Our Enemy, The State

Healthcare Is Not A Right

2009-11-28T12:57:00.010-05:00

Healthcare is a right, not a privilege.

With Barack Obama, we will break the old gridlock and finally make health care what it should be in America—a fundamental right for all, not just an expensive privilege for the few.

- Senator Edward Kennedy (D-MA)

I think [healthcare] should be a right for every American.

- President Barack Obama

The ongoing healthcare reform debate has been quite heated, polarizing, and educational. (I bear witness to the passionate "debating," as I had a front-row seat at Representative Jim Moran's Health Care Townhall, and saw hundreds of people yelling -- and not in a good way -- as he and Howard Dean entered the auditorium. Was I one of the yellers? I plead the Fifth.)

As almost everyone will attest, there is a definite need for "health-insurance" reform (not necessarily "health" or "healthcare"). [For the sake of clarity, when I refer to "healthcare," I mean the provision of services from others to improve or manage one's health.] My contributions to the debate can be found here, here, here, and here.

I believe the supporters of the various reform bills have managed to wrest the moral high ground by shaming opponents of reform as uncaring haves, who wish the sick and unhealthy (or soon to be unhealthy) to go without needed care. Of course, that is not the case, but just raising that straw man all but eliminates the ability to have a reasonable, objective debate about the issue.

In this essay, I argue that healthcare is NOT a right; that, in fact, asserting that healthcare is a right is indistinguishable from an explicit support of slavery.

Some ground rules must be stated, such as:

What are "rights," and what rights do we possess?
What role does the government have to support, or defend, our rights?

A "Right" Defined

A "right" is not granted by anybody or any body; it is intrinsic in the nature of man. (Thus, "rights" differ from "privileges," which are permissions granted by someone.)

I believe in the theory of "natural rights," that was espoused by the British philosopher John Locke (1632-1704) in his 1689 publication The Second Treatise of Government. In his Second Treatise, Locke stated that every man was entitled to his life, liberty, and property (his "natural rights") provided that exercising those rights does not intrude on others' rights, and that the role of government in natural-rights theory is to protect those rights.

Thomas Jefferson felt Locke was the most important thinker of liberty. Not surprisingly, the Declaration of Independence -- of which Jefferson wrote the initial draft -- echoed Locke by identifying our rights and the role of government:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed....

These rights, importantly, do not grant men the power to have a claim on anyone else. Everyone owns his life and liberty (no one can be a slave), and no one can take away another’s right to try to achieve the life he or she wants (the "pursuit of happiness").

Notice that the Declaration of Independence does not state that men have a right to "happiness"; we do not have the innate right to assume our preferred station in life, or to assume our ownership of any property to which someone else has a rightful claim.

One way to think about this distinction is to follow up the claim of a right with the question, "At whose expense?" According to natural-rights theory and the Declaration of Independence, the answer should be: "No one"; for no one may make a claim at the expense of anyone else.

Is Healthcare a Right, or a Privilege?

Messrs. Sanders, Kennedy, and Obama, and many others, claim that healthcare is a right, meaning it is innate and further that the government's role is to grant and to protect that right.

The assertion appears defensible on the surface, for which heartless person would wish his or her fellow man to be denied healthcare -- especially in the wealthiest country in the world?

Ask yourself the question, "Healthcare ... at the expense of whom?" [Healthcare meaning, again, the provision of medical services from others.] If healthcare is a right, then a sick or injured person can make a claim on a doctor's or nurse's services -- he/she can demand healthcare, whether or not the practitioner is willing to provide it.

Put aside the response that few healthcare practitioners would be unwilling to provide care. I am debating about actions that a person is required to do -- under threat of coercion by the State -- despite objections that he or she might have.

Of course, in America, all people have the privilege of healthcare, as the Emergency Medical Treatment & Labor Act (EMTALA), enacted in 1986, ensures public access to emergency services in Medicare-participating hospitals, regardless of ability to pay. (And, since almost every hospital accepts Medicare funds, we are talking about essentially every hospital in America.)

EMTALA is an example of the danger of accepting payment from a party -- the State -- which also writes the rules. With EMTALA, the government -- which should be protecting the rights of all citizens equally -- has taken sides with a class (patients) that can demand services from another class (providers).

Conclusion

I challenge anyone to explain how the innate ability to demand services (medical or otherwise) from another differs from slavery.

Is the government's role to ensure that all have equal protection to life, liberty, and the pursuit of happiness?

Or, instead, is it the government's role to protect the ability of people to place a claim on another's property (in this case, a lifetime of study, hard work, and expense honing his or her skills as a physician)?

More specifically, is the government's role to force healthcare providers to provide medical services to those needing care?

If you answer "Yes" to the last question, may I introduce you to a text that may speak to you from the heart? It is called Critique of the Gotha Programme, and contains your mantra:

From each according to his ability, to each according to his needs!

It was written by Karl Marx.

Don't Cover Doctor's Visits! (if you want a better healthcare system)

2009-08-25T16:14:00.007-04:00

The debate of healthcare and healthcare financing continues apace, as we get deep into August. Our elected officials certainly knew there would be a certain level of disagreement, but I doubt they envisioned their town halls to become 2009's version of riots over civil rights and the Vietnam War.

You can now see why Rahm Emmanuel and Company wanted healthcare legislation signed and sealed before the August recess, though. Any 1,000+-page bill will have elements with which everyone disagrees, and it's just a matter of time before interest groups organize and solidify opposition to those elements.

Given that my Congressman, Jim Moran, is hosting his healthcare town hall -- accompanied by Howard Dean, presumably for moral support -- this evening, I thought it would be a good occasion to post my next essay on how I would like to see healthcare reformed.

My other commentary on reform appears here (each link should open in a separate window):

The "Public Option" For Health Reform Is No Option

When Discussing Heath Care, Paul Krugman Should See A Doctor

Copays, Premiums, and Risk-Pooling ... Oh, My!

The current essay recommends removing doctor's office visits from coverage under health insurance policies, and expanding the role of nurse practitioners.

The Problem

The financial structure of most health insurance policies encourages overuse and misuse of the healthcare system, with resulting increases in healthcare costs, as well as pervasive inefficiency.

One consequence of third-party payment is that the consumer of the service (in this case, the patient) is shielded from the true cost of the service. If you ask most people what a doctor's visit "costs," they will probably respond with whatever amount their copay is. The true cost is much higher -- probably $100 for a 15-minute visit.

As a result of this "cost-shielding," people are much more likely to see a doctor, for many more reasons, than if they had to pay full price for a doctor's visit. Many visits to the doctor are due to the common cold and allergy symptoms, for which very little can be done to alter the course of the condition except for rest, proper eating and hydration, and over-the-counter symptom control treatments.

Most common cold or allergy complaints do not require a visit to a highly-trained physician -- a nurse practitioner can treat the patient just as effectively, and at much lower cost. I would expect a comparable 15-minute appointment with a nurse practitioner would cost about $25.

The point is that many office visits to physicians are unnecessary, with money and time being wasted by the patient. Additionally, the physician could be using his/her time on much more sick or injured patients. But, since it only costs $20 or $25 to see "the expert," why wouldn't you? People would certainly think twice about making an appointment if it would cost them $100, especially if appropriate care could be obtained for a quarter of the cost by a nurse practitioner.

And why should office visits be removed from coverage by health insurance? Again, the third-party payment structure leads to overuse, as the consumer is not informed about the true cost of the service. The result is excessive, unnecessary use of healthcare services.

The Solution

I believe two changes affecting office visits would show dramatic healthcare cost reductions, with no lessening in quality: 1) remove office visits from health insurance coverage, and 2) increase the scope of services that nurse practitioners can provide.

First, the financial structure of health insurance policies. The vast majority of health insurance policies cover all office visits, with the insured only paying a modest copayment (typically $10 to $25). Office visits are, by far, the largest healthcare expense, due to their frequency.

Removing office visits from health insurance policies would render them similar in function to auto insurance policies: financial relief is available for highly expensive (or "catastrophic") needs, but less expensive services are wholly out of pocket. (This concept is actually available today as health-savings accounts (HSAs), but is largely unused.)

The second change, increasing the scope of services by nurse practitioners, is already gaining traction via some physician practices and urgent-care clinics. It only makes sense to have patients treated by a practitioner who is well -- but not excessively -- trained to provide the care necessary to heal the patient.

If you are hungry, in a hurry, and without much cash, it does not make sense to order a meal at a four-star restaurant; a fast-food establishment better meets your needs. However, if an important occasion is arriving, for which the added expense and time is worthwhile, then fast food might be counterproductive, and a fine restaurant is warranted. The same "triage" could apply to your choice of healthcare practitioners.

The net result of having the cost of office visits borne by the consumer/patient would be a greater ownership of one's healthcare. Office visits for (apparently) minor illnesses or injuries could be managed by a nurse practitioner. The nurse practitioner could triage the patient (via questions or observation), with potentially serious conditions being transferred to a physician.

From the physician's perspective, insurance compliance costs could be reduced, as fewer claims would need to be submitted and tracked. The physician would still "keep" the patient, but the nurse practitioner would be handling the majority of visits.

To continue the auto-insurance metaphor, having physician office visits paid by health insurance is akin to having oil changes paid by auto insurance. If that were the case, people would not look for shops offering the combination of high quality and low price that fit their needs -- they would be totally insulated from the "true cost" of oil changes. Additionally, people would not learn the most practical mileage interval at which to get their car's oil changed, and would end up getting oil changes much more frequently than is needed. ("If getting my oil changed every 3,000 miles is good, then getting it changed every 1,000 miles must be better!")

Obstacles

There are several impediments to these changes. The Powers-That-Be are not interested in fostering these changes. Insurance companies do not want to lose the premium revenue that accompanies insurance policies that cover everything under the sun. More rational health insurance policies would be much lower in cost, which helps policyholders, but certainly is not in the best interest of health insurers.

Similarly, the American Medical Association -- the governing body that largely determines which services can be provided by physicians (and only physicians) -- is not interested in having its treating authority diluted by other professions. It views just about any attempt by other professions to treat patients as an encroachment on their turf.

Skyrocketing healthcare costs might do more to expand the availability of creative health insurance policies, such as HSAs, and to increase the availability and treatment authority of alternative healthcare providers, such as nurse practitioners. It remains to be seen whether commonsense, cost-effective, minor tweaks to the healthcare system can garner sufficient support.

Copays, Premiums, and Risk-Pooling ... Oh, My! (First in a series on healthcare reform)

2009-08-05T12:28:00.007-04:00

At the risk of causing eyes weary with healthcare reform to glaze over, I am starting an essay series to suggest various measures to improve the current U.S. healthcare system. The measures I describe include global changes, as well as tweaks, or modifications to the current system. Nothing I suggest is necessarily original -- the changes are discussed elsewhere in great detail -- but my blog offers an opportunity to have a discussion with those not steeped in the details of healthcare financing.

I have decided to make the essay much more manageable for readers by addressing one weakness and solution per day.

I have been a healthcare consultant for 15 years, with experience tracking the financing of patient care, medical technologies, drugs, biologicals, and advanced procedures for treating patients. Doing so has afforded me a birds-eye view of how the U.S. healthcare system intersects with patients, physicians, hospitals, and health insurance companies.

An earlier essay discussed the inherent problems with the so-called "public option," whereby the government will offer a health insurance plan to "compete" with private-sector insurance companies. An astute reader commented that, while he felt my piece was effective in identifying the structural flaws with the public option, I did offer any solutions of my own. (In other words, it is very easy to criticize without presenting alternatives.)

As everyone knows, President Barack Obama (here, here, here) and others have derided the free market for "failing" Americans in health care. That is, quite simply, false at best, and a lie at worst. The federal government has infiltrated itself into the health insurance market so deeply that it publishes approximately ten thousand pages of rules and regulations annually, just for Medicare and Medicaid. That does not even include regulations for private insurers, as well as legislation and regulations the state governments lard onto the insurance market.

So, the reader will understand if my recommendations to improve the healthcare system do not draw on anything Obama says; in fact, most of my suggestions run counter to anything he has said or believes. So, with that framework understood, let's jump right in.

The first measure needing reform is the tax structure of health insurance.

Tax Structure

Problem

The tax structure of health insurance is one of its most distorting features. A series of federal rules, enacted shortly after World War II and culminating in an IRS decision in 1954, resulted in employer-sponsored health insurance not being taxable income (and, therefore, payable with pretax income). However, health insurance purchased elsewhere (e.g., self-purchased) must be paid with after-tax dollars.

Predictably, the vast majority of Americans now receive health insurance through their employer. (David Blumenthal, MD, summarizes succinctly the origins of employer-sponsored health insurance in his 2006 New England Journal of Medicine article "Employer-Sponsored Health Insurance in the United States — Origins and Implications" located here.)

This tax preference for employers has several pernicious consequences. First, it means that health insurance provided by employers is much cheaper than health insurance purchased by an individual for himself and/or his family. As a result, simply having health insurance tends to tether employees to their jobs -- even if the job is less than desirable -- out of fear of being without coverage. This "job anchor" prevents many individuals from pursuing a better job (however, one defines "better," whether it be a higher salary, shorter commute, improved quality of life, etc.)

The second implication of employer-sponsored health insurance is that it constrains salaries. If a new employee already has health coverage from a spouse, he or she may not need to participate in the employer's health insurance plan -- thus saving the employer thousands (or tens of thousands) of dollars a year in insurance premiums. However, that economic benefit -- through no strategem on the employer's part -- accrues 100 percent to the employer. In other words, the employee does not participate in the economic benefits of forsaking health insurance, in the form of a higher salary or other benefits.

Solution

Removing the tax deductibility of employer-sponsored health insurance would help equalize insurance costs between employers and individuals. A likely result is that many employers would no longer provide health insurance as part of the benefit package.

Despite probable knee-jerk reactions about the horror of this possibility, this is not a bad development: As prospective employees start negotiating for jobs in the "new normal," and realize benefit packages no longer include health insurance, they should begin demanding higher salaries and/or other benefits (i.e., subsidized transportation costs, subsidized tuition, etc.) to compensate.

The provision of employer-sponsored health insurance was originally offered because the federal government placed a cap on salaries -- leading employers to search for other job benefits -- so the process of salaries increasing to compensate for the lack of health insurance is simply a reversal of earlier employment decisions.

Ultimately, shifting health insurance provision to individuals is a better arrangement, because employers do not (cannot, actually) offer employees the full range of health insurance options available, for the employee to select the plan that best meets his or his family's needs. Rather, in an effort to keep insurance premiums as low as possible -- while still offering employees a modicum of choice -- most employers allow employees either an HMO (health-maintenance organization) or PPO (preferred-provider organization) option.

Employees could use the resultant higher salaries to select from a much greater range of health insurance plans -- and the plans would not be linked to employment status (or lack thereof).

Granted, employers would still have a cost advantage due to pooling (i.e., large employers could "pool" together a number of employees, thus spreading out risk to reduce premiums). However, individuals would still be able to join risk pools, and benefit from the same premium-reducing activity. As a matter of fact, individuals could join pools structured around commonalities that may result in greater cohesiveness than employers, and potentially greater loyalty to insurance companies. These advantages might well result in lower premiums for pools that involve "families of families" and other cooperative arrangements, especially given the disloyalty that employers and insurance companies have toward one another. (Employers change health insurance companies approximately every two years.)

When Discussing Heath Care, Paul Krugman Should See A Doctor

2009-08-03T22:18:00.003-04:00

On July 25, Nobel Prize-winning economist Paul Krugman wrote a column entitled "Why markets can't cure healthcare" in which he listed reasons for which the free market was unsuited for health care.

The tone of the column is condescending (or smug, perhaps? the difference escapes me), as he repeatedly knocks over the straw men he uses as "weaknesses" of the market in healthcare. However, I feel he mostly repeats the talking points uttered by those who favor of government-run healthcare, but -- as is typical -- without any data or sound analysis to justify his position. (Presumably, Krugman's Nobel Prize grants him immunity from having to provide supporting evidence for any of his claims.)

Sadly, the New York Times closed the comment period for this column, so I'll just share my thoughts here.

His first whopper is that the "big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office."

Wrong, and not only a "little" wrong, but "a lot" wrong. As in "billions of dollars" wrong. In 2006 (the most recent year for which data is available), Medicare payments for all bypass surgery (not just triple-bypass surgery) totaled $2.9 billion.

By contrast, in the same year Medicare paid $13.5 billion for office visits of mild to complex decision-making. These office visits represent an enormous 12.2 percent of total Medicare payments to doctors for all services and procedures. In other words, one out of every eight dollars that Medicare paid physicians in 2006 went to Krugman's piddling office visits.

So, Krugman's unsubstantiated claim notwithstanding, the "big bucks" in healthcare are with office visits, which represent a dollar expense 450 percent greater than bypass surgery. (All data are from the CMS Data Compendium.)

Krugman later states that health care "must largely paid for by some kind of insurance," and that "[c]onsumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours."

Insurance is necessary for SOME -- but by no means all -- healthcare costs. And anyone who mentions "consumer choice" in the same sentence as "health care" is only displaying to the world how ignorant he is. Since the 1940s/1950s, employers have been given preferential tax treatment over individuals for purchasing health insurance, with the obvious result that virtually all Americans under age 65 obtain their health insurance from their employer. Most employers offer employees a limited number of insurance "choices" (in most cases, either an HMO or a PPO, and that is it), which do not even include some of the newer packages that are more appropriate for younger workers, such as health-savings accounts or high-deductible plans). So, the vast majority of "consumers" already have very little "choice" about which insurance policy they purchase.

Krugman's comment about not being able to "trust" health insurance companies is specious and meaningless. Does that mean that people cannot "trust" their auto insurance companies, their life insurance companies, their homeowners' insurance companies, etc.?

Insurance companies need to be regulated, to be sure. But, can you trust the government, either? And, if not, who is going to regulate the government? The answer: no one. Not when the government is making the rules that will govern oversight. I would rather take my chances with a greedy insurance company that has oversight -- rather than the government, which will have no oversight, is subject to political pressure, and can always justify denying treatment for the greater good (i.e., taxpayers).

People who conduct business transactions based on "trust" -- rather than on contracts -- are destined to get fleeced, whether they are purchasing insurance or are purchasing a car. No one relies simply on "trust" when transacting with an insurance company, so Krugman's claim is just utter, misleading nonsense that ignores every aspect of contract law, business, and economics -- which is ironic, since the statement is coming from a Nobel Prize-winning economist.

Krugman states that "private insurance has much higher administrative costs than single-payer systems."

The fact that private insurance companies cost more, administratively, than public-sector insurance is a convenient falsehood for those in favor of government-financed or -controlled healthcare.

In actuality, the so-called financial "advantages" that the government demonstrates over private insurers largely derive from outsourcing to private enterprises. As a result of the outsourcing, Medicare does not have to pay union wages, infrastructure costs, or leasing/rental fees. Additionally, Medicare spends very little on reviewing insurance claims, with the result that administrative costs are kept low, but fraud is rife in Medicare.

Lastly, Krugman states that "in health care, the free market just doesn’t work."

If Krugman wants an example of how free-market principles work -- and work well -- in health care, he need look no further than a medical treatment in which government regulations are minimal, and insurance coverage is almost non-existent: laser eye surgery.

When laser-eye surgery first hit the market, costs exceeded $2,500 per eye. Approximately ten years later, per-eye costs had dropped to $1,000 per eye, with greatly improved quality.

That is how the free market works when not strictured by excess regulation: lower costs, improved quality, continuing innovation.

Robert McNamara: Maybe The Brightest, But Certainly Not The Best

2009-07-13T23:12:00.006-04:00

Robert McNamara died last week (July 6th) at the age of 93. For anyone under the age of 50, he is probably just another historical figure, jumbled together with all of the other "government types" that populated the bureaucracy in the 1960s. He is most well known, of course, for being Secretary of Defense under Presidents Kennedy and Johnson, and for being the architect of the U.S. involvement in the Vietnam War.

And, even more specifically, he is most well known for his admission, published in his memoirs in 1995, that he felt -- essentially from the beginning of our country's involvement in Vietnam -- that the United States would be unable to win the war.

Yes, that's right.

The architect of the war, one of Kennedy's "best and brightest," the brilliant CEO of Ford Motor Company, felt from the beginning that the edifice he constructed was not durable like the cars his previous employer built. Rather, it better resembled a house of cards. (More like a cemetery of cards, actually.)

Why didn't he broach his concerns to President Johnson? Because he felt that he was simply a vehicle for LBJ's intentions and desires, and that he owed his loyalty to the president.

This is a pathetic, tired refrain that continues to this day. A recent example includes Colin Powell being a bagman for the Bush Administration, convincing the United Nations (and, by extension, the rest of the world) that Iraq was, indeed, developing and stockpiling weapons of mass destruction. Meanwhile, he was informed beforehand that George Tenet's "slam dunk" was a total fabrication. (Not, of course, that Colin Powell was a novice at being a tool of the Republican Party. He did his best to portray the My Lai massacre as a picnic.)

Alan Greenspan, also, waited until he was out of the government -- and, consequently, much less empowered to effect any change -- to inform everyone that one of the Bush Administration's major errors was abandoning fiscal restraint. (Meanwhile, Greenspan bears absolute responsibility for the Internet and real-estate bubbles, though he'd never admit it.)

Okay, I realize I'm getting sidetracked. Enough of Powell and Greenspan -- back to the ultimate government shill, Mr. McNamara.

I recognize that the pressures of politics are immense, and that standing up to the president would be an intimidating task. However, McNamara was strong enough to lead Ford, and I would think his forbidding intelligence could have crafted a way to communicate his doubts to LBJ. Guess not.

Apparently, he took his failure to make a stand quite hard, and "[o]n many occasions when confessing his errors regarding Vietnam, his voice shook or cracked and tears came to his eyes."

I find myself having a vanishingly small amount of sympathy -- or empathy -- for him. My father was drafted to Vietnam while his wife -- my mom -- was pregnant with me. Fortunately, my father returned safely, but over 58,000 sons, brothers, and fathers never did -- and McNamara bears a great deal of responsibility for THAT body count.

So McNamara felt himself a little weepy on occasion because of his inaction? He did live to be 93, so he might have had quite a few tears spill down his face. I doubt, however, that they outnumbered the tears shed by the mothers, wives, and children of those dead 58,000 soldiers. I hope the image of a different soldier visited him every day, and continues to do so. Wherever he is.

The "Public Option" For Health Reform Is No Option

2009-06-19T12:22:00.003-04:00

Health insurance reform is in the Washington air these days. President Barack Obama gave a big speech in Wisconsin last week (which I plan to critique in short order), where he reiterated his belief and faith in a so-called "public-plan option." In the speech, he reassured the audience that, if one is happy with his current plan, he will be able to keep it.

He forgot to add, "...for now."

It is important to note that the phrases "health reform" and "healthcare reform" are conflated often, but they are not even what is being debated these days. What is being debated is health insurance reform. "Health reform" refers to modifying the physical well-being of an individual, and "healthcare reform" refers to the provision of medical and surgical services by hospitals, physicians, and other providers of healthcare. "Health insurance reform" is the financing of "health" and "healthcare." Of course, hearing the phrase "health insurance reform" is sufficient to cause one to be able to nod off on the middle of a rollercoaster, so it is not used.

In this post, I want to discuss the inherent problems -- from a liberty and economic standpoint -- with a "public-plan option." The public-plan option essentially means that, in addition to private-sector companies offering health insurance, the government will also offer a health-insurance "option" -- the purpose of which, it is touted, is that it will fill in the cracks where commercially-provided health-insurance plans fail to provide an option for certain people. (Typically, this means that commercially-available plans are too expensive for some people to afford.)

There are reams of information available discussing the problems with the government involving itself in health insurance, so I just want to highlight and briefly discuss the main reasons why I believe the public-payer option could, literally, ruin the level of quality, access, and cost of healthcare. (Not just health insurance, mind you, but healthcare.)

As with all things economic -- and government promises, for that matter -- it is important to think through how the various incentives will ripple through the system, and what impact they will ultimately have. Politicians love to promise programs that have short-term benefits, but long-term, crippling costs -- most politicians have zero economic or business education, so they are clueless about the long-term results of their legislation. They also know they will be out of office by the time the short-term benefits have withered away, so they do not have to pay the consequences of their decisions. In other words, they get to enjoy the one-night stand, but are never subjected to the walk of shame.

Government Has Intrinsic, Nonmarket Advantages

Once government enters a market, it becomes the 800-pound gorilla that cannot be moved. It's advantage is so overwhelming that it makes the 19th-century oil trusts seem like mom-and-pop shops. This intrinsic advantage manifests itself in multiple ways.

Government as price maker. A fundamental tenet of economics is that market players are either "price takers" -- in which case the normal process of supply and demand will ensure the market provides good and services consumers want at an acceptable price -- or "price makers" -- in which case the market player (or players) are so dominant that they can dictate the price, because there is insufficient competition, or insufficiently-powerful competition.

This has already happened with Medicare and Medicaid (government health-insurance programs for the aged and disabled, and the poor, respectively). Almost all companies that offer health insurance base their pricing for services and supplies on what is called the Medicare "fee schedule." The government reimburses hospitals and physicians for Medicaid patients at such a low rate that most physicians limit the number of Medicaid patients they accept -- or simply don't accept any Medicaid patients at all.

The rates Medicare pays physicians and hospitals are below market, so that many physicians and hospitals must make up the difference by charging private insurers and cash-pay patients higher amounts. This, in turn, has driven up costs to employers, the insured, and the uninsured. Additionally, physicians cannot afford to see many patients with Medicaid, so those very patients have limited options.

So, the government setting below-market payment amounts for every Medicare and Medicaid patient has had a cascade effect of driving up costs, especially for the uninsured, who can least afford high healthcare costs.

With the government entering the "traditional" healthcare-insurance market (i.e., non-Medicare, non-Medicaid patients), it will then become a price-maker for the rest of the insured (and uninsured) market, with the subsequent effect of driving up costs for private health-insurance companies. Those companies will be forced to set their prices at close-to-government rates (i.e., below-market rates) ... but will have the increased costs due to physicians and hospitals trying to make up their losses elsewhere. The combination of below-market payment, and increased costs, will force many health-insurance companies to begin operating at losses, and then to close their business.

Of course, the government -- as a purchaser of health insurance -- will insist that it "provide value" and "be prudent" with taxpayer funds -- thus justifying its strangling price demands.

Therefore, the short-term benefit ("affordable" health insurance provided by the government to fill in the gaps where commercial insurance plans do not offer plans) inevitably withers away because commercial insurance plans are driven out of business as they try to match government pricing, leaving the long-term cost -- only the government will remain standing in the health-insurance market.

Another consequence is that many people considering medical school will be driven away by the combination of a low salary (due to low payments by the government and insurance plans) and enormous school loans.

Government has unfair financial advantages. A government health insurance program has enormous, market-corrupting inherent advantages over a private-sector health-insurance company:

Whereas a company must pay payroll, property, and countless other taxes ... the government can always raise taxes or deficit spend to offset any revenue shortfalls.
Whereas a company must pay rent or lease costs ... the government can place headquarters on government-owned property, thus eliminating those expenses. Even if a company owns the land and building on which it operates, it must still pay property tax. The government is not a taxpayer -- it is a tax-consumer.

These factors are never considered or mentioned when advocates tout that Medicare has lower operating costs than private health-insurance companies. Of course they do -- the have a completely different, cheaper, taxpayer-subsidized cost structure compared to companies that must operate under tight fiscal discipline.

These financial advantages for the government can have the same ultimate effect as its role as price-maker -- private-sector companies cannot hope to compete with the government when the rules are being set by the government. As a result, they will be driven out of business.

Loss of Economic Liberty Thus Results

It is axiomatic that, once the government inserts itself into a market, politics ALWAYS trumps policy. Politicians, always on the prowl for solidifying their power base and ensuring re-election, will exploit the government's role in health insurance to reward constituents and interest groups ... without regard to the impact on sound healthcare policy.

Thus mandates enter the equation. "Mandates" are government decrees by which that the private business sector must abide, or else pay large fines or get out of that business line. Federal and state governments are famous for introducing mandates into health insurance, such as all health plans must provide coverage for alcohol rehabilitation programs or for alternative treatments such as acupuncture.

At first glance, it makes sense -- don't all leftist, statist policies start out this way? -- after all, shouldn't alcohol rehabilitation or acupuncture be available? However, what is unseen is that such mandates drive up the cost of health insurance, and many people would just as soon not include those types of coverage, in favor of reduced premiums.

However, keep in mind that every wrinkle of the tax code, and every perturbation of government rules and regulations, was created by a politician. And most politicians did not introduce these "enhancements" (i.e., mandates) without them also satisfying important constituents, or donors (i.e., special interests).

Therefore, be prepared that, when the "public-option plan" is rolled out, politicians will be unable to stop themselves from "enhancing" and "extending" the insurance program ... all in the name of insured Americans, of course. (Never mind that said insured Americans will have no say in whether or not such "enhancements" are even needed for their particular situation.)

And, of course, the mandates will add costs to everyone's health insurance -- it is unavoidable. For someone who is barely able to afford health insurance for himself (or his family), a premium hike might be the tipping point at which he will have to apply for federal assistance via enrolling in the public option. And a private-sector health insurance company loses another customer through no actions of its own. Multiply this scenario a hundred thousand, a million, or ten million times, and one sees how health insurance firms will be forced out of business. (Thus forcing potentially millions of Americans to the taxpayer-funded public option.)

As choice goes, so goes liberty. As the private sector goes, so goes liberty.

Next up is a critique of Obama's speeches to Wisconsin and the American Medical Association touting his health-insurance plan ... speeches where he plays fast and loose with the facts.

We Will Probably Learn Your Medical History

2009-06-04T09:59:00.007-04:00

On Wednesday, June 3rd, the Washington Post reported that "a U.S. document containing sensitive details about hundreds of civilian nuclear sites across the country was posted online Monday, an apparently inadvertent security breach that had federal officials scrambling yesterday to remedy the mistake."

Turns out that a 267-page document, listing locations of facilities that store enriched uranium and other material used in nuclear weapons, was available for about a day on a Government Printing Office web site. Inquiries from news organizations prompted its withdrawal.

How does this impact your health care? One word: privacy. The Obama Administration and Congress want the federal government to have a dominant, potentially all-encompassing role in Americans' health care. This role will include the need to collect and store MASSIVE amounts of sensitive information about almost every Americans' health.

Think that the list of U.S. nuclear sites being posted online is just an anomaly? Here are some other breaches of sensitive information supposedly held "secure" by the federal government:

In March 2008, the U.S. National Institutes of Health (NIH) confirmed that a laptop containing unsecured information about 2,500 participants enrolled in a cardiac study by its National Heart, Lung, and Blood Institute (NHLBI) was stolen from the trunk of a researcher's car.
In May 2006, the Veterans Affairs Department admitted a theft of a VA laptop and hard drive containing sensitive data for up to 26.5 million veterans and their spouses.
In July 2006, a thief stole an Office of Inspector General Special Agent’s laptop computer from a locked government vehicle in Doral, Florida, near Miami. This laptop contained individuals' name plus other identifying information such as Social Security number or date of birth for thousands of Florida residents.
In August 2006, another VA laptop was stolen that contained thousands of unsecured records of VA patients that had been treated in Philadelphia and Pittsburgh medical facilities.

Mind you, these are events reported on the first page of a simple Google search for government security breaches. My mindfulness of my readers' patience prevents me from listing page after page of supposedly secure sensitive information being released into the public domain.

Having a list of nuclear facilities and millions of Social Security numbers being accidentally released publicly is bad enough. Having medical histories being posted on the Internet? Terrible but -- sadly -- also probably inevitable.

Rereading Atlas Shrugged, Part Deux

2009-05-27T16:33:00.006-04:00

"Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters."
-- Daniel Webster (1782-1852)

I am currently on page 242 of Atlas Shrugged, and am finding it un-putdown-able. Despite Ayn Rand's terrific ability to craft scenes vividly, I think my main reason for enjoying the novel this time is reading about the spirited defenses against the Statist sycophants and enablers.

Contrast that combative attitude with today's political environment, where the mainstream media is -- as many have written about en masse -- simply an outlet for the White House and Congressional press offices. The sycophantic worship of Everything Obama is stomach-turning, especially since the sole reason the Founding Fathers enshrined the protection of the press in the Constitution was to serve as a bulwark against government encroachment and abuse.

There are plenty of brave souls standing strong against the infection of government control in our lives -- Dr. Ron Paul comes to mind, as do countless bloggers and alternative media. However, if the mainstream media is your only source of news, you would think the only people opposing the solidification of the government into every nook and cranny of our lives are right-wing extremists who want the smallest tent possible.

'Tis not the case, of course, but as I have mentioned, therein lies the danger when a news outlet's main source of revenue is advertising, versus subscriptions. Only corporations with the deepest pockets can afford continuing advertising in the major newspapers, and many of those firms rely on government largesse or favorable government regulations. (And, it should never be forgotten, most news outlets are owned by the same corporations that do enormous business with the government.) Does anyone in their right mind harbor a hope that a newspaper would risk government wrath ... thus angering advertisers ... and risking cozy relationships with government staffers?

Back to Atlas Shrugged. A scene reminded me of the (continuing) fight over GM's nationalization/bankruptcy, where an "unnamed" Obama Administration official argued that,

"...the UAW was making other sacrifices in wages and benefits, and that [GM] could not function without workers."

That quote rang in my ear as I read Rand's depiction of the conflict over whether a railroad union would, in a clumsy attempt to dictate the operations of Taggart Transcontinental, try to stop the maiden voyage of the John Galt Line, a train running on advanced rail that was the last hope to save American freight shipping. (Bear with me ... the excerpt is a page long, but well worth reading.

"Well, it's like this, Miss Taggart," said the delegate of the Union of Locomotive Engineers. "I don't think we're going to allow you to run that train."

Dagny sat at her battered desk, against the blotched wall of her office. She said, without moving, "Get out of here."

It was a sentence the man had never heard in the polished offices of railroad executives. He looked bewildered. "I came to tell you--"

"If you have anything to say to me, start over again."

"What?"

"Don't tell me what you're going to allow me to do."

"Well, I meant, we're not going to allow our men to run your train."

"That's different."

"Well, that's what we've decided."

...

She reached for a sheet of blank paper and handed it to him. "Put it down in writing," she said, "and we'll sign a contract to that effect."

"What contract?"

"That no member of your union will ever be employed to run an engine on the John Galt Line."

"Why ... wait a minute ... I haven't said--"

"You don't want to sign such a contract?"

"No, I--"

"Why not, since you know that the bridge is going to collapse?"

"I only want--"

"I know what you want. You want a stranglehold on your men by means of the jobs which I give them -- and on me, by means of your men. You want me to provide the jobs, and you want to make it impossible for me to have any jobs to provide. Now I'll give you a choice. That train is going to be run. You have no choice about that. But you can choose whether it's going to be run by one of your men or not. If you choose not to let them, the train will still run, if I have to drive the engine myself. Then, if the bridge collapses, there won't be any railroad left in existence, anyway. But if it doesn't collapse, no member of your union will ever get a job on the John Galt Line. If you think that I need your men more than they need me, choose accordingly. If you know that I can run an engine, but they can't build a railroad, choose according to that. Now are you going to forbid your men to run that train?"

Now, just substitute "automobile factory" for "railroad," and you get a sense of what GM's former CEO Rick Wagoner probably felt ... just before Obama fired him.

THAT's why I'm enjoying rereading Atlas Shrugged, because I'm getting tired of being defenseless while the government cuts down one pillar of liberty after another.

New Emission Standards - Obama's Grasp for (Ever More) Control

2009-05-21T21:30:00.011-04:00

"There are two patterns for the realization of socialism. The first pattern (we may call it the Lenin or the Russian pattern) is purely bureaucratic....

The second pattern (we may call it the Hindenburg or German pattern) nominally and seemingly preserves private ownership of the means of production and keeps the appearance of ordinary markets, prices, wages, and interest rates. There are, however, no longer entrepreneurs, but only shop managers....[I]n all their activities they are bound to obey unconditionally the orders issued by the government's supreme office of production management....

This is socialism under the outward guise of the terminology of capitalism."
- Ludwig von Mises, Human Action

Steven Mufson of the Washington Post reported Tuesday (May 19) that President Obama plans to propose "tough standards for tailpipe emissions from new automobiles, establishing the first nationwide regulation for greenhouse gases." The new "CAFE standards" will also raise fuel efficiency targets to 35.5 miles per gallon for new passenger cars and light trucks by 2016. The cost of complying with the new standards? According to Obama, the new 2016 CAFE targets will add $1,300 to each vehicle.

In this essay, I will expose Obama's math (robustly optimistic), and describe his real reason for pushing through the new standards (government tentacles writhing into our lives).

Why the New Standards?

Why the impetus for the new emission standards? As Mufson wrote, "The measures are significant steps forward for the administration's energy agenda by cutting greenhouse-gas emissions that contribute to climate change and by easing U.S. dependence on oil, most of which is imported."

Climate Change - Reality or Myth? Who Really Knows?

Before I address the real, underlying reason for the new emission standards, I want to dispel the accepted notion that, despite what Al Gore bleats to anyone who will listen, "climate change" is occurring, is accelerating, and is hastening the End of Life As We Know It.

I am not a meteorological expert, but I do know that the Cato Institute has some fearsome intellectuals in its corner. On March 30, 2009, Cato purchased advertising space in many national newspapers for this ad to counter the popular myth that climate change is a foregone conclusion.

The ad includes supporting references and over 100 scientist signees, and states that "the case for alarm regarding climate change is grossly overstated" and that Obama's "characterization of the scientific facts regarding climate change and the degree of certainty informing the scientific debate is simply incorrect."

That ad, and the copious material on Cato's website discussing Energy and Environment, leads me to, at least, question whether global warming or climate change is 1) occurring, and 2) the direct result of Industrial Man.

Obama's Consolidation of Control

And the fundamental reason for Obama's pushing through the emission requirements? Not surprisingly, it is related to his Administration dictating the restructuring of the auto industry (as I discussed here and here), and can be summed up in one word: control.

As Ludwig von Mises stated so clearly, consumers are all-powerful under a market economy:

"In his capacity as a businessman a man is a servant of the consumers, bound to comply with their wishes. He cannot indulge in his own whims and fancies. But his customers' whims and fancies are for him ultimate law, provided these customers are ready to pay for them. He is under the necessity of adjusting his conduct to the demand of the consumers."

Well, so much for a consumer-driven, market economy. Obama is wresting control of the automotive industry away from consumers and giving it to the federal government -- precisely what he is doing, of course, to the health care, education, and energy sectors. (He is even dissolving federalism by having bankrupt state governments lining up, hat in hand, to beg the White House for money. Not, of course, that the Administration would ever expect anything in return for its generosity." Oh, wait.)

The new emission standards will see automobile manufacturers increasingly reliant on small vehicles, to ensure their overall fleet fuel efficiency is in compliance. And, of course, when the government needs to dictate production, that means it is unhappy with consumption patterns.

Sure enough, despite the recent energy shock of $4/gallon gasoline, people still want large SUVs and pickups. As a matter of fact, the two best-selling cars in 2008 were the Ford F Series and the Chevy Silverado. The Dodge Ram is also among the top ten.

In addition to three of the top ten best-selling vehicles (made by American manufacturers, it should be noted) being specifically targeted by the new emission standards, the standards happen to attack the very models that are the most profitable. I am sure I'm not the only person shaking my head at Congress and the President tsk-tsking Chrysler, GM, and Ford for operating poor businesses -- and then undermining the only product lines keeping them on life support the last ten years or so.

Did Obama Pass Basic Arithmetic?

It should also be noted that, in addition to the new emission standards siphoning away profits from the car companies by forcing them to produce low-margin small vehicles, the regulations will also hurt ... anyone who wants to buy a new car. Compliance with the new CAFE standards is expected to add up to $1,300 per vehicle, which Obama says will be repaid after three years.

Let's peer under the hood at Obama's math.

The calculations below show that, under the planned 2016 CAFE standards (35.5 mpg for passenger cars), someone driving a vehicle 10,000 miles a year would save 81.9 gallons of gas compared to the current CAFE standards of 27.5 mpg. That 81.9 gallons per year (colored in light blue) calculates to 245.8 gallons of gas over three years (colored in tan):

Obama states that the $1,300 vehicle surcharge will be repaid within three years due to increased fuel efficiency. (By the way, does anyone believe the additional cost will be $1,300? Does the Administration have ANY incentive to low-ball the surcharge estimate?)

So, if the 245.8 gallons of gas saved results in offsetting the $1,300 surcharge, how much must each gallon of gas cost?

$5.29 per gallon. I will leave it to the reader to wonder about the likelihood of gas costing over five dollars a gallon in seven years ... and, more importantly, also question why Obama did not happen to mention that fact during his ~~preening~~ press conference.

Why Not Raise the Gasoline Tax Instead?

Harvard professor Gregory Mankiw (certainly no bleeding-heart liberal) advocated a "Pigouvian tax" on gas aimed at curbing gas consumption and correcting for “negative externalities” like pollution and threats from hostile foreign countries. (Incidentally, these are exactly the outcomes being promoted for Obama's new emission standards.)

So, why doesn't Obama simply raise the gasoline tax? That would, arguably, accomplish his exact goals without penalizing the automobile manufacturers to spend billions of dollars developing new fuel-efficiency mechanisms and upgrading their assembly plants.

Several reasons explain his choice of interfering with the automobile industry:

Raising CAFE standards forces auto manufacturers to produce smaller, more efficient vehicles -- despite consumers' preferences. Simply raising the gasoline tax would not directly compel manufacturers to design new car models.
Obama, it has been shown, cares not a whit for free-market principles or business, so forcing auto manufacturers to upgrade their assembly plants is not likely to cause him to miss any sleep.
Obama, by his fiscal policies, does not really care about future generations -- otherwise, why saddle them with trillions and trillions of dollars of debt? So, saddling Americans with thousands of dollars of additional charges per vehicle to advance his interests ... is not likely to cause any missed sleep.
Raising the gasoline tax would go against his campaign promise [sic] that 90 percent of Americans will have lower tax bills under his presidency. Instead, the vehicle surcharge still costs taxpayers money, but he can still claim not raising taxes.

So, let's all pray for gas to skyrocket in price, so we can all pay off the additional costs to our cars that much sooner!

Rereading Atlas Shrugged

2009-05-18T10:55:00.006-04:00

I have started rereading Ayn Rand's magnum opus Atlas Shrugged, after having read it approximately 20 years ago. With a confession that is risking a torrent of fury from Randophiles, I must say that I find it a little disappointing upon the revisit. Since Atlas Shrugged is such a lodestone and flashpoint for lovers of personal responsibility, I plan to write a series of essays about my interpretation of her writing. This is the first.

My dominant impression, so far, is that she makes her points in an almost cartoonish way -- unrelentingly, repetitively, and obviously. Rand does NOT deal in subtlety or nuance. At first, the style is powerful, as her lexicon vividly limns the characters. After a while, however, its constancy becomes distracting -- you find yourself thinking, "Enough already!"

First, Ayn Rand is a superb writer; she can evoke images and scenes that the reader sees with perfect clarity.

"Far in the distance, beyond the mill structures, she saw a string of gondolas waiting on a siding. The bridge of an overhead crane cut the sky above them. The crane was moving. Its huge magnet held a load of rails glued to a disk by the sole power of contact. There was no trace of sun in the gray spread of clouds, yet the rails glistened, as if the metal caught light out of space. The metal was a greenish-blue. The great chain stopped over a car, descended, jerked in a brief spasm and left the rails in the car. The crane moved back in majestic in difference; it looked like the giant drawing of a geometrical theorem moving above the men and the earth."
- Page 86

Not THAT is terrific writing.

I don't know how literature professors classify Atlas Shrugged, but reading it I feel the same way I felt about reading Frank Norris's The Octopus, a perfect representative of the naturalism movement in literature, which sought to describe things as they are, with repetitive language used to conjure a sense of realism. (Of course, I read The Octopus in my early high-school years. Even then, my classmates and I got fed up with the repetition.)

With Atlas Shrugged ... it is one thing to have the predominant themes/observations ringing in every chapter to keep your perspective front-of-mind, but when they occur every page ... it becomes distracting. As a reader, you find yourself, literally, jolted back into reality -- death-knell for a novel -- where you say to yourself, "Okay, okay -- I get your point! Your heroes are supermen and superwomen with intelligence, endurance, and grace beyond mortal understanding." Some examples:

The reader's first introduction to oil magnate Ellis Wyatt:

"The man who entered was a stranger. He was young, tall, and something about him suggested violence, though she could not say what it was, because the first trait one grasped about him was a quality of self-control that seemed almost arrogant. He had dark eyes, disheveled hair, and his clothes were expensive, but worn as if he did not care or notice what he wore."
- Page 81

Dagny Taggart and Hank Rearden watching "Rearden Metal" (an advanced metal alloy with unlimited possibilities) being produced:

"Rearden Metal..."
He noticed that, but said nothing. He glanced at her, then turned back to the window.
"Hank, this is great."
"Yes."
He said it, simply, openly. There was no flattered pleasure in his voice, and no modesty. This, she knew, was a tribute to her, the rarest one person could pay another: the tribute of being free to acknowledge one's own greatness, knowing that it is understood.
- Page 86

Keep in mind that pronouncements of the characters' virtues such as these are not presented in every chapter -- they occur almost every paragraph. Reading a Rand novel is a bit like being hit over the head with an Objectivist shovel.

As anyone who knows anything about Ayn Rand realizes, she does not deal in gray; everything is black and white. That holds true for Atlas Shrugged (and The Fountainhead). People are either good ("clean," "angular," "graceful," "reasoned") or bad/evil ("slack," "slow," "impulsive"), and good people make good decision, while evil people make evil decisions.

I recognize that Rand was writing the shining example of her Objectivist philosophy and, hence, wanted it to be her "purest" exemplar of how objectivists (and non-objectivists) are. (Notably, she does not write about how objectivists should be. As will be discussed below, it appears that you are either born an objectivist ... or you will never be one.)

Nevertheless, her fiction is not an accurate reflection of life -- who, after all, is 100 percent good? (Even Ron Paul has his faults.)

The most irritating aspect of the book -- and, ultimately, its most limiting -- is that the heroes of the book are all born as objectivists. Not a single person sees the error of his/her ways, and grows to correct any inherent flaws. I am currently on page 135, and Rand has introduced three main characters (all business titans) who serve as model objectivists. Unfortunately for us mortals, all three have known from their earliest days how truly special and gifted they are.

To wit, Hank Rearden:

"...[H]e owned [the mines] as of that morning. He was thirty years old. What had gone on in the years between did not matter, just as pain had not mattered. He had worked in mines, in foundries, in the steel mills of the north, moving toward the purpose he had chosen. All he remembered of those jobs was that the men around him had never seemed to know what to do, while he had always known."
- Page 30

Dagny Taggart:

"Dagny Taggart was nine years old when she decided that she would run the Taggart Transcontinental Railroad some day....She never tried to explain why she liked the railroad....She felt the same emotion in school, in classes of mathematics, the only lessons she liked. She felt the excitement of solving problems, the insolent delight of taking up a challenge and disposing of it without effort, the eagerness to meet another, harder test.

"Studying mathematics, she felt, quite simply and all at once: 'How great that men have done this" and 'How wonderful that I'm so good at it.'"
- Pages 50-51

Franciso d'Anconia:

"When I run Taggart Transcontinental..." Dagny would say at times. "When I run d'Anconia Copper..." said Francisco. They never had to explain the rest to each other; they knew each other's goal and motive."
- Page 95

In addition to knowing one's life's pursuit at an absurdly early age, Rand's protagonists are superbly intelligent. At 12 years old, Francisco d'Anconia is already impressing adults:

Francisco's notes of calculation were still scattered about on the ground; [Dagny's] father picked them up, looked at them, then asked, 'Francisco, how many years of algebra have you had?' 'Two years.' 'Who taught you to do this?' 'Oh, that's just something I figured out.' [Dagny] did not know that what her father held on the crumpled sheets of paper was the crude version of a differential equation."
- Page 93

Well, since I did not instinctively "create" differential calculus when I was 12 years old, I humbly recognize that I do not fit the mold of Rand's "superperson." Does that mean I should renounce my goals of grandeur? According to the models that Ayn Rand present, I should -- especially if I do not have a clear vision of exactly what I want to do (with a burning, unquenchable yearning, of course).

I certainly welcome prodigies and geniuses -- they are the lifeblood of innovation and progress. However, crucially, I have yet to see a single character born "average" (or, at least, not preternaturally brilliant) in an Ayn Rand book, and not blossom to greatness through education and/or hard work. The clear implication -- that you are either born with cognitive gifts and a focused purpose in life, in which case your success is assured -- or you have a completely corrupted personal philosophy that dooms you to unhappiness and proceeding through your days in slack-jawed torpor.

This reverence for elitism is what is most infuriating, because -- like it or not -- the vast majority of people do not have the acumen or native ability to accomplish feats of greatness. However, that does not mean that someone could not discover truths about the world and himself, and try disciplining his life according to a set of defined values.

Life is hard. Trying to craft a life that reflects values true to oneself, and raising children to do the same: now that is a hero.

For the reasons discussed, I think the best age group for reading her fiction is 15 to 24. Anyone older, I believe, would like to see character development and growth, as well as seeing people make mistakes and learning from them.

The GM Deal Stunk, But This Chrysler Deal Reeks

2009-05-10T00:51:00.003-04:00

"It is an old fallacy that it is a legitimate task of civil government to protect the less efficient producer against the competition of the more efficient....Such a privilege conveys to the privileged the benefits which the unhampered market provides only to those who succeed in best filling the wants of the consumers."
- Ludwig von Mises, Human Action

Let no one now doubt it -- the last few weeks have laid bare Barack Obama's intent and willingness to strong-arm American industry to conform to his wishes. I speak of the convoluted arc of the Chrysler Corporation, as its lenders and the State played chicken, with the State prevailing.

To recap, during Chrysler's painfully slow slide toward bankruptcy, it borrowed money from lenders, who were granted "senior-debt" status. (In bankruptcy, there is a hierarchy of payback as follows: bank debt, senior debt, junior debt, accounts payable, preferred stock and then common stock. This hierarchy is solidified in federal law.)

This translates during bankruptcy roughly as follows: repayment (usually via sale of assets) at 100 cents on the dollar starts with the most senior creditors, and continues down the rungs to subsequent debt-holders until all assets are liquidated. Usually, common stockholders receive, at most, pennies on the dollar -- this risk is also why common stockholders have the greatest upside with concomitant company success.

In Chrysler's case, lenders with senior-debt status included major banks, hedge funds, and asset managers. The United Auto Workers (UAW) had a financial stake in Chrysler via a trust fund for retiree health insurance. (Similar to the arrangement the union had with GM, discussed previously.) This trust fund had junior-debt status, meaning it stood in line behind other lenders to be repaid in the event of bankruptcy.

Now, Obama and the Democrats ABSOLUTELY do not want any auto manufacturer to go bankrupt, because that would be the death knell for the still-lush salaries and benefits of its union workers.

And, much more importantly, it would probably cripple the political donations made by the UAW to Democrats. And we are not talking about meager amounts, either: since 1990, the Center for Responsive Politics reported that the UAW has donated over $25 million to political campaigns -- of which 99 percent has gone to Democrats. There is a better chance Obama will be honored at the National Rifle Association than Democratic politicians will not pull out all stops to protect the UAW.

So, when it became clear that Chrysler was perilously close to bankruptcy, panic mode set in at the White House. (After all, the UAW spent nearly $5 million to help get Obama elected.) The Administration crafted a deal whereby the UAW would own 55 percent of Chrysler, the Italian auto maker Fiat would own 35 percent, and the government 10 percent.

Obama offered the senior creditors 32 cents on the dollar for their stakes, and managed to "convince" many of the lenders to accept the offer. Four banks holding 70 percent of the debt agreed to a deal, while other lenders held out, believing they could get 65 cents on the dollar in a bankruptcy hearing. Since all of the lenders could not agree to terms, Chrysler declared bankruptcy this past week.

Now, about those four banks who agreed to the deal? It just so happens that they -- J.P Morgan, Citi, Morgan Stanley and Goldman Sachs -- received billions and billions of dollars from the Troubled Asset Relief Program (TARP) and other subsequent bailouts. As a result, they were in no position to resist Obama's offer -- he owns them. (Live by the sword, die by the sword.)

Obama then went on the offensive with a briefing to shame the remaining lenders that did not accept his absurd offer. His remarks are worth noting as exemplars of the audacity of doubletalk. Portions follow:

"But as I've said from the start, we simply cannot keep this company, or any company, afloat on an endless supply of tax dollars. My job, as President, is to ensure that if tax dollars are being put on the line, they are being invested in a real fix that will make Chrysler more competitive."

Actually, I don't think he's ever said "that" from the start. However, simply by stating that he has, he's granted himself legitimacy as a good steward of American taxpayer dollars. Which, given his sickeningly bloated $3.4 trillion budget for FY 2010, is such a baldfaced lie that I am baffled how anyone but a narcissistic politician (pardon the redundancy) can deliver those words with a straight face.

Additionally, he only refers to our money he's spending as "taxpayer dollars" when it suits his purposes to be seen as respecting this great responsibility he's been given. Most of the time, when he is discussing one pet spending plan after another, our hard-earned money is referred to as "investment funds," or other such nonsense.

To continue:

"But over the past month, seemingly insurmountable obstacles have been overcome, and Chrysler's most important stakeholders -- from the United Auto Workers to Chrysler's largest lenders ... -- have agreed to make major sacrifices."

Priceless. The "important stakeholders" he references who have made "major sacrifices"? The UAW has been granted a potentially sweeter deal than it received under the GM reorganization. The UAW will own a majority stake in Chrysler -- just let that percolate for a while -- even though it was far down the pecking order in terms of being repaid.

This issue is the linchpin of why so many people are outraged over the Chrysler deal. Let me be clear -- Obama flouted long-standing bankruptcy jurisprudence by moving the union up the repayment hierarchy, ahead of senior creditors. These actions are probably illegal, but who in their right mind is going to cross paths with a president? It would take years for a case to work its way through the courts; in the meantime, the bully pulpit you have doesn't even begin to compare to the bully pulpit the president has. Not even close.

But the interpersonal, Administration-versus-company controversies are but a sideshow to the real problem. What do you think might happen to investment capital now? Companies lend funds at lower rates, as long as they are granted senior-creditor status. (In other words, lenders are willing to accept lower interest rates in exchange for a greater likelihood that they will receive a greater proportion of their principal back if bankruptcy occurs.)

What lender, in his right mind, would offer to lend money at a low rate if they cannot even trust their place in line for repayment during bankruptcy? Therein lies a major reason why the State, with its disproportionate influence above and beyond its expertise, should not become directly involved in private-sector financial transactions.

And, given that our president has so little business education that he does not understand that profits and earnings are the same, businesses are going to be loathe to tiptoe out on a limb the least bit. This Administration might saw off that branch, either to help another party or out of sheer ignorance.

This scenario, single-handedly created by the Administration, has the potential to stifle lending as much as, if not more so, than the subprime lending mess. Amity Shlaes, who wroteThe Forgotten Man: A New History of the Great Depression, has a thesis that the Hoover and Roosevelt Administrations prolonged, and deepened, the Great Depression with their inconsistent and unpredictable business interactions and decisions. Companies that must deal with an uncertain capital, investment, or regulatory environment are much more likely simply to hoard their cash, and ride out the storm.

Height of Irony: TV Execs Begging Obama for Scheduling Relief

2009-05-01T10:52:00.005-04:00

Barack Obama held his third prime-time news conference this past Wednesday (April 29th). It is widely reported that his prime-time news/press conferences costs each of the major networks between $9 million and $10 million in revenue due to lost advertising time.

As a result, the networks are apparently begging Obama to think about their pocketbooks when he considers the timing of future prime-time events. The AP reported on this, probably not recognizing the hilarity of the situation:

"An executive at one of the three other broadcasters, who asked for anonymity because the conversations were private, said that network's executives had expressed concern to the White House about the frequency of prime-time news conferences and the financial sacrifice they were making in carrying the event."

I am sure I am not the only person to see the irony of a for-profit corporation beseeching Obama -- who believes the private sector is a piggy bank for his donor base -- to respect their need to generate revenue.

At the same time, mind you, the television networks are asking Obama to take a lower profile by not appearing on prime time. Good luck. We're talking about the same narcissist who campaigned on a stage resembling a Greek temple:

and who couldn't even wait to be inaugurated before giving himself a fancy title and lectern:

I have one suggestion to ABC, CBS, and NBC: mark your calendars for the Second 100 Days, and the Third 100 Days, and the ....

The Swine Flu Is Already Infecting American Business

2009-04-28T21:04:00.005-04:00

The Washington Post reported today that the Treasury Department has created a plan to take a 50-percent ownership stake in General Motors; however, bondholders, who are critical ownership stakeholders, are recalcitrant. The other major decisionmaker is the United Autoworkers (UAW). An analysis of the plan follows.

US Government Wants to Partially [sic] Nationalize GM

Below I list the three major ownership constituencies of GM, the capitalization invested or owed by each party*, and the resulting ownership stake the government will "grant" each party. (*Note that, while the UAW has not invested directly in GM, it is owed $20 billion for a health fund for retired workers. This trust is roughly equivalent to an ownership stake.)

You don't have to have solved Fermat's Last Theorum to do the math: Bondholders have invested almost fifty percent more than the union, yet the union will own almost four times the amount of GM as the bondholders will. Bondholders have invested more than fifty percent than the federal government has, yet the government will own more than five times as much GM as the bondholders will.

So, in keeping with the Statist, worker-friendly, business-unfriendly attitude of the Obama Administration, this much is clear: The government takes care of itself and the union, and leaves bondholders out to dry.

The bondholders still have until May 8th to agree to this plan, or else GM will almost assuredly have to declare Chapter 11 bankruptcy, under which its assets will be sold off for a fraction of their sticker price. Nevertheless, the bondholders believe that bankruptcy might present them with the best salvage opportunity.

This formula does not bode well for "kick-starting" the economy, because "bondholders" will be a dying breed -- potential investors will treat future bond offerings like the plague. Not exactly the best way to encourage investment.

The Fatuity of the Supporters of the Gov't Nationalization Plan

And, again, we see the so-called mainstream media acting as the government's press agency. The Washington Post story buried the details of the government's plan in the middle of the story, and did not even provide a simple analysis of the relative winners and losers of the plan.

Defenders of the government plan offered up biased, feeble support that was rife with errors of principle and purpose. The Washington Post reported the Obama Administration's (unattributed, of course) defense of the union's proposed ownership stake:

"Administration officials argued that the UAW was making other sacrifices in wages and benefits, and that the company could not function without workers."

Actually, Unnamed Administration Officials, GM can function just fine without workers -- without UAW workers, that is. Plenty of foreign automakers have plants operating in the U.S. without UAW workers. The big difference between their plants and every UAW-dominated plant, of course, is that the non-unionized plants are ... profitable.

The very next paragraph showed how little Representative Gary Peters (D-MI) understands basic business concepts:

"Our state has been hit hard enough already," Rep. Gary Peters, (D-Mich.) said in a statement. "The purpose of providing General Motors taxpayer funded loans was not just to keep GM in business, but to preserve American jobs. . . . We all know that GM must make cutbacks, but preserving as many American jobs as possible must be the primary goal of all restructuring efforts." [emphasis mine]

No, Congressman Peters, the primary goal of "all restructuring efforts" is to return GM to profitability, so it becomes a going concern -- without the need for continued taxpayer welfare to prop up GM's fetid business model. "Preserving as many ... jobs as possible" is exactly what GM (and Chrysler and Ford, for that matter) has been doing for years. That business practice, without buyer demand to soak up the supply of cars, led GM to bleed itself dry of cash.

And, to top it off, the Washington Post reports the infamous politician's trick of saying exactly what the public wants to hear, shamelessly ignoring facts that dispute his assertions:

"But the Obama administration said yesterday that it would not seek any seats on the company's board and vowed to take a hands-off approach to GM management. "This administration and this government have no desire to run an auto company on a day-to-day basis," said White House press secretary Robert Gibbs." [emphasis mine]

How quickly Mr. Gibbs (conveniently) forgets. Not one month ago, the Obama Administration forced out Chief Executive Officer Rick Wagoner because officials felt he was unable to lead GM to success.

And, does anyone believe that the Administration will stand by and let GM continue to build SUVs and pickups (its only profitable vehicles)? The Administration merely needs to assert that it must intervene in GM's operations in order to act as a "prudent steward" of the taxpayers' money. It can then claim the high moral ground, and proceed to implement the Administration's wishes -- not the wishes of GM. Or the taxpayers.

Not quite 100 days into office, President Obama is doing a fine job of putting big business under the thumb of the State. The potential long-term damage is clear. In addition to investment in American industry potentially being snuffed out, big business now understands that the once-unthinkable step of the federal government injecting itself into (or making) corporations' financial, strategic, and structural decisions is not only real, but commonplace. (For any doubters, see: entire investment and commercial banking sector. See: Chrysler.)

And, for anyone who thinks that GM will be the last company in which the Administration wants to tamper, I have a blank sheet of paper entitled "The Government's Guide to Better Business Practices" to sell you.

Obama and Torture: Truth or Consequences?

2009-04-23T22:45:00.005-04:00

As the entire world now knows, President Barack Obama has released selected memos from the Bush Administration that detail certain aspects of the so-called "enhanced interrogation" ("torture," according to anyone who is honest) program.

The release of the memos has triggered a storm of controversy among liberals and conservatives. How Obama handles this will reveal a lot about his true intentions.

Back to the firestorm. Liberals want blood -- specifically, Bush Administration officials' blood, for approving and engaging in torturing of suspected al Queda operatives. (And, also, simply because they are Bush Administration officials.) Conservatives also want blood -- anyone's blood who threatens national security by releasing interrogation techniques which would, presumably, alert America's enemies about how we extract information from captives.

On Sunday, Rahm Emmanuel followed up the memos' release by stating unequivocally that prosecuting Bush Admin officials involved in the torture program was off the table. (Generating predictable outrage from the left.) Just 48 hours later, however, Obama wavered a bit on Emmanuel's stance, and indicated that he was not interested in prosecuting those who conducted the torture; however, he left open the possibility of prosecuting officials who provided legal justification for the torture. (Generating predictable outrage from the right.)

As I have written before, I am firmly opposed to torturing captives for two reasons: first, because it is not been shown to extract useful, actionable information; rather, the captive tends to "reveal" whatever he or she believes the guards want to hear. Secondly, and more importantly, I believe that torturing another person -- especially by the State, which can always concoct a reason in the name of "national security" -- is morally reprehensible. No government should ever have that authority -- especially since torture has been shown not to work.

One of the emerging debates about the government's torture program is whether or not actionable intelligence was obtained. The Bush Administration, no surprise, has been trumpeting that the program yielded information that helped stave off terrorist attacks.

Clearly, governmental inquiries of some type will occur to understand the "value" of the program, as well as its legality. Such detail will be important, in case future geopolitical circumstances devolve ... to the point where government officials determine that torturing captured enemies for their intelligence is worthwhile.

I see a government investigation proceeding in one of two ways: 1) a search for the truth (to guide future decisions, among other reasons), in which case the best approach would be to grant complete immunity to participants; or, 2) a criminal prosecution, in which case immunity would not be granted to all participants.

According to Emmanuel, the administration is not interested in pursuing a criminal investigation. According to Obama, those who provided the legal justification and cover for the torture might be prosecutable.

Granted, Congress operates independently of the executive branch, and may proceed along a path different from what Obama would prefer. Nevertheless, he will certainly share his preference regarding the direction and purpose of any inquiry. Where he ultimately leans will be quite telling.

So ... what shall it be -- truth, or consequences?

Reflections on Tax Day and Taxation

2009-04-19T11:52:00.004-04:00

"The intelligent man, when he pays taxes, certainly does not believe that he is making a prudent and productive investment of his money; on the contrary, he feels that he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him."

- H.L. Menken, More of the Same (1925)

April 15th has come and gone, and I felt it appropriate to share some my thoughts about that deadline for submitting income taxes, and about taxation in general.

With the possible exception of conscription, taxation is the most direct and visible State intervention into our lives. Whether one believes the current level of taxation is appropriate or not, there is no escaping the blunt reality that it is forced confiscation of citizens' private property. (With the State having a legal monopoly on violence, "forced confiscation" is not an exaggeration.)

Taxes fund government for tasks that people believe the government can perform, or perform better, than they can. Just about everybody agrees that, at a minimum, taxes are necessary to fund government to perform the following: 1) defend Americans from foreign and domestic threats, 2) develop and maintain infrastructure (i.e., roads, bridges, etc.), and 3) enforce contracts.

Once the government moves beyond those three basic functions, however, no topic elicits greater controversy and heated debate than the "proper" amount of taxation needed to support "necessary" government services. I, for one, think it unfathomable that people are content with having almost 50 percent of their income confiscated via taxes.

Perhaps the most brilliant, and pernicious, action the government implemented is the automatic withholding of federal income, state income, Social Security, and Medicare taxes from paychecks. The government knew that citizens would have fewer objections to paying high taxes if they never saw their full paycheck; mindsets would adjust to recognize only their take-home pay.

Just think about the concept of automatic withholding: The government takes your money out of your paycheck before you even see it -- and it's hard to miss what you never see. Essentially, the government has granted itself a greater claim to your income than you have, a Big-Brother concept if there ever was one.

As a small-business owner, my taxes are not withheld -- I send estimated federal and state income tax payments every calendar quarter. Let me tell you -- it is no fun writing checks to the government for thousands of dollars every three months. That simple act focuses one on the direct link between your income and government spending, and the government knows this. Government spending would be a fraction of current levels if automatic withholding never existed.

Another simple change that would directly affect government spending would be if Tax Day occurred one week before elections were held. Imagine how different the candidates would campaign if they knew voters' mindsets were shaped so recently by the grim reminders of paying taxes.

Of course, politicians understand how viscerally opposed people are to having taxes raised, which is why the federal government -- Republicans and Democrats alike -- has been funding itself via deficit spending.

Deficit financing is pure heroin to politicians -- since the "benefits" are seen almost immediately (at least, if the recipients have "shovels" at the "ready"), and the costs are pushed into the future (when the politicians are no longer in office and unaccountable), it is almost costless. The politicians get to hand out buckets of cash to their voters, and they will be long gone before the deficits have to be repaid.

Parallels Between Maritime Piracy and Home Defense

2009-04-11T22:47:00.005-04:00

As I'm sure everyone on the planet knows, the U.S. cargo ship Maersk Alabama was attacked recently by pirates. As of this posting (April 11, 2009), the captain was still being held by the pirates, though the crew of the Maersk Alabama was able to fight off the pirates and is now safe in Kenya.

Piracy off the coast of Somali is serious business -- one source has reported that pirates were paid over $150 million in ransom just from November 2007 to November 2008.

Why the prevalence of the piracy? Because the area in question is enormous -- over a million square miles -- making it very difficult for navies to patrol. Also, the International Maritime Organization (IMO), a specialized agency of the United Nations, prefers military action to be initiated by nations, rather than by the individual ships.

As I watched the saga of the Maersk Alabama unfold, I could not help but notice a parallel to the gun rights debate in this country.

Consider this: Various organizing bodies prefer that individual ships' defense against piracy be limited to escape measures; should a ship be taken captive by pirates, the preferred course of action is to let national governments' militaries and hostage-negotiation personnel handle attempts to recover the personnel and the ship.

Translation: If piracy is threatened, undergo escape or defensive -- but nonviolent -- measures to prevent a ship takeover. However, if such actions are unsuccessful, do not resist with force. Leave follow-up negotiations and any potential military responses to the countries' armed forces. Do not try such efforts yourselves.

How similar to the current, state-supported approach to crime: Undergo preventive measures -- install security systems, locks, etc. -- but, should an invader enter, or threaten to enter, your home, try contacting 911 and wait for the police response.

In both situations, waiting for the so-called 'cavalry' to arrive is, all-too-frequently, going to be too late. By the time a country's navy, or a precinct's police force, is able to respond to the crime, the aggression has already occurred -- and any casualties tend to be weighted unfavorably to the unarmed parties.

However, should a merchant ship, or a person's home, be stocked with people trained to respond to aggression with aggression, not only does the ship or home stand a better chance to remain secure, but the chance of future attacks is reduced, as would-be criminals will pass up an armed camp in favor of a defenseless one.

Such a stance, however, is not favored by States, because that takes power and authority out of their hands, and into the individuals' hands -- thus limiting their reliance on the State for protection. (And what authority wants to yield influence and power?)

A New Big, Bad SEC Sheriff In Town

2009-04-07T22:33:00.005-04:00

Today, Zachary Goldfarb in the Washington Post profiled the new Securities and Exchange Commission (SEC) enforcement director, Robert S. Khuzami. Completely unsurprisingly, the pro-establishment slant could have been submitted directly by the SEC's press office, ~~an annoying~~ a teeth-gritting pattern I have discussed before.

In addition to the Washington Post siphoning work from John Nester, Khuzami's comments are troubling for anyone who values liberty and a fair, nonintrusive government. Let's deconstruct the ~~fawning bio~~ article.

Khuzami discusses how the SEC has been tarnished by the Bernard L. Madoff fraud, leading to plans to "shake up" his team of 700 lawyers and -- you can see this coming a mile away -- "put more arrows in the SEC quiver." (Has any government bureaucrat ever expressly stated a need to tone down its authority?)

As if having whistleblower Harry Markopolos tell the SEC for NINE YEARS about Madoff's alleged fraud wasn't sufficient "firepower"? Markopolos did all the work for the SEC -- the agency merely had to open its mail. But, of course, the oldest admonition in the book -- more authority is not needed; simply enforcing existing rules would suffice -- would fall on deaf ears.

So, to be clear, the governmental agency falls on its face humiliatingly, and yet it will be rewarded with increased power. This is the same bureaucracy to whom people are willing to hand over their healthcare.

...Khuzami continues: "We'll distinguish ourselves in the future by being fast and furious."

Wonderful. Given that white-collar financial crimes are incredibly complex and arcane, what is not needed is painstaking, analytical investigation. Not sexy enough. What IS needed, instead, is the Wall Street equivalent of ~~jackbooted clowns~~ SWAT teams launching illegal no-knock raids. Yup, "fast and furious" lawyers will certainly (not) dot i's and cross t's to ensure effective prosecutions. Perhaps Khuzami is using that language to appeal to the anti-finance sentiment in the country.

In case the reader is not concerned about this soon-to-occur grab for power, consider the words of Alfred Jay Nock in Our Enemy, The State:

"[E]very assumption of State power, whether by gift or seizure, leaves society with so much less power; there is never, nor can be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power."

One can already sense that Khuzami is yearning to hear the strains of Il Buono, il Brutto, il Cattivo play as he swaggers through the doors of the NYSE's trading floor.

Abolish the Estate Tax

2009-04-05T17:19:00.003-04:00

The debate of the estate ("death") tax has resurfaced.

President Obama's American Reconstruction and Reinvestment Act of 2009 ("ARRA"), better known as the stimulus bill, contains language to freeze the estate tax permanently at 2009 levels, but Senators Jon Kyl (R-AZ) and Blanche Lincoln (D-AR) have proposed an amendment to reduce the rates.

What follows is my rationale, from a libertarian perspective, about why the estate/inheritance/death tax is unsound, and why it should end.

Background
The 2001 tax-cut law (Economic Growth and Tax Relief Reconciliation Act of 2001, or EGTRRA) gradually phased out the estate tax by raising the exemption level and reducing the top rate. In 2009, estates valued at more than $3.5 million per individual ($7 million per couple) owe tax, with a top rate of 45 percent. Under EGTRRA, the tax will disappear completely in 2010 but reappear in 2011 under its 2001 parameters, with a $1 million exemption and a 55 percent rate on the largest estates.

President Obama has proposed extending the tax permanently at its 2009 level (taxing estates worth more than $3.5m/$7.0m at up to 45%). The Lincoln-Kyl amendment to the budget resolution would pave the way for subsequent legislation to increase the exemption to $5 million per individuval/$10 million per couple, and reduce the top rate to 35 percent.

Ideological Debate
Few issues divide people as starkly -- few fence-sitters here -- as how the government should treat a person's wealth after he or she dies.

Liberals believe that taxing an estate -- especially for the rich who, they assume, can "afford" it -- is eminently fair, as a redistributive measure towards those less fortunate.

A more ideologically honest argument in favor of the estate tax, I believe, would be that passing wealth on to one's heirs provides them with an unfair, unearned financial advantage in the game of life.

I believe the so-called "death" tax should be eliminated entirely for multiple reasons.

Fiscal Reason for Eliminating the Estate Tax

The fiscal reason is that any assets -- be they real property, financial, business equipment, personal property, etc. -- have already been taxed multiple times. Consider, for example, the tax obligations placed on a car purchased in Virginia (where I live):

The car must be paid with income reduced by state and federal income taxes.
The cost of the car itself is increased by three percent sales tax.
Every year thereafter, the owner is assessed a five-percent personal property tax (although some relief is provided).

The end result is that shrunken income is used to purchase property made artificially more expensive by the government. (And, remember, the tax must be paid with taxable income.) While, it should be remembered, the State wants to extend its reach one last time when the owner dies, and confiscate half of the estate's value.

Philosophical/Ideological Reason for Eliminating the Estate Tax

I can understand (though disagree with) the thinking that guides the rationale of inheritances offering unfair to the heirs -- for why should someone who did not earn those assets be given essentially an unearned advantage in life?

Holders of that argument ignore -- nay, dissolve -- the rights of the property owner (i.e., the bequeathor). I have yet to hear a cogent argument about why the State deserves a claim on property of the deceased.

The inevitable, inescapable act of dying, it is implied, confers property rights for those assets to the State, which is a perfect example of the State's confiscatory nature to coercively demand any and all rights and property from the citizens.

As the economist Murray Rothbard states in For A New Liberty:

"Many people are willing to concede the justice and propriety of property rights and the free-market economy....But they balk at one point: inheritance. [W]hat ... is the justification for someone whose only merit is being born a Rockefeller inheriting far more wealth than someone born a Rothbard? The libertarian answer is to concentrate not on the recipient, the child Rockefeller or the child Rothbard, but to concentrate on the giver, the man who bestows the inheritance. For if Smith and Jones and Stargell have the right to their labor and property and to exchange the titles to this property for the similar property of others, they also have the right to give their property to whomever they wish."

The reality, I think , is that those in favor of an inheritance tax would probably not want their inheritance to their children halved. If that is the case, it is not logical to wish the opposite on someone else. Therein lies the basic flaw in so many ideological arguments: "Do as I say, not as I do."

The State: Charities Not Welcome

2009-03-30T22:17:00.001-04:00

In his Tuesday (March 24th) evening press conference, President Barack Obama discussed his tax proposal for charitable gifts. Though his defense of the proposal (excerpted below) sounded reasonable, a little historical knowledge and a dose of reality shed some light on what, exactly, is happening: a multi-billion-dollar transfer of wealth from charities to the federal government, furthering the State's continuing attempts to hijack the role of charitable organizations, and thus gain greater control over its citizens.

But first, the facts. Under current law, the tax deduction for those with annual incomes greater than $250,000 is 35 percent. (In other words, a charitable donation of $100 realizes a deduction of $35 from taxable income.) By comparison, the tax deduction for those making less than $250,000 annually is 28 percent.

Under Obama's proposal, the playing field for tax deductions for charitable contributions would be leveled at the lower 28-percent rate. In his news conference, President Obama explained his reasoning for lowering the rate for those in the upper-income bracket:

“Let's go back to the rate that existed under Ronald Reagan. People are still going to be able to make charitable contributions. It just means, if you give $100 and you're in this tax bracket, at a certain point, instead of being able to write off 36 percent or 39 percent, you're writing off 28 percent.

Now, if it's really a charitable contribution, I'm assuming that that shouldn't be the determining factor as to whether you're giving that $100 to the homeless shelter down the street.

And so this provision would affect about 1 percent of the American people. They would still get deductions. It's just that they wouldn't be able to write off 39 percent.

In that sense, what it would do is it would equalize. When I give $100, I'd get the same amount of deduction as when some, a bus driver who's making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent, he gets to write off 28 percent. I get to write off 39 percent. I don't think that's fair.

So I think this was a good idea. I think it is a realistic way for us to raise some revenue from people who've benefited enormously over the last several years.

It's not going to cripple them. They'll still be well-to-do. And, you know, ultimately, if we're going to tackle the serious problems that we've got, then, in some cases, those who are more fortunate are going to have to pay a little bit more.”

Sounds reasonable, right? Why, indeed, should the so-called "wealthy" let such a venal motivation as a tax deduction direct their charitable actions?

As much as Obama tries to paint the tax-deduction issue with idealistic brush strokes ("I'm assuming that that shouldn't be the determining factor as to whether you're giving that $100 to the homeless shelter down the street"), reality begs to differ. As explained in a Washington Post editorial, Martin Feldstein (economics professor at Harvard University, president emeritus of the National Bureau of Economic Research) explains how a "substantial body of economic research" indicates that, for every 10-percent increase in tax deductions, people donate that amount more. Therefore, Obama's proposal to decrease the tax deduction by seven percent for people in the upper-income brackets will translate to a corresponding seven-percent decrease in charitable giving.

Obama's beseeching that deductibility does not influence charitable donations aside, the reality is quite the opposite. The greater tax deduction that people receive from charitable donations, the more they donate. Period.

The motivation is not hard to understand: most people have a set percentage of their disposable income they plan to put toward their favorite charities. If their "donations fund" has shrunk (via a higher tax rate), they are unlikely to tap into other funds (e.g., vacation, entertainment, etc.) to make up the shortfall; they will just donate the reduced amount. Logical enough.

Before I shift to the larger implications of this tax proposal, I would just like to pose the following question: if people in higher-income brackets have presumably greater disposable income, and you believe that donating to charitable organizations is a worthwhile endeavor, wouldn't you want to encourage them donate more, rather than penalizing them?

Not so fast, says the State. (Or it would, if it was honest.) Because, given a choice, politicians much prefer being able to control how money is spent, so their pet projects, Statist goals, and favorite interest groups can be funded and rewarded (at taxpayer expense, of course). Leaving more money in control of those who earned it means that the government must trust the individuals to fund the "correct" (i.e., State-approved) projects.

Does anyone think that taxpayers would voluntarily donate to each of the 9,000 earmarks in the recent spending bill? Of course not, which is why coercive action is necessary to force Americans to fund these initiatives.

But this argument holds true for an increase of any tax -- whether it be a sales tax, county income tax, state income tax, federal income tax, personal property tax -- or a decrease in tax deductions (which amounts to the same).

Why, specifically, does the State hate charity? Because charity is competition to the State for providing services to the community.

Before welfare existed, churches and other local community organizations provided temporary succor to those residents who hit a stretch of bad luck. Before Medicare and Medicaid, physicians would negotiate payment rates or terms for those in financial distress.

However, relying on local charities and charitable actions is not a one-way street; accepting assistance endowed the recipient with an obligation to repay the service he or she received, even if the repayment was simply a renewed effort to escape the unpleasant circumstances.

Thus, personal responsibility is reinforced and enhanced, which leads to a better and more productive citizenry.

However, the intrusion of the State into how individuals cope with adversity diminishes the need for personal responsibility. Do welfare recipients feel a greater or lesser obligation to repay the government, compared to their local charity? Do individuals feel a greater obligation to ensure they pay Medicare in full, or their local doctor?

Thus, the State's all-encompassing need for power and control -- and any who doubt this need merely has to look at Obama's plans for the federal government to assume a dominant role in health care, the financial sector, education, etc. -- crowds out the private sector, rewards those with connections to politicians controlling the purse strings, and leads to a gradual -- but inevitable -- diminished sense of personal responsibility in its citizenry.

Al Gore for Earth Hour: Do As I Say, Not As I Do

2009-03-30T09:44:00.003-04:00

Mr. Global Warming himself, Al Gore, believed in Earth Hour's cause so much that, in the middle of that "sacred" hour, he had "a dozen or so floodlights grandly highlighting several trees and illuminating the driveway entrance of [his] mansion."

So reported Drew Johnson of the Tennessee Center for Policy Research. (Thanks, A.C. Kleinheider (story) and Matthew Hurtt (story).)

Torture Does Not Work

2009-03-29T12:23:00.005-04:00

The Washington Post reports today that the CIA's torturing of their supposed high-value captive, Abu Zubaida, not only yielded no useful intelligence, but the faulty intelligence he blurted sent hundreds of CIA officers on wild-goose chases around the world.

Additionally, U.S. officials had known within weeks that Zubaida was simply a travel agent of al-Queda -- but still insisted referring to him publicly as "al-Queda's chief of operations," a "trusted associated" of Osama bin Laden, and "a major figure in the planning of the September 11, 2001, terrorist attacks." None of which was true. Nice. Way to be straight with the American public, George Bush, Dick Cheney, and their flunkies.

To those willing to consider the issue dispassionately, this torture-providing-false-information situation is not only unsurprising, but entirely predictable. There is plenty of evidence showing exactly this: 1) captives being tortured will say anything to stop the torment, and 2) correct -- not faulty -- information, and more of it, can be obtained using standard psychological techniques.

Consider the opinion of Army Col. Stuart Herrington, a military intelligence specialist who conducted interrogations in Vietnam, Panama and Iraq during Desert Storm, and who was sent by the Pentagon in 2003 to Iraq:

Aside from its immorality and its illegality, says Herrington, torture is simply "not a good way to get information." In his experience, nine out of 10 people can be persuaded to talk with no "stress methods" at all, let alone cruel and unusual ones.

There is not a shred of evidence backing the hypothesis that torture yields valuable information. In addition, many interrogators have gone on record stating unequivocally that torture does not extract useful information. Sure, the Bush Administration proclaims to anyone in earshot that it obtained intelligence that foiled horrific plots against the country -- but, when pressed for evidence, shields itself behind the "national security" curtain.

In addition to torture simply not working, the United States, by condoning it, abdicates its status as the "city on a hill" -- a proud role shouldered by the country starting in 1630. Part of our country's cultural strength lies in presenting itself as a brighter beacon of hope, opportunity, liberty, and justice than any other country.

By proclaiming itself willing to use the same barbaric tactics as the most backward people on the planet, the United States drags itself to their level, rather than rising above such inhumane behavior. Our cultural strength, as a result, withers.

Also, any chance of our captured soldiers being treated humanely has evaporated. Knowing that their captured soldiers will be treated to "harsh interrogation tactics," the enemy will doubtless resort to torture on our servicemen, for revenge if nothing else.

I think it is time to re-evaluate the country's character if it shares the most reprehensible actions of the Inquisition. It is impossible to command the high moral ground if one is wallowing in slime.

It Turns Out The Government WILL Pay For Veterans' Combat Injuries

2009-03-22T15:57:00.004-04:00

Last week witnessed YAUOM (Yet Another Unbelievable Obama Moment). In an effort to control budget expenditures, President Barack Obama proposed billing war veterans' private insurance companies for treatment of amputations, post-traumatic stress disorder, and other combat-related injuries.

Just a short 48 hours later, Obama reversed his decision. White House spokesman Nick Shapiro explained the turnabout:

"While it comes as a surprise to those still entrenched in the old ways of Washington, the president carefully listened to the veterans service organizations and military service organizations' concerns, and then he decided on a course of action," Shapiro said. "Such consultation and collaboration were all too rare over the last decade -- they won't be rare in this administration, particularly when it comes to our veterans."

Let's hope, for our veterans' sake, that Shapiro is correct about the administration having "consultation and collaboration" with veterans. If not, they may not have the opportunity to prevent the president from cutting them off at the knees again, so to speak.

Let me be clear: this trial balloon, which would have only saved $540 million, would NEVER have been floated by anyone who respected and cared for our veterans, and who was humbled by their matchless sacrifices.

President Obama is perfectly content with spending trillions of taxpayers' dollars for reform measures that are guaranteed to weave the State's greasy tentacles of power into every facet of our lives, and will vacuum up an ever-greater portion of national wealth. But he, who does not have the political will to defend his campaign pledge [sic] to reform the earmark process, wants to weasel the federal government out of paying for combat-related injuries. (Injuries that were, it should be noted, initiated by presidential decisions to go to war.*)

*Unconstitutional, by the way.

I have many points of contention with the military policy of the U.S. I do not think the U.S. needs over 700 military bases around the world. I do not think the government needs U.S. taxpayers to fund military spending that is almost equal to the rest of the world combined. I do not think we need to be in Iraq and Afghanistan -- and I definitely don't think we need 50,000 American soldiers to be in Iraq for perpetuity. I do not think we need to ratcheting up the pressure and tension on Iran and Pakistan that may very well send our troops to war in those countries.

But those are issues for other posts. What I do agree with the military about is that our soldiers are the best, most honorable national treasures we have. Many Americans say they would die for our country. These men and women risk just that -- they put their lives on the line to protect and preserve our liberty.

I cannot imagine the responsibility to send U.S. troops into battle, with absolute knowledge that some will not come back alive, while some will come back alive, but missing limbs and having injuries that will haunt them the rest of their lives, and may impair their abilities to support their families.

No, I cannot imagine the weight on someone's shoulders who has to make that decision. However, I would think it an easy decision to honor those sacrifices by agreeing to care for those injuries.

There is absolutely no other justification for Obama's budget proposal. Quite simply, he does not feel the moral obligation to provide care for injured veterans. He is more than willing to send them to battle, but recognizing and bearing the financial responsibility for those actions? Not so much.

Obama's proposal illustrates perfectly clear how the State will pursue its own goals -- control and power -- but does not share the interests of American citizens. Alfred Jay Nock's unerring indictment of the State -- the lodestone of this blog -- is as true today as it was 73 years ago:

"The State always moves slowly and grudgingly towards any purpose that accrues to society's advantage, but moves rapidly and with alacrity towards one that accrues to its own advantage; nor does it ever move towards social purposes on its own initiative, but only under heavy pressure, while its motion towards anti-social purposes is self-sprung."

Let the AIG Bonuses Stand

2009-03-19T00:09:00.005-04:00

Update:
I think President Barack Obama is taking more correct (though decidedly unpopular) approach by directing "government lawyers to review the company's contracts to determine whether provisions guaranteeing the payments could be overturned." It remains to be seen, however, if he will be able to maintain his position in the face of public anger and Congressional meddling. His response to any bills sent to him by Congress to intervene in the AIG contracts will be telling.

Barney Frank wants to subpoena AIG for the list of employees who received bonuses. Where was his outrage when Franklin Raines and Jamie Gorelick left Fannie Mae in a shambles, after pocketing hundreds of millions of dollars? Oh, never mind -- they are powerful, well-connected, contributing insiders. The State rolls on.

Either the United States is governed by the rule of law, or is governed by the passions of elected officials who, after all, are supposed to have cooler heads and not be enticed into action by the whipsawing emotions of the public. That is why the United States has a republican, not direct democratic, system of government.

Original Post:
America's version of the Indonesia Tsunami struck our shores this week, in the form of insurance (former) giant AIG's revelation that it paid out bonuses to the tune of $165 million to current and former employees of its subsidiary AIG Financial Products. (The derivative-related shenanigans of AIG Financial Products, in case you've been on Mars, was responsible for the looming meltdown of AIG and its attendant need for $173 billion of taxpayer bailout funds.)

(For those interested, the Washington Post has an excellent three-part series on the genesis of AIG Financial Products, and how AIG morphed from a staid, boring insurance company into a firm that handed out credit-default swaps like Monopoly money.)

Adding fuel to the fire is that many of the bonuses were for retention purposes, yet many of the recipients no longer work for AIG. Only on Wall Street.

There is understandable public outrage at AIG, and politicians -- never ones to shrink from riding the waves of public sentiment to further their self-aggrandizing goals -- are predictably threatening a raft of efforts to "claw back" the bonus pool. Courtesy of Fox News, the proposed actions include the following:

Ten House Democrats introduced a bill Tuesday to tax all bonuses above $100,000 at 100 percent to recoup all the "outrageous" AIG bonuses. House Speaker Nancy Pelosi said in a statement that recouping a "substantial portion" through taxation is one of several viable possibilities.
Rep. Charlie Rangel, the Democratic chairman of the tax-writing House Ways and Means Committee, authored a resolution that would place a 90 percent income tax on bonuses above $250,000 for firms, like AIG, that received at least $5 billion in bailout money. Initially, Rangel said he was uncomfortable with the idea of meddling with the tax code as a solution to the AIG problem, but he told FOX News he "had an obligation to respond to the fears and anger of the people."
Senate Majority Leader Harry Reid also said Tuesday that legislation being crafted by Senate Finance Committee Chairman Max Baucus, D-Mont., would subject the bonuses to a tax of more than 90 percent.
Sen. Chuck Schumer, D-N.Y., said, "If (AIG CEO Edward) Liddy does nothing, we will act and will take this money back and return it to its rightful owners, the American taxpayers. We will take this money back by taxing virtually all of it."
Not to be outdone by anybody, Sen. Charles Grassley, R-IA, said, "...the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."

I think it is outrageous that the very people who caused American taxpayers $173 billion (and counting) were paid millions. Does that mean I think the government should annoint itself with the power to violate private contracts, and to confiscate private property? Absolutely not. While doing so would satisfy the populist hunger for retribution, I think the long-term consequences would be horrific.

Make no mistake about it: the United States has enjoyed the greatest accummulation of wealth and prosperity due entirely to its respect for property rights. Does anyone think that, having plundered legally-gotten gains, the State would never again stoop to such a level? If so, ask yourself why ever more products and services get taxed every year, while taxation, once applied, is NEVER removed.

The Scottish philosopher David Hume described the sanctity and importance of property rights in A Treatise of Human Nature better than I can, and it bears careful consideration:

"We have now run over the three fundamental laws of nature, that of the stability of possession, of its transference by consent, and of the performance of promises. ’Tis on the strict observance of those three laws, that the peace and security of human society entirely depend; nor is there any possibility of establishing a good correspondence among men, where these are neglected. Society is absolutely necessary for the well-being of men; and these are as necessary to the support of society. Whatever restraint they may impose on the passions of men, they are the real offspring of those passions, and are only a more artful and more refin’d way of satisfying them. Nothing is more vigilant and inventive than our passions; and nothing is more obvious, than the convention for the observance of these rules."

On the bright side, I must say it is quite comical to see politicians get purple-faced with rage over having (supposedly) no knowledge of the financial details of the AIG-employee contracts. Given that the Democratic Senators presented the country with almost no time or opportunity to read through the $1 trillion stimulus bill, I must say...

"How does it feel?"

Just Because the Press is Free, Does Not Mean It Acts Like It

2009-03-15T18:36:00.003-04:00

"I want to do everything I can to make this thing work, this new presidency work."
- Chris Matthews, November 8, 2008

My concerns are growing about the press being independent. I think most people would agree that the major media outlets, as do most people, have a favorable opinion of President Barack Obama. While a president liked by the people certainly doesn't bother me, a president that is fawned over by the media does not bode well for said government to be kept in check.

The Washington Post has been running profiles of Barack Obama, his family, Cabinet members, and his staff seemingly every day. Not surprisingly, the stories tend to treat their subjects somewhere in the range between positive and fawning.

The March 13, 2009 edition, however, struck me as particularly "non-independent." The picture below shows the above-the-fold, front page of the Washington Post that Friday:

Above the fold -- the most coveted real estate on a newspaper -- were only two stories: 1) an article about the economy, and 2) an article about President Obama's ethics adviser, Norm Eisen.

The Eisen article was a puff piece, to be sure, but what was even more frustrating was the 8" by 5" photo of Eisen's office, with Mr. Eisen -- the object of the story -- only comprising a tiny fraction of the photo.

To put it more clearly: there is approximately 100 square inches of newspaper space available above the fold on the front page. Of that 100 square inches, the picture of Eisen's office took up 40, and the article an additional 25 square inches or so. And Mr. Eisen's appearance in the picture? One square inch (and that's generous).

What stories did the ~~bio~~ ~~press release~~ article about Mr. Eisen bump?

A pattern of D.C. teachers allegedly being attacked by students.
House Speaker Nancy Pelosi denying that a second stimulus bill will be prepared soon.
Pope Benedict XVI issuing an unusual letter acknowledging his mistakes over embracing an excommunicated bishop who denied that Nazis killed Jews in gas chambers.

All news events worthy of above-the-fold treatment.

I recognize that the Washington Post is a business, and wants to provide content (i.e., anything Obama-related) in which its readership will be interested, and be willing to purchase. That being said, the Post is going a little overboard by having fully 40% of print space taken up by a nondescript picture of a nondescript office (bringing attention to a nondescript article).

Of course, complaining about the media being essentially public-relations outlets for the government (as well as for big business) is well-trod ground, with Edward Herman and Noam Chomsky's Manufacturing Consent one of the better-known depictions of the propagandizing role the press has assumed.

Having the press NOT be "independent and committed to discovering and reporting the truth" (as Herman and Chomsky portray quite convincingly) is the price we pay for two qualities of the modern press: the supremacy of advertising revenue, and the concentration of media ownership.

The consequence of advertising dollars being the dominant revenue stream for newspapers is that the interests of the advertisers take precedence over the interests of the subscribers. As a result, the newspaper cannot afford to take too many controversial stances, or turn over too many rocks, because that may scare away any staid, don't-rock-the-boat advertisers.

The second feature of the modern press -- concentration of media ownership -- also causes it to shy away from its traditional role of exposing malfeasance. The behemoth corporations that own many of the media outlets -- GE being a perfect example -- frequently have large contracts with government along their other lines of business. (Many subsidiaries of GE, for example, have government contracts in the fields of aviation, energy, healthcare, electrical distribution, and security.)

These corporations do not want to jeopardize any of their ongoing and potential government contracts by taking hard-hitting stances that might expose malperforming (or worse) government elements.

Not that I am only pointing blame at the Washington Post for its performance during the Obama Presidency. As Amanda Terkel itemizes in a scathing post, the Washington Post banged the loudest war drums during the run-up to the Iraq War in 2003, despite convincing evidence that Iraq had no WMD.

Much like it will be difficult to roll back the government's intrusion in our lives, expecting the press to get religion and start playing its ~~traditional~~ idealized role will be a long shot.

Signing Statements = Unlimited Authority. Any Problems?

2009-03-11T13:45:00.006-04:00

As reported in the Washington Post yesterday, President Obama seems set on continuing one of the more odious power-grabbing actions perpetrated by presidents: signing statements.

Presidential signing statements are, as stated by the Congressional Research Service (CRS),

"...[O]fficial pronouncements issued by the President contemporaneously to the signing of a bill into law that, in addition to commenting on the law generally, have been used to forward the President’s interpretation of the statutory language; to assert constitutional objections to the provisions contained therein; and, concordantly, to announce that the provisions of the law will be administered in a manner that comports with the Administration’s conception of the President’s constitutional prerogatives."

In other words, when Congress passes a law with which the president disagrees, he can simply issue a "signing statement" which will outline just how (or, alternatively, whether) he intends to execute the law.

Or, in other, other words, if the president doesn't like a law, he doesn't bother with it.

For some reason, I do not think our Founding Fathers intended for anyone to flout the law with little, if any, repercussions.

According to the same CRS report, presidents have used signing statements since the 19th century, but George W. Bush accelerated their use to warp speed. By contrast, the popular view of President Obama is that he will refuse to issue any signing statements, as one of his many (loudly proclaimed) drastic changes from the previous administration.

Not so. Although Obama deplored the use of Bush's signing statements while he was campaigning, he certainly did not shrink -- when pressed -- from the potential use of signing statements, as evidenced by his campaign's response to a survey issued in 2007:

Signing statements have been used by presidents of both parties, dating back to Andrew Jackson. While it is legitimate for a president to issue a signing statement to clarify his understanding of ambiguous provisions of statutes and to explain his view of how he intends to faithfully execute the law, it is a clear abuse of power to use such statements as a license to evade laws that the president does not like or as an end-run around provisions designed to foster accountability.

I will not use signing statements to nullify or undermine congressional instructions as enacted into law. The problem with this administration is that it has attached signing statements to legislation in an effort to change the meaning of the legislation, to avoid enforcing certain provisions of the legislation that the President does not like, and to raise implausible or dubious constitutional objections to the legislation. The fact that President Bush has issued signing statements to challenge over 1100 laws – more than any president in history – is a clear abuse of this prerogative. No one doubts that it is appropriate to use signing statements to protect a president's constitutional prerogatives; unfortunately, the Bush Administration has gone much further than that.

As it turns out, in 2007, all 12 presidential candidates (Republican and Democratic) were surveyed about this very issue. Not surprisingly, Rudy Guiliani, Mike Huckabee, and Fred Thompson -- the most hawkish of the candidates -- ~~refused~~ declined to answer the question.

With the exception of those three, Barack Obama's response was -- far and away -- the most aggressive in favor of signing statements. (Not quite the ranking expected by his fervent, slavish followers who, lulled by his melodic voice, don't bother to analyze his words?)

When considering his response, one could take the position that Obama, who was a senior lecturer (not "professor," his self-promotion aside) in constitutional law, either understands the "proper" role of signing statements, or was in no way going to hobble himself if and when he became president. Since he's been a politician all of his life, and a lecturer only a small part of it, I think the Politician threw the Lecturer to the side of the road like one of his used cigarette butts.

This is not to cast aspersions on only Obama for his attitude toward signing statements. Former President Bush took that fairly narrowly-defined concept, and twisted it beyond recognition so that he was, literally, operating above the law. Many laws.

Signing statements are a corruption of power, and an example of how the Executive Branch now dwarfs the other two. If a president disagrees with a bill Congress sends his way to sign into law, Article I, Section 7 of the Constitution gives him authority to disagree.

(Yes, Mr. Bush, it's called a "veto" -- of course, that means that Congress could still overrule you. Nope, can't have that? How about you just sign every bill into "law," and then inform the lawmakers that their so-called "laws" matter to everyone in the country except your office. Nice and neat ... except for the troubling fact that our forefathers left England to escape people who did not believe that all men are created equal.)

And, if pesky Congress overrides the veto, you can always petition the Supreme Court as a citizen. (Article III, Section 2, in case you're wondering, Mr. President.)

We shall see if Obama starts to rachet down the over-reaching authority of the State, or if he tries the Imperial Presidency on for size, and finds he likes it.

Trickle-Down Stimulus Funds

2009-03-09T23:01:00.003-04:00

The Washington Post has a lengthy article today about how, "as tens of billions of dollars in stimulus funds begin to flow across the country, states and federal agencies are gripped by disputes over whether the money is being used in ways that violate the letter or spirit of the legislation."

For example, Kansas is considering saving some of the state funds, even though such a use may not stimulate the economy. Texas is spending a tenth of its transportation funding on a highway loop around Houston, "despite criticism that the project goes against President Obama's call to move away from oil dependence."

Kentucky is planning to use the money to balance its budget. However, critics in Kentucky are (amusingly) angry that the funds won't be used for projects near and dear to their hearts. (As if the money the state spent this year THAT IT DID NOT HAVE isn't sufficient.)

The Washington Post article, predictably, leans towards chastising the state officials for potentially straying the slightest iota from the intent of the nonspecific block grants in the legislation. I'm sure many people will agree, and declare that any deviation from what the master architects created will dilute the impact of the stimulus.

I have a different take -- that federalism might actually be functioning as intended. Though most people remember the powers separated in the federal government (executive, legislative, and judicial branches), the Constitution includes another separation-of-powers division that, sadly, is becoming more of an unfair contest every year: the separation of powers between the national and state governments, as specifically articulated in Article I, Section 10 and the Tenth Amendment (my favorite amendment, by the way).

There is an organizing principle in Catholic social thought called "subsidiarity," which states that, in the words of David A. Bosnich, "Nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization."

In the context of political science, the smaller unit of government, the more closely it approximates a group of people acting consensually. For President Obama's stimulus bill, state officials -- who are more intimately familiar with their ballooning budgets and local needs than the cast of characters in Washington, DC who are determined to control the means of production -- are choosing to disburse the federal funds to best effect. Perhaps their decisions will be better than the feds', perhaps they won't.

I have zero sympathy for the states, which, due to the legal requirement to balance their budgets each year accords them barely more fiscal discipline than the federal government. However, I must confess a sneaking suspicion that any actions which pester those greedily snapping at stimulus funds must be doing something right.

Because what is really infuriating those in the federal government is that they no longer have complete control over who gets the money.

Obama: For Health Reform, "Every Voice Will [Not] Be Heard"

2009-03-06T09:53:00.003-05:00

Yesterday, President Obama hosted a healthcare summit, with over 150 elected officials and participants from representative groups. (Attendee list.) The purpose of the summit? In Obama's words, to "...lower costs for everyone, improve quality for everyone, and expand coverage to all Americans."

Because healthcare costs threaten to overwhelm the country's fiscal capacity, Obama appeared to welcome a range of viewpoints regarding reform:

"In this effort, every voice has to be heard. Every idea must be considered. Every option must be on the table."

Well, Mr. Obama, you're obviously willing to listen to the following voices:

Big Union (AFL-CIO, American Federation of State County and Municipal Employees, American Federation of Teachers, Building and Construction Trades Department, Communications Workers of America, National Education Association, Service Employees International Union, Teamsters, United Food and Commercial Workers International Union, United Auto Workers, United Steelworkers)

Liberal Think Tanks and Advocacy Organizations (AIDS Action, Campaign for America's Future, Center for American Progress, Change To Win, Families USA, Health Care for America Now, Human Rights Campaign, Physicians for a National Health Plan, People Improving Communities Through Organizing)

None of which are supportive of free markets, and free-market solutions to social problems. A sampling of respected organizations promoting health reform through private enterprise includes the following:

All of the above organizations have developed scholarship for healthcare reform with goals that parallel Obama's -- improving quality, lowering costs, increasing choice, and increasing coverage.

None were included. So much for listening to "every voice"and considering "every idea." I will be tracking the development of Obama's healthcare reform, but am highly, highly doubtful that the paper-thin range of ideas he will hear can meet any of his goals.

What do these developments have to do with shining a light on the encroaching, smothering influence of the State? To put it simply, as future posts will develop the reasoning, healthcare reform in this pro-government climate will only result in a patchwork of expensive (politician-demanded) mandates, higher costs, lower quality, and sufficient compliance requirements that Sarbanes-Oxley will look refreshing.

And make no mistake about the ideological tilt of any healthcare-reform plans or programs that will eventually emerge. If you have a seesaw with a sumo wrestler on one end, and an infant on the other end, the outcome is already decided.

Prince George's County Police Dept is Unbelievable

2009-03-05T20:37:00.003-05:00

Prince George's County (Maryland) Police Department is at it again. Not two days after I wrote about a police brutality case caught on video, the Washington Post reported today about actions (or, rather, inaction) by a Prince George's police officer that led directly to at least a dozen suspects in armed carjackings and robberies going free, or receiving vastly reduced sentences.

And, what did the police officer not do? As reported in the Post, Alphonso Hayes "routinely failed to follow up on leads, interview witnesses, file court paperwork, or appear at trials." And when Hayes became aware that his former supervisor, Gerard Hanley, was building a case against him, "cabinets full of his files disappeared."

Dereliction of duty has consequences. A suspect in a carjacking, who allegedly beat the victim with a lead pipe, was convicted in a string of later carjackings. (He was suspected in at least 30 subsequent carjackings, most while armed.)

We either have a grossly negligent police officer, or an officer who purposely hampered efforts to investigate crimes. The citizens of Prince George's County, after reading about their less-than-crack police force, are (understandably) probably nervous about what they should do if they need police assistance: they risk being abused, or the responding officer may LITERALLY IGNORE the crime.

Given the massive injustice subjected to the residents of Prince George's County, what are the alternatives, if any? (Keep in mind that the county has "one of the highest concentrations of violent crime in the Washington area.")

People of most ideological persuasions would agree that protection of the citizenry is a duty for the State. This concept was described by the English philosopher John Locke, in his discussion of the purpose of government in his Two Treatises of Government:

§. 92....government being for the preservation of every man’s right and property, by preserving him from the violence or injury of others, is for the good of the governed...

However, entrusting such power -- the legalized use of violence -- is enough to give anyone pause. Therefore, the general approach has been to "localize" State authority; in other words, giving such power to the smallest possible quantum of State organization that can fulfill the duties. (If a town can provide a police force, then no need for the state to have the authority; states will be involved in multi-town crimes. If a state can provide a militia to protect itself, then no need for the national government to have a National Guard.)

Localizing State authority serves two purposes: 1) It ensures that State officials are as close as possible to the community, rather than having too many faceless bureaucrats making decisions; and 2) should the authority become too overbearing, citizens can simply leave that jurisdiction.

Because possessing the legalized use of violence is such an awesome power, with tremendous temptation, anyone in that position must have extraordinary restraint, patience, discipline, and self-control. (Qualities quite possibly drummed out of recruits at the police academy for this department.)

A problem with State control and oversight of a community's police department is that the citizenry does not, really, have much ability to have their voices heard. Additionally, the police may not necessarily have a vested interest in furthering the safety goals of the community, in much the same way that executives of publicly-traded firms may not have the shareholders' best interests in mind. (Referred to as the agency dilemma.)

If the implicit social contract is broken between a police department and its jurisdiction, what are the citizens to do? Are the residents of Prince George's County going to move because their police officers have an annoying habit of abusing them, or safeguard serial violent criminals (see, possibly: Hayes, Alphonso)? No -- it's too impractical, too expensive, and they are too invested in their communities.

Murray Rothbard explored an alternative in For a New Liberty: private enterprise to the rescue. It seems completely counter intuitive, but that concept is just because we have only known State-supported protection. The chapter should be read in full to understand the various threads of Rothbard's thinking, but he addresses police protection for the poor, assurance of efficient and effective police, and the fact that we are already paying for police protection as taxpayers with little input.

There is another feature of a privately-funded police force that would especially appeal to residents of Prince George's County:

"Free-market police would not only be efficient, they would have a strong incentive to be courteous and to refrain from brutality against either their clients or their clients' friends or customers."

YAPBCIPGC (Yet Another Police Brutality Case in Prince Georges County)

2009-03-03T23:04:00.003-05:00

Poor Prince Georges County Police Department. Just when the department frees itself from its nanny, some clowns manage to besmirch its ~~shiny~~ corroded image.

Perhaps some explanation is due to those who do not follow news in the Washington Metro area, or are on overload from reading the latest in a string of police brutality incidents in that region. To set the stage: As reported by the Washington Post,

After a series of shootings early in the decade drew the attention of federal investigators, the county agreed to make the improvements under the watch of an independent monitor in 2004 to avoid legal action. At the time, FBI agents were also investigating four incidents in which suspects died after being injured in struggles with county police.

However, on February 10, the police department reported that it had improved to the point that it no longer requires federal oversight, and announced "...the end of nearly a decade of scrutiny by the Justice Department over allegations of excessive force." Prince Georges County Executive Jack B. Johnson was quoted as saying that the police department is "now ... considered a model for law enforcement."

Don't speak too soon, Jack. Barely three weeks later, Police Chief Roberto L. Hylton announced the suspension of two officers, John Wynkoop and Scott Wilson, who are seen on a police videotape beating and pepper-spraying a Latino motorist, Rafael Rodriguez, during a traffic stop in October 2008.

Wynkoop had charged Rodriguez with two counts of assault, consisting of Rodriguez punching him in the stomach, and then assaulting the two police officers even after Wilson pepper-sprayed him.

Thank goodness for police videotape. The videotape, subpoenaed by the defense attorney, shows Rodriguez questioning the citation. The tape shows Wynkoop ordering Rodriguez to turn off the car's engine and get out. Rodriguez does not immediately do so, and Wynkoop opens the door and pulls him out. Rodriguez does not punch or attempt to strike either officer on the tape.

The officers proceed to slam Rodriguez against the car, pepper-spray him, and beat him with a police baton. At some point, one of the officers manages to catch his breath enough to mock Rodriguez's accent.

It will be interesting, to say the least, to see what happens in this case. The evidence certainly does not look good for Messrs. Wynkoop and Wilson. If they are found guilty, justice had better be meted out swiftly and severely.

The extreme abuse of p0wer -- of which police brutality is at the apex -- is infuriating because the victims are, correlatively, powerless. Powerless, I might add, due to dictates of the State, which is quick to disarm "ordinary" citizens, but loathe to do so to itself.

And the public's mistrust of State functionaries policing themselves is justified. As only one example of many, a 2007 study of the Chicago Police Department found that, out of over 10,000 complaints of alleged police abuse, only 19 resulted in "meaningful discipline."

Looks like Jack Johnson has found his model for law enforcement.

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

2009-02-26T09:16:00.002-05:00

Well said.

Hey Government, Stay Away From Fraud!

2009-02-24T23:16:00.002-05:00

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.

2009-02-20T23:14:00.002-05:00

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"

2009-02-20T21:52:00.002-05:00

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?

2009-02-18T20:24:00.002-05:00

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

2009-02-16T21:47:00.004-05:00

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

2009-02-15T22:35:00.005-05:00

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.