Category Archives: Socialism

Chavez’ Plan: Domination Through Caffeine Withdrawal!

We’ve already reported on Venezuelan food shortages, which are going to make the population too weak to fight Chavez. Now it appears they’ll be too tired as well:

Venezuela, a traditional coffee exporter that boasts one of the best cups of java in South America, may have to import coffee for the first time ever this year or face shortages, industry experts said.

Producers say rising costs and prices fixed by the government have caused production to fall and illegal exports to rise. The government says poor climate and speculation by growers and roasters is to blame.

“There is a serious shortage,” Pedro Vicente Perez, coffee director with the national agricultural federation, Fedeagro, told Reuters.

“This is the first time ever Venezuela will have to import large quantities of coffee,” Perez said.

If Alaska goes communist, they’ll have a shortage of snow.

Hat Tip: Carpe Diem via TJIC

The Perfect Guidebook As We Travel Down The Road To Serfdom

As I’ve noted in the past, sales of Ayn Rand’s Atlas Shrugged have increased significantly over the past year.

Now it appears that the same is happening to Frederich Hayek’s seminal work:

So far this year the most popular edition of Road to Serfdom has sold 11,000 copies. That compares with 3,000 copies at the same point last year. That’s a 263 percent increase for those of you keeping score at home.

Why? Well, no doubt huge new government spending programs and attempts to massively expand the welfare state send people looking for classic literature that makes the case for liberty and limited government. But what the Marxists call the “objective conditions” can always use a bit of help. And indeed, just as I found in investigating the sales bump for Atlas Shrugged, it looks like an op-ed in the Wall Street Journal was instrumental in boosting the sales of The Road to Serfdom.

On February 4, former House Majority Leader Dick Armey, now chairman of Freedomworks, published an op-ed in the Journal titled “Washington Could Use Less Keynes and More Hayek.” Sales of Road to Serfdom, which were in the low hundreds each week since the beginning of 2009, more than doubled over the next four weeks. It seems likely that Armey’s op-ed caused the new interest.

If you haven’t read it yet, you ought to. It does a better job than anything of explaining what’s wrong with where we’re headed in this country.

H/T: United Liberty

Hayek

Control Without Responsibility

At Cafe Hayek, a letter to the editor by Andy Morriss to the Wall Street Journal is posted:

Holman Jenkins asks “Does Obama Want to Own the Airlines?” (Business World, July 8). I am sure he does not. Rather than own them, the president and his congressional allies want to control the airlines — a crucial difference as ownership implies taking responsibility.

As Mr. Jenkins notes, the Justice Department’s belated intervention against Continental’s efforts to join the Star Alliance appears aimed at extorting concessions for the Democrats’ union allies. That is not the action of an owner of airline assets but of someone determined to redistribute wealth from airline passengers and shareholders to favored special interests.

One of the many benefits of free markets is that the people who own something are the ones who experience the benefits or losses accruing from their use of it. When considering how some property is going to be used, an owner and non-owner may have very strong opinions. The non-owner, who has less to lose, will be less careful and prudent in their decisionmaking. Moreover, often the non-owner will gain more from the misuse of the item than from its prudent use.

One does not have to look to hard to see this phenomenon in action. The attempt by GM to close dealerships, and thus reduce its losses was overridden by Congressmen interested in using GM’s wealth to buy votes by keeping the dealerships open. And that is one example of literally millions of instances that take place every year from all levels of government.

Obama, leading democrats and some very influential economists have repeatedly expressed the idea that increased government control of the medical industry would reduce costs without sacrificing quality. In their vision selfless government officials will ensure that people receive high quality treatment regardless of the cost, while the market power of government as a customer will ensure that costs will stay low. Against this charming vision stands a great body of evidence from public choice theory; government officials – or their private counterparts in the private-public partnerships in vogue today – will be able to exert control without any consequences. Just as medicare and medicaid administrators proved willing to authorize higher and higher treatment prices – to the point where it threatens the budget of the federal and nearly every state government – the administrators of any new government program will behave in similar uneconomic ways.

Control without responsibility is a very bad idea.

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.

Breaking News: Results Of Honduran Referendum!

As reported (circumspect) by QandO:

One of the district attorneys that participated in the operation that took place this Friday showed reporters an official voting result from the Technical Institute Luis Bogran, of Tegucigalpa, in which the specific number of people that participated in table 345, where there were 550 ballots, 450 of which were votes in favor of Zelaya’s proposal and 30 were against, in addition to 20 blank ballots and 30 ballots, which were nullified.

That’s a very complete report of the election, and contains a wealth of details about the results that would be a credit to the authorities in charge of any election.

Of course, it would be even more impressive if the referendum had actually taken place.

There was no referendum. It was aborted by the legal, constitutional removal of Mr. Zelaya from power.

And yet, in the presidential palace’s computer, Mr. Zelaya apparently had a complete, certified result of an election that never took place.

Between real life and all the other important things worth posting about, I’ve been off the Honduras deal. QandO has been doing an excellent job on this one, so I recommend heading over there. That said, I’m only partially jumping onto this bandwagon… This is still a story in its infancy, and I’ve been burned enough to know that “reports” don’t always equal “evidence”.

But that being said, this does seem to fit the playbook. Such a thing being true would confirm my priors. So even if I’m not absolutely jumping cojones-deep into believing that this actually happened, I really want to see the follow-up investigation to see if it can be proved.

Government Is Not Society

One of the most pernicious beliefs held by Americans is the conflation of the state with society. This belief is causing them acquiesce to government actions that threaten the destruction of American civilization if not stopped.

The word society comes to us from the Latin societas, which meant a group of people bound by friendship or a common interest.  The societies we participate in are the manifold groups that people join in order to accomplish various goals, for protection, for commerce, for companionship.  When compared to a life of autarky, of isolated independence, the benefits of societies become clear.  The defining characteristic of society is that membership in a society is voluntary. Whenever a person feels that a society no longer meets their needs, they can exit it – choosing another one to replace it or even going without.

Of course, one of the primary functions of the societies we join are to fulfill those needs we have that we cannot fulfill ourselves.  We depend on our families, friends, fraternal organizations, etc to care for us when we are sick, to provide for us when we cannot provide for ourselves.  These acts of charity, when provided to us by people who do it voluntarily using the means that they have acquired through peaceful means, are a necessary component of civilization.  Remove charitable interactions from society and we cease to live in a state of civilization and return to a state of barbarism.

The state, on the other hand, is an organization that is distinguished by violent action.  It acquires resources not through peaceful economic interaction but through threats of violence.  When it threatens wrong-doers – such as thieves, rapists or murderers – it can be useful; scaring other would be thieves, rapists and murderers from committing similar crimes. But all too often, such as when it orders the destruction of livestock in order to raise the market price of meat, it is a social bad that leaves everyone worse off.

The state is powerful.  It can commandeer vast resources.  It does not have to make anything; it does not need to trade for anything;  it merely takes what it wants.  However, the state is not all powerful; tomorrow the people could rise up and hang all the officers of the state from the lamp-posts.  Its officers must ensure that their plunder or violence does not rise to such a level as to incite too much active resistance.   These men and women therefore promote the fiction that the state is not a predator but engaged in trade with the people, exchanging protection and other services for “contributions” as they term the taxes they extort from the populace.

Over the last 100 years, the state has systematically weakened or coopted the institutions of society.  It has, via the welfare system, taken over much of the provisioning of charity.  It controls commerce via regulation.  It dicates what insurance companies can and cannot do.  It tightly controls medical care.  Most dangerously, it has taken over the education of the young. And everything it has taken over has taken on the characteristics that typically accompany violence and extortion; shoddy service, excessive prices or compelled payments, and draconian punishments.

And far too many people, never having experienced society where these institutions or social needs were provisioned voluntarily rather than by the state, are left ignorant of any idea that that is even possible.  And so, when they are warned that Medicare and Social Security threaten economic ruin, they think that the speaker is contemplating casting the old and sick out on the street to die.  When they hear a call for the abolition of govenrment schooling, they imagine the speaker must want the broad mass of children to be left uneducated.  When they hear the call for the end of medical licensing or pharmaceutical regulations, they imagine that people will be subjected to all sorts of quackery. When they hear a call for an end of standing armies and the purchase of expensive weapons systems, they imagine that the speaker must naively want to invite a tyrant to waltz in and take over.

Too many people, no doubt from their experiences in schools where the classrooms are presided over mostly benevolent dictators called teachers, assume that society must be arranged in a similar vein, with leaders who make and enforce the rules, where there is no right of refusal or exit.

In the end, though, while it can commandeer impressive resources, and thus accomplish mighty things, the state invariably consumes more and produces less than organizations that it replaces.  It replaces the civilization of people voluntarily bonding together with the barbarism of compelled relationships, compelled production and compelled trade.

Today, the various governments that rule over Americans, taken together, commandeer or consume some 40% of production.  The more production the government seizes, the worse off we will be.  The greater the control government exercises over society, the worse off we all are.

One way to put things in perspective is, when considering how some need is to be supplied, to ask if you would be comfortable with the Mafia providing it.  After all, the mafia is really a proto-government, using extortion and violence to commandeer resources. Both are protection rackets, although the Mafia takes far less than the government.  While most people wouldn’t be too upset with the idea of the mafia punishing a rapist, most would laugh derisively at the idea of the mafia running a school, or operating a hospital.  This recognition arises from the fact that no-one conflates the Mafia with society.  If only they were so wise about the state!

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.

Discretionary?

cbo-spending

Ezra Klein says there’s we shouldn’t act as if defense spending (considered discretionary in the budget) in unable to be cut:

My friend Chris Hayes likes to say that “non-defense discretionary spending” is the most pernicious phrase in Washington. It means, essentially, that there’s spending, which we can cut, and then there’s defense spending, which we cannot cut, and shouldn’t even talk about. Defense spending, however, accounts for about 20 percent of federal dollars. Add in the wars of the past few years and it’s accounted for even more than that. Saying you can’t touch defense spending is like going on a diet but letting the milk industry say that you can’t cut back on dairy.

There aren’t “defense dollars” and then “non-defense dollars.” There are only dollars, and we need to figure out how best to use them.

Hmm… Defense spending is 20% of the budget. And I might find myself in agreement with Klein that perhaps we can defend our nation for a hell of a lot less money than that.

But there’s another distinction here. “Discretionary”. Klein doesn’t ever address the fact that this is an antonym (in the case of a federal budget). There are two types of spending. “Discretionary” and “entitlement”. And entitlement spending is more than twice as large as “non-defense discretionary spending”.

Klein says “there aren’t ‘defense’ and ‘non-defense dollars'” — only dollars. Well, if 42% of our budget is entitlement spending — and that’s a number that’s going to rise significantly with Obamacare — why is it that we should assume that nothing there can or should be cut? You want to put defense spending on the chopping block, Ezra? I’m down with that. I’ll see your proposition and raise you entitlement spending. You ready to call, or are you just bluffing?

Quote Of The Day

Gennady Zyuganov, the head of the Russian Communist Party, gives a thumbs up to Obama-nomics.

“I said that I had thoroughly studied the U.S. president’s anti-crisis program, that I liked it, as well as that it is socially oriented and primarily aimed at supporting poor people and enhancing the state’s role. I said all this to President Obama,” he said.

Sort of makes you think, huh ?

Pope Benedict XVI Would Make Marx Proud

Pope Benedict XVI has decided to wade into territory which he has no understanding or expertise: the global economy. The New York Times reports that the pope is now calling for a “New World Economic Order”*

VATICAN CITY — Pope Benedict XVI on Tuesday called for a radical rethinking of the global economy, criticizing a growing divide between rich and poor and urging the establishment of a “world political authority” to oversee the economy and work for the “common good.”

He criticized the current economic system, “where the pernicious effects of sin are evident,” and urged financiers in particular to “rediscover the genuinely ethical foundation of their activity.

I have to ask the question to my Catholic friends who believe in Papal infallibility that also happen to believe in free market capitalism: how do you square the two philosophies? (Argument withdrawn; I am by no means infallible and was lacking in my understanding of this concept)

The article continues:

In many ways, the document is a somewhat puzzling cross between an anti-globalization tract and a government white paper, another indication that the Vatican does not comfortably fit into traditional political categories of right and left.

“There are paragraphs that sound like Ayn Rand, next to paragraphs that sound like ‘The Grapes of Wrath.’ That’s quite intentional,” Vincent J. Miller, a theologian at the University of Dayton, a Catholic institution in Ohio, said in a telephone interview.

“He’ll wax poetically about the virtuous capitalist, but then he’ll give you this very clear analysis of the ways in which global capital and the shareholder system cause managers to focus on short term good at the expense of the community, of workers, of the environment.”

Indeed, sometimes Benedict sounds like an old-school European socialist, lamenting the decline of the social welfare state and praising the “importance” of labor unions to protect workers. Without stable work, he notes, people lose hope and tend not to get married and have children.

Sorry padre, you can’t have it both ways. If you truly believe the Communist/Socialist model is morally superior to Capitalism (an admittedly selfish system by honest supporters such as Ayn Rand) just come out and say so! If one honestly reads the scriptures, one will see that the teachings of Christ are much more in line with Karl Marx than Adam Smith.

But wait, it gets worse…

Benedict also calls for a reform of the United Nations so that there can be a unified “global political body” that allows the less powerful of the earth to have a voice, and calls on rich nations to help less fortunate ones.

In other words, the U.N. should force the citizens of the most efficient and productive nations at gun point to give money to people in nations who are less efficient and less productive in large part because they subscribe to the philosophy of the Pope: “From each according to his ability, to each according to his need.” There’s a word for this; it’s called extortion.

» Read more

A few thoughts about last weekend’s Tea Parties

While I’ve not had enough time to take a comprehensive look at Tea Parties held around the nation on or around Independence Day, here are some quick observations from this full-time Tea Party enthusiast and part-time skeptic.

First of all, Senator John Cornyn (R-TX) was booed when he spoke in Austin, Texas.  The key reason reason seems to be that he voted for the Fannie Mae/Freddie Mac bailout in order to protect “free market capitalism, with our civil liberties, [which are] are the foundation of American exceptionalism.”  In the hyperlinked explanation for his vote, he quoted Senator Tom Coburn (R-OK) and former House Speaker Newt Gingrich in order to help spread the blame.  “This bill does not represent a new and sudden departure from free market principles…” explained Cornyn, who was quoting Coburn.

Coburn has also infuriated fiscal conservatives because, in his role as chairman of the National Republican Senatorial Committee, he sided with “establishment candidate, Florida Gov. Charlie Crist, in a Senate primary against young conservative leader, former Florida House Speaker Marco Rubio” in the Florida Senate race.

Coburn probably wasn’t the only Republican Party leader booed in Texas.  I’ve seen some video of Texas Governor Rick Perry speaking in San Antonio, but I’ve not seen any video with jeers from the audience from anywhere in Texas (he wasn’t allowed to speak at the major Dallas event).  However, there are multiple reports that he was booed for “his advocacy of toll roads to relieve traffic congestion.” I tried to obtain additional information on Twitter and it seems my suspicions were correct: He received some sporadic booing, not specifically because of toll roads, but that the road in question is the “NAFTA Superhighway” or “Trans-Texas Corridor”.  Based upon observations during my campaign work in east Texas in 2006, there are probably quite a few Birchers who still vehemently oppose this effort.

The least biased view of the Austin event which I’ve read comes from Robbie Cooper: » Read more

BB&T One Of First To Return TARP Funds

BB&T, a regional southern bank, is a bit of a darling of the libertarian movement. After Kelo, they made it bank policy to not lend money towards projects utilizing eminent domain. Co-contributor Jason Pye suggested a desire to open an account there after BB&T began donating money to UNC-Greensboro to found a pro-capitalism and pro-markets program that is founded in morality as well as economics.

It was sad, of course, when I reported late last year that BB&T had decided to take TARP money. I pointed out that if the rules have changed and the government’s picking winners and losers, it’s possible that they had a fiduciary duty to their shareholders to take the money. But I was still sad.

So I’m much happier to see that BB&T is leading the charge to pay back the TARP funds. There are many banks who I believe are simply trying to get out of TARP due to the additional regulation imposed by the government, but BB&T’s previous commitment to principle is enough to give them the benefit of the doubt that it was done in earnest.

Hat Tip: Reason Hit’N’Run

It’s Time to Impeach Obama

It’s time to impeach Obama; indict him, and his entire administration, for fraud, coercion, extortion, influence peddling, and grand theft under the color of law, amongst hundreds of other charges.

It is not simply the auto issue; but that is currently the most visible.

This is no hyperbole. I am not simply spouting off. I believe, and will from this point forward, work to see, Barack Obama impeached, charged, indicted, tried, and imprisoned, for the crimes he and his cronies have committed against this nation, and its people.

Also, let me make this clear: This is NOT about politics, or at least not about political ideology. I believe that everyone, left, right, libertarian, or indifferent to ideology; should see what Obama and his administration are doing, and understand the damage it is doing, and will do, to this country.

We cannot allow our nation to become a nation of men. We MUST remain a nation of laws.

At this point, Obama, and his administration, aren’t even bothering to PRETEND to obey the law, or the constitution. They have embarked on a campaign of theft and fraud never seen before in the history of man kind; knowing that they had the full cover of the media protecting them, a friendly congress, and a co-operative judiciary.

They are in clear violation of the constitution, and hundreds if not thousands, of state and federal laws; blatantly and knowingly flouting them in fact, because, in Obamas words, “We won”.

Well, I’m sorry sir, for now at least, we are still a nation of laws; and you must be brought to account.

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

Is The “Public Plan” True Market Competition?

I’m not sure if this is a case of drinking too early in the day or willful dishonesty, but I can’t quite understand why Ezra Klein would misrepresent his opposition this badly:

I’ve been trying to figure out how to make this sound like more than a cute argument, because I think it’s actually a point my conservative friends should seriously consider.

In general, there are two ways for firms to adopt an idea. The government solution — the socialist solution — is to impose it on them by legislative fiat. An example would be Congress passing a law that makes selling New Coke illegal. The other path is through market competition. Plummeting revenue and rising market share for Pepsi convince the Coca Cola company that selling New Coke is a bad plan and they should cut it out.

It is perhaps evidence of the triumph of market-based ideas that the public plan falls pretty decisively on the right edge of that spectrum. The idea here is that the public plan will adopt effective reforms that will then lower its costs and improve its quality. In response, the private market will follow suit.

The conservative argument against a public plan is NOT that the plan will be too effective, too efficient, and too low cost for private insurers to compete.

The argument is that government will unfairly stack the deck against private insurers through outright subsidies or disparate regulatory regimes, while artificially presenting a lower end-user cost to the insured. Essentially we think they’ll keep premiums low by subsidizing the program on the back end through tax dollars.

The government has proven time and time again that it doesn’t like to compete on fair terms. When you can tax your competitors and take revenues out of their profits to subsidize your costs, you don’t have to compete on fair terms.

You Can Tax My Beer When You Pry It From My Cold Drunk Hands!

Now it’s personal:

Consumers in the United States may have to hand over nearly $2 more for a case of beer to help provide health insurance for all.

Details of the proposed beer tax are described in a Senate Finance Committee document that will be used to brief lawmakers Wednesday at a closed-door meeting.

Taxes on wine and hard liquor would also go up. And there might be a new tax on soda and other sugary drinks blamed for contributing to obesity. No taxes on diet drinks, however.

Beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth. Proceeds from the new taxes would help cover an estimated 50 million uninsured Americans.

I suppose, if this goes through, I’ll just have to homebrew more often. In addition to being cheaper in general, this tax won’t apply. Yeah, that missing tax revenue may mean that little Timmy never gets his operation… But that’s what the little bastard gets for basing his health care plan on my drinking habits.

Hat Tip: Reason

Why Collectivism “works”, but doesn’t work.

Generally speaking, when talking with a relatively reasonable and intelligent leftists about politics, economics (which are the same thing to them), econometrics, and social philosophy (again, they can’t be separated in leftist theology); the “question” will arise “If socialism is so bad, why does it work in families, and villages? It works there, so it should work everywhere.”

That isn’t so much a question, as argumentum inquisitum (aka “begs the question”), but let’s take up the challenge anyway; as the answer is simple, fundamental, and absolutely vital to understanding microeconomics, and how it interacts with societal level macroeconomics.

Collectivism (of any variety) does not work on scales larger than a village, because people will ALWAYS respond to their perceived interests and incentives.

ALWAYS

Let me repeat that one more time:

People will always, over time and absent interference, respond to their perceived interest and incentive.

People may (in fact, very frequently do) mispercieve their interest, or may choose a poor course of action in their properly (or improperly) perceived interests, but they will ALWAYS respond to them.

In a family, the incentive and interest are VERY strong, genetically, socially, societally, emotionally, and spiritually; to ensure the prosperity and well being of the family unit equal to or ahead of ones self.

We can see what happens to families where this is not so among the majority of members; or is not so among the “strongest” members (the “leaders” of the family). These families rapidly degenerate into an unhealthy mess of force, fraud, manipulation, pain, and dysfunction.

This is also what happens in society as a whole when collectivist ideology is enforced on it.

One should note, there is no such thing as a naturally occurring voluntary collectivist order above the small tribal group. At larger scales, collectivism must always be enforced on the whole, because it is against the interest of many individuals; until such time as a dependent class is formed which will create an artificial interest, causing that class to act in that interest to enforce collectivism on the independent individuals.

As I said, people will ALWAYS act in their perceived interest. Even in collectivism; which is supposedly communitarian in nature.

In society as a whole, and specifically in societies larger than familial, clan, village, or small tribal level; self interest is a considerably stronger incentive and interest than the interest of society.

Communitarian ideals can generally work scaled up to village size, or even small tribes; but the bigger the unit gets, in general, the weaker the cohesion; unless there is another binding force (such as tribalism, or at least ethnic solidarity).

Also, the free rider problem, which may be one or two individuals within a family, becomes a serious drag on resources even at the village size. It becomes insupportable above the scale of a large tribe or small state.

These village size units work best when the village is itself a competing interest against other villages, or groups of villages united by a common characteristic which creates a cohesive identity.

We call this tribalism; and it allows for progress to a certain point, but is also a natural restraint on it; in that tribalism encourages the violent breakdown of civil culture in conflict with other tribes.

In fact, almost all of the greatest evils perpetrated within the confines of society (as opposed to evils outside of a society such as serial killers, etc…) are the result of violent tribal conflict; including the wars in the middle east and Africa (all of them).

All forms of collectivism fail to recognize or account for the inherent competitive, and striving nature of man; and generally fail to account for his inherent xenophobia as well (yes, certain individuals or small groups may suppress those characteristics, but man as a whole is man; unchanging and vicious from prehistory to this minute. We just have better tools to kill each other with, faster, and on a larger scale now).

Thus, aside from its structural deficiencies, inefficiency, and moral evil; socialism is antithetical to the natural social nature and structure of man (contrary to the assertions of socialists that it is in fact derived from the nature of man, or is scientifically and historically inevitable. Both logic and history show this construction to be elegant, but falacious).

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

Obama Administration Setting Compensation — For Non-TARP Banks

obama-teaching
I’ve said I was going to write a post — one that I’ve been thinking about since Obama’s 100-day mark — on how much worse his Presidency has been than I feared. I expected him to be a typical Democrat in the mold of a Clinton. I expected him to be a typical politician. I knew he’d be a tax-and-spender, and ramp up on regulation, but he’s taken things to a whole new level.

But he has shown in a little over 100 days that he’s ideologically in line with FDR when it comes to the power of government, and he’s determined not to “let a good crisis go to waste.” So it was with resigned dismay that I read this:

The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.

The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.

Among ideas being discussed are Fed rules that would curb banks’ ability to pay employees in a way that would threaten the “safety and soundness” of the bank — such as paying loan officers for the volume of business they do, not the quality. The administration is also discussing issuing “best practices” to guide firms in structuring pay.

This is a pure, naked, power grab. They want to claim that the compensation packages threaten the health of the wider economy (when things like over-leverage were the real culprits) and thus don’t want to simply limit compensation for those who took government funds — they want to regulate it all.

Remember the sea change in government authority, attitudes, and impact on the economy that followed the Great Depression and the New Deal? Well, folks, you’re watching the sequel. And I don’t see any way to stop it.

Hat Tip: Cafe Hayek (where Russ Roberts is simply left speechless by this)

Nominal SSA/Medicare “Solvency” Dates Worsen Slightly; Journalists Apoplectic

As I’ve thoroughly explained here and here, the whole Social Security “trust fund” issue is a joke. It’s an accounting gimmick designed to push the supposed date of concern out into the future.

When does Social Security become “insolvent”? Well, let’s look at what the word means:

adjective
not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.

Assets are a printing press, taxpayers, or the farce of a “trust fund” that contains nothing but promises to raid the printing press or taxpayers in the future. There is absolutely nothing tangible there. Nothing backs up the future liabilities of the system.

But the accounting gimmick is still there, and people still argue as to what year Social Security and Medicare will start running into trouble. They argue about this as a problem to be solved for the future, but those dates for both Social Security and Medicare are coming in a bit as the economy collapses:

The financial health of Social Security and Medicare, the government’s two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives.

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year’s report.

The trust funds — which exist in paper form in a filing cabinet in Parkersburg, W.Va. — are bonds that are backed by the government’s “full faith and credit” but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

I credit this AP writer for pointing out the italicized text, and for hammering the point home later in the article. Very few journalists have understood or expressed the idea that the “trust fund” is not full of actual assets, only promises. This doesn’t mean the situation will be bad in another decade and only dire in the 2037 time frame; it means this situation is worsening every year.

To illustrate this [yet again], let’s pull out a business example. Let’s create a corporation, and we’ll call it Ubiquitous Spending & Aggravation, Inc. We’ll use USA, Inc. for short.

Let’s say USA, Inc. has three divisions. They have the General Products Division, the Depends Adult Diaper Business Unit, and the Viagra & Ensure Business Unit. As you’d expect, one is a general purpose spending group, another caters to the general needs of the elderly, and the final caters to the medical needs of the elderly.

So assume that the below are true:

Today:
USA, Inc. Today

So it looks to me like USA, Inc. is losing $20 Million per year, but two business units are profitable. Would you call that a healthy company? Would you invest in it?

Now, let’s project earnings into the future.

2017:
USA, Inc. 2017

So what’s happened here? The company is still losing $20M a year, and now the two previously profitable divisions are losing money, while the General Products division is actually earning money due to the CEO instituting his AMP – Advanced Mugging Policy. Does this now look like a healthy company? Does it now look investment-worthy? Unfortunately, you’re already invested, because their stock certificates are printed with the words “Federal Reserve Note”. And they’re going to be issuing new shares soon.

I’ve said it before and I’m sure I’ll say it again. This is all a shell game. As long as the government keeps borrowing money and the debt keeps going up, it doesn’t matter how the individual accounting entities are performing. They can raise payroll taxes, offset by a cut in the income tax, and if it’s overall revenue neutral, it doesn’t matter whether Social Security and Medicare are “saved”. About the only benefit to doing so would be that journalists could quit wasting ink arguing over whether 2016, 2017, 2137 or 2141 are the “important” milestones.

There are no “important milestones”. The feds are going to run a $1.8T deficit this year! The problems we have are far larger than a 4-year swing in projected “insolvency” of an entity that is completely insolvent right now. The only “assets” the Social Security administration has access to are the Federal Reserve printing press or our wallets, and you can be SURE they’re going to be reaching for both.

Truth Hurts… Ignorance Hurts Worse

I disagree with Schiff on hyperinflation; but we’re DEFINITELY going to be seeing significant inflation. I’m thinking 1979 levels or so.

Note: Schiff is also a firm believer in the inherent value fallacy; which is just that, a fallacy. There is no such thing as a stable currency, because nothing has inherent value. All value is circumstantial.

Fiat currency is a horrible thing, but the solution is NOT specie currency, which has its own issues (which can be just as bad as those of fiat currency). The solution is a global free currency market, without government value setting by fiat, OR by an arbitrary commodity standard… or any other arbitrary standard for that matter.

Let the market decide what the currency of a nation is worth, and it will seek its natural level AT ANY GIVEN MOMENT. Let the markets set their own confidence level, based on whatever a currency represents, is backed by, what its purchasing power is… whatever the market values.

We are approaching the technology basis that will allow this, though we aren’t there yet. Universal realtime international communications are a pre-requisite for an efficient currency market. Currently, currency markets present significant arbitrage opportunities based on asymmetric information, communications lag, and government distortion.

Unfortunately, now that governments have the power of fiat currency, they will absolutely refuse to give it up.

We’ve got maybe a 24 month window of slight recovery and plateauing of prices; then we doublehump this, with real economic contraction spurred on by the devaluing dollar, rapid inflation; and concomitant high interest rates, and tighter credit (you think credit is tight now? Not even close).

If you want to buy a house, do it 18-24 months from now on a fixed rate mortgage; and plan on living there the rest of your life. Inflation is going to wipe out a significant amount of your debt anyway.

… Presuming the Chinese don’t bail out on us entirely, and kick this off SIX months from now, instead of 24 months from 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

Bundling The Banks Into A TARP

Geithner's Treasury Grabs A Bank
Back in October, the banks appeared to be in very deep trouble. Such deep trouble that they were forced to enter a deal with the Devil decided to run to the government for assistance. But they were shocked — SHOCKED! — when the government starting attaching a whole bunch of regulations and conditions to the deal after the fact.

So they want to return the money. And the government won’t take it back without a fight:

The bottom line for the banks is that if they want out of TARP, they have to be able to withdraw from all the other sources of emergency public support that the government has given them. If they want the support, then they have to agree to the conditions and regulations that come with TARP. No subsidies without regulations. To put it into more common terms, banks can decide to break up with the government or they can decide to stay together. But they don’t get to be friends with benefits.

Imagine the outcry from utility regulators if you signed up for the sports package with your cable company because you wanted, say, SpeedTV. After a while, you grow tired of the programming and all the extra cost because you don’t think you need to pay for TVG and all the other channels, so you call the company and try to cancel the sports package. And they tell you that if you want to quit the sports package, you’ll have to cancel cable, internet, and phone service altogether — you can’t have just one!

I think Stuart Varney lays it out quite well (c/o Michael Wade @ QandO):

I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?

My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ‘em what to do. Control. Direct. Command.

I’ll have a more detailed post coming up when I get around to it, but I think I, too, was naive. I expected more from Obama. I honestly believed that he was actually trying to become President because he wanted to improve outcomes, not just drive the train. I was sure, of course, that Obama was going to be pointing us the wrong direction, but I thought he was at least going to try to do so carefully, efficiently, and taking input from all sides before doing so. In short, I knew I wasn’t going to like him, but I thought he was going to be reasonable.

Not so much. He wants to control the financial sector. He doesn’t just want to fix it, he wants to remake it according to his own ideology. He doesn’t want them to succeed without government; he wants them to be dependent on government. I thought Bush was an exceptionally authoritarian President, but it seems that he was just laying the groundwork for Barack Obama.

The Feds have the banks in the grasp of their talons and they’re squeezing. And by god they won’t let up until submission is complete.

No Secession, No Legitimacy!

Many Republicans, having discovered that Bush’s policies are tyrannical, are making noises about wanting out of the fascist state that they were cheering on a few months ago. While we may wonder why it took the trivial matter of having people who have the letter D appended to their names on news reports executing Bush’s policies to open their eyes, we must welcome the fact that they are dimly becoming aware of how thoroughly their leaders had betrayed their country and are looking for ways to undo the damage these leaders wrought.

Some Republicans have even endorsed secession! This is keeping with American tradition that started the first time the idealogical ancestors of the Republican party – the Federalists – lost an election for the Presidency. In that case the merchants of New England threatened secession since Tomas Jefferson’s policies of trade embargoes with foreign markets were crippling them. Since then threats of seccession have been a regular part of the political landscape.

Often the threats of secession are not taken seriously… usually the benefits of leaving the union are not sufficiently great to attract many supporters, and thus the powers-that-be can ignore the movements completely.

Today, though, the Democrats and political leadership are reacting in horror at the reemergence of threat American phenomenon – their dreams of social engineering will go up in smoke if the masses have the option to escape! And many people who should know better are agreeing with them.

People make three arguments against secession:
1)That it is illegal
2)That it is immoral
3)That it is unwise

Let us examine these arguments. » 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 new libertarian line-of-attack when debating medical marijuana issues with Republicans

For years, activists have been trying to pass federal legislation which prevents the feds from arresting patients (or doctors, growing clubs, etc.) when they’ve been prescribed medicinal marijuana by a physician in the states where such prescriptions are allowed by law.  Libertarians have often made valid points about Republican hypocrisy regarding federalism when it comes to medical marijuana.

Loretta Nall provides a brand new argument to use with Republicans on the matter:

I am sick of hearing Republicans scream about ‘socialized medicine that would put the government between you and your doctor.’ Just what the hell is the difference here? The Republicans want to be involved in your health care decisions if they seek to prevent you and your doctor from discussing/using marijuana as medicine…and that is the same thing. Socialized medicine. HYPOCRITICAL FUCKS EVERY ONE OF THEM! […]

[…] Mention that it is socialized medicine for Republicans to stand between a doctor and patient….no matter what their ‘justification’. Human suffering shouldn’t be used as a political football.

Let’s take a look at some recent Republican stands on socialized medicine and compare them to the views of the very same people on medical marijuana.

“In any serious discussion of health care in our nation, this should always be our starting point — because the goal, after all, is to make the best care available to everyone,” said Senator John McCain in a 2008 presidential campaign speech. Later on, he added: “[With nationalized health care, ] we’ll have all the problems, and more, of private health care — rigid rules, long waits and lack of choices, and risk degrading its great strengths and advantages including the innovation and life-saving technology that make American medicine the most advanced in the world. The key to real reform is to restore control over our health-care system to the patients themselves.”

“Families also place a high value on quickly getting simple care, and have shown a willingness to pay cash to get it,” noted McCain, surely aware that the cost of home-grown marijuana is significantly less than the cost of Marinol. “Government can provide leadership to solve problems, of course. So often it comes down to personal responsibility — the duty of every adult in America to look after themselves and to safeguard the gift of life.”

When asked about medical marijuana on the very same campaign trail, McCain responded, “Right now my answer to you is no.”

On the same presidential campaign trail, Rudy Giuliani had a moment of libertarian lucidity when he stated that “government cannot take care of you. You’ve got to take care of yourself.”

Here are some of Giuliani’s views on socialized health care:

Charging that Democrats’ health care proposals would lead to “socialized medicine,” Republican presidential candidate Rudy Giuliani said Tuesday he wants to give American citizens more control over their health care.

“We’ve got to do it the American way,” Giuliani said during a town hall forum in Rochester, New Hampshire. “The American way is not single-payer, government-controlled anything. That’s a European way of doing something; that’s frankly a socialist way of doing something.”

McCain and Giuliani weren’t alone on the GOP presidential campaign trail regarding these issues. No stranger to hypocrisy regarding health care issues, Mitt Romney piped in, as well:  “[Senator Clinton’s health care] plan is crafted by Washington; mine is crafted by individual states.”

Of course, Giuliani and Romney both opposed medical marijuana from both a federal and state perspective.

Let’s take it off the presidential campaign trail for a moment and pick on perhaps the most hated drug warrior in Congress.   Here’s Congressman Mark Souder’s take on health care (from his website):

Every American deserves affordable and quality health care, not government control. I support a patient-centered approach to health care reform that provides every American, regardless of health or financial status, access to the affordable health care coverage of their choice. Nobody should go bankrupt because they get sick.

I will continue to fight to make health care family-focused and patient-centered. I think that patients, in consultation with their doctors, should have control over the health care they receive. The government, your employer or a health care plan selected by your employer should not decide what health care you receive. The road to affordable health care for all is not easy or simple but, by implementing more consumer choice, cracking down on frivolous law suits and lessening the bureaucratic paper work it is achievable. Forcing Americans into a government controlled health care plan will not solve the problem. I believe that it will only make things worse.

Here’s Souder calling for a non-patient-centered “approach to health care” which is neither family-focused nor “patient-centered.”  Here’s a direct contradiction to “I think that patients, in consultation with their doctors, should have control over the health care they receive.”  Here’s a crystal-clear example of the hypocrisy to which Nall referred.

If passed, this amendment would put people in danger of shysters and quacks willing to recommend a dangerous drug, marijuana, in place of federally approved safe and proven medicines. You can get Marinol. We have got other ways by taking a pill to treat this. There are multiple chemicals in marijuana. It is not medicine. Marijuana is just as much medicine as the carbolic smoke ball from the later 19th century was medicine…. The rhetoric about marijuana as a ‘treatment’ for medical purposes… probably was dreamed up at some college dorm…

[L]et me state that my mother and father-in-law both recently died of cancer as well. Compassion is not limited to either side, but there is science and there is not science. In fact, the Carbolic Smoke Balls and the snake oil is very similar; getting high is the same as getting splashed….

Furthermore, we have heard kind of a silly argument here on the House floor today that physicians should be making up FDA law. Physicians do not do trials of a different drug when they come to market. Physicians do not have big testing agencies. That is why we have a Food and Drug Administration. This is in effect asking to repeal the Food and Drug Administration.

Imagine being in the audience the next time a local Republican congressional candidate gives a speech.  When it comes Q&A time, it might be fairly easy to ask the following:

Congressman Smith, I applaud your view that the federal government shouldn’t be able to tell states what to do.  Furthermore, you are to be applauded for your views that the government shouldn’t stand between a patient and a doctor, that individuals should be empowered to make their own medical decisions, that federal bureaucracy harms the health care process, that when patients have the responsibility to make their own decisions health care costs are drastically reduced, and that health care choices should be made in a free market.  Since it’s so obvious that you agree with how I feel about these issues, I’m pleased that you’ll be supporting both the Hinchey-Rohrabacher bill and our state legislation to treat cancer victims and AIDS patients with a bit more compassion.

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