Big things

December 20, 2010

Interesting article here asking why can’t we do big things anymore.  First, lets look at the list:

The recent quick fade of the Deficit Commission was the latest reminder that America no longer seems to have the stomach for big challenges.  There was a time – was it just a generation ago? – when Americans were legendary for doing vast, seemingly superhuman, projects:  the Interstate Highway System, the Apollo Missions, Hoover Dam, the Manhattan Project, the Normandy invasion, the Empire State Building, Social Security.

All of the above, with the exception of the Empire State building, are all creations of massive government.  If he’s going to praise war and socialism then, why does he not champion it now?

I have an answer as to why we cannot accomplish even simple things anymore.  There’s simply no room left given the size and scope of the federal government, its wealth confiscation, its overbearing regulations, its economic plannings.

I do love how he includes the Manhattan Project: government financing of the means of total annihilation.

Part of the reason he surmises is how technology has made everything smaller.  Ah yes, the beauty of the free market, capitalism, entrepreneurs taking risks, and we all are winners.

He only finally gets around to the real problem in passing:

Everybody’s a winner: The recruiting ad for the Pony Express said:  “Orphans Preferred.”  The ugly fact is that the building of America cost a lot of lives by putting men (and sometimes women) in dangerous, high-risk situations.  We don’t seem to have the intestinal fortitude for that kind of sacrifice anymore – and even if we did, our robust system of torts laws would make it too expensive to pursue anyway.  You probably can’t conquer outer space with a society that doesn’t keep score in youth soccer games, hands out participation trophies, and sues for every cut and bruise.  After all, the virtual bullets in a Halo gunfight don’t hurt.

Well of course.  Make government big enough, have ti do big enough things, and pretty soon it gets around to running, and ruining, everyone’s lives.  Sad, he doesn’t see the connection between the first paragraph and this one. In fact, he misses the picture entirely.  We do big things extremely well.  The big thing IS government.

“Peace” on the march

December 17, 2010

In further news on the warfare state,

The Obama administration plans to further step up attacks on Al Qaeda and Taliban insurgents in the tribal areas of Pakistan, to address one of the fundamental weaknesses uncovered in its year-end review of its Afghanistan war strategy.

Administration officials said the increased attacks across the Afghan border would help offset the Pakistani government’s continued refusal to move against the Qaeda leadership and their extremist allies, especially the Haqqani network. From havens in Pakistan’s North Waziristan region, those groups have carried out deadly assaults against American troops and have plotted attacks against the West, officials say.

In announcing on Thursday that the 97,000 American troops now in Afghanistan have made some fragile gains in the past year, President Obama said Pakistan was “increasingly coming to realize that the Al Qaeda and Taliban leaders who have been given safe havens pose a threat to Pakistan as well as the United States.”

We’re extending the war into Pakistan.

But the real strategy appears to be for the United States to do most of the work itself — at least until the Pakistanis step up. That means even more strikes using Predator and Reaper drones in Pakistan’s tribal areas, and possibly carrying out Special Forces operations along the border.

These are the same strategies and tactics employed by the previous administration, so criticized by then candidate Obama.  In fact, Obama has been far more aggressive than even Bush was regarding Pakistan and missile strikes.

Warfare is the life of the state.  I guess when the welfare state fails, one can always turn to war.  That’s what the nobel peace prize is about.

Con-law time

December 15, 2010

I’m not a professor of constitutional law, and thankfully so.  I think it goes without say that as we have one in the white  house currently, the last thing we’d need is any more.  But, that does raise for me at least, a very interesting question: If he’s a professor of constitutional law, I’d love to know which constitution.

The recent case regarding the obamacare mandate has sparked tremendous debate about its constitutionality.  In a case brought by Virginia (ah yes, Virginia, home to Jefferson, the Virginia resolutions nullifying the Alien and Sedition acts) a court threw out the mandate as beyond the powers of Congress.  This is but the first of many battles, one I’m going to wager here, will end up in a decision in the affirmative for the forces of the state.  The only victory over this monstrosity will be willful refusal by individuals and states.  Right now, we are voluntarily servile.

If one needs a JD from an Ivy League school to discuss the constitution, then we truly are doomed.  In fact, the writing down of laws and posting publicly thereof, is sort of, kind of, an old tradition.  The whole point is that anyone should be able to read, know, understand, and discuss the laws.  Obfuscation and arbitrary laws are, how we say it, tyranny.

The crux of the argument is the “necessary and proper” clause in the constitution.  So, to begin with, let’s examine the actual text:

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

I don’t claim to be a legal expert, nor can I cite from the vast number of decisions on this excerpt.  Perhaps the most famous case of the N and P clause was McCulloch.  I’m sure there are many others, including Wickard v. Filburn, the most heinous of decisions that allowed the government to prohibit farmers from growing wheat for their own use.  I guess property rights are the first things to vanish in dictatorships!!

So, this isn’t intended to be a full blown discourse on the N and P clause history.  In fact, it shouldn’t need to be.  What is “necessary and proper” is for citizens to be able to read and understand the words as written.  If we need specially trained lawyers to do that for us, then we’re no longer a republic.

First, let’s look at the relevant parts: “carrying into Execution the foregoing powers” and “all other powers vested by this Constitution”.  That alone ought to end the debate.  Clearly, the only things that the government can do must be entirely related to those powers specifically spelled out in the constitution.  Nothing more.  (It’s also why I have no faith in the courts.  95% of what the federal government does in unconstitutional and they’ve upheld all of it.  Why stop at the remaining 5%.)

Now, it also states that this applies to the government, or any “department or officer thereof”.  This surely means that the government, or any departments or officers must only execute those constitutionally authorized powers.  Nothing more.

Anything else the government does, anything that is beyond the scope of its constitutionally authorized powers, is null and void.  And in a sane world, that would be the end of it.

For instance, the principle of implied powers assumes that since only the federal government can make treaties and establish relationships with foreign governments, it ought to be able to provide the ambassadors travel and living expenses.

Another power is the admittance of new states into the union.  Oddly enough, the issue of leaving the union was never addressed.  I guess it required a bloodthirsty dictator to make union a one-way ticket.

The income tax, the life’s blood of statism, required a constitutional amendment.  Ought that fact alone prove the point.  If it was “necessary and proper” to tax the incomes of people, then an amendment wouldn’t have been “necessary”.

If one looks honestly at the constitution and still argues that the federal government can force someone to buy something, that they believe that somehow this fits into “necessary and proper”, then that person is either a liar or a fool.  In fact, if anyone with such lofty credentials hold such a view, that speaks volumes on the credentialing institutions.

I don’t want to hear recitation of the litany of court cases supporting this, opposing that, of particular of arcane legal proceedings.  It simply doesn’t matter.  This is just using flawed statist logic to support even more flawed statist logic.  Am I to believe that I am unable to read the document and understand it in its entirety, both its meaning and intent.  The words are actually quite clear.

There is no power granted to regulate the individual health of any citizen.  There is no power in the entirety of the  constitution to force anyone to do anything.  As such, there is absolutely nothing necessary nor proper about doing such.

This is really a very simple and easy problem.  However, we live in a world where the most intelligent and enlightened can’t read.  Or at the least, they cannot understand the clear and simple written word.

Living on borrowed dime

December 3, 2010

The government had finally crossed the threshold.  It is now living entirely as a fiction.  In other words, without fake money and debt, it would literally cease to exist.  And as much as that sounds wonderful, don’t get your hopes up just yet.

What is the situation: Table S-3 from the OMB Budget Summary Table

2010 Total Receipts – $2213 (billions)
2010 Total Mandatory Spending and Interest on the debt – $2245 (billions)

Mandatory spending (which is “mandatory”, required by law) and interest (which is mandatory, or they go into default) surpass all receipts to the government.

ALL discretionary spending, for the wars, roads, schools, trees, etc., EVERYTHING ELSE is borrowed or printed money.  Without that, the government would literally cease to exist.

The US government is living entirely on other people’s  money.  But, considering that so many millions of people are as well, it only makes sense.

Effects of QE2 already happening

November 14, 2010

Maybe it’s due to the first round, maybe the upcoming catastrophe, but I got this email which highlights perfectly the damage the fed has done.  For those of you who know, my love in life is fishing.  I buy (way too much!!!) fishing tackle online, and the retailers will send out promotional email.  It isn’t spam, as I signed up (I guess) when I ordered.  Anyways, here the latest email from them:


Here’s the situation: The Japanese Yen has increased in value by over 20% which means our cost for Megabass Lures has Gone Up almost 25%! This is not good. What was once almost affordable is now absurdly expensive. So we have stopped ordering Megabass for now. But, do we have a HUGE INVENTORY! What to do? Come on, you know the answer…..Let’s Have a SALE!!

Notice the key parts:  first the depreciation/debasement of the dollar has made imported goods much more expensive.  It’s not good?  No, it’s absolutely awful.  It hurts everyone.  And, they have stopped ordering Megabass lures directly as a result.

Now, a few things.  I’ve never used Megabass lures, they are for fishing I don’t do, and honestly, I would never spend that amount of money on lures.  But some do.  But now, because of the actions of the fed, they will have to pay far more, or worse, not be able to purchase.  And it will be felt in Japan as well.  No doubt, there are many other goods as well that US consumers won’t be able to purchase.  And no doubt as well, the Japanese government will see this (as well they should) as an attack on their economic well being.

This is policy driven economy its worst.  If anyone ever doubts just how destructive what the fed is doing really is, just read that email.

Catching up…

November 10, 2010

From the “I’ll believe when I see it” department:

The West is turning against big government – but what comes next?

The governments of what were the richest countries in the world may be broke, but what is interesting is their response to this: the plan is not to make themselves rich enough once again to do all the things that they used to do, but to rethink the whole enterprise so that government never again finds itself so extravagantly overextended.

On this side of the Atlantic, there is now a broad understanding that the social democratic project itself is unsustainable: that it has grown wildly beyond the principles of its inception and that the consequences of this are not only unaffordable, but positively damaging to national life and character…

If ordinary citizens are to be expected to take back more control and moral responsibility, then some pretty basic things will have to be on the table. First, they must be allowed to keep significantly more of what they earn. The lowering of taxes cannot be a vague intention or a pious hope. It is a sine qua non of a more self-reliant, independent, morally resourceful private life. (And, contrary to the androids’ argument, lower taxation does not conflict with cutting the deficit: in fact, lower rates of tax will increase growth and revenue.)

Note: it might be the case that tax cuts will enhance revenue, but that should NEVER be the argument for tax cuts.  I’d rather tax cuts dramatically reduce revenue, if for no other reason, than to force the shrinkage of leviathan.

And this is a perfect example of how ingrained statism is: “they must be allowed to keep”.  Seriously, “allowed to keep”, how about must not steal so much of their wealth?  That language implies that we’re allowed to keep more, as if the fundamental basic right of property, ownership of one’s self and product, is now a state privilege.  We’re allowed to keep more?  Gee, thanks.

And speaking of leviathan…

Boo hoo hoo, such a sad thing to read:

Thousands of Democrats to be jobless in Washington

Well, I wouldn’t call them “jobless”, as that implies the recently booted actually did something useful enough to be called a job.  I don’t think lording over us, imposing one’s will upon us, and harassing us with myriad of laws, taxes, and regulations, then enforcing such measures counts as a job.  In fact, peaceful removal from office sounds like getting off way too lightly.

And from the “This isn’t anything at all called capitalism department” (and the same article):

Former Clinton press secretary Joe Lockhart, who runs the Glover Park Group, was a bit more optimistic. In 1994, when the Democrats lost the House for the first time in 50 years – and the Senate as well – the lobbying and political strategy business was a lot smaller and foundations hardly had a presence. “The industry is much bigger than it was in 1994,” he said, and the “corporate footprint in town is bigger.” So each potential employer may not be filling many slots, he said, “but there are a lot more of them.”

So, there is a much larger footprint of rent seekers.  Not surprising as government has grown by leaps and bounds the past decade.  And, if nothing else, it disproves the spurious notion that somehow we’re a free market economy.  It certainly disproves without any doubt, that the last decade and a half was an unregulated, laissez faire, system.

On another note, let’s put to rest once and for all the myth that consumer spending drives an economy.  (I know, this data is simple, and easily accessible to even the most enlightened, credentialed, and honored.  I mean, I bet they even have internet access in the bowels of the NY Times.)

From the Bureau of Economic Analysis (government data, so it must be true!!) NIPA tables:

Table 1.1.5 GDP

Personal Consumption:

1999 6342.8
2000 6830.4
2001 7148.8
2002 7439.2
2003 7804
2004 8285.1
2005 8819
2006 9322.7
2007 9806.3
2008 10104.5
2009 10001.3

Gross Domestic Private Investment

1999 1641.5
2000 1772.2
2001 1661.9
2002 1647
2003 1729.7
2004 1968.6
2005 2172.2
2006 2327.2
2007 2295.2
2008 2096.7
2009 1589.2

Let’s put a few things into perspective.  In the last decade, consumer spending has increased by 37%.  And today, there are fewer people employed than a decade ago.  Unemployment is officially 9.6%, but the more accurate number, U6, shows over 17%.  And some estimates put it around 20% when one counts those that have dropped out completely.  2008-2009 saw a mere 1% drop in consumer spending, yet GDP (which is hardly the best measure of economic well being by the way) plummeted.  If spending drives an economy, then, this is hardly the data I’d want to sell that idea with.

Investment (and of course the malinvestment, but in a the wrong manner) drives an economy.  Jobs don’t magically appear with more consumer spending.  In fact, Austrians know that consumer spending is the last act in a long chain of events, the many and various stages of production, which results in satisfying consumer wants.  Investment declined precipitously, and that’s the problem.

It’s actually only half the problem, as much of the investment was of course monetary expansion, credit bubble induced, driving a boom which invariably busts.  But that’s already been covered here, and far better here.  It’s clear, and something even a nobel prize can’t change, that economic growth is driven by business investment.  Real investment, supported by real savings matching consumer time preferences, is the only way to improve economic well being and the standard of living.

Spend all you want, it won’t matter.  In fact, it’ll only make things worse.

On a final note, there’s three things the newly elected party in congress can do to convince me they are serious.

1) immediate vote on repeal of obamacare
2) end of baseline budgeting
3) across the board, 5% real reduction in spending on everything

Obviously, they’ll be fighting both the senate and the president.  But they can draw a line in the sand, so to speak.  And that’s far from all, but given the political reality and entrenched bureaucracy, it’ll at least be the first real step.

There’s much more to be done, for example:

-eliminate the departments of: commerce, education, energy, transportation, HHS, HUD, veterans affairs, interior, labor (this one HAS to go!!!), agriculture
-audit, then eventually eliminate, the Federal Reserve, and move towards once again a gold standard and 100% reserve system.  (Perhaps nothing at all, a system of free banking, but that’s an altogether more complicated and esoteric point, one I’m not willing to, nor qualified to, take a stand on.)
-repeal of legal tender laws
-eliminate the IRS
-eliminate the capital gains tax, corporate/business taxes
-require that any bill or spending program be constitutionally authorized (cf. Pelosi’s “are you serious?”)
-phase out all entitlement programs
-end the wars of empire.  I am not a “purist” libertarian, as I understand that sometimes defense and national security isn’t always black and white.  Sometimes, to quote Thucydides, “human nature being what it is”, not everyone is going to see non-aggression from the same point of view.  But unending wars and nation building, needs an abrupt end.

I’m sure there’s more.  But until they prove to me that they really are serious, I’m not holding out hope for change, or something like that.

Who teaches these people?

November 5, 2010

Peter Beinart claims the biggest loser in Tuesday’s election was Keynesianism.  Instead of being thankful, he is distraught:

The real loser is Keynesianism: The idea that when businesses and individuals stop spending, government must. That idea will not rebound; it’s over for this period in economic history. First Britain, and now the United States, are responding to the worst economic contraction in 75 years by contracting government, despite the fact that the world’s best economists are screaming that it’s exactly the wrong thing to do. As Virginia Thomas might say, “Have a good day!”

Actually the world’s best economists!!! say otherwise.  Even many non-Austrians have been saying the exact same thing.  Heck, there’s even a few Nobel laureates in there too.

In retrospect, maybe the greatest blame lies with America’s pre-recession policies.

Yes, 110% correct.  He gets it.

Um, not by a mile.

In retrospect, maybe the greatest blame lies with America’s pre-recession policies. For years, green-eyeshade types had been warning that America needed an economic surplus to prepare for the huge entitlement costs imposed by the baby boom retirement. Instead, George W. Bush—with a boost from Alan Greenspan—spent the surplus on war, tax cuts and expanding entitlements, leaving Americans anxious about debt even before the economic meltdown. Had America’s government done something about its long-term fiscal problems while times were good, perhaps America’s people would be more tolerant of the short-term spike in debt required by Keynesian stimulus. Instead, debt—even necessary debt–has become a metaphor for governmental irresponsibility and national decline. Fiscal restraint is to the anti-Obama Republicans what sexual restraint was to the anti-Clinton Republicans: the ultimate character test.

One, to create this so called “surplus” is technically impossible.  The government cannot save money, just sock it away for the future.  It must by default spend all it takes in.  (Yes, by necessity, to maintain the state, it must spend far more, but that’s another issue.)  If for instance, it was to actually “save”, let’s just say it took $100 billion out of the economy through taxation and just sealed it away in some vault.  (Of course, why should it when it can just print to its heart’s content.  And, true savings would have to be in the form of some solid, real, tangible currency.  A good possibility would be gold, but then again, that’s never been tried before.  Gold as money?  Are you kidding me?)

So, now the government (assuming no actual increase in the money supply) simply continues to extract such wealth from the economy.  In very short order, one would see massive contraction and the very same individuals (like Mr. Beinart) calling for releasing the reserves.

Two, the entire entitlement system is an unsustainable ponzi scheme.  There is simply no means to fix it, salvage it, or fund it.  Anyone who would argue such is a fool, or a liar.  Or, writer for the NY Times.

Debt is always destruction, as is inflation.  What caused this mess was the massive expansion of the money supply, the classic boom/bust cycle.  What Mr. Beinart has no understanding of is the causes, and real solutions, to the problem.  What is needed is far less taxing and spending, as little interference in the economy so it can liquidate the malinvestment and return to a savings backed, real investment driven growth model.  The latest attempts by the fed to inflate the economy are only going to delay real recovery and exacerbate the problems.

But Mr. Beinart ought to at least admit the utter failure of the bailouts, takeovers, spending, printing, debt, regulations, as well as the stunting power of regime uncertainty. At least the American people do.

Mr. Beinart is supposed to reflect the reasonable center-left, and as such, is taken to be a serious commentator and influential voice outside the usual partisan hackery.  Here, he shows no such acumen.

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