Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
In Romans 13:1-7 the apostle Paul writes:
"[A ruler] is the minister of God to thee for good" (v. 3);
"Wherefore ye must needs be subject . . ."(v. 5);
". . . pay ye tribute [taxes]" (v. 6).
St. Paul seems to be saying that God ordains human governments and that Christians should honor and obey the government under whose jurisdiction they live. Many Christians conclude from these verses that Christians should accept whatever government and laws their country has. Other Christians, while accepting the need for government and lawful behavior, question whether Romans 13 commands us to submit to human governments unconditionally. They ask: Is rebellion ever justified? Reform movements? Civil disobedience? Tax protests? Change?
Based on scriptural texts, Paul appears to be a quintessential conservative - not in the contemporary American sense of favoring a smaller government, but in the more traditional political sense of not wanting to disrupt the established order. Indeed, contemporary progressives reject Paul's unwillingness to challenge the social status quo. In his epistles, St. Paul tells servants to treat their masters well and vice versa. There are no appeals for "social justice," equality of status, or redistribution of wealth. In addition to the famous passage in Romans, Paul exhorts Christians to pray for all in positions of authority (I Timothy 2:1-4). These are not the writings of a political dissident.
Before categorizing Paul as a political conservative, let us consider another possibility: Perhaps he was apolitical. Like his Lord and Savior, Jesus Christ, Paul's life was devoted to a spiritual mission - the advancement of the heavenly kingdom that is not of this world. His objective was to reform and reconstruct the architecture of the thought, soul, and heart, not the superstructure of civil government. Paul was an evangelist for God and His son, not a political philosopher or activist. He was too busy being a spiritual radical to get involved in a political movement.
Indeed, Paul had to take great care that the fire of the Holy Spirit that burned in men's hearts not be conflated with the flames of political passions. Many Jews were still looking for a militant Messiah to lead them in revolt against the hated Romans. Paul must have known that if the followers of Jesus became a political movement challenging the authority of Caesar, the Roman army would crush, if not annihilate, the nascent Christian movement. Out of love for his Lord and his fellow man, Paul would not lead his flock to certain slaughter. His apparent cautiousness was not due to personal timidity or concern for his own safety. This faithful apostle bravely endured repeated hardships in the service of his Lord:
Five times received I forty stripes save one, thrice was I beaten with rods, once was I stoned, thrice I suffered shipwreck, a night and a day I have been in the deep . . . In weariness and painfulness . . . in hunger and thirst . . . in cold and nakedness (2 Corinthians 11:24, 25, 27).
Ultimately, this "great lion of God" (as the novelist Taylor Caldwell characterized him) was martyred for his faith.
It is significant that Paul's statements about honoring government occur in his letter to the Roman church. Certainly Rome, as home to Caesar and capital of the Roman Empire, would be particularly diligent in monitoring potential rebels. What if Roman authorities were to intercept Paul's letter? In that case, his statements about honoring government would contradict any charge that Christians were somehow disloyal to the emperor. At the same time, Romans 13 conveys messages that were opaque to the pagans but transparent to Christians.
The chapter begins, "Let every soul be subject unto the higher powers" (v. 1). While Roman authorities might have assumed that Paul was writing about Caesar, Christians knew that "the higher powers" were divine - that God is the sovereign to whom one owes fidelity. And when Paul writes that a ruler "is the minister of God to thee for good" (v. 4), doesn't this imply that he is speaking of rulers who are just and good - those who uphold God's rules protecting the sanctity of life, marriage, property, reputation, etc.? Yes, we should pray for all who are in positions of authority, for benign and just rulers, that they continue to be so, and for corrupt or unjust rulers, that they mend their ways and govern better.
Here is a jarring thought: If Christians are never to rebel against unjust government, then America's Founding Fathers were wrong to rebel against the English crown and parliament to establish a republic where most people's God-given rights were given greater protections than anywhere else on earth.
This leads us back to those controversial, fundamental questions about which Christians of good conscience may strongly disagree: What is the proper scope of government? To what extent should Christians "turn the other cheek" and "suffer it to be so now" by accepting the status quo, and when is challenging and changing laws and government justified? Is it possible that Paul's contributions to the scriptural canon were not essentially conservative, but so profoundly revolutionary on a long-term basis, leavening human thought until, centuries later, Christians' hearts and minds were filled with the unshakable conviction that it was a human right to throw off unjust governments?
Here is one point on which most Christians may agree: Governments often adopt policies that don't seem right, and we disagree on which policies those are. But all of us can take heart from that glorious promise that St. Paul gave us in that same letter to the Romans: ". . . all things work together for good to them that love God . . ." (Rom. 8:28). Amen.
When writing about the IMF last week, I mentioned that bureaucracies tend to do everything possible to perpetuate themselves. So it is with the United Nations and the Environmental Protection Agency.
The UN long ago found common cause with redistributionist national governments on the subject of climate change/global warming, spouting an alarmist theory of impending disaster unless we Americans slow down on economic growth and the governments of richer countries give more of their taxpayers' money to the governments of poorer countries. Thus, predictably, the UN's Inter Governmental Panel on Climate Change has just issued its fifth assessment report in which it continues to sound the alarm about warming caused primarily by increased concentrations of CO2 in the atmosphere. It also states that developing countries need between $70 and $100 billion per year to make needed changes - money that the developed countries are expected to supply, even as they shrink their own GDPs.
The EPA has been progressively expanding its reach, successfully positioning itself as a ubiquitous presence in our lives and establishing itself as one of the most powerful agencies of the American government. Its latest gambit involves attempting to regulate emissions of bovine flatulence - a major source of methane, a gas that traps much more heat than CO2. The EPA initiative has far-reaching implications, since the only way to reduce the amount of gas emitted by cattle may be to curtail our consumption of beef by reducing the number of cattle in existence.
There are multiple flaws in the alarmist position. Let's cover just a few:
1) The climate change gurus can't forecast the future. This goes beyond the problem that the alarmists have as a result of their dozens of computer models not conforming to real-world historical data and all contradicting each other like some sort of scientific Tower of Babel. The inescapable problem is that much of the climate is a "coupled, nonlinear, chaotic system," meaning that it may not be possible to predict it with accuracy.
2) Not only can we not "prove" that earth will warm or cool over the coming decades, we don't even know what the net gains and losses of either alternative would be. Maybe (I don't claim to know) warmer would be better on a net basis, maybe cooler would be better (although based on the history of the last 2000 years, I lean toward warmer).
3) Not only can mere mortals not predict the future climate, we cannot control it with present or near-term technology. The UN report warns "that the problem will become increasingly difficult to manage." This belief that humans can somehow "manage" the climate is what Friedrich Hayek called "the fatal conceit" on steroids.
Look, the alarmists themselves already have sabotaged their own theory. A number of them in recent years have started to hedge their bets by suggesting that the current 17-year stretch of non-warming may continue for several decades. They avoid mentioning that manmade CO2 emissions are likely to continue to increase over that period. That pretty much nullifies their thesis that CO2 is the primary driver of climate change. Essentially, they are conceding the skeptics' point that other factors have greater impact on global temperatures than CO2.
Over 20 years ago, the George Marshall Institute published a study showing that all of the small increases in global temperature from 1900 to 1990 could be attributed to increases in the sun's energy output. Over the course of earth's history, changes in earth's orbit around the sun, changes in the tilt of the Earth's axis, and changes in albedo (reflection of light from the planet, due partly to cloud cover) have driven changes in terrestrial warmth. As for the atmosphere's greenhouse effect, by far the major portion of that is attributable to the primary greenhouse gas - water vapor (which even the UN and the EPA aren't foolish enough to propose regulating). As for the minor share of the greenhouse effect due to global warming, since humans account for only about four percent of total global CO2 emissions, it becomes apparent that we humans are, in terms of our impact on climate change, a monkey on an elephant's back - we're not the driver, we're just going along for the ride.
We need to remember how hyper-politicized the IPCC and EPA are. They have their agendas. I was interviewed about climate change for a Voice of America broadcast a few weeks ago, and, since I'm a skeptic, was asked if I had received money from fossil fuel companies. My reply was that I haven't, but how horribly biased it is to ask skeptics if they receive oil money, but not to ask alarmists if they receive government money. Why this presumption that private money is corrupt but government money is pure and noble? What a naive, unrealistic, perhaps deluded assumption that is. Billions of government dollars have been spent advancing the alarmist scenario/agenda. The alarmists bring to mind something H. L. Mencken once wrote:
The whole aim of practical politics is to keep the populace alarmed by menacing it with an endless series of hobgoblins, all of them imaginary.
Don't let the hobgoblins scare you. *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
The Congressional Budget Office's recent analysis of the Affordable Care Act concludes that it will result in the equivalent of 2.3 million full-time workers leaving the work force to preserve their taxpayer-financed subsidies for health insurance.
This is troubling on several levels: In terms of fiscal impact, it will exacerbate the federal budget deficit, both on the revenue side (fewer taxable hours being worked) and on the expenditure side (Obamacare's new subsidies). Economically, our country will be poorer than it otherwise would be. Work produces wealth; less work means less wealth, and also less upward mobility for those who drop out of the labor force. Politically, as the number of unproductive citizens dependent on government increases and the number of productive citizens whose taxes finance government decreases, the unproductive may achieve a permanent majority - a political hegemony - as happened in ancient Rome with dire consequences.
News of fewer Americans working should come as no surprise with the current administration running the show. Whether it be the unproductive "stimulus plan," increasing the minimum wage, suffocating regulation, increasing unemployment subsidies (miscalled "compensation"), adding record numbers to the disability rolls, etc., the Obama presidency has been a job-destroying machine from the start, as I noted four years and two-and-a-half years ago. Even as the heroic efforts of industrious Americans manage to keep our economic nose above water, the labor participation rate has fallen.
What is remarkable about the all-too-predictable loss of jobs resulting from Obamacare is the administration's response. Jason Furman, the chairman of the White House's Council of Economic Advisers, tried to spin the projected net reduction in productive labor as a positive. He said, "This is not businesses cutting back on jobs, this is people having new choices they didn't use to have." Team Obama's attitude seems to be that it's bad for society when businesses reduce jobs in the face of increased cost burdens - as if the primary reason businesses exist is to "give" somebody a job rather than to produce wealth and serve consumer needs - but it's good for society if individuals cut back their work hours and increasingly live on government support. Note the double standard: If businesses respond to Obamacare's disincentives to employ people by reducing employment, that's bad (and the IRS, without statutory authority, will play the grand inquisitor, and demand to know if Obamacare was the reason they cut employees' jobs or workweeks) but if individuals respond to Obamacare's disincentives to work by reducing their hours of work to qualify for larger government subsidies, that's good.
Referring to a record number (over 100 million) of Americans not working, White House spokesman James Carney hailed this lost economic production as a wonderful development. Or, in other words, "a milestone on the path toward the ultimate complete liberation of the American worker from the drudgery of work," to quote Lewis K. Uhler and Peter Ferrara. This utopian vision of a world without work is uncomfortably close to the economic irrationality of the Occupy Wall Street crowd.
At their 2012 May Day rally in Chicago, the Occupy Wall Street members prominently displayed signs saying, "If you have to work to live, is it a choice? If you have no choice, are you free?" Sorry, people, but, we aren't born with a lifelong supply of sustenance accompanying us, and so we are not free from the necessity to produce what we consume - that is, to work. Those who lament that they aren't free if they have to work seem remarkably unconcerned about the freedom of their fellow citizens. To reword the slogan on the Occupy Wall Street sign: If you don't work, and you expect your fellow citizens to work to support you, can your fellow citizens be free?
This administration's desire to make it easier for people not to work and to live at taxpayer expense makes no economic sense. It reduces the amount of wealth produced and keeps people from ascending the ladder of individual economic progress. Politically, though, it makes a lot of sense to Obama and his progressive allies. By continually increasing the number of citizens economically dependent on the political process, Obama comes that much closer to achieving the Curley Effect and securing a permanent Democratic majority over an increasingly shrinking productive sector. Should that happen, the war on producers, and therefore on wealth, will escalate, resulting in a poorer America. The longer Team Obama's war against work continues, the more they cripple the wealth production upon which our standard of living depends.
Americans are deeply divided in 2014, suggesting that this year's elections will be another bitter clash. One major fault line that divides us is that many Americans view the federal government as their benefactor while others perceive it as a grave threat to their well-being.
A recent Pew research project found that 53 percent of Americans think that today's government threatens personal rights and freedoms. (Incidentally, this isn't the first time Americans have felt this way. As historian Burt Folsom reminds us in New Deal or Raw Deal, at the end of Franklin Roosevelt's first term in 1936, a Gallup poll indicated that 45 percent of Americans thought that FDR's policies could lead to dictatorship.)
Government aggression against Americans is indeed rampant. The IRS has targeted conservative groups, persecuted individuals who have tried to expose election fraud, and will now act as the grand inquisitor of businesses that have laid off workers due to Obamacare's costs. The rogue EPA is hounding energy companies and others, the National Labor Relations Board has once again shown it isn't impartial by helping to get Volkswagen workers to join the UAW, and the NSA's snooping seems ubiquitous.
Perhaps most worrisome is that even elected leaders are becoming bolder and more overt in expressing their hostility to individual rights. It's almost as if they feel they are so close to achieving an unbreakable political hegemony that they don't even have to pay lip service to tolerance, pluralism, or the rights of conscience any more.
Here are a few examples: Last month, New York Governor. Andrew Cuomo, stated on live radio that "extreme conservatives" (Americans who are right-to-life, Second Amendment absolutists, and those who do not embrace the gay agenda - far too sizable a percentage to merit the pejorative "extreme") "have no place in the State of New York." (Cuomo's team went into damage control spin mode, claiming that all he meant was that conservatives couldn't win statewide elections.)
New York's senior Senator Charles Schumer followed Cuomo's outburst a couple of days later by openly calling for the IRS and other government agencies to continue to hamstring tea party and other conservative groups so that he and his fellow progressives can exert more control over national policies. Apparently, Schumer no longer fears a public backlash from advocating the suppression of free political speech.
Then, of course, there was the ominous irony of the president declaring in his State of the Union address that, if Republicans wouldn't work with him to adopt the policies he wants, then he would bypass the people's elected representatives completely and rule by executive fiat.
And don't forget Senator Harry Reid's decision last year to jettison Senate rules by reducing the votes needed to approve key presidential appointees from 60 to a simple majority. Critics at the time thought Reid's decision was short-sighted - that he might rue having changed the rules once the Republicans regained a majority. But what if Reid doesn't think the Democrats will fall from power? What if he, Cuomo, Schumer, Obama, and company believe that by ignoring precedent, defying the constitution, and usurping power, they will never relinquish control of the government to Republicans - that they are so sure of their own rightness and good intentions that they feel entitled to rule and that the end justifies the means?
Some of you on the right might regard these brazen statements on the left as a godsend, on the grounds that surely the majority of Americans will perceive how tyrannical the left is, thereby paving the way for a conservative counterrevolution. Although I hope that is the case, the question then becomes: Who are you going to turn to as an alternative - the Republicans?
The problem with today's Republicans is that they do not offer a unified, principled opposition. Recently, they have capitulated on the debt ceiling issue and helped to pass the $956 billion farm bill "with strong bipartisan support." Runaway spending continues unchecked. Central planning is alive and well in Washington, the welfare state is undiminished, and cronyism remains firmly entrenched as the basic modus operandi of the federal leviathan. Combined with the internecine feuding between the GOP "establishment" and the tea party, constitutionalists, and conservatives, prospects for a significant change of direction in Washington in 2014 seem dim.
It appears that those Americans who want to use the government to redistribute wealth outnumber those who feel victimized by the predatory state. This is the true state of our disunion in 2014.
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
I got a call the other night from my friend who was disgruntled about the myriad hassles caused by Obamacare. You may be tempted to respond, "No fooling! Join the club," and you'd be right, but there's more to it than that. My friend, Larry, is almost impossible to irritate. One of the definitions of "imperturbable" in the dictionary should be "Larry." If Obamacare is egregious enough to bother him, then the Obamacare fiasco is registering 9.0 on the Richter scale of political earthquakes.
Besides the meanness and injustice of millions of Americans suffering from this policy, Obamacare is spreading misery far and wide. This grotesque program has left millions feeling betrayed and abused, and has caused them to feel anxiety, bitterness, and resentment. Obamacare has placed the health (both physical and financial) of masses of innocent Americans at risk. And why? All so that some implacable ideologues can play social engineer and central planner, trampling on the Constitution, defying common sense, and abandoning common decency.
This fiasco is exposing the soul of leftism. Leftist ideologues (perhaps, by now, even some Democrats may concede that this is what Obama is) are chronic malcontents, constantly peeved that the world doesn't conform to their own ideal notions. Consequently, they sanctimoniously lash out, willing to tear down and tear apart society, condemning it for not being perfect, magnifying its imperfections while ignoring, if not despising, what is good about it.
Hardcore leftists are worse than malcontents; they are haters. Lenin told the commissars of education in 1923, "We must teach our children to hate. Hatred is the basis of Communism." Karl Marx, according to Bertolt Brecht, proudly proclaimed himself, "the most outstanding hater of the so-called positive."
It is the left's unremitting negativism that dominates their character. They are like spiteful, spoiled children who never grow up. They rage and complain about "injustice" because other people are not doing what leftists believe they should be doing. Thus, you have Bill Ayers, the young Jane Fonda, the petty intellectuals like Richard Cloward and Frances Fox Piven, the president, and many others who, having partaken of all the rights, privileges, benefits, and amenities of the USA, nevertheless resent, despise, damn, and war against it. They strive to trigger cataclysms and revolutions in our "bourgeois" society to punish it for its alleged sins, even if it harms millions of innocent people in the process. They are so obsessed with the bad that they are blind to the good.
In short, the left has lost the capacity to be happy, unless they are able to impose their will on other people. They are ungrateful for the abundant good that abounds in America. Since "misery loves company," leftists want the rest of us to be as unhappy as they are. What right have we to be happy (indeed, what rights should we have at all?) if they aren't, is their malevolent attitude.
Let us not allow them to succeed in dragging us down to their level of unhappiness. Let us not give in to despair, even as Obamacare swings its deadly wrecking ball through the health insurance industry.
The best response we can make to the predations and depredations of this vicious leftist administration is to refuse to share their wretched mental state. Instead, during this holiday season, let us remember and celebrate the abundance of blessings that we Americans have. Let us vigorously reaffirm that life is a beautiful gift and loved ones are a priceless joy. Let us remember that even though freedom and prosperity have been historical rarities, we Americans have enjoyed them to an unprecedented degree. Let us be glad and rejoice that, despite the unconscionable encroachments of the progressive left, we are still freer than most human beings ever have been. Let us exult that we have the opportunity to exercise that freedom to throw off the yoke of creeping tyranny that the progressives are trying to impose on us.
The left are after our rights, our liberty, and our joy. Let's not let them take them from us.
The approval ratings for the U.S. Congress are abysmal. According to realclearpolitics.com, the average score on polls of Congress' popularity taken between Dec. 4 and 23, 2013 was 80 percent disapproval and only 13.9 percent approval. Ouch!
Ironically, the results of the 2012 election paint a different picture. Of 393 seats in which incumbents ran for re-election, 13 were defeated in primaries and 22 in the general election. In other words, over 90 percent of incumbents were re-elected. Where polls show disapproval, actual elections indicate approval. What gives?
Since Americans overwhelmingly re-elect congressional incumbents, it seems that dissatisfaction with Congress is directed mainly against the other 434 representatives rather than one's own single representative. Voters don't like the fallout and side effects from our current system of redistributive politics - the increasing debt; too much spending; the clamor, chaos, and conflicts that inevitably result when each congressman is trying to benefit his constituents at the expense of voters in other congressional districts.
In short, when so many are trying to get their hands into someone else's pockets, and everyone knows that property is up for grabs and that those with the most political clout or pull can get their hands on it, then social harmony is undermined. Voters on the take are unsatisfied with Congress because they aren't getting more, while voters whose property Congress is plundering are upset at being plundered. Few are content.
Far from advancing brotherhood and social justice, the modern transfer society has turned neighbor against neighbor as the fabric of society unravels in a Hobbesian bellum omnium contra omnes (war of all against all). The unseemly, shrill, incessant squabble over the spoils in Washington is not so much the fault of Congress as of the person in the mirror. Yes, Congress is obnoxious and rapacious, but that is because most Americans want, or at least tolerate, a government that redistributes wealth. Congress is merely carrying out the will of the people, so the blame is ours primarily, and Congress' only secondarily.
There are other reasons why many Americans disrespect Congress. Congress exempts itself from costly laws that apply to the rest of us (e.g., Obamacare). Congressmen often seem to leave office worth far more than when they entered. But why should we be surprised? Surely, when millions of voters expect Congress to redistribute trillions of dollars of wealth every year, we shouldn't be surprised when congressmen feel entitled to skim off a minuscule percentage for themselves.
Congressmen can lie with impunity; no truth-in-advertising laws apply to them. Congress - again unlike private businesses - can employ anti-competitive, monopolistic practices to ward off electoral challengers, giving themselves advantages such as large taxpayer-financed staffs and the franking privilege. But why should voters protest when congressmen attempt to rig the outcome of elections when many of those same voters engage in rent-seeking behavior and want Congress to rig the economic game to their financial benefit?
The area in which I deem Congress' performance most worthy of withering disrespect is its abdication of its fundamental constitutional responsibility to legislate the rules by which we live. Today, more than 90 percent of the rules we must obey are not legislated by Congress, but promulgated by unelected federal bureaucrats (e.g., the EPA's current drive to regulate the coal industry out of existence). Add to that the unaccountable Federal Reserve Bank to which Congress has delegated its constitutionally mandated monetary prerogative, and we must conclude that contemporary Americans are subject to powerful, unaccountable, unelected individuals who whittle away at our liberty.
By delegating to unelected officials its constitutional mandate to legislate the laws and policies by which we live, Congress has evaded its responsibility to make the tough decisions and stand accountable to the voters. They may pretend to commiserate with us when the Fed and other bureaucrats discomfit us, but they are glad they can use the unelected officials as scapegoats, blaming them for our diminished wealth and liberty.
Yes, Congress is a disgrace and a mess. Each congressional election is, as Mencken once wrote, an "advanced auction of stolen goods." For the sake of their own personal profit, power, and prestige, individual members of Congress have been plundering our property and diminishing our liberty.
As much, though, as I disapprove of Congress' performance, I think "we the people" are just as much to blame. Joseph de Maistre wrote, "Every country has the government it deserves." That seems particularly true when voters choose their own representatives. Millions of Americans have concentrated so much on using Congress to obtain financial benefits that they have tolerated or ignored Washington's progressive encroachments on their rights. Many of the 80 percent of voters who disapprove of Congress should look in the mirror. If they disrespect Congress, then they are disrespecting themselves.
On Dec. 23, 1913, President Woodrow Wilson signed the Owen-Glass Act, creating the Federal Reserve. As we note its centennial, what has the Fed accomplished during the last 100 years?
The stated original purposes were to protect the soundness of the dollar and banks and also to lessen the jarring ups and downs of the business cycle. Oops.
Under the Fed's supervision, boom and bust cycles have continued. Three of them have been severe: the Great Depression, the stagflationary period of 1974-82, and the current "Great Recession." Bank failures have occurred in alarmingly high numbers. Depending on what measurements are used, the dollar has lost between 95 and 98 percent of its purchasing power. (Amazingly, the Fed's official position today is that inflation is not high enough, so the erosion of the dollar continues as a matter of policy.)
Having failed to achieve its original goals, the Fed also has had a miserable record in accomplishing later goals. The 1970 amendments to the Federal Reserve Act stipulated that the Fed should "promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." In baseball parlance, the Fed has been "0-for-three."
First, the premise that the central bank can "fix" unemployment is erroneous. It is based on the Phillips curve - the discredited academic theory positing a trade-off between inflation and employment. Unemployment is fundamentally a price problem, not a monetary problem; therefore, the cure for unemployment is a free market in wages, not any particular monetary policy. The Fed's current policy of persisting in "quantitative easing" until the official unemployment rate reaches a targeted level is the wrong medicine.
Second, central bank tampering with interest rates is the fundamental cause of, not the cure for, the boom and bust cycles; thus, the Fed should cease from tampering with interest rates.
Finally, focusing on "stable prices" is looking at the problem backwards. The Fed shouldn't try to influence prices any more than a nurse should influence the readings of a thermometer. The "fever" that causes prices to rise and purchasing power to fall is sick money. "Heal" the money (i.e., do away with a fiat currency and abolish fractional reserve banking) and prices will take care of themselves.
So, what has the Fed accomplished during its century of existence? Well, it has become adept at bailing out mismanaged banks. In the aftermath of the 2008 financial crisis, the Fed orchestrated the big bailout of Wall Street. (Why the Occupy Wall Street movement didn't focus their protests on the Fed mystifies me.) Its other "accomplishment" has been to become the enabler of runaway federal deficit spending through its manipulation of interest rates.
Politically, the Fed is repugnant to the American system. Its chairman is commonly referred to as the second most powerful person in the country. In a democratic republic, should the second most powerful policymaker be unelected?
The Fed is unaccountable. Former congressman and presidential candidate Ron Paul tried to get Congress to mandate an audit of the Fed for years, but a majority of his colleagues seem afraid to take this simple, prudent step. Here, let me share an experience I had in 1981: A young congressman (later the governor of his state) gave a talk in which he asserted that Congress essentially was helpless because of the Fed's enormous power. Afterward, I approached him and said that the creator is superior to the creation, and that since the Fed was created by an act of Congress, it could be reformed or abolished by an act of Congress. The congressman turned ashen and fell silent. You can decide for yourself whether congressmen are afraid of the Fed or are using the Fed to get themselves off the hook, but unless something changes, Congress will allow the Fed to remain unaccountable.
The Fed is unconstitutional. Thomas Jefferson argued that Congress has no authority to create a bank and give it a monopoly over our money, because such actions "are not among the powers specially enumerated" in the Constitution. I agree. The Constitution plainly designates the people's elected representatives as the guardians of their money ("Congress shall have Power...To coin Money, [and] regulate the value thereof . . . " -Article I, Section 8.)
The Fed is a rogue entity. As I mentioned in my article about Ben Bernanke, the Fed has arrogated to itself arbitrary powers to create however much money it wants and buy whatever financial assets - whether government, private, or even foreign - it chooses. The Fed even keeps its own Inspector General in the dark.
It is anomalous that there should be such a powerful, unrestrained institution as the Fed in our body politic. The Fed's centennial is nothing to celebrate. Instead, this institution of awesome, arbitrary powers makes a mockery of constitutional checks and balances. It poses a threat, not just to our currency and economic well-being, but to liberty itself. It's a tragedy that this institution has lasted as long as it has.
The entire country pauses on Dec. 25, as Christians commemorate the birth of Jesus of Nazareth, known to Christians as God's Christ and Saviour, and known to many as The Prince of Peace.
The impact of this one special life has reverberated through the centuries. Kingdoms and governments rise and fall; the celebrities of one generation are largely forgotten by the next; powerful institutions and organizations - from central banks to giant business enterprises to mighty armies - come and go, but the influence of Jesus of Nazareth endures.
From the very beginning, Jesus' mission was misunderstood. Many of his own people had expected God to send them a mighty man of war, not a healer and teacher.
Today also, Christians often misunderstand their Saviour, as when they invoke the New Testament as justification for government to forcibly redistribute wealth in the name of charity. The social gospel, social justice, and liberation theology strains of Christianity have overlooked one fundamental principle of Jesus' life - one that should be especially obvious at this time of year when we think of Jesus as a tiny infant: He never used force to compel others to do good.
In Matthew 19, Jesus offered a rich young man a contract - his wealth to be given to the poor (demonstrating that he would not make an idol of his money and be willing to follow Christ fully) in exchange for eternal life - and he accepted the man's decision to decline the offer. In Luke 12, he refused to get involved in a "redistribute the wealth dispute," tacitly accepting the sanctity of property rights. In the parable of the Good Samaritan (Luke 10), Jesus illustrated genuine Christian charity. The Samaritan freely gave his own money and time to help the person in need. He most assuredly did not seize money from others to pay for the wounded man. Jesus shunned the use of force. He rejected the liberal temptation of using other people's money to accomplish ostensibly charitable goals (what William Graham Sumner referred to as A and B deciding what C should do for D).
Adam Smith, the great moral philosopher, understood the difference between law and gospel better than many contemporary Christians do. In The Theory of Moral Sentiments, Smith cited prudence, justice, and beneficence as the three great social virtues. Christian charity - beneficence - was "the ornament which embellishes, not the foundation which supports [society]." Justice, by contrast, is "the main pillar that upholds the whole edifice" of society. Therefore, no person may compel another to give charity, for that would violate justice, the basis of society and law. While Jesus encouraged charity and beneficence in the clearest terms to his disciples, he did not view the gospel as abrogating the law protecting private property; hence his statement in the Sermon on the Mount, "Till heaven and earth pass, one jot or one tittle shall in no wise pass from the law." (Matt. 5:18)
Just as the physician's first principle is "do no harm," so Jesus did harm to nobody. He did not believe in a zero-sum economy in which one person would benefit at the expense of another, but believed in freedom, voluntary contract, and mutual benefits. His life was the highest example of the non-aggression principle in practice. He never taught that it was legitimate to help one person by trespassing on the rights of another. He never taught that the key to heaven lay in compelling other people to do good things. Instead, he healed, comforted, taught, and saved human beings, rescuing them from their sins, errors, diseases, and fallibility with a love so far above the normal human sense of love that we still are far from grasping its full import.
What we can grasp is the innocence and gentleness of the baby Jesus. Think of how blessed the world would be if that spirit governed mankind.
At Christmastime 2013, it's worth pondering what Jesus would ask of us today. I imagine it would be profoundly simple and sublimely wise - something along the lines of: Whatever you do, don't hurt anybody and, if you can find it in your heart, be willing to help somebody.
Merry Christmas everyone, and "on earth peace, good will toward man." (Luke 2:14)
Every now and then, something unforeseen and special happens - something that logic or reason would tell you is either impossible or that the odds against it happening are overwhelming. And yet those things occasionally happen and fill us with wonderment.
How should we characterize or classify such events? Are they miracles? Flukes? Coincidences? Or do they hint at some sort of transcendent or metaphysical power - perhaps another dimension of reality that exists just beyond the range of the human mind - something like karma, fate, destiny, or divinity?
Before I tell you about my recent experience, let me share an incident that typifies the improbable long shots that somehow happen even when there is no apparent reason why they should. Some years ago, I read the book, Beyond Coincidence: Amazing Stories of Coincidence and the Mystery Behind Them, by Martin Plimmer and Brian King.
Over the course of about 260 pages, the authors relate dozens of actual incidents that seemed to mock the laws of probability. One story in particular caught my fancy. In the 1920s, a young opera singer named Lauritz Melchior (whom I later learned became the pre-eminent Wagnerian tenor opera singer of the 20th century) was practicing in the garden at his pension in Munich. Plimmer and King write:
As he sang the words, "Come to me, my love, on the wings of light," a female parachutist landed at his feet. It was the Bavarian actress Maria Hacker, who was performing a stunt for a movie thriller. They were married in 1925. "I thought she came to me from heaven," said Melchior.
Knowing my wife, Eileen, to be a romantic, of all the vignettes compiled in that book, this was the one I decided to share with her. The "coincidences" weren't over, because Eileen said:
I met Lauritz Melchior shortly before his passing when Lou [Eileen's first husband, who died tragically young] auditioned for him at the New York Met.
Think about it: What are the odds that my wife would know any of the individuals whose stories were included in the book I was reading, much less the protagonist in the only account I shared with her?
Okay, now on to recent history and a real feel-good story. This August, while going through a box of memorabilia, I found an article in my high school newspaper about the man who had been my English teacher in the seventh and eighth grades, Mr. Ted Walters. He was leaving our school to return to his native Pittsburgh. This really intrigued me, because the embryonic idea had been developing within me for a few years that I should track down this teacher to thank him for all that he had done for me, and since I now live in western Pennsylvania, too, this seemed like a real possibility.
As a teacher, Mr. Walters worked my tail off. I had to write one paper every week for two school years. Those papers made my Sunday nights in the dormitory miserable, but the payoff was immense. In two years of academic boot camp, he whipped my writing into shape and taught me to write like an adult. Becoming a clear writer helps one become a clear thinker. Quite literally, Mr. Walters equipped me to succeed in all subsequent academic and intellectual endeavors. One example: I earned the first "first" (that's the top grade) ever awarded by my tutor in literature at Oxford, but it was Mr. Walters' achievement as much as mine. Basically, the papers that I wrote for my tutor were based on lessons that Mr. Walters had taught me way back in junior high school at Cranbrook.
Well, you know where this is going, so let's get to it: After learning that he had ties to my geographic area, I tried to find him through Google searches and on the website of the college where he taught, but no luck. Then the school year started and I put my search on hold. On Monday, Oct. 14, I sent an email to my friend and colleague, Paul Kengor, to ask him if his van had broken down, because it had been in the same spot in the school parking lot for several days. Paul wrote back that he and his wife had parked it there while they were out of town at a wedding. Then he added, "By the way, Lee (Wishing, another friend and colleague) and I had lunch with a Grove City College grandfather who told us about teaching Mitt Romney and Mike Kinsley at your school. His name is Ted Walters. Do you know him?"
WOW! I'm looking for one person in the world, not sure how to get in touch with him, and a friend writes and says out of the blue, Oh, by the way, I just had lunch with this man. What are the odds of that? And to make the story even sweeter, it turns out that Ted's granddaughter was a student in a couple of my courses, so I went full circle with the Walters family. And, yes, the story gets happier. Ted and I have exchanged several emails, and we're making plans for a reunion soon.
What unseen force accomplished this joyful miracle for me? I don't think it was luck or coincidence. I'll call it God, you call it what you want, but I'm convinced there is a higher intelligence binding us together for good in ways that we haven't begun to comprehend. The Force is there. May it be with you and bless you. *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
For over 20 years, a number of politicians have sought to reduce our consumption of fossil fuels and/or raise taxes on such fuels for the stated purpose of trying to save the world from catastrophic climate change. They insist that scientific research has proved conclusively the validity of the anthropogenic global warming hypothesis that is now called "climate change." Increasingly, people have their doubts about whether this is so.
Why? I don't think it is because people don't respect science. On the contrary, people generally have a high regard for science due to the multitude of ways science has benefited the human race. What many people distrust is the palpable politicization of science by climate alarmists.
People naturally have had trouble enough believing the alarmist line that carbon dioxide inevitably raises global temperatures. The simple reason for this belief is that there has been no global warming for the past 16 years in spite of rising atmospheric concentrations of CO2. However, the alarmists have shot themselves in the foot, weakening their case and diminishing their own credibility by their own misconduct.
The so-called "climategate" scandal of a few years ago cost the alarmists dearly in terms of lost credibility. The more than 1,000 emails that came to light showed a pattern of manipulation and dishonesty on the part of leading British and American scientists. In the words of E. Calvin Beisner, the emails provided shocking evidence of
. . . serious scientific malfeasance - the fabrication, corruption, destruction, hiding, and cherry-picking of data . . . intimidation of dissenting scientists and journal editors . . . and efforts to evade disclosure under Freedom of Information Laws in the United Kingdom and the United States.
That scandal was followed a few weeks later by charges from Russia's Institute of Economic Analysis accusing Britain's Meteorological Office of deliberately editing Russia's temperature data to skew the results.
Anecdotal reports over a period of decades reveal a pronounced tendency by alarmists - whether politicians, scientists, or journalists - to crush or censor dissent. Politicians have purged government offices of dissenters. As William Perry Pendley writes in his excellent new book, Sagebrush Rebel: Reagan's Battle with Environmental Extremists and Why It Matters Today, this has been going on at least since 1977, when the Carter administration fired Dr. Vincent McKelvey, the director of the U.S. Geological Survey, for daring to write that there was an abundant untapped supply of oil at a time when the president was trying to advance a "running out of oil" scenario.
Scientists and even professors in social sciences have told of colleagues or university officials warning them that non-alarmist research could damage their careers or cause the loss of a government grant. In his book Eco-Tyranny, Brian Sussman exposed the Society of Environmental Journalists, a group that provides lists of scientists that either are recommended for interviews (alarmists) or not recommended (skeptics).
Politicized science is very much in evidence in the tactics of the UN's Intergovernmental Panel on Climate Change (IPCC), which is highly regarded by alarmists and provides the final say on the science invoked to justify costly and disruptive policy changes. The IPCC unequivocally makes the case for potentially catastrophic anthropogenic climate change, right? As the commercial says, "Not exactly."
For example, the IPCC's 2007 report stated that it is "very likely" that human activity is causing global warming. Why then, just two months later, did the vice chair of the IPCC, Yuri Izrael, write: "The panic over global warming is totally unjustified. . . . There is no serious threat to the climate . . . [humanity is] hypothetically . . . more threatened by cold than by global warming"? Why did Dr. Vincent Gray, a member of the IPCC's expert reviewers' panel assert, "There is no relationship between warming and level of gases in the atmosphere"?
The discrepancy between the IPCC's reports and some of its leading scientists is explained by certain facts. Rule three of IPCC procedures states, "Documents should involve both peer review by experts and review by governments." The IPCC's policymaker summaries (the ones the media rely upon) are produced by a committee of approximately 50 government appointees, many of whom are not scientists. (Remember: it's an "intergovernmental," i.e., political, body, not a scientific body.) Those political appointees are given considerable latitude to modify the scientific reports.
Another fact appears on page four of Appendix A to the Principles Governing IPCC Work. It states:
Changes (other than grammatical or minor editorial changes) made after acceptance by the Working Group of the Panel shall be those necessary to ensure consistency with the Summary for Policymakers or the Overview Chapter.
According to reports in the U.K.'s The Telegraph and other news outlets, leaks of the soon-to-be released Fifth Assessment Report of the IPCC document reveal that the policy-making committee has requested approximately 1,500 changes in the text on behalf of the government leaders they represent. Would you want to bet on the scientific integrity of such a report?
It is clear that politicians are willing to go to great lengths to produce the best "science" money can buy in order to "prove" the need for major action on the climate change front. In fact, our own government alone has spent tens of billions of dollars in support of "climate change." Why do both the UN and American liberals support the alarmist scenario so strongly? Part of their agenda is to redistribute wealth by curbing American energy consumption (the more energy a society consumes, the wealthier it tends to be) and part of it is the fact that Western governments are desperate for more revenue to fund their ambitious wealth redistribution plans. A tax on energy would be the mother of all excise taxes, producing an immense stream of additional government revenues.
So, when we read reports (this again from The Telegraph) about a "recent survey of 12,000 academic papers on climate change [that] found 97 percent agree human activities are causing the planet to warm," should we be swayed or persuaded? First, one would want to know if the added warmth is significant or negligible. Second, one would need to know more about how and why those particular papers were selected. Were they selected by random, or perhaps cherry-picked, using a list like the Society of Environmental Journalists' list of who "the good guys" are? It would be crucial to know how many of those papers were produced by individuals or institutions that received government grants in support of their work. What is the percentage of papers on climate change that were produced by those not receiving government grants concluded that human activity is warming the planet significantly?
Even if 97 percent of academic papers come to similar conclusions, that doesn't mean they are correct. In my profession, economics, the majority of economists believed in the benefits of large-scale government control over economic activity, and many even believed that socialism was the path to a more prosperous future, only to have their academic theories exploded by subsequent events.
Here is the bottom line: If we truly want public policies grounded on sound science, our best chance is to get government money out of the process. Science, like religion, is a search for truth (the main difference being that scientists are seeking physical truth whereas religionists often are more concerned with metaphysical truth). The U.S. has a well-established tradition of keeping church and state separate for the purpose of preventing religion from being corrupted by politics. That is as it should be. The contorted political shenanigans and, yes, corruptions, of climate science make it plain that it is now time to erect a wall of separation between science and state. Science is too important for us to allow it to be hijacked by political and economic special interests. It is time to remove federal funding from scientific research, liberate scientific research from political influence, get scientists off the federal gravy train, and let the market decide what scientific work is worthy of being funded. The statement, "we're toast," is far more likely to be true if politics dominates science than from using fossil fuels to improve our lives.
This week (Oct. 30 to be precise) marks the 173rd anniversary of the birth of William Graham Sumner (1840-1910). Sumner, one of the founders of American sociology and the first professor of sociology at Yale, wrote an amazingly clear and quotable book entitled, What Social Classes Owe to Each Other in 1883. Remarkably, it is completely relevant today.
Sumner is a largely forgotten man today, but his lesson about "the forgotten man" as a prototype remains timely. According to Sumner, the various political schemes of social reformers:
. . . may always be reduced to this type - that A and B decide what C shall do for D. ... In all the discussions attention is concentrated on A and B, the noble social reformers, and on D, the "poor man." I call C the Forgotten Man, because I have never seen that any notice was taken of him in any of the discussions.
Sumner continues his observations and says:
The State cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it. This latter is the Forgotten Man.
Later in the book, Sumner states, "It is plain that the Forgotten Man and the Forgotten Woman are the real productive strength of the country."
Sumner has no use for muddled collectivist notions, writing, "'Society' is a fine word, and it saves us the trouble of thinking." With bracing logical rigor, Sumner skewers the sloppy theory of collective guilt:
The French writers of the school of '48 used to represent the badness of the bad men as the fault of "society." As the object of the statement was to show that the badness of the bad men was not the fault of the bad men, and as society contains only good men and bad men, it followed that the badness of the bad men was the fault of the good men.
In regard to "the state," Sumner writes:
. . . it is not at all the function of the state to make men happy. They must make themselves happy in their own way, and at their own risk.
A few pages earlier he notes that:
History is only a tiresome repetition of one story. Persons and classes have sought to win possession of the power of the State in order to live luxuriously out of the earnings of others.
Sumner makes another point saying:
A man who is present as a consumer, yet who does not contribute either by land, labor, or capital to the work of society is a burden. On no sound political theory ought such a person to share in the political power of the State.
Sumner offers insight on rights when he says:
If anyone thinks that there are or ought to be somewhere in society guarantees that no man shall suffer hardship, let him understand that there can be no such guarantees, unless other men give them - that is, unless we go back to slavery, and make one man's effort conduce to another man's welfare.
He also points out that, "Rights do not pertain to results, but only to chances . . . to the pursuit of happiness, not to possession of happiness."
On equality Sumner writes that:
. . . if there be liberty, some will profit by the chances eagerly and some will neglect them altogether. Therefore, the greater the chances the more unequal will be the fortune of these two sets of men. So it ought to be, in all justice and right reason. The yearning after equality is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which can do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization.
He also discusses liberty, writing:
The notion of civil liberty which we have inherited is that of a status created for the individual by laws and institutions, the effect of which is that each man is guaranteed the use of all his own powers exclusively for his own welfare.
And:
. . . the product of all history and all philosophy up to this time is summed up in the doctrine, that he should be left free to do the most for himself that he can, and should be guaranteed the exclusive enjoyment of all that he does.
Sumner writes about the importance of entrepreneurs when he says, "Great captains of industry are as rare as great generals." Later, he says that the entrepreneur
. . . contributed . . . what no one else was able to contribute - the one guiding mind which made the whole thing possible. In no sense whatever does a man who accumulates a fortune by legitimate industry exploit his [employees], or make his capital "out of" anybody else. The wealth which he wins would not be but for him.
Writing on various do-gooders, busybodies and social engineers, Sumner says:
For A to sit down and think, "What shall I do?" is commonplace; but to think what B ought to do is interesting, romantic, moral, self-flattering, and public-spirited all at once. It satisfies a great number of human weaknesses.
Then Sumner reminds each of us of a largely forgotten principle (what the Bible called getting the beam out of one's own eye, and Adam Smith described as the social virtue, "prudence." Sumner writes, "Every man and woman in society has one big duty. That is, to take care of his or her own self. This is a social duty."
Sumner writes more about would-be reformers, saying:
It no doubt wounds the vanity of a philosopher who is just ready with a new solution of the universe to be told to mind his own business. So he goes on to tell us that if we think that we shall, by being left alone, attain a perfect happiness on earth, we are mistaken. . . . Under all this lies the familiar logical fallacy, never expressed, but really the point of the whole, that we shall get perfect happiness if we put ourselves in the hands of the world-reformer. We never supposed that laissez faire would give us perfect happiness. We have left perfect happiness entirely out of our account. If the social doctors will mind their own business, we shall have no troubles but what belong to Nature.
There is a lot more timely and timeless wisdom and insight in William Graham Sumner's What Social Classes Owe to Each Other, and I encourage you to check it out.
If there is one truth that became apparent during the financial panic five years ago, it is that Big Government and Big Finance are inseparable. Of course Uncle Sam was going to bail out Wall Street, for without the financial infrastructure that Wall Street provides to maintain orderly markets in various securities, particularly debt instruments, the multi-trillion dollar operation of our federal government would cease to function.
I wrote about "The de facto Nationalization of JPMorgan Chase" in April, 2008, suggesting that when the Federal Reserve helped to plan and finance JPMorgan Chase's absorption of many of Bear Stearns' assets and operations, it represented "a major turning point in U.S. financial history." Subsequent events have corroborated that assessment.
If anyone doubted that Uncle Sam was moving to take charge of the U.S. financial system, those doubts should have been dispelled by the passage of the Dodd-Frank Act in 2010. Dodd-Frank conferred unprecedented leverage over financial institutions through its enforcement arm, the Consumer Financial Protection Bureau. Through its power to designate the institutions of its choice as "too big to fail" or "systemically important," and, as I fear we shall see, to effectively dictate policy to firms so designated, the federal government is moving to convert gigantic private corporations into administrative arms of government.
Two recent stories illustrate this point that the trend is moving toward government dominance of Big Finance. The insurance giant, Prudential Financial, attempted to resist the feds designating it a SIFI (the acronym du jour: Systemically Important Financial Institution.) Not a chance. Washington regulators crushed Prudential's resistance and trampled the principle of federalism by usurping the state insurance regulators that heretofore have overseen Prudential's operations. According to Richard Liskov's account in The Wall Street Journal, the feds apparently are devising rules on the fly, having assumed regulatory control over Prudential before the actual regulations have been drafted.
The other incident showing that Big Government is subjugating Big Finance is the record $13 billion penalty that Attorney General Eric Holder has extracted (some would say "extorted") from JPMorgan Chase.
A lot of people don't care about JPMorgan Chase's vicissitudes. "They're just a bunch of corrupt Wall Street fat cats"; "They can afford it"; "It serves them right"-seem to be the yawning reaction of a largely apathetic public. If those who are indifferent to this episode were to understand what's at stake here, they wouldn't be so sanguine.
First, there is the question of justice. The feds strong-armed JPMorgan Chase into absorbing Bear Stearns, and now they are penalizing them for things Bear Stearns had done before the takeover - specifically, peddling low-quality, high-risk mortgage-backed securities. Never mind the fact that the primary impetus to crank out large volumes of such shoddy (and eventually "toxic") securities came from Uncle Sam, particularly the Department of Housing and Urban Development which pressured Fannie Mae and Freddie Mac to increase the number of risky mortgages that were the main ingredient of mortgage-backed securities.
Even if you don't think big financial corporations deserve justice, you should be concerned about the economic impact of Uncle Sam's heavy hand coming down hard on SIFIs. Already, according to Investors Business Daily, JPMorgan Chase and other megabanks are setting aside billions of dollars of capital in anticipation of settlements and legal expenses. That means less capital for entrepreneurs and businesses that could create wealth and provide jobs.
Besides the capital that the government is taking from the banks in penalties, the banks are hemorrhaging capital in another way. Again, Investors Business Daily reports that, "HUD is forcing banks to eat $57 billion in bad FHA loans." It appears that the Federal Housing Administration is HUD's current henchman, having supplanted the disgraced Fannie and Freddie. Again, there goes more capital down the proverbial drain instead of financing wealth-creating enterprises.
The feds are playing a dangerous game by bleeding the megabanks of capital. According to Richard Parsons in the Wall Street Journal, 3,000 banks have failed over the last 30 years. The industry is being consolidated into a progressively shrinking number of lenders. Due to financial stress (i.e., under-capitalization) 30 of the 50 largest U.S. banks in 1980 no longer survive as independent entities - many because federal regulators have merged them into larger, better capitalized banks. If the feds weaken the remaining megabanks by draining capital from them, they are going to exhaust the supply of financially healthy banks available to absorb failing banks. Someday, the only alternative remaining to the Big Government advocates will be to nationalize the banks - to confer de jure status on the de facto reality that banks are being reduced to servile vassals carrying out the will of the federal government.
The current trend of bank consolidation is heading inexorably toward "Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly" - Marx's fifth plank in his ten point program for incrementally achieving socialism. You may not like the big banks, and they surely aren't blameless, but if Washington effectively monopolizes the flow of credit in this country, our economic future will be dismal indeed.
Years ago, I thought that if I ever attempted to write a novel, I would describe a future dystopia in which the ruling elite were those who made and understood computers and the rest of us would be techno-klutzes like me who wouldn't recognize a byte if it bit me on the behind.
Now, George Mason University economist Tyler Cowen is making a splash with his new book Average Is Over. The book is a nonfiction prediction of an American society comprised of 10 to 15 percent highly prosperous achievers and a "permanent underclass" dwelling in shantytowns and subsisting on beans. With all due respect to the highly erudite Cowen, this is not the natural evolutionary future of market economies.
Let me emphasize that this is not a review of Cowen's book, but an attempt to show why his gloomy vision is flawed in its very conception. This may be the gloomiest pronouncement by an economist since the Malthusian/Ricardian "iron law of wages" mistakenly posited that laborers would inexorably have to settle for subsistence wages.
Cowen's book may provide fodder to the left's incessant refrain "the rich are getting richer while the poor are getting poorer," but to regard this mantra as true requires an abandonment of both economic logic and history.
How are the wealthy to gain their vast riches without selling their products to the masses? Even in the much-maligned "Gilded Age," when the Carnegies, Westinghouses, Fords, and Rockefellers earned their vast fortunes, the standard of living of the vast majority of working Americans also rose.
Indeed, the two phenomena were, and still remain, interdependent. The billions earned by successful entrepreneurs mirror the billions of dollars of value they provided to the mass of consumers. We should hope that 10 to 15 percent of our population become wealthy entrepreneurs, a far higher percentage than was the case during the Gilded Age, because they will uplift standards of living far higher than was possible with the relatively small number of entrepreneurs in the past.
The growth in the number of wealth creators will tend to raise wages rather than lower them. Andrew Carnegie and other early entrepreneurs enjoyed a buyers' market for labor due to the large supply of labor relative to the capitalist demand for labor. As economic development progressed - that is, as more capitalist entrepreneurs wanted to "exploit" workers and provided them with the capital that increased their productivity - the law of supply and demand swung in favor of workers, and the affluent American middle class was the result. With more "exploiters," the potential for higher wages in the coming decades is enormous.
Alas, Cowen appears to have channeled Ned Ludd (see: Luddism), who revolted against technology. Holy smokes, should we now undo the Industrial Revolution? Machines have been raising the productivity of labor in the U.S. since our founding, enabling us to feed ourselves and manufacture a wide variety of products with ever-smaller numbers of workers. Rather than turning waves of unemployed workers into paupers, the country grew richer from all the additional goods and services that erstwhile farmers and shop workers produced.
Is there any scenario under which Cowen's gloomy forecast could come to pass? Yes, but such a tragedy would have political, not economic causes. In a free market, the notion of a permanent underclass is absurd, because, as millions of earlier Americans have proved, freedom includes economic opportunity and opens the door to upward social mobility. Only when the state rigs the system to determine economic winners and losers - as in feudalism, mercantilism, and socialism - do class divisions become rigid. Capitalism remains the best antidote for such social pathologies. Only when the state crushes wealth-producing entrepreneurs do job opportunities dry up and incomes stagnate. This is our current political situation. Progressives have made idleness pay more than employment, engaging in unremitting harassing of and hostility toward profit-seeking (i.e., wealth-producing) business. President Obama has favored the governing elite while attempting to divide us into two Americas.
The last comment I'll make about Cowen's book is that it's a shame he has been taken in by the macroeconomists' and socialists' obsession with "average." Socialism indeed seeks to make citizens average, but at the cost of freedom, dignity, and prosperity. The only "average" that government can enforce is to average down standards of living. That won't happen to us if we remember to respect, appreciate, and value those among us who excel at producing wealth. Average is worse than over-rated. It is unworthy of our aspirations. Let us exalt excellence.
What we need to do today is to dismantle the system of privileges that has supplanted the rule of law in America and has corrupted free enterprise. Big government cronyism has the potential to divide us into the nation that Tyler Cowen envisions in Average Is Over. Alternatively, genuinely free markets under a government that protects, rather than persecutes, wealth creators would blast Cowen's gloomy forecast into oblivion.
For political junkies, October 2013 is shaping up to be a month that will be remembered. The current government shutdown over the bitterly contended issue of whether Obamacare should be funded is only a prelude to the main act - the donnybrook over raising the debt ceiling that will be upon us later this month. Although the two issues partially bleed into each other, the current fracas over Obamacare raises a fundamental constitutional question that nobody seems to be addressing.
First, though, the theatrics: The shutdown standoff reminds us of why politicians are so widely despised. Let's start with the president. In public statements before the start of the shutdown on October 1, Obama stated, "Are they [congressional Republicans] really willing to hurt people just to score political points?" That's a hoot. Once again, this president has projected his own methods of operation onto his opponents. At the outset of sequester-related spending cuts last spring, Obama made it abundantly clear that he has no compunctions or reservations about trimming government services that cause the maximum amount of unpleasantness or inconvenience for the American people in his own attempt to "score political points."
Already this week, Obama has used the shutdown as a pretext to block access to the World War II memorial in Washington. Meanwhile, although most of the White House staff has been furloughed, those who wait on the First Family are still on the job. It wouldn't hurt to let Their Majesties make their own bed and fix a few meals. Well, maybe Ms. Obama is so busy working to influence what people eat that she needs some domestic assistance, but the Golfer-in-Chief certainly has enough time to take out the garbage. Alas for fans of Bill Clinton, this is a president who doesn't feel our pain.
Moving over to Congress, an AP report quoted top-ranking Senate Democrat, Dick Durbin of Illinois, as declaring Republicans' refusal to pass a budget as "conduct unbefitting a responsible Congress." Excuse me, Sen. Durbin, but why didn't you criticize Majority Leader Harry Reid's irresponsibility for refusing to allow the Senate to debate or pass a budget? How quickly politicians change their tune when the partisan shoe is on the other foot.
Then there are some Republicans who, in spite of the almost daily revelations that Obamacare is even more dysfunctional, disruptive, and downright destructive than originally thought, think, "We shouldn't try to stop it. It will wreak so much havoc that we'll gain seats in next year's elections." How terribly cynical! They are willing to sacrifice the American people's welfare on the altar of their own political ambitions. Who wants creeps like that to represent them in Washington?
Thank goodness for the other Republicans who, at least temporarily, are willing to take a stand and try to block the implementation of a program that already is costing Americans lost income opportunities, higher health insurance premiums, dropped coverage, and a host of other problems. But is this strategy constitutional? As Harry Reid asks, "What right did they have to pick and choose what part of government is going to be funded?"
That's a fair question. So is this one: What right does Obama have to "pick and choose" which federal laws his administration will uphold (No Child Left Behind, Defense of Marriage, immigration, and even sections of Obamacare itself)?
So, which is it? Can the House of Representatives, which has the constitutional power of the purse, decide what parts of legislated acts to fund? Can the president unilaterally decide what laws to enforce? In this colossal tug of war, which branch of government, the legislative or the executive, ultimately has the upper hand? Can each essentially thwart the other, or must one prevail?
I don't know the answer to these questions. Maybe the constitutional experts out there can shed some light on it. Would it be too extreme to suggest that if we go forward with uncertainty about which legislative acts really are the law of the land, we'll descend into chaos and political disintegration? *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
How fast is technology developing? Raymond Kurzweil describes the pace as "exponential," leading to a "singularity" that will radically transform the human experience.
Robert Stevenson asserts, "The doubling speed of knowledge is now between one and two years." This implies that when this year's incoming college freshmen graduate, knowledge will have quadrupled.
Whatever the actual rate of technological progress (as in economics, whatever we assert about the future can only be educated guesses), it appears certain that we will be inundated with amazing changes and breakthroughs. The accelerating pace of technological innovations raises two vital questions: 1) Do human beings have the moral capacity to use new technologies beneficially or destructively? 2) Do humans have the psychological capacity to "roll with the punches" and adapt to mind-boggling rapid change, or will the pace of change overwhelm our psyches and lead to all sorts of individual and societal traumas?
The first question is perennial - every generation has to make moral choices about the appropriate uses of technology. Technology can be a blessing or a curse. Take handguns, for example. They have been used to kill innocent people. That's bad. But many innocent people have used guns to protect themselves and save the lives of loved ones. That's good.
Similarly, nuclear energy can be used to provide abundant energy or to annihilate populations.
Idealists would like to eliminate technologies that have destructive uses, but technological knowledge is like the proverbial genie that can't be put back into the bottle. And, in such a world it makes a huge difference whether lethal technology is in the hands of the (relatively) "good guys" or "bad guys." Technology, in sum, is neither good nor evil in and of itself, but the choices humans make about how they use technology can be categorized according to their moral content. These thoughts have been brought to the fore in recent months by news stories about lethal drones and NSA data-gathering.
Shortly after reading about mini-drones that will be able to chart a course to a particular individual and kill him, there was a disquieting report that the Obama Administration has sold drone technology to one or more of the Arab mini-states. Perhaps someone will find a way to defend against these personalized messengers of death, but imagine what the world will be like if various would-be tyrants gain access to such technology.
Such a scenario was enough to make me think of the old Star Trek episode, "A Taste of Armageddon." In it, technology had advanced to the point where "kills" were a certainty, so rather than blowing up homes and factories, two warring planets let computer programs identify the "kills" who then went to death chambers where their lives were ended without maiming, pain, suffering or destruction of property. Mini-drones raise the question of the morality of such efficient means of killing one's enemies.
As for the NSA's data gathering, it is indeed a technological marvel that the entire content of the Internet and of telephone conversations can be gathered, and that algorithms can identify networks of terrorists. That sounds good. But how confident can we be that nobody who has access to such information will misuse it? Aye, there's the rub. In the final analysis, a technology is only as "good" as the people who use it.
Even if good retains the upper hand over evil so that technology's potential destructiveness is held in check, what will the accelerating pace of technological change do to our psyches? The futurist Alvin Toffler warned nearly fifty years ago that the pace of change could someday exceed humans' ability to adapt, leading to the collapse of societal institutions.
You're aware, I'm sure, of the estimates that the average young person today may experience ten or more career changes. Might not as-yet unseen technological changes impel even greater economic and societal upheavals and changes? This poses an enormous challenge, because humans are creatures of habit. Businesses desperately cling to familiar but no-longer-competitive modes of operation. Union members use the political process to protect themselves against the threat of change from both domestic and foreign competitors. Most of us prefer stability to unpredictable change. We fear the unknown; yet the unknown is what technological change portends and is thrusting upon us.
So, what kind of a brave, new world are we entering? Rapidly evolving technologies seem certain to unfold new wonders that have the potential to greatly enhance human life. Less certain is whether we humans have the moral and psychological capability of keeping up with the pace of technological change.
We have a president who specializes in banal slogans and fatuous cliches, yet his July 8 call for "smarter government" has to rank as one of his most vacuous banalities yet. Adding exquisite irony to the occasion, Barack Obama had Joe Biden stand next to him as he droned on about government needing to be smarter. There is less substance to this lame suggestion than meets the eye.
There was additional irony in hearing a president who favors Big Government and has noticeably expanded the size and power of government to openly acknowledge what millions of us in the private sector already knew - namely, that the federal leviathan is chronically inefficient and embarrassingly incompetent. Further, his comments invite the question: Why, Mr. President, have you waited until the fifth year of your presidency to address this problem? Didn't you think government needed to function more intelligently and effectively during the years of economic sluggishness over which you have presided?
There is also something pathetically immature about Obama calling for smarter government. Millions of college undergraduates experience the heady, intoxicating brew of the delusion that they, unlike their predecessors, are the first ones both to care deeply about our society's problems and to know how to fix them. Obama gives the impression that he is the first of our 44 presidents to recognize the need for "smarter" government. It's too bad that he doesn't have a clue what "smarter government" is.
Undoubtedly, there are technologies and procedures that can be adapted from the private sector to the government, but the stubborn fact remains that government will never - indeed, can never - operate as efficiently as private firms. As I wrote earlier this year, the Pentagon is inefficient, not because it was tasked with national defense (with mission creep having expanded the sense of what "national defense" includes) but because it is a bureaucracy. As Ludwig von Mises explained in his book, Bureaucracy, the profit-and-loss calculus that impels efficiencies in the private sector is irretrievably absent from bureaucracies.
Actually, Mr. Obama isn't giving federal bureaucrats enough credit for behaving smartly. If he knew anything about public choice theory, he would realize that many of the decisions made by bureaucrats, though they might not make sense economically to a disinterested observer, make perfect sense from the perspective of bureaucrats and the incentives they face. And consider the incentives acting upon Congress. When a federal bureaucracy, such as FEMA, is perceived as performing poorly, as was the case after Hurricane Katrina, public pressure builds on Congress to keep that from happening again. In the private sector, an underperforming insurance company will lose customers, revenues, and profits, and may even go out of business, whereas the common response to poor performance in the public area is for Congress to increase appropriations so that the bureau can add employees and spend more money.
When Obama talks about "smarter government," what he really means is that he wants government to do more to implement his personal, partisan, and political objectives. Listen to his hectoring State of the Union addresses, and you hear the conceit of the central planner. Obama acts as though he knows what the country needs, and so he supports green energy boondoggles and electric cars, strives to channel more federal dollars to unions and other political allies, and desires to be the architect of a more "just" redistribution of the country's wealth.
All that being said, like Obama, I also want smarter government. Unlike Obama, though, I believe (along with Thoreau, Jefferson, Emerson, and other eminent Americans in our past) that smarter government is smaller government - "that government is best which governs least." Indeed, some of the great economic growth spurts in American history occurred during periods in which the federal government was shrinking (e.g., 1866-1895; the Roaring Twenties, the late 1940s). Study after study and country after country have shown that smaller government is smarter government.
Yes, we need smarter government in Washington. It won't happen, though, as long as Barack Obama is president. The first step toward smarter government is for Americans to become smarter voters.
During my vacation travels, I spotted Mortimer Zuckerman's enthusiastic paean to Federal Reserve Chairman Ben Bernanke in the July 26 Wall Street Journal. In his article, Zuckerman lamented President Obama's "shabby treatment" and "mean-spirited" dismissal of "the greatest central banker in American history," "the man who saved the economy" through his "heroic effort" and "imaginative . . . procedures" in the aftermath of the 2008 financial crisis.
Whoa, Mort, slow down! I'll grant you that the way Obama let it be known that he has no use for Bernanke was tawdry, but what do you expect from this most ungracious of presidents? As a central banker, though, Bernanke's performance deserves little praise. Let's review a few of the ways that Zuckerman is mistaken about Bernanke.
First, did Bernanke pull "the country - and ultimately the world economy - back from the abyss"? I assume Zuckerman means that without a massive expansion of the Fed's balance sheet, there would have been a catastrophic deflation triggering a second Great Depression. Perhaps, but there are two flaws with this widely held belief: 1) Deflation need not be catastrophic. The Friedmanite/Keynesian dogma that the Great Depression was caused primarily by a sharp contraction of the money supply ignores what happened during the sharp-but-brief depression of 1920-21. The money supply contracted just as severely then as it did in the early 1930s, but the economy quickly rebounded - not because of Fed intervention, but because government got out of the way (lower taxes and spending) and let markets work as flexible prices and wages adjusted to new equilibriums. 2) By preventing the liquidation of debt and mal-investments, the Fed has contributed to the sluggishness of the Obama era economy and has merely postponed those inevitable corrections, i.e., (as has been said ad nauseam) "kicked the can down the road."
Second, through its unwise interventions, Bernanke's Fed has painted itself into a corner. What Zuckerman praised as Bernanke's "untested [and perhaps extralegal] emergency funding procedures" has turned the central bank into the world's largest repository of financial detritus. The Fed has become a "bad bank" - a garbage dump, by virtue of lending "more than a trillion (newly created) dollars (to]) troubled (i.e., over-leveraged, reckless, and often unidentified) financial firms" and buying distressed (i.e., nearly worthless) mortgage assets" and no-bid "debt from industrial corporations such as General Electric GE -0.04 percent." The Fed will never be able to find buyers for much of the garbage paper it has bought, and what it is able to unload will surely be sold at a significant discount to opportunistic and well-connected financial giants.
Third, Bernanke's series of Quantitative Easing policies are predicated on a fallacy. The notion of continuing to purchase federal debt until unemployment falls to a certain level is little more than the discredited "Phillips curve" - the theory that monetary inflation leads to lower unemployment, which the stagflation of the 1970s blew to smithereens. The simple economic truth that Bernanke and the public policy establishment willfully ignore is that unemployment is a cost phenomenon. (If it were a monetary phenomenon, then there wouldn't be an unemployment problem in any country with a central bank, because the bank would merrily create money and credit until everyone who wanted a job had one.) Our unemployment has remained stubbornly high not because of monetary policy, but because of a widespread mispricing of labor due to various combinations of the wages, benefits, inflexible contracts, tax and regulatory costs of labor.
Fourth, Bernanke's policies have been both unfair and economically harmful to the American people. In the private sector, by selectively assisting certain corporate entities, particularly on Wall Street, Bernanke has exercised the kind of power that Obama likes - i.e., picking economic winners. (Indeed, Zuckerman enthusiastically approves of Bernanke having "transformed the Fed" into "an active market participant" that has abandoned any pretense of impartiality, but millions of Americans regard this as blatantly unfair.) Bernanke's bailouts have increased moral hazard by rescuing and propping up zombie firms guilty of misfeasance and malfeasance.
In the public sector, Bernanke has been the essential enabler of the unconscionable deficit spending of recent years. If it were not for his creation of fiat credit via QE interventions, the federal spending surge of recent years would have pushed the market price of interest to balloon rather than collapse. That would have caused the annual carrying costs of the federal debt to soar, which, in turn, would have made it much harder for Congress and the president to spend so much. Bernanke's massive purchases of federal debt have hurt the American people by adding to Washington's power to transferring additional control of real wealth.
Fifth, where Zuckerman applauds Bernanke for "manipulating prices and forcing interest rates down to virtually zero," this policy deserves our strongest condemnation. Interest rates perform the vital functions of rationally pricing capital and helping to coordinate production between the present and the future. By sabotaging this market, Bernanke has been wreaking havoc with entrepreneurial and business decisions, penalizing savers, and sowing the seeds of future economic problems resulting from the as-yet unseen mal-investments produced by his artificially low interest rates.
Far from being "the greatest central banker in American history," Ben Bernanke has misdiagnosed our economic problems, undermined the soundness and respectability of the Fed, trampled on the principles of justice, and undermined the naturally self-correcting functions of free markets. In some ways, he is a tragic figure, at once both immensely powerful and totally powerless. On the one hand, his words move financial markets. Earlier this year, a statistician reported an astounding .85 correlation between the QE programs and stock market performance showing that the bull market has been the product of Bernanke's interventions. On the other hand, Bernanke seems to sense that QE can't continue forever, but he is reluctant to stop QE, because once he does, the economy is likely to head south in a hurry.
If there is one thing for which we can thank Ben Bernanke, it is that his policies should prove once and for all that central banks can't produce economic growth. They can, however, undermine prosperity.
Last year I wrote about some of the myths surrounding higher education in the U.S. You also have to beware of colleges acting to redistribute wealth.
Following is an anecdote with which I am intimately acquainted: In the mid-1990s, there was a family (a white family which you will see is a significant detail) whose daughter had a sterling high school record that guaranteed her acceptance at all but the very top colleges in the country. This girl had everything - a nearly perfect grade point average and strong SAT scores, leadership and citizenship awards, three MVP awards in two different sports, and also additional extracurricular activities in school and community service outside of school.
One college that accepted this girl had annual fees of over $25,000 (more than twice that today, which shows how rapidly college costs have increased). The girl's family had only a few thousand dollars of discretionary income after the unavoidable expenses of mortgages, taxes, insurance, food, transportation, etc. Surely that thriving, well-endowed college would offer such a well-rounded student some financial aid, right?
Nope. Not a penny. The college's financial aid office was committed to increasing educational opportunities for minorities by giving them nearly full scholarships. Essentially, white kids, even ones like this girl with the exceptional range of accomplishments, were expected to subsidize the education of other, often less-qualified, students.
While offended by the college's plan to redistribute wealth racially, this was a private college. The family felt that the college had a right to practice social engineering if it wanted to. The family, though, wasn't going to go into debt to pay for this plan, so the daughter went elsewhere for her highly successful collegiate career.
The issue of colleges redistributing wealth becomes more problematical when it happens at state-subsidized schools. Recently, the Oregon legislature approved a plan that redistributes wealth (although, to their credit, not along racial lines). The Oregon plan will let students attend Oregon's state universities at reduced expense, repaying the state of Oregon after they graduate. Repayments will be a certain percentage of their income. In other words, graduates who earn higher incomes will pay more for their college education than those will lower incomes. This plan passed both the Oregon House and Senate unanimously - a costly mistake.
In fiscal terms, during an era of stressed state budgets, it would have made more sense to reduce the taxpayer subsidy to state universities (i.e., state expenditures) rather than current tuition receipts (state revenues). Budget cuts would have induced university administrators to prune courses that make no economic sense and end up wasting taxpayer dollars.
From a fairness point of view, the Oregon plan is yet another scheme to redistribute wealth from the more productive members of society to the less productive. Why should those students who, while in college, do the extra work necessary to eventually gain employment in demanding fields such as engineering and science be expected to shoulder, through a lengthy stretch of their work lives, a portion of the cost of the instruction received by students in less demanding and less remunerative majors?
In the Oregon plan, we once again see the ugly head of moral hazard rear itself. By reducing the economic penalty for poor decisions in choosing what classes to take, the state is increasing the incentive for students to waste time and postpone a profitable start to their careers.
Did it not occur to conservative legislators (if, in fact, there are any left in Oregon) that they have voted to subsidize less marketable majors in the soft disciplines-those often saturated with statist opinions and fuzzy ideological causes such as "social justice?" Thus, they have made the self-defeating blunder of helping to fund the propagation of worthless and pernicious leftist ideologies that already has done so much to undermine the principles and practice of individual liberty and impartial rule of law in this country.
Consumers are increasingly questioning the value of college degrees. The market for exotic, esoteric, feel-good "blow" courses is shrinking. This is the natural, logical course of events, but the Oregon legislature ignored that trend and instead voted to spend precious resources to subsidize the increasingly uneconomic status quo in higher education.
Both private and public colleges and universities have become active in wealth redistribution practices. If you don't want to support such an agenda, you should find out if your kids' prospective college is engaging in it before selecting that college. *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
I'm sad. Detroit is my native city. It's decline from being arguably the world's richest city to being America's "first Third Word city" is tragic, politically criminal, and a warning to other Americans.
The official declaration of Detroit's bankruptcy last week could not have come as a surprise to anyone familiar with the Motor City's atrocious financial condition. The city had no hope of ever recovering from its colossal over-indebtedness, and without a central bank standing by to create fiat credit to augment its insufficient revenue - the scheme that is the only thing keeping the even more colossally over-indebted national government solvent - the only question was when someone would pull the plug.
Fiscally speaking, Detroit had been in the "walking dead" category for years. The announcement by Detroit's emergency manager, Kevyn Orr, finally acknowledged the inescapable facts.
Clearly, some Michiganders are still in denial and refuse to face those facts. Last Friday, Ingham County Circuit Judge Rosemarie Aquilina insisted that the Chapter 9 bankruptcy declaration be withdrawn, stating the Michigan constitution forbids any action that would decrease the pension benefits of public employees. In the first place, Judge Aquilina should read my article about will and abandon the delusion that a constitution can alter reality by making nonexistent funds magically appear; second, it is an unjust constitution that confers a protection on public employees that private-sector employees don't have. A sounder constitution would have prohibited the city government from gaining control of employees' retirement funds contributions and instead have mandated that those contributions all go into a private fund in the workers' names where the city couldn't touch them.
The ideology that causes Judge Aquilina to believe that political action - policies, laws, even constitutions - can make reality conform to one's political vision is the very ideology that already has devastated Detroit. Politicians believed that they could create a "fairer" city by raising taxes on businesses and productive individuals and redistributing wealth to favored political constituencies, particularly the public sector unions. In doing so, they killed the goose that laid the golden egg.
The more aggressive the policies to take the wealth of the productive (including imposing an additional tax on those who worked in Detroit but lived outside the city limits), the more people and businesses left the city to avoid the city government's predations. This is the social and political pathology that Ayn Rand portrayed so vividly in Atlas Shrugged. One of her novel's central themes was that when a society, instead of respecting (and perhaps even being grateful for) those who produce the wealth that sustains and enriches our lives, treats society's economic benefactors as enemies to be plundered, a society embarks on a destructive path that, if unchecked, leads to doom.
So, what happens now? It's hard to feel sympathy for any of the vultures who are squabbling over Detroit's carcass. Municipal bondholders certainly don't merit sympathy for the huge losses they will incur. Anyone who invested in the debt promises of such a corrupt and poorly managed city deserves to lose money. They would have had to be blind not to see how broke the city was, so it seems that they made a cold, cynical, calculated bet on Detroit's predatory government continuing to be able to find victims from whom to extract more money. While acknowledging that there are dedicated policemen and teachers in Detroit who labor under difficult conditions, it is still hard to justify economically the generous pension promises they have received when the average response time to a 911 call is 58 minutes, and educational results have been so abysmal.
Just as individuals sometimes resolve to change their ways so that someone who has departed has not died in vain, the demise of Detroit may not be in vain if we learn its grim lesson and reform city, state, and the federal government from their destructive predatory policies. Atlas has shrugged in Detroit. You had better restrain government so that Atlas doesn't shrug where you live.
One of the most hotly debated of all individual rights is the right to privacy. Generations of immigrants came to the United States to escape religious persecution, economic oppression, and the danger of becoming embroiled in the Old World's frequently recurring wars. These reasons are variations on a single important theme: People want to be left alone to get on with their own lives. What made America special was not only that it was "The Land of Opportunity," but it also was a place where what a person did with his or her life was his or her own business, and the state was obliged to leave Americans alone except in cases where a person had criminally trespassed upon someone else's rights.
Conservatives oftentimes look askance at the right to privacy. In a typical example, conservative author and talk-show host Mark R. Levin, writing at National Review Online in 2005, stated flatly:
. . . if you look in the Constitution, however, you will find no general "right to privacy" anymore then you will find a "right to abortion" - and for good reason: It's not there.
Mr. Levin is both right and wrong. True, there is no explicit mention of a "right to privacy" anywhere in the Constitution; however, the Ninth Amendment hallows and protects that right: "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."
In the never-ending struggle against government encroachments on individual rights and liberty, a citizen's right to privacy is of crucial importance and a powerful defense. Do you think that the Founders would approve or disapprove of the proposition that American citizens have an inherent right of privacy as a necessary shield and buffer against government intrusions such as those addressed by a plain reading of the First, Fourth and Fifth Amendments? The answer is self-evident.
What Mr. Levin and other conservatives find objectionable is the use (or, from their point of view, misuse) of the "right to privacy" in Supreme Court Associate Justice William O. Douglas' famous 1965 opinion in Griswold v. Connecticut, in which he engaged in somewhat mystical language, invoking the Bill of Rights' "penumbras" and "emanations." A mature understanding of our constitutional rights includes the recognition that these rights are not absolute. Every first-year law student learns that the right to free speech does not entitle one to shout "Fire!" in a crowded theater. Similarly, crimes of violence are not protected from retribution and punishment on the grounds that they were committed in private. We could argue until the cows come home about when and where the right to privacy must be curtailed in order to uphold other individual rights, but we never should disavow or devalue our right to privacy.
There seems to be precious little privacy from government intrusion remaining in contemporary American society. For example:
* As April 15 approaches, tens of millions of Americans regard the Internal Revenue Service as a financial proctologist, uncomfortably familiar with intimate details of our lives.
* Transportation Security Administration agents at airports use x-ray machines to strip us of any vestige of privacy or modesty about our own bodies.
* Government-operated cameras observe us at traffic intersections and other public locations.
* The surveillance may not yet be as extensive as depicted in the CBS television drama "Person of Interest," but the day of ubiquitous surveillance may not be far off.
* Uncle Sam apparently keeps all our Internet communications archived in California, and may be able to hack into our hard drives without our knowledge.
* There have been reports of domestic federal agencies using unmanned drones to monitor us from above.
Increasingly, it feels like Big Brother is always watching and privacy is going the way of the dodo.
The government equivalent of individual privacy is secrecy. The difference is that individual privacy protects freedom, while government secrecy jeopardizes it. One of the great protections for a freedom-loving people is government transparency - the ability of citizens to keep a watchful eye on their elected representatives.
Unfortunately, as individual privacy has been declining in America, government secrecy has been increasing:
* In spite of the existence of the Freedom of Information Act, it is often difficult or impossible to obtain desired information about our government's activities.
* Federal bureaus and agencies often operate in shadows (or "penumbras," to use Douglas' murky term).
* Former Speaker of the House Nancy Pelosi pushed Obamacare through the House of Representatives in the dead of night, announcing that Congress would have to pass the law so that we mere citizens could find out what was in it.
* The recently departed Environmental Protection Agency administrator epitomized secretive regulators, using a false identity to cover her tracks.
* The Department of Justice stonewalled and preserved secrecy rather than divulge who was responsible for the deadly "Fast and Furious" gunrunning scheme in Mexico.
* President Obama and former Secretary of State Hillary Clinton kept secret who was responsible for the unconscionable and or incompetent decisions that led to the tragic deaths of four Americans in Benghazi, Libya, last year.
Clearly, the balance between individual privacy and government secrecy is enormously out of whack. Individual privacy continues to shrink, while government secrecy continues to grow.
It was once wisely said (although not by Jefferson, to whom the quote is frequently misattributed):
When governments fear the people, there is liberty. When the people fear the government, there is tyranny.
We will fear the government less and be freer if we can recover our privacy and remove the veil of secrecy from government.
Jonathan Swift's classic novel Gulliver's Travels - and in particular the novel's first section in which the tiny Lilliputians succeeded in immobilizing Gulliver by binding him with thousands of their tiny, threadlike ropes - serves as a literary metaphor for today's American economy. While our friends on the left may complain that it is hyperbolic and chauvinistic to describe the American economy as a colossus bestriding the globe, nobody can dispute that it has been the big kid on the block.
Just as Swift's fictitious Lemuel Gulliver's strength wasn't enough to overcome the cumulative effect of myriad tethers, so the American economy's tremendous strength and energy have been progressively overcome and subdued by innumerable government (and its partner in crime, the Federal Reserve) interferences with the market economy. Taken individually, each intervention has been a minor nuisance in the economy; taken collectively, though, they have been subduing the American Gulliver.
The analogy isn't perfect. The tying up of the American Gulliver has been a decades-long, slow motion process. And, of course, the "American economy" isn't a single sentient being, but a composite of several hundred million. What has enabled government to get away with its encroachments is a combination of demagoguery, factionalism, special interest politics, and the fact that most Americans are content if they are getting theirs, and thus being indifferent to encroachments that adversely affect others.
Let's describe government encroachments that have increasingly burdened and enfeebled what historically has been (and still is, for the time being) the world's greatest wealth-creating economy:
* It is impossible to tabulate all the American businesses that have been hamstrung, crippled, or even forced into closure by the oppressive edicts of federal regulatory agencies. We tend to hear about the large corporations that go broke; their sheer size commands national media attention, but countless thousands of smaller businesses have been crippled or crushed by OSHA, the green brigades of FWS, BLM, and the green queen bee, the EPA. In declaring independence from Great Britain, the Founders complained that the British government "has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance." "Swarms" sounds like an accurate characterization of the present American regulatory state run amuck. (Read Wayne Crews' "Ten Thousand Commandments," which estimates the annual cost of federal regulations to be $14,768 per household - apart from the immeasurable but considerable lost production that never took place due to financially prohibitive regulation).
* During the Obama presidency, federal spending has commandeered a record-breaking share of peacetime GDP. In his insightful economic history, Crisis and Leviathan, economist Robert Higgs detailed the "ratchet effect," whereby federal spending soared during national crises (whether wars or depressions) then, after the emergency had passed, federal spending would recede, but never to the pre-crisis level, thus leading to an unbreakable secular trend toward bigger government (i.e., "leviathan"). Has the ratchet effect worked in the aftermath of the Great Recession? Sort of.
Obama's stimulus plan succeeded in raising annual spending from the $3.0 trillion of George W. Bush's last year to $3.5 trillion in 2009 - Obama's misguided attempt to revive the economy via federal "stimulus." Even though the recession officially ended in summer, 2009 - meaning that the extraordinary fiscal "stimulus" could be withdrawn - federal spending never came even halfway back toward pre-crisis levels. It remained at $3.5 trillion in 2010, actually increased to $3.6 trillion in 2011, eased slightly to $3.5 trillion in 2012, and looks likely to hit $3.7 trillion this year. With Obama in the White House, a one-year emergency stimulus paved the way for a permanent major increase in federal spending.
* One last indicator: The number of federal programs that transfer wealth from some Americans to others. I recall that in the mid-1980s, President Reagan charged the Grace Commission with the task of taking an inventory of federal programs. Although the Grace Commission reported that they found it impossible to find out how many people actually worked for the federal government (its scope was too big, sprawling, unmonitored, and murky even in 1985) but they did find 963 programs that provided various forms of financial support to individual recipients.
Alas, the wealth-redistribution activities of the federal government have continued to grow in the nearly three decades since then. In preparing a talk to my college's student body in March, I found 2,199 transfer programs listed on the government website, The Catalog of Federal Domestic Assistance (cfda.gov). Two days later, I double-checked, and was surprised to find that another program had been added during that brief interval, bringing the total to 2200. Surely, that must have been a fluke during this year of sequester and GOP control of the purse strings via their majority in the House of Representatives, right? Alas, no. I updated my talk a week ago, and when I checked cfda.gov, I found that in less than three months, another 32 federal transfer programs had made the list. Surely such a rate is unsustainable, but for federal transfer programs to be cropping up at a rate of almost three per week shows that the federal leviathan continues to gorge and grow, implying continued strong headwinds for the private sector.
Wake up, Gulliver! Or is it already too late?
For the second straight year I've had the pleasure of an extended visit with my daughter in London, and for the second year, the themes of liberty and rights - and how closely related they are to conflict and religion - have been prominent.
Last year, we saw Magna Carta at Salisbury Cathedral. The fact that one not-so-large sheet of parchment changed the trajectory of Western civilization from despotism to liberty is powerful evidence that the pen is ultimately mightier than the sword. (Regarding Magna Carta: the way the copyist managed to write each letter and space each line with a precision indistinguishable from modern print technologies is truly incredible.)
Last week we toured Scotland, and wherever we went, we heard stories of earlier generations of Scottish freedom fighters, saw the castles (including the famous one overlooking Edinburgh from its perch on top of a volcanic upthrust) used to defend against aggressors, and relived the conflicts between different peoples and religions. Then on Memorial Day, on a day trip to Cambridge, we saw the hallowed cemetery where are 3,811 of the approximately 30,000 graves of U.S. airmen who died while flying combat missions out of England in World War II.
Today, the United Kingdom and its values and liberties are under attack again. While we were enjoying Scotland's beauty, Drummer Lee Rigby was butchered in broad daylight on the streets of London by two fanatical Islamists. We had heard about it from a taxi driver in Edinburgh, but when it really hit home for me was after we got back to London and I saw his wedding photo in one of the newspapers. The young man was one of the kindest, gentlest, most cherubic looking men I have seen in a long time, and the image of his bride gave the same impression. That such a man could be treated so brutally, such a family be devastated so wantonly, is evil of uncommon magnitude.
While walking to the Lords Cricket Club to share a Sunday roast with an old prep school chum, we passed one of London's largest mosques and a number of Muslims on the sidewalk. It's easy to see why some wag coined the word "Londonistan." The tension and mutual mistrust were palpable. It feels like London is under siege. The mosque seems like a beachhead of an invading force. As was the case here centuries ago, a religious war threatens to rob merry olde England of its tranquility. Londoners find themselves potential targets of random attacks by guerrilla jihadists dwelling in their neighborhoods.
In the anguished aftermath of Lee Rigby's murder, Londoners yearned mightily for solutions to the grim threat they feel. The problem is, there are no easy answers, only vexing dilemmas and uncomfortable tradeoffs.
In a land that values free speech, there are proposals to censor jihadist websites and suppress hate speech - understandable and in many ways justifiable - but such suggestions are accompanied by the nagging feelings that enforcing such objectives could lead to abuses and that driving jihadists underground may not be sufficient to prevent future guerrilla attacks.
In a country where one of the finest historical achievements was learning to set aside sectarian differences, agree to disagree about religion, but coexist peacefully in a civil society based on the impartial protection of individual rights, few citizens want their country to be divided by religious strife. Religious tolerance was achieved at great cost by earlier generations of Brits, but how viable is tolerance if a core tenet of one religion is intolerance of anyone outside the faith? How can Christian England avoid religious strife, when adherents of one particular religion are thrusting it upon them?
And how safe and practical is it to cling to the belief that it is wrong and bigoted to look at individual members of some "other group" as being potentially dangerous? The current situation is horribly unfair to Muslims who have assimilated into Western culture and share our belief in religious tolerance and the separation of church and state, but the insurmountable problem is: How are we non-Muslims to know which Muslims are ticking time bombs waiting to explode?
I wonder whether Britons fully realize the nature of the conflict in which they are engaged. What drives Islamism is a religious belief system. The fanatics are moved by what they perceive as a higher purpose. They have the conviction that faith in divine law imparts, and the concomitant willingness to die in the service of that cause.
It seems to me, although I'm sure many in the West will disagree, that only a comparable belief system of religious faith, with its devotion to a purpose that transcends temporal and temporary happiness, can withstand and prevail against a fervent political-religious ideology. Somehow, I doubt that secular humanism or the facile belief that "nice people don't butcher or seek to enslave others" won't cut it against a rabid, unreasoning, uncompromising, to-the-death fanaticism.
There are visible clues about the antidote to illiberal, atavistic ideology of Islamic conquest all over London and the British isles. I refer to the ubiquitous beautiful churches and magnificent, sometimes centuries-old cathedrals. (Speaking of cathedrals, Salisbury Cathedral, which dates from the 13th century and houses Magna Carta, would be worth a visit even if Magna Carta were elsewhere.) The architectural majesty of these hallowed buildings puts to shame the uninspiring utilitarian structures of the modern era.
Britain's grand and gorgeous Christian churches are monuments in stone to grand and enduring ideas. They remind us that, in spite of manifold sins and shortcomings on the part of fallible individual Christians, it has been Christian values and concepts that gave birth to our love of freedom, our respect for individual rights, the search for and discovery of the principles governing nature, and even our free market system, based as it essentially is on the Golden Rule whereby one profits to the extent of providing value to others. It was the genius of Christianity that taught us to live and let live, to tolerate others, to peacefully coexist in our economic and social lives even as we go our separate ways on the Sabbath to observe different religious traditions, or no tradition. These have been the happy and prosperous fruits of Christian culture. Many in our Western societies, having achieved material abundance, have had less time for religion in recent decades. England's churches, like the ones on the European continent and like many at home in the States, are largely empty. We have forgotten what made us what we are. Indeed, we have the right to abandon our cultural roots and forsake the teachings that lifted us above life that was nasty, brutish, and short. I strongly suspect, though, that the cost of doing so will be great, and, conversely, that a return to our roots will strengthen us for the struggle ahead. *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
In the Age of Obama, there are many viable candidates for the official title of Washington's "Private Sector Enemy Number One." You could make a strong case for the National Labor Relations Board, the Department of Homeland Security, the Transportation Security Administration, and others, but my choice would be the Environmental Protection Agency.
For over 20 years I have gathered stories about ways in which the EPA has perpetrated misfeasance and malfeasance, misdeed, and mischief. Let me say that I mean no offense to the many employees of the EPA who conduct their professional lives with integrity and on the basis of sound science. My target is the hyper-politicized leadership of EPA and its henchmen who have misbehaved.
Here are just a few of the significant "lowlights" of the EPA's record: the political nature of the EPA became clear not long after President Nixon established it in 1970. In 1972 the first administrator of the EPA, William Ruckelshaus, banned the insecticide DDT after his own hearing examiner concluded, on the basis of several hundred technical documents and testimony of 150 scientists, that DDT ought not to be banned.
In 1978, the EPA tried to suppress research showing the cost of proposed air pollution standards. If Pennsylvania's two senators at the time (John Heinz and Richard Schweiker) hadn't intervened, the EPA would have imposed standards stringent enough to effectively shut down the U.S. steel industry.
In 1991, a panel of outside scientists brought in to review EPA practices concluded (among other things) that the EPA often tailors its science to justify what it wants to do and shields key research from peer review. EPA Administrator William Reilly acknowledged, "scientific data have not always been featured prominently in environmental efforts and have sometimes been ignored even when available."
The EPA has ignored epidemiological evidence to foment false alarms about the dangers of ozone, radon, Alar (used in apple orchards), dioxins, and asbestos. The asbestos story is illustrative. Not only did the EPA, in 1989, decree an eight-year phase-out of asbestos despite studies from Oxford, Harvard, the Canadian Royal commission, New Jersey, etc. that the health risks posed by asbestos-lined buildings were miniscule, EPA's administrators even ignored the EPA's own scientific panel, which denounced the study used to justify the ban on asbestos as "unconvincing," "scientifically unappealing," and "absurd." (Thankfully, sanity returned and EPA Administrator Reilly rescinded the ban a year later.) The U.S. Fifth Circuit Court of Appeals officially deep-sixed the asbestos ban in October, 1991, on the grounds that the EPA had exceeded its legislated authority - a not-uncommon finding replicated multiple times in subsequent years, such as when the EPA has used the Clean Water Act (which pertains explicitly to "navigable waters") as a pretext to regulate lands where puddles form after heavy rains.
It seems that the most visible EPA administrators were the most problematical. In the 1990s, under the leadership of Carol Browner, the EPA refused to divulge how it calculated cost-benefit analyses. Indeed, in 1997 Browner admitted that new research would be required to set a "scientifically defensible" standard for air quality issues that would "fill obvious and critical voids in our knowledge." The Browner-led EPA also blatantly broke federal law by actively lobbying against legislation designed to curb some of EPA's abuses. Browner herself broke the law by defying a federal judge's orders and overseeing the erasure of the hard drives and the destruction of back-up email tapes that she had used as administrator.
One of the most amazing rulings to come out of Browner's EPA was a letter sent to the city of San Diego, ordering them to stop treating the sewage pouring into the Tijuana River Valley on the grounds that human actions were disturbing the "sewage-based ecology" of the affected estuary - ignoring the fact that the sewage posed a health threat to human beings (whose "ecology" obviously wasn't considered as important by the EPA).
In 1993, Senator Patrick Moynihan (D-NY) wrote to Browner expressing concern that EPA hadn't submitted a report of cost-benefit studies it was required to submit to Congress under Section 812 of the 1990 Clean Air Act amendments. Not only did Browner not even bother to reply, the agency still hadn't completed a report by 1995. Meanwhile, the EPA is notorious for imposing fines on businesses that are late in submitting the piles of paperwork filings that EPA requires of them.
So bad did things get during Browner's tenure that in 1996, a 27-year veteran microbiologist at the agency went public with his concerns about the lowering of scientific standards under Browner, alleging, for example, that the science EPA used in wastewater toxicity tests was unreliable, and that EPA had become more interested in issuing regulations than in practicing sound science. Similarly, during the summer of 1998, a dozen career employees at EPA went public about the agency's "egregious misconduct." These whistleblowers charged that people who work at EPA "are harassed, even fired, for protesting illegal or irresponsible behavior by managers who jeopardize the proper enforcement of the law."
Barack Obama's recently departed EPA Administrator, Lisa Jackson, also distinguished herself by placing political agendas over sound science (and also, like Browner, breaking the laws governing the computer records of public officials - in her case, by trying to hide what she was doing through use of a bogus email identity).
Jackson showed her disregard for scientific rigor by seeking to replace actual samples of air quality with computer estimations of air pollution. Considering the agency's considerable power to act as judge and jury and bring businesses to their knees, it hardly seems like justice to empower the EPA to enter whatever data it chooses into a computer program and essentially produce evidence based on its own assumptions.
In my previous article, we reviewed some of the ways in which politics has trumped sound science in the EPA's policymaking process, even to the point of defying the law at times. Here are some more specific instances of the EPA having abused its power, often at great cost to American citizens.
We haven't heard much about Superfund in recent years, but this EPA program was a headline grabber 20 years ago. Set up to clean up contaminated sites, Superfund consumed over 40 percent of the EPA's budget at one point. Sadly, most of the money went to lawyers, and the program itself ended up demonstrating its "essential irrelevance to public health."
During the administration of Bush I, the EPA suppressed the findings of a decade-long, half-billion-dollar study of acid rain - NAPAP, the main scientific conclusion of which was that acid rain was not the culprit in increasing the acidity of lakes - until after Congress passed Clean Air Act of 1990. By enacting legislation premised on incomplete and incorrect science, unnecessary regulatory stringency cost Americans untold billions of dollars. So egregious was the EPA's conduct in this matter that Kay H. Jones, the senior scientist on the Council on Environmental Quality under three presidents, issued a report condemning the EPA cover-up and accusing the agency of "blatant public misinformation."
Unfortunately, the NAPAP incident was far from the only instance of EPA misinformation. In the early 1990s, Congressman John Dingell (D-Mich.) pulled no punches in insisting that certain environmental health regulations were based on the work of a scientist who "cooked the books" and performed "criminally fraudulent work." On another occasion (in 1993) Dingell had this to say about the EPA's treatment of scientific research: "It cooks the books with great vigor."
Accuracy in Media published some blockbuster reports in the early 1990s exposing how the EPA would plant disinformation in the media, even quoting an 11-year EPA press officer who stated that EPA handouts were - ahem - "not completely honest."
The late, great journalist Warren Brookes found numerous instances of the EPA's disregard of the cost of its policies. One of the most startling was a rule issued under the Resource Conservation and Recovery Act that shut down 150 companies and imposed $100 million in costs to reduce a hypothetical cancer risk that was the equivalent of spending $9 trillion (yes, with a "t") to avert a single case of cancer.
Congress often has helped the EPA squander the taxpayers' money. It has passed more than 20 environmental laws directing the government to pay the legal fees of green groups that sue the government, even when the government-subsidized plaintiffs would lose. Guaranteed money for suing the government - what a deal! Forbes.com contributor Larry Bell recently detailed EPA's cozy collusion with green groups, in which the two parties (who really are on the same side) negotiate settlements outside of the courtroom where they are shielded from scrutiny.
Another way in which EPA has proven a poor steward of taxpayer dollars is seen in its history of grant giving. According to EPA's inspector general in 2002, the EPA "could not justify more than $1 billion in noncompetitive grants" - just in the year 2000 alone! In some cases, EPA grants are rather incestuous. Over the last 20 or so years, the EPA has given at least $25 million to the American Lung Association, which reciprocates by putting up billboards that amount to pro-EPA propaganda.
The EPA is known for its power grabs, too. In a current notorious inter-bureaucratic power play, the EPA is trying to usurp the Army Corps of Engineers' prerogative under the Clean Water Act to revoke or withhold permits needed by resource extraction companies.
In another Obama-era episode, two experts from the Wyoming Water Development commission charged that the EPA ignored its own guidelines in testing water wells when testing for fracking-related contamination. Referring to the same tests, the Bureau of Land Management said that better testing would be needed to reach accurate conclusions, and the U.S. Geological Survey rebuked the EPA for using poor scientific practices.
When 30-year EPA veteran Alan Carlin dissented from the EPA's alleged "endangerment" finding on carbon dioxide and other gasses in 2009, the EPA ordered him to stand down and remain silent. A subsequent investigation by the inspector general determined that Carlin was right. Carlin, however, retired, and the EPA is marching forward toward regulating carbon emissions.
As has happened many times during EPA's history, Inspector General Arthur A. Elkins, Jr. issued a public statement on Sept. 28, 2011, in which he stated that the agency's greenhouse gas endangerment finding did not make sufficient use of peer review, ignored requirements to certify its compliance with related policies, and provided dubious documentation of its analyses, politely suggesting that the EPA needs to strengthen the quality of its data.
Also in 2011, the chair of a National Academy of Sciences panel on ways to improve EPA's risk assessment practices, told EPA officialdom in no uncertain terms that its research needs to become more sound and transparent if it is to regain credibility and respect.
Under the recently departed Lisa Jackson, the EPA fined 24 businesses about $40 million for not conducting due diligence by virtue of failing to discover that certain refiners of biofuels were selling rights to fictitious output. What makes this fine so outrageous is that the EPA itself had certified the very biofuel companies who were perpetrating the fraud, and even after having discovered the fraud, they waited 15 months to notify the refiners who were being victimized by it. When the EPA finally alerted the refiners that they were holding bogus permits, they gave them only 14 days to find replacements - a virtually impossible task, and yet EPA then lowered the boom and chose to fine the refiners who were the victims, not the perpetrators, of the scam.
Similarly, the EPA seems to derive perverse pleasure from fining refiners for failing to use nonexistent fuels. Under the authority of amendments to the Clean Air Act, the EPA mandates the use of cellulosic biofuels and fines refiners for failing to use the mandated amount. In 2010, the EPA wanted refiners to burn five million gallons of these biofuels, yet zero gallons were even produced in 2010. Nevertheless, in 2011, the EPA upped the mandate to 6.5 million gallons, but again, zero gallons were produced. In 2012, the mandate was for 8.5 million gallons - and a grand total of 25,000 gallons were produced. A federal judge essentially told EPA to stop this nonsense. EPA's response was to raise the 2013 mandate to 14 million gallons.
The EPA's in-your-face, anti-fossil fuel vendetta is even more obvious in this Machiavellian power play: Under its greenhouse gas endangerment finding, coal-powered electricity generating plants would need to pay for expensive equipment to limit CO2 emissions. The EPA then estimated the cost of all this technology to be zero. How so? Because the price will be so high that the EPA assumes no utility would ever do it. In other words, by regulatory fiat, the EPA is flirting with shutting down coal-fired plants completely.
The EPA seems to enjoy imposing impossible requirements on private energy companies.
Often the EPA oversteps its statutory authority so blatantly that federal judges frequently overrule EPA actions. At least one court has ruled that EPA delays at granting permits are illegal. (No word on whether the practice has stopped, but don't bet on it.)
The ideologically split Supreme Court united long enough for a 9-0 slap-down last March, ruling that EPA had gone too far when it refused to grant homeowners a review of the EPA's decision to halt construction of a house on a "wetland." The lot in question had no water on it, and yet EPA decided to fine the homeowners $75,000 per day - half of that without informing the homeowners.
Last summer, the EPA presumed to order ships operating within 200 miles of Alaska's southern shores to use more expensive low-sulfur fuel. The authority EPA invoked was a maritime treaty that had not yet been approved by the U.S. Senate.
In January of this year, a judge in Virginia ruled against the EPA, which had arrogated to itself the power to regulate unpolluted storm water that runs into a creek. The EPA argued that it had the authority to do anything that the Clean Water Act did not explicitly say that it could not do - an expansive view of bureaucratic power indeed.
There are even reports that the EPA is now using drones to keep an eye on American farmers. If this isn't a rogue agency, I don't know what is.
Last summer, Barack Obama riled a lot of entrepreneurs when he got carried away at a campaign event and told any American who had built up a successful enterprise, "you didn't build that." An even greater backlash awaits any politician who dares to tell Medicare recipients, "You didn't pay for that" - for there are far more seniors than entrepreneurs in our country.
Time after time during Election Year 2012, seniors and near-seniors reacted to the slightest mention of Medicare reform with indignation and the emphatic insistence, "Don't you dare touch Medicare; I've paid for it!" There is only one problem with that statement: In a mathematical sense, it isn't true.
The amount that American workers have paid and are paying into Medicare isn't enough to fund all the benefits that are being paid out to seniors under Medicare. The trustees of Medicare have stated that the promises they have made exceed their projected revenues by tens of trillions of dollars. Senator Tom Coburn (a physician in private life) has estimated that the average American couple contributes approximately $110,000 to Medicare over their working careers and receives over $330,000 of Medicare benefits. On Feb. 20, USA Today cited Urban Institute data pegging those same figures at $88,000 and $387,000, respectively.
There are differing estimates of the size of the gap, but clearly Medicare suffers from an unsustainable funding deficit. (Just to be clear: Every insurance program has participants who receive far more in benefits than they paid in, but that is possible only because some participants die before they collect. In other words, in a sound insurance program, the average payout will not exceed the average contributions plus earnings on invested funds - but there are none in the pay-as-you-go Medicare program).
Let me hasten to say that I have sympathy for those who make the "I paid for it" case. Through decades of their working lives, millions of seniors paid into the system and were promised that Medicare would be there for them starting at age 65. These citizens played by the rules, acted in good faith, and held up their end of the bargain.
The problem is that the politicians in Washington have not acted in good faith. Instead, they have committed a gigantic fraud by underfunding the program. The fact of the matter is that we've been swindled, and the anger and sense of pending betrayal that many seniors feel is understandable. At the same time, we, the people, need to accept some responsibility for this sorry state of affairs.
Certainly, the members of Congress and presidents who allowed the imbalance between Medicare income and expenditures to get so out of whack are ethically culpable. Still, "we the people" share some responsibility for the Medicare fiasco. The mistake was navet and gullibility. One of our endearing national characteristics is our readiness to take people at their word. Millions of decent Americans would never defraud or deceive their neighbor, and so they assume that others won't deceive them. We can see now what an enormous mistake it was to trust politicians' promises.
This brings to mind a sequence in the slapstick, farcical movie, "Animal House," in which a freshman pledge in Delta house, Flounder, lets some upperclassmen in the fraternity talk him into letting them use his brother's brand-new Lincoln for a road trip. The frat brothers, predictably, trashed the car. As Flounder wept in regret, the suave, smooth-talking senior, Otter, put his arm around Flounder's shoulder and explained the facts of life to him: "You [goof]ed up; you trusted us." ("Goof" replaces the original R-rated verb.) "We the people" have goofed up big time, trusting a government bureaucracy to oversee something as important as our health care.
Regrets and recriminations aside, the question now is: Where do we go from here? What are our options? The only way that the oncoming flood of baby boomers will be able to receive all the Medicare benefits that they were promised would be to either increase payments into the system or reduce disbursements from it.
We already have seen how volatile, contentious, and divisive the political strife over Medicare has been. Sadly, it is likely to get much worse. Generations will be arrayed against generations.
On the one side, gray-haired Americans will demand that the promises made to them, and for which they upheld their end of the bargain, be kept. The progressives have played a masterful political game, for while their socialistic hearts lust to take control of even more of Americans' wealth, they will have huge numbers of average Americans who think of themselves as anything but socialists egging them on and supporting them in their quest to absorb and appropriate more property. The great American middle class, who has the most to lose when Big Government supplants the private sector, will be energetically demanding some of the very policies that will crush the life out of the economy.
On the other side, at some point the younger generations are going to rebel against the debt slavery to which they have been subjected, and they will push back as a matter of economic survival and a desire to feel as free as their elders once did. Responding to pressure from the young, the federal healthcare blob inevitably will ration health care. As happens as a matter of routine in the United Kingdom today, bureaucrats will make cold-blooded decisions about which seniors from which to withhold care as a matter of cost containment.
What a terrible price Americans will pay for falling for the seductive promise of a benign government caring for us all in our old age. Not only will the country be poorer and less free, but the quality of health care itself is bound to decline - all while our society is riven between young and old when the common enemy is the idea that the compulsory economic relations imposed by government comprise a way of life that is somehow more just, more harmonious, more helpful, and more prosperous than a society in which each individual's life and property are his own and economic exchanges are voluntary (i.e., a society in which people are free). *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
A primary meme of the Democratic Party in 2013 is that the federal government doesn't have a spending problem. That is what President Obama reportedly said to House Speaker John Boehner (R-Ohio) in their January budget negotiations. Acting on that assumption, Obama's State of the Union address signaled his desire to scuttle the 2011 sequestration deal that appears to be the American people's last best hope to trim federal spending.
The president's partisan allies have rushed to take up the cause. Two days after the State of the Union, Iowa Senator Tom Harkin (D-Iowa) stated, "I want to disagree with those who say we have a spending problem." Over the weekend, House Minority Leader Nancy Pelosi (D-Calif.) took up the refrain, telling Chris Wallace on Fox News, "It is almost a false argument to say that we have a spending problem."
With these statements, the political battle lines for 2013 have been drawn. The Democrats don't even want to talk about spending cuts. For them, the only desirable option is to continue what Washington has been doing for decades regardless of which party was in power - spend more.
With apologies to anyone struggling with alcoholism, a U.S. senator earnestly insisting that he and his colleagues don't have a spending problem is like an alcoholic denying that he has a drinking problem. While the problem is obvious to some, the senator is stubbornly in denial, not yet ready to face the unpleasant reality.
Harkin's fellow Congressman, House Minority Whip Steny Hoyer (D-MD), recently articulated his party's agenda, declaring, "The country has a paying-for problem," not a spending problem; in other words, full speed ahead with spending while we look for more tax revenues.
Nobody, however, believes that Congress will raise taxes enough to pay for all the spending that is forthcoming, sequestration or no sequestration. Instead, Washington will continue to spend more today while sticking future taxpayers with the bill by borrowing to cover the deficit.
The spendaholics charge ahead because they know they can borrow whatever they need. If Uncle Sam didn't have the power to tax, it would be considered a lousy credit risk. Taking into consideration over $16 trillion of "official debt," several trillions more of off-budget indebtedness, and perhaps as much as $200 trillion of unfunded liabilities, the risk premium attached to a borrower with negative net worth and insufficient revenues would result in interest rates far higher than today's abnormally low rates.
By cramming down interest rates, the Federal Reserve has become the federal spendaholics' enabler. Like many homeowners during the housing bubble last decade - who paid more for their houses than their income could support, only because creative financing enabled them to "tote the note" for a while - so, too, is the federal government able to borrow enough to avoid its day of reckoning: the universal recognition that it can't possibly make good on its obligations - because of the Fed's financial engineering.
Why? Here's one reason: power. Spending equals power.
All this government spending makes our society poorer, because such spending is "acatallactic" (a fancy economic word that means government spending withdraws scarce economic resources from the free markets and diverts them into the public sector, where they will be directed by political decisions into less-valued uses). The evidence that Big Government leads to economic anemia is overwhelming, whether in the extreme cases of socialistic governments that have commandeered entire economies to democratic interventionist states or where the dose of statist poison is smaller, but the positive correlation between size of government and slowness of economic growth remains.
How can the spendaholics get away with policies that don't make economic sense? Because they make great political sense. Democrats have seen how Europeans have taken to the streets to protest any and all budget cuts by Europe's broke governments, and they know that tens of millions of Americans are more concerned about continuing to receive federal benefits today than some potential financial Armageddon tomorrow.
Think of how George W. Bush and a Republican Congress acted like spendaholics when they were in power. This shows how difficult it will be for federal spending ever to be curbed. The fundamental problem isn't so much partisan as it is systemic. In a democratic system, politicians win elections by doing what attracts the most votes. Since voters like to receive benefits from government, but don't like to be taxed to pay for all those benefits, all the incentives are for politicians to adopt policies that increase spending faster than revenues.
This will all end badly some day when "the market" asserts itself and sweeps aside the rotten debris of spendaholic policies abetted by a compliant central bank. Until that day, though, the spendaholic binge will continue.
There is good news and bad news: The good news is that President Obama is consistent; the bad news is that he is consistently wrong. Once again - as he has before - he filled his State of the Union address with rhetoric designed to gull the gullible by saying things that sound compassionate and wise and reasonable to those who don't bother to pause and reflect on what he said.
Clearly bent on breaking the 2011 sequester agreement that would cut federal spending, the president warned that "These sudden, harsh, arbitrary cuts . . . would slow our recovery, and . . . are a really bad idea." This is - ahem - inaccurate. How could such cuts be considered "sudden" or "arbitrary" if Congress and the president have had nearly a year and a half to prepare for such an eventuality? When the president goes on to say a few paragraphs later, "we can't just cut our way to prosperity," the implicit message is that a society needs Big Government in order to prosper economically, when the entire history of the 20th century proves the opposite.
The president's earnest assertion that Medicare requires "modest reforms" is as disingenuous as his statements over the past few years that the key to our trillion-dollar budget deficits is to get the rich to pay "a little more." Sorry, but the numbers don't add up. In both cases, the problems cited by the president will require far more significant action than the president is willing to admit.
Indeed, the president strayed into dreamland when he proposed to lower healthcare costs by having patients billed based on "quality of care" (How many lawyers will it take to figure out how you measure that?) than by objective measures, e.g., which procedures were performed or how many days a patient spends in a hospital. I imagine every hospital administrator in the country is depressed tonight.
In his typical pull-the-rug-out-from-under-us style, the president recited some good news on the energy front, particularly increased domestic production of oil and gas, only to say "but" and going on to warn us that he will bypass Congress and take "executive actions" to speed the transition away from reliable and abundant fossil fuels in the quixotic quest to save the world from the global warming bugaboo. In support of this policy, he stated, "the 12 hottest years on record have all come in the last 15" - a whopper that ought to keep all the fact-checkers busy. (Another dubious assertion was his claim that "study after study shows that the sooner a child begins learning, the better he or she does down the road," when, in fact, the definitive study of Head Start - one of the rare federal programs to actually have its effectiveness evaluated - shows that there are no measurable long-term benefits to children who participated in that program.)
The president offered his customary plans for government to redistribute wealth according to his vision, e.g., planning to "reward schools" (monetarily, of course) "that develop partnerships with colleges and employers;" promising that "states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support;" and proposing that "affordability" influence "which colleges receive certain types of federal aid" (which sounds like a deal by which colleges that reduce tuition the most might get the largest federal subsidies).
The president once again revealed that he is still in thrall to Marx's fallacious labor theory of value when he called for legislation to guarantee that women "earn a living equal to their efforts." In a market economy, it isn't effort that counts, but productivity. There are the studies, such as those cited by Kay Hymowitz in The Wall Street Journal (on April 26, 2012) showing that women's aggregate per capita pay is lower than men's because, in total, they work fewer hours, and that "childless 20-something women do earn more than their male peers."
The rest of Obama's economic ideas read like nothing more than a Big Labor wish list, asking for another increase in the minimum wage and calling for heavy spending (the earlier pious pronouncements about reducing the deficit having already been forgotten) on various construction projects. Same old, same old.
Near the end of his speech, the president asserted, "As long as I'm Commander-in-Chief, we will do whatever we must to protect those who serve their country abroad." In light of the Benghazi fiasco, how can anyone believe this?
The conclusion that I take from Barack Obama's 2013 SOTU address is that this country will continue to remain divided between those who believe this president's pronouncements, and those who distrust them.
The prospect of four more years of Barack Obama in the White House has caused several conservative voices (among them, The Wall Street Journal's Daniel Henninger, Fox News commentator Charles Krauthammer, and noted Ronald Reagan scholar Paul Kengor) to opine that President Obama's second term portends the passing of the Reagan era, the reversal of his pro-growth policies and the attempted burial of Reagan's credo, "government is the problem."
None of this is news. It is a given that Obama and his fellow progressives reject Reagan's values and philosophy. They will continue to try to expand government.
There is, however, a more sinister dimension to the progressive agenda: Rush Limbaugh asserted that Obama wants to "erase every trace of Reagan from America" - not just to repeal and reverse Reagan's policies, but to engage in wholesale historical revisionism by obfuscating Reagan's record and reshaping public opinion about him. It serves the progressives' interests if they can obscure the fact that Reagan's policies of lower tax rates, a sound dollar, and reductions in governmental regulatory micromanagement enhanced prosperity and raised standards of living. Those of us who lived through the Reagan years remember the resulting economic growth, but nobody under the age of 30 has first-hand knowledge of those years.
Is it really possible that the left could rewrite the history of the Reagan presidency? Absolutely. They've already perverted the record of earlier Republican presidents. Take, as Exhibit A, Warren G. Harding - the president who always appears at the bottom of presidential rankings.
Yes, I know there were a couple of crooks in Harding's cabinet. Those odious men betrayed the trust of both a president and a nation. But while they gained a few hundred thousand dollars, Harding's policies enriched the American people by billions. Harding entered office in the midst of the Depression of 1920-'21 - a downturn as rapid and severe as any in American history, with GNP contracting 24 percent and unemployment more than doubling to 11.7 percent.
Harding's policy response was to get government out of the way and let free markets make the necessary adjustments. He induced Congress to slash federal spending by 40 percent in two years and lower the top marginal tax rate from 73 percent to 56 percent (on its way down to 25 percent under his successor, Calvin Coolidge). Demonstrating the fallacy of the Keynesian dogma that government should increase spending and deficits to cure recessions, the Harding spending cuts yielded large surpluses (used to pay down World War I indebtedness), and yet, by 1922, GDP was rising and unemployment falling, plummeting to a minuscule 2.4 percent by 1923. Maybe Harding wasn't the best judge of character, but his economic program was arguably the most successful of any president in the 20th century. A "terrible" president? Absurd.
Another example of historical revisionism, progressive-style, involves Herbert Hoover. Today's students are routinely taught that Hoover was the last of the "laissez faire" presidents. Last year, progressives produced a "take back the American dream" special edition of "The Big Picture" during which the host denigrated the alleged laissez faire trio of Harding, Coolidge, and Hoover, contrasting them with the great economic savior, Franklin Roosevelt. Part of the error is simple partisan bias - i.e., Republicans are bad and Democrats are good - but party aside, Hoover should have been lumped with FDR, not with his two predecessors. Harding and Coolidge truly were sympathetic to free markets. Hoover was not. He disdained and distrusted the laissez faire philosophy, and was almost as much of an interventionist as Roosevelt. Indeed, FDR's own advisers recorded in their memoirs that the true originator of the New Deal was Hoover. It is political propaganda, not historical verisimilitude, which paints Hoover as a clone of his predecessors rather than of his successor.
The lesson is clear: If those who understood and approved of Reagan's policies fail to reiterate Reagan's beliefs and policies, Reagan's progressive opponents will distort his history, and he eventually will be as misunderstood as Harding and Hoover are today. (For the record, I did not vote for Reagan either time - although I would have if I had thought that he needed my vote to spare us from the incompetent Carter or the robotically statist Mondale - because Reagan was too big a spender for my taste. How much of that was due to Reagan himself, how much to Tip O'Neill's Democratic House, and how much to the popular thought of the day, is another debate.)
The progressive war against historical accuracy should concern all American citizens. When those in power mutilate truth, the welfare of the people is at risk. Think of what all the illiberal movements - whether fascist, socialist, Communist, environmentalist, or progressive - have in common. All exalt state power at the expense of the individual rights of liberty, property, and ultimately life itself. In the effort to attain that power, they also commit depredations on truth, as George Orwell warned in 1984. Watch to see how often Team Obama employs the Big Lie technique in attempting to revise Reagan's record.
The Bible says, "Ye shall know the truth, and the truth shall make you free." A corollary would be that if we, the people, do not know the truth, there's a good chance we won't be free. Whether we agree or disagree with what Ronald Reagan did, we shouldn't let anyone lie about it. Falsehood is the enemy of human progress.
What do television sports announcer Brent Musburger, world-class golfer Phil Mickelson, and yours truly have in common? We've all had pointed encounters with political correctness - the efforts by zealots on the left to discomfit and intimidate, if not censor and silence, those who utter ideas that depart from their ideological orthodoxy.
Musburger drew the ire of the PC brigades during the telecast of the Alabama-Notre Dame football championship a few weeks ago. His offense? He dared to call Miss Alabama, a friend of the Alabama quarterback who was being shown to millions of viewers in a close-up camera shot, a "lovely lady," following it up with a corny comment about how it seems that quarterbacks "get all the good-looking women."
It is positively weird that the self-anointed, PC-language police remain silent about the vulgar crudities and disrespectful references to women as "hot chicks" or "babes" on primetime television, and then go ballistic over a few innocuous words. Had Musburger described Miss Alabama lewdly, lecherously, or in crude terms comparable to the customary swill on television, then a rebuke would have been appropriate, but what is so objectionable about the respectful compliment "lovely" lady?
Perhaps the PC crowd is protesting nature for being cruelly unfair, because some people are more handsome and attractive than others, and so they denounced Musburger for committing the sin of anti-egalitarian heresy by calling attention to humans' individual differences? Or could it be that the presumed fault here is heterosexuality - that for a man to say aloud that a woman is lovely is an atavistic instinct appropriate for Neanderthal man, but disgraceful in a modern male?
Another example of the obnoxious aggressiveness of the PC mob was the mini-firestorm that erupted when one of America's top golfers, Phil Mickelson, mentioned that he was thinking of moving out of California due to the increasingly heavy tax burden there. This should have been an uncontroversial statement. After all, it's a time-honored tradition for Americans to grouse about their taxes, and lots of people already have fled California's high taxes. (Indeed, when someone asked Tiger Woods about Mickelson's remarks, Tiger said he understood why Mickelson might relocate to a low-tax state, because Tiger himself already had done so.)
Alas, Mickelson wasn't aware that in a politically correct world, rich people aren't supposed to complain about taxes. According to the PC-speech police, it's fine for a Warren Buffett to state that taxes on the rich should rise, but unacceptable for Mickelson or other rich Americans to express the opposite opinion. Even one of Forbes.com's bloggers scolded Mickelson, asserting that, because he earns millions of dollars annually, he has no business stating his dislike of the fact that Big Government perennially takes millions of his earnings and is coming after more. The implicit message: "Shut up, Phil, you're lucky the government isn't taking it all."
My own brush with political correctness is not as public as what Musburger and Mickelson were subjected to. In that way, it actually was more insidious. Before he would publish an article I wrote about the weaknesses of the manmade global warming theory, the editor of a major national newspaper said he had to ask me if I ever had received compensation from a fossil-fuel company.
The answer, in my case, is "no," but the very question is an insult, and it shows how political correctness already has infiltrated the mainstream media. The question insinuates that anyone who has received money from an oil company is venal and untrustworthy. When I asked the editor if he was required to ask pro-global warming writers whether they have received government funding, the answer was "no." This is a rather peculiar double standard, since government has poured vastly more money into the climate change issue than have energy companies. The PC notion that anyone whose funding comes from government is immune from conflicts of interest and is unbiased is logically ludicrous and brazenly bigoted.
The implications of what Musburger, Mickelson, and I have experienced are plain. As the left aggressively pursues its economic, political, and cultural agenda, they are eager to denounce, discredit, hound, harass, vilify, abuse, and make life difficult for anyone who dares to contradict their catechism. And if we object to this treatment, we will be accused of incivility, intolerance, partisanship, and ideological rigidity. Such is the game plan of the peevish scolds of political correctness.
An oft-quoted adage is, "You are entitled to your own opinion, but you are not entitled to your own facts." A corollary to this is that you can't make your reality, and the laws of the universe won't change because you want them to. What's the point of me even writing such an obvious, even banal, truism? It's the fact that various ideologues, reformers, revolutionaries, utopians, and other political fanatics persist in the belief that our social problems are the fault of a lack of will, and that if we just insist on something vehemently enough, nothing can prevent the desired improvements from coming to pass. This belief is a dangerous, and often destructive, delusion.
An incident that the late Alexander Solzhenitsyn recounted in The Gulag Archipelago illustrates the tragic consequences of allowing ideological zealotry, hubris, and political fanaticism to lead one to deny and defy reality and the laws of the universe. Soviet officials wanted to transport larger loads of steel by railroad. They told some railroad engineers what they wanted to do, expecting the engineers to make it happen. When the engineers explained that the request was impossible because the heavier loads would exceed the capacity of the tracks and cause them to break down, the party officials had the engineers shot as saboteurs of progress. They then began to ship heavier, and, as the engineers had warned them, the tracks indeed broke down. The Communist Party had the power of life and death over Soviet citizens, but they were powerless to revise or repeal the laws of physics or the principles of engineering.
The progressives in Washington seem infected with zeal comparable to that which Solzhenitsyn described. These flights from reality manifest themselves in a variety of policy initiatives.
Take, for, example, the "reasoning" employed by the left when they pushed Obamacare through Congress nearly three years ago: Then-Speaker of the House Nancy Pelosi extolled the marvels of this new legislation that would, she believed, be of universal benefit by putting "a cap on your [health-care] costs, but no cap on your [health-care] benefits." Anybody with an elementary grasp of economics recognizes the Pelosi promise as a pipedream, and that the actual consequence of such a policy will be pronounced shortages necessitating rationing of health care as opposed to unlimited consumption thereof.
Another example of ideological zeal resulting in an absurd policy is Congress' astounding constellation of policies pertaining to cellulosic ethanol. Having decreed that energy companies had to buy stipulated quantities of cellulosic ethanol, it turned out that the inherently uneconomic realities of the production process for such ethanol were such that companies decided not to produce it so that they wouldn't suffer losses. This hasn't stopped Congress from madly insisting that energy companies pay fines for not purchasing as much American-produced cellulosic ethanol as Congress had mandated - even though the reason they aren't buying it is because it doesn't exist.
I can't help but think of such depressingly irrational behavior this week as I think of another four years with Barack Obama in the White House. Here is a man who pleases the crowd by using his inaugural address to pay lip service to working in a bipartisan fashion to reduce federal budget deficits, even after already having told Republicans that spending cuts are completely off the negotiating table. The president talks about creating a bright future for our posterity, even as he mortgages that future by amassing crushing debts that amount to tax increases on our children.
There are other signs that Obama, in his zeal to transform America, seems to believe that he and his fellow progressives can use government to alter the way the world works. Examples: He now speaks of gay marriage as essentially indistinguishable from heterosexual marriage (a quite different proposition from impartially protecting the rights of all Americans), thereby ignoring the span of human history and inescapable biological realities; proceeding as though taking more property from productive Americans and giving more to the unproductive is an economically or socially sustainable policy, which makes one wonder if Obama believes that he can reprogram human nature to produce "the new man" that the Soviets failed to mold; the belief that overall safety can be enhanced by more extensive gun regulations, despite abundant historical evidence to the contrary; feeding the notion that human beings can control earth's climate, which is perhaps today's ultimate utopian conceit.
This is not to say that Barack Obama is literally as oblivious to reality as the Soviet officials mentioned above, or even Nancy Pelosi. Indeed, there is a grimmer, more chilling possibility here: Obama is no dummy. He may be well aware that his policies will impoverish our future, and yet he will pursue them anyway, knowing the damage he is causing. You can decide for yourself what his motivation is. Maybe Obama's unsustainable deficit spending really is due to misguided idealism, but it also could be due to a desire to wreak revenge on America for past sins, imaginary and real (the Dinesh D'Souza theory); his adherence to a Marxian ideology; and the fact that he is a hard-core member of the "mean green" club that believes that Americans are guilty of having committed the sin of affluence; or maybe it's just a ruthless application of the Curley strategy designed to benefit him politically while inflicting heavy economic costs on the people.
Is it possible that Obama designed his inaugural address rhetoric to make the left feel good, and that his actual intention is to govern closer to the center? From my perspective, indulging in such a fanciful belief could be as delusional as the leftist fanaticism of believing that one can alter reality through force of will. I'd love to be proven wrong, but leopards don't change their spots. Obama is who he is and believes what he believes, and I think that we are in for four years of hectoring, pounding, executive orders, end runs around Congress, increasingly heavy-handed regulatory control, and more suppression of liberty in the name of some mythical "justice." *
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
Forecasts for sluggish economic growth are common. Investment superstars and gurus such as Bill Gross of PIMCO and Jeremy Grantham of GMO, and researchers such as Dr. Robert Gordon of the National Bureau of Economic Research, all have predicted anemic growth for the next several years. With the caveat that when too many "expert" opinions agree, the resulting consensus can be spectacularly wrong, I agree with the pessimists.
The American economy is stuck in the molasses of unfathomably colossal debt. Team Obama will block any attempt to curtail the federal government's chronic overspending or to reform its unsustainable growth in entitlements. President Obama's regulators are ramping up costly, suffocating rules on massive scale. A compliant Federal Reserve continues to enable the destructive over-spending by further debasing the currency by aggressively increasing its supply. And don't be fooled by modest rises in the Consumer Price Index; the Federal Reserve Note's purchasing power is shrinking.
Looking ahead, I see no end to ZIRP - the Fed's zero interest rate policy. Besides depriving savers of an opportunity to earn a measurable return on their savings, I suspect that the Fed will do everything in its power to keep interest rates artificially low, whether that power has been explicitly authorized by enabling legislation or not. The Fed simply cannot permit interest rates to rise several percentage points above current rates, because the ensuing cost of servicing the federal debt would consume so much of Uncle Sam's tax revenue that the Fed would have to undertake a quantum increase in quantitative easing (raising it from a river to a flood of new monetary units) to provide enough liquidity to fund the government.
The continuation of ZIRP serves to keep large economic zombies - inefficient, dead-on-their-feet banks, corporations, and, of course, the grand-daddy of them all, Big Government - on life support. For healthy economic growth rates to return, these zombies need to be allowed to expire - that means bankruptcy for the private-sector zombies, and a massive down-sizing, if not the outright dissolution, of the federal leviathan - so that valuable economic resources can be reallocated to more rational, wealth-producing ventures.
If market forces were allowed to follow their natural course, the moribund, rickety structure of mistakes, mal-investments, and misguided government planning would be euthanized, clearing the way for renewed vigorous and sustainable economic progress. Both for ideological reasons (i.e., the progressives' preference for government planning over free markets) and pragmatic reasons (i.e., no politician, Democrat or Republican, wants to be blamed for a wrenching-but-healing reallocation of resources to their most valued economic uses) the powers-that-be will do everything possible to thwart market forces and preserve the sluggish status quo.
My suspicion is that we will take the route that Japan has been following since 1990. The Japanese political class has averted a full-fledged deflationary cleansing of their economy by engaging in endless rounds of Keynesian fiscal stimulus and loose monetary policy. One might expect near-zero interest rates to lead to an economic boom (i.e., bubble). Indeed, that is possible, but don't discount the possibility that Team Obama and Federal Reserve Chairman Ben Bernanke will, like their Japanese counterparts, manage to keep a lid on economic activity as they strive to prevent a surge in economic activity that would cause interest rates to rise significantly and unleash a government-insolvency-followed-by-central-bank-hyperinflation sequence.
Team Obama's army of regulators is prepared to restrict and subdue vigorous private-sector growth so that it won't compete with public-sector spending and push up interest rates. The financial regulators in particular, now that Dodd-Frank has given them great power to ration credit and direct it toward the public sector, will be able to deprive the private sector of the fuel it needs to pick up speed and push up interest rates. Indeed, Dodd-Frank, which does so much to centralize control of credit in the state, may well be Team Obama's greatest success in implementing Marx's 10-point platform.
I sure hope I'm wrong, folks, but it looks to me like 2013 will see a progressive Japanization of the American economy. Bernanke will persist in his ZIRP policy to prop up politically connected economic zombies, and official Washington will do everything possible to prevent a needed economic restructuring from taking place. The good news is that, against this unpromising backdrop, American ingenuity and creativity will find ways to prosper-but it won't be easy. Good luck.
We live in radical times. How radical? Over $16 trillion of officially acknowledged debt - multiples of that if you count unfunded federal liabilities; a president with a Marxist-Leninist economic agenda; a Senate majority leader who refuses to pass a budget and will do his best to sabotage any meaningful restructuring of fiscally unsound federal entitlements, etc.
The Republicans don't know how to respond. Mitt Romney is a good man who probably would have made a great president in the 1950s, competently managing the executive branch at a time of balanced budgets. By temperament and philosophy, though, he was too moderate for the radical challenges facing us today. He had no radical plan to break our addiction to the deficit spending and entitlements that are bankrupting us.
Some thought Romney's selection of Paul Ryan hinted at radicalism, but the much-ballyhooed "Ryan Plan" wasn't radical. On the contrary, it was designed to shore up the entitlement state and still would add trillions more to the national debt. Ryan's plan to gradually reduce deficits over the course of a decade might have sounded reasonable on paper, but does anybody think that the American public has the self-discipline to adhere faithfully to a fiscal diet for 10 straight years? Dream on!
For decades, the Republicans have let the Democrats set the agenda, expanding the power and scope of the federal government and spending far beyond federal revenues. The Republicans have been reactive, agreeing to the basic premises of the transfer society while generally trying to slow the rate of growth in spending (although Nixon and Bush II took the line of least political resistance and spent as merrily as any Democrat not named Obama). The result is that Republicans are too stingy for liberals and too profligate for true conservatives and libertarians.
A truly radical alternative to Obama's Big Government radicalism might involve slashing over a trillion dollars of federal spending per year. Too radical? Then try these on for size:
Zero out of the advertising and grant-giving lines in the budget of every federal department and agency. Currently, they use our tax dollars to promote themselves and to give grants to special interest groups who then sue the government in the attempt to increase the regulatory chains they put on us.
Reduce federal employees' compensation packages to the same levels as their private-sector counterparts receive.
Liquidate one of the cabinet-level departments. Put it all on the auction block in a Thatcher-style privatization, and whatever useless bureaucratic pieces don't receive a bid from the private sector would simply be shut down. Taxpayers would quickly learn that the sun would still rise in the morning and the world could get along fine with less government.
Abolish OSHA - the Occupational Safety and Health Administration. Considering the epidemic explosion of Americans going onto permanent disability in the last few years, OSHA should be disbanded on the grounds of rank incompetence. Either that, or somebody needs to put the kibosh on the disability scam, because the American taxpayer shouldn't have to pay for both a safety bureaucracy and record numbers of workers on disability.
Here's a big one: Privatize Social Security. Not in the timid way clumsily proposed by George W. Bush, but if the government is going to remain in the pension business at all (a dubious proposition), set up a private account for each worker with his or her own name on it. Don't ever let contributions to workers enter the U.S. Treasury. Pay off accrued benefits with a combination of cash and tradable shares in U.S. government assets (e.g., land, oil, and gas leasing properties).
If Speaker of the House Boehner had a single radical bone in his body, he would at least argue that any tax increase should only be passed with an expiration date. Why should only tax cuts be scheduled ahead of time to expire, but not tax hikes? Why can't Boehner hold his ground against raising the tax rate on millionaires? Why can't he just say, A) I don't believe in discrimination, and B) They are Americans, too, and their property rights are just as important as any other American's - and just as entitled to the equal protection of the law under the 5th and 14th Amendments.
These are radical times, but there is only one party in Washington playing a radical game with radical rules, and that's why they are prevailing.
The passing of a right-to-work law in Michigan is a hugely significant development. In my mind, Michigan would have been the last state to pass legislation removing the requirement for workers to join a union as a condition of employment in unionized businesses.
As welcome as this new law is for those of us who recognize how economically pernicious and ethically debased compulsory union membership is, the reporting of the story has been marred by sloppy, inaccurate usage of a key word: "rights." Here's a typical example from Reuters: "Michigan weakens union rights in home of auto industry."
Americans greatly value rights. It's in our DNA. However, no rights - neither unions' nor anyone else's - have been lost by passage of this right-to-work law. What has changed is that unions can no longer compel a worker to pay dues to them as a condition of employment. That was never a "right," but a power - a power that had been bestowed on unions by prior legislation conferring upon them a privilege. Unions in Michigan have lost a privilege, not a right.
In fact, rather than infringing on anyone's rights, Michigan's right-to-work law restores a lost right to workers - the right of voluntary association. Our Declaration of Independence and the Constitution's 5th Amendment name liberty as an unalienable right; now workers in Michigan have the liberty to choose whether to join or not join a group as each one's conscience dictates.
American labor law has been out of whack for the last century. Unions have been given special powers and privileges that have trampled on the rights of their fellow citizens. Consider:
Do businesses have a right to block you from purchasing from their competitors? Do Kellogg employees have a right to stand in the cereal aisle of a grocery store and interfere with your right to buy a General Mills cereal? Of course not. Then what gives unions the "right" to prevent an employer from choosing to hire someone who doesn't happen to be a union member?
Unions behave monopolistically, suppressing competition. It's time to amend the Clayton Antitrust Act of 1914 by removing its explicit exemption for unions. What's sauce for the goose is sauce for the gander. Unions, like businesses, should not enjoy the privilege of being insulated from competition. Workers should be free either to refrain from joining a union or to join a competing union that they believe will better serve their interests.
Should anyone have the power to tell an American that he can't move to a particular state? That would violate the citizen's rights. Then what right does the National Labor Relations Board have to tell a private corporation that they can't move to a different state? Why does the NLRB have the power to infringe on the First Amendment right of free speech by forbidding employers from communicating key financial information to workers as an "unfair labor practice"? Why does the NLRB operate a separate, special judicial process outside of the laws and courts that govern non-union Americans and hold union members to a lower standard of accountability for extortion, racketeering, and acts of vandalism and violence? For all Americans to have equal rights, we must abolish the NLRB by repealing the 1935 Wagner Act that created it.
What American has a "right" to violate the life, liberty, or property of other Americans? Courtesy of the 5-4 Enmons Supreme Court decision in 1973, unions have enjoyed special privileges allowing them to inflict bodily harm, to prevent people from entering workplaces, and to destroy private property if it is "in the pursuit of legitimate union goals." Such violations of the rights of others can never be a "right" of unions or anyone else. To restore justice ("justice" means "equal protection of everyone's rights," not "we get what we want," as the unions seem to think) Congress should pass the Freedom from Union Violence Act.
Michigan's right-to-work law is an important step in restoring the unalienable rights of every American. We still have a long way to go, but If Big Labor's unjust power to infringe individual rights can be rolled back in Michigan, then there is hope that individual rights will be restored across the country.
As soon as the elections were over, a wave of commentaries extolling the virtues of compromise appeared in the press. The common theme is that it is time for Democrats and Republicans alike to end partisan gridlock - to make compromises that will shrink federal deficits without driving us off "the fiscal cliff."
That said, gridlock has its defenders. They fondly remember "the good old days" in the 1990s when divided government (Democratic White House, GOP Congress) produced a gridlock that kept spending increases relatively modest and eliminated budget deficits.
Gridlock today, however, is not as benign as it was then. Also, the 1990s constituted a very special case that cannot be replicated today.
In the 1990s, gridlock kept the spigot of federal spending stuck at a relatively slow growth rate. Today's gridlock between the Boehner-led House and Team Obama has stuck the federal spigot in the wide-open position of perennial trillion-dollar deficits.
The 1990s are an inapt comparison for another reason: That decade featured a fiscal "perfect storm" to wash away red ink: The end of the Cold War led to defense spending cuts; the welfare reform of 1996 slashed welfare expenditures and increased the number of taxpaying workers; the Roth IRA legislation of 1997 induced millions of Americans to pay taxes on their private retirement funds up front; the "Greenspan put"-fueled stock-market bubble gave Uncle Sam a windfall of capital-gains revenue. In short, the propitious confluence of events that stanched the flow of red ink in the late 1990s was a one-off phenomenon.
So, we need compromise rather than gridlock, right? But what if compromise is not a viable option either? Compromise may be what fair, reasonable, mature, and enlightened people do; it may be the democratic way, but the problem is that there are limits to compromise, dictated by the immovable truths of economic realities.
We see this at the local level in school district contract negotiations with teachers' unions. The union asks for 10 percent annual pay increases; the school board offers 2 percent; they compromise at 6 percent. That may work for decades, but what happens when the local taxpayers go through a prolonged economic slowdown and the tax base in the district stagnates? There comes a breaking point where teacher compensation can't rise as much as it used to, if at all, and maybe even retirement benefits have to be cut back because taxpayers simply can't afford additional tax increases.
A similar dynamic plays out with the federal budget. The big spenders propose a large increase in spending (an increase above an assumed projected increase, i.e., the infamous "base line"); the opposition proposes a smaller increase; they compromise and spending continues on a relentless upward trajectory. There is a ratchet effect whereby total spending can only move in one direction: higher. But "trees don't grow to the sky," and eventually government spending produces so much accumulated debt that there isn't enough wealth to tax or borrow to finance spending, so the central bank steps in with "quantitative easing" and financial manipulations. Eventually, the debt burden and the inflation of the monetary unit proceed to the point where they threaten the financial viability of not only the government but the entire economy - the net result of a succession of well-meaning, "fair"-minded compromises.
The pickle we are in today is excruciating. In the first place, the big spenders clearly won't make any more than token compromises. President Obama came out of the election suddenly asking for tax hikes twice as large as he had requested earlier. Senate Majority Leader Harry Reid declared that Social Security was off the table. Since Reid has blown up Congress' constitutional budget-making process for several years already, we know he isn't bluffing. They are willing to drive off the fiscal cliff if necessary, because chaos and crisis provide them with the pretext for more government intervention and control, which is their ultimate goal.
If there is to be any meaningful compromise, the Republicans will be the ones who make it. Yet, if the GOP compromises by agreeing to raise taxes while not curbing runaway spending, the result will be slower economic growth and probably lower federal revenues. Nothing positive will have been accomplished and the government will continue careening toward an eventual financial crackup. We are told that reasonable people compromise, but if compromise leads to disaster, can it be a virtue?
Gridlock or compromise: Heads, Big Government wins; tails, "we, the people," lose. *
Hendrickson's View
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.
Dear Mitt,
I have awakened on November 7 to learn that your bid for the presidency was unsuccessful. In the midst of the disappointment that I share with you, I want to thank you for devoting years of your life to the wearisome task of running for president. Millions of Americans are grateful to you.
You have been one of my heroes for the past 48 years. I still recall vividly the valiant cross country race you ran at our Cranbrook Homecoming in October of 1964 - a race when you willed yourself to run faster than you ever had until, near the end, oxygen starvation set in, causing you first to stagger, then to collapse just 30 yards from the finish line. I can still see your face, ashen and contorted in pain, as you ignored the torture of the cinders on the track scraping against soft skin and began to crawl. Even though every other runner passed you, and you had nothing to gain - other than surcease of agony - from dragging yourself to the finish line, you refused to quit until you reached your goal. Your brave effort touched me deeply. That's when I learned that you were special - a man of character, commitment, heart and guts, someone who embodied the indomitable American spirit.
I also admired your exuberant joie de vivre. You loved life, and I can see that your great capacity for love found abundantly happy fulfillment in your life with your wife and sons. I also remember your friendship with Chester, our night watchman at Cranbrook. At prep school, there can be a tendency to disregard the support staff, to take them for granted like the furniture, but you reached out to that good, simple, kind, salt-of-the-earth security guard. (Just for the record, I befriended Chester, too, during my senior year, so I feel we share that bond.)
Nobody can doubt your love for our country. Whereas your opponent concentrated on lining up support from key special interest groups, your focus was more akin to the patriotic statesman than the opportunistic politician - it was so clear that you wanted to get our country back on track. As we can now see, that wasn't to be.
What occurs to me is that, by losing the election, you might have been spared a cruel fate. If elected, you would have inherited an economic mess. The problem isn't just the looming fiscal cliff and debt ceiling, but the overall financial situation of our government is clearly unsustainable and nonviable. Entitlement spending has mushroomed so that it - combined with interest on the national debt - now consumes virtually every dollar of tax revenue. That means that the various departments and agencies that we normally think of as "the federal government," from the Pentagon through the EPA and everything in between, is being run on borrowed (or "quantitatively eased") dollars. No president could trim entitlement spending or shut down enough of the government to stanch the flood of red ink. Government indebtedness will continue to balloon and our currency will continue to be debauched, and it would have been impossible for you, given the prevalent attitudes of the people, to halt that insidious process. You might have tried by firing Ben Bernanke and replacing him with someone who would stop quantitative easing, but that would have caused interest rates to rise and the federal government to become insolvent, triggering a crisis that would have made you a vilified president.
The presidency at this juncture in history strikes me as an impossible job. Both domestic and foreign policy seem to be Gordian knots that no mere mortal can cut. I know, though, that you would have valiantly been willing to give your all in the attempt to help your country at this difficult time. Your path as president would have been as excruciating as those last 30 yards of that cross country race you ran so long ago, but you would have addressed the challenge with the same determination and commitment as you did then. Now those awful burdens you would have been willing to shoulder fall on your opponent, and we'll see what kind of shoulders he has.
You gave years of your life for the chance to be of service to your country, Mitt, and you lived by our school motto, "Aim High." You did us proud.
Can Americans holding different opinions on political issues even talk to each other anymore? Sometimes it seems like liberals and conservatives, statists and libertarians, Democrats and Republicans inhabit parallel universes, each with its own "facts" or perception of reality. Examples of "the great divide" abound.
Recently, my colleague Paul Kengor wrote an article citing several examples of how teachers and professors in America present Communism in the classroom. One would think that we could at least agree that a political ideology that resulted in well over 100 million deaths in the 20th century is as repulsive as Nazism, but that isn't the case. Many teachers prefer to ignore the genocide and extol Communism's allegedly positive attributes.
Here are some other, less startling, examples:
* People on the left insist that voter ID laws are vicious plots to disenfranchise racial minorities. People on the right perceive them as prudent protections against fraudulent voting.
* Conservatives thought (for a while) that our invasion of Iraq was a worthwhile military adventure. Liberals thought (for a while) that Afghanistan was "the good war."
* Republicans want to balance the budget largely by cutting spending, not tax increases, whereas Democrats are gung-ho for more taxes.
American politics has spiraled into a Hegelian netherworld wherein the thesis and antithesis forever produce a synthesis that both sides find unsatisfactory.
As shrill and contentious as the partisan divide has become, the great divide in the American polity runs far deeper than the divide between the two major parties. Mitt Romney's problematical comment about the 47 percent notwithstanding, our polity seems to be coalescing into the two classes, or warring factions, called the "taxpayers" and "tax consumers." The champions of the tax consumers, such as President Obama, are seeking to achieve a permanent political majority. One wonders if they know what happened to the Roman Empire when the tax consumers prevailed.
The great divide that plagues America today was vividly described by Ayn Rand in her prescient 1957 opus, Atlas Shrugged. In Rand's dystopian novel, the American polity and society were divided between the producers who produced wealth, and the looters who parasitically lived off of the producers. As the looters extended their democratic majority and solidified political control, they progressively [double entendre] suffocated and stifled the productive members of society upon whom the economic well-being of all depended. The inevitable result, of course, was the decline and fall of that corrupt system.
At the most fundamental level, today's great divide is not political or even ideological, but moral. What is raising the political temperature, ripping our society apart, and grinding down our economy is the insidious belief that it is morally justified for the government to grant anyone the spurious privilege (erroneously called a "right") to live at the expense of others. Most Americans still acknowledge that it is morally wrong to enter their neighbor's house and take some of his property, but far too many have been seduced or brainwashed by the toxic notion that as long as the government does the taking on our behalf, then such taking is legitimate, even laudable.
This is what I call "the democratic temptation" - the debased belief that if a democratic majority takes wealth from A to give to B, then the taking is just and legitimate. There is nothing sacred about democracy. Democratic majorities are capable of great evil (e.g., the deaths of noble Socrates and the innocent Jesus) and when they use their numerical superiority to gang up on others and redistribute property, that obnoxious practice is nothing more than what Frederic Bastiat so aptly termed "legal plunder."
Social harmony cannot survive when the members of a society make war on the property of others. The democratic temptation divides us into economic enemies, tearing our society apart, and we are all poorer-economically, socially, and morally-for having succumbed to it.
The opening line of the Beatles' iconic "Sergeant Pepper's" album is echoing in my thought: "It was 20 years ago today . . ." Well, not quite to the day, but 20 years ago I published an article titled, "$4 Trillion and Counting." In it, I despaired at the rapid increase in the national debt from its first-ever crossing of the $1 trillion mark during the Reagan presidency to four times that gargantuan amount in only a decade.
Today, a mere two decades later, we have quadrupled the national debt again, to $16 trillion. (That figure represents the official national debt, but if you add the many "off-budget" items and all the liabilities that are conveniently omitted from government "accounting," then it's multiples of the official number.)
Who is to blame?
Let's start by picking the low-hanging fruit: "progressives," a.k.a, Democrats. The Dems always want more federal spending, higher taxes, more government. Indeed, there is no major area of economic activity over which they want less control. Whether it's food, energy, housing, health care, retirement, finance, transportation, education, etc., they always want to expand the government's scope and power.
The Democrats have led the way toward bigger government. They always succeed in getting Republicans to blink every time the debt ceiling is reached, because whereas Republicans are ambivalent and divided about Big Government, progressives are united and utterly committed to it. They do not vacillate; the Republicans do, and so they buckle.
Surely, though, now that we are racing toward a jarring fiscal cliff, the government's credit rating is at risk, and major entitlement programs are on a collision course with insolvency, Democrats will compromise to fix these problems before it's too late, won't they?
The short answer, dear reader, is "No." On the contrary, the threat of insolvency is something that progressives welcome. They view it as a means to an end.
The key to understanding this dynamic is to recognize what progressives want. They want government control over economic matters, and so they adopt whatever strategies will further that goal. We saw this strategy in action with Fannie Mae and Freddie Mac. When the two mortgage giants were about to implode from insolvency, Congress simply nationalized them, making the taxpayers responsible for their financial obligations.
Do you think Barney Frank, Nancy Pelosi, and the other "progressives" were sad about that pair of nationalizations? It is more likely that they popped open champagne bottles and celebrated, for now they had achieved government control over the gigantic home mortgage business.
What do you suppose Democrats will propose on the day that funds run dry for Social Security or Medicare? They surely won't say, "Sorry, folks we're broke; end of program." Instead, in the case of Social Security, they will try to use the emergency as the pretext to nationalize private retirement accounts a la Argentina (they've already held congressional hearings about taking this step); in the case of Medicare, they will do what many of them already have stated they want to do - nationalize it.
It doesn't even matter to the Dems if the whole government goes bankrupt. Look at Senate Majority Leader Harry Reid's obstinate (and criminal) refusal to let the Senate vote on a federal budget. That indicates that the Dems have gone "all in" on their diabolical "bankruptcy as the road to nationalization" strategy. They will tell a scared public that the government will continue to take care of them, the Republicans will be afraid to oppose "a strong government response" to the fiscal emergency, and the government will take over large swaths of the private sector.
Now for some bipartisanship: The Republicans must share in the blame for the government's fiscal woes. Other than Ron Paul, what Republican has refused to vote for expansions of government into numerous areas not enumerated in the Constitution? Yes, Republicans generally have wanted to grow government at a slower rate than the Democrats, but they still have supported its continued growth. The most "conservative" long-term fiscal plan that has gained any traction in the Republican Party has been Rep. Paul Ryan's plan that would increase the national debt by "only" $4 or $5 trillion over the next decade. If that is the most "radical" "right-wing" "anti-government" plan on the table, then clearly the flood of red ink will continue to swell (that is, until the Federal Reserve Note tanks and the system cracks up).
Having blamed both Democrats and Republicans for our impending national bankruptcy, is there anyone else left to blame? Yes, indeed, now we come to the principal culprits: "We, the people." It's very convenient to blame politicians for our fiscal wreck, but the bottom line is that a lot of Americans want the government to do things for them, and so they elect big spenders. Perhaps Joseph de Maistre (1753-1821) was correct when he wrote, "Every country has the government it deserves."
The reason our government is broke is staring most Americans in the face whenever they look into a mirror. Too many of us have acquiesced to, if not agitated for, a corrupt political system. As I wrote in that article 20 years ago:
Americans must return to the traditional principle of respecting the property of others, rather than seek to obtain a portion of it through government. . . . Until then, 4 [now 16] trillion dollars is just another milestone on the way to economic ruin.
Whom should we blame for the nightmare of runaway spending and debt? The majority of Americans in both major political parties.
Perhaps you saw the recent "Obama phone" video clip that has gone viral. In it, an Ohio woman picketing a Romney campaign event proclaimed her emphatic support for Obama's reelection. Why? Because of the "Obama phone" the president had given her and some of her friends.
That short, mundane, trivial, video clip is quite instructive:
First, it provides an example of how ill-informed many voters are. The free cell phones about which the woman enthused were the result of policies that predated the Obama presidency. That program was another "mess" inherited from Obama's old pal, George W. Bush. The ignorance that Jefferson believed would pose the greatest threat to the survival of liberty was on prominent display in the video.
Second, it indicates how little some citizens value their vote. Mistakenly thinking that she owes her free phone to the generosity of Barack Obama, the grateful woman - sounding like a child who delights in the box of cereal that includes a free toy - will vote for the incumbent in hopeful expectation of another free prize.
Third, the reaction to the video displayed the left's cynical manipulation of the topic of race for political gain. Their entirely predictable knee-jerk reaction was to denounce the video as "racist," because the woman it captures in a less-than-flattering light happens to be black.
The race of the woman is irrelevant. The video reminds me of an incident that happened early in Bill Clinton's presidency. The Clintons had profited handsomely from an allegedly shady real estate deal that became known as "the Whitewater scandal." At a public presidential appearance, a woman (white, as I recall) called out from a crowd, "Don't you worry about Whitewater, Bill, just keep our welfare checks coming!"
The significance of both of these little incidents is that the two women are typical of millions of Americans regardless of race. They don't care about any of the larger issues facing the country (if, indeed, they even know what those issues are); they don't even care if the president of the United States is a lawbreaker who has ripped off the American taxpayer - as long as the president will give them their little piece of something-for-nothing.
So, are the barbarians at the gate? It appears that they are within the gates. Are there enough Americans (even if not literally 47 percent) hell-bent on getting something for nothing such that the Republic is doomed? Perhaps. But it is important to realize that the millions of grasping, pathetic, demoralized Americans who think that "the government" is a never-ending cornucopia of goodies and that the president is Santa Claus are not the primary cause of the problem.
How can we really blame a poorly educated woman for wanting a free cell phone when lobbyists secure seven-, eight-, nine-, and ten-figure favors from their cronies in government? Why shouldn't they get a small piece of the action, when their own congressmen magically become millionaires by getting a tiny slice of the trillions of dollars of loot they parcel out each year? Moreover, who can blame poorly educated, ignorant people for believing that they are entitled to government largess when they have been told this repeatedly by those who should know better?
Indeed, the real culprits here aren't the poor people receiving government handouts, but their enablers - the thought leaders who have propagated the notion that political taking is not just acceptable, but a morally superior way to prosper; economic service to one's fellow man a lesser path to prosperity. These thought leaders include the educators who teach collectivist ethics, the writers and journalists who scorn property rights and assert that government must redistribute wealth in the name of "social justice," and the clergymen who confuse socialism with Christianity. All of these highly educated (which is different from "well educated") individuals provide the intellectual justification that enables demagogic politicians to pander to the poor and lead them down the seductive path of dependency. The manifold pied pipers of this ethical plague, not the mice they mislead, bear the primary responsibility for the culture of thievery that is corroding the fabric of our Republic.
Ralph Waldo Emerson once wrote, "A nation never falls but by suicide." If we don't find a way to extirpate the moral rot that is corrupting us from within, future historians may some day write of the American experiment that we ultimately committed suicide.
Earlier this year, President Obama has told us, "we can't just drill our way to lower gas prices." In one sense, he is correct: If he is re-elected, his administration will not allow oil companies to do the drilling that would reduce the price of gasoline. In that case, "we can't" means "we won't let you."
Absent political interference, of course we can drill our way to lower prices. We've already done it with natural gas. The price of natural gas is lower now than it has been in years, because drilling has increased the supply so dramatically. Could the same thing happen with oil and gasoline prices? Absolutely.
Over a year ago, I published an article titled, "The Global Energy Superpower," in which I included links showing the vast extent of U.S. reserves of fossil fuels. It turns out that the United States is not only "the Saudi Arabia of coal," as has been accepted for decades, but in light of recent developments, we have a chance to be the Saudi Arabia of natural gas and even the Saudi Arabia of oil.
That was the assessment a year-and-a-half ago. Since then, the Congressional Research Service has tabulated the totals and acknowledges that the United States currently has the largest known fossil fuel reserves in terms of total oil equivalent - almost three times as much as Saudi Arabia - and it seems that every month the news gets better: The reserves continue to swell.
The benefits to our country of allowing our superabundant energy resources to be developed are manifold. Let me try to explain them in terms that show why Democrats as well as Republicans should abandon Obama's anti-drilling policies:
1) Increased oil production will benefit all Americans economically, but especially those with lower incomes - the ones who have taken the brunt of the pain from high fuel prices in recent years. Team Obama and others on the left who oppose domestic oil production like to claim that they care about "the little guy." Well, prove it. Let the experts tap into our immense petroleum reserves, increase supplies, and push oil prices lower.
2) The more oil we produce domestically, whether for domestic consumption or for export, the more we will reduce the merchandise trade deficit. For years, politicians on the left and right have bemoaned our enormous trade deficit. In some years, imports of oil have accounted for more than half of that deficit, so one way to take a hammer to the trade deficit would be to crank up domestic production.
3) Cranking up domestic oil production would crank down the unemployment rate. After years of unemployment rates above 8 percent and masses of workers dropping out of the labor market, a boom in the oil patch would add large numbers of desperately needed, high-paying jobs. The true friends of American workers would be whichever president and Congress would reverse the current policy of suppressing job creation in the energy industry.
4) Starting to provide for our own energy needs would show more respect for other countries and win more respect for us. It has been pathetic that the president of the United States has traveled to Saudi Arabia and implored them to increase their production while we have refused to increase our own. Liberals are uncomfortable with American exceptionalism, but isn't it a form of exceptionalism when we expect the rest of the world to produce our energy for us?
5) Increasing domestic oil production would enhance national security. The more energy we produce at home, the less vulnerable we are to disruptions in politically unstable oil-exporting countries. By increasing supply and lowering the price of oil, less money would go into the treasuries of such problematical regimes as the House of Saud - the principal funder of intolerant Wahabbism - and Venezuela's Chavez.
6) The increased domestic economic activity would generate significant revenues to the government. It makes me uncomfortable to say this, because my primary goal is to shrink government, not to find ways to divert more wealth to government control. Still, as the lesser of evils, my own preferred way of balancing the budget would be through reductions in federal spending, but the additional tax revenues resulting from increased domestic energy production would shrink the deficit in a way that would be far less damaging than raising existing tax rates.
Obama likes to rail about the allegedly "obscene" profits of oil companies. Actually, there are dozens of industries (sometimes more than 100) that earn higher profit margins than oil's 7 or 8 percent. Doesn't Obama realize that by restricting the supply, he has raised the price and probably the profits of Big Oil? If he really wants to hack away at oil profits, he should turn them loose and let them produce oil to their hearts' content. Under the resulting competitive pressures, prices would fall, consumers would rejoice, and oil company profits would be squeezed.
Superabundant fossil fuels have the potential to help snap us out of our economic doldrums and invigorate the economy. What we need is a change of energy policy. It's time to reject Team Obama's central planning. The Obama policy has been to impede, restrict, harass, and attack producers of fossil fuels, while heavily subsidizing uneconomical renewable energies. An enlightened energy policy - one that I hope a President Romney would adopt - would be to replace government intervention with nonintervention and let the free market work. The United States would be "open for business" to energy companies, market prices would determine the economic winners and losers in that competition, and our energy woes would be alleviated. *