And Now, A Dose of Reality For Obama's Tax Plan

Well said.

Hey Government, Stay Away From Fraud!

A couple of brushes with fraud recently has me wondering about how the State has wormed itself into our thinking so that any intervention it imposes on our lives is simply accepted by the population.

The first fraud instance involves the Washington Nationals, who are facing a huge embarrassment. As reported by Sports Illustrated last week, one of the Nationals' shortstop prospects falsified his age and identity. The Nationals gave the shortstop from the Dominican Republic a $1.4 million signing bonus in 2006 -- twice the amount of the next-highest bidder.

Sports Illustrated reported that the size of the prospect's bonus and the close relationship among the various people involved in the recruitment drew the attention of the FBI and Major League Baseball's department of investigations.

As I was reading the story, I wondered ... just why is the federal government involved in this case? I can certainly understand the MLB's investigators being involved -- they've got skin in the game. If you simplify this situation to the basics, the prospect (whoever he is) violated the terms of his contract. At this point, responsibility for proving the facts of the dispute should -- in a world where the State hasn't seeped into every crevice of our lives -- fall to the aggrieved party (who could then either investigate the fraud, or assign an agent for the investigation). A judge would rule if the contract was, indeed, violated and issue compensatory redress.

Who do you think is more interested in locating the stolen money, and who is more interested in putting someone in jail? (Do you think the Nationals are more interested in recovering the bonus, or in seeing the guilty parties punished with jail time?)

One could charge that individual parties may not have the economic resources to hire investigators to resolve contract violations and, therefore, that justifies our enormous tax burden for federal, state, county, city, etc., officials to investigate fraud. To that claim, I say there is a free-market solution already operating: insurance companies, who are already guaranteeing many contracts, and would expand their service offerings accordingly.

The second case of fraud was a little closer to home: me. Last week, I was the victim of identity theft -- somehow, someone obtained my social security number and secured a state identification listing my name, address, and social security number -- with his picture. He was able to open charge accounts at multiple Home Depot branches, and walked away with over $4,000 in merchandise. (I have since found out that the impersonator attempted to open charge accounts at least eight different stores.)

I was notified by Citi, the bank that is Home Depot's financing partner. The person who contacted me (on a Sunday) was extremely helpful and informative about the steps I needed to take to lock down my credit file to prevent future theft by the impersonator. She also informed me that Citi's Fraud Investigation Unit would be pursuing the impersonator to recover the stolen material, and directed me to contact Citi's Identity Theft Solutions department when it opened the next day. Monday morning, I contacted the Identity Theft Solutions department; the Citi representative coordinated a teleconference with one of the national credit-reporting agencies, suggested actions I could take to obtain free credit reports (due to the fraud), and indicated she would follow up in a few days to inform me of the case status, and to provide additional assistance, if needed.

That Sunday evening, I was also contacted by the jurisdictional county police department, who was also investigating the fraud. The officer, though very nice, was clueless about any steps I could/should take to prevent further identity fraud. She also indicated that I would probably not hear from her again, unless an arrest was made (which she admitted was doubtful).

My point with recounting these details is not to offer a peek into one of the more annoying episodes of my life, but rather to compare and contrast the differing approaches of the two investigative parties. The bank's priorities were to assure me that I would not be responsible for the stolen merchandise, to assist my efforts to protect my identity and credit, and to recover the stolen merchandise. Given their financial stake in what happened, it was in the bank's best interests to reassure and help protect me -- which, not coincidentally, would further their own interests in helping reduce future losses.

Compare with the actions of the police department. The instinctual reflex of most people to whom I have recounted this story was to wonder, "What are the police doing?" Umm ... I don't know: they didn't ask me about how my identity might have been stolen (which might've helped them locate the imperonator), and offered zero suggestions about what I could do to prevent additional credit accounts from being opened.

These cases of fraud demonstrate that the State's priorities are wrong when it comes to this type of crime. (I have not extended my analysis to other crimes.) The victim stands a much better chance of being "made whole" when the investigator has incentives to assist the aggrieved party -- rather than meting out punishment.

People instinctively feel the State should be leading the charge for the righting of wrongs. Not necessarily -- not by a long shot, because the State's primary interests (punishing the criminal with fines to the State, incarceration, etc.) are not always aligned with the victim's best interests (justice and redressing of the crime).

The brilliant Murray Rothbard captured this concept in his libertarian manifesto For A New Liberty:

Every reader of detective fiction knows that private insurance detectives are far more efficient than the police in recovering stolen property. Not only is the insurance company impelled by economics to serve the consumer — and thereby try to avoid paying benefits — but the major focus of the insurance company is very different from that of the police. The police, standing as they do for a mythical "society," are primarily interested in catching and punishing the criminal; restoring the stolen loot to the victim is strictly secondary. To the insurance company and its detectives, on the other hand, the prime concern is recovery of the loot, and apprehension and punishment of the criminal is secondary to the prime purpose of aiding the victim of crime. Here we see again the difference between a private firm impelled to serve the customer-victim of crime and the public police, which is under no such economic compulsion.

Oh, I should add -- I have much, much more faith that the bank's investigators will locate the impersonator before the police even get a whiff of him.

Yes, this is another post by a libertarian complaining about a State-dictated smoking ban. (And, totally coincidentally, The Prodigy's awesome song Breathe is playing on my iPod. They're telling me to "inhale" and "exhale" -- I'm assuming they're referring to tobacco? If I was pro smoking-bans, I'd argue that they're telling me to breathe oxygen ... way too obvious, I say.)

On February 19, the Virginia General Assembly gave final approval to a plan that prohibits smoking in most of Virginia's bars and restaurants. The bill was bitterly opposed from both sides -- bars and restaurants opposed it as too strict, while anti-smoking proponents opposed it because they felt it didn't go far enough. Looks like we have a compromise.

The libertarian argument against State-imposed smoking bans is well trod: it rests with the sanctity of property rights and voluntary exchange -- that a person is free to establish the rules of conduct -- of contract -- on his or her private property.

Yes, that includes smoking. If I own a bar, and I want smoking to be an option, then I should be free to announce that my bar is a smoking establishment. If potential customers object, then they are free to take their business to competitors. The same guideline holds true for my employees -- if they want to work for me, they agree to the terms of our employer-employee contract. (With criminal prosecution available if there is any aggression, of course.)

However, under the nanny state, Americans are not entitled to freedom of contract. And, since most people do not smoke, and many nonsmokers (including me) are disgusted by the olfactory and inaesthetic qualities of smoking, the poor smokers -- and business owners -- get short shrift.

I asked a friend how he felt about the Virginia smoking ban. He was all for it, he said, since he could now go to bars without leaving smelling like a burnt Marlboro. However -- and this is a crucial point that many people do not see -- what happens when other behaviors fall out of fashion with mainstream America, and are subsequently banned? We are already seeing this with the trans-fat bans in New York and California. Here are some potential bans that could be passed, based on the public-health "risk":

• Banning using large quantities of sugar in meal items -- desert-lovers, beware!
  
• Banning using large quanitites of fat in meal items -- french-fry lovers, beware!
  
• Banning the use of offensive perfume, to prevent causing an allergic or asthmatic reaction in customers -- Drakar-lovers, beware!
  
• Banning using large quantities of L-tryptophan in meal items, to prevent drivers from falling asleep while driving home -- turkey-lovers, beware!
  

It is important to realize that the public will never run out of special-interest groups who have their pet causes, and who will go to any lengths to advance their causes. Taken individually, the average person might not see anything wrong with limiting the quantities of trans fat or sugar in meal items, or with banning smoking. However, State's incremental cauterizing of liberties is pernicious because it is so gradual, and affects only a small portion of the population at a time.

Sure, you may not like going to restaurants that allow smoking but, if there is a market, there would be restaurants that ban smoking out of the desire to capture just that population group. What happens, however, when the State bans YOUR activity that perhaps only a small portion of the population shares? You will have no standing to insist that others defend your right to eat cookies with lots of sugar, or lots of turkey.

Therein lies the road to serfdom, indeed.

I'm Really, Really Tired of "Bipartisanship"

I find it funny that there is such increased attention placed on the "need for bipartisanship." It was a bedrock of presidential candidate Obama's campaign -- one of his biggest goals. And, of course, every progressive-thinking person touts that the way to national bliss and harmony is via "bipartisanship."

I disagree. As a matter of fact, I believe that bipartisanship is almost completely incompatible with our two-party system of government. Given that the country has coalesced around, essentially, two broad approaches (I wouldn't dare say "philosophies") about how to govern, it is inevitable that any major issue will have conflicting ideas about the "correct" plan of action.

And, by its very nature, a "bipartisan" solution means that one (or both) parties have compromised their principles -- if not totally capitulated. And, almost always, it is the minority party that had to take the "pragmatic" stance.

Of course, now that the Democrats control the White House and Congress, just about every media voice wants "bipartisanship," because they know it would have to be the Republicans ceding ground to the Democrats.

In November 2008, the French economist Pascal Salin (Mises Institute profile) gave a lecture for receiving the Gary Schlarbaum Prize for lifetime achievement in liberty. During the talk, he shared his perspective about believing in your principles, and also learning from others:

This gradual approach led me to a conviction: one has to be tolerant with people, not tolerant with ideas. Most people have not had the privilege of being confronted with right ideas; they have to discover them and there are several possible ways to make such a discovery. This is why one has to be tolerant with persons and accept that they may have different views or, why not, a tiny bit of truth. But, whenever you have strong convictions, you must not be tolerant in the sense that you must not accept any compromise of your beliefs.

Why is this discussion about the false promise of bipartisanship occurring on a blog that strives to shed light on the overreaching abuse of the State? Because everyone knows that compromise is the lubricant of the legislature; the legislator loses little by compromising and horse-trading -- in fact, he or she is enriched by it -- but the constituency has to suffer through watered-down legislation, or legislation that it clearly does not want but is dismissively handed. (As evidenced by the overwhelming disapproval of the original banking bailout by the citizens, which apparently mean nothing to the members of Congress who voted for it, anyway.)

Because, due to the scientifically-gerrymandered districts, Representatives are largely shielded from having to suffer for their unpopular votes. Instead of compromising leading to a better quality of life for the citizenry, it is really a matter of collecting chits from fellow Representatives, to be redeemed in the interest of the following, in order of importance: 1) getting re-elected, 2) rewarded special-interest groups and financial backers, 3) strengthening fellow Representatives, 4) looking after one's constituency.

Anytime in the next two years (at least) that "bipartisanship" is mentioned, you know that a someone's principles are going to evaporate.

Armed Guards? Really?

Yesterday, I went to the Baltimore headquarters of the Centers for Medicare and Medicaid Services (CMS, for short). For those who do not know, Medicare is the government-run health insurance plan for the aged and disabled, and Medicaid is the government-run health-insurance safety net for the poor.

The ONLY activity that CMS does is pushing paper to coordinate benefits and policies for the millions of Americans who receive healthcare administered via Medicare and Medicaid. There are no dangerous vaccines tested (as at NIH), nor is there tremendously-valuable intellectual property held there (as with FDA).

You can imagine one's surprise, then, to be faced with armed guards just to enter the parking lot of the headquarters. Armed guards that insist you step out of your vehicle, open your glovebox, open the hood of your car, and generally give a decent impression of what it will be like to enter an El Al airline unannounced.

For the life of me, I cannot comprehend the need for armed sentries there. A friend mentioned that having data for millions of patients represents a potential privacy breach, which may warrant the armed guards. If so, with that logic, shouldn't doctors' offices, hospitals, and insurance companies have similar security measures? It's not as if the government has a monopoly on consideration for privacy. (Quite the contrary, as a matter of fact, as shown by this incident, this incident, and this incident -- which compromised the privacy of 26.5 million veterans and military personnel.)

I see one of the major flaws of the State -- the lack of a need for cost-benefit analysis -- as a prime reason behind this sheer waste of taxpayer funds. The beauty of the free market's profit incentive is that is leads to rational use of scarce resources: had CMS been a private-sector organization, the executives would balance the value of security worthy of a war-torn country with competing needs. (For example, better health-insurance or retirement benefits for employees, providing a subsidized cafeteria, in-house day care, to name but a few.)

But, with the government -- especially the federal government, which is under no obligation to balance its budget -- there is, really, no such concept as "scarce resources." And, with the 9/11-fostered fear of terrorism, any demand for increased security is met by government officials falling over themselves to demonstrate how committed they are to keeping America safe. (And, most especially, keeping government property and employees even safer than "regular" America.)

And that's what leads to the headquarters of the federal government's health insurance programs being "protected" by taxpayer-funded armed guards.

Just Because It's Your Money, Doesn't Mean We Have to Let You Have It

An Associated Press story, reported in the Minneapolis Star-Tribune, states that Kansas has suspended income tax refunds, among other accounting legerdemain, due to inability to pay its bills. (California is also doing the same.)

Hmmm....seems just a little bit annoying. Having a monopoly on legalized violence certainly allows the State to take action that would, literally, have "ordinary" citizens thrown into jail. (See how much lenience the IRS grants you when you claim during an audit that you were not paying your taxes because those funds were needed elsewhere.) There are always two sets of rules.

Now is as fine a time as any to share the constitutional lawyer (and anarchist) Lysander Spooner's analysis of how the State treats ordinary citizens:

"The fact is that the government, like a highwayman, says to a man: 'Your money, or your life.' And many, if not most, taxes are paid under the compulsion of that threat.

The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful.

The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a 'protector,' and that he takes men's money against their will, merely to enable him to 'protect' those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these.

Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful 'sovereign,' on account of the 'protection' he affords you. He does not keep 'protecting' you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave." [Lysander Spooner, The Constitution of No Authority, 1870]

The Republican legislature is refusing various requests by Democratic Governor Kathleen Sebelius to borrow money, in an attempt to have the governor sign a bill to enact approximately $150 million in spending cuts.

State and local governments fall victim to the vicissitudes of the economy just as much as people, corporations, and other organizations: when times are flush, spending increases. However, unlike people and firms, governments tend to increase spending and benefits largely for permanent accounts. This spending/benefits expansion is such that when the economy eventually slows down, governments must decide between shrinking the enhanced benefits, raising taxes, or securing funding in another fashion. It should come as no surprise that local and state governments lean towards the latter choice, so as not to have to make hard decisions.

Does it ever occur to the government to put aside the money for future lean times, or -- aghast! -- to actually lower their constituents' tax burdens? Never. The instinct to spend money is hard-wired.

A Frightening Time, Indeed

Well, I believe it's time to vent to someone besides my dear wife, as I read through The Washington Post every morning. (Which, of late, simply seems to be a chronicle of State abuses (told from a not disapproving viewpoint).) Most of my observations will stem from a Post entry, for no other reason than it is "my" daily newspaper, albeit ever-shrinking.

I focus on abuses of the State -- both large and small -- as a meager attempt to balance the local, state, and national governments' amply-funded resources to monitor its citizens.

I fear that the national government's recent unprecedented extension of its tentacles into every facet of Americans' lives is only the beginning; once you have started the currency printing presses, it will take monumental will power not to dip into that well again and again. And, sadly, there is not enough willpower in Congress or the Presidency to step away from their precious.