Monthly Archives: December 2007

Are Exports Good?

Now, I know this is a question that most people will answer with a resounding “YES!” After all, exports are the sign of a strong economy, right? And the reason that we’re so pissed off at China is because they keep sending us goods and we’re not sending them nearly as much in return, right?

Well, if you believe in 18th-century mercantilist theory, as I believe the Chinese do, you’d say yes. I don’t know that it is the right answer, though.

Let’s look at your personal lives for a moment. In order to live and be comfortable, you must buy food and goods, pay for shelter, etc. These are imports. Unfortunately, you need to pay for these imports, and to do so you must trade your labor, your chief export, for dollars that allow you to buy the imports.

What’s the ideal situation? Well, outside of the personal accomplishment many of us feel from working, the ideal situation would be to not work at all, and only receive imports. If you really want to be rich, you would import constantly and never export anything! Of course, that’s not possible for us. We as individuals cannot print money that people will accept for those imports they’re selling, so we must exchange something of value for them. Granted, in the world of voluntary transactions and division of labor, we are both being made richer through this trading process, but we are still forced to export labor in exchange for those imports.

Now, step outside of this situation for a moment, and look at the wider national picture. Should America find exporting to be beneficial? Is an export the sign of a rich populace? I would say that it is not. It may be a productive economy, and there may be low unemployment, but we are working to send stuff away to other people, rather than to be consumed here. A nation which exports constantly without importing an equal number of goods is sending away the fruits of their labor to other nations. They’re becoming poorer in the process!

Ahh, but there’s a conundrum here. That nation is not just sending those exports out as a charitable act, they’re doing so in exchange for money. But what is money? Is money a tangible store of wealth? If money is a tangible store of wealth, they are simply deferring consumption, and not becoming poorer. This is like the individual who wants to save to buy a house, so he defers consumption and lets his bank balance increase to save a down payment. He is not becoming poorer by saving. But what if money isn’t a tangible store of wealth? What if money, due to printing, is a constantly depreciating asset? Well, then the exporting nation does not benefit from the exports. They may have full employment, but they are not making their society richer. (Note that this is a general statement, and the productivity gains and economies of scale generated from such production may– and usually will– have side benefits for their society).

So what is the ideal for a nation? Well, for a nation, the ideal is to fool the world into believing that you’re sending them something of value in exchange for their exports, when you’re really just sending them an empty promise. They take that promise and store it in a “reserve”, where it slowly rots. As we pointed out here and here, America has been taxing the rest of the world in the form of their imports for the last 40 or so years (the time during which the dollar was the world’s reserve currency). America has been getting something for nothing from the world, and thus it’s silly for us to export goods to them instead of using those productive resources to satisfy ever-greater internal demands.

America may see exports as a good thing, but all they really are is a way for other countries to exchange their dollar reserves for durable goods. This is not something we want. We want other countries to hide their dollar reserves in a locked vault and never let them out, because if they use these reserves to start buying goods, the prices rise and we see the inflation that’s been hiding for the last 40 years. As long as those dollars leave our shores and never come back, we’re getting a free lunch. When the world decides they actually want to redeem those dollars for goods, we’ll all be working our butts off and sending the product of that work overseas. Sure, you’ll be making plenty of money by doing all that work, but everything you buy will have risen in price to the point that you’re not better off.

Just like an individual cannot borrow forever, the dollar hegemony won’t last forever. It will come crashing to a halt, and eventually result in crippling inflation and probable war. After all, if the world ever learns that mercantilism doesn’t apply when fiat currencies reign, they might become very upset with America. And rightly so, as they’ve held these dollars expecting us to keep our promises (and keep the dollar stable), and we’ve reneged on that promise. In the process, we’ve gotten a lot of something for nothing, but someday the bill will come due. When the bill comes due, it’s your butt in the factory seat that will be paying it.

Breaking: Two Officers Surrender In Johnston Death

(WSB Radio) Two Atlanta Police narcotics officers have turned themselves in to federal marshals as part of their plea agreements in the manslaughter death of 92-year-old Kathryn Johnston.
WSB’s Veronica Waters reports Gregg Junnier, 40, and Jason Smith, 35, pleaded guilty in April to civil rights charges and voluntary manslaughter in Johnston’s death. Both admitted they lied to a judge to get a no-knock search warrant for the woman’s Neal Street home in November 2006, then conspired to plant marijuana in the home when there were no drugs there.

Those revelations prompted an in-depth probe of corruption in the APD narcotics unit, and in Fulton County some 70 cases have not been prosecuted–having had the charges thrown out–as a result. Smith and Junnier have been cooperating with the FBI, which could help them when they are sentenced likely next year, after the Fulton County trial of a colleague.

The men are expected to testify in the April 2008 trial of Arthur “Bruce” Tesler, who has pleaded not guilty to violating his oath, false imprisonment of a confidential informant and making false statements.

Defense attorney John Garland describes J. R. Smith as a man who once viewed himself as “a war hero and a good-guy cop getting drugs off the street,” yet now has grasped the idea that he deserves to go to prison.

“The realization of what he did that day that led to the death of Kathryn Johnston, and the practices and procedures that led up to that, has really forced him to reanalyze who he is as a person,” Garland tells WSB. “He’s come out a totally different person. He’s a fragile human being. He’s suffered.”

The APD’s narcotics squad has since been revamped and restaffed, adding more checks and balances, structure and supervision as well as providing the officers with extensive outside training.

On the anniversary of her death, Johnston’s family filed suit against the city of Atlanta.

While its good to see that Kathryn Johnston’s killers will face justice, perhaps even more importantly, this case should shed some light on this phenomenon of late night “no-knock” raids and the ease at which warrants for these raids can be obtained. My fear is that far too many people are willing to give authority figures from the police all the way up to the president the benefit of the doubt instead of giving our public servants the scrutiny a free society requires. I believe this to be the case when a jury convicted Cory Maye for “murdering” Officer Ron Jones when Officer Jones and other narcotics officers kicked his door down in the dark of night nearly 6 years ago. The prosecution wanted the jury to give more weight to the testimony of the police officers than the testimony of the defendant. The jury dutifully complied.

The police always act in good faith when seeking a search warrant.

Informants are always reliable sources.

The police never lie under oath or make false statements in police reports.

The police never plant evidence.

The police would never violate an individual’s civil rights.

Judges always consider requests for search warrants carefully.

This is what we are supposed to believe. By now we should know better. Are we supposed to believe the Atlanta Police Department (or any police department for that matter) when they say they will have “more checks and balances, structure, and supervision” with “additional training” ?

Color my skeptical.

The only way we can expect change is to demand citizen oversight. Ronald Regan used to say “trust but verify” when dealing with the Soviet Union. As citizens, this should be our motto as well when dealing with our public servants.

This crime against Kathryn Johnston and her family in the prosecution of the war on (some) drugs should also be used to confront each and every one of the presidential candidates. What is their position on no-knock raids? What should happen to individuals who have been placed in a position of trust who cover up their crimes against citizens? As unbelievable as it may be for many of us how presidential candidates can cavalierly blow off individuals who use cannabis to relieve their pain, surely such an arrogant treatment towards victims of no-knock raids would not play as well in the general public?

Maybe they should also be asked the follow-up question: “Is the lives of innocent citizens worth continuing to pursue this losing war on (some) drugs?”

Authoritarians in both political parties want to dismiss us libertarians as crazy for demanding an end to the war on (some) drugs, that doing so would result in chaos.

Wait a minute…they call us crazy?

The Neocons And The NIE

As I noted yesterday, the latest National Intelligence Estimate reports that Iran stopped actively pursuing nuclear weapons back in 2003.

So, how are the neoconservatives who’ve been pushing for confrontation with Iran for years now reacting to this news ? Well, Norman Podhoretz himself is out with a piece that sounds more like it came from DailyKos than Commentary:

I must confess to suspecting that the intelligence community, having been excoriated for supporting the then universal belief that Saddam had weapons of mass destruction, is now bending over backward to counter what has up to now been a similarly universal view (including as is evident from the 2005 NIE, within the intelligence community itself) that Iran is hell-bent on developing nuclear weapons. I also suspect that, having been excoriated as well for minimizing the time it would take Saddam to add nuclear weapons to his arsenal, the intelligence community is now bending over backward to maximize the time it will take Iran to reach the same goal.

But I entertain an even darker suspicion. It is that the intelligence community, which has for some years now been leaking material calculated to undermine George W. Bush, is doing it again. This time the purpose is to head off the possibility that the President may order air strikes on the Iranian nuclear installations. As the intelligence community must know, if he were to do so, it would be as a last resort, only after it had become undeniable that neither negotiations nor sanctions could prevent Iran from getting the bomb, and only after being convinced that it was very close to succeeding. How better, then, to stop Bush in his tracks than by telling him and the world that such pressures have already been effective and that keeping them up could well bring about “a halt to Iran’s entire nuclear weapons program”—especially if the negotiations and sanctions were combined with a goodly dose of appeasement or, in the NIE’s own euphemistic formulation, “with opportunities for Iran to achieve its security, prestige, and goals for regional influence in other ways.”

In other words, the CIA, NSA, and DIA are all involved in a vast conspiracy to undermine the Bush Administration’s foreign policy and, horror of horrors prevent us from engaging in yet another war in the Persian Gulf.

What’s clear, of course, is that there’s no amount of evidence outside of the smoking remains of Tehran itself that could convince Podhoretz that the Iranian nuclear program had in face been ended. In fact, the lack of evidence is, under this logic, evidence itself.

This is the same type of logic, or lack thereof, that got us involved in the Iraq War. While everyone suspected that Saddam Hussein was still pursuing chemical and biological weapons, there was no conclusive evidence either way that this was the case — and that lack of evidence was presented as proof that the weapons in fact existed and that war was therefore justified. The difference today, which Podhoretz doesn’t seem to realize, is that this isn’t 2003 and the American public isn’t nearly as gullible as it was back then.

Grover Norquist Sells Out

Grover Norquist has a reputation has one of the most hard-line fiscal conservatives out there, which makes two recent statements about the Republican race all the more distressing:

First, here’s what he had to say about Rudy Giuliani:

Rudy Giuliani’s campaign twice circulated to reporters today a very chummy exchange of letters between the candidate and Americans for Tax Reform’s Grover Norquist.


In Norquist’s response, also written today, he expresses his “delight” with Giuliani’s answer to his question during last week’s CNN/You Tube debate. Would the candidates oppose or veto any tax increases? “You simply said, ‘yes’,” Norquist writes.

“In looking at the records of all the Republican candidates, yours clearly stands out,” he continues. “You cut the income tax, business taxes, sales taxes, property-related taxes, and nuisance taxes. You are the most successful tax cutter in modern New York history and, on balance, the most successful tax cutter in the Republican field today. If you are elected president, I will look forward to working with you to reduce and reform taxes, restore fiscal discipline, increase government transparency, and pursue pro-growth policies that will improve America’s competitiveness in the global economy.”

What Norquist ignores about Giuliani’s tenure as Mayor is that, while he may have cut some taxes in the City, he spent tremendous amounts of time lobbying in Albany and Washington for subsidies from the State of New York and the Federal Government. He’s not a fiscal conservative, he just likes spending other people’s money.

But that’s not all, here’s what Norquist had to say about Mike Huckabee:

“He has signed the pledge and he has promised to veto and oppose any efforts to raise income taxes if he was President. And at the debate he said that he would support the veto of any tax increase, so that was good too… So he’s made that commitment.”

“Now, Club for Growth has been rough on him because of his period when he was governor. We had arguments with him when he was governor because he supported too much spending and too much taxes as governor… It’s one of these things that as governor he’s had a bad track record on taxes and spending, but as a candidate for President he is running as someone who will not raise taxes in the future and who is talking about fundemental tax reform such as going to a retail sales tax or the so-called fair tax. So some people say ‘If you’ve changed your mind, we don’t like you,’ but that’s not my position. I believe that when people say I used to be pro-choice but now I’m going to be pro-life and here’s why, if they can make a credible argument as to why they have switched in their position, I think we should accept converts. That’s what winning looks like.”

In other words, he doesn’t matter that he governed as a tax-and-spend liberal while he was Governor of Arksansas, he says he’s going to be a fiscal conservative as President.

Grover, I just don’t get it.

H/T: The Crossed Pond

The Nanny State Invades The School Cafeteria

Today’s New York Times reports that the Senate is about to consider a proposal to ban candy, soda, and fatty foods from the nation’s school cafeterias:

Federal lawmakers are considering the broadest effort ever to limit what children eat: a national ban on selling candy, sugary soda and salty, fatty food in school snack bars, vending machines and à la carte cafeteria lines.


The nutrition standards would allow only plain bottled water and eight-ounce servings of fruit juice or plain or flavored low-fat milk with up to 170 calories to be sold in elementary and middle schools. High school students could also buy diet soda or, in places like school gyms, sports drinks. Other drinks with as many as 66 calories per eight ounces could be sold in high schools, but that threshold would drop to 25 calories per eight-ounce serving in five years.

Food for sale would have to be limited in saturated and trans fat and have less than 35 percent sugar. Sodium would be limited, and snacks must have no more than 180 calories per serving for middle and elementary schools and 200 calories for high schools.

And to make the blow against Federalism even more pronounced:

Although states would not be able to pass stronger restrictions, individual school districts could.

Can someone please point me to the portion of Article I, Section VIII of this document that gives Congress the authority to decide what appears on a child’s lunch tray on a daily basis ? Yes, I know that Congressional power has expanded far beyond where it was intended but there are times when the grab for power is so egregious and unauthorized that it becomes, for lack of a better term, galling.

But will the American people protest ? Will they flood Congressional phone lines in protest of this latest invasion of the nanny state into their lives ?

My guess is that, for the most part, the answer to those questions will be no. For the most part, Americans will look upon this as a good idea and will thank their enlightened leaders in Washington for telling them what their children should eat because, you know, we’re all too stupid to figure that out.

H/T: Cato@Liberty

The Kind Of Help Ron Paul Doesn’t Need, Part II

Back in September, I wrote about an incident in Michigan in which some overly-enthusiastic Ron Paul supporters who nearly became physical with former Mayor Rudy Giuliani.

Well, Giuliani was in Metro Atlanta this weekend and, while it didn’t get quite that bad, I don’t think that this group of Ron Paul supporters did any better job to convince people to vote for their candidate:

It was Rudy Giuliani campaigning for president on the Marietta Square on Sunday afternoon, but anyone listening may well have thought the candidate’s name was Ron Paul.

“RON PAUL! RON PAUL! RON PAUL!” — a crowd chanted from Glover Park, effectively drowning out comments from the former New York mayor and occasionally changing the chant to “FREEDOM! FREEDOM! FREEDOM!”

The younger crowd of Paul supporters had stronger, or maybe more enthusiastic, lungs than the middle-aged crowd of Giuliani’s gaggle, who responded with a college try — “Rudy! Rudy! Rudy!” — while the Paul cadres tailed the GOP front runner on his walking photo op in downtown Marietta.

The Paul backers, handing out their own candidate’s literature, said they were more interested in a president who would truly try to shrink government, not just promise to do it, and who promises outright to bring the troops home from Iraq.

“You’re being very inconsiderate,” an elderly woman, aghast at the lack of Southern manners, told three young female Paul acolytes.

“You’re not helping your candidate with this,” a middle-aged man told a 20-something man toting a blue-and-white Paul campaign sign.

That’s an understatement.

I understand the enthusiasm that Ron Paul’s supporters have for their candidate, but whether your goal is to win the nomination, or simply to move the Republican Party, engaging in tactics like this that really do nothing more than annoy other Republicans doesn’t accomplish anything, doesn’t help the campaign, and doesn’t help the candidate.

H/T: Jason Pye

This Should Make The War-With-Iran Argument Much More Difficult

The latest National Intelligence Estimate finds that the Iranians stopped actively pursuing nuclear weapons in 2003:

WASHINGTON (CNN) — Iran halted work toward a nuclear weapon under international scrutiny in 2003 and is unlikely to be able to produce enough enriched uranium for a bomb until 2010 to 2015, a U.S. intelligence report says.

A declassified summary of the latest National Intelligence Estimate found with “high confidence” that the Islamic republic stopped an effort to develop nuclear weapons in the fall of 2003.

The estimate is less severe than a 2005 report that judged the Iranian leadership was “determined to develop nuclear weapons despite its international obligations and international pressure.”

But the latest report says Iran — which declared its ability to produced enriched uranium for a civilian energy program in 2006 — could reverse that decision and eventually produce a nuclear weapon if it wanted to do so.

Enriched uranium at low concentrations can be used to fuel nuclear power plants, but much higher concentrations are needed to yield a nuclear explosion.

“We judge with moderate confidence that the earliest possible date Iran would be technically capable of producing enough highly enriched uranium for a weapon is late 2009, but that this is very unlikely,” the report says. A more likely time frame for that production is between 2010 and 2015, it concludes.

By which time there may not even be an Islamic Republic of Iran.

This should make the foreign policy debate during the upcoming elections more interesting. For Republicans at least, standing up to Iran was close to being a litmus test with every candidate with the exception of Ron Paul refusing to take the possibility military action off the table. Even the major Democratic candidates have been hedging their bets on Iran; and the unstated assumption underlying the debate as been that some kind of confrontation between the United States and/or Israel and Iran was coming.

The release of this report would seem to make the political argument for any military action much harder to make.

Republican Candidates Challenged On Medical Marijuana

The New York Times reported over the weekend that a public policy group is challenging Republican candidates who are opposed to the legalization of marijuana for medical use to put up or shut up:

Some of the Republican presidential candidates have dismissed medical marijuana as unnecessary or “too dangerous.” Now they’re being offered $10,000 to come up with the scientific evidence.

The Marijuana Policy Project, a group advocating the use of medical marijuana, will be in New Hampshire next week with a mobile billboard offering to contribute $10,000 to the campaigns of Rudy Giuliani, John McCain or Mitt Romney if any of the candidates can substantiate their statements about medical marijuana.

Something tells me that none of the candidates will be biting on this one.

Chavez Suffers A Setback

In what can only be characterized as a surprise, Venezuelans narrowly defeated President Hugo Chavez’s latest bid to amend the country’s Constitution to expand his power:

CARACAS, Venezuela, Dec. 3 — Venezuelan voters delivered a stinging defeat to President Hugo Chávez on Sunday, blocking proposed constitutional changes that would have given him political supremacy and accelerated the transformation of this oil-rich country into a socialist state.

Hours after the final ballots were cast, the National Electoral Council announced at 1:15 a.m. local time Monday that voters, by a margin of 51 to 49 percent, had rejected 69 reforms to the 1999 constitution. The modifications would have permitted the president to stand for reelection indefinitely, appoint governors to provinces he would create and control Venezuela’s sizable foreign reserves.


The victory for the “No” vote represents the first electoral setback for Chávez, 53, a former lieutenant colonel who won the presidency in a 1998 landslide and, until now, had trounced his opponents in one referendum and presidential election after another. Political analysts had said last week that the populist leader had lost standing this year after implementing unpopular policies, such as canceling a television station’s broadcast license and displaying increasingly erratic behavior in verbal spats with foreign leaders.

The extent of the public’s frustration with Chavez became clear a few weeks ago when an offhand remark by the King of Spain became the rallying cry for opponents of the constitutional changes that Chavez was advocating.

This isn’t the end of Chavez, of course. He remains in office through the end of 2012, which is more than enough time to stir up trouble at home and abroad.

Who Raised Taxes More: Bill Clinton or Mike Huckabee

An editorial in the Arkansas Leader reveals the truth

Mike Huckabee raised more taxes in 10 years in office than Bill Clinton did in his 12 years.


So which raised taxes more? It is hard to quantify. If you measured the increases in the revenue stream, the Huckabee tax cuts far exceeded Clinton’s but that would be unfair because the economy had grown and the same penny of tax would produce far more under Huckabee.

But if you look at the major taxes, I see the aggregate Huckabee taxes as greater, especially if you deduct the 4 cent gasoline and diesel taxes that Clinton vetoed in 1985 and that the legislature enacted over his veto.

Anyway, the sales tax is the big revenue producer. Both raised it by 1.5 cents on the dollar and both expanded it to cover a myriad of services. Clinton raised motor fuel taxes a little more, Huckabee cigarette taxes a lot more.

Now, who cut taxes the most. After all, part of Mike Huckabee’s “fiscal conservatism” is that “he cut taxes 94 times”.

The 94 tax cuts that he said he fathered are similarly misleading. The vast majority of those were the usual exemptions and modifications of various taxes and fees that the legislature enacts every time it meets. They were not a part of Huckabee’s program with a few exceptions. Rather, Democratic legislators sponsored them, usually at the behest of whatever special interest benefited, and Huckabee signed them when they hit his desk. If you did a similar summary of Clinton’s years he could claim probably well over 100 tax cuts. Every Arkansas governor since World War II could claim dozens each.

If you counted all the tax benefits extended to corporations under the incentives enacted by the legislature under Clinton — and they were part of his programs, especially in 1983, 1985 and 1989 — the tax cuts would dwarf those under Huckabee.

Tax Hike Mike is lying about his record again.

Tax Hike Mike is easily the most dangerous Republican running for president. He combines religious fanaticism with socialism and populism which would wreck the country if he’s elected. As such, I cannot support any ticket with Tax Hike Mike on it.

h/t: Jason

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at IJ and Rare. You can also find me over at the R Street Institute.
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