I'm a racist with a psychological disorder...

At least that's what I've learned about myself on the Internet in the last few weeks from people who must be smarter than me because they get paid to write.

I wasn't aware of my racist-ness until it was pointed out to me that it simply isn't possible to disagree with President Obama on philosophical or economic grounds. The only possible explanation for my disagreement with his policies is my latent racism. I am truly thankful that such brililant, kind, generous people exist in this world to point out the miserable failings of a wretch like me.

I have also learned that I am apparently suffering from an as-yet-undiagnosed psychological disorder, possibly brought on by some sort of traumatic deprivation as a child, that manifests itself in the form of libertarian thoughts and leanings. This is rather frightening because I have no memories of any such deprivation. I'm certain it must be because the trauma was so severe that my conscious mind has blocked those memories. I hate my parents for what they must have done. It is becoming increasingly clear to me that children are much too precious to be left to ignorant parents to teach and raise. Again, I must thank my betters for assisting me through my illness.

In addition to my problems outlined above, some very kind-hearted souls in various message boards have helped me understand that I am selfish, uncaring, inhuman, greedy, and something of a monster. I must also be suffering from several other problem, including being a bad judge of character, since I have managed to surround myself with lots of friends, none of whom have bothered to point out my problems or offer to help me find professional assistance with them and I have been able to hide my disorders from family, acquaintances, employers, etc., for many, many years.

I certainly hope that President Obama's health care plan provides adequate funding for the rehabilitation of people like me. Clearly, I am becoming a danger to myself and others and will need to be confined soon. I believe the government has already implemented a fairly developed program for dealing with difficult cases and put it into practice down in Guantanamo.

Until then, I'm going to wear my tin foil hat as often as I can without being a distraction and try to resist the temptation to indulge myself in any libertarian thoughts. I'm also going to start the process of trying to cure myself of these problems. Every night before bed I will offer a prayer of thanks to our caring government and my kind, loving brothers and sisters for helping me through my illnesses. I will then, with all my heart and desire to believe, repeat to myself until I fall asleep: 2 + 2 = 5.

Paul Krugman, Demagogue

Yesterday Paul Krugman wrote a piece for the New York Times in which he recounts the events at a recent town hall meeting on government health care.

http://www.nytimes.com/2009/08/07/opinion/07krugman.html?_r=2&ref=opinion


"There was a telling incident at a town hall held by Representative Gene Green, D-Tex. An activist turned to his fellow attendees and asked if they “oppose any form of socialized or government-run health care.” Nearly all did. Then Representative Green asked how many of those present were on Medicare. Almost half raised their hands."

"Now, people who don’t know that Medicare is a government program probably aren’t reacting to what President Obama is actually proposing... But they’re probably reacting less to what Mr. Obama is doing, or even to what they’ve heard about what he’s doing, than to who he is..."

"Does this sound familiar? It should: it’s a strategy that has played a central role in American politics ever since Richard Nixon realized that he could advance Republican fortunes by appealing to the racial fears of working-class whites. Many people hoped that last year’s election would mark the end of the “angry white voter” era in America."

So, according to Mr. Krugman, these people are clearly ignorant and racist. Apparently it never occurs to Mr. Krugman that these "people who don't know that Medicare is a government program" may be smart enough to realize when something isn't working and that he is, pardon my French, full of shit.

Medicare IS NOT OPTIONAL. These people participated in Medicare because the government put a gun to their head and forced them to do it. Granted, a few may have bought the lies and thought it a great idea at the time but it seems they have changed their minds and the rest had no choice. Perhaps it is the fact that Medicare is facing unfunded liabilities of around $40 trillion that will be paid by the children, grandchildren, great-grandchildren, etc., of the folks in that meeting that indicate it isn't what was promised and adding to it is a bad idea. Perhaps those people realize that the government is full of liars and theives and they want no part of any more such programs. Perhaps these people realize that the only possible hope of getting back any of the tens of thousands of dollars that were taken from them is to participate in the current program.

Is it possible that some of the people to whom he refers are racist and would oppose anything Obama offered? Sadly, yes, it is. Is it irresponsible of an intellectual to resort to this sort of rhetoric. Certainly. What is beyond question is that Mr. Krugman either lacks the mental capacity to analyze the situation beyond his own preconceived notions or he is a race-baiting demagogue with an agenda. Given that he is a Keynes-loving economics professor at Princeton with a Nobel prize, I'm guessing its the latter.

Foresight?

"It would be a serious blunder to neglect the fact that inflation also generates forces which tend toward capital consumption. One of its consequences is that is falsifies economic calculation and accounting. It produces the phenomenon of imaginary or apparent profits... If the rise in the prices of stocks and real estate is considered as gain, the illusion is...manifest. What makes people believe that inflation results in general prosperity is precisely such illusory gains. They feel lucky and become openhanded in spending and enjoying life. They embellish their homes, they build new mansions and patronize the entertainment business. In spending apparent gains, the fanciful result of false reckoning, they are consuming capital. It does not matter who these spenders are."

Wow, that pretty well sums it up, huh? A nice recap of what we are living through. Except its not a recap. It is the writing of Ludwig von Mises. The genesis of his line of thought can be traced to a treatise he published in 1912. Yes, 1912. Almost twenty years before the same series of events led to the Great Depression. It was included as part of a greatly expanded theory and published again in 1940, before finally being published in English in 1949 as part of his magnum opus Human Action.

F. A. Hayek, winner of the Nobel Prize in Economics and Presidential Medal of Freedom, was a student of Mises and a contemporary of John Maynard Keynes. Through the work of Hayek (and others) the theories of Mises and the other "Austrian School" economists were spread around the world. Over the years Hayek and Keynes engaged in several battles of wits and intellectual arguments, yet, Hayek never wrote a review of Keynes' General Theory of Employment, Interest, and Money. Why? The short answer is, in my opinion, that he felt it so poorly reasoned that Keynes would quickly abandon this line of thinking as he had done on a previously published work. "Hayek later regretted that he had not responded after the General Theory was published, but explained (somewhat lamely) that after Keynes had quickly disavowed his Treatise on Money in the face of criticism, he assumed that Keynes would change his views yet again, so why bother?"(1)

So, if there are theories that have historical accuracy, appear to be excellent predictors of future events, and are widely known, why is it that politicians and their intellectual supporters continue to worship at the feet of Keynes and his General Theory of Employment, Interest, and Money when it has proven, time and again, to be horribly wrong?

Guess which one advocates ever increasing command and control by politicians.

(1) http://hayekcenter.org/?p=335

Cash for Clunkers - Brilliant!

Yesterday, for the first time in months, we spent the day doing nothing. I spent a good part of the day sitting in front of the television and saw countless ads touting the new Cash for Clunkers rebate program. Ignoring the fact that the entire program has been on the verge of collapse (when they could actually get it to work), I read a piece this morning that, if correct, points out precisely how ridiculous this type of "stimulus" really is. The article can be found here -

http://seekingalpha.com/article/152909-cash-for-clunkers-may-cost-up-to-45-354-per-vehicle

- but I'm going to break it down into what I hope is a more digestable presentation.

According to the article there would normally be about 200,000 clunkers traded-in every three months. Under the new program they are projecting about 222,000 trade-ins. 222,000 - 200,000 = 22,000. Think about that for just a minute. The "stimulus" is generating about 22,000 more trade-ins than would have occurred otherwise. The bulk of the money is being used to subsidize purchases that would have happened anyway! Or, put another way, the federal government program has spent $1.2 billion (the program has a budget of $1 billion but that money had to be borrowed, so I'm including interest at 3% for 10 years) to stimulate the purchase of 22,000 additional cars - $1,200,000,000 / 22,000 = $54,545 per car. The NADA estimates that the average price of a new car bought in the US is $28,400.

(Sigh)

A Deal with the Devil?

Of all the political sub-groups in this country, I think none face a more difficult series of decisions than the "Christian Right." For a very long time now they have been convinced, almost exclusively by Republicans, that they must elect fellow believers and surrender some rights in order to protect others and to defend "traditional, family values." This was not an accident. It came as a political response to the attack launched by modern liberals and Progressives against what the Christian Right perceived to be "traditional, family values". The left began to use the federal government to implement its will legislatively, through "activist" judges, and a sympathetic media. The Republicans and the Christian Right, sensing a move by liberal politicians to replace religion with the state responded in kind and embraced politicians who seemed to share their beliefs. A massive battle has been waged with each side seeking to put it's people in positions of power and authority to protect and expand their ideology, with every step - by either side - resulting in a growth in the power and scope of those in Washington.

The Christian Right, with the best of intentions, engaged in a battle that should never have been fought. This is much easier to see with hindsight than foresight but it is a battle that cannot be won. One cannot fight the growth and authority of the state by giving greater power to friends in positions of power within the state because those friends will not always be there, but the power, once vested, is almost impossible to remove. This must be the lesson learned from George W. Bush. Millions turned a blind eye to the massive growth of executive authority under Bush because they believed that he shared their vision. He was a born-again Christian, after all. And now he is gone, retired to Texas, and we are left with an executive office with almost unlimited power currently occupied by a socio-fascist and who knows what to come.

What the Christian Right must understand, above all else, is that no matter how many times he or she goes to church, no matter how many times God, Jesus and the bible are mentioned, no matter how much those traditional, family values are discussed, no matter how much outrage is expressed in press conferences and campaign speeches, the people in Washington - and nearly every person who wants to be there - are politicians first and political power is more important to them than anything else. (Incidentally, it must be noted that this isn't a problem just for the Christian Right. The politicians pandering to left-wing groups are in the same boat - they will say anything, do anything to motivate their group(s) to get out and vote and put them into power. The politicians of today are a product of the almost pure democratic means we use to elect them - the lowest common denominator that can rally the most troops is elected by a woefully undereducated population.)

We are now in a position where the power and authority of the state is almost out of control and the Christian Right face some difficult choices. There are many lessons we can learn from history but few are more clear than the fact that unless a state enforces a state-controlled religion, the state will not tolerate any religion longer than necessary. For the politician, power comes from the state and religion outside the state is a threat to that power - a man can worship only one master. No matter what a political candidate says to the contrary, it must be assumed that he (or she) will always vote to protect himself and his power.

This long-held belief that the best way to fight against the perceived secularization of America is to elect politicians that share their beliefs must be abandoned. The election of self-professed Christians to political offices would not remove the temptations of power. In fact, the combination of divine and political authority would enhance the temptation exponentially. If Lord Acton was correct in his observation that power corrupts and absolute power corrupts absolutely, then there is nothing more subject to corruption than a government that believes itself the bringer of Truth. History has shown that the greatest atrocities to ever occur have been the result of the state as religion or controller of religion.

Almost every religion on earth teaches that it is the one, true way. Ironically, the only way for people of all religious faiths to ensure that they may continue to practice their faith as their doctrines command is to resist the temptation to use the power of the state to enforce its doctrine. The end result of the pursuit of political power for those of a particular faith is armed conflict. The faith that achieves political power and attempts to enforce its will upon people of other faiths will be met with resistance and defiance. The only possible alternatives are peaceful co-existence, which doesn't require the acquisition and temptations of political power, and armed coercion, which certainly doesn't fit well with traditional, family values.

The decision to abandon the quest for political power for peaceful co-existence is certainly not an easy one for it means acknowledging the rights of others to live in a manner that may be at odds with Christianity (or even at odds with various demoninations of Christianity). It moves the battle for a man's soul from the courthouse to his house which is where it, and those choices in which Christians may not agree, belongs. Oddly enough, this is the same path that must be taken by atheists, agnostics, and people of no faith.

If one wishes to be free and to live in peace, one must resist the temptation to use political power to enforce his views. The attempts to use the state to do otherwise is a deal with the devil of the worst kind. As George Washington noted long ago, "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." We must all recognize that he who wishes to use the power of the state to subject others to his views is, without question, declaring that he is willing to use violence to achieve his goals.

Note:
I can already hear the retorts, "But what about (fill in your cause here)?"
Here is what must be remembered - Once we have put such a decision into the hands of the state, it is forever a decision to be governed by the state and, thus, becomes subject to the ebb and flow of politics. What was once a moral issue becomes a legal issue; what was once a personal decision now carries the force of the law. The right to do and the right not do has been ceded to the state and everyone loses.

Waaaaay down the rabbit hole...

Here, for your reading pleasure, are links to a handful of blog posts, articles, and the like that should offer more evidence as to just how badly the American people are being systematically raped by our own government. Enjoy!

http://www.thenewamerican.com/history/american/946

http://webcas.cas.suffolk.edu/history/hansen/hist332_s4.htm

http://query.nytimes.com/gst/abstract.html?res=9B07E1D9133FE633A25752C3A9669D946296D6CF

Some analysis and commentary on the first article -
http://www.marketskeptics.com/2009/06/federal-reserve-created-by-washington.html

http://www.marketskeptics.com/2009/06/researching-corruption-at-treasury.html

http://www.scribd.com/doc/11046124/The-Visible-Hand

One of the Best?

The dog woke me up early this morning and I ended up (as usual) sitting at the computer reading. I happened upon the blog of Judge Richard Posner where he discusses and adds to his new book A Failure of Capitalism. Judge Posner sits on the U.S. Court of Appeals for the Seventh Circuit and is a lecturer at the University of Chicago Law School and is regarded as one of the best legal minds in the country.

In the second paragraph of the first blog post I read

http://correspondents.theatlantic.com/richard_posner/2009/05/response_to_comments--may_16_to_may_26.php#comments

I came across this gem -

"...capitalism and government cannot be separated. You cannot (here I part company with "anarcho-capitalists," such as David Friedman) have capitalism without a government, specifically a central bank with discretionary authority over the money supply and a regulatory regime for financial intermediation (banking in a broad sense)."

I would argue that not only has he "parted company" with the anarcho-capitalists but he's also parted company with logic, common sense, and any knowledge of history. My God. This is the man named as one of the best legal thinkers in the country? No wonder we are in this mess...

Not-so-Easy Listening

A few weeks ago an acquaintance of mine, upon reading something I posted on Facebook, made the comment that perhaps it was time to start listening to Rush. I quickly let him know that listening to Rush was an enormous waste of time if one wants to start to really understand what is going on in Washington. I offered to put together a solid list of podcasts that would be of much greater value. Well, it took longer than I expected, but here is the very incomplete, but certainly listen-worthy list:

The easiest thing to do, if you use iTunes, is to subscribe (its free) to The Lew Rockwell Show and to Mises Institute Media (also free) and download their entire catalogues.

Start with the Lew Rockwell show. They are shorter (usually about 15 minutes) and generally less technical. All of the podcasts are of interest, but I would start with the following:

Episodes 1, 2, 3, 8, 11, 14, 16, 17, 19, 27, 28, 36, 37, 38, 40, 41, 43, 44, 48, 49, 57, 58, 63, 72, 75, 76, 82, 98, 99, 104, 110, 117

Then move on to the Mises Institute. Some of these are full-blown lectures by professors, economists, and the like. Mises doesn't index its podcasts in episodes so they can be a bit cumbersome to find. Well, at least I haven't been able to come up with an easy method. I'm a long-time podcast subscriber so I have them all rated. Here are the ones I would listen to first:

What Must Be Done
A Plea for the Real Union
Philosophical Foundation of Keynesians
Keynesians and Neo-Keynesians
Modern Myths of Keynesian Economics
The Origin and Nature of Money
The Origin and Nature of Banking
The Future of the Dollar
The Rise of Social Democracy
Democracy: The God that Failed
Free Markets: An Interview with Walter Block
The Truly Unintended Effects of the Fed
John C. Calhoun on Free Trade
Cycles, Business and Otherwise, in the Austrian World View
Meltdown: An Interview with Tom Woods
Why the Meltdown Should Have Surprised No One
Endangered Specie: Monetary Debasement in the U.S.
I, Pencil
80 Years Later: Parallels Between 1929 and 2009
A Recipe for the Next Great Depression
Why You've Never Heard of the Great Depression of 1920
Free Markets: An Interview with Joseph T. Salerno
'Which is to Be Master?' - The Indefensibility of Political Represenation
Not Yours to Give

If you want some supplemental reading, I would highly recommend the following as a great place to start. They aren't too long and are written for the average person and aren't full of economics jargon.

Economics in One Lesson - $12.00
by Henry Hazlitt
http://www.mises.org/store/Economics-in-One-Lesson-P33.aspx

What Has Government Done to Our Money? - Free
by Professor Murray N. Rothbard
http://mises.org/books/whathasgovernmentdone.pdf

Meltdown - $21.00
by Dr. Thomas E. Woods
http://www.mises.org/store/Meltdown-P557.aspx

Economic Calculation in the Socialist Commonwealth
by Professor Ludwig von Mises
http://mises.org/pdf/econcalc.pdf

The Anatomy of the State - Free
by Professor Murray N. Rothbard
http://mises.org/pdf/anatomy.pdf

This is absolutely the equivalent to at least a full year's worth of college level study in Economics and Political Science, for about $35.

I will offer some advice. First, it is almost certain that you are going to hear and read things in the above that are in absolute disagreement with everything you have been taught your entire life and that are constantly ridiculed by the talking heads in the media. Some of it will likely make you uncomfortable and you will be tempted to dismiss it. Don't. I first came across most of this about ten years ago, read a bit, and tossed it aside. Clinton's second term was coming to an end, Bush and the Conservatives were going to be in control and do it right. Man, was I wrong. I wasted the better part of ten years chasing a fantasy. You may never come to agree with or accept everything you hear and read but it will make you see the world differently going forward.

Second, as tempting as it may be to jump into some of the other books, go through the above first. It might seem strange that I'm recommending so much at an institute named after Professor Mises but only one of his books. Most of his work was written for professional economists and professors not the average reader. You might also notice that I haven't recommended anything by Professor F. A. Hayek, a student of Prof. Mises and Nobel Laureate. It is for the same reason.

Finally, and this is related to my second recommendation above, you will see and hear frequent references to Human Action, Prof. Mises magnum opus. It is a monster of a book at close to 900 pages and it is an intellectual Everest. I am a fairly intelligent, moderately well-read, college educated professional that spent two years studying economics, passed the CPA exam and received my Certified Financial Planner designation - and that book has been sitting on my shelf along with a 380 page chapter-by-chapter study guide, untouched, for six months, and, I am dying to read it. But, I know that I'm not ready. I am spending the entire spring and summer reading four other treatises, three by Nobel winners and the other Prof. Mises first masterpiece written 37 years earlier, in preparation for tackling Human Action late this fall and into the winter.

I know I'm hammering on this but I am all too familiar with being tempted to skip the "fluff" and jump directly into the heart of the matter.

Thoughts...

After a lazy Saturday morning of reading and relaxing we turned on the television for something to watch during lunch. Band of Brothers was on History Channel. I watched the entire series when it was first shown on HBO and have seen it multiple times since. In fact, I bought the box set about six months ago and watched the entire series in a matter of days.

All my life I have had a certain respect for the men and women that serve in the military. I can remember spending many days and nights playing war and sitting in the floor at my grandparents looking up the various military ranks in a set of impossibly old encyclopedias. My father was drafted into the Army and served in Vietnam, but rarely discussed it unless asked and never spent any time discussing his duty or the military in glowing terms. As far as I can tell, it was just something he was asked to do and did. Yet, I have always held a certain respect for the military.

As I grew older and began to gain a deeper understanding of what is asked of those that serve my appreciation grew. As someone who has spent his entire life in the comfort and safety of the United States and never served in the armed forces, I can only glimpse a small piece of the psychological toll that combat takes on both those that serve and those that live through it.

I am fully aware and acknowledge the fact that freedom is not free. It is fought for and earned, never given. Millions have died and millions more have served so that I can live in peace and comfort. It is with all respect that I tip my hat to those who have served and protected, some because they volunteered, some because they had no choice. I will always remember what others have done so that I might not be asked to do the same.

As the years have passed, however, I have come to question so much of what I once held so dear. It is not the soldier I question but those who send him to fight and their motives for doing so. Americans are taught from birth to respect and revere our men and women in service, and history has taught us that this respect is justified and deserved. The soldiers are taught to follow orders and the power of duty, honor and country. They do what is asked, generally without fail and without question - and they get it done. Always. The combination of the two has produced the finest, most powerful military in the history of the world.

But, there is a problem.

The men and women of the armed forces are living and functioning under a gigantic lie. Everyday they train and put themselves in danger believing in their hearts that they do it so that those of us back home can sleep in peace with the knowledge that the greatest fighting force in the world is doing its job protecting our freedoms. Yet, every day we lose more and more of those freedoms they are fighting to protect.

As far back as we can find, people in power have understood that having an enemy to fight is one of the most effective ways to maintain that power. If the people are frightened they will surrender their rights for protection and security in return - even the threat of attack or invasion is usually enough. The mafia has spent decades perfecting the art of the protection racket. What we have seen here, especially since the fall of the Soviet Union, is a fairly dramatic increase in the use of our military around the world and, culminating in the days following September 11, 2001, a dramatic increase in U.S. nationalism that should (and probably does) scare the bejesus out of the rest of the world. History makes it pretty clear that when a well-armed country is that certain in its righteousness and loves itself that much, war is coming.

I do not believe that 9/11 was an inside job, nor do I believe there is some grand conspiracy or shadow government pulling the strings, but I am convinced that it has become the policy of our government to never let a crisis go to waste (in fact, Rahm Emanuel stated this explicitly) in its efforts to grow itself and the media is only happy to play along because sensationalism drives ratings. For decades we had the specter of Communism and the evil Soviet Union for the government to use as justification for any action it took, however, the Soviet Union actually functioned as a control mechanism for U.S. global interference because, for most of its existence, it had the military power to act as a deterrent. We risked a full-scale, potentially nuclear, assault from an enemy capable of reaching our shores if we were too aggressive in our overseas manuevers.

After the fall of Communism the U.S. appetite for global hegemony exploded but it needed a new enemy to justify its expansion - and Muslim extremists gave us one, but it wasn't enough. The problem is that the American people, if left to their own devices, aren't likely to support such actions without justification. So, our government finds every conceivable reason to justify its expansion and if one isn't forthcoming, it will create one. We are under an almost constant barrage of crises, both real and imagined - global warming, avian/bird flu, Hurricane Katrina, North Korea, Iraq, Muslim terrorists, Venezuela, Mexican drug lords and open borders, tsunamis, Iran, swine flu, financial collapse, nuclear Pakistan, global climate change, African pirates, etc. Almost all of which require action by an arm of the U.S. military and all of which directly or indirectly encroach upon the freedom of U.S. citizens either through changes in the laws or the trillions in U.S. dollars spent in dealing with the crisis. Without ever meaning to do so, the men and women who thought they were signing up to secure our freedom have been tricked into serving our government's ability to exert its influence around the world and to protect it when it engages in activities that would land any other nation under international sanctions.

Do not misunderstand, some of these threats are very real and do pose a potential threat to the people of this country, but we have been hammered by so much propaganda that it is becoming impossible to separate the real from the imagined and all of it is being used to justify the taking of our rights and freedoms.

I realize this is a lot to swallow all at once and that it is so hard to see our government in this light. For so long we have believed the propaganda - we are different, this is the greatest country on earth, things aren't like that here. But, they are, and it will become completely obvious as our economic and financial crisis continues to unwind. We are borrowing trillions of dollars from around the world and printing even more. We are never going to repay what we have borrowed. We may return the same amount of dollars but it will be an almost worthless currency carrying just a fraction of the value of what we stole from the rest of the world. We have become a government of liars and thieves that uses the military to protect itself, for it is only the threat of our military that will keep the rest of the world at bay once they realize what we've done.

All my life I have operated with the knowledge that, if called to do so, I would put on the uniform and serve my country because this is the greatest country in the world and it is worth fighting for. Now...I'm not so sure. As the decades have rolled by it is increasingly clear that our government uses the military to protect itself and its interests and not the interests of the people. Please don't misunderstand, I will fight to the last to protect our freedoms, but why would I ever fight to protect this government - a government that is becoming everything I despise and would never tolerate from another person? As I sit here this morning it is our government that has become the greatest threat to my freedom, more so than any other force in the world. Why should I fight to protect an organization that seems hell-bent on taking everything I have and hold dear?

An update to my May 2007 post on Oil Profits

Record Profits

Publish at Scribd or explore others: Business & Economics Research

A Different Perspective

A few days ago I posted a link to the testimony offered by the White House economic advisers. I will now offer a different perspective.

http://www.europac.net/whitepapers/BewareOfObamanomics.pdf

They Don't Have a Clue?

During the first few minutes of lunch today I took the time to read the testimony of Dr. Christina D. Romer, Chair of the White House Council of Economic Advisors, before the Joint Economic Committee. The title of her talk is The Economic Crisis: Causes, Policies, and Outlook. It can be found here -

http://jec.senate.gov/index.cfm?FuseAction=Files.View&FileStore_id=9ae99fef-abc7-42f9-b748-a60afc589d7a

Under the heading Causes of the Crises she tells us exactly what, in her opinion, led us to where we are today:

1. "In thinking about the causes, one needs to begin with the extreme fall in house and stock prices over the last eighteen months."

2. "...a decline in wealth as large as the one we have experienced has led to a large decline in the aggregate demand for goods and services."

3. "Another factor to consider is the uncertainty created by the gyrations in asset prices."

4. "...the drying up of credit."

5. "Fear, uncertainty, and a desire to contract lending spread to other markets."

6. "The reduction of credit had two devastating consequences. One was a further lowering of consumption and business investment... The other consequence of credit rationing is a reduction in efficiency."

7. "Finally, falling income in the United States means we are buying less from abroad."

With all due respect to Dr. Romer and the other members of the committee, when the Chair of the committee that is advising the President doesn't know the difference between the causes of the problem and the symptoms of the problem how could they possibly provide sound advice in part two of the testimony, Policies for Recovery. She has offered a laughably inadequate explanation of the causes of our current crisis that would receive a failing grade in a first year economics class at the local community college.

Dr. Romer received her PhD in economics from M.I.T. so it would be difficult to chalk this embarassment up to ignorance, which implies that it was deliberate. Why? Her testimony was not designed to address the stated goals and provide economic guidance because it was not a statement on economics. It was, rather, a political statement - a statement designed and written to protect the prime movers in this depression - the government itself - and to provide support for a political agenda that coincides with a school of economic thought that insists that the solution to every problem, even those caused by the government, is more government.

Wealth Accumulation at the Top

I definitely haven't fleshed out all the details but something occurred to me this morning and I wanted to share in the hopes that I can get some feedback.

In a nutshell -

I think it would be fair to say that one of the "goals" of the Federal Reserve has been to maintain a slow inflation, somewhere in the 2-4% range. General inflation occurs because additional money is being pumped into the economy by the government.

The thing is, that "new" money doesn't hit the economy everywhere at once and prices and wages do not rise all at once. Those who get that "new" money first are getting it before prices and wages have begun to rise, so they have "new" money to spend on goods and services being sold at "old" prices. As the "new" money slowly makes its way through the economy, wages and price levels will slowly rise with the general laborer being among the very last to see an increase in wages.

I've known, at least conceptually, about the horrible effects of inflation, particularly on the poor and retired, for quite a while, but this morning I "saw" something I haven't seen before.

As the Fed continues to pursue inflation over decades there is a slow transfer of wealth to those that receive the money first from the rest of the country. I do not have any data on this but I'm confident that I can name who gets that "new" money first - banks, big business and institutions, and the wealthy. Long before any of that "new" money gets to the couple buying a home or a small business owner borrowing money to expand it has passed through several layers, each of which is, through no direct action of their own, getting a tiny piece of the wealth of everyone below them on the ladder.

This has some important implications, most notably that even the most ethical big business that paid all its taxes, treated its employees well, paid well, and did everything "right" would still see a very slow, but steady, increase in its total wealth relative to everyone further down the ladder.

Given that it has been about 25 years since we have seen a sustained recession and we've had an equally long period of slow, steady inflation it would seem that, even holding tax rates constant, we would have seen a significant accumulation of wealth at "the top" during this period.

Decreases in income tax rates, greed, and other factors also played a role and cannot be ignored (and it will take someone with considerably more experience in mathematics and statistics to determine the effects of each), but it seems clear to me that there is a lot more to the story of wealth accumulation than the powers that be are discussing or, quite probably, given their handling of our current recession, even aware and it is a direct result of the policies they prescribe.

I can't decide...

I can't decide which was the most humorous:

a) Watching the Republicans and "conservatives" try to hi-jack the tea party events by screaming for lower taxes even as they plan to increase the size, scope and intrusiveness of government

b) Watching the Democrats and liberals scoff at the parties and assert that they are all the product of Fox News, the wealthy or one "extremist" group or another

c) Watching and reading the incessant references to the parties as "teabagging" from those on the left that know what that means and are using it in a derogatory manner and those on the right that have no idea

d) Watching the protestors show their "mad as hell and not going to take it anymore" frustration even as they don't seem to have a clear indication as to what it is they aren't going to take any more

e) Watching and reading comments about "going Galt" from people that probably haven't read 1,100 page in the last five years combined much less the novel they quote

f) Watching me play golf yesterday after not playing since last September

I'm going to go with answer (f) - the only thing damaged by it is my ego, to everyone else its hilarious...unless you happened to be in the group directly ahead or behind us or the poor bastard that got paired up with us at random.

Tea-blogging

All across the country thousands of people are attending "tea parties" today to protest...something. There are all sorts of reasons but the primary motivating factor appears to be nothing more than frustration at the disconnect between Wall Street and Main Street, between Washington and the rest of the country, between what we were and what we've become.

I understand. Trust me, there is probably no one more frustrated than I am at all that has led us here.

But, I am afraid that the entire "tea party" movement is much ado about nothing. Republicans (one half of the very reason we've arrived at this point) are doing all they can to hi-jacked the "movement" in a bid to take back power from the Democrats (the other half of how we got here). It's the same game, all over again. The fact of the matter is that Americans protest the same way they give to charity - without getting their hands dirty. Myself included. Standing in a park for an afternoon, listening to speeches, and waving American flags might make us feel better, but that's about it.

The fact of the matter is that most Americans live hand-to-mouth and can't take time away from work to engage in any serious protesting and we certainly aren't about to break any laws to do it. The "tea parties" will be held where they are told to hold them and will begin and end when their permits allow - certainly not the spirit in which the original tea party occurred. In fact, the more involved the various established political parties and local governments become the more it begins to look like some Orwellian "Two Minutes Hate."

I can't help but feel that the people that are supposed to be getting the message are laughing.

Maybe I am wrong and this is the start of a real shift in the American political landscape. I certainly hope it is. If so, my apologies for being late (fashionably?) to the party. But, all indications are that it is just another verse in the same tired song we've been hearing for decades and, until I see evidence to indicate otherwise, I've got better things to do.

Some choice...

As distasteful as the AIG bonus situation may be, I believe history will show that we have far more to fear from greedy, power-hungry politicians than greedy, power-hungry "capitalists."

Irony - I love it

In 1902 Charles Ponzi migrated to the United States from Italy. He gained infamy for his financial scheming whereby existing investors were paid returns from the incoming investments of new investors. Eventually, these schemes fail because the inflow of new investors - and the money to pay returns to existing investors - can't be maintained. He didn't invent the concept, he just did it so well that his name has become synonymous with it. For obvious reasons, these schemes are against the law.

On March 12, 2009, Bernie Madoff pled guilty to eleven counts of fraud and admitted to running a Ponzi scheme that cost investors, at the latest count, about $65 billion. Once his plea was accepted in court he was taken into custody and now awaits sentencing - a sentence that could reach 150 years.

As I saw the news of his plea being blasted across the Internet I couldn't help but laugh. He should go to jail and every single thing he owns should he sold and the proceeds used to repay investors. However, the irony of watching an agent of the Federal government - the perpetrators of a Ponzi scheme 150 times bigger than that operated by Madoff - order this man into custody was astounding. But, it doesn't stop there.

The people are up in arms and full of indignation at his greed and corruption. How could he do this to people? Outrage! Everywhere you turn - Outrage!

Yet, I would be willing to wager that many of those same people that want to see this man put on the rack will fight tooth-and-nail to keep Social Security. Huh? No wonder this country is falling apart...

If you really want to read something humorous, find a copy of Social Security's official response to being labeled a Ponzi scheme. It is a masterpiece of double-speak that would make Orwell proud.

You tell me...

Inflation, anyone?
Courtesy of http://blog.mises.org/blog/

And the hits just keep on coming...

I think this is fairly self explanatory.

If you've got nothing to hide you shouldn't mind the government watching your every move, right?

Your papers, please, Comrade.

http://news.cnet.com/8301-13578_3-10168114-38.html

Thanks for the heads up, David.

Chasing the Impossible...

I haven't really thought this through but it popped into my head while eating lunch...

How much of our current mess can be blamed on our collective unwillingness to concede that there are some things we can't "make right"?

I'm wondering if our overriding goal of trying to make things like education, medical care, retirement income, etc., available to everyone is simply chasing the impossible.

I realize I am going to get called a selfish s.o.b. for even writing this, but maybe we just have to recognize that there really are cost-benefit relationships involved in these things.

For example, getting 100% of all children born in the U.S. to graduate with an acceptable level of academic accomplishment will always be impossible due to various forms of learning disabilities, etc., so to demand 100% success is foolish. Yet, suppose we can get a 70% graduation rate at an acceptable level of academic achievement for $5,000 per student; 80% at $15,000; 85% at $30,000; 90% at $50,000; and, 97% at $100,000. Clearly, $100,000 per pupil is economically impossible and impractical, but where do we draw the line? I think we would all agree that spending any amount of money required to achieve 100% success would be foolish, but what if the incremental cost of going from 70% to 80% means pushing taxes so high that it destroys the tax base? We all want to see every child receive that chance so we keep doing more and more and more, after all - its for the children - and who can argue with that?

The same thing applies to medical care. No one wants to see people not get treatments and medicines they need, but what if the cost of making it available to everyone means taxing the economy into shambles?

Perhaps the lesson we should be learning is that, while we may want to see all things for all people, it is economically impossible in the long run - it requires massive borrowing to do it. I know there are already objections forming because of the wealth and money in the country. I'm not saying there isn't money available, but what if the policies that are required to get that money kill the goose that lays the golden eggs.

All tax policies have affects on the people being taxed and, importantly, the people receiving the benefits. There is constant pressure to increase the number of net benefit receivers and decrease the number of net tax payers and, as the number of net receivers increases, it puts ever more pressure on the remaining net payers.

For example, if you could stop working today and receive the same net benefits as working, would you continue to work? People aren't dumb. My dad figured out his retirement income would be the same as his after tax working income, so he retired. Why keep working? Just to pay taxes? At the same time, if your net after tax benefit at $200,000 of gross income is the same as it would be at $100,000 why do the extra $100,000 of work?

I have known the effects of these policies for years on the freedom of the citizens but maybe it runs deeper than that. If someone had pushed me on this two years ago I would have argued that while "soft" Socialism wasn't good for freedom, it was possible. We had almost all of Europe to use as an example. But the current economic crisis is global and certainly includes Europe. Perhaps those policies just won't work, in the long run, under any form of government...

Bah, I'm rambling...and a little incoherent, to boot...

Hey, Mr. President...

Another one worth a view...

http://www.cnbc.com/id/15840232?video=1039849853

Ho-ly Crap...

Land of Confusion

The Disturbed version, because Genesis isn't pissed-off enough

I must have dreamed a thousand dreams
Been haunted by a million screams
But I can hear the marching feet
They're moving into the street

Now, did you read the news today?
They say the danger has gone away
But I can see the fire's still alight
They're burning into the night

There's too many men, too many people
Making too many problems
And there's not much love to go around
Can't you see this is a land of confusion?

This is the world we live in
And these are the hands we're given
Use them and let's start trying
To make it a place worth living in

Oh, superman, where are you now?
When everything's gone wrong somehow?
The men of steel, these men of power
Are losing control by the hour

This is the time, this is the place
So we look for the future
But there's not much love to go around
Tell me why this is a land of confusion

This is the world we live in
And these are the hands we're given
Use them and let's start trying
To make it a place worth living in

I remember long ago
When the sun was shining
And all the stars were bright all through the night
In the wake of this madness, as I held you tight
So long ago

I won't be coming home tonight
My generation will put it right
We're not just making promises
That we know we'll never keep

There's too many men, too many people
Making too many problems
And there's not much love to go round
Can't you see this is a land of confusion?

Now, this is the world we live in
And these are the hands we're given
Use them and let's start trying
To make it a place worth fighting for

This is the world we live in
And these are the names we're given
Stand up and let's start showing
Just where our lives are going to

Random Thoughts...

Einstein is given credit for the following observation: "Two things are infinite: the universe and human stupidity; and I'm not sure about the universe." I have no idea if he actually said it, but, given what I see and read these days one thing is absolutely clear - whoever said it was right on the money...

Perhaps all of this is inevitable. Humans seem to want some kind of government. As soon as government comes into being it begins amassing power and never stops. Eventually, the power of the government begins to crush the people. It may take centuries, but, eventually, the people revolt and overthrow the tyrannical government - only to replace it with another one and the process begins anew.

At what point is being a hard-working, tax-paying, law-abiding citizen nothing more than letting the bastards abuse us? At what point do we realize that we are the only ones still playing by the rules?

It really sucks to realize we've failed. Not just as a country, but we've failed the entire world. What I've come to realize is that what the Founders gave us was not the miracle of the republican form of government (the type, not the party) and it certainly wasn't democracy. For a long time I thought what made America great was that we were a republic, with checks and balances, and segregated authority. I was wrong. What made America great was that we had a system of government founded upon Natural Rights with the only purpose of government to secure those right. A democracy founded on any other principles is nothing more than the tyranny of the majority and the primary reason why our misguided attempts to bring American Democracy to the Middle East have failed so miserably. Majority rule without the recognition and protection of Natural Rights does nothing but give legitimacy to the will of the majority as they destroy the minorities. We were the hope of the world, now we are the beggar - PLEASE loan us more money.

I have pretty much lost all interest in professional sports, with a small exception for golf. There is just too much cheating for my tastes. And, I'm probably fooling myself with golf. I think there are about as many honest professional athletes as honest politicians.

I think I have too much work to do to spend too much time throwing out random thoughts.

Bloggin...while I'm still allowed.

I made mention a few weeks - maybe even days - ago that the Democrats are going full-speed ahead with bringing back the "Fairness Doctrine" to regulate what is said on radio and television - to limit free speech in direct violation of the First Amendment. I also said that it wouldn't be long until they made a move to regulate speech on the Internet. I wish I could say I'm right so often because I'm brilliant, but that would be a lie. I'm right so often because the a-holes in Washington are so easy to predict.

Henry Waxman, a Democrat from California and member of the House Energy and Commerce Committee, made the following statement yesterday:

"The FCC and state and local governments also have oversight over the Internet lines and the cable and telecom companies that operate them. We want to get alternative views on radio and TV, but we also want to makes sure those alternative views are read, heard and seen online, which is becoming increasingly video and audio driven. Thanks to the stimulus package, we've established that broadband networks -- the Internet -- are critical, national infrastructure. We think that gives us an opening to look at what runs over that critical infrastructure." (emphasis mine)

How about another prediction?

When this stupid and ill-advised "Stimulus" plan and its bastard bretheren, the "Bailouts," fail to deliver what is promised and even more drastic measures are being instituted, the Imperial Federal Government will make it a crime to publicly disagree with them or point out their stupidity. We will be suffering from a "crisis of confidence" and we will have "nothing to fear but fear itself" and anyone that undermines our collective confidence in the system will be a traitor to his country and guilty of sedition.

Crazy? Perhaps. But, hey, we've done it before.

The Sedition Act of 1798
http://www.constitution.org/rf/sedition_1798.htm

The Sedition Act of 1918
http://www.history.com/this-day-in-history.do?action=Article&id=562

The Soviets developed the Gulag for just such traitors.

Left, Right, Left, Right - as we march into oblivion

I came across two opinion pieces during my morning reading that I wanted to share.

First, to those on the Right that still hold onto the belief that the Republicans can save us, it is time to pull your head out of the sand. Anyone that wants to go back and read my blog posts over the last couple of years can see this process occurring in my head, the slow realization that I've been had. Hey, I know how hard it is to let go of something you believed in so strongly, but you must come to terms with it. The people you trusted and believed in lied to you and they've been doing it for years. I was wrong. Big time. I can't undo the past, but I can face the future with open eyes.

I've come to the conclusion that everyone in positions of power and influnce know that the game is up and all they are doing now is looting the coffers and vying for positions of power in the "new" government.

http://www.lewrockwell.com/grigg/grigg-w79.html

Second, even though I have "seen the light" when it comes to the Republican party, it was not a miracle that provided me with some sort of new understanding of exactly how a government should operate and what I want out of political leaders. I've spent the last two years trying to find the answer to those questions and I have made some significant progress, but it is difficult when you feel you can't trust anyone.

In the mean time, the thing I have been saying might happen, has happened and the pace at which we are marching into oblivion has quickened. So, what to do? As much as this country likes to engage in "party" politics, when it can find the energy to tear itself away from American Idol or football or whatever it is we do rather than pay attention to Washington, everyone is going to get slapped in the face with reality very soon. Perhaps you will take stock of the situation and come to a different conclusion that the one I have reached. Be that as it may, I think this guy has an interesting take and some good advice.

http://www.lewrockwell.com/shaffer/shaffer188.html

Goldman Sachs...

Apparently, it runs FAR deeper than I ever dreamed possible. And this is over a year old. I wonder how far it reaches now.

http://www.economicpolicyjournal.com/2007/10/does-goldman-sachs-run-world.html

Uh, oh...

In the process of doing a little statistical digging I came across some information I felt I needed to share. President Obama spent much of his campaign talking about cutting taxes on the middle class and making the top 5% pay more of "their fair share." This is tried-and-true political rhetoric and I have made mention of it before. Even now, in the midst of the greatest financial collapse in eighty years it continues. I have, here and in other places, been trying to explain the dangers of the bailout. But, here is some concrete numbers that provide some scale of the problem:

In 2006, the last year for which data is available - and prior to the bailouts and stimulus - the total income (yes total income, not total taxes) of the top 9% (there is a natural break in the data at that point - it is tax returns with an AGI of $200,000+) of tax returns filed plus the total taxes paid by the bottom 90% of taxpayers is still less than total federal expenditures. Let that roll around in your head for a moment. Even taxing the top 9% at an effective tax rate of 100% still isn't enough. [Yes, there are other taxes, but the individual income taxes are by far the largest source of "revenue"]

This data is from before the bailouts, the stimulus and all the other Obama plans.*

Then, just yesterday, I came across some more jaw-dropping information. The federal government prepares its financial statements on the "Cash Basis." Generally, items do not appear on the financial statements until a cash transaction has occurred. Thus, debts and liabilities do not appear on the statements until an actual transaction has occurred, for example, bonds are issued. If you watch the news or read the paper the debt figure given, $5 trillion or $8 trillion or whatever it is, generally corresponds to the actual debt outstanding. This is important information but it doesn't tell the whole story for it doesn't include future obligations for which a cash transaction is yet to occur. All publicly traded companies prepare their financial statements using GAAP - Generally Accepted Accounting Principles. GAAP calls for all current and future obligations to be listed.

I have found two different groups that have determined the government debt on the GAAP basis and its a little, tiny bit higher:

$55 - $64 trillion, depending on the source. Sixty trillion dollars. Or roughly the equivalent to the GDP of the ENTIRE WORLD.

*I realize that my personal experience does not provide a random sample from which to extrapolate general claims, but my personal experience, combined with reading hundreds of posts on the Internet and hearing hundreds of interviews with people on television leads me to the conclusion that the vast majority of people in this country believe the top 10% (or 5% or 1%, it really doesn’t matter) do not pay “their fair share” (whatever that means) and if they did all our problems would be solved. In one form or another, and to greater and lesser degrees, this is the Democrat position. In addition, while the Democrats may want to cut or reduce given programs (defense spending, for example), cutting total government expenditures is not an option. For the last year in which data is available, the total combined adjusted gross income for ALL taxpayers was about $5.5 trillion. We are quickly approaching the point where it is going to require such a huge percent of all income to cover our obligations that it will begin eroding the economy. Shifting around the tax burden or even shifting around who makes the money will not solve this problem.

The Republicans, on the other hand, continue to push the ‘trickle down’ idea of tax cuts - that cutting taxes on the highest income earners and allowing them to invest that money will lead to higher total tax revenues because of the growth of the economy and middle class incomes. Empirically, there is some truth to that statement, but it assumes that government expenditures will remain constant or decrease over time and that inflation will remain very low or nonexistent, among other things – none of which exist in the real world. They, too, want to cut or eliminate certain programs (welfare programs, for instance), but cutting total expenditures is not an option. The connection to the 10% data here is actually more about what it implies about the bottom 90% - given that expenditures are not likely to decrease, the Republican plan to grow total revenues by ‘trickling down’ is ridiculous. The Republican deceit is, to me, more insidious because it is so much harder to detect. The ‘bracket creep’ of climbing incomes pushing people into higher and higher tax brackets, combined with the horrific effects of inflation, makes for a giant wealth transfer from the people (all of them) to the government and it punishes the poor and lower income people the most.

The bottom line is that the entire situation was unsustainable BEFORE the bailouts and the "stimulus" and neither party has any intention of doing what it will take to fix it. Now, we've just made it horribly worse. But politicians aren't stupid. Most of the effects are going to be through inflation and most people will never realize what is really happening. The people and the government will just blame "greedy" businesses for raising prices. Keep your eyes open - I'm willing to wager that we see some form of price controls, in an effort to stop "greedy" businesses from raising prices, before Obama leaves office.

Pretty sure this was in the Stimulus as well...

And so it continues...

Stimulus?

Okay, for just a few minutes I am going to stop using my brain and "believe" that the government must save us with some form of "stimulus" package. Okay, now we need some government spending to 'prime the pump' and 'jump start the economy.' Wooohoooo, lets start printing and borrowing money! We can start with some roads or some power plants or a giant bureacracy to monitor and determine all of our medical treatments or...waaaait...what?


As part of this little sweetheart deal that is going to save the economy, turn lead into gold, water into wine, and bring peace to the middle east, there are some (more) asinine grow-government-power, destroy individual freedom provisions that clearly have nothing to do with stimulating the economy.


Many thanks to former New York Lieutenant Governor Betsy McCaughey for bringing this to our attention in her column at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLzfDxfbwhzs


The numbers in parentheses indicate page numbers in the bill.


"The bill’s health rules will affect 'every individual in the United States' (445, 454, 479). Your medical treatments will be tracked electronically by a federal system. Having electronic medical records at your fingertips, easily transferred to a hospital, is beneficial. It will help avoid duplicate tests and errors. But the bill goes further. One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and 'learn to operate less like solo practitioners.'"


I'm going to pause for just a minute while you let that little piece of good news bounce around your head - the government is going to decide what medical treatments are appropriate and cost effective. Oh, this is going to be good. That just fills me with confidence. The largest group of criminals and incompetents on the planet will now be in charge of my medical treatments. Maybe my doctor will just ignore them...


"Hospitals and doctors that are not 'meaningful users' of the new system will face penalties. 'Meaningful user' isn’t defined in the bill. That will be left to the HHS secretary, who will be empowered to impose 'more stringent measures of meaningful use over time' (511, 518, 540-541)."


Or not. If the doctors and hospitals think they know medicine better than some bureaucrat or politician and don't play along the government will show up with guns. I can hear it now, "The system is voluntary." Yeah, just like the IRS. Cooommmmpletely voluntary. It just keeps on getting better.


"In his book, Daschle proposed an appointed body with vast powers to make the “tough” decisions elected politicians won’t make. The stimulus bill does that, and calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept 'hopeless diagnoses' and 'forgo experimental treatments,' and he chastises Americans for expecting too much from the health-care system."


Well, that makes perfect sense because researchers certainly know the results of the research BEFORE they conduct it. The last thing in the world that we need is some new medicine or technology to be developed that saves or improves the quality of lives. Good grief. What an idiot. Thank God the people that developed vaccines, anti-biodics, new surgery techniques and procedures, and the thousands of other advances in medicine over the years were smarter than this. If humans had always operated under this logic we would still have a life expectancy of about 40. But medical care would be cheaper! There is a certain level of stupidity that is almost breath-taking and this is a perfect example. Tom Daschle spent 8 years in the House and another 18 in the Senate and was, for a while, the Senate Majority Leader, and was on the verge of being appointed to Obama's cabinet. (As hard as this is to believe, he lied on his income tax returns - BIG TIME - and had to withdraw from nomination. Who would believe that we have a politician that passed tax law but felt it didn't apply to him? I digress...) This man, with the intellect of a lima bean, was in a position of power in Washington for 26 years.


"The Federal Council is modeled after a U.K. board discussed in Daschle’s book. This board approves or rejects treatments using a formula that divides the cost of the treatment by the number of years the patient is likely to benefit. Treatments for younger patients are more often approved than treatments for diseases that affect the elderly, such as osteoporosis."

So, let me see if I've got this straight - the healthier you are the quicker and more likely you are to receive treatment? That should certainly cut down on costs. "You, sir, with the pneumonia, get in the back of the line. We will get to you when we can. You two, with the splinter and the sunburn, come with me." This has all the makings of a Monty Python skit...

Behold the destructive power of politicians with limited intellectual capacity, the desire for power, and a willingness to spend other people's money on good intentions.

(emphasis mine)

Our moral desire to see all people receive quality medical care cannot and will not trump the laws of economics. Not now, not tomorrow, not ever. Medical care of the kind that we would call "high quality" is always going to be a limited resource - a resource that must, like all scarce resources, be allocated in some manner. In the end, that allocation can be done by the market, through prices, or by giving someone or some group the authority to dictate to everyone else. As Lord Acton pointed out long ago, power corrupts and absolute power corrupts absolutely. The rich and powerful will get better care under both systems.

I have no problem saying it - I flippin' told you...

House Financial Services Committee Chairman, and #1 supporter and defender of Fannie Mae and Freddie Mac, "said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies. The provision will be part of a broader package that would likely give the Federal Reserve the authority to monitor systemic risk in the economy and to shut down financial institutions that face too much exposure..."

Oh, and, "Treasury Secretary Timothy Geithner said last month that he might try to extend to all U.S. companies a restriction that prohibits bailout banks from taking a tax deduction of more than $500,000 in pay for each executive."

So now, in addition to dictating salaries for potentially EVERY COMPANY IN AMERICA we have Congress willing to discuss giving the Federal Reserve the authority to shut down a company it deems is taking on too much exposure.

We aren't talking about some nuts on the fringes of government. This is the Chairman of the House Financial Services Committee and the Treasury Secretary.

I told you. Government NEVER stops seeking power. Ever. And they are just warming up.

Perspective...

While I certainly do not agree with everything in the articles, the fact that these two stories were on the front page of CNN is a strong indicator of just how prevalent these ideas have become. CNN, by no stretch of the imagination, can be tabbed as 'right-leaning' or libertarian.

http://www.cnn.com/2009/POLITICS/02/04/voter.anger/index.html

http://www.cnn.com/2009/POLITICS/02/05/miron.libertarian.stimulus/index.html

'Cause when Foxnews says it, well, its like this here, see...

http://www.youtube.com/watch?v=uuwgHNtyD54

BTW - just for perspective:

The 'crimulus' package now being debated in Washington is coming in at around $900 billion. How much money is that?
If on the day Jesus was born you started spending $1,000,000 a day and never stopped, as of this morning you still wouldn't have spent $900 billion.

If you started spending $1,000,000 a day, every day, beginning on the day the Great Pyramid in Giza was completed you still wouldn't have matched the two stimulus packages combined.

Our generation is currently on the hook for about $50 trillion dollars. At $1,000,000 a day, it would take 137,000 years to spend that much money. According to wikipedia, anatomically modern humans appear in the fossil records about 130,000 years ago.

Clearly, the folks in Washington have it under control and know exactly what they are doing. Clearly.

Good P.R., Bad Unforeseen Consequences

So, it appears that the Great, Enlightened, Infallible, All-Knowing Rulers in Washington have decided they know how to handle executive pay better than the companies themselves and are instituting wage controls on the companies that receive bailout money.

So what, they should be held accountable, right?

Well, think of it like this - what would happen if laws were passed that set the limit on what baseball teams in the American League could pay their players at $500,000. How long do you think it would take for the really great, or even really good, players in the American League to start making their way to the National League? How much time would pass before the National League, which has no pay limit, attracts all the talent leaving only marginal players in the American League?

If you were a top-notch executive and your income just got capped by the idiots in Washington, would you stay at that job when someone from another firm called and offered you substantially more?

One of two things will happen as a result of this, either a) the companies will find a way to pay the executives (and take the risk that they will all be labeled as greedy pigs) or b) the better executives will leave and take better paying jobs without government interference. Brain drain.

Although...not too long ago Congress passed that little set of laws that allows the government to confiscate the property of people leaving the country. So, if you are a top-notch executive and you've had enough of the idiots in Washington and you get a huge offer to come run a bank or investment house in Dubai or Hong Kong or Singapore then you've got a tough decision. If you take the job and become an expatriate the government is going to seize a big chunk of your assets.

God, I'm so thankful we live in a free country. Bwahahahahahahahahahahahaha!

And, as if giving the best executives every incentive in the world to leave the companies that may need them the most isn't enough, there is the added problem of what this means to New York and New York City. It seems that the state and the city reap HUGE amounts of income taxes from executive pay and executive bonuses and Washington's brilliant idea is taking millions in revenue away from local governments. So much for the notion that rich people don't pay taxes! Politically, I'm curious to see how the Democrats, who love to foster that very idea in the voting public, try to get around this. If rich people don't pay taxes how can the state and city governments be going broke without the revenue those people generate? As interesting as watching politicians make asses out of themselves can be, it bothers me because now New York state and New York City will both turn to Washington with their hands out asking for money.

Good intentions will not and cannot change the 'laws' of economics. Apparently, we are going to learn this the hard way.

Just jump. You can fly. I promise. Trust me, I'm from the government. We know what's best.

A Leap of Faith

A thought occurred to me on my way in to work this morning that I think will explain what I have come to understand about Natural Law.

Natural Law is a property of a volitionally conscious being and, just like the other laws of nature, these laws do not change over time (I'm ignoring the fact that there is some indication that those laws did change in the first few millionths of a second after the big bang. As far as we have been able to determine, those laws have remained constant for the 15 billion or so years since). The law of gravity is, I think, a very good analogy.

Gravity had been around for a LONG time before Galileo (and others) realized it was some sort of predictable, natural phenomenon and began working to understand it. Decades passed and others took up his work. Then Newton came along and provided a quantum leap in human understanding of gravity. Hundreds of years came and went with no marked improvement upon Newton’s laws, and then Einstein came along and provided another giant leap forward. None of these men created gravity they have each simply come to provide a better understanding of it and how it works. Gravity does not evolve, we just find better and more complete mathematical “laws” to explain how it works.

The natural law of a volitionally conscious species does not change over time any more than gravity. We may gain a greater understanding of it, but we can't create it or destroy it. Just as with gravity, we can choose to ignore it and we can use other laws to attempt to circumvent it. For example, using the principles of lift, we can build an airplane to temporarily defy gravity - but the law is still there and it constantly ‘acts’ to prevent being ignored or circumvented. Eventually, that plane will come down.

We can conceive of a situation where one person (or a group of people) convinces another that he, in fact, can defy gravity. All he must do is believe it and jump from the cliff. Of course, we know the result - no matter how much you may believe you can defy gravity, you will plummet to the ground.

The same situation occurs with Natural Rights. We can be convinced they aren't there, we can be convinced to not exercise those rights, we can be forced with penalty of death or imprisonment or eternal damnation to ignore them, but the law never goes away. Eventually, the steps taken to defy natural law will lose the energy required to sustain the defiance.

To continue an analogy from my previous post, government – all forms of government – is effectively a giant black hole that sucks in everything around it. It consumes everything within its reach and the more it consumes the more powerful it becomes. The analogy continues here for, just as the laws of the universe break down in a black hole, the Natural Law of Man breaks down in government. Our government was originally so structurally sound that it built a country so strong it has taken well over two hundred years for the black hole destruction of government to destroy it, but even as brilliant as the Founders were, they could not design a government that does not exert this influence.

(I believe this ‘black hole’ theory of government is a corollary of Natural Law. This effect of government is what happens when a person or group of people become artificially isolated from the effects of Natural Law by the shield of a government. In short, that person or group of people are left free to act as they wish without fear of consequence. This cannot be avoided, even in a republic or a democracy for, even if the people change, the offices remain the same and are never subject to the consequences of the actions of the office holder.)

Just as the “punishment” of pain increases as the leap of faith in an attempt to defy gravity gets higher, the more convinced a society becomes that it can ignore Natural Law, the more painful the consequences. The Communists, through coercion, intimidation, and propaganda, convinced large numbers of people that they could fly and about 100 million died as a result. The Nazis – the democratically elected Nazis, I might add – convinced large numbers of people that they could fly (those they couldn’t convince received treatment similar to that used by the Communists) with the result being that about 20 million people died.

As I sit here this morning writing these words, forty miles to my southwest a small group of people are working very hard to defy that law, to convince us that we can fly. We have, almost from the beginning been marching up an enourmous cliff. We have climbed higher than any civilization in history. No one has ever taken a leap of faith from this height. Unfortunately (or fortunately depending upon your perspective) we are all in this together. If we jump, we jump as one – the government will make sure of it. The people and the government may offer me no choice but to jump off the cliff, but I will never, ever, believe I can fly. And, I packed a parachute.

High Hopes, High Expectations, Little Time

I have spent pretty much every free minute of the last six months reading a small mountain of books, papers, pamphlets, monographs and encyclopedia entries on such topics as American history, political history, philosophy, and economics, to name a few. I've even spent my daily commute and my time on the treadmill listening to podcasts of speeches and lectures on these topics. I have always loved history so I enjoy the process, but there has been a method to this madness. I've been accumulating and organizing this knowledge with the idea that perhaps I could put together a series of essays, possibly a small book, that would present this small library of information in a manner that is less threatening and easier to grasp than it is in it's original form.

As a nation, we are ignorant but not dumb. We are a television society - we like our information in short, easy-to-grasp bursts. We don't want to have to dig and analyze and spend hours in study. The story of Romeo and Juliet, for example, is not terribly complicated - elementary school children can understand the concepts - but it is altogether different if we attempt to read it as it was written. It was my goal to help bring the thoughts and ideas of the Founding Fathers, the men who inspired them, and their ideological forebears to the masses. A bold initiative to be sure, and perhaps a little naive.

I firmly believe this is a project that needs to be done and done quickly. Our country is fast approaching what I believe is going to be a pivotal moment in our history. We are on the verge of completely abandoning the very principles upon which this nation was founded - principles so great and so radical that they were beyond what we were able to achieve in our founding. In fact, history may show that we have already passed the point of no return. As much as the people of this country need this information, I have come to the conclusion that I do not have the time it would require to do it and do it well. It is still a dream of mine and one I may work on for years to come, but we need it NOW. So, what to do? It is time for every citizen of this country to turn off the television, to begin asking themselves some very important questions, and to begin the process of educating themselves.

The one single question that everyone must ask and answer is: Who owns me?

Do you own yourself? Does society own you or part of you? If society owns part of you, do you own part of everyone else? If you own yourself, do you have a right to any ownership of anyone else? Regardless of your answer to those questions, the answers carry implications that, I am willing to wager, go so far beyond what is expected that it will take some serious analysis to come to terms with their meaning.

Why is that particular line of questions so important?

Every form of government that has, does, or will ever exists has one thing in common - it makes assumptions about human nature. Specifically, it makes assumptions about each individual's ownership of himself. On one end of the political spectrum is the society (Society A) in which every individual is equally owned by every other individual - pure equality. On the opposite end is a society (Society B) in which every individual fully owns himself and has absolutely no claim on any other individual - pure equality. So, if both ends of the spectrum produce pure equality, why all the bother about whether one owns himself? Because the definition of equality changes as you move from one end of the spectrum to the other.

(Note: The analysis below is a highly simplified, scaled-down version that makes many assumptions and leaves out many important details. It is not meant to cover all aspects of the two ends of the spectrum, only to provide food for thought and hopefully encourage more questions.)

In Society A, every person has an equal claim on everyone else, thus, your labor and the results of your labor do not belong to you, it belongs to "everyone" and may be taken by "everyone" without giving anything in return. At the same time, you have an equal claim on the labor and results of labor of everyone else and may claim your equal share without giving anything in return. There is no private property in this society and there are no political leaders. Everyone is perfectly equal.

In Society B, every person has a claim only upon himself and the results of his own labor and no claim upon the body or labor of anyone else. If someone wants your labor or the results of your labor he must offer you something that will entice you to give it. If you should decide you want the labor or the results of labor of someone else, you must offer him something that will entice him to give it. There is no community property in this society, everything is privately owned. There are no political leaders because every need is privately negotiated between owner and buyer. It provides only an equality of opportunity.

Between these two theoretical societies, which have never existed at a level approaching that which we would call a 'country,' fall every form of government with which we have experience - monarchy, oligarcy, democracy, republics, Communism, Nazism, Fascism, emperors, despots, etc. Society A is the dream of Communism - a workers paradise where no one is exploited and all are equal. Society B is the dream of the Anarchro-Capitalists - an individuals paradise where everyone is free to pursue their own agenda with no interference from a government or society.

The Founding Fathers constructed a government that, while certainly not Anarchro-Capitalism, was much closer to B than A. However, almost immediately after the country was born we began a slow march towards A. The actions of Abraham Lincoln during the Civil War were a big jump towards A and, beginning in the first two decades of the twentieth century, what was a walk became a run. Under the direction of Bush, the run became a sprint, and now, under Obama, we have given up on self-propulsion and are now heading towards Society A at light-speed in the Millenium Falcon.

This is scary because, while no major geographic area, a nation if you will, has ever fully attempted to become Society B, there have, thanks to the works of Karl Marx, Frederick Engles, Vladimir Lenin, and others, been multiple attempts to become Society A - with disasterous consequences. Reasonable estimates place the number of deaths as a result of Communism at between 75 and 100 million people. It has failed so often and in such spectacular fashion it simply amazes me that so many are still drawn to it, particularly those considered "intellectuals."

I can hear the objections being mounted, that we are really becoming more Socialist (like our European bretheren) and not Communist. For the sake of brevity I am not going to provide a complete explanation. I will, however, offer this brief analysis:

The true Communist utopia cannot exist for very long because it is impractical and illogical. If everyone is completely equal, then everyone must be involved in every decision. Clearly, this is not a workable position for any group larger than a few people. Therefore, a group of decision-makers must be chosen. As soon as those decision-makers are chosen pure equality is gone as there now exists a group with authority over the others. Lenin believed he found a solution to this problem, but he was, quite obviously, wrong. Those with power always want to retain it. Always. Communism is, therefore, at best, always going to be a government of decision makers - the party - controlling the masses.

Socialism, on the other hand, usually begins its life as a form of democracy. However, as soon as it reaches a critical mass - the point in which a majority of the voting public is no longer responsible for the funding of the government - it quickly begins to devolve into a class of politicians pandering to the voting public. Minority rights still exist, but only for those which support the ruling political class. Individual rights begin to be non-existent. In the end it becomes a weak, perverted form of Communism. In fact, Lenin believed that democracy was simply the first step along the path to Communism.

The root problem with Socialism, Communism, and any attempt to become Society A is the question "Who owns me?" In a society in which a person does not own himself and the product of his labor he has no incentive to produce. We intuitively understand this, even as small children without the first political thought. A five-year-old that spends an hour constructing a sand castle will be brought to tears if his older brother destroys it in seconds. If the same process is repeated over and over again, eventually the five-year-old will stop building sand castles. Yet, the Socialists and Communists insist that those who produce continue to do so even when they are not allowed to enjoy the product of their labor. It is simply your duty to society to produce whether you want to do so or not. There will certainly be some who chose to do their work simply for the love of the job but, it should go without saying, that they will be the exception rather than the rule and people would, on the whole, be far more productive if allowed to enjoy the fruits of their labor.

There is so much more that needs to be explained. As I have made mention in previous blog posts, this is just the tiny tip of the iceberg. Even an attempt to put together a list of recommended reading is extremely difficult because there was no single source of inspiration for the Founding Fathers and an enormous amount of work has been done since then.

So, with a large grain of salt, here is my recommended reading list. I would highly recommend reading them in the order as shown. For most people, this is swimming in unfamiliar waters so I have tried to arrange the books so that they build upon each other to some degree.

*Conceived in Liberty by Murray N. Rothbard - This is the longest (and most expensive) read on the list but the simple, direct and entertaining writing makes it fly by. It is actually a collection of four volumes that outline the entire early history of this country, from early British colonies through the Revolutionary War.

*The Constitution of the United States and The Bill of Rights - The shortest read on the list. The foundation of our form of government can be read thoroughly and in its entirety in less than an hour.

*The Federalist Papers and The Anti-Federalist Papers and the Constitutional Debates (Signet Classics) - This may be the most difficult material on the list simply because the style of writing is so different compared to modern styles but containst the arguments that were presented to the people when the debates about formally adopting the Constitution were at their peak.

*Economics in One Lesson by Henry Hazlitt - One must have at least a rudimentary understanding of economics and this is a fantastic way to get it.

*The Road to Serfdom by F. A. Hayek - A masterpiece explaining the dangers of state control over the means of production.

*Socialism by Ludwig von Mises - A devastating critique of Socialism

*America's Great Depression by Murray N. Rothbard - What really caused the Great Depression and why it lasted as long as it did.

*What Has Government Done to Our Money? by Murray N. Rothbard - The title says it all. If the previous book didn't do it, this is a short read that will make you see your government in a whole new light.

*The Ethics of Liberty and For a New Liberty by Murray N. Rothbard - Two books that really belong together and lay the foundation for an entirely new form of government.

*1984 and Animal Farm by George Orwell - Two short works of fiction that were once required reading for every high school student in America. Once you read them you'll understand why an all-powerful government wouldn't want you to read them.

Finally, if you have read all of the above and are looking for a challenge:

*Atlas Shrugged by Ayn Rand - A massive work of philosophical fiction.

*Human Action by Ludwig von Mises - Mises' Magnum Opus on free market economics.

*Man, Economy and State by Murray N. Rothbard - Rothbard was a student of Mises and took the ideas presented by Mises in Human Action and elaborated, expanded and applied them to all sorts of situations.