Category Archives: Economics

We don’t go black… We try to turn on lights

We’re not going black today, over SOPA or PIPA.

In case you by some miracle hadn’t noticed it yet, tens of thousands of web sites around the country and around the world, are “going black” or putting up banners explaining that they are not available or there is no content today etc… In protest against the “Stop Online Privacy Act” and the “ProtectIP act”, which are currently (or were recently), being promulgated in congress.

We don’t have a problem with anyone who does. It’s important that people understand what SOPA and PIPA are (or were), and most folks are sadly unaware of the kind of stupid and harmful things that our government does.

Google and Wikipedia are two of the most important and most used sites on the net; and by participating in this protest, they will very certainly make a lot more people aware of this issue.

But “going black” isn’t what we do here.

We talk about political and social issues here; in particular about liberty and freedom. We try to inform people about the important issues, events, and principles of liberty and freedom; and then talk about them in as free and open a way as we can.

I personally think that going black would be entirely against what we are about here; and while it might help to draw more attention to the problem, it wouldn’t help us inform you, or help us begin the conversation about the issue.

… and of course, you can’t go to wikipedia day to find out about it…

So, I personally, would like to do something that is in the spirit of protesting the idiotic and harmful nature of these pieces of industry lobbying masquerading as legislation…

…And share a few things:

That’s the best explanation of why the freedom to share (within fair use of course, copyrights ARE important) is important; and why legislation like PIPA and SOPA are not only stupid and harmful, but entirely antithetical to the American system of ordered liberty.

And then there’s this piece by my friend (and bestselling author, buy his excellent books please) Larry Correia:

“for all of the people out there on the internet having a massive freak out about the government potentially damaging something they love… WELCOME TO THE PARTY.

You think this is something new or unusual? Nope. This is just about a topic that you happen to be familiar with. If you fall into that camp, I want you to take a deep breath, step back, and examine all of the other issues in the past that you didn’t know jack squat about, but your knee jerk reaction was to say “there’s a problem, the governement has to do something!” Well guess what? The crap the federal government usually comes up with to fix these problems is similar to SOPA. In other words, the legislation addresses a perceived problem by instituting a bunch of stupid overregulation and taking away someone’s freedom.

You think people need access to affordable medical care and shouldn’t be denied coverage? Well, you got used and we got the bloated ridiculous mess that is Obamacare. You saw a news report about how big business defrauded people and said congress should do something? Well, everyone in the business world got screwed because of Enron by completely useless new arbitrary crap laws, and a few years later we got into an even bigger financial crisis which the arbitrary crap laws we spent billions conforming to did nothing to prevent. No, because that financial crisis was caused by people saying that there was this huge problem that needed to be fixed, so more people who couldn’t afford to pay mortgages could still buy houses, and the government simply had to do something to fix this problem!

Any crisis… Any problem… You ask the feds to fix it, you get this kind of answer. Almost never do the laws fix the actual problem. Instead the government gets bigger and gains a few more powers and it doesn’t fix the issue. When the problem gets bigger, then the government gets bigger and gains a few more powers that actually make the problem worse. Oh look! Despite all of these laws the problem has gotten even bigger? Whatever should we do? Why, I know! Let’s pass an even bigger law that takes away more individual freedom and gives the government more control!
Repeat, repeat, repeat.

Any topic, any situation, any problem.

They address it, you lose freedom and they gain more control. Some of you are only offended today because this particular law hurts something you enjoy. The rest of the time? Screw it. You can’t be bothered to pay attention. Or worse, people like me who are up in arms over an issue are just cranks or anti-government crackpots.”

I was going to write something roughly similar to this, but Larry beat me to it… and I’d rather share what he wrote, because it’s good, and because I can.

At least for now…

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Polls Show Encouraging Signs in the Cause of Liberty

Just yesterday, the Libertarian Party celebrated its 40th Anniversary. In that time, no LP presidential candidate has come close to winning and few have won any office higher than at the city or county level. As someone who would like America to return to a much freer and prosperous place, it’s very easy to become discouraged. But is it possible that perhaps maybe more of our fellow citizens are finally coming around to our way of thinking? Can Ron Paul, Rand Paul, Mike Lee and other libertarian leaning Republicans win the struggle for the soul of the Republican Party?

According to a Gallup Poll released yesterday, 64% of a sample of 1,012 adults they polled said that “big government was the biggest threat to the country in the future” compared to 26% who said big business, and 10% who said big labor was the biggest threat. Surprisingly (to me at least), it was those who identified themselves as Democrats, who had the greatest increase in adopting this view, up 16% from the poll Gallup took in 2009, 48% now say big government is the biggest threat. What is even more remarkable is this increase happened while their guy is in the Oval Office.

Gallup’s bottom line conclusion from the poll:

Americans’ concerns about the threat of big government are near record-high levels. The Occupy Wall Street movement, focused on “fighting back against the corrosive power of major banks and multinational corporations,” has drawn much attention and a large following. Still, the majority of Americans do not view big business as the greatest threat to the country when asked to choose among big business, big government, and big labor. In fact, Americans’ concerns about big business have declined significantly since 2009.

Additionally, while Occupy Wall Street isn’t necessarily affiliated with a particular party, its anti-big business message may not be resonating with majorities in any party. Republicans, independents, and now close to half of Democrats are more concerned about the threat of big government than that coming from big business.

Music to my Libertarian ears!

On the presidential campaign front, here’s another nugget of encouraging news in a recent PPP poll in Iowa: Newt Gingrich 22%, Ron Paul 21%, Mitt Romney 16%, Michele Bachmann at 11%, Rick Perry at 9%, Rick Santorum at 8%, Jon Huntsman at 5%, and Gary Johnson at 1%.

Perhaps Gov. Gary Johnson holds the key to Ron Paul closing the gap in Iowa (and perhaps elsewhere). Gov. Johnson has been publicly flirting with the idea of dropping the GOP like a bad habit and running for the Libertarian Party nomination for some time now (hey, if the Republican establishment wants to treat him like a 3rd party candidate, maybe he should become a 3rd party candidate). As much as I hate to say it, the establishment has prevailed against Johnson and his supporters in this stage of the campaign. The time has come IMHO for Johnson supporters to encourage the governor to drop out of the Republican primary contest and throw his full support behind Ron Paul (while gearing up for the LP contest in the event Paul doesn’t get the GOP nomination).

Now that I am firmly 100% in the Ron Paul camp, a word of warning: the GOP establishment isn’t taking too kindly to Ron Paul’s recent success. It’s going to get nasty the more success he has (and the more nasty the attacks become, the more we know his message is resonating). Here’s one example of what I mean.

If Ron Paul can somehow overcome the establishment and win the nomination, perhaps some of the Democrats and independents who aren’t too thrilled with Obama’s atrocious civil liberties record can help put Paul into the Whitehouse. Not an easy task to be sure but probably our best (probably only) hope of slaying the dragon of big government and restoring liberty to America.

***UPDATE***
I somehow missed this story but apparently, Gov. Johnson has requested that his name be removed from Michigan primary ballot (his request was denied).

Johnson, a former governor of New Mexico, had been running as a Republican, but was denied access to most of the party’s televised debates and recently announced he would seek the Libertarian Party nomination instead.

Johnson’s campaign could not immediately be reached for comment, and it was unclear how Johnson’s decision would affect his effort to qualify as a Libertarian. Gendreau said Michigan law prohibits a candidate whose name appears on a primary ballot, and fails to win the nomination, to appear under another party banner in the general election.

Institute for Justice’s Bone Marrow Donor Compensation Legal Challenge Prevails

Here’s a follow up to a story I linked back in 2009 concerning the Institute for Justice’s legal challenge to the National Organ Transplant Act of 1984 and the act’s applicability to bone marrow transplants. This is very good news for the roughly 3,000 Americans who die every year while waiting to find a bone marrow match:

Arlington, Va.—The Ninth U.S. Circuit Court of Appeals today issued a unanimous opinion granting victory to cancer patients and their supporters from across the nation in a landmark constitutional challenge brought against the U.S. Attorney General. The lawsuit, filed by the Institute for Justice on behalf of cancer patients, their families, an internationally renowned marrow-transplant surgeon, and a California nonprofit group, seeks to allow individuals to create a pilot program that would encourage more bone-marrow donations by offering modest compensation—such as a scholarship or housing allowance—to donors. The program had been blocked by a federal law, the National Organ Transplant Act (NOTA), which makes compensating donors of these renewable cells a major felony punishable by up to five years in prison.

Under today’s decision, this pilot program will be perfectly legal, provided the donated cells are taken from a donor’s bloodstream rather than the hip. (Approximately 70 percent of all bone marrow donations are offered through the arm in a manner similar to donating whole blood.) Now, as a result of this legal victory, not only will the pilot programs the plaintiffs looked to create be considered legal, but any form of compensation for marrow donors would be legal within the boundaries of the Ninth Circuit, which includes California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon, Washington and various other U.S. territories.

[…]

Rowes concluded, “This case isn’t about medicine; everyone agrees that bone marrow transplants save lives. This case is about whether individuals can make choices about compensating someone or receiving compensation for making a bone marrow donation without the government stopping them.”

Climate Gate 2.0 – What is it, why does it matter?

The hacker or whistle-blower who leaked a tranche of emails several years ago has struck again, releasing 5,500 emails and an encrypted set of 22,000 emails into the Internet. The proponents of Anthropogenic Global Warming are claiming it is old news, with emails being taken out of context and that due to the number of investigations that exonerated the scientists involved, the matter should be ignored.

This is very wrong. The emails are worth studying in full, because they raise very serious questions about the credibility of the IPCC, the journals publishing papers on climatology, the government scientific bodies commissioning research into climate and the news organizations covering them.

Moreover, the emails call into disrepute the assertion, frequently made, that the warming of the climate over the past century is known to be “unprecedented”. While it is possible that it is unprecedented, we do not know this for certain, since the proofs advanced are provably flawed. » 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.

Book Review: Slackernomics, by Dale Franks

Those of you that have been around the libertarian blogosphere for any length of time will recognize the name Dale Franks. His main writing gig is over at QandO, where he spends the bulk of his time writing about the economy. In addition, he’s a bit of a gunblogger, and runs a separate blog for motorcycles.

At one point a few years ago I had noticed a link to a book Dale has written called Slackernomics: Basic Economics for People Who Think Economics is Boring. Given that I’m not the type who thinks economics is boring, but had enjoyed his blogging, I wanted to get a chance to read it. At that time, the book was only available in print at a price above $20. It took a spot on my “buy when I get around to it list”, and sat there for quite some time, but I never pulled the trigger. Then, more recently, it became avaiable for the Kindle at only $2.99 — I no longer had an excuse not to buy it. So onto the Kindle it went, and after several long months of sitting there taking up space, I’ve finally gotten around to reading it.

Slackernomics is a primer on basic economic theory that, as the title suggests, is written for people who think economics is boring. It’s written in a convivial tone, and the illustrative examples that Dale uses reminds one more of Freakonomics than of Adam Smith. Don’t let that fool you, though — the book is not a “sideshow” like Freakonomics — it gets to the heart of the matter. I liken it to be similar to Henry Hazlitt’s “Economics in one Lesson”, but written for people who may not be interested in the more formal writing style of Hazlitt. In addition, having been written many decades after Hazlitt’s book, it’s obviously much more up to date.

The book covers everything from price theory, minimum wage & rent control to monetary theory and the business cycle, Keynesianism, taxes / deficit spending, savings & investment, and economic statistics. He continues with a great defense of free trade and a bit of entrance into politics (touching a tad on public choice theory). In all, for being a relatively short book, he hits all the major notes that anyone looking for an introduction to economic thought would need to learn.

But the big question, for readers of this blog, is whether it’s worth it to buy. “Am I going to learn anything new?” And I can honestly say that despite the fact that I read economic books & blogs for leisure, and that I’ve blogged a fair bit about economics myself, I learned some new things from Slackernomics. Dale’s fourth chapter, unwinding the mess of the myriad of economic reports and statistics he’s constantly posting on Twitter, Google+, and at QandO, was wonderful. I’ve looked at many of these reports merely reading analysts *reaction* to the numbers (Higher jobless claims? How unexpected!), but rarely understood which group (public or private) was putting out certain reports nor how they all fit together. For me, a layman who is conversant on a lot of economic theory but not as perhaps on the technical reports, I have never seen an explanation of the reports that come out each week and each month as simple and readable as that chapter. That was more than worth it for my $2.99.

So my recommendation is simple: at $2.99, if you have a Kindle (or a device with a Kindle app), it’s hard to pass it up. You’re almost assured to get your money’s worth from the book. Even further, if you know someone in high school or college that may not have received good schooling in economics (which is, unfortunately, most of them), and who isn’t exactly about to tackle The Wealth of Nations, find a way to get them a copy of Slackernomics. Dale’s writing style will keep them interested.

All in all, it’s a book that lives up to its title, and goes well beyond.

Reducing OWS Economic Equality Demands to Their Absurd Conclusions

While I’m sympathetic and agree with some of Occupy Wall Street’s grievances, too many of their solutions are fatally flawed. Louis DeBroux over at United Liberty has written some grade A quality snark concerning OWS’s demands for economic equality. DeBroux says he had an epiphany while watching some of the ESPN coverage concerning the NBA lockout: what if the NBA adopted the OWS model?

The most obvious reform he mentioned would be to pay all the players equally regardless of talent and contribution to his team. But why stop with pay? Why not change the rules of the game itself in the name of fairness:

This new equality should not be limited to just to salaries though; it should extend to the basketball court. While winning is fun, losing just stinks. It makes the losers feel like, well, losers. Sometimes players even cry when they lose. It hurts their self esteem and makes them feel inferior to the winners. To solve this horrible injustice, I propose that at halftime of each game, the total points scored by that time be redistributed equally among the players of both teams. Then, with one second left on the clock, just before the game ends, the head referee will call time out and the official scorekeeper will once again redistribute the points evenly among the players of both teams.

Think how great this would be! Everyone that plays will be the high scorer. Never again will an NBA player experience the sadness of losing! Every team will be the L.A. Lakers or Boston Celtics, and no team will have to feel like the Washington Wizards or Toronto Raptors. Every team will go 82-0, and every player will be an MVP! It’s perfect! Just like PC-kiddie-soccer leagues, everyone is a winner and everyone gets a trophy. Isn’t this awesome?

Obviously, this would be the death of sports if such changes were implemented. As awful as that would be, DeBroux points out life and death consequences if the notion of competition was taken out of our culture completely:

There might be the occasional sacrifice that hits closer to home when little Sally, who always wanted to be a surgeon but could never quite remember the names and anatomical characteristics of the various human organs, accidentally mistakes the aorta for the appendix and snips that sucker right out of there. Oops! That’s gonna make a mess! Alas, poor mom, we loved you and will miss you, but the loss of your life was the acceptable price for keeping Sally’s self-esteem intact by letting her become the surgeon she always wanted to be, even if she never quite mastered the minutiae of performing surgery.

We would be all worse off to be sure, but hey, at least we would all be equal!

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

Part 1
Part 2

The challenge of creating an economically sound, simpler, and more just tax code, be it the existing code, 9-9-9, a flat tax, or a sales tax will remain an impossibility if tax revenues is the only focus of any reform. The problem that dwarfs any notion of how tax policy is implemented is how the money is spent by the government.

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

Even more staggering, the sum total unfunded liabilities for Social Security and Medicare is just over $116 trillion. The prescription drug part of Medicare is over $20 trillion by itself!

Other than the Federal Reserve creating money out of thin air, what tax policy can possibly begin to support this kind of spending? It seems stupid to even pose the question.

Yet the only answer the Obama administration seems to have to pay down the debt or turn the economy around is to raise taxes on the wealthy and continue the reckless spending. The Republicans for their part offer modest tax cuts and modest spending cuts that will have no noticeable impact on the debt.

It’s high time that we as citizens tell our public servants that the out of control spending has to stop. We must demand serious structural reforms to entitlement programs or phase them out over time.

We must also recognize the difference between military spending and true national defense spending. We can no longer afford to police the world. It’s time to tell Iraq, Afghanistan, South Korea, Japan, and others that they are now responsible for their own national defense and domestic security.

That’s just a start; there’s a great deal more spending that should be cut. But before any significant cuts can be made, we need to decide just how much government we want in our lives and what we are each willing to pay. For those who believe that individuals who make under a certain income level should be spared from paying any taxes at all (i.e. too small to tax) maybe it is you who should be out front in demanding a whole lot less government.

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

Part 1

Is an economically sound, simpler, and more just tax code even possible?

The truth of the matter is that there are too many people on the Left and the Right who do not want a simpler tax code that treats everyone equally.
It’s probably not because the defenders of the existing system necessarily think the existing code is good economic policy nor does a better job funding the federal government. The most likely reasons why there is so much resistance have to do with political pandering, vote buying/special interests, and social engineering.

It’s not too difficult to figure out why the Left panders to the working poor because the poor always outnumber the wealthy regardless of how well the economy is doing overall. What would happen if there was such a tax code where everyone paid the same rate without any tax credits or loopholes and without any hidden or embedded taxes? I’m guessing it would be more difficult to raise taxes on the evil rich if it meant that everyone received the same percentage tax hike. When it comes to the tax code, equality is the very last thing the Left wants.

If there is anything I agree with the Occupy Wall Street crowd or the Left more generally it’s the special treatment politically connected individuals and businesses receive via the tax code and/or subsidies. So you say you want to get money out of politics or do something about the role of corporate lobbyists in Washington?

I do too.

The simple answer IMO is to eliminate all taxes on business and all subsidies that benefit business. If there are no taxes or subsidies, there is no reason for businesses to lobby for special tax treatment or subsidies; the main reason most industries send lobbyists to Washington in the first place. If we would like to go any further in limiting influence of special business interests, maybe just maybe we should get the government out of regulating just about every aspect of business* and restrict the government to its limited constitutional powers. What a novel concept!

Finally there’s the social engineering aspect of the tax code. Frankly, I’m not sure if those on the Left or the Right are worse when it comes to using the tax code as a tool to encourage the American people to engage in particular activities. Even with Perry’s flat tax plans, there are a handful of deductions that are sacred cows. The home interest, charitable giving, and state and local taxes are preserved for those who earn up to $500K. Those who earn under $50K can choose not to file under the 20% rate with a $12,500 per family member deduction (which would eliminate all if not most tax liability under the existing rate for those in this tax bracket). With these deductions as part of the plan, the Perry plan can hardly be called a flat tax.

While I’m critical of keeping these deductions in place (he probably could get by with a smaller rate without the deductions), it’s not difficult to figure out why Gov. Perry keeps them in place. Voters would raise all sorts of hell at the thought these deductions would go away. Maybe there’s a good argument to make that charitable giving should be deducted since these funds help people who might otherwise be on government assistance.

But the home interest deduction? Why is that held sacred? Is there some sort of right for homeowners to get a break because they choose to buy a home rather than rent? I suspect that the realtor and home building lobbies and those in government who truly believe that every person should buy a home perpetuate this notion to a point to where now home owners think they are entitled to this special treatment.

Perhaps the most sacred cow of all of the deductions is the child tax credit. This deduction is a feature of every tax reform I mentioned in part 1 (even the Fair Tax prebate is based on family size). In the last presidential debate, Rick Santorum said in so many words that the federal government should promote families via the tax code.

Is this really the sort of thing the government should be concerned with? Should the amount of taxes an individual pays have anything to do with marital status or number of dependents s/he is supporting? Is it fair to make a single person pay more taxes because s/he doesn’t have dependents?

I don’t think there is an answer that will satisfy everyone.

Part 3
» Read more

Peter Schiff to OWS: “I Am the 1% Let’s Talk”

Here’s a very fascinating video taken at New York’s Zuccotti Park where Peter Schiff has a dialogue with some of the Occupy Wall Street protesters. Schiff brought a sign that read “I Am the 1% Let’s Talk,” and talk they did.

One of the things that occurred to me watching this was how little true discussion is going on between the OWS movement and their critics. Notice how some of the protesters say things like “you rich people” or “you Republicans” etc. Just as its unfair for these protesters to lump everyone into these groups is a mistake, I think it’s also a mistake to assume that all of these protesters are clueless and don’t have some legitimate grievances.

Kudos to Peter Schiff for going out among the protesters and having this much needed conversation. There seems to be some common ground concerning these grievances; the real differences are what the solutions should be.

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

If there is one positive thing Herman Cain has contributed to the national debate it would be this renewed discussion about tax reform. While I am skeptical of some of the specifics of his 9-9-9 plan, if nothing else, Cain has forced the other candidates to come out with proposals of their own. Gov. Rick Perry in a seemingly desperate move to remain relevant proposed an alternative 20% flat tax – a single rate that’s less than the sum of all of Cain’s 9’s.

Before I was aware of and became a supporter of the Fair Tax (a 23% consumption tax that would replace the income tax, payroll tax and all other federal taxes; Gary Johnson and Herman Cain* both support the Fair Tax) I was a supporter of the Flat Tax as proposed by Steve Forbes in his 2000 presidential bid. If we must be subject to an income tax, it seems only fair that everyone pay the same tax rate. None of these proposed plans are perfect but at least everyone is subject to the same rates.

But apparently my definition of “fair” differs quite a bit from those who think a “progressive” tax (i.e. the more you make, the more the government will take) is fair. Take this article from Politico for example:

Taxing the poor has become a badge of honor among conservatives. When Occupy Wall Street protesters launched their cry of “We are the 99 percent,” the right-wing blogosphere responded, “We are the 53 percent,” meaning the 53 percent of American households that they say pay federal income taxes.

Conservatives have become fixated on the notion that largely because of the Earned Income Tax Credit — passed under Ronald Reagan and expanded under Bill Clinton — almost half of all Americans pay no income taxes.

Perry launched his presidential campaign expressing dismay at the “injustice that nearly half of all Americans don’t even pay any income tax.” And he was not alone. Every major candidate — Rep. Michele Bachmann (R-Minn.), Mitt Romney and Cain — has suggested that too many of the working poor aren’t paying income taxes, a position The Wall Street Journal describes as “GOP doctrine.”

[…]

The argument is disingenuous. Working poor people do pay taxes. They pay a larger portion of their incomes in payroll taxes and sales taxes than the wealthy. And they pay property taxes indirectly in their rental costs. Poor workers pay about one-eighth of their incomes in taxes, on average.

For the sake of argument, I will assume that the author’s assertion is correct that the working poor pay a greater share of their incomes than the wealthy counting both direct and indirect taxes. Indeed there are all sorts of hidden taxes that are embedded in every good or service we all buy.

Regulations on business (which the author of this article undoubtedly supports) that contributes to the overall cost of employing a worker** are potential earnings the worker might otherwise be paid. » Read more

Ron Paul Unveils “Restore America” Plan

LAS VEGAS – Republican presidential candidate Rep. Ron Paul unveiled his economic “Plan to Restore America” in Las Vegas Monday afternoon, calling for a lower corporate tax rate, a cut in spending by $1 trillion during his first year in office and the elimination of five cabinet-level agencies.”

[…]

Paul does get specific when he calls for a 10 percent reduction in the federal work force, while pledging to limit his presidential salary to $39,336, which his campaign says is “approximately equal to the median personal income of the American worker.” The current pay rate for commander in chief is $400,000 a year.

Based on Dr. Paul’s speech, there’s not a whole lot not to like. Cutting $1 trillion of government spending in the first year would be a very good thing IMO.

As a Gary Johnson supporter, I can’t help but get more than a little annoyed each time one of Paul’s supporters, member of his campaign staff, or the congressman himself makes the claim that Dr. Paul is the only candidate in the race who would balance the budget. Gov. Johnson has promised a balanced budget, not merely in his first term but in his first budget in virtually every debate, interview, and speech he has given since he announced his candidacy.

That criticism aside, I hope this plan is given serious consideration by the primary voters and debated among the candidates.

Herman Cain is Either a Liar or Has a Very Short Memory

Just when I was starting to give Herman Cain another look, he lies to Rep. Paul’s face in last night’s debate concerning comments he made concerning the need to audit the Federal Reserve.

Yeah, there goes crazy Uncle Ron again with these crazy misquotes he picked up off the internet!

I’m not sure if the crowd was laughing at Cain or Paul at this point but it wasn’t that difficult to find audio of his “misquotes” on YouTube from when he was guest hosting The Neal Boortz Show.

But this wasn’t the first time Cain has been busted on a flip-flop followed by an accusation that he was misquoted or received “misinformation”. The next example: Cain changes his mind as to whether the president can target an American citizen for assassination without due process.

The Flip:

The Flop:

I never said that [President Obama] should not have ordered [the killing]. I don’t recall saying that. I think you’ve got some misinformation. Keep in mind that there are a lot of people out there trying to make me sound as if I am indecisive.

I don’t know all of the compelling evidence that the intelligence agencies and the military had. I’m convinced — I’m convinced that they have enough intelligence information that said he’s a threat to the United States of America. You don’t try to prosecute or capture him simply because he’s a United States citizen.

What will he say when he is confronted with these audio and video clips? Would he have us believe that these were imposters?

If Cain would have said on either of these issues “You know, I after thinking about it a little more, I was wrong…” I might be able to respect that. But to accuse people who challenge him of misquoting him when it’s so easy to prove otherwise is disturbing to say the least.

10 Years of Failed Nation Building Policy

Last Friday marked the 10 year anniversary of the U.S. attack and subsequent nation building in Afghanistan. Most Americans, myself included, felt the attack on the Taliban and al Qaeda in Afghanistan was a perfectly legitimate response to the 9/11 terrorist attacks. I doubt that most Americans would have supported a nation building mission creep that would continue a decade later, however.

This policy has cost a great deal in blood and treasure; how well has it worked? The foreign policy experts in the first video below from the Cato Institute report on where things stand right now in Afghanistan. Their conclusion: 10 years is enough.

The second video below from the Ron Paul campaign deals with nation building more generally and asks a very provocative question: How would Americans respond if the Chinese or some other foreign power started occupying our country with troops with their own nation building program?

Gary Johnson and Ron Paul CPAC Speeches

The 2012 G.O.P. candidates each gave speeches at CPAC following the debates. Below are the speeches from Gary Johnson and Ron Paul. The first video is Johnson’s presentation before perhaps the largest audience he has had in awhile. Johnson spends a good part of his presentation introducing himself before giving an overview of his proposals. In the second video, Dr. Paul who is no stranger to CPAC, gets right into his prescriptions for fixing the economy and restoring lost liberty.

Don’t Bother with the Fine Print, Just Pass the Bill

The title of this post ought to be a red flag no matter who the president is or what your political persuasion. President Obama is demanding that congress pass his “American Jobs Act” in front of supportive crowds of people who I am sure have taken the time to read the whole bill and understand its contents. This bill should be passed “immediately” and with “No games, no politics, no delays,” so sayeth our dear leader.

I can’t help but think of another piece of legislation that had to be passed “immediately” and “without delay” nearly ten years ago in the aftermath of the terrorist attacks of 9/11. The piece of legislation I am referring to of course was the USA PATRIOT Act. I mean what’s not to like? The bill has the words “USA” and “PATRIOT” in them and would make our country safer because the law would give law enforcement the tools needed to fight terrorism.

One of the tools the PATRIOT Act (Sec 213), a.k.a. “sneak and peek” provided law enforcement the ability to delay notification of search warrants of someone suspected of a “criminal offense.” Between 2006 and 2009, this provision must have been used many hundreds or thousands of times against suspected terrorists, right? Try 15 times. This same provision was used 122 in fraud cases and 1,618 times in drug related cases.

Is this what supporters of the PATRIOT Act had in mind when most of them didn’t even read the bill?

So we’ve been down this road before – pass a bill with a name that no one would be comfortable voting against. To vote against the PATRIOT Act might suggest to voters that you are somehow unpatriotic as voting against Obama’s jobs bill will undoubtedly be used in campaign ads to say opponents are “obstructionists” or are not willing to “put politics aside” in order to “put Americans back to work.” And don’t even get me started on all the bad laws that have been passed using names of dead children.

But who is really playing political games here? I think the answer quite clearly is President Obama in this case. He knows damn well that if the economy is still in the shape it is come Election Day he has very little chance of winning a second term unless he can find some way to successfully pin the blame his political opponents. He knows that raising taxes is a nonstarter for Republicans – particularly Tea Party Republicans. There may be some good things in his bill that should be passed (the Devil is in the details of course) that Republicans can support but if it’s all or nothing, the answer will be nothing.

President Obama is counting on the nothing so he can say it’s the House Republicans’ fault that the economy hasn’t recovered. This class warfare rhetoric plays very well on college campuses and union rallies. The worst thing that could happen from Obama’s perspective is if the Republicans call his bluff, pass the bill, and the bill fails to provide the results he claims his bill will achieve (though as a political calculation, it may be a wash as Tea Party voters in-particular would not be pleased either).

The worst thing the congress could do for this economy would be to pass this bill as hastily as the PATRIOT Act was a decade ago. The best thing congress could do is for its members to actually read the bill and have a rational discussion* and debate it line by line. Whether Obama’s intentions are for good or ill, there will be seen and unforeseen consequences if the bill does pass. A top down approach (as I think this bill is) is rarely if ever a good recipe for an economy. No one is smart enough to plan the economy, not even the brain trust of the Obama administration (this should be obvious by now).

Just because the president says his bill will create jobs doesn’t make it so.
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A Ban Worth Drinking To

For the first time ever, reason.tv is cheering their “Nanny of the Month.”

That’s right, starting September 1 , more than 500 Michigan restaurant and bar owners will begin turning state lawmakers away from their establishments. State Senator So-and-so wants a brew? Too bad. Politicians won’t be served until they revisit the state’s 2010 smoking ban, which, owners say, has devastated business, and left bars like Sporty O’Tooles on the verge of collapse.

Okay, “nanny” is a bit of a misnomer in this case as these bar owners are reserving their freedom of/from association rights in their own establishments but good for them for standing up to these busybodies in the legislature. These are the kinds of bans I would love to see more of.

SP Lowers the U.S. Debt Rating

The Standards and Poor rating service has downgraded the U.S. Federal Government’s bonds to AA+ status. This action long overdue does not go far enough.

To understand the meaning of this, we should first understand the meaning of the S&P ratings.

The ratings indicate several things:
1) The likelihood of a default – the debtor failing to make interest payments owed to the people who purchased the bonds.

2) The likelihood that the bond holders will recover some of their losses after a default.

3) How quickly the debtor’s financial condition could deteriorate causing them to slide into default.

In the pdf explaining their rating system, S&P has a very interesting table showing the default rate associated with organizations based on their classification. As one would expect, in the past thirty years no AAA organization has defaulted, nor has any organization that is rated AA+.

In their press release explaining the downgrade, S&P makes the following points:

• The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
• More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
• Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
• The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case
• The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short ofwhat, in our view, would be necessary to stabilize the government’smedium-term debt dynamics.
• More broadly, the downgrade reflects our view that the effectiveness,stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned anegative outlook to the rating on April 18, 2011.
• Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics anytime soon.
• The outlook on the long-term rating is negative. We could lower thelong-term rating to ‘AA’ within the next two years if we see that lessr eduction in spending than agreed to, higher interest rates, or newfiscal pressures during the period result in a higher general governmentdebt trajectory than we currently assume in our base case.

In essence, the S&P rating agency is implying that since the recent debate about raising the debt ceiling was immaturely handled, they are now more pessimistic than they were this spring. This strikes me as and excuse to give plausible deniability to the accusation that for years they have been rating the U.S. government much more favorably than is appropriate by any objective manner.

The fact is that over the past few decades, the U.S. government’s long-term fiscal condition has been steadily eroding, and the legislature has shown no willingness to seriously tackle the issue.  Unsurprisingly any legislator who broaches the topic of reducing any of the major sources of spending, medicare, social security, millitary spending,  corporate subsidies, etc risks being voted out of office by an electorate whipped into a frenzy about an attack on the elderly, the poor, our allies, etc.

The rating agencies, having been granted a monopoly on ratings by the U.S. government, have been loath to bite the hand that feeds them, to risk the wrath of the legislature by frankly describing the terrible financial outlook for the U.S. government. At this point the AAA rating has become a joke; there is no way that the U.S. government can pay back the loans. There is no ideological chasm between the Republicans and the Democrats.  Both parties support massive welfare spending, high taxes, and massive plundering of the productive bits of the economy.  I am increasingly of the opinion that the debt fight was a kabuki theatre engaged in by the Democrats and the Republican leadership in order to end the Tea Party threat to the metastasizing state.  The Teaparty were the grownups announcing that the party has to stop, and the political parties’ leadership were the petulant teenagers plotting to keep things going a little longer.

At this point U.S. government bonds are a very bad thing to buy. The interest the U.S. government is offering is pathetically low.  Inevitably, to attract buyers, the government will have to raise the interest rate. Once they do this, prices in the secondary market for the older low-yield bonds will collapse.  The interest payments needed to service the outstanding debt will increase, and the U.S. government will be in even worse financial shape.  It’s possible that the Federal Reserve will buy the bonds itself, using newly printed dollars, much like the central bank of Zimbabwe.

Unfortunately too many retirees have invested in U.S. government bonds, expecting that the income from the bonds would provide a reliable, dependable source of income. Either they will be screwed by the inevitable default, or they will find their income’s purchasing power destroyed by inflation.

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.

Too big to fail: Washington edition

From Megan McArdle, a list of reasons why the Federal Government is too big to fail (or even pause):

  • The nation’s nuclear arsenal is no longer being watched or maintained
  • The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
  • The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don’t have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
  • All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
  • Our embassies are no longer operating, which will make things difficult for foreign travellers
  • No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
  • Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
  • The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who’s going to be teaching your kids without a special property tax assessment.
  • The market for guaranteed student loans plunges into chaos. Hope your kid wasn’t going to college this year!
  • The mortgage market evaporates. Hope you didn’t need to buy or sell a house!
  • The FDIC and the PBGC suddenly don’t have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
  • The TSA shuts down. Yay! But don’t worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don’t have a vacation planned in August, much less any work travel.
  • Unemployment money is no longer going to the states, which means that pretty so, it won’t be going to the unemployed people.

Now, how many of the companies that leftists were screaming were “too big to fail” could have had one one-hundredth the impact of a Federal Government failure? Yet these same leftists who recognize too big to fail as a bad thing want to endow the Federal Government with ever more power. Amazing.

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