News roundup

I haven't posted much this week, but I've been saving a number of news stories throughout the week that I found interesting. Without further ado, here they are:

Fear of Government

Reason posts excerpts from a couple of authors about this chart. One says that not everybody is afraid of the government as the general feeling seems to be; it's only Republicans. The other argues that Democrats are equally susceptible to this fear when their party is out of power. I didn't find this chart so interesting, as what it shows is fairly obvious. What it did for me though, was highlight exactly how blind (read: partisan) Democrats and Republicans are when their party is in power. If one could take a step back and see the forest for the trees, as it were, one would find that the government acts pretty much the same way no matter which party is in power. They just focus their attention slightly differently.

Flag Burning

Talk about statist. The flag deserves respect? It's an inanimate object, for crying out loud. Justice Stevens thinks that the "U.S. flag and the symbol of liberty it represents" are too important to allow it to be burned in protest. Alright, you bring back the liberty, and I won't burn the flag.

We suck... less!

Pajamas Media explains why the Republicans are going to make big gains in the midterm elections. The story's byline says it all.

Because in the Democratic land of epic, mega, ultra, apocalyptic levels of sucking, those who kinda suck are king.

TSA scanners

The TSA was in the news quite a bit this week after an airline pilot last week decided to stand up to a TSA officer and refuse a pat down after refusing to allow them to look at his naked body with their AIT scanners. The first link there is to a CNN story which talks about how the TSA is planning to institute full body pat downs across the country. The woman who wrote the article was reduced to tears after being groped, and she is a regular traveler.

The second link is to a story written by a woman who thinks that the best way to fight for our civil rights (with respect to illegal searches by the TSA) is to begin writing letters to corporations whose businesses will be hurt if people refuse to be groped and stop flying, altogether. At first, I didn't think this approach had any merit, but after seeing the TSA steel their resolve in the face of that pilot standing up to them, I think the corporations who control the government might be our only chance.

Economic destruction

I have written a little bit about inflation and hyperinflation. Well, this article says that it (hyperinflation) is already taking hold and will be in full swing by spring of next year. The author makes a pretty compelling argument. I'm of the mind that collapse of the U.S. currency and economy are a matter of when, not if, and I suspect sooner rather than later. I don't know if it's going to happen as the author suggests, but I'm also not going to argue that it's not.

What's wrong with this picture

Yesterday, I received my Social Security statement in the mail. It looks something like this. I just assume that the country will be bankrupt by the time I reach retirement age, so I don't pay much attention to these things. I did notice a sort of Frequently Asked Questions insert that came with the statement, though. I was especially intrigued and infuriated by the question in the green box in the middle of the page. It asks the hypothetical question of whether or not Social Security will still be around when I retire. It then answers the question by saying that even though the whole enterprise will be insolvent, the current estimate is that Social Security will pay 76 cents on the dollar of promised benefits. (The website is apparently out of date.)

Let's put some real numbers behind this. Let's say Mr. Smith, a 30 year old man, makes $100,000 per year, or rather, let's say that his salary over the time for which we works, averages to $100,00 per year. Let's further assume that Social Security taxes stand at 7.65%, which is where they currently stand. They tend to increase over time, but let's try to keep this simple. Finally, let's assume Mr. Smith starts working out of college, at age 22, and works to his full Social Security retirement at 67. In this example, Mr. Smith will have worked for 45 years, earned $4.5 million and paid $688,500 (with his employer's matching contribution) into the Social Security "trust fund". Assuming that the entire $4.5 million is taxable for Social Security purposes, Mr. Smith is entitled to $2,659 per month. At this rate Mr. Smith could live for almost 22 years (to age 87) before he would exhaust the money he paid into the system.

Before we get ahead of ourselves, let's also look at the case of Mr. Jones, also aged 30 years. He makes closer to the median of $50,000 per year. At retirement, Mr. Jones will have earned $2.25 million and paid $344,250 in Social Security taxes. In retirement, using the same parameters as above, Social Security estimates that it will pay him $2,015 per month. Mr. Jones could live for 14 more years (to age 81) before his money would be exhausted.

What's wrong with this picture? In spite of the common arguments that people are living longer and fewer people are paying into the system than are drawing upon it, the government should be running a huge surplus given that the average life expectancy in the U.S. is currently 78 years. This is what truly makes this a Ponzi-scheme. People aren't even living long enough to exhaust their own benefits, and Social Security is still insolvent. This is almost certainly due to inflation, and Social Security benefits with it, rising faster than wages. I touch on the inflation and benefits portion of the problem later. First, let's look at the money that is paid into the system.

Social Security trust fund

You may have heard of the so-called Social Security Trust Fund. The idea most people have is that the money that is paid into Social Security by workers and employers is socked away somewhere in a bank quietly earning interest. Instead, the money paid into Social Security is invested in U.S. government treasury bonds. The actual money is then spent by the government to pay for other things (perhaps even existing retirees). In fact, there is no trust fund. What actually exists is $2.5 trillion of debt that the government owes to itself, plus interest. The money that the fictional Mr. Smith and Mr. Jones paid into Social Security has already been spent. Their retirement money rests solely on the government's ability (or possibly even willingness to) pay its debts.

Inflation

Inflation is defined as "a rise in the general level of prices of goods and services in an economy over a period of time." Let me make a distinction, though. When corn prices rise because farmers had a bad season, that is not inflation. Instead when I say inflation, I'm referring to the existence of an excess amount of money in the economy contributing to the devaluing of all money. To demonstrate this phenomenon, though, here are a few charts:

This first chart is of the "consumer price index". The CPI refers to the price of a group of common goods bought by consumers. The dark line shows the relative price of those goods over time. The red line shows the year over year change in the price of those goods. Since the red line is almost always in positive territory, over time the darker line has to go up.

This chart is another way of conceptualizing what is shown in the CPI chart. Relative to the value of the goods that one would purchase with a dollar, the value of that dollar is falling. Stated differently, today's dollar is capable of purchasing 1/20th (or less) of a good that it was capable of purchasing one of in 1913.

This chart should drive home the point about excess money in the economy. You can see that things really went awry (in all three charts) around 1970, which coincidentally is when the U.S. finally severed all ties to a gold standard.

What does this have to do with Social Security? The federal government has two options with regard to Social Security: default or pay. I don't believe that there is the political willpower to default, which means that the government will attempt repayment (assuming the economy lasts long enough). The government can only raise money via taxes or inflation, and raising taxes is going to be politically difficult for the foreseeable future. That leaves inflation. The point of all of these charts then is to demonstrate that by creating inflation, the government will necessarily have to destroy the dollar. The worst part is that inflation begets inflation. In order to protect those on Social Security, the government raises their benefits through COLA. In order to raise their benefits, it has to print more money. By printing more money, it creates more inflation. Creating inflation is a very dangerous game, though. It can very quickly lead to hyperinflation, which some argue is not far away; and even if hyperinflation never occurs, the inflation tax is still levied on everyone.

What's wrong with this picture, indeed

I mentioned earlier that I was infuriated by the question in the insert with my Social Security statement. What infuriated me so much is that I was enrolled into the Social Security program without my consent and given no way in which to opt out of it. Assume that I got over that, though. Great, so I pay into a system that promises to pay me X amount at retirement (ignoring for a second whether or not I get the full benefit of the amount that I paid in). Suddenly, I get word that the rules have changed. I continue to pay in the same amount, but now I receive reduced benefits. If anyone but the government did this, it would be illegal. I believe the technical term is fraud.

Here's my favorite part, though. John Boehner has suggested that those with "substantial non-Social Security income" when retired should receive reduced or no benefits at all. From each according to his ability (via the progressive tax regime), to each according to his need (no benefits for those who don't need it). Who's the Socialist now, Mr. Boehner? Who would put their money into a system that guarantees a 100% loss before the first dollar is even invested? Nobody, that is, except by the coercion of law.

My solution

Here's is what I propose: If the government will release me from the Social Security system, now, I will forgive the money I've already paid into it and promise not to attempt to draw on it later. Sound fair?

Just... hold on a second

I came across a number of weird/wacky news stories this morning, and since I didn't really feel like writing very much, I was going to just post a few links with some commentary to accompany them. Then a friend of mine posted a link to an opinion piece entitled "Just Stop" over on the Mesa Democratic Club's website. Well, I loves me some politics, so I went over to read it. The article started out well enough (read: I agreed with it), but then it lost me. Since this friend of mine and I have agreed not to discuss politics over our social network of choice, I decided to write this post.

The article starts out pointing out that Sarah Palin is not a "political outsider", that the Tea Party is not an independent group, and that John McCain no longer has any discernible political positions outside of whatever it takes to get elected. These are all excellent points with which I could not agree more. It's at this point that our respective positions diverge.

Stop pretending that the deficit we’re all facing is the fault of President Obama and the Democratic Congress. During the Bush administration, we went from a surplus to a massive deficit, largely thanks to two wars that were never (until Obama) added to the federal budget—wars, in other words, fought entirely on credit. We compounded the problem with tax cuts that largely benefited the wealthy, and a huge Medicare increase, and all those were also on credit. When the economy tanked in fall 2008, Bush quickly pushed through the TARP bailout, adding to the deficit (but pulling the economy back from the cliff).

President Obama is not entirely responsible for the deficit. He is quickly adding to it, though. Yes, Obama added the wars to the federal budget, but that does not change the fact that they (along with the much of the rest of the budget) are still paid for on credit. And while Bush may have pulled the economy back from the cliff, he did not change it's direction; it is still headed that way under Obama.

Stop pretending that the near-ruinous economic crash that we’re still reeling from was Obama’s fault, too. The root causes stretch back decades, to a continued process of deregulating financial institutions, allowing them ever more leeway to prey on the vulnerable, to sell mortgages to people who couldn’t afford them, and to manipulate financial products that were ultimately guaranteed to fall apart.

And stop pretending that Obama and the current Congress should have been able to fix the two above problems in 18 months, when it took eight years to create the first one and literally decades of foxes guarding financial henhouses to create the second.

Again, the author is correct that the economic crash was not caused by Obama, and that it is unrealistic to think that the government would be able to fix it (I would argue, in any amount of time). The author implicitly places the blame on the private sector, however, when he talks about mortgages and financial products. Those mortgages that people couldn't afford were promoted and backed by the government in the form of Fannie and Freddie and FHA and VA loans. Obama has continued this process with the homebuyer tax credit and the HAFA and HAMP programs. For non-mortgage related financial instruments, look no further than the Federal Reserve serving as the "lender of last resort". Even though the Fed is nominally a private entity, it's ludicrous to think that they really are, and when banks get into trouble, the Fed bails them out via the power of "printing" money, a power that Congress abdicated to it long ago.

Stop pretending that saying “No” is the same as governing. We pay our legislators good money to go to Washington and make difficult decisions that keep the country moving. By voting “No” on every bill, by refusing to negotiate in good faith, by deciding that short-term political advantage was more important than the everyday lives of Americans, the Republicans set back our recovery, made needed reforms fall short, and put our lives and our economy at unnecessary risk.

I hate the idea that governing means "doing something". Saying "no" is a legitimate act, one in which all politicians engage because nobody can agree on the exact role of government. In this way, saying "no" is doing something. That is not to say that Republicans are not being obstructionist for political gains; however, the author would be better advised to point out Republican hypocrisy on things like expanding Medicare under Bush but railing against the PPACA, now.

Stop pretending that the economy is magic. You can’t continue to give millionaires and billionaires huge tax cuts, make tiny, cosmetic cuts at the margins of things, and still reduce the deficit. You can’t create jobs without spending money. Tax cuts for millionaires and up are not stimulative because those people don’t spend the money from the cut—it’s not like you’re giving them a wad of cash and sending them to the store. When you put an unemployed person to work or give a tax cut to a poor or middle class family, that’s exactly what it’s like—they go buy things they need and those dollars flow through the economy, creating jobs and wealth everywhere they go.

I'm not sure anyone is pretending that the economy is magic; however it is far more complex than most imagine. Not only that, but the government via regulation or the Fed often arbitrarily moves the market in ways that could only be predicted by magic. The author is correct that tax cuts (to anyone) won't balance the budget. He is mistaken, though, if he thinks that tax increases will do the job, either. Federal spending is out of control, and the only way to save this country's economy, over the long term, is to start cutting Social Security, Medicare, the military, everything.

And stop talking about stimulus. It's too bad that people believe that Keynesian economics preaches deficit spending. Keynes, mistaken as I believe his theories to be, spoke of stimulative spending out of savings. Yes, it takes money to create jobs, but it also takes money to keep those jobs. To think that the government (or anyone) can throw a one-time bucket of cash at the economy to "unstick" it is ridiculous. It will only lead to the government having to throw ever increasing amounts of money at the economy. It's amazing to me that most people agree that easy credit was the proximate cause of the economic conditions in which we all now live and at the same time believe that if the government just borrows more from China that that will fix the problem. We will end up back in this very situation again, only it will be much, much worse.

The things that Pelosi and Reid have supported these past 18 months have been programs that will help America move into the 21st century. Health care reform, in spite of great efforts at pretending, is not a “government takeover” of health care—it institutionalizes, in law, the presence of the health insurance industry, and gives that industry millions of new clients.

Whoa! Stop right there! Did you catch that? The government, under Democratic control, via the coercion of law, just delivered millions of customers to the health insurance industry. It's not just the Republicans that are in bed with big business.

It will, in the long run, reduce the deficit and create a healthier nation, by allowing more people to get preventive care and long-term care and keeping the sick and impoverished from turning to emergency rooms when there’s a crisis.

This entire problem was created by the government in the first place, though.

Stop pretending that “lifelong politician” is some kind of curse. Most people who hold public office do so because they genuinely want to help people, they genuinely want to make government responsive to the needs of their fellow Americans, and they’re willing to put themselves on the line every few years to get the chance to do so.

Here's a thought experiment: If "most" people who hold public office genuinely want to help people and make government better, why hasn't it happened?

Stop pretending that “big government” is the problem. When’s the last time you were seriously inconvenienced or injured by something that big government did?

Gay rights, TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, indefinite detentions, inflation, etc. Don't tell me that (some of) these don't affect me. When one person's rights are trampled, everybody's are, and that's just at the federal level. Not only that, but all of this ignores the fact that every year I have to fill out a number of forms figuring out, on the government's behalf, how much money they want from me, and then send them that amount under the threat of force if I either figure wrong or don't send the right amount.

Stop pretending that anybody’s going to come and take your guns away. [...] There’s no truth to it, there’s never been any truth to it, and if you actually believe it, you just might be so simple-minded that you shouldn’t be trusted with a firearm.

They may not be trying to take them away, per se, but the laws (at least in CA) are clearly not conducive to gun purchases or ownership. One must wait 10 days to purchase any gun, even if one already owns one or one hundred of them. AB962, once in effect, will make the mail-ordering of handgun ammunition illegal and require fingerprints be taken of law-abiding citizens when they do purchase ammunition. It is illegal to actually carry one's gun in a manner that would actually allow it to be used effectively in self-defense, and many counties around the state deny CCW applications to all but the wealthy and connected.

Perhaps the author can explain to me why the BATFE and the state of CA keep records of gun sales if not to retain the possibility of rounding up guns in the future. I realize that that has a bit of a "tin foil hat" sound to it, but it is a legitimate question.

The author goes off the rails at this point with a lot of name calling. He tries to bring it home at the end, though.

Finally, stop pretending that voting doesn’t matter, and don’t let the 2010 Class of Crazy take office and convince you otherwise.

A variation on the previous thought experiment I proposed is apropos here: If voting mattered, why is government the way that it is? Perhaps it's because we've gotten the very government for which we voted. Voting doesn't matter and arguably does more harm than good. A voter is statistically more likely to be killed going to or coming from his/her polling place than to cast the deciding vote in an election. I refer the reader my previous posts on voting and the nature of government.

Free speech, alive and well

I noticed the 'crawl' along the bottom of the TV screen this morning mention that NPR had fired Juan Williams over some comments that he had made. When I was able to get to a computer, I found a link to this story in my RSS reader. I thought it was fitting that the story came from Fox News since Mr. Williams is a regular contributor to Fox and his fateful comments were made on a Fox program. The linked story cites this quote as the reason for the firing:

I mean, look, Bill, I'm not a bigot. You know the kind of books I've written about the civil rights movement in this country. But when I get on a plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they're identifying themselves first and foremost as Muslims, I get worried. I get nervous.

Mr. Williams's first mistake was prefacing his comments with "I'm not a bigot." Whenever someone prefaces a comment with, "I'm not X", at best, it means that he/she fears that his/her comments will be interpreted so as to paint him/her as X and, at worst, that that person really is X. It's sort of the same way that the phrase "with all due respect" is interpreted as "I have no respect for you".

I have to admit, though, that I don't really see what the uproar about this particular comment is all about. The September 11th attacks were carried out by Al-Qaeda, a militant Islamic group. The Christmas Day bomber and the Times Square bomber both cited their religion as reasons for their actions. The U.S. continues to agitate Muslims around the world with its continued presence in Iraq and the war in Afghanistan in addition to indefinitely detaining and torturing people without charges when it is not just killing them both on and off the battlefield. In light of those actions, it seems reasonable to expect further violence to be attempted, if not perpetrated, against the U.S. by the very recipients of this U.S.-style democracy. I'm not sure that being nervous about flying with a Muslim is entirely irrational.

Glenn Greenwald takes up the case against Juan Williams this morning. In his article, some more context is provided for Mr. Williams's comments. Immediately prior to the earlier quote, Mr. Williams said this:

Well, actually, I hate to say this to you because I don't want to get your ego going. But I think you're right. I think, look, political correctness can lead to some kind of paralysis where you don't address reality.

This was said in response to Bill O'Reilly's "Talking Points Memo" which had aired just previous to Mr. Williams's comments in which Mr. O'Reilly had said:

The world is on edge because millions of Muslims accept violence and enable jihad. In order to correct the economy and the terrorist threat, those [referring also to the fact that private businesses are not hiring] things must be understood and stated.

These two statements properly deserve all of the outrage, in my opinion. Millions of Muslims do not accept violence and enable jihad. The U.S. government, itself, says that there are probably less than 100 Al-Qaeda members fighting in Afghanistan. It admits that many are probably hiding in Pakistan, but even being generous would probably place the total number under 1,000. Muslims make up almost a quarter of the world's population. If they all really supported violence and jihad, even if merely millions of them supported it, they would have destroyed the U.S., whose military only numbers about 1.4 million, quite decisively a long time ago. In fact, most (the percentage of "radical" Muslims is almost infinitesimal, but still prevents one from saying "all") Muslims are peaceful, preach peace, and abhor the violence perpetrated in their religion's name.

I'm not really sure how I feel about Juan Williams being fired by NPR. To be honest, I don't care enough to try and decide. He may have been a good reporter, but I never cared too much for his opinion pieces on various Fox shows. What is interesting to me is the outcry from the political right that his free speech rights are being violated because NPR gets a significant portion of its funding from the federal government. (Funny, that in this instance, they are, all of a sudden, civil libertarians.) Eugene Volokh contends that acceptance of government funds does not, on its face, make one a government actor and therefore obligate one to protect the free speech of others. I tend to agree. To argue the opposite is to open up a Pandora's box of (further) government intrusion into private affairs. As Mr. Volokh reasons, there is nothing preventing Congress from attaching strings to funds that it allocates (which it has not done in this case), but I would argue that Congress shouldn't be allocating funds to private businesses in the first place.

The first amendment says what?

I usually try to stay away from the low hanging fruit of the day in and day out political machinations and mud slinging that make up the U.S. electoral system, but I just can't resist Christine O'Donnell's appearance in a radio debate yesterday against her opponent Chris Coons. Here is a video of the event so that you can see for yourself. The fun starts around the 5 minute mark.

There is a lot of talk about the fact that the Constitution does not actually contain the phrase "separation of church and state" and that that is the point that Ms. O'Donnell was making. The fact that that phrase is not in the Constitution is not in dispute by anyone who can read. However, it is clear to me that the idea is embodied within the first amendment despite the absence of the phrase. I think Ms. O'Donnell either had some prepared talking points related to the separation of church and state and she used them at an inopportune time (i.e. the debate didn't correctly line up with what it is she wanted or had prepared to say) or she truly doesn't believe that the government and religion should be separate. The Wall Street Journal blog, linked above, addresses that debate, and I'd rather stay out of it.

I am more interested in a blog entry over on LewRockwell.com about Ms. O'Donnell's remarks. In it, the author derides the "left" for their mocking of Ms. O'Donnel's position saying that the "gaffe" label is applied when someone tells an "unwelcome truth". He then continues:

"Where in the Constitution is separation of church and state?,"  O’Donnell asks. The answer? It ain’t there. The First Amendment, passed after the Constitution was adopted by a Congress elected under that ratified Constitution, reads, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."

The author goes on to note that many religions were "established" in the several states around the time of the Constitution's adoption and that even John Jay supported a New York law prohibiting Catholics from holding office. "In no way does the Constitution or the Bill of Rights establish a 'wall of separation' between church and state," he writes.

The amendment

Are we reading the same words? Let me start by saying that I am not a Constitutional scholar. With that out of the way, I'm willing to concede that the first part of the amendment, quoted above, means that Congress is forbidden from establishing a national religion and not necessarily from passing a law or laws that comport with a particular religious view or views. The second part seems pretty self explanatory to me, and that is that Congress may not pass a law that interferes with a person's practice of their religion, in any way.

So Congress can pass a law (subject to the rest of the Constitution, obviously) that follows or arises from a particular religious view so long as that law does not establish a "national" religion nor interfere with the free exercise of any other religion. The reason I wanted to go down this road is to show that the separation (as contained in the first amendment) is not explicit, but the idea that the federal government cannot impose religion on anyone nor prevent religious freedom is clear.

For the sake of clarity, I would go so far as to say that the federal government is not explicitly barred from supporting a religion (monetarily or otherwise) so long as it does not do so to the exclusion of others. That said, I think that government support of any religion is an extremely unwise policy.

State infringement

I'm not going to do any research into the author's claims about the several states establishing or prohibiting religions. The reason is that the Constitution of the United States did not, at the time, prevent them from doing so. The Constitution, as adopted, only restrained the federal government. The several states were free to violate the people's "rights" as defined by the first 10 amendments to the Constitution to their hearts' content.

It was not until the adoption of the 14th amendment, specifically section 1, in 1868 that this changed. Technically, that isn't even true, as the protections afforded by the 14th amendment (as viewed by most legal scholars) was gutted by the Slaughterhouse cases (this view is in dispute) in 1873. It is only via incorporation that individual amendments to the Constitution have been applied against the states. (The 2nd amendment was just applied this year!) The fact that the states, at the time of the adoption of the Constitution, were interfering with religion has no bearing on whether or not a separation existed at the federal level.

Government bailout turns a profit

According to Bloomberg news:

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds

I'll be honest; my first reaction to this was, "Oh no, I'm going to be forced to admit that the government did something right". Indeed, according to the article, the government invested $309 billion in Wall Street bailouts via the so-called TARP program, of which, about $200 billion has been repaid. Not only that, though. The government has also earned $25 billion on its investment. What's not to like?

How about the fact that the bailouts didn't actually work? Unemployment actually skyrocketed while the government was supposedly making this profit. These unemployment numbers are "official" ones, by the way. "Real" unemployment is actually nearly twice as high, and even that number doesn't paint a totally accurate picture of the economy. It fails to account for falling wages, part time workers who had and/or want full time work, and those who simply are no longer looking.

Here's the real reason to be upset about the bailout, though, and Bloomberg, to its credit, points it out.

One of those subsidies [to the banks] is the $350 billion that savers forgo each year because the Fed keeps interest rates near zero, according to Petzel’s calculations. While banks can borrow at close to zero from the Fed, they lend to consumers and corporations at almost 5 percent, or to the Treasury at 2.5 percent, and they get to keep the difference.

Take a second to do the math. The American taxpayers have given up over $700 billion (so far). That is more than double what the government originally invested and gained via that investment. So, we have the taxpayers, the government, and the banks. Government comes out $25 billion ahead. Banks come out $700 billion ahead. (This is debatable since the banks also took losses. However, those losses are mitigated by this $700 billion). Taxpayers come out $700 billion behind plus the wrecked economy.

It doesn't end there, though.

According to Prins’s tally, the money plowed into the financial system to prop it up peaked at $19.4 trillion. Banks have benefited from that cash, which helped keep prices of mortgage securities, house prices and other assets overvalued, Prins said in an interview. Even though some of the support has been withdrawn, part of it will likely be lost, such as the hundreds of billions of dollars put into Fannie Mae and Freddie Mac, she said.

"These are all indirect subsidies the banks got," Prins said. "So the TARP gains touted by the Treasury are only true if you ignore all the other costs."

Keep these other costs in mind the next time someone tries to tell you that the bailouts worked or that the government (and supposedly, by extension, the taxpayers) actually made money on the deal.

Men are not angels

For those who didn't pick up on the title of this post, it is a reference to a post from last week entitled "If Men Were Angels". That post's title and most of its content were shamelessly lifted from an article of the same name which itself gets the phrase from James Madison's writing in Federalist No. 51. The same day on which that article was posted, news of an excerpt from a book by former chairman of the Joint Chiefs of Staff under Clinton and then Bush, General Hugh Shelton, hit the Interwebs. This news was unfortunately buried by virtue of its coming out on a Friday.

In the book, the general relates a story of a conversation he had with a Clinton cabinet member during one of their weekly breakfasts.

At one of my very first breakfasts, while Berger and Cohen were engaged in a sidebar discussion down at one end of the table and Tenet and Richardson were preoccupied in another, one of the Cabinet members present leaned over to me and said, "Hugh, I know I shouldn’t even be asking you this, but what we really need in order to go in and take out Saddam is a precipitous event — something that would make us look good in the eyes of the world. Could you have one of our U-2s fly low enough — and slow enough — so as to guarantee that Saddam could shoot it down?"

The general doesn't explicitly say with whom he was speaking at the time, but the general consensus seems to be that it was the same person who gave this interview.

I was actually really surprised to hear of someone as far back as the Clinton administration suggesting something like allowing one of our own to be shot down in order to provoke war. To be honest, this is something I would have expected to hear come out of the Bush/Cheney White House. Not only was this person willing to purposely send one of our own to die, but he/she was willing to do so to enable the killing of probably tens, if not hundreds, of thousands more. It really is regrettable that stories like this don't get more play. I think it is imperative that people understand that this is what the State is capable of. Even if one is unwilling to accept the premise that such behavior is commonplace or routine and instead believes that false flag operations are the things of spy novels, it should be a very sobering thought that people at the highest levels of government are even capable of suggesting such a thing out loud and with a straight face.

Let's give credit where credit is due, though.

The hair on the back of my neck bristled, my teeth clenched, and my fists tightened. I was so mad I was about to explode. I looked across the table, thinking about the pilot in the U-2 and responded, "Of course we can ..." which prompted a big smile on the official’s face.

"You can?" was the excited reply.

"Why, of course we can," I countered. "Just as soon as we get your ass qualified to fly it, I will have it flown just as low and slow as you want to go."

Brav-o! The military, in some circles, gets a bad rap for being a bunch of warmongers and killers, and I don't know much about this particular general's career, but for this show of cojones, he earns a gold star in my book. I am in constant fear, though, that over time people like this will disappear or lose their sway within government. This quote, attributed to Edmund Burke, looms large:

All that is necessary for the triumph of evil is that good men do nothing.

Follow the money, part 1

I mentioned to my dad recently that money is the best way to determine what people really believe; he kind of chuckled at the notion. I made the same point again the other day when I posted a link to a story about Carl Paladino renting space to Planned Parenthood in spite of his anti-abortion political platform. The same could also be said of Al Gore's recently purchased ocean view property in Monticello, CA. If he believes the oceans are going to rise due to global warming, why would he live on the coast? Then again, maybe "believe" is the wrong word. Perhaps money is better at determining priorities. Maybe Al Gore really does believe that the oceans are going to rise, but it's probably a ways off and he'd really like to live by the beach until then. Maybe Mr. Paladino really does believe that abortion is murder, but he likes profit just a little bit more.

The concept certainly isn't new. Consider the phrases "put your money where your mouth is", "talk is cheap", "actions speak louder than words", etc. Note that the first two idioms make a direct reference to money. The latter refers to "actions" which take time to implement, and time is often equated with money. That's a kind of a stretch, though, so I'll generalize that people will make an "investment" in the things that they care about. Investment does not even necessarily have to refer to time or money. Rather investment, in this context, simply means the use of something valuable to further, reach, or effect an end.

My point in all of this is this: A person will invest in things relative to the importance of those things to him. As I've said, this investment doesn't necessarily have to be money, but money is easily quantifiable and is almost, if not completely, universally regarded as valuable. So, here are some examples (in addition to those above) of money showing what is really important to people:

• It's a generally accepted fact that Christians, on average, tithe 2-3% of their income rather than the commanded 10%. (The slightly bigger house, fast food, cable TV, etc. are arguably more important than the 10% "donation".) [By the way, please don't flame me. I fall into this group, and I know it's wrong.]
• Walmart is still in business (and profiting) despite its wide regard as a pariah among businesses by its employees and customers. (Low prices and employment are a bigger concern than Walmart's business practices and the "plight" of its workers.)
• Consumers have rejected the compostable Sun Chips bag because of its aesthetics despite the wide outcry for "green" products. (The loudness of the bag is a bigger factor than "saving the planet" via reducing waste.)

It is absolutely not my intention to "call anybody out" as a hypocrite for saying one thing and doing another (i.e. if you fall into one of the aforementioned groups). My point is simply that investment (usually money) is perhaps the best way to determine what is truly important to people.

If Men Were Angels

There was, what I considered to be, a truly outstanding article over on the Mises Daily this morning about the "disaster" that would befall mankind if the State were to disappear. I'm going to shamelessly reprint portions of it here. The author starts by quoting a portion of The Federalist No. 51:

The great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.[1]

and derives the following table from Madison's writing:

	Anarchy	State Control
Men == Angels	OK	OK
Men != Angels	Impossible	Best that can be done

The author then argues:

One need not spend much time, however, to find theoretical arguments — some of them worked out in great detail and at considerable length[4] — about why and how a stateless society could work successfully. Moreover, researchers have adduced historical examples of large stateless societies, ranging from the ancient Harappan civilization of the Indus Valley[5] to Somalia during the greater part of the past decade and a half.[6] Given the enormous literature that has accumulated on stateless societies in theory and in actual operation, we may conclude that, if nothing else, such societies are conceivable.[7]

and derives the following table in light of his argument:

	Anarchy	State Control
Men == Angels	OK	OK
Men != Angels	Bad	Worse

Finally, he supports his conclusion by stating:

Although I admit that the outcome in a stateless society will be bad, because not only are people not angels, but many of them are irredeemably vicious in the extreme, I conjecture that the outcome in a society under a state will be worse, indeed much worse, because, first, the most vicious people in society will tend to gain control of the state[8] and, second, by virtue of this control over the state's powerful engines of death and destruction, they will wreak vastly more harm than they ever could have caused outside the state.[9] It is unfortunate that some individuals commit crimes, but it is stunningly worse when such criminally inclined individuals wield state powers.

Lest anyone protest that the state's true "function" or "duty" or "end" is, as Locke, Madison, and countless others have argued, to protect individuals' rights to life, liberty, and property, the evidence of history clearly shows that, as a rule, real states do not behave accordingly. The idea that states actually function along such lines or that they strive to carry out such a duty or to achieve such an end resides in the realm of wishful thinking.

City gets up on its high horse

This morning I caught a story about a proposed jewelery/pawn shop trying to open in downtown Oceanside.

A plan to open an upscale pawn shop in the heart of downtown Oceanside ran into a wall of opposition from a citizens advisory group Wednesday whose members said a pawn shop wasn't what they had in mind for revitalizing the area.

[...]

The committee voted 5-0 to advise the City Council to reject a proposal to open a pawn shop in a vacant store at 205 N. Coast Highway.

This seemed like kind of a bummer to me. The last time my wife and I were in the downtown Oceanside area, we tried to go into a pawn shop. We thought it would be fun to look around. (The place was closed on the day that we were there, unfortunately.) And this place looks like it would be more of a jewelery than pawn shop, anyway.

The pawn shop ---- Coast Jewelry & More ---- would deal in "mostly high-end jewelry pieces and watches," said Jason Lambert, who would manage the store. "We want to fit in, and we want to make everyone happy."

Over time, the focus of the store would likely shift away from offering loans on pawned items to a more conventional retail operation, Lambert said, although he said it would continue offering collateral loans.

The advisory group sees it differently, though.

But committee members said a downtown pawn shop would harken back to a past the city is trying to leave behind, when downtown had a reputation for sleazy bars, strip joints and tattoo parlors.

"It's the wrong location, downtown, as we're trying to bring in more residential and tourists," said committee member Carolyn Krammer. "We don't want our tourists to be subject to people trying to pawn merchandise."

Is the committee afraid that people are going to begin trying to sell their wares to tourists right on the street (as if that weren't already possible)? Or do they just detest the "kind of people" who would patronize a pawn shop for a loan? One thing is clear; the group isn't actually interested in "redevelopment" or increased tax revenue.

[...] the owner of the proposed store, David Mueller, would remodel what has been a vacant space for more than four years and has been "kind of an area for people to hang out and maybe do things we're not crazy about."

Former Oceanside newspaper publisher Tom Missett, who presented the pawn shop plan to the committee, said Mueller would invest about $2 million on the pawn shop.

The committee would prefer that the building (already owned by Mr. Mueller!) remain vacant. His $2 million investment isn't the "kind of money" they want. But the insanity doesn't end with the committee.

Oceanside police also oppose the plan, fearing a new pawn shop would lead to more crime downtown and mean more work for a department already stretched thin, said Lt. Valencia Saadat.

According to police statistics, seven arrests have been made so far this year related to stolen property taken in by pawn shops and $21,000 in stolen property has been recovered.

Maybe I'm reading this wrong, but it seems to me that stolen goods were recovered and the offenders arrested and taken off the streets because of pawn shops. Those crimes likely would have never been solved if those goods had simply been sold on the street. The police don't want the extra work (doing what they're paid to do!), though. They don't want it even though the shop manager is willing to jump through all sorts of hoops to make their jobs easier in order to get his store opened.

Besides installing security cameras throughout the store, Lambert said anyone pawning items would have to show identification, sign a slip saying the property belonged to them and have photographs taken of themselves and whatever they're pawning. He said the photographs and other information would be made available to police daily.

Apparently the insanity isn't limited to the city. Sign a slip saying the property isn't stolen? If he thinks that is going to work, then why submit information to the police on a daily basis? Why not just go all the way and take finger prints and a DNA swab? It's too bad. I wouldn't sell anything to a shop that treats its customers like common criminals in this way.

And finally, we have the government serving its own interest.

Bartlett said he'd be fine with the business if it was a jewelry store, but the very use of the term pawn shop is troubling.

"That's semantics but it bothers me," said Bartlett, who lives downtown."I will be strung up if my neighbors are told we are going to have a pawn shop in downtown."

We certainly wouldn't want Mr. Bartlett to lose his position of power, looking down on honest people and crushing their entrepreneurial spirit because he doesn't like the type of business they would open or the clientele it might draw. That empty building will be a much better symbol of his ability to direct the redevelopment of the downtown area.

The state just can't win

I'm not sure how to feel about this:

The state [of California] announced Monday it is selling 24 government office buildings — including the Ronald Reagan State Building in Los Angeles and the San Francisco Civic Center — to a group of private investors for $2.3 billion.

One the one hand, I'm glad to see the state getting serious about trying to pay its bills, and all the more so because it is doing so by putting the land into private hands where it can be used to boost the economy:

"This sale will allow us to bring in desperately needed revenues and free the state from the ongoing costs and risks of owning real estate." Gov.Arnold Schwarzenegger and lawmakers included the sale as part of the state budget last week.

On the other hand, this only helps the state once and unfortunately it appears that the forest is being obscured by the trees:

The Associated Press reported earlier this year that the deal would end up costing the state $5.2 billion in rent over 20 years, perhaps saddling taxpayers with costs beyond whatever the state would net from the sale.

[...]

The nonpartisan legislative analyst's office also warned that selling the properties then renting back the space could cost the state an additional $1.5 billion, based on a 35-year projection.

Government serves its own interest

Last month, a federal district court judge struck down the military's "Don't Ask, Don't Tell" policy as unconstitutional. Yesterday, that same judge issued an injunction barring its enforcement. It's nice to see someone in government doing something right even when it is for the wrong reason(s). In her ruling, the judge wrote (emphasis mine):

Far from furthering the military's readiness, the discharge of these service men and women had a direct and deleterious effect on this governmental interest.

Governmental interest? What is that? Since when does the government have an interest? That's probably the wrong question; the idea of "governmental" interest goes back a long way. What I find interesting (and disturbing) is the idea, apparently codified in case law if not statutory law, that the government is a separate entity from the people. In reality, the people have an interest, and the government is supposed to serve that interest. At least, that is what our founding and governing documents would have us believe.

In addition, the government's interest appears to extend to preventing gays from marrying, not just serving in the military. President Obama has directed the justice department to appeal a July ruling against the 1996 Defense of Marriage Act:

"As a policy matter, the President has made clear that he believes DOMA is discriminatory and should be repealed," said Justice Department spokeswoman Tracy Schmaler. "The Justice Department is defending the statute, as it traditionally does when acts of Congress are challenged."

Essentially, what this spokesperson is saying is, "We don't like the law, but we have a duty to enforce it." That is an absolute cop out. Government employees take an oath to "support and defend the constitution". That is, no person has a duty to enforce unconstitutional laws. This law plainly violates the 1st, 10th, and 14th amendments, not to mention that involving itself in marriage is not one of the federal government's enumerated powers. Perhaps, however, the government can show that somehow this law constitutes an economic activity that falls under the commerce clause.

The idea of a government official saying one thing and doing another should come as no surprise to anyone, though, and while I don't mean to pick on Obama, specifically, he is currently the most prominent example of government officials doing exactly that.

• On closing Guantanamo Bay: says / does
• On habeas corpus rights: says / does
• On executive power: says / does

And in spite of that, he wants everyone to keep hoping for change:

"The question, once again, is going to be whether hope overcomes fear," Obama said at a webcast event meant to buck up young supporters who helped him to victory two years ago, but who are less enthused by mid-term polls.

The question should really be whether hope can overcome reality. This article, in my opinion, answers that question.

So while the electorate recognizes that they are electing at best incompetents and at worst crooks, the constant, naïve, prodemocracy mantra is that "we just need to elect the right people." But, the "right people" aren't (and won't be) running for office. Instead, we will continue to have "the average American legislator [who] is not only an ass," as Mencken wrote, "but also an oblique, sinister, depraved and knavish fellow."

Empire and its imminent demise

Glenn Greenwald writes today that the U.S is a collapsing empire. As evidence, he points to a number of surveys and studies showing the rapid decline in life expectancy, infant mortality, literacy in math and science, and the "soundness" of our banks and, by extension, financial system. He wrote a column a few months back on the same topic, though the examples provided there were more direct. On the bright side, though, he points out in the current column that the U.S. is only fifth in the world in executions and continues to best all comers in incarceration rates.

In addition, a few days ago, Ron Paul said that he thinks that a collapse of the U.S. currency system is "95% likely" and that a war with Iran would only hasten its demise. This all has a very "the sky is falling!" ring to it, but look back at the bank "soundness" rankings, mentioned earlier. The U.S. ranks 108th in the world, out of 133 countries on the list. That puts it 63 places behind Greece, a country that just received a 146 billion dollar bailout from the EU.

Peter Schiff, on a related subject, writes about the massive inflationary expedition on which the Federal Reserve is about to embark. Even I wrote about this a week or so ago. Unlike me, Mr. Schiff researches and writes about this stuff for a living (and does quite well at it), so when he speaks, it's probably a good idea to listen. Aside from the normal, "gold, silver, and commodities are rising; the dollar is falling" talk, he explains why bonds are currently acting the way they are:

A confounding factor is the strong performance of US dollar-denominated bonds. When the Fed creates inflation, that erodes the value of fixed-asset investments like bonds, which can't adjust their returns to the new price level. So many commentators are pointing to the record low bond yields as evidence that inflation is not a threat. But this is a misreading of the situation.

What is overlooked is that when the Fed prints more dollars, it typically uses them to buy bonds. Traders know this, so they are stocking up on bonds at ridiculous prices just to flip them to the Fed. They don't care that, in the long run, the Fed's policies will destroy the bonds' value because in the short run, the weak dollar policy serves as a tremendous subsidy to bond sellers.

I'll leave you with this quote, attributed to George Washington, and let you draw your own conclusion(s) about where our government is headed:

The last official act of any government is to loot the treasury.

If you don't vote, you might (still) be a statist

While eating lunch the other day, a friend of mine mentioned that he had intended to comment on one of my recent posts, or in his words, "get on there and argue with you". I asked if he simply wanted to argue with me or if he had a legitimate disagreement, to which he replied, "yes". Such is our relationship.

After heating up my spaghetti, leftovers from the previous night's dinner prepared by my lovely wife, we sat down to discuss the issue. He had concluded from my writing that it was my contention that the only way to change a government with which one disagreed was through revolution, specifically violent revolution. I said that that was not the message that I intended to convey with my writing. Instead, my writing was premised upon the language in the Declaration of Independence stating (implicitly) that a just government governs with/at the consent of the governed, and I consider the act of not voting a withdrawal of consent.

At this point, he almost  laughed at me and told me that I was sadly mistaken if I thought that any government would give up its power simply because the people failed to vote it into power. In fact, it would be easy and quite likely for a government to regard low voter turnout as apathy, not principled opposition to it. I think that any government, if it intends to pay any fidelity to the concept of the rule of law, would be hard pressed to continue "ruling" if nobody voted, but I conceded the point. However, I continued to argue that to continue to vote would perpetuate said government because the nature of government, over the long term, is to grow regardless of the particular office holders at any given time. He conceded this point. So, I asked him, "if voting is not an effective means to limit government over the long term, and one does not wish to engage in violent revolution, then what alternative does one have?"

He posed a different question, trying to further understand. "If one refused to vote on laws (think speed limits, drug prohibitions, and the like)," he asked, "is one exempt from following those laws?" I replied that regardless of my answer, in breaking these laws, one would find his case being adjudicated in a court instituted by the very government charged with enforcing them. That court's very existence is based on the legitimacy of the government, so a defense based on the illegitimacy of the government would likely be untenable.

This ultimately led back to the idea of revolution as the only viable means by which to oppose a government. I was still not willing to budge on this issue; I could not, in good conscience, advocate violence. In the end, we agreed on two points:

• Violent revolution may be the only viable means of opposing a government; however, it is an illegitimate remedy for someone who votes.
• The act of not voting is not necessarily a withdrawal of consent. For example, there are those who do not vote because they just do not care who governs or how.

In short: if you vote, you're a statist; if you don't, you might (still) be a statist.

[Let me be explicitly clear. I am not, in any way, advocating violence, even in the face of failed attempts at peaceful resistance or resolution.]

The arrival of the total state will not be televised

Yesterday, a federal judge in Michigan handed down a ruling upholding the new health care law. Here is an excerpt:

There is a rational basis to conclude that, in the aggregate, decisions to forego insurance coverage in preference to attempting to pay for health care out of pocket drive up the cost of insurance. The costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers. The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance. These are the economic effects addressed by Congress in enacting the Act and the minimum coverage provision.

The health care market is unlike other markets. No one can guarantee his or her health, or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. [...]

The plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market. [...]

The decision, in simpler terms, is this. Unless a person opposes the medical establishment on religious grounds, that person will at some point avail himself of services provided by the health care market. That person, at the time of service, may not be able to pay for the service. Therefore, that person's original refusal to participate in the market by purchasing insurance constitutes economic activity (because if he can't pay, his costs will be shifted to other participants) which the congress may regulate under the commerce clause. In even more simple terms, refusal to participate in an economic activity constitutes an economic activity that congress may regulate.

I want to address the mental gymnastics undertaken by the judge in arriving at this decision, e.g. that a person can't not get sick; that a person, once sick, can't avoid the health care market; and the fact that that person may not be able to pay means that he can be forced to buy insurance. I'm not going to, though. At least, I'm not going to any more than I just did.

Instead, I'll focus solely at the situation in which a person does get sick, does avail himself of the health care market, and can't pay for the service(s) since that is the situation on which the judge's upholding of the PPACA is based. So, what happens when an uninsured person arrives at a hospital emergency room? Under the EMTALA, that person must be treated. Nobody [explicitly] pays for this treatment, though. The federal government has mandated that hospitals treat such patients but does not reimburse them for these costs. Instead, hospitals can write this cost off as charity or bad debt on their taxes. They can also shift these costs to paying customers in the form of higher charges for service. (Note, too, that there is nothing preventing a hospital from doing both.)

So, the judge is correct that caring for uninsured patients creates additional costs for taxpayers (in the form of tax deductions taken by hospitals) and for paying participants in the health care market (in the form of increased costs for service). Here's the rub, though. The government created that additional cost in the first place by passing the EMTALA! The absurdity of trying to fix the problems created by government interference in the market by further interfering in the market should be obvious to everyone. The problem is more insidious than that, however.

The government has dropped all pretense of "legally" taking people's money via taxation. It is now explicitly assuming the ability to force people to spend money in the ways that it directs and is using its own policy as an excuse for the authority. By this logic, there is nothing that the government cannot regulate. The total state has arrived.

Unintended consequences revisited

Last week I wrote about how some people were actually going to lose their health insurance coverage as a result of the new health care law. USA Today reports today via Bloomberg that the government has reversed course and issued waivers to McDonald's and 29 other companies exempting them from the conditions imposed by the new law. Those employees will now get to keep their insurance, but they won't be afforded the "protections" of the new law. Look at it this way, though: the government actually helped these people more by doing nothing at all.

The whole debacle is a perfect example of the failure of central planning:

The most notable critique of economic planning came from Austrian economists Friedrich Hayek and Ludwig von Mises. Hayek argued that central planners could not possibly accrue the necessary information to formulate an effective plan for production because they are not exposed to the rapid changes in the particular time and place that take place in an economy, and are unfamiliar with these circumstances. Transmitting all the necessary information to planners to accumulate and form a comprehensive plan is therefore inefficient.^[13]

Centralized economic planning has also been criticized by proponents of de-centralized economic planning. For example, Leon Trotsky believed that central planners, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and understand/respond to local conditions and changes in the economy would be unable to effectively coordinate all economic activity.^[14]

Ultimately, though, as reported in the USA Today article, it's highly unlikely that the government set out to help these people at all.

"The big political issue here is the president promised no one would lose the coverage they've got," says Robert Laszewski, chief executive officer of consulting company Health Policy and Strategy Associates. "Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they've got."

Those in office need to stay in office so that the can keep "helping" the people.

If you vote, you're a statist

I began reading a book called Moral Politics last night. (It can be found on Google Books, here.) I plowed through the first two chapters which basically comprise an introduction for the rest of the book relatively quickly. So far, it appears that the author divides politics, and those who participate in them, into two basic camps: conservative and liberal. He then introduces the idea that the nation, the U.S. in particular, is a family (or at least that it is viewed this way by its citizens) with the government acting as a parent and the citizenry as its children. Finally, he lays down his main thesis that people's view of government comes from the moral structure by which they live their own lives. Ultimately, he arrives at the conclusion that conservatives view the government as a "strict father", and liberals view it as a "nurturing mother" (or "parent").

The strict father model holds that the government's job is to give "tough love" to its citizens to prepare them to be self-sufficient. As such, it should be tough on crime and make sure that discipline is swift and decisive. It should also not get involved with "entitlement" programs like social security, health insurance, or unemployment benefits. The strict father view is not heartless. Social programs may have their place for short periods, but the emphasis is always on discipline and self-reliance.

The nurturing parent model holds that the role of government is to support its citizens by understanding their problems and the causes of them and helping them work through them so that they can become self-sufficient. In this role, the government would provide rehabilitation programs to criminals while they "do their time". It would be understanding that people's economic troubles are not necessarily of their own doing and that things like health insurance and unemployment benefits are necessary to help people get "back on their feet" and become self-sufficient. In short, discipline and self-reliance are good things, but the emphasis is always on helping people find their way back to those ideals.

As I read these first two chapters, I couldn't help but feel that I didn't fit into either category. And maybe that's not the point. I think the author's purpose is not to help people fit into one camp or the other but to explain why the two camps think the way they do. Nevertheless, I couldn't help trying to fit myself into some neat little box so that I could then decide how I felt about what the author was saying. Eventually, I realized that my problem with this book (at least so far) is that the author never questions the existence, legitimacy, or authority (moral or otherwise) of the government (or as I like to refer to it in these types of discussions, the State). (I'd like to explore this in later posts.)

In the context of the book, the conservative and liberal labels only apply insofar as they describe political views. As far as I am concerned, conservatives and liberals are the same. While they disagree about the means (strict vs. nurturing) by which to achieve their ends (a disciplined and self-reliant society), they do agree that those means are best carried out by the State. They're statists. I imagine that statism is most closely associated with fascism in many people's minds and therefore typically associated with conservatives and those on the political right. Statism, though is the belief that the State has a major role, economic or otherwise, to play in people's lives. Given this view, statism can be equally associated with socialism which is a commonly associated with liberals and those on the political left.

Now, let me connect the dots between the title of this post and everything I've written up to this point. When a person participates in the electoral system and votes, he legitimizes the system. As such, he agrees to be bound by the outcome, and regardless of which person is put into power or which law is enacted, the result is always the same: the State is legitimized. No matter which person or law a person votes for or against, that person is always voting for the State. The only way to vote against the State is to not vote at all.

If you're still reading, you've probably realized that I don't vote. If you were paying attention, then you'll realize that the old line, "if you don't vote, you can't complain" is exactly backwards. By voting, you agree that the process and the outcome are legitimate and to be bound by them. I, on the other hand, by refusing to vote lend no such legitimacy to the process or the outcome. Therefore, I'm actually the only one who can complain.

Currency wars

I hear a lot on the radio and in the news lately about the U.S. and other central banks' grumbling about China's refusal to let its currency rise. I have (what I think is) a pretty good understanding of inflation and deflation and how central banks' policies affect their currency, but I had never really put much thought into why China refusing to let their currency rise was a bad thing. This morning NPR did a story about possible coming currency wars, and finally spoon fed me the information that I was too lazy or apathetic to discover for myself.

The U.S. Federal Reserve wants to inflate the dollar, or in the parlance of the previous paragraph, make it fall. Make sure you really take that in; the Fed wants to devalue the dollar. It wants to do that because when the dollar is weak, then U.S. exports become cheaper overseas. This is because foreign currency, in relation to the dollar, rises. Therefore, that foreign currency can buy more of a given U.S. good than it could have previously. The thinking over at the Fed is that if our exports rise, then businesses will begin producing more which will require them to hire more which will eventually start the economy growing again.

The reason the U.S. is upset at China is that it is doing the exact same thing. By refusing to let its currency rise, China is making its exports cheap for foreign buyers. So, the U.S. is mad at China for doing the very thing that it is trying to do.

This is yet another case of "its okay when we do it but not when they do it", but it's so much worse than that. There's no guarantee that China will play along. There is no guarantee that the Fed will inflate the currency just enough to "goose" the economy but no so much that it creates hyperinflation. There's no guarantee that the Fed will "revalue" the dollar if the economy starts moving again; in fact, it's more likely that that value will be forever lost. Even more basic that that, does it concern anyone that twelve people at the Federal Reserve can take money out of everyone's pockets in the U.S. whenever they want by devaluing the dollar?

Moral Politics

A friend recently suggested that I read the book Moral Politics. In preparation for reading, I typed "moral politics" into Google, and this link was at the top. I clicked it, thinking that it was a website related to the book. It wasn't. Instead, it was a link to some kind of moral politics test that I couldn't resist taking. Here is the result:

This represents a score of -0.5 on the Moral Order axis and a -7 on the Moral Rules axis. It's still not clear to me what exactly each of those represents, but according to the website, I'm an "Ultra Liberal", which is interesting because I would consider myself a "Libertarian Capitalist". I'm guessing that expressing a belief that there is a higher power and that morality does have a place in my personal life means that I'm not sufficiently capitalistic. I blame the wording/interpretation of the questions.

What I found most interesting about the result, though, were the statistics that came along with it. According to the website, only 1% of the approximately 650,000 people who have taken the test are more conservative than me. On the other hand, only 1% of those same people are more liberal than me.

Take the test for yourself and see what it says about you.

Fire protection and the free market

Earlier this week, fire fighters in Obion County, Tennessee let a man's house burn to the ground because he hadn't paid his annual $75 fee to the nearby city of South Fulton for fire protection. Here is the short version:

In rural Obion County, homeowners must pay $75 annually for fire protection services from the nearby city of South Fulton. If they don't pay the fee and their home catches fire, tough luck -- even if firefighters are positioned just outside the home with hoses at the ready.

Gene Cranick found this out the hard way.

When Cranick's house caught fire last week, and he couldn't contain the blaze with garden hoses, he called 911. During the emergency call, he offered to pay all expenses related to the Fire Department's defense of his home, but the South Fulton firefighters refused to do anything

They did, however, come out when Cranick's neighbor -- who'd already paid the fee -- called 911 because he worried that the fire might spread to his property. Once they arrived, members of the South Fulton department stood by and watched Cranick's home burn; they sprang into action only when the fire reached the neighbor's property.

I was planning on writing about this, but smarter people have already done the heavy lifting:

I don’t get this debate at all. It is not even a real debate. The fire-protection services were government services. The fee in question was a government-mandated fee. The county lines in which the fee was applicable is a government-drawn line that is completely arbitrary. The policy of not putting out the fire was a government policy enforced by the mayor. As he said, in the words of a good bureaucrat, “Anybody that’s not in the city of South Fulton, it’s a service we offer, either they accept it or they don’t.”

So why is the market being criticized here? This was not a real market. Instead, this is precisely what we would expect from government. In a real market, there is no way that a free-enterprise fire service would have refused to provide the homeowner service. They would be in business to provide that service. The fire would have been put out and he would have been charged for the service. It is as simple as that.