with respect to China. Our "defense" budget has very little to do with defense and has everything to do with "offense" and sustaining a national jobs program. Our leaders, on both sides of the political divide, have very little interest in peace and even less interest in a military strategy that is focused on protecting and defending the country, in spite of their election rhetoric to the contrary. Politicians love money and influence and nowhere can both be obtained and showered more successfully and with little challenge than in the "defense" budget.

This cannot continue much longer simply because we will no longer have the credit rating to borrow the money necessary to do so. Without significant entitlement reform, most notably medicare, rationing will have to occur and then, and only then, will the nation realize it cannot simultaneously fight abroad and succor its citizenry at home. The day of reckoning will come, and come it will, for the math cannot be made to add up.

How did we get here? Read Gregory Bresiger's series The Road to the Permanent Warfare State.

The Road to the Permanent Warfare State, Part 1
The Road to the Permanent Warfare State, Part 2
The Road to the Permanent Warfare State, Part 3
The Road to the Permanent Warfare State, Part 4

The Militarization of Police

2011-11-08T23:42:00.000-05:00

It must be a function of my age, that or it's a result of the financial, economic, social and geopolitical upheaval that has categorized the last four years or so, but I trust government much less than I ever have before. Gone are the days when I somehow believed "the government" was somehow better informed, more benevolent, better placed to assist those in need, than the citizens it represented were in comparison. Those days are definitely gone. Gone are the days when I believed it was necessary to wage wars on drugs and poverty, only to realize both are failures because of the very policies and practices of those doing the fighting. And finally, gone too are the days when I believed the police were, well, always right, and truly had my safety and protection as their primary reason for being, but no more. Why this loss of faith in the police? Easy: SWAT teams, with "no-knock" warrants, asset forfeiture as well as the many cases of false arrests particularly those associated with being video recorded for example. Of these few items, the SWAT teams concern me the most. What was once considered an elite, rarely-used force in only a few major cities has transformed into a national phenomenon where even the smallest of towns and cities have SWAT teams. It's now hard to distinguish between the police and the military, and this alone, is a cause of major concern. Upon being asked why I thought this to be of concern, I replied that I believed police would look upon me as someone to be protected whereas the military are trained to look at everyone as the enemy and respond in kind. I am afraid that police, adopting more of a military-like capability, will likewise adopt a military mindset. This does not bode well for either the police or those whom they're sworn to protect and serve. The most disconcerting aspect of the use of SWAT teams is the primary reason they are being used: to serve warrants primarily in the war on drugs. Seriously, is it really necessary to put any person's life in danger over the use of drugs? Next, I am concerned that if our nation does scale back on the military's budget, more attention for defense contractors as well as politicians will be to directed to police departments. Politicians will shower their constituents with grants for example to acquire the technology being developed and deployed on the battlefield. In effect, the battlefield moves from the streets of Kabul and Baghdad to Philadelphia, Baltimore and New York for example. The military-industrial-congressional complex evolves into the military-industrial-congressional-policing complex. Nothing good can come from this evolution and I fear it will become much worse and in the end, irreversible and a new paradigm of law enforcement will emerge in which many of our freedoms and liberties are irretrievably lost.

Below are some of the best articles available on the issue of the militarization of the police.

Militarization of Police a multitude of links from Reason

Jose Guerena Killed: Arizona Cops Shoot Former Marine In Botched Pot Raid by Radley Balko

The Militarization of Police is More Than Just Weapons and Tactics by Lucy Steigerwald

How the War on Terror Has Militarized the Police by Arthur Rizer & Joseph Hartman

The Truth about Violence

2011-11-08T19:51:00.000-05:00

Superb article on violence by Sam Harris The Truth about Violence The 3 Principles of Self-Defense. It's a good (and long) read, but well worth the time. I've listed the three principles below:

Principle #1: Avoid dangerous people and dangerous places.
Principle #2: Do not defend your property.
Principle #3: Respond immediately and escape.

Note: All guys should read this!

Moral Hazard Personified: Benjamin Netanyahu

2011-11-08T07:02:00.000-05:00

It's often said that what America receives back from the allies it protects is simply the permission to do so (i.e., they let us) meaning, the relationship is unilateral. While this is certainly humorous in no small degree, it can be deadly when one considers the moral hazard associated with our "defense" of other nations. For example, could South Korea decide to send its troops into North Korea without consulting America? Politicians and our military would likely admit they would not do so, but, they could, and then what would America do? Simply stand back after 50+ years of standing watch? I doubt it. Let's take a more likely case: Israel. Israel certainly does have legitimate defense concerns, primarily with the Palestinians, but principally with Iran, the latter reportedly close to obtaining a nuclear capability. Though the United States has no military presence in Israel, we are inexorably linked. Will Israel decide to launch a preemptive strike on Iran's nuclear facilities? If so, would they consult with America first? Likely, however, what is unlikely is any sense of certainty they would comply with American wishes or even demands if they believe their only option to ensure survival for at least another day is to attack. For a moment, let us presume they launch an attack without America's approval: will America stand by, especially if Iran, and its ally, Syria, launch a counterattack? This scenario is the prime example of a moral hazard for America. To that end, I believe as Sheldon Richman does that Barack Obama Is Not the Most Dangerous Man in the World. That 'honor' belongs to Israeli Prime Minister Benjamin Netanyahu. I had, up until recently, believed the most volatile place on the earth was the border between India and Pakistan, but now I'm not so sure.

The Latest From the Sage: Thomas Sowell

2011-11-08T01:27:00.000-05:00

An American Sage, Thomas Sowell:

From Payday Loans :

Is it worth paying the $45 to get the $300 right now, rather than wait a couple of weeks for your check to arrive?

No third party can know that. But taking decisions out of the hands of those most directly affected is one of the central patterns of the political left that make them dangerous to the very people they think they are helping. This is not idealism. It is arrogance -- and too often, it is ignorant arrogance, as in this case.

From Democracy Versus Mob Rule:

People who cannot distinguish between democracy and mob rule may fall for the idea that the hooligans in the street represent the 99 percent who are protesting about the "greed" of the one percent. But these hooligans are less than one percent and they are grossly violating the rights of vastly larger numbers of people who have to put up with their trashing of the streets by day and their noise that keeps working people awake at night.

As for the "top one percent" in income that attract so much attention, angst and denunciation, there is always going to be a top one percent, unless everybody has the same income. That top one percent has no more monopoly on sainthood or villainy than people in any other bracket.

Moreover, that top one percent does not consist of the "millionaires and billionaires" that Barack Obama talks about. You don't even have to make half a million dollars to be in the top one percent.

Moreover, this is not an enduring class of people. Nor are people in other income brackets. Most of the people in the top one percent at any given time are there for only one year. Anyone who sells an average home in San Francisco can get into the top one percent in income -- for that year. Other one-time spikes in income account for most of the people in that top one percent.

But such plain facts carry little weight amid the heady rhetoric and mindless emotions of the mob and the media.

From Numbers Games:

The relationship between age and income is not hard to understand. It usually takes years to acquire the skills and experience that high-paying jobs require, or to build up a clientele for those in business or the professions.

But those in the media and in politics who are currently up in arms, denouncing income inequalities, seldom mention age as a factor in those inequalities.

The shrill rhetoric about differences in income proceeds as if they are talking about income inequalities between different classes of people. It would be hard to get the public all worked up over the fact that young people just starting out in their careers are not making nearly as much money as their parents or grandparents make.

Differences in age are just one of the reasons why the insinuations about income and wealth that are thrown around in the media and in politics are often remote from reality.

While the rhetoric is about people, the statistics are almost invariably about abstract income brackets.

It is easier and cheaper to collect statistics about income brackets than it is to follow actual flesh and blood people as they move massively from one income bracket to another over the years.

More important, statistical studies that follow particular individuals over the years often reach diametrically opposite conclusions from the conclusions reached by statistical studies that follow income brackets over the years.

More on Poverty

2011-11-07T18:54:00.000-05:00

Excellent pieces to add to my compendium on the subject of poverty. These are focused on the issue in the United States:

Exaggerating Poverty for Political Gain by Daniel J. Mitchell. In his post, Mitchell makes reference to a recent study by the Heritage Foundation, which is likewise discussed in Morning Bell: What is Poverty in America? The charts in this piece are very eye-opening. From Robert Rector comes Plugged-In Poverty in which he too asks what does it mean to be 'poor' in America and then addresses the misconceptions held by many Americans.

Dramatic Increase in Poverty Rate: One Small Step for Obama, One Giant Step for the So-Called War on Poverty, another entry from Daniel J. Mitchell in which he points out that America's poverty rate was declining until LBJ declared a "War on Poverty" and since then, all we have done is to, as Mitchell says, "trap people in lives of dependency." This has been a 40-year "war" on poverty and goes to prove two points: 1) money is not the answer to poverty and 2) getting government out of the way and truly understanding that charity begins at home and is not a matter for politics in which professional bureaucrats chose those "poor" on whom they spend our money. That's a formula for failure ... ah, which is what we have now ... funny how that is so circular!

Let's once again visit some surprising facts about America's poor from Mike Brownfield:

80 percent of poor households have air conditioning
Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks
Nearly two-thirds have cable or satellite television
Two-thirds have at least one DVD player and 70 percent have a VCR
Half have a personal computer, and one in seven have two or more computers
More than half of poor families with children have a video game system, such as an Xbox or PlayStation
43 percent have Internet access
One-third have a wide-screen plasma or LCD television
One-fourth have a digital video recorder system, such as a TiVo

That picture I have of a poor family in a wooden hut in the Appalachian mountains just isn't quite validated by the data. Want to see real poverty? Visit Mumbai. You'll get the real picture of poverty.

Interesting take from David Henderson in his post 30 Million Non-Poor Americans Have Been Mislaid:

Tim Worstall explains the weird way in which the federal government counts people who are poor: it doesn't include in their income many of the benefits it gives them to take them out of poverty. If those benefits were included, many millions of people now officially counted as poor would not be so counted.

Following up on Henderson's work is one from James A. Dorn which highlights that poverty is also the result individual poor choices. In Poor Choices, he states:

Poverty is often blamed on high taxes, onerous regulations, barriers to occupational entry and other economic factors. But poverty is also affected by people's choices. For individuals who wait to have children, get married and stay married, obtain more education, and stay out of jail, poverty rates diminish greatly.

Next up, New Video Shows War on Poverty Is a Failure from the Center for Freedom and Prosperity.

Poverty Measure a Gimmick to Equalize Incomes by Robert Rector

The Census Bureau’s new poverty measure is another tool in President Obama’s endless quest to “spread the wealth.” Although the media portray it as a more accurate measurement of poverty, in reality it deliberately severs all connection between “poverty” and actual deprivation.

The new measure places income thresholds for poverty on a built-in escalator that rises automatically in direct proportion to any improvement in the living standards of the average American. So even if the real income of every single American were to double, the new measure would show no drop in poverty because the income thresholds also would double.

The result is that, over the long term, poverty can be reduced only if the incomes of the “poor” are rising faster than the incomes of everyone else. The old measure told us how much one household could purchase; the new measure tells us how much one person can buy relative to others.

The new system measures income “inequality,” not “poverty.” But the Left refuses to call this an “inequality index” and insists on using the emotionally charged term “poverty” instead. That’s because the typical American voter isn’t willing to increase welfare spending, taxes and deficits to reach the liberals’goal of equalizing incomes.

On the "Withdrawal" from Iraq

2011-11-07T17:03:00.000-05:00

Cato's Malou Innocent is at her best Ignore the Hawks on Iraq, in which she succinctly documents

America's failure in Iraq and provides us with a forgotten history lesson on the origins of the conflict:
Hawks from both sides of the aisle are unhappy about the withdrawal of all U.S. troops from Iraq by year's end, saying it will be a victory for Iran. Aside from President Obama, Defense Secretary Leon Panetta has talked about staying longer in Iraq. Sen. Joe Lieberman (I-Conn.), Sen. Lindsay Graham (R-S.C.), Sen. Scott Brown (R-Mass.) and Mitt Romney, one of the leading Republican presidential contenders, all fear that withdrawal will embolden America's enemies.

But they have their causation wrong: It was the overthrow of Saddam Hussein that handed Iran a victory on a silver platter. Americans should stop listening to the people who promoted this wrongheaded war in the first place, and remember the limitations and unintended consequences of our intervention.

While Innocent provides us with a reminder that America's intervention in Iraq was, in effect, a gift to Iran, let's recall too that some reports have the forces being "withdrawn" from Iraq not returning to the United States, rather, they're likely moving to other facilities in the region. There is still more research to do on this topic, but as far as I am concerned, unless these forces come back to the United States, it hardly constitutes as a "withdrawal." Peace.

God and the Welfare State

2011-11-07T16:51:00.000-05:00

From God: The Shakedown Artist for the Welfare State? by Doug Bandow:

This doesn't mean that Scripture forbids reliance on government. But doing so is a matter of public policy, not Biblical justice. Michael Gerson, an aide to President George W. Bush, an irresponsible spendthrift second only to President Obama, contended that "The scale of private efforts is not sufficient to meet the demands of public justice — which gives government an important role." However, government has no money of its own. It can only take resources, which otherwise could be donated, from people, who otherwise could donate.

Moreover, the state has actively discouraged private assistance by steadily taking over more areas of human life. One can apply Gresham's Law (bad money pushes out good) to poverty: bad welfare pushes out good charity. More expansive benefits with less stringent conditions will draw more takers than tough-minded initiatives which speak to the whole person, including addressing self-destructive behaviors. And to the extent that people believe helping the poor is the government's responsibility rather than their own, they naturally will do less. They are likely to believe that they've already "given at the office," so to speak.

I'll say no more ...

H.L. Mencken on FDR

2011-11-07T16:33:00.000-05:00

"Roosevelt transformed millions of Americans from citizens into clients. The direct effect of this was evil, and the indirect effect was even worse, for all these people were robbed of their self-respect."

HT: Professor Don Boudreaux, Quotation of the Day

More on Drones (Sadly So May I Add)

2011-11-07T00:51:00.000-05:00

This Lucy Steigerwald blog entry title from Reason is like something from The Onion: CIA Told to Be More Careful With their Drones. Seriously, does it get any more ridiculous than this? The piece editorializes a recent WSJ article entitled U.S. Tightens Drone Rules itself almost a headline and an article that highlights the mind-numbing exchanges between the Executive Branch, the military and the intelligence community (note: is it me or is it strange to read 'intelligence' and 'community' in the same sentence?).

Matt Ridley: In Defense of Climate Change Skepticism

2011-11-07T00:37:00.000-05:00

Matt Ridley's recent lecture entitled "Scientific Heresy" in my opinion, slays the Climate Change dragon. Read Ronald Bailey's Matt Ridley's Rousing Defense of Climate Change Skepticism.

A Primer on Changing the Tax Code in the United States

2011-11-06T23:59:00.000-05:00

Let me begin with this simple quote from Stephen Littau as the foundation for this post:

As I write this, the national debt is approaching $15 trillion. That’s $47,810 per citizen or $132,927 per tax payer.

Time for a massive overhaul of our tax code in the United States, one whose hallmarks are: simplicity, flatness, applicable to all, i.e, just, and devoid of exceptions and deductions, and lastly, as impervious as possible to the forces of politics.

Below are some of the best writings on this topic:

The Challenge of Creating an Economically Sound, Simpler, and More Just Tax Code (Part 1 of 3) by Stephen Littau

The Challenge of Creating an Economically Sound, Simpler, and More Just Tax Code (Part 2 of 3) by Stephen Littau

The Challenge of Creating an Economically Sound, Simpler, and More Just Tax Code (Part 3 of 3) by Stephen Littau

A Primer on the Education Bubble in the U.S

2011-11-06T23:29:00.001-05:00

"What kind of incentives motivate lenders to continue awarding six-figure sums to teenagers facing both the worst youth unemployment rate in decades and an increasingly competitive global workforce?" Discover the incentives in this excellent primer on the education bubble in the United States from n+1 writer Malcom Harris in his work Bad Education.

Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy, then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants’ faith in the value of higher education has only increased, employers’ has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt.

Very scary indeed - and yet, I'm guilty of perpetuating the myths and blowing air into the bubble. Sorry.

Higher Education Bubble: College Tuition Doubled Over the Last 10 Years vs. +52% for Medical Care by Mark J. Perry

Why Has College Tuition Risen So Much? Ask the Administrators, Whose Ranks Have Grown 84% Since 1989 by Reason's Nick Gillespie

The Debt Crisis at American Colleges by Andrew Hacker and Claudia Dreifus

Chart of the Day: Student Loans Have Grown 511% Since 1999 by Daniel Indiviglio [note: there is a link in this article to the one above by Hacker and Dreifus]

Deregulate the Practice of Law to Promote Justice and Create Jobs by Hans Bader [note: this article is focused on law schools, which are referred to in a quote as "scams".]

As Student Loans Hit All Time Record, One High School Valedictorian "Gets It" by Tyler Durden

The Solution to Student-Loan Debt by Richard Vedder and Andrew Gillen

Student Loan Bubble To Exceed $1 Trillion: "It's Going To Create A Generation Of Wage Slavery" And Another Taxpayer Bailout by Tyler Durden

As You’ll See, Student Loans Hurt Us All by Neal McCluskey

College has been oversold by Alex Tabarrok

The Student Aid 'Myth' Myth by Neal McClusky

Team O's Denial on College-Cost Crisis by Neal McClusky

Federal Spending on Student Financial Aid Drives Up College Tuition, Shrinks Economy by Hans Bader

A Primer on Government Dependency

2011-11-06T23:16:00.000-05:00

Dependency on a government is the fastest path to the failure of the country providing the dependence. As Margaret Thatcher famously said: "The problem with socialism is that you eventually run out of other people's money." Basic economics: if you subsidize something, you get more of it. Tax something, and you get less of it. Creating a "dependency constituency" may result in votes, but will ultimately fail. Refer back to this post for reference material on the state of our dependency State.

Additional material:

Americans 'Hooked on Government' as Record Number Get Benefits by Brian Faler

A record 49 percent of Americans live in a household where someone receives at least one type of government benefit, according to the U.S. Census Bureau. And 63 percent of all federal spending this year will consist of checks written to individuals for which the government receives currently no services, the White House budget office estimates. That's up from 46 percent in 1975 and 18 percent in 1940.

Welfare Dependence Keeps Growing by Kevin Reagan

8 Million More People Leave the Tax Rolls by John Goodman

Use of Drones in the United States

2011-11-06T23:01:00.000-05:00

Just a few days after sharing my opinion on the use of drones by the United States in which I discuss my fear of their eventual justification and deployment in domestic policing, we learn that Houston's SWAT team will indeed obtain such weapons: the first step on a very slippery slope indeed. This is truly scary. The militarization of our police forces thus continues, and one can hear the echo of President Eisenhower's warning about the influence of the military-industrial complex, to which I add of course, "congressional", thus becoming the military-industrial-congressional complex. Nothing like arms dealers being capable of selling to the military and now our country's police forces. Scary.

Dependence on Government: Failing as an Individual

2011-11-06T22:39:00.000-05:00

How horrible the prospect! On your own to pay for your own health care; on your own to pay for your own college expenses; on your own to pay for a lawsuit against a corporation that has harmed you unlawfully. How can anyone with an ounce of humanity in his body expect people to take such self-responsibility? The next thing you know, those callous, reactionary Republicans—you know, the ones who ran up the size, scope, and power of government consistently under every Republican president since Chester Arthur—will demand that people take care of their own children and aged parents! Where will it end?

The Inversion of America’s Dominant Ideology by Robert Higgs

On Political Ideology

2011-11-06T21:49:00.000-05:00

It frustrates me to no end when I read something that goes like this: "We must help people who face x!(replace "x" with any cause, e.g., mortgage foreclosure) People must put aside whether they're on the Left or on the Right! It's all about helping and not about politics!" One can read countless pieces that contain any number of variations of this theme. Why do I get frustrated? Because it's all about politics, period. As soon as anyone, be they on the Left, the Right, in the Middle, wherever, they are invoking government and government action. Government is all about the politics and when politics is involved, so is ideology. So, it was so refreshing to read Wonder If He's Ever Read David Hume by none other than GMU Professor Don Boudreaux:

Here’s a letter to the New York Times:

Joe Nocera argues that a policy of government “helping struggling homeowners by writing down some principal on their mortgages” is justified exclusively by “the data”; it’s science and not “ideology” (“To Fix Housing, See the Data,” Nov. 5). Therefore, save for those who are blinded by ideology, all well-meaning people must support this policy.

This Gradgrind-like argument fails.

Not only do the data that so impress Mr. Nocera speak only about existing mortgages – and, hence, say nothing about the possible altered incentives of future homebuyers to take on excessively large mortgages, or about government perhaps becoming locked in to a policy of granting mortgage relief – the very notion that certain homeowners are entitled to financial relief at the expense of taxpayers springs from an ideology. That ideology might or might not be wise, well-grounded, and humane. But ideology it undeniably is.

Here’s a fact: no conclusion about the proper role of government rests only ‘the facts.’ Ideology is inescapable. And it turns most lethal when smuggled into arguments in the guise of ‘just the facts.’

Sincerely,

Donald J. Boudreaux

See this related article (available here, alas, only by subscription) by my GMU Econ colleague Dan Klein.

Politics is ideology, and as soon as you read or hear someone say "this goes above politics" it means it's all about the politics and using the ~~coercive~~ persuasive powers of the government to achieve their goals.

Threat from US Government: Cutting Defense Will Increase Unemployment

2011-11-03T22:36:00.000-04:00

President Eisenhower's prophetic warning on the dire influence of a military-industrial (and congressional) complex on a democratic society was recently highlighted when Defense Secretary Leon Panetta "suggested that cuts of up to $1 trillion would increase the nation’s unemployment rate by a full percentage point, and put up to 1.5 million people out of work." The "defense budget" (in quotes because it recently has had very little to do with defense) is a jobs program that happens to provide for our nation's defense, but more recently, for our nation's offensive wars in Iraq and Afghanistan to name but two. Christoper Preble's The Pentagon and Jobs provides not only an assessment of Panetta's claims, he outlines a history of the "spending on the military is a national good" across multiple administrations. Spending on the military is, after all, "military Keynesianism" which he too mentions in the piece, and he highlights the classic debate within the Keynesian "stimulus is good" school, where some Keynesians, who believe that government stimulus is a good thing, more often than not proclaim it's not good when spent on the military: odd logic from an odd group that supports a debunked economic ideology. Read the entire piece from Preble. You'll be glad you did. - Peace.

Random Thoughts

2011-10-30T18:27:00.000-04:00

Why do many people continue to hold government, at all levels, unaccountable for the financial, economic and social mess we find ourselves in today? Many act as if the government is blameless in the debacle and that only government is capable of "fixing the problem."

Delegating more power to the government is not, has never been, and never will be, the solution to any problem.

I'm tired of hearing the phrase "American Dream." Anytime I hear a politician mention it, I reach for my wallet to check it's still there and then ask the question: So what actually is the American Dream?

President Obama recently said that Americans were "soft." Hmmm ... Mr. President, what do you think happens when more and more people depend on government for their existence and when those that fund the dependency of others grow tired of it?

George Will on Mitt Romney: "The Pretzel Candidate"

2011-10-30T18:24:00.000-04:00

A straddle is not a political philosophy; it is what you do when you do not have one. It is what Romney did when he said that using Troubled Assets Relief Program funds for the General Motors and Chrysler bailouts “was the wrong source for that funding.” Oh, so the source was bailouts' defect.

George Will, Mitt Romney, the pretzel candidate

CIA Killing Americans Violates Law of War

2011-10-28T18:47:00.000-04:00

Just a day after sharing my views on America's use of drones, Nat Hentoff pens CIA Killing Americans Violates Law of War in which he likewise points out the unconstitutionality of the use of drones by a non-military agency, the CIA. Hentoff provides much more insight on the issue and the thought that any American could read this piece and not at least question the legitimacy of the program is depressing.

Principal-Agent Theory and the Welfare State

2011-10-28T08:41:00.000-04:00

Principal-Agent Theory and the Welfare State by Mark Pennington is an absolute masterpiece on the subject of "controlling politicians: the mother of all principal-agent problems." I do my best to look at an issue from as many perspectives as possible, and rarely do I come away from any article convinced the author has successfully articulated the problem and the solution, but Pennington was the exception. I find it difficult to understand how anyone, regardless of their political affiliation (or lack thereof) would not likewise be convinced that Pennington has not correct. Read and save this piece.

Europe's Debt Crisis is NOT Over

2011-10-28T01:54:00.000-04:00

From A Brief Guide To The Euro Crisis by Jeff Harding:

There are several things that you need to know about the eurozone crisis and Wednesday’s Summit agreement:

It isn’t over.

The European Monetary Union’s (EMU) “architecture” is a failure.
They spent too much and can’t possibly repay the debt.
Banks will need to be bailed out.
They will print money.

HT: Econophile at ZeroHedge
More Opinions:

EU Reaches Deal on Greek Debt by Megan McCardle (Hold the applause)

Ron Paul

2011-10-27T23:43:00.000-04:00

Ron Paul's Unusual Path: The Texas congressman challenges the GOP status quo by Steve Chapman. A worthy read.

On Drone Warfare

2011-10-27T22:59:00.000-04:00

Drone Warfare Is Fraught with Danger by Sheldon Richman, is a thought-provoking piece on America's use of drones. Like Richman, I believe the use of drones to be questionable at best, especially when they're operated by the CIA and worse, when they're used to target American citizens. While I rarely subscribe to 'slippery slope' arguments, in the case of drones, I believe the slip to be very steep and very slippery indeed, as first evidenced by their use on foreign soil and secondly, their use against American citizens. To the latter point, regardless of how reprehensible the activities of any American, whether in or outside the United States, the rights granted to them by the Constitution are absolute, regardless of the questionable legal justifications this administration or its predecessor has used to justify killing its citizens. Today, we are witness to the increased militarization of much of our nation's police forces, many indistinguishable from paramilitary units in the armed services: how soon before we deploy domestic drones? Next, drone warfare certainly does minimize the risks faced by soldiers on the ground, but the discussion should not be how to minimize risk, rather, it should be focused on avoiding risk altogether and not embarking upon military engagements in which no existential threat to the security of the United States exists in the first place. Lastly, drone strikes often results in "collateral damage", the standard euphemism for "civilian" or "non-combatant" deaths. How our country's leaders, in and out of power, political pundits and our military, can discount, or worse, ignore the impact these strikes have when conducted on the soil of a country with which we are not at war is indefensible. Imagine the outrage if China for example, deployed drones, remotely operated from Beijing, to kill "terrorists" on American soil! In my opinion, the use of drones must have an incredible recruiting power for terrorists organizations, as I do not believe the families of those killed by such strikes simply accept it as fate and move on. In conclusion, I fear drones will be used to justify future operations, as the primary fear of having military personnel killed or captured is removed from the decision-making process employed to make a 'go' or 'no-go' decision to use our precious armed forces. The destruction of war goes well beyond the battlefield, regardless of whether the battlefield is in Pakistan or the United States. Making war "easier" or "remote" does not make it right or essential. Peace.

Don Boudreaux on Dangerous Political Naifs

2011-10-27T00:12:00.000-04:00

Anything written by Don Boudreaux is worth reading and Dangerous Political Naifs is no exception. He points out how people assume that our politicians are somehow all-knowing and are motivated by ideals higher than those in the private sector. As he points out, both perceptions are wrong, and in fact, dangerous:

In short, economists mysteriously conclude that desirable public-sector outcomes follow from the praiseworthy intentions that economists assume motivate most public officials.

Nowhere does this mystery run more deeply than in fiscal policy. Even if it were true that increased government spending can hasten an economy’s escape from a recession, the large number of economists who today endorse such spending is discouraging. Seldom do these economists inquire into the incentives facing government officials in charge of spending. The assumption is that these officials will spend the money in ways sure to promote the public interest. Also, seldom do these economists inquire into the information asymmetries and other constraints that might hamper even well-meaning officials’ efforts to carry out fiscal policy effectively.

Save for the relatively few economists steeped in Public Choice economics, the typical economist today remains a political naif—and a dangerous one at that. He is bloated with unjustified confidence in models which show that if government officials behave in the public interest and if these officials are immune to the same decision-making quirks and knowledge limitations that afflict decision-makers in private markets, then government can perform all manner of marvels. This economist then uses his authority to support interventions that are utterly unjustified by genuine scientific standards. It's shameful.

Shameful indeed, and, shame on us for delegating our individuality to the government.

Quantitative Easing Forever?

2011-10-27T00:05:00.000-04:00

Christopher Lingle's Quantitative Easing Forever? is an excellent piece especially for those interested in addressing their rational ignorance on the subject. We have had QE1, QE2 and QE3 (albeit with a 'Twist') and Lingle points out that QE may in fact be never-ending as he begs the question: What is the Fed's exit strategy to stop QE as a practice? It's obvious the Fed does not have one, which is as scary as QEn.

“Find Out What the People Want”: The Russell Conwell Story

2011-10-26T23:57:00.000-04:00

It was very tempting not to read an article that opens up with this quotation:

“There is not a poor person in the United States who was not made poor by his own shortcomings. . . .”

But I'm glad I did. “Find Out What the People Want”: The Russell Conwell Story by Harold B. Jones Jr is well worth the time. Those in Philadelphia may find this interesting for a reason that will become evident early in the piece. The moral of the piece is likewise worthy as well. Peace.

Obama's Mortgage Re-Fi Plan: Another Failure

2011-10-26T23:32:00.000-04:00

A must read: Guest Post: Obama's Re-Fi Plan: The Perfection Of Debt-Serfdom, Submitted by Charles Hugh Smith from Of Two Minds (courtesy of Tyler Durden at ZeroHedge). The conclusion is below:

The Big Lie here is implicit: "your house will someday come back in value, so hang in there, debt-serf." No, it won't. The bubble has popped, and the mania has left town. Housing will retrace to pre-bubble valuations circa 1996-98.

As usual, the Plan is all about managing perceptions and political theater: we're here to help the little guy, the struggling homeowner; we are in charge, we have a plan, we're competent, this will fix the housing market.

Too bad they're all lies. Perception management is not the same as actually solving the underlying problem, yet perception management is the Status Quo's response to every problem.

The perfection of debt-serfdom is now complete. First, make student loans "necessary" for the "good life" and then make that debt permanent and unbreakable. In other words, institutionalize debt-serfdom and lifelong servitude to the financial sector.

The re-fi "plan" herds potentially rebellious mortgage debt-serfs into new corrals, with the incentive of slightly lower interest rates. The lifetime of servitude to financial Overlords remains firmly in place. That's the "plan."

Read my previous post on Obama's Education Loan Plan. Together, it makes one want to occupy Pennsylvania Avenue. Note to my son: never, ever, buy a house! Rent instead.

A Deal for Greece? (... and the Euro ... and the Eurozone ... and ...?)

2011-10-26T23:19:00.000-04:00

From Tyler Durden's post at ZeroHedge, We Have A Deal!:

We just may have a deal:

EU OFFICIAL SAYS DEAL REACHED ON GREEK DEBT-CUTTING PLAN: AP
'PRIVATE CREDITORS TO TAKE 50% CUT ON GREEK BONDS, AP SAYS
EU official, who wished to remain anonymous, tells Bloomberg that euro-area leaders are set to approve accord for 50% writedown on Greek bonds

If true, this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece. It also means that, at least according to Barclays, we have a CDS credit event, although we are certain that Europe would never announce this deal unless ISDA (complete determinations committee list here) was onboard, and corrupt as always. In addition, Greece was unable to generate a 90% acceptance for a 21% haircut tender offer. And we are somehow supposed to believe they can do it with 50%? Lastly, as a reminder, on September 14, Moody's put SocGen, BNP and Credit Agricole on downgrade review. This will be the trigger. [emphasis is mine]

My rational ignorance is at a dangerous level when it comes to the entire Greece, Eurozone, Euro issue, this despite my best efforts to read and absorb as much as possible. A common underlying theme of many of the most recent material I've read has been that a partial or even full default by Greece must be a key component of any 'solution.' It will be interesting to review the evaluations of this deal, if it is indeed true as reported by Durden's post.

The bottom line for me: this deal/solution does nothing to change my pessimist view for the future with respect to European debt problem; the PIIGS; Greece and so forth. Just keep reading.

Additional Reading:

The Education Bubble Just Got Bigger (And So Did the Inevitable Bailout)

2011-10-26T22:28:00.000-04:00

President Obama today announced a plan that will ensure students are able to commit to higher levels of federally backed student loans. By limiting student obligations to repay, and by passing more of the repayment burden onto taxpayers, colleges and universities will be able to continue to raise tuitions at a rate that outpaces nearly every other cost center in the American economy. The move will come as a great relief to an education establishment increasingly concerned that students might no longer be able to afford skyrocketing tuition rates.
- Peter Schiff, President Obama Announces Plan to Boost College Tuitions

Political pandering and electioneering at its best. We're all on the hook for yet more debt and schools will continue to charge whatever they want because all loans are, in effect, guaranteed, and so the vicious cycle not only continues, it has become worse, something I never thought was possible.

Additional Readings:

Pushing Basket-Weaving College Loan Debt onto Working-Class Taxpayers by Lindsey Burke

Optimisms and Pessimisms

2011-10-26T00:34:00.000-04:00

Below are links to some of my favorite economists' lists of their optimisms and pessimisms:

Bryan Caplan: About What Am I Optimistic and Pessimistic?

Tyler Cowen: About what am I optimistic and pessimistic?

David Henderson: My Optimisms and Pessimisms

Hoover and Obama

2011-10-26T00:24:00.000-04:00

From Obama's Great Depression The president is following in Herbert Hoover's footsteps by A. Barton Hinkle:

As even The New York Times conceded a couple of months ago, "There is something you should know about the deal to cut federal spending that President Obama signed into law on Tuesday: It does not actually reduce federal spending. By the end of the 10-year deal, the federal debt would be much larger than it is today. Indeed, both the government and its debts will continue to grow faster than the American economy."

That story also noted, "The Congressional Budget Office estimates that the federal debt is likely to exceed 100 percent of the nation's annual economic output by 2021." Well. According to the latest figures, U.S. debt is on track to exceed GDP by Halloween—this Halloween.

Herbert Hoover would be proud.

Nothing I can add: Obama's record, like Hoover's, says it all, but of course, like Hoover's record, Progressive interpretation will be drastically different than the cold hard facts of reality. Obama will get a second term.

Once Again with Gusto: End the Fed (And All The Other Central Banks Too)

2011-10-25T20:54:00.000-04:00

In sum, the Fed and the other major central banks are making those least able to protect themselves from inflation and job loss poorer, and sending all of the wrong price signals to business people, which, in turn, is negatively affecting the world economy.

I have some sympathy for the central bankers because they have been given an impossible job — namely, they are supposed to be smarter than markets "and lean against the wind." But they aren't smarter and they don't know which way the wind is blowing. They also have been saddled with correcting a problem brought on by politicians of governments that are accumulating debt far faster than their respective economies are able to finance them. The central banks can get rid of the debt problem by inflating the currency (i.e., reducing its value by printing too much money) to the point where the debts are almost meaningless but, as we learned in the 1970s, inflation only serves to make almost everyone poorer.

- Richard W. Rahn, Abolish Central Banks

My rational ignorance on this subject, while still significant, is slowly being replaced by education and more importantly, empirical evidence. As Professor Don Boudreaux once stated in a podcast on Public Choice economics, he quoted David Hume who said "Just because something is, does not mean it ought to be." I believe that to be the case with not only the Federal Reserve, but with many aspects of government in general. This continued reliance, or better yet, this continued belief that government is somehow more intelligent when it comes to the economy, monetary policy, housing, education and so on, is just not borne out in any empirical evidence. Our significant leaps in technology, in lifting people out of poverty and much more are the result of our individual pursuit of our own self-interests. I can just hear the OWS crowd screaming at that last sentence: "self-interests" = greed; the poverty-stricken 99%; the income inequality... Peace.

Infrastructure "Investment" Myths

2011-10-25T00:01:00.000-04:00

The recent infrastructure debate has focused on job creation, and whether projects are "shovel ready." The more important question is who is holding the shovel. When it's the federal government, we've found that it digs in the wrong places and leaves taxpayers with big holes in their pockets. So let's give the shovels to state governments and private companies. They will create just as many jobs while providing more innovative and less costly infrastructure to the public. They're ready. [emphasis mine]

Infrastructure Projects to Fix the Economy? Don't Bank on It by Chris Edwards

I tire of this incessant call for government spending on "infrastructure." I understand why it's favored: as Edwards points out in his article, politicians love such spending because they long to have access to the millions of dollars doled out in the name of stimulating the economy. Of course, the fact that we're in an election cycle (when aren't we by the way?), the calls to repair our "crumbling infrastructure" will once again spew forth from the very politicians who ~~steal~~ misspend the billions already collected in taxes to build and maintain our nation's infrastructure. There are countless other components of our nation's economy besides construction and infrastructure, and the thought of a political class which lacks any business or economic experience picking winners and losers is not only sickening, it's a formula for failure.

Follow-up: Chris Edwards states that his article on infrastructure (link above) "...elicited a large and vigorous response. The comments on the WaPo site and emails to my inbox were about 80 percent in opposition to my views." Not a surprise really, given the love affair people still have with the government in general and its spending on infrastructure specifically. He addresses the criticisms in The Downside of Federal Infrastructure Spending. Superb rebuttals to the proponents of government ~~theft~~ investment.