Monthly Archives: December 2008

A Good Argument Against “Stimulus”

Normally I hate to pass along others’ thoughts without commentary, but this one strikes right to the heart of an issue in a way that requires no further thought. Regarding the question of whether massive government spending will stimulate the economy, Tad DeHaven over at Cato@Liberty has this response:

But isn’t spending tons of money exactly what government at all levels has been doing in recent years? According to U.S. Bureau of Economic Analysis numbers, combined federal, state, and local expenditures in 2000 were an already unhealthy 30% of GDP. Eight years and two recessions later, government spending now sucks up 35% of the nation’s economy and is trending higher. During that time we have witnessed the first $2 trillion federal budget and the first $3 trillion dollar budget.

With all the money federal, state, and local governments have been spending shouldn’t we be experiencing a boom? It would seem to me that proponents of government spending as a cure for our economic cold have it backward.

The feds have increased spending by over 50% since Bush took office, and my home state of California increased spending by about 44%. Why, then, is the only solution to this mess to increase spending even further?


Dismantling a ‘Libertarian’ Argument for Restricting Immigration

Few topics seem to trigger strong emotions like the question of immigration.  The body of classical liberal and libertarian philosophy is full of people who espouse laissez-faire positions on the movements of goods and investment across borders, then completely reverse this position when it comes to the free movement of people.  Much of the opposition seems willing to abandon liberty, even as it claims to be promoting liberty.

The Simple Argument in Favor of Open Borders:

I have a right to do business with whomever I want so long as they are willing and able to do business with me.

The Simple Argument in Favor of Open Borders Explained in Greater Detail:

I have a right to do business with whomever I want so long as they are willing and able to do business with me.  So long as that person does not trespass on someone else’s property or steal anyone else’s property in  order to do business with me, no one else has the right to physically restrain me from doing business with them.  As I wrote in an earlier post:

No, when confronted with a person who desires to leave Mexico, purchase a plane ticket from an airline, fly to Atlanta, rent an apartment from a property owner, find employment in a factory, all of which are peaceful transactions that any individual should be free to do, the vast majority of White Nationalists cheerfully and openly call upon others to thwart these peaceful transactions at every turn. They want armed men to prevent him from stepping off the aircraft, from being allowed to rent the property, from being allowed to enter an employment contract with the factory, from driving on public roads, etc. They wish to force all these transactions to be constrained for people who aren’t members of the White race.

When a person considers how limits on immigration are put into effect, one immediately can see that liberty is destroyed, not enhanced by such restrictions.  The armed man preventing an airline from permitting a paying customer from boarding, preventing a man from renting an apartment, or from selling his labor services to a factory is attacking not only the man whom they are trying to keep out of the country, but those with whom that man wishes to do business.  These restrictions inherently involve attacks on liberty.

The ‘Libertarian’ Argument Against Open Borders

An interesting argument is one leveled by Dr Hans-Herman Hoppe: » Read more

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

A Libertarian-Friendly Economic Stimulus Plan?

Based on Brad’s recent post about the stimulus plan and the comments to it, I’ve come up with a plan that puts money in the hands where it can do some good, ours, while allowing the politicians in Washington to claim they’ve done something.

Here are my starting assumptions:

1) The plan must be revenue neutral or else it would die in Congress.
2) The plan must align with the Federal Reserve’s goal of increasing liquidity in the economy to gain its support.
3) The plan must get money in the hands of the people, where it belongs.
4) The quickest way to get money into the economy is to stop withholding it from paychecks.

Based on this, the solution seems simple. Implement a tax holiday period funded by newly-printed dollars from the Federal Reserve. Americans see an immediate boost in the amount of money available to them while federal spending is not negatively (or positively) impacted.

Here are some numbers generated in response to Louis Gohmert’s tax holiday plan:

According to American Solutions, a conservative think tank founded by former Speaker of the House Newt Gingrich, Americans pay $101.6 billion per month in personal income tax and $65.6 billion per month in FICA tax.

A three month tax holiday would inject approximately $501.6 billion into the economy far faster and more efficiently than Obama’s job program can or the Bush stimulus checks did. By balancing the uncollected tax with newly printed dollars, the Federal Government can fast-track money into circulation without having to enlist the aid of banks, who are understandably cautious about lending.

Now, because this idea seems too good to be true, I’ll ask you, the readers, to blow some holes in it. Go!

» Read more

Grievous, That’s What

Kevin Drum, in response to a Tyler Cowen post explaining that we have very little evidence that fiscal stimulus actually works, suggests we try it anyway:

But do we need examples? I’d argue that we’re basically in terra incognita today. In the postwar era, we’ve virtually never seen an industrialized country, let alone the whole world, stuck in a liquidity trap before. The only example that comes to mind is Japan in the 90s, and their experience with fiscal stimulus was pretty mixed. Depending on your preconceptions, you could take the Japanese experience either as proof that massive stimulus doesn’t work or as evidence that not enough was done. And either way, it’s only one example, so it would hardly be proof enough for skeptics anyway.

That leaves us with theory, which suggests that government spending when monetary policy has lost traction helps to stimulate the economy. But even if doesn’t, my question to Tyler is this: what harm does it do to try? Assuming that stimulus spending is implemented even modestly well, it will, at a minimum, help out a bunch of people with continued employment and produce a bunch of infrastructure improvements that will enhance our future welfare. The downside is more debt, and I’m open to the argument that this is a bad thing to the extent that this debt is funded from overseas and produces further deterioration in our current account balance. But is that the argument against spending? Or is it something else?

“what harm does it do to try?”

Believe it or not, folks, that’s actually a serious question. So let’s take one moment to ask what harm would occur. We’re left with a few simple questions.

  1. Where is the money going to come from?
  2. What are the negative effects of the provisioning of this money?
  3. What better things could the money be doing?

The answer to #1 can be threefold. First, that it is raised by spending offsets elsewhere. No, stop laughing! Second, it can be raised through taxation. Third, it can come from borrowing. Fourth, it can be printed out of thin air.

So based on the answer to #1, you can comprehend an answer to #2. If it is raised through taxation, that results in money being siphoned away from the productive economy at a time when it desperately needs liquidity. Especially due to the fact that most taxes are either on income or profits, and taxing the hell out of the portions of business who are actually earning during the downturn is not helpful. If it is raised through borrowing, you run into the same problem. You’re taking money away from productive enterprises who may have some risk in their needed borrowing by offering huge amounts of “safe” investments to the people with money. Essentially, you exacerbate the “liquidity trap” as the government soaks up the little liquidity that exists. Arguably, the printing press is the best of bad options, especially in a deflationary debt spiral, because it may stop the bleeding. But as I mentioned a mere two months ago, I don’t think they’ll know when to shut off the pump.

Based on all the negative answers to #2, you get a sense of the problems with #3. The real productive part of society is the private sector. Siphoning money away from that portion of the economy through taxation or borrowing hampers the ability of the private sector to operate. Trying to create make-work projects using printed money has the appearance of being much better, but it is only a matter of appearances — the economic activity is not “real” and every dollar spent makes everyone poorer through an inflation tax.

Drum’s argument is similar to one often used regarding FDR: “His small-scale socialism is what kept people fed and clothed enough to keep them from overthrowing the whole system.” It’s a nice claim, because it cannot be disproved, but the inherent claim is much simpler — “Doing nothing would be far worse than doing something.”

Drum suggests that even though we do not have any evidence that a massive fiscal stimulus program would work, it’s better than nothing*. He wants to put the burden of proof on us to show that massive fiscal stimulus is worse than doing nothing. But I think that the party who wants to either tax, borrow, or print anywhere between hundreds of billions to a few trillions of dollars for stimulus should carry the burden of proof. The default position is not to spend this money, and an absence of evidence of the utility of doing so is only further reason that we should do nothing.
» Read more

The Need for Deflation

In a follow-up on Tarran’s excellent Primer on Money, I’d like to take the opportunity to bring the lessons to bear on our current financial situation.

Tarran correctly points out what has happened with the US Government and its ability to control the money supply:

Today, the United States government has engaged in massive amounts of spending. They are not getting this money through taxation. Rather they are borrowing it, and a good portion of what is being borrowed is money created by the Federal Reserve.

As Milton Friedman pointed out, inflation is always a monetary phenomenon. Here’s my quick and dirty example of inflation:

Imagine if you were in a poker game with four other people. You each put $50 in. That means there’s $250 on the table. Now, you’re playing with chips instead of cash. The banker makes sure each of you get the equivalent of $50 in chips. So far, so good, right?

After a while, the guy sitting to your left starts losing chips on some bad bets. He’s not wiped out yet, but he’s not doing great either. You start watching him more carefully as he continues to lose money. Suddenly, through the buzz you’ve got going after four beers, you realize that he should have run out of money two hands ago. He’s been adding chips to the game! Worse, they look identical to the chips used by the banker.

You call the guy on it, and the rest of you decide it’s time to cash out. There’s a problem, though, because now there are more chips than there is real money. In other words, your chip supply has been inflated beyond whatever value was backing it. So, to cash out of the game, you would have to adjust the value of the chips so that all the chips added together equals $250, now making each chip worth less than it was before.

In this example, by introducing more chips into the game, our cheat was able to steal a little bit of money from each of the other players in the game to continue his play after the point he should’ve been bust. His deliberate inflation of the chip supply was theft.

Now, take this example and apply it to what happens when the US Government demands freshly-printed money from the Federal Reserve for spending. All the other dollars in circulation lose a little value upon the creation of that new money. In other words, the US Government has gotten the Federal Reserve to steal a little bit of buying power from your wallet, bank accounts, and investments by forcing them to print new money. That’s theft!

It’s theft in reality, but because of the party committing the theft, we have a special name for it: a tax. So, in the case of the US Government, inflation is taxation.

But, that’s not all that’s been going on. » Read more

Well-Needed Lambast Of Democracy-Worship

I’ve come out with criticisms of democracy at many times in the past. I believe simple “majority rule”, which is what democracy is, is not a very good form of government. When most westerners think of “democracy”, they actually think of a western liberal form of government similar to that we have in the USA, where the government is hamstrung from becoming too heavy-handed by the natural history of the culture (in our case, English common law and natural rights doctrine), and Constitutional limits on the scope of power. Thus, many applaud the spread of “democracy” around the world, but do not understand that democracy without the above restraints ceases to be a good form of government.

I’ve pointed out that those restraints are beginning to crumble here in the USA, and we’ll all be worse for it. TJIC, along the same lines, gives his take on democracy:

I continue to assert that the leftist love affair with “democracy” is a horrid mistake. Or, rather, democracy is something horrible, and leftists love it for that very reason. Justice and freedom are the two important things in society, and democracy is neither – it is a tool whereby the political leaders are selected. Certainly, there is some reason to believe that a polity with a feedback loop whereby the worst leaders can – maybe – be ejected from power via the ballot box is preferable to the identical system where no leader can ever be ejected from power … but that’s hardly a ringing endorsement of democracy as the be-all, end-all of governance.

I am convinced that leftists love democracy, though, particularly because it does not promise freedom. Individual freedom (a negative right; an ability to say that government may not do something) is often distasteful to leftists, and “democracy” is an ideology that makes it easy to subvert the desire to stop government. “Stop government?” they say “why, the government is not something ‘other’ – the government is just you and me! All of us, working together, to accomplish a common goal! Now, it’s only fair that we the people …”, and thus begins the justification for all manner of theft, destruction and regulation.

I spoke about Libertarianism and Democracy two years ago, where the salient point is this:

Libertarianism isn’t anti-Democracy. In fact, the statement itself is nonsensical. Libertarianism is a moral system, valuing individual liberty as it’s highest ideal. Democracy is a form of government, consisting of majority rule. Or, to make it more plain, liberty is an end, democracy is a means to an end.

Unrestrained democracy does not always (some would say not even usually) lead to liberty. In fact, democracy is a subterfuge by which liberty can be restrained. The majority is often wrong, and many infringements of liberty (slavery, Jim Crow and segregation) were upheld by the majority. It’s not that I’m opposed to majority rule; I’m opposed to unjust rule. Unjust rule is far more difficult to defeat when it is justified by “the will of the people”.

Quote Of The Day

I was at lunch with colleagues today, and the question was raised as to why regulators couldn’t see the financial crisis coming due to all the “creative” financial instruments. To me it was clear, and I threw out a slight paraphrase of an old saying:

Those who can; produce. Those who can’t; regulate.

Now, it’s undoubtedly more complex than that. Just as they say generals spend time preparing for “the last” war, I would say that regulators try to address “the last crisis”. While they were trying to solve the incentives that created Enron with SarbOx, people with money on the line were looking for ways to exploit the rules of SarbOx. The system is structured to reward those who find the loopholes in the system.

But I think it’s also clear that the leading lights of the world aren’t drawn to the comparative low pay of government employment. Those who are willing to risk more get the bigger rewards.

The problem is the system. If there were LESS constraints, there would be less of a presumption of safety in the market. That presumption of safety and stability is one of those things that allowed people to become so highly leveraged. If we didn’t live in a world where we assumed that the SEC makes us safe, might we take a little more care in how we invest?

A Primer on Money

Money is critical to civilization. Without it, the capital improvements and complex economic processes are impossible, and there will be a very weak form division of labor. Money allows humanity to rise above the savagery of stone age existence. Yet most people don’t understand what money is, how it is created and how it can be abused by elites in a society to plunder the common men.

What is money?

Imagine you are a farmer. You want to purchase some shoes. You grow grain. To purchase shoes in a barter economy, you must find a shoemaker who wants some grain. If you want to purchase some eggs, you must find an egg farmer who wants grain. If you want to make a tractor, you have to find a tractor maker who wants to be paid in grain, or failing that, you have to find the tools and materials you need to build the tractor from scratch, finding suppliers who are willing to be paid in grain.
Of course, grain is perishable, so you can’t amass too much grain with which to pay for really expensive stuff. And of course, you are not likely to find a supplier who is willing to be paid in large amounts of grain since they fact the same problem. As a result, you will be limited to purchasing small items that are worth small amounts of grain.

All of these problems can be solved by trading your grain not directly for the stuff you want to consume, but for something that is
a) more long lasting than your grain
b) in wider demand than your grain

Whereas you might only find one shoemaker who is willing to trade shoes for your grain, you might find three shoemakers who are willing to trade shoes for this mystery substance. This allows you to chose the lowest cost supplier of shoes, who is willing to trade the most shoes for the least amount of your grain.

Additionally, you can stockpile this substance, storing it for later consumption, allowing you to save years of productions in order to purchase some very expensive item like a tractor.

Finally, if this substance is popular enough, you will be able to find many people willing to buy your grain by trading you this substance. This allows you to maximize the payment you get for your product.

Of course, given a choice between two substances that have these qualities, you will naturally choose the substance that has the best qualities you are looking for, choosing the more popular substance over the less popular one if you are looking for something to trade in the near term, and choosing the more durable item over the less durable one if you are looking to stockpile it.

If you are not a farmer, but a tractor maker, selling one tractor every few months, but needing to buy food daily you will of course have an additional quality you demand: you want something that is divisible.

Any human society where people engage in trade, some substance or small group of substances that are
a) homogeneous or fungible
b) durable
c) in wide demand

will come to dominate the trade. These substances are what we call money.

Inflation in a free market

Since money is merely a commodity that is widely demanded for trading purposes, it is produced like any other commodity. Farmers grow tobacco. Distillers distill whiskey. Chemists produce cocaine paste. Miners produce gold. The production is dictated by the demand for the commodity.

Of course, the larger the supply of money that is available for trade, the lower the price of the money in terms of other commodities. In other words, if the supply of gold expands, everything else being equal, the number of bushels of grain an ounce will purchase will go down. Of course, to a persons seeking to purchase things with the money, they see this as each bushel of grain having a higher price.

Rising prices erode savings. The faster the supply of a money commodity is increasing, the less useful it is as a way of saving. This reduction in the usefulness of the commodity translates into a reduced demand for it. The reduction in demand means that people will be less interested in trading other goods for it, which again results in a rise in prices, since a a grain seller will want even more of the stuff before he is willing to risk a trade.

There are two outcomes of rising prices due to inflation in a free market. The first is that production is reduced. As the money commodity becomes worth less, its production becomes less profitable. The production eventually slows until the effort involved in producing money is once again justified by the profit earned by selling it for other goods and services.

The second is that people look for more stable substitutes, and start switching to using alternate money-commodities for their transactions.

Deviation From Free Markets

Money standards
Of course, the producer of the money commodity would prefer that this not happen. Many would see an opportunity for great profit if they could produce the commodity as rapidly as possible without having to worry about people abandoning the money.
So they call for laws to force people to do business in that commodity. These laws are known as legal tender laws. These laws force people to settle debts in the commodities whether they want to accept them or not. The force is to the detriment of consumers and money users, who are forced to forego a better money in favor of the standard.
Taxation can confine people to using a particular commodity just as legal tender laws do. If the government routinely levies taxes that are to be paid in fish-heads, for example, people will have to procure a certain number of fish-heads annually to pay the tax. The fish-heads being in wide demand, naturally they are used in indirect exchange. Other commodities are at a substantial disadvantage as far as their usefulness as a money.
Discriminatory Taxation
A government can also make alternate commodities even less popular by taxing transactions or saving in other commodities more heavily than the government approved money commodity. Her in the United States, for example, if you keep your savings in gold rather than in U.S. dollars, when you trade the gold for something else, you are levied a capital gains tax on the difference between the prices in dollars of gold on the day it was traded away and the day you acquired it.

The dangers of government control of the money supply

There are two properties that make governments especially destructive:

1)Governments are able to seize resources by force and to compel people to do buainess with them allowing them to continue economically unprofitable activities for far longer than free market enterprises.

2)Governments, being controlled by people who have little incentive to take a long term view, and a great deal of incentive to use their offices for short-term personal gain

When governments seize control of the money supply, the result is usually disaster. They overproduce money, usually by debasing coinage. They force people to use the state approved currency to the exclusion of all else. In extreme cases they wreck the economy so badly that saving because impossible, and the economy reverts to a barter economy.

Today, the United States government has engaged in massive amounts of spending. They are not getting this money through taxation. Rather they are borrowing it, and a good porioin of what is being borrowed is money created by the Federal Reserve. The production costs of U.S. dollars being almost nonexistent, the Federal Reserve can continue to create money profitably through a Zimbabwe like hyperinflation. The Soviet Union and Nazi Germany were founded upon the ruins of nations whose economies had been strangled by government mismanagement of money. Will the United States similarly succumb to tyranny? Time will tell.

Recommended Reading

What has government done to our money? by Dr Murray Rothbard

Milton Friedman and the Case against Currency Monopoly by G Selgin

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

Bush ignores Congress…

…again. When Congress couldn’t come to terms on a bailout for the big three stooges, President Bush had to make sure it got done:

President George W. Bush’s decision to provide up to $17.4 billion in short-term loans should help General Motors Corp. and Chrysler LLC avoid a short-term cash crisis, but it will force them to dramatically change how they operate – or face bankruptcy.

No one should be surprised by this. The question is whether or not Obama will be inspired by this to continue the imperial presidency “for the good of the economy”. Your thoughts?

Condemning Those Who Forget History

Financial analysts are starting to notice a disturbing correlation between the present economic crisis and the roots of the stagnation that gripped Japan for the better part of a decade starting in the 1990s.

In today’s New York Times, for example, Martin Flacker notes a surprising similarity between what the Federal Reserve has been doing and the actions that the Bank of Japan took in response to it’s crisis:

The Bank of Japan first lowered interest rates to zero in 1999 for a year and then again in 2001 for five years. The Japanese central bank was trying to contain a domestic financial crisis not unlike the one now crippling global markets, in which collapsing real estate and share prices caused the bankruptcy of large financial companies, like Yamaichi Securities in 1997.

The central bank’s hope was that by lowering borrowing costs to virtually nil, it could encourage commercial banks to lend more money to businesses and consumers, rekindling demand.

Sound familiar ? It should, because it’s essentially the same thing that the Federal Reserve Board has been doing since September.

And the similarities don’t end there, Anthony Randazzo at Reason notes the five mistakes that Japan made when faced with a bursting asset bubble:

First mistake. The Bank of Japan tried to ease economic pains during their downturn through the 1990s by loaning large amounts of money to businesses. However, such attempts to recapitalize the market were counteracted by underlying management problems endemic to the dying firms.

According to Shigenori Shiratsuka, Deputy Director and Senior Economist at the Bank of Japan, even though firms became unprofitable, the government still encouraged lending to them to prevent losses from materializing. There were heavy concerns about a failing firm increasing unemployment.


Fifth mistake. With the Japanese government enabling lending to zombie businesses, taking cash away from productive ventures, and passing tax laws and other regulations that did not promote growth, the private sector was actively discouraged from investing.

Again, sound familiar ? The United States started doing that in September with the financial services bailout — which quickly expanded beyond the financial services industry as more and more companies sought to redefine themselves as banks in order to be eligible for government largesse — and continues today in the just-announced auto industry bailout.

Rather than letting the market liquidate these zombie companies in an orderly fashion, the Japanese government instead sought to prop them up, which only served to delay the inevitable day of reckoning, and divert money from more productive uses.

But if you thought the similarities between late 80’s Japan and America 2008 ended there, you’d be wrong; the Japanese also tried a healthy dose of Keyensian pump-priming:

As January 20 nears, Barack Obama’s ambitions for spending on the likes of roads, bridges and jobless benefits keep growing. The latest leak puts the “stimulus” at $1 trillion over a couple of years, and the political class is embracing it as a miracle cure.

Not to spoil the party, but this is not a new idea. Keynesian “pump-priming” in a recession has often been tried, and as an economic stimulus it is overrated. The money that the government spends has to come from somewhere, which means from the private economy in higher taxes or borrowing. The public works are usually less productive than the foregone private investment.

In the Age of Obama, we seem fated to re-explain these eternal lessons. So for today we thought we’d recount the history of the last major country that tried to spend its way to “stimulus” — Japan during its “lost decade” of the 1990s. In 1992, Japanese Prime Minister Kiichi Miyazawa faced falling property prices and a stock market that had sunk 60% in three years. Mr. Miyazawa’s Liberal Democratic Party won re-election promising that Japan would spend its way to becoming a “lifestyle superpower.” The country embarked on a great Keynesian experiment:

Over a period from 1992 through 1999, the Japanese injected 118.2 trillion Yen (the equivalent of about 203.4 billion US Dollars at current exchange rates) into the economy, and it didn’t help move the economy one bit. Japan’s economy was stagnant for a decade and didn’t start moving again until 2003:

Japan’s economy grow anemically over that decade, but as the nearby chart shows, its national debt exploded. Only in this decade, with a monetary reflation and Prime Minister Junichiro Koizumi’s decision to privatize state assets and force banks to acknowledge their bad debts, did the economy recover.

Do Barack Obama, George W. Bush, Hank Paulson, and Ben Bernanke really think that the United States can succeed where the Japanese so obviously failed ?

More importantly, can American’s learn from the mistakes committed by what was once the most dynamic economy in the world ?

We’d better hope so, otherwise we could be looking at a pretty long and bleak decade.

Cross-posted from Below The Beltway

Quote of the Day: The Death Penalty Edition

From Mississippi Supreme Court Justice Oliver Diaz Jr. dissent in Doss v. Mississippi

[T]he most terrifying possibility in a system where the death penalty is dealt arbitrarily: innocent men can be, and have been, sentenced to die for crimes they did not commit. In 2008 alone, two men – both black – convicted of murders in Mississippi in the mid-1990s have been exonerated fully by a non-profit group that investigates such injustices.

One of these men, Kennedy Brewer, spent an astonishing six years on death row. Just as a cockroach scurrying across a kitchen floor at night invariably proves the presence of thousands unseen, these cases leave little room for doubt that innocent men, at unknown and terrible moments in our history, have gone unexonerated and been sent baselessly to their deaths.

Hat Tip: Reason Hit & Run

Open Thread Question: Is Naming a Child “Adolf Hitler” Child Abuse?

Heath and Deborah Campbell have three young children. Their names: JoyceLynn Aryan Nation Campbell, Honszlynn Hinler Jeannie Campbell, and Adolph Hitler Campbell. Unsurprisingly to everyone (with the exception of Heath and Deborah Campbell), having such names for their children can have very negative effects on their children. When it came time to request a birthday cake from ShopRite complete with the words “Happy Birthday Adolf Hitler,”* ShopRite refused. ShopRite offered to leave room for the Campbells to write the inscription themselves but the Campbells refused.

In the comments section of this news story, some suggest that the very act of naming a child Adolf Hitler constitutes child abuse. There’s no question that in the course of Adolf’s life his name will cause him a great deal of hardships; not having a cake with his name on it will probably be the least of them. But child abuse?

I am hesitant to say that naming a child after a despicable person is child abuse for the same reason I oppose so-called hate crimes legislation: criminalizing thought. Are those who would argue that naming a child Adolf Hitler is child abuse suggesting that CPS should take the children away from the Campbells? If so, what other names should be considered child abuse worthy of the state taking action? David Duke? Joseph Stalin? If the Campbells would have chosen “Che Guevera Campbell” or “Mao Zedong Campbell” (Mao who killed many times that of Adolf Hitler), ShopRite probably would have had no problem inscribing those names and the child would likely have far fewer problems associated with those names in his lifetime.

Perhaps when Adolf reaches adulthood he can choose to change his name** and serve his loving parents with a lawsuit for a lifetime of otherwise avoidable emotional and psychological damages?

But until that day, how should the public respond to the Campbells? They should be shunned.

And goods and/or services businesses would otherwise provide the Campbells? ShopRite did the right thing by refusing to grant their request. Businesses should have the right to refuse service to anyone for any reason.

If enough people refuse to associate themselves with the Campbells, perhaps they will be shamed into learning that naming a child Adolf Hitler isn’t the best idea. But to say that giving their children such terrible names is child abuse may be a bridge too far.

» Read more

The Gloves Come Off At The Fed

Well, they’re about to make it official. The Fed will stop at nothing to make sure they “save” the markets. So far they’ve been unable to stop the deleveraging and get things moving, so they’re pulling out all stops:

The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy.

The Fed’s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.

Bernanke, a scholar of the Great Depression, indicated in a Dec. 1 speech that policy makers will need to focus on “the second arrow in the Federal Reserve’s quiver — the provision of liquidity,” including options such as purchasing Treasuries to inject more cash into the economy.

A formal commitment to expand the balance sheet would constitute “the most extraordinary policy approach we have seen” so far, said Brian Sack, a former economist at the Fed’s Monetary Affairs Division, who is now senior economist at Macroeconomic Advisers LLC in Washington.

Emphasis added for a very strong reason. In early September, that Fed balance sheet was reading about $900B. It’s now up to about $2.29T. And not they’re actually admitting they want to expand it, which can only mean we’re looking at another enormous addition.

All this so far, and they’re throwing more money around, and it doesn’t seem to be improving. Anyone else get the sense that the saying that best explains the situation is “pushing on a string”?

Driving Home In The Dark

For a long time, I’ve been pissed off about Daylight Savings Time. In my job, I work with a lot of people across the country, and thus I get into work early (7:30 or so) and leave about 5:00 PM. Before it went into effect this year, each morning I would drive to work in sunlight, and return home in sunlight. I’d have a good half an hour or more of evening dusk when I got home. After it went into effect, I still drove to work in the sunlight, but each day I drive home in the dark.

I had remembered learning, years ago, that it had something to do with making life easier on farmers. Which I never understood, because farmers live far more based on the earth’s clock than man’s. But even so, I never quite understood why the rest of us would be stuck going along with it, when we no longer live an in agriculture-dominated society. Then, they changed the deal, making the duration of DST shorter in the hopes of being more “green”.

It turns out, though, that DST is actually rather pointless AND it is an energy-waster.

The Daylight Savings idea was one of Ben Franklin’s worst. He thought we’d all save candles if, in the summer, we started the day earlier on the clock, leaving more sunshine for the evening.

Politicians made it official: Move the clock one hour forward in the summer, to hoodwink people to get up earlier and leave more daylight hours for after work.

But now it turns out that Daylight Savings Time doesn’t save energy. Matthew J. Kotchen and Laura E. Grant, writing in the New York Times, report on their recent study in Indiana, where implementation of Daylight Savings has been county-by-county, a perfect statistical testing ground.

They found that Daylight Savings cost one percent extra. Franklin didn’t figure on morning heaters and daytime air conditioning.

I lived in Indiana before DST was in effect there, while I attended Purdue. Half the year, I would be on the same time as my parents in Illinois, and half the year I’d be an hour ahead of them. While it was largely an annoyance, it wasn’t that big of a deal. I often chided my hoosier friends* about the residents of their state simply being incapable to comprehend DST and change their clocks.

But — and believe me, it pains me to say it — maybe Indiana was right? Could it be finally time to put an end to DST once and for all?

UPDATE 10:30 PM: Okay, folks… Mea culpa. I said I never quite understood the whole deal about DST, and then I proved myself completely correct. I’m still not a big fan of it, but thanks for pointing out my mistakes.
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Lining Up At The Trough

Don’t think it’s just Wall Street & the Big 3, everyone’s coming for this:

“We’re talking a significant bump up in Pell,” says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. The association is one of the organizations signing on to a letter to House Speaker Nancy Pelosi, D-Calif., that outlined the proposals, citing the need to help struggling families who cannot pay for college.

Other education groups signing on to the plan include the American Association of State Colleges and Universities, State Higher Education Executive Officers, the National Association of Student Financial Aid Administrators and the United States Student Association. The National Consumer Law Center and Project on Student Debt are other co-sponsors.

The move comes as automakers, mayors and other sectors are putting pressure on Congress for new federal spending to combat the recession. After passing a $700 billion financial bailout largely aimed at Wall Street, lawmakers are planning a large “Main Street” economic stimulus package with public works and construction spending and, education leaders hope, some attention to postsecondary education.

“I think everybody is going to fight for their fair share,” Nassirian says of the current budget climate.

As a result, long-time concerns about deficit spending and limited resources have all but vanished. “The budget always has checkmated many policy ideas we presented in the past,” Nassirian says. Of the abrupt shift in tone in Washington, he says, “It’s extraordinary.”

Am I the only one reaching straight to protect my wallet any time anyone starts talking about a “fair share”? To them, fairness means to make sure some other sucker pays the bill, and they get the reward. Fairness is ensuring that when they line up for free goodies, there are still some left when they get to the front of the line.

Put simply, most people’s definition of “fairness” scares the hell out of me.

2008 Guide To Government Waste

Oklahoma Senator Tom Coburn has published a guide giving a snapshot of the most wasteful programs enacted by the Federal government this year. The programs highlighted total a little over $1.3 billion (which is small potatoes in a year where the budget deficit is hovering around $1 trillion).

Some of the programs highlighted are:

National Drug Intelligence Center – Pennsylvania ($39 million)
In 1992, Congress created, the National Drug Intelligence Center in Johnstown to collect information on drug activity around the nation. Since then, though, it has been labeled a “boondoggle” and, according to U.S. News and World Report, “been rocked by scandal, and been subjected to persistent criticisms that it should have never been created at all.”76 Attempts have been made in recent years by the Department of Justice to shut down the center because of concerns related toduplication, overlap and wasteful spending. None of this stopped Congress from awarding NDIC $39 million in 2008.77 One former NDIC director said, “I recognized that a lot of reports were [awful], poorly written, poorly researched, and, in some cases, wrong.”

This program is a snapshot of the entire War on (some) Drugs. By the way, the Congressman for Johnstown, Pennsylvania just happens to be John Murtha.

Kanjorski Center Parking Garage ? Pennsylvania ($5.6 million)
That the Kanjorski Center, a 32,000 square foot office building in Pennsylvania, has stood completely empty since 2005 did not prevent Congress from trying to funnel $5.6 million in transportation money to add a large parking garage to it.83 Officials at the Department of Transportation opposed the project, noting that current law prohibits the department from funding parking garages unless they serve mass transit needs – and this parking garage would not meet the test. Angered by the rules, one local congressman is fighting to keep the project alive, saying, “I don’t think the rule should have any attention paid to it. Because in Congress we have our own rules.”84 When challenged by a reporter that the parking garage is costly to federal taxpayers, he replied, “For the community, it is free money.”

Paul Kanjorski, a corrupt Congressman who was reelected in November, has found yet another way to steal from taxpayers.

Field Trips for School Teachers – Illinois ($918,600)
Field trips aren’t just for students anymore. Teachers from Illinois were given a grant of nearly $1 million by the Department of Education Teaching U.S. History program for vacations in the name of “continuing education.” Upcoming outings are planned for New York City, while past trips to New Orleans, Boston, California and Washington, D.C. were paid for with federal funds. High school teacher, Chris Johnson, a veteran trip?taker, feels that excursions to other cities help to give teachers “ownership” of the material they teach. “I’m a better teacher today than before I started these trips,” he said.

Government workers taking yet another taxpayer funded junket.

2010 Decennial Census Bailout – ($210 million)

Since 2004, the Census Bureau has embarked on an effort to bring the 2010 Census into the 21st Century, but wound up in the 18th Century. One of the significant challenges facing the Census is the collection of information from 300 million Americans entirely by pper and pencil. To do so, the Bureau awarded a $600 million contract to the Harris Corporation to develop handheld computers that would help census takers collect data electroically. The devices were problematic from the start, and although they rely on basic technology found in nearly all cell phones, the agency was never able to get them working properly. When asked in 2006 whether it would be appropriate to have a backup plan in case the handheld computers did not work, then?director Louis Kincannon responded, “They will work. They have worked. You might as well ask me what happens if the Postal Service refuses to deliver the census form.”93 Despite enormous cost overruns, the devices will only contain half of the functionality originally intended. As a reward, Congress gave the Census Bureau a $210 million bonus in the form of an “emergency” bailout.94 $800 million later, the 2010 Census will still be collected, not electronically but by paper and pencil, just like the first census over 200 years ago.

$800 million pissed away just to count people.

Billings Mustangs Minor League Baseball Stadium – Montana ($328,300)
In 2008, the Billings Mustangs – a minor league baseball team affiliated with the Cincinnati Reds – moved out of Cobb Field and into its new home, Dehler Park. While constructing the new stadium, which cost $13 million, came in under budget and completed its first season of operations, the federal government is sending the team a check for $328,300. Funds will come from the Community Development Block Grant program despite the fact that local citizens fully funded the stadum with municipal bonds and more than $2 million in private donations, making federal money unnecessary. “But I have plans for it,” insists Mike Whitaker, director of the park. He would like to use at least $100,000 of the extra cash to put up a foul ball net that the stadium does not need, “We feel we need to put netting along North 27th Street, even though it’s not required.”

Now the Federal government is getting involved in building stadiums…

Senator Coburn has some solutions for fighting government waste:

1.Eliminate programs that do not work. Federal programs do not often disappear, but that does not mean they all work well. If a determination is made that a program is not achieving results, it should be eliminated.

Federal programs are power, for Congressman to buy votes and for bureaucrats to run citizens’ lives. I do not see the government giving up this power anytime soon.

2.Eliminate or consolidate duplicative existing programs. Those that duplicate existing government programs and are no longer needed and should be eliminated.

See item 1.

3. Eliminate earmarks. Earmarks, otherwise known as “pork,” are pet projects that members of Congress single?handedly direct, often to bring home money to their district. While that might seem like a good idea, or even a congressman’s job, the earmark process is corrupt, wasteful and non?transparent. Tax dollars are routinely directed into questionable projects, as seen in this report, which benefit lobbyists, special interest groups and the well?connected. They are not required to have a meritorious purpose or to demonstrate results, and should be eliminated.

The problem with earmarks, as Senator Coburn writes above, is not the amount of money given (which is quite small in the big picture), but the fact that earmarks are often the currency of corruption.

The rest of the items are:

Implement stronger transparency measures. Transparency in government should allow the taxpayer to know how every penny of federal money is spent. The advantages of this are obvious, and include the accountability brought to officials who know that poor spending decisions will be found out and penalized. Taxpayers should be able to track every federal expenditure on loans, grants and contracts down to the penny.
Conduct more congressional oversight. Congressional oversight and hearings provide an opportunity to exert Congress’ “power of the purse” on the actions of the government. Oversight should ensure money is spent wisely and in line with objective performance standards. Members of Congress should be held accountable for how tax dollars are spent, and they in turn should agencies accountable for how they spend tax dollars.

End automatic budget increases. Too often, Congress increases the budget of every government agency without regard to the previous year’s performance. This practice must end with resources being directed only to those programs performing well and not to those that fail, as well as to only those programs that are true national priorities.

Require Performance Metrics for All Programs. Many federal programs operate with objectives that are illdefined or nonexistent. Every program should be given performance metrics that are measureable and enforceable.

All of the above require an informed and engaged citizenry that believes in liberty or at the very least an efficient government. That is something we do not have in this country. Until that happens, abuses like ones outline above will continue..

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.

Do We Even Need Congress Any More?

Signing statements were wrong enough… Now Bush is saying “if Congress won’t do it, I’ll do it myself“:

Under mounting pressure to act, the Bush administration said Friday it was ready to step in and prevent the U.S. auto industry from collapsing after the Senate refused to pass a rescue bill endorsed by the White House and congressional Democrats. The most obvious source of help was the Wall Street bailout fund.

“The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry,” White House press secretary Dana Perino said.

Treasury spokeswoman Brookly McLaughlin said, “Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.”

The Bush administration has repeatedly said the Wall Street bailout fund should not be used for emergency aid to the automakers because it was designed to restore stability to the financial sector. But with the Senate’s action, Detroit’s supporters looked to the White House for help.

I think I’ve seen this before. My son isn’t quite old enough to use this tactic, but I think most children figure it out pretty quickly. If Mommy says no, go ask Daddy.

This is how an imperial presidency behaves. Bush believes that he should be able to get what he wants, and that Congress exists to enact his goals into law. When they don’t see it the same way, rather than accepting that a legislature (which should rightfully hold the purse strings) has decided not to play along, he simply decides to do it anyway.

If this is the way things work, isn’t Congress just there for show?

“Aha!”, you say, “Bush won’t be around more than another month, so things will get better when we don’t have someone who wants to expand Presidential authority!” Think again:

President-elect Barack Obama said he was disappointed that the Senate failed to act. “My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term-restructuring that is absolutely required,” he said in a statement.

Well, President-elect, Congress pretty clearly said they’re not going to do it. Does that grant the President authority to do it anyway? Would your answer be any different if you weren’t the President-elect?

I think what Obama’s saying, since it’s such a short remaining tenure for his predecessor, is this: “I’m not a believer in the strong executive powers that Bush has taken. However, I can no longer argue against them, because I see a lot of wonderful ways to use them myself.”

Congress may be useless, but I don’t in any way support the President simply doing an end-run around their responsibilities when he doesn’t like what they have to say.

Che, Mao, and Pop Culture

One thing that disturbs me to no end is the way despotic Communist serial killers like Ernesto “Che” Guevara and Mao Zedong are iconic figures in American pop culture. When I see someone wearing Che’s ugly mug on his/her chest, I want to ask him/her: “Do you really have any idea who this man was or what he did?” I suspect that if I were to ask, I’d get a blank stare.

This short video below from features interviews with two individuals who lived under the thumbs of Che and Mao. Neither are what you would call fans of these pop culture icons.

Quote Of The Day

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Ludwig Von Mises

After Great Depression I, a well-known economist was quoted* to say “We are all Keynesians now.”

Perhaps the refrain after Great Depression II will be “We are all Austrians now”?

Hat Tip: to herd or not to herd
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