December 16, 2009

Gitmo, Jobs, and Habeas Corpus

I realize I haven't posted in a while. Facebook makes it too easy to soapbox.
I try to choose topics that can lead to meaningful discussion. Usually this means that the topics are somewhat controversial, even among some who read my posts. I find this much more interesting than writing on topics that will spark very little disagreement, but I hope those will come up as well. I find that even if I agree with someone on an issue, it is still beneficial to discuss it.
I came across an article about the moving of Gitmo detainees to Illinois and it brought up a couple of issues that are otherwise pretty unrelated. Here's the article: Ill. town welcomes plan to house detainees

I wanted to first address the issue of job creation. This probably deserves its own post, which may come later, but it came up in the article so I wanted to explain why I feel it is so off-base. It seems that many are preoccupied with the existence of jobs, as if jobs were the whole point of an economy. The goal of politicians seems to be to create jobs. They seem to think that creating jobs will make the economy better. The problem is, they have the whole thing backwards. Jobs don't make the economy better, they are merely one way of measuring the health of an economy. High unemployment is a symptom of a sick economy, not the disease itself. Treating the symptoms of the disease is not a likely cure.
The reason we have an economy is because food and things don't appear at the snap of our fingers in as great abundance as we could ever want. In short, there is scarcity of resources. Economics is the study of how these resources are allocated and the theories of economics postulate how they can best be allocated. Jobs exist as part of the economy, but it is not jobs per se that we need. We need food and stuff. Jobs are simply an aspect of how those things are provided.
So, to assume that we can merely create jobs, and that by so doing, stuff will come into existence is foolish. All the talk about creating jobs will do nothing to actually improve economic conditions unless the stuff exists to allocate. Now, it is true that stuff is produced by people who have jobs, but these jobs need to be productive jobs, not boondoggle jobs as some call them. For instance, it will do no good for a trucking company to hire more drivers if there is nothing for them to transport. Sure, jobs are created, but there is no actual productive work to do. Most government-created jobs consist of digging a hole and filling it again. One can easily see the folly in this, but many advocate this exact type of thing for improving the economy. (This is an Op Ed piece by Paul Krugman--quintessential idiot) Improvement in the economy comes when there are more things to allocate, not when there are simply more jobs to allocate the same amount of stuff. Vedder and Gallaway wrote about this at length in their book Out of Work.
The idea that government can create actual jobs is perpetuated in the AP article:
Federal and state officials estimate the federal takeover will create as many as 3,000 jobs in the area within several years, including an estimated 800 to 900 at the prison and at local businesses that would sprout up as a result.
Why are these not real jobs? Well, these jobs don't create any wealth. These jobs are unproductive in the sense that we gain nothing by their existence. Now, whether or not they are necessary is another question, which I address below, but the fact remains that we would be better off if these jobs didn't have to exist. The resources that government is redirecting from elsewhere to pay for this prison and employees could be used for productive means. This is the problem with so-called government-created jobs: they take real resources from the productive economy and reallocate them toward something less efficient and often completely unproductive.
Now I come to the second issue raised by this article. The saddest part about the whole thing is that quite frankly, this prison is completely unnecessary and unconstitutional. Holding prisoners or "detainees" without a writ of habeas corpus is strictly against Article 1 of the Constitution:
The privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.
This statement is particularly interesting because Habeas Corpus was thought to be so important that it was actually included in the body of the Constitution and not only implied in the Bill of Rights. The only exceptions that the Constitution allows for the suspension of Habeas Corpus are for rebellion or invasion. Prisoners of war captured in a country on the other side of the world (Afghanistan or Iraq) obviously do not fit this description. Personally, I don't see any reason to suspend Habeas Corpus even in these cases. Basically, a writ of habeas corpus is a judicial mandate requiring that a prisoner be brought before the court to determine whether the government has the right to continue detaining them. The individual being held or their representative can petition the court for such a writ. There are few if any cases where these criteria cannot be satisfied. There is certainly no reason to deny this to the detainees in Guantanamo. It's not as if we don't have any judges available to take their cases. Rather, this is another disturbing case of government disregard for the rights of the individual, which are explicitly protected by the Constitution.
Some argue that since these people are not citizens of the United States that these rights do not apply to them. I think this argument is disturbing and just plain wrong. A person does not have rights because he or she is a citizen of any given country. Our own Declaration of Independence is built on his fact:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
We cannot justly go around the world promoting "democracy" and "freedom," denying it at home all the while.
When, if ever, do you think an executive could justly suspend a writ of habeas corpus? Has there ever been such a time in US history--when habeas corpus was or could have been justly suspended?

October 18, 2009

Soda: the New Cocaine

A newly proposed tax would pay for health care, and it as a lot of people upset, but I am not sure how they are justifying their objections. I guess this is another case where principle has little or no influence on the strongly-held opinions of some.
Apparently, since soda and other sugary drinks are bad for us, we should tax them in order to discourage consumption and improve the overall health of our country. But the real motive is obvious and even blatant:
The beverage tax is just one of hundreds of ideas that lawmakers are weighing to finance the health-care plans. They're expected to narrow the list in coming weeks.
That is, it's all about money--money and control. Here lies the slippery-slope of government intervention into things like drug prohibition and health care. There no longer exists any consistent precedent for NOT passing such laws. Most have already accepted the notion that government can regulate what substances we can and can't take into our bodies (FDA, drug laws etc.), and with the push for a universal healthcare plan, many are also accepting the premise that government is responsible for our health. One cannot remain consistently opposed to a soda tax and, at the same time, defend anti-drug laws and the like. However, since it is unlikely such laws will be repealed, we can expect many opponents of a soda tax will eventually fall in-line with the program of government regulation of our lives. Thus, we can certainly expect more and more regulation on things we consume simply based on how healthy they are:
Health advocates are floating other so-called sin tax proposals and food regulations as part of the government's health-care overhaul. Mr. Jacobson also plans to propose Tuesday that the government sharply raise taxes on alcohol, move to largely eliminate artificial trans fat from food and move to reduce the sodium content in packaged and restaurant food.
I can only imagine one day someone getting arrested for hiding fried chicken down their pants. Don't get me wrong, I don't drink much soda, I don't drink any alcohol, and I can't remember the last time I ate fried chicken. BUT, outlawing fried chicken is just a hop away from bacon. That creates a problem for me.
What foods do you like that might be illegal or taxed? Would you still buy them on the black market?

September 30, 2009

Nuclear Weapons and Iran

There has been a lot of talk in the news about Iran testing missiles and its possible nuclear capabilities. First of all, I certainly don't have any particular desire for Iran to have nuclear weapons. On that note, I don't have any particular desire for anyone to have nuclear weapons. Nuclear weapons are, by definition, a weapon of aggression, not defense. They are designed to kill mass amounts of people indiscriminately. Thus, they don't have any place in a purely defensive armament.
That being said, it is very hypocritical of the US to try to deny these weapons to any other nation when the US itself is the only country who has ever dared to use them. Someone who respects the principle behind the second amendment would ultimately have to concede that we cannot both allow the individual to bear arms and deny a whole country that same right.
As far as practicality, Iran has little reason to use a nuclear weapon, especially against its supposed enemy Israel. For starters, Israel would wipe Iran off the map before Iran's missile even reached Israeli borders. Secondly, any nuclear fallout would certainly reach Iran, which is a short distance downwind from Israel.
Glenn Greenwald takes on several people on exactly this point and adds some other great points while he is at it. I think his arguments are difficult to refute. What are your thoughts?

August 11, 2009

Obama just defeated his own argument

"UPS and FedEx are doing just fine....It's the Post Office that's always having problems."

Can I get a 'duh'?! How many BILLIONS of dollars has the Post Office lost to prove that government can't even deliver the mail at a profit. How can we expect government to deliver affordable healthcare?
By the way, the Post Office has a monopoly on letter delivery, so the fact is that UPS and FedEx can't even compete on that level. Government health insurance will bankrupt private insurance because it can run at a loss, just like the Post Office, and stay operational. This is pure and simple economic waste.

July 29, 2009

Education and Freedom

Ben has been asking me for a while to write a post on education. I have been hesitant, mostly because I am not confident in my writing skills or in my ability to convey my thoughts, but since it has been a while since Ben has written a post I feel my attempt is better than nothing. As most of you know Ben has many "soapboxes" which he loves to write about. He enjoys the challenge of refining his thoughts and arguments against all of you. There is one thing that he has yet to write about, even though he has strong opinions on the matter--that is educating children. He has left this task to me for many reasons. I will give a little background for those of you who do not know us. Ben and I have been married for over 3 years. I teach fourth grade at a public elementary school close to our house. My mom and sister are both public school teachers. I am actually a 4th generation teacher. It is in my blood and something that I love, but times have been changing.
There was a comment on a previous post about how I work for the public school system and that it is not in-line with the principles that we profess. There is definitely a contradiction there that I would love to address outside of this forum, but I would like to take the time in this post to discuss what I believe to be the role of education and some of the problems that I have seen today.
Since marrying Ben I have had to rethink the purpose of education and the people who are responsible for it. I have come to realize that the most important factor in a child's education is the parents. This is contrary to what my professors in college taught and to what the policies of my school district have tried to drill into my head. The argument that I have heard against this thinking is that if we (teachers) are not the most important factor in education then we will not be able to succeed. I argue against this idea. The parents are the ones responsible for their children's education. They are the ones who hire me because they feel I can meet their child's needs. At least I feel this is the best way to focus on a child's education.
The family's role in education is recognized, studied and counterfeited. I was recently reading the want ads for teachers. There was a posting from a school in the east for a teacher/house parent. This combination intrigued me, so I looked into it further. This school was a type of boarding school--pre-K-12 grades. It was for low income students who would not be able to afford a normal private school. It had nice accommodations, great testimonials, and lots of resources. I was still puzzled about this house-parent thing, so I continued to research. I then found something that scared me. Instead of the normal dorms that you would find at a boarding school, there were houses. 10-13 children would live in a house with a teacher and the teacher's spouse. They would be in family units and taught family values, such as responsibility, kindness, and hard work. The parents could have contact with their children by phone, e-mail, and occasional visits. The family was replaced. Where would morals be taught? Who would guide in spiritual decisions? What about the emotional stability that comes from a loving parent?
This school did what a lot of educators and parents have been asking for: it took the most important variable out of the equation and replaced it with something that can be controlled. If it is true that education would be best if the teachers, the ones who are trained, were completely in-charge, then we should expect to see these types of schools having succes. I predict the opposite. I predict these schools will fail fundamentally, because they are not based on true principles.
One of these principles is responsibility. Responsibility is inherent in freedom. When you make a choice, you are accepting the consequences of that choice. If the choice is good, you are free to receive the benefits of your choice. If the choice is bad, you must also accept its consequences. A person cannot be free if he or she is unwilling to accept or prevented from receiving the consequences of a choice.
I see this in education. Many parents expect me to “fix” their children. They send their children to me, “a trained agent of the state” to be the specialist. If a child can’t memorize her math facts or can’t read fluently, it is my fault and my responsibility to fix it. At least, that is the mentality of many parents and educators in the public school system. This mentality is facilitated by the public school system as parents are given incentives to NOT be personally involved in their children's education. Parents do not know what their children are learning, how their children learn, the social interactions of their children from day to day, or the morals that are being taught their children by the state. They are instead encouraged to raise money for the PTA, cut out pictures, and make sure their child reads for 20 minutes everyday. These are the duties of an "involved" parent who, according to some, are truly watching out for the best interest of their children. We can thank the benevolent state for providing such important guidelines, or else parents wouldn't know how to raise their children. (that last sentence was Ben's thought)
I saw something else that appalled me this summer that will further illustrate my point. Our school provided free breakfast and lunch to any child under 18 that walked through the door. I saw many mothers drive to the school and walk in with their children to watch them eat the government-provided food. The parents gave up the responsibility to feed their children to the government. Whose children does that make those kids?

June 19, 2009

This Man is a Hero

I first heard of this some months ago, but just now CNN has decided to make it news. We need more people to stand up to intimidation by the government. The full recording of the incident is available here.

June 7, 2009


Over time, after many conversations regarding the role of government and the importance of freedom, I have come to realize that I often operate on a different premise than those I discuss these matters with. This realization has been difficult to deal with because I have come to recognize that my outlook on life is considered irrelevant by some. I will attempt to explain what I mean.
My life philosophy is based on the idea that there are certain principles, which, if applied correctly, are universal and uncompromising in every situation. Thus, I have tried to discover those principles and apply them so that my actions have a consistency which is based on unchanging principles. Whenever I realize that my behavior does not conform to one of these principles that I have previously determined to be correct, I have to re-evaluate my actions and/or the principle to understand if I need to change my behavior or my understanding of the principle.
By this, I have come to certain conclusions about liberty. According to my understanding, liberty is a principle that is universal and correct. It is a virtue in and of itself that is to be protected at all costs, even if it allows for uncertainty. In my attempt to understand the principles that are related to liberty, I have started these discussions of the laws of liberty so that I can evaluate my own behavior and understanding of the principles.
However, as I wrote before, I have recently been realizing that many people do not base their understanding or beliefs on such a premise. Many do not accept the notion that there are universal principles that can govern behavior. So far, I have been limiting my discussions to the role of government since I see the government as the most prominent idea whereby human beings seek to legitimize coercion. The idea of coercion directly opposes the principle of liberty. Thus, the principle of government which relates to liberty must be that government (force) can only be used to protect the principle of liberty. Anytime government becomes destructive to the principle of liberty, instead of upholding it, government has overstepped its bounds.
This principle is foreign to many, so much so that even when presented, it has no effect to change their ideas because they do not base their ideas or philosophies on principles at all. Their ideas and philosophies are based on sound-bytes and emotionalism. They are based on short-sighted political whims and false traditions. Some are based on ignorance and hypocrisy.
At times, even the most basic principles are rejected by some because they are not "practical". I ask: if a principle is not practical, is it even a principle? If we cannot follow principles because they are not practical, we have no principles at all. It seems that for some, their only principle is practicality. Thus, they are subject to the sound-bytes, emotionalism, political whims, false traditions, ignorance, and hypocrisy that plagues our society and has literally destroyed faith in the supremacy of principles at all.
My call is for a return to principles and a realization, as a good friend puts it, that principles ARE practical, and if we defer to practicality instead of principles, we will find we lose our principles all together.

May 16, 2009

Got it...finally

Here is the picture of the Prostate Cancer case any of you are interested. This is related to my post from a while back.

May 7, 2009

Proof We Need an Audit of the Fed

This shocks me, as it does the Congressman. Call your Rep. and tell him or her to support HR 1207 to audit the Federal Reserve.

April 29, 2009


This is what we should really be afraid of. Forget terrorism.

**I thought this was real until the end.

April 26, 2009

Quick Screenshot

Where do you think Bart got the idea anyway?

April 19, 2009

Fascism 101 and Conservative Hypocrisy

Here is one of the best explanations of economic fascism that I have seen. A lot of people blame the economic crisis on the free-market when, in fact, our system is full of government intervention. What we are moving towards is a form of socialism most commonly associated with the tenants of fascism (corporatism).

I love this cartoon because it exposes many so-called conservatives for what they really are: hypocrites. They tout the idea of lower taxes while at the same time advocating higher government spending and bailouts. The real cost of government is NOT what it TAXES, but what it SPENDS.

April 15, 2009

Fair Tax, Flat Tax....How about NO TAX!

A lot of people advocate a fair tax or a flat tax instead of an income tax. I can see that, but let's make it truly fair and really flat....LIKE ZERO!

April 9, 2009

Illegal Immigration: Why I don't really care

I was reading an article about Obama's plan for immigration and the controversy over the issue. I started thinking and feeling some of the same things that I think and feel each time I hear the issue discussed on the news or by others: simple indifference. This may strike some people as odd. For many, the issue of immigration is strongly emotional and frustrating. But as far as I am concerned, I am not personally affected by "illegal" immigration. Let me give some reasoning as to why this is such a non-issue for me.
Those who oppose illegal immigration often claim that the immigrants are taking jobs that could be filled by Americans. Thus, immigration is bad for the economy. First off all, this is a simple non-sequitur. Someone "taking" someone else's job does not make the economy weaker. Economic growth happens because of the division of labor and the law of comparative advantage. Producers continually seek ways to cut their costs so that they can make profits. Profits are invested as capital in future production of goods so that more can be produced. The effect is that we get lower prices--a good thing, because we can buy more stuff with the same money. Part of lowering costs means that a producer seeks employees that give the highest marginal benefit/cost ratio. Immigrants will often work for lower wages or benefits, thus increasing the benefit/cost ratio of the producer and increasing profit. This will result in cheaper goods in the end.
Now, immigrants sometimes work for wages below the minimum wage limit. This makes it more difficult for "Americans" to get the same job because of tax laws. However, this is not a problem of immigration, but a problem of the government's regulation of wages. It is a simple economic law that price floors create surpluses. That is, a minimum wage will create unemployment since some workers have a benefit/cost ratio that is below the minimum wage. If this seems too confusing, I am sorry. Feel free to comment/ask questions.
There is another economic factor related to immigration though that I think is more influential but almost totally ignored. Immigrants come here almost exclusively for economic reasons: they can earn more money. But as I explained above, immigrants who are willing to work for lower wages is good for the economy. They don't object (or else they wouldn't come) and we shouldn't either. However, there is another economic incentive that draws immigrants to the US. It is our welfare state.
I don't have any statistics, but anyone who cares to can find them without too much difficulty. The fact is that many immigrants come here because we give free healthcare, food stamps, education, and other forms of welfare. Emergency rooms are often overwhelmed by illegal immigrants. Hospitals are required by law to give free emergency care to immigrants and there are even Federal programs for people who are not US citizens. A large percentage of people who receive food stamps are illegal immigrants and public schools are loaded with their children.
So why don't I care about all these outrages? Well, I do care, but I don't see why these problems are the immigrants' fault. First of all, if we don't want them to come here for the free stuff, we should stop offering it. It acts as an effective subsidy on illegal immigration, while at the same time we are taxing our people to prevent it.
Secondly, I don't see any difference between a US citizen who participates in welfare and an illegal immigrant who does. Either way, the money they receive was taken from another by force or the threat of force. Thus, I don't care so much where you come from. I consider an illegal immigrant just as entitled to welfare as a US citizen, i.e. NOT AT ALL!
Other common points of opposition are issues of security and national sovereignty. I can understand these objections, but I feel they are not based on solid Constitutional principles or principles of liberty. The issue of security is best handled by the states, or, even better, by the land owners themselves who have an incentive to protect their property from trespassing. Should a threat of invasion occur, there is authority within the states and even Federal government to deal with it. Immigration, however, is not an issue of invasion because it is a matter of individuals or very small groups who are acting independently in their own economic self-interest. They do not constitute a security or military threat anymore than the criminals who already reside or were born in the US (such as those in Washington D.C.).
Besides that fact is the reality that stopping "illegal" immigration is hardly something that can be realized by force. Patrols and fences have done little to really prevent the majority of immigration that happens illegally. See John Stossel's recent piece on this issue here.

March 26, 2009

March 25, 2009

Tough Questions from Minnesota

Rep. Michele Bachmann from Minnesota drills Bernanke and Geithner on the constitutional source of the authority for the actions they have recently taken, as well as their avoidance of providing full information to the public and the Congress. Not surprisingly, they have trouble making a coherent answer and Barney Frank is noticeably irritated by the end. Finally, someone else is asking tough questions.

Notice how even Bernanke is calling it a bailout now. HAHA!

March 23, 2009

A New Record: Largest Bill Ever Printed

I remember sitting in my economics class when the professor talked about inflation and showed examples of some of the largest denominated bills ever printed. Check these out:

In 1946 Hungary issued a 100 Million B-Pengo, which was the the largest circulated banknote at the time, unfortunately it was worth only about $0.20 USD in 1946.

Hungary also printed a 1 Milliard (Trillion) B-Pengo in 1946 but it was never released into circulation.

On December 23, 1993, the former Yugoslavia issued a new banknote to keep up with rampant inflation, the 500 billion dinar note, that's a 5 followed by 11 zeros, but shortly after cut off nine of the zeros. One of the 500 billion dinar notes could have bought you lunch if you were very frugal.

The 500 Billion note just blew my mind. That was, until I saw this, just released from Zimbabwe:

Look at all those zeros!

March 17, 2009

Apparently, I am a Terrorist, and You May Be Too....

Maybe you've heard, or maybe not, but the Missouri State Police think I might be a security threat (maybe you are too).

Why? Because I support Ron Paul and the Campaign for Liberty. Also, because maybe I own guns, oppose abortion or support homeschool.

Even, and I'm serious, because I support the U.S. Constitution.

This is no joke. Read it for yourself here. On the top of page 7.

March 14, 2009

John Stossel: Bailouts and Bull

When I was growing up, I used to watch Friday night TV on ABC. Afterwards, 20/20 came on and I often found it interesting, even when I was 10 or younger. My favorite part was always John Stossel's 'Give me a Break' bit. It made so much sense. This guy is actually still making sense. Good for him. Check out a special he did last night (Friday). He makes some excellent points.

Part 2

Part 3

Part 4

Part 5

Part 6

March 8, 2009

Pro-State Cancer

I saw a billboard the other day and it gave me an idea for a title of a book. However, since I am not interested in writing a book anytime soon, I thought I would just make it the title of a blog post. This was the best image I could find of what the billboard said:

Suffice it to say that we are suffering from what could be called pro-state cancer. It is the malignant idea that the state can somehow solve our problems. It also reminded me of a demotivational poster I saw on that was funny. It fits the current situation perfectly.

March 6, 2009

A Novel Idea

The is funny, but it is absolutely true. And yet, at every turn, the government is trying to get people to ignore this, even setting the worst possible example by spending trillions of dollars it does not have. Savings is just as important to the economy as investment and consumption. The sooner we learn this, the sooner we can recover economically.

March 3, 2009

Politics vs. Statesmanship

It is often lamented that politicians are fickle and unprincipled. They promise one thing in order to get elected and do another when in office to please special interests. They lie, cheat, deceive and elude questions with great skill at times. The word politician has a derogatory connotation--so much that it has become an insult in itself. In fact, this connotation has become a truism and I doubt the need to explain my meaning further.
And yet, there is an interesting phenomena that occurs particularly around the time of presidential elections. From among a broad range of candidates, people choose a favorite politician and find themselves defending that politician by all means. If their politician said this and the media thought it was wrong, they will say their politician meant that and the media is simply taking it out of context or misconstruing his words. This game is known as politics and we all got more than two earfuls of it during the presidential campaigns. We probably even participated in it to some extent, arguing over what he meant by this and what he didn't mean by that. At the same time, we were quick to point out the flaws in the words of politicians we didn't like as evidence that they were incompetent or dishonest.
First of all, I think it very sad that the media has embraced this practice and called it politics. They revel in this sort of bickering and he-said-she-said noise. I see the political pundits constantly searching for any snippet of a sound bite or excerpt that could be controversial in any way. The art of being elusive and avoiding this sort of criticism is known as political correctness. Politicians, under constant threat of being attacked personally because of the way they chose to phrase something, seek more refined, vague, and mostly cryptic ways of speaking their message. This translates into political positions that aren't really positions at all. They do not dare take a stance on important issues for fear of sounding politically incorrect or deemed radical and uncompromising. Their favorite phrases are some of the following: "I am committed to working accomplish....for the good of our country" or "We need to come together on this to find a solution that works for the American people" or "This bill has strong bipartisan support" or "I have experience working with people on both sides of the isle". What do these statements really even mean?! They certainly don't articulate a true position on any certain issue.
This whole mess that the politicians and media have created does nothing more than muddy the waters. The bickering over the meaning and intent of words and phrases distracts from the truly important debates that need to happen in order for people to understand issues and decide what they believe about them. If the water were cleared, I think we would find that many who are continuously at each others' throats about what the other has said about X, are really not in any disagreement at all. Their argument is simply to distract from this fact and maintain the illusion that there are deep ideological differences among key political figures. Generally speaking, there are few, if any, ideological differences, and politics-as-usual masks this fact rather well to the untrained eye.
Gone, it seems, are the days of true statesmanship. The days when a man stood up for what he believed and didn't revel in the mud of personal attacks and semantics. Rather, there was honest and serious intellectual debate about issues that mattered.
For this reason, I breathed a sigh of relief that some of these statesmen may still exist when I saw Ron Paul take on a political pundit today, touching on this very issue. The reader may know of my affinity for Congressman Ron Paul, but let me say that there are certainly others out there like him. I just don't know where they are at the moment. We should seek these good, honest men, and uphold them in the principles that they espouse.
The video is well worth watching and shows perfectly what I mean.

March 2, 2009

The Word is Spreading

Not all the articles I read in the mainstream are ridiculous. Every once in a while, I will run across an article that seems to at least get some things right and be fair about it in the process. I wanted to point out one article from Newsweek that at least puts a plug in for free-market Austrian Economics. The author gives a small explanation of the Austrian business cycle theory--which I hold to be fact, not theory per se and have tried at length to explain in some of my posts. I would highly recommend that those seeking to understand the economics of today study the Austrian Business Cycle Theory. There are some excellent books out on it but you can get free articles and audio books/lectures from

Here's the Newsweek article.

March 1, 2009

An Email to Mr. Schoen

I read an Answer Desk article the other day on that really got my blood moving. After I took a few breaths, I typed up a quick response to the author, Mr. Schoen, explaining some things that I think he missed in his article. As I think this article touches on a few important points about the issues at hand, including Obama's mortgage bailout plan, I decided to post my response. I recommend reading the article first to get the context. It can be found here.

Mr Schoen
Your recent article about the mortgage bailout and income taxes was quite disturbing, to say the least. Without going into too much detail (since I doubt you will read this anyway), I wanted to respond to your misguided attempt to cover for the failed policy of price-fixing.
You mention in your article, and I have heard many times throughout the past several months, that the government is justified in rescuing bad mortgages in order to keep the prices of houses from falling too low. You write that it is legitimate for the government to use our tax dollars to pay for the mortgages of others so that the value of our house will not fall. There are two important economic problems with this argument, besides the moral hazard it creates. The first problem is that not everyone owns a home. Not everyone is concerned with a mortgage and therefore with the falling value of houses. In fact, many people are looking forward to buying a house and have been saving their money, paying their taxes, and otherwise living frugally. And yet, our tax dollars are being used to keep housing prices high--exactly what we do not want if we are going to buy a house. This works directly against our interest.
The second problem with this plan is that it, quite simply, creates a price floor for homes, not allowing the market to fix the correct price. The simplest laws of economics teach us that price-fixing creates distortions in the efficient outcome of the market. In particular, price floors, such as would be created by keeping house prices higher than the market would set them at, create surpluses in housing and general waste. The prices of houses MUST go down in order for the surplus to be liquidated. The fact that you do not understand this should exclude you from writing about economics at all.
I also wanted to touch on another point you made in your article about the income tax. First of all, the dates you listed for the ratification by each state are heavily disputed and have not been clearly verified to have taken place in the correct manner. Second of all, there was mention in the title of your article about whether or not income taxes are legal. You actually never address this point. And NO, just because it was "ratified" does not make it legal. The Constitution clearly states that there shall be no direct tax on the people. You can dance around this all you want, but the fact is that the income tax is simply unconstitutional. This does not mean that I do not pay it. To do so would be unwise. But I have to object to your dismissal of the argument and your treatment of those who espouse it as juvenile and ignorant.

February 25, 2009

What just happened?!

I was just watching Congressman Paul question Federal Reserve Chairman Ben Bernanke. He asked him some very important questions and Bernanke gave some very elusive answers, as usual. Then Paul asked Bernanke if WWII pulled us out of the Great Depression. Paul was immediately cut-off by Barney Frank, even though he still had some time left, and they went on a break. This effectively nullified Paul's question and Bernanke didn't even have to answer it.
I will post the video as soon as possible, but honestly this was blatant censorship and I am amazed.

February 19, 2009

The Revolution is Brewing

I am surely not the only blogger to put this up, but this is a taste of the frustration that so many people are feeling right now. The government is creating the worst moral hazard ever and stealing from our grandchildren to do it.

February 15, 2009

The Principles of '98 (1798)

Well, what was once thought lost after the Civil War may now be brewing again. Thomas Jefferson's Kentucky Resolution, also called the principles of '98 or 1798, asserts that when the Federal Government oversteps its powers enumerated in the Constitution, states have the right to 'nullify' that action. This nullification principle takes different forms, but it was the basis for the Civil War and it is the principle under which at least 20 states are now reclaiming powers usurped by the Federal Government.
Here is the resolution introduced recently in the Texas legislature.

By:AACreighton H.C.R.ANo.A50


WHEREAS, The Tenth Amendment to the Constitution of the

United States reads as follows: "The powers not delegated to the

United States by the Constitution, nor prohibited by it to the

States, are reserved to the States respectively, or to the people";


WHEREAS, The Tenth Amendment defines the total scope of

federal power as being that specifically granted by the

Constitution of the United States and no more; and

WHEREAS, The scope of power defined by the Tenth Amendment

means that the federal government was created by the states

specifically to be an agent of the states; and

WHEREAS, Today, in 2009, the states are demonstrably treated

as agents of the federal government; and

WHEREAS, Many federal laws are directly in violation of the

Tenth Amendment to the Constitution of the United States; and

WHEREAS, The Tenth Amendment assures that we, the people of

the United States of America and each sovereign state in the Union

of States, now have, and have always had, rights the federal

government may not usurp; and

WHEREAS, Section 4, Article IV, of the Constitution says,

"The United States shall guarantee to every State in this Union a

Republican Form of Government," and the Ninth Amendment states that

"The enumeration in the Constitution, of certain rights, shall not

be construed to deny or disparage others retained by the people";


WHEREAS, The United States Supreme Court has ruled in New

York v. United States, 112 S. Ct. 2408 (1992), that congress may not

simply commandeer the legislative and regulatory processes of the

states; and

WHEREAS, A number of proposals from previous administrations

and some now pending from the present administration and from

congress may further violate the Constitution of the United States;

now, therefore, be it

RESOLVED, That the 81st Legislature of the State of Texas

hereby claim sovereignty under the Tenth Amendment to the

Constitution of the United States over all powers not otherwise

enumerated and granted to the federal government by the

Constitution of the United States; and, be it further

RESOLVED, That this serve as notice and demand to the federal

government, as our agent, to cease and desist, effective

immediately, mandates that are beyond the scope of these

constitutionally delegated powers; and, be it further

RESOLVED, That all compulsory federal legislation that

directs states to comply under threat of civil or criminal

penalties or sanctions or that requires states to pass legislation

or lose federal funding be prohibited or repealed; and, be it


RESOLVED, That the Texas secretary of state forward official

copies of this resolution to the president of the United States, to

the speaker of the house of representatives and the president of the

senate of the United States Congress, and to all the members of the

Texas delegation to the congress with the request that this

resolution be officially entered in the Congressional Record as a

memorial to the Congress of the United States of America.

February 12, 2009

Black September: Now we find out how bad it really was

Around the 2:00 mark, you will hear the meat of what happened in September 2008. If this was going to happen 6 months ago, what are we in for now that the government has spent trillions more?

“On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened.

If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.”

February 5, 2009

The Warfare State

I have been thinking quite a bit lately about war. This is not really much of a change from my earlier adolescent years when I idolized war heroes and played violent video games for hours. Some things never change, but my thoughts on war have definitely been refined over the years. There’s a lot to say about war, but I wanted to stick with some misconceptions that I have had or hear commonly.

Some people claim that war stimulates the economy, so it is good for economic growth. I heard this a lot in school, especially in the context of WWII. The theory is that the war brought us out of the Great Depression. Plenty has been written on this to disprove the idea, but I am interested in refuting the broader theory. The fact is that war cannot possibly be good for an economy, just as natural disasters cannot make us better off economically. War redirects the resources of an economy away from consumer demands toward destruction. Instead of producing goods for domestic consumption and trade, war channels production for destructive ends. Soldiers are consuming, not producing, and factories are making bombs to blow up bridges instead of steel and concrete to build them. This is all beside the fact that productive people are being killed, greatly reducing future abilities to produce.

Sure, war increases government spending, but the money government spends has to come from somewhere. People pay for war through higher taxes. Usually outright taxes are unpopular, so governments find other ways to get the money they need now—the ‘buy now, pay later’ gimmick that you saw last time you stepped into a furniture store. The easiest way to do this is debase the currency by inflation. The people pay the tax through higher prices instead of explicit taxation. Thus, a hidden tax levied without representation. I want to emphasize that I am not arguing that war is never necessary; I am simply refuting the claim that it has economic benefits per se.

Randolph Bourne astutely observed that war is the health of the state. War makes government thrive like nothing else. In wartime, governments increase their power over their subjects by nationalist rhetoric, taxes, and curtailing of individual liberties. The examples of this are numerous, and one need only look to the history of virtually any war to find that governments increase in power—particularly the governments of the victors but often the governments of the losers as well. In US history, war has followed the ratchet effect. After the war, the government’s power is sometimes decreased, but it never returns to the level it was previously, creating an ever-expanding state.

But above all other considerations, I must insist that war is nothing less than the conglomeration of every evil, horror, depravity, perversion, and violation of natural law of which man is capable of. In other words, it is the breeding ground for the sum of all the most terrible vices that man has ever expressed. It seems clear to me that much of the emotion I feel when watching a war film is a conflict between the apparent necessity of violence and the utter horror at witnessing what awful things we can do to each other under the guise of powerful ideologies.

Again, I am not advocating pacifism here. I am not saying that war is never justified, but I am saying that it is quite rare—much rarer than widely considered—and must morally be only in blatant defense. The idea of pre-emptive war feeds on this justification in a most pernicious way. To accept the doctrine of preemption is to make war totally subject to the whims of government. Under this doctrine, defense becomes offense and a country cannot defend itself without violently preempting every conceivable threat to any one of its so-called interests.

What are your thoughts on war? When is it justified? What wars in history do you think were just/unjust? Why?

January 28, 2009

Can we say: MORAL HAZARD!

So the Fed is now bailing out "distressed" homeowners. Here's the catch: you have to be two months delinquent on your payments. Wow! If that's not an incentive to stop paying your mortgage, I don't know what is. These people are totally oblivious to the concept of moral hazard. This is going to compound the problem more than imaginable.

Here's the link:

January 20, 2009

Negative Interest Rates: Can they be serious?!

There's an absolutely mind-boggling article here which makes some of the most outrageous claims I have ever heard. I couldn't let these claims stand unchallenged, even if my voice is only a squeak.
The article claims that the current Federal Reserve interest rate of ZERO percent is not low enough. In fact, one report from Goldman Sachs actually says that the Fed needs to cut the interest rate to NEGATIVE 6 percent to provide the needed stimulus.
It gets better. The article goes on to claim that inflation will soon be zero percent. What it said next almost made me fall out of my chair:

The solution is obvious: The Fed needs to deliberately raise the rate of inflation — maybe not all the way to 6 percent, but significantly above zero.
One way to do that is to print lots of money. The Fed can create money from thin air by purchasing assets such as Treasuries and mortgage-backed securities and paying for them by crediting the seller with newly created reserves at the central bank.

As if this wasn't good enough to pass as the worst idea in history, the author goes on to explain more:

That way today's zero interest rates would be negative in inflation-adjusted terms and the economy would get the boost it needs. Fed rate-setters would need to swallow hard, since 99.99 percent of the time they try to quell inflation, not raise it. But most of the voters on the Federal Open Market Committee are aware that deflation can be an even greater nemesis than inflation.

Honestly, I am now speechless. Not only is this paragraph full of lies, it deliberately misleads people into thinking that the Fed fights inflation. The Fed is the SOLE CREATOR of inflation. What is there to do in the face of such blatant disregard for sound monetary policy? Can they really believe that inflation is not a problem? If they follow this policy, there is nothing stopping us from becoming the next Zimbabwe.

January 14, 2009

Zimbabwe update: Just to prove my point

So remember how I said that the Zimbabwean dollar was $1 US = $9,570,555 Z? Well, as of today, the new rate is $1 US = $12,525,200 Z. So, the US dollar costs $3,000,000 (that's three million) MORE Zimbabwean dollars than it did TWO DAYS AGO!
This blew me away so I just wanted to share it. Don't think it can't happen to us.

January 12, 2009

Largest check ever written

So this must be the largest check ever written:

In case you can't read it, its one quadrillion, seventy-two trillion, four hundred and eighteen billion, three million dollars. Well, that's what you get when the inflation rate is 12.5 million percent. This check was drawn on a Zimbabwean bank. That's hyperinflation folks. By the way, $1 US = $9,570,555 Z as of a couple minutes ago...
Not sure what it is now....
Or now...

January 11, 2009

Israel, Gaza, and [the] US

I would like to make a quick note about the situation in Gaza as it is prominent in the news lately. First of all, most people will realize that there is nothing new going on here. Israelis and Palestinians have been bashing it out for decades. I could spend a lot of time talking about the history of this bashing. I could talk about the atrocities committed by both sides. I could present either side's case for its claim to ownership of the land. I could talk about the lopsidedness of the forces involved and those that suffer because of it. But it all is beside the point I hope to make. The point is: It's none of the United States' business.
And yet, the US government has been making it its business since the creation of the state of Israel. Sure, there are many reasons why, but none of them convinces me that it is in our national interest, security-wise or otherwise, to officially support Israel militarily or financially.
Israel can take care of itself. It has proven this for many years. Its enemies are vastly unequal to its power militarily. Israel cannot possibly need the military support of the United States. Furthermore, our support of other countries who are historically enemies of Israel has been counterproductive. Why do we continue to support both sides of an ongoing war? Are we not facilitating its perpetuation by our meddling?
These interventions have not made us safer or more prosperous as a nation. In fact, they have made us less secure by inciting hatred toward us in the Middle East and elsewhere. At the same time, our military ventures have placed undue strain on our financial resources, the consequences of which we are experiencing now.
Another point I would like to make is about Iran. Some have recently suggested that Iran has been supporting Hamas against Israel and that we should intervene to stop this. Frankly, I cannot understand this argument, even if the accusations are true. If we oppose Iranian (foreign) involvement in an area that Iran deems necessary to its interests, why should we not also oppose our own involvement in the area? Is this not a gross contradiction in principle?
Now, I do not wish to take sides in this conflict. Experience and research has shown me that there is not truly a side to which justice belongs and therefore I could commit myself. However, even if there were, this would not justify the intervention of our government in affairs over which it has absolutely no authority.
I am hoping to get some response to this post. What are your opinions on the conflict? What do you know about its history? What do you think the role of the United States should be, if any?

January 4, 2009

Money: Part 2

Earlier I wrote about how money originates as a commodity through the barter system. While the origins of money may be clear, the idea of money may still be abstract for some. This is because our concept of money has changed dramatically from its original form. Our current system consists of a fiat paper currency which is nonredeemable for any commodity by the institution who issues it. That is, our “money” is simply ink on paper which the government forces us to use through legal tender laws. This paper money is issued by the Federal Reserve Bank, but the Federal Reserve will not redeem that money in any commodity other than an identical paper note.
Legal tender laws which establish the paper money as fiat money require that it be accepted as a form of payment for debts. This means that if fiat money was offered as payment for a debt, the courts will consider that debt paid. The courts will not enforce payment in any other form, even if that form of payment was specified in a contract (ever heard of the gold clause?...It was made irrelevant by legal tender laws).
The evolution of a commodity-based monetary system to a fiat paper money system is somewhat complicated, but I will try to explain the process as best I can. Originally, when gold was used as money, banks issued paper receipts to customers so that they could return and claim their gold at any time. People eventually began simply trading the receipts themselves as if they were gold because it was easier than withdrawing the gold to pay for everything.
Eventually, banks figured out that they could issue more receipts for gold than gold that actually existed in their vaults because virtually no one ever came to withdraw the gold. This led to what is called fractional reserve banking. That is, banks only held a fraction of the receipts in circulation in gold, but this practice was not particularly legal when it first started. This is because it was considered fraud. The receipts were titles to the property that existed in the bank vault. The bank was essentially committing fraud by issuing new titles to the same gold. The system became legalized through a partnership of the government and banks so that banks could provide quick and easy credit to governments to finance this project or that war.
However, there were problems with this type of system. Occasionally, banks expanded their credit or their paper receipts far beyond their actual reserves. When people started realizing this, they began to withdraw their gold from the bank before it was too late. If the panic grew, there was a “run on the bank,” causing the bank to fail. This wiped out the savings of those who falsely thought their money was safe in the bank because suddenly their paper notes where not worth anything as they were issued by an institution that didn’t exist anymore.
But instead of abolishing the system of fractional reserve banking, the government sanctioned it and setup a central banking system that linked all banks and regulated their activities. Central banks made sure banks kept a certain amount of gold in reserve and offered individual banks infusions of gold if problems arose. The problems with this solution may be obvious. The government could not prevent a full-scale bank failure (one that targeted all banks) it could only prevent isolated bank failures. Because the system was fully based on a fractional reserve, there would never be enough gold to cover the receipts, no matter how centralized the system was.
This led to the temporary, and eventually complete, suspension of redemption for gold of the paper notes. But this is not the end of the story; today we have moved into a whole new phase of currency evolution. Not only is our paper money not redeemable in gold in any way, our paper money itself has replaced gold as the reserve unit. That is, banks no longer hold gold in reserve, they hold paper money. They don’t even have to hold enough paper money to cover all their checking and savings accounts.
This new form of fractional reserve banking goes way beyond the old kind. But it is also somewhat strange, because it is, in a sense, also a 100% reserve system inasmuch as accounts are insured by the FDIC. The whole way that this came about is pretty complicated, as I said, but suffice it to say that the natural laws that govern money circulation and usage have come to bear on our current fiat paper monetary system. In order to prevent bank runs, the government has insured deposits, essentially removing the worries that one will lose his deposits’ nominal value. However, the government has not eliminated the workings of the fractional reserve system, such that banks can still lend more money than they have and collect interest on more money than existed in the first place.
In effect, this has created a monetary mess that can honestly only end in disaster for our currency. Returning to sound money, which is not subject to these weaknesses and caprices, would prevent a monetary disaster, but the transition would not be simple or easy. In the next part on money, I will give some of my ideas about how we can return to sound money.
What other weaknesses does our current system have? What are the benefits of our current system?