4/30/2009: The Goal Is Freedom: The Pretense of Regulatory Knowledge by Sheldon Richman

Sheldon Richman is the editor of The Freeman and In brief, and a contributor to The Concise Encyclopedia of Economics. TGIF appears Fridays. Comments welcome.

Advocates of the free market are sometimes parodied for their seemingly all-purpose answer to any problem: Let the market handle it. What may sound like a simplistic answer, however, is actually the most complex prescription imaginable. In the modern world, the workings of any particular market are so complicated, they are beyond the grasp of mere mortals. Moment by moment, day by day, so many subtly interrelated decisions are made by so many people worldwide that no individual or group could possibly understand the big picture in any detailed way. So there is nothing simplistic about proposing the market as a solution to an economic problem. It’s short way of saying: let the multitude of knowledgeable people seeking profit, risking their own money, and responding to incentives find a solution based on persuasion not force. Translated that way, it sounds like a promising approach.

Ironically, those who don’t appreciate markets are in fact the ones who offer a simplistic, even empty alleged solution to economic problems: government regulation. That phrase is uttered like an incantation, the magical answer to all doubts about how, in the absence of fully free markets, problems would be solved. The irony is that while “let the market handle it” can be unpacked and made specific, “regulation” cannot. It can only be interpreted this way: Appoint a czar or a committee to somehow watch over things, and all will be well.

We’re hearing this idea a lot these days. It’s the most popular suggestion for preventing a repetition of the turbulence in the financial markets: There’s not enough regulation. We need more regulation. When free-market advocates point out that the problems were caused by government’s systematic and deliberate weakening of market discipline in order to promote corporate profits through homeownership regardless of income or creditworthiness, the other side seems to want to say, “If we have proper regulation, we don’t need market discipline.”

But chanting “regulation” and “oversight” is not a solution to anything. It raises more questions than it answers. Even if we assume the regulatory body would be populated by honest, disinterested people (a wild assumption, we should realize by now), how would they know what to do? As noted, markets are complex beyond imagination. One may have a great deal of knowledge about one’s own sliver of a given market, but that would count for nothing were one called on to regulate the whole thing. Sure, the committee could collect data. But to what avail? Data are history. By the time it is collected, it is old.

Knowledge, Not Data

And that’s the least of the problems. The most important knowledge that fuels market activity is not data. It is not even convertible into data. It’s the kind of knowledge, or know-how, that people may realize they possess only when confronted with unexpected alternatives. They might not have been able to tell you in advance what they would have done under those circumstances, and they might not be able to tell you how they knew to do what they did. They found themselves in a situation and, based on their experience, savvy, and hunches, they spotted an opportunity and acted. Much financial-market activity is like that. Split-second decisions based on unverbalized flashes of insight leading, under the right circumstances, to serendipitous results. Put that into a computer model!

How are regulators to keep things under control with all that going on? Sitting in an ivory tower and writing regulations for a complex market is a recipe for stagnation, even chaos. Should everyone be required to file a form with the regulators before doing anything different from what was done in the past?

Those who understand little about markets fret that people trade exotic derivatives that even they don’t understand. Presumably, the regulators wouldn’t understand them either. Does this mean no one should be permitted to engage in a trade with someone else before the regulators understand it? That would be the precautionary principle applied to exchange, and it would scuttle valuable innovations in the financial markets — innovations that would provide liquidity to underpin production. Everyone would be held down to the level of bureaucrats who have no incentive, much less ability, to spot promising innovations when they see them.

Calling regulators bureaucrats is not just an insult; it’s also a description. Bureaucrats are not in the profit-and-loss game, as entrepreneurs in a (truly) free market are. They don’t gain financially from producing value, and they have no capital at risk. As we’ve learned from the Food and Drug Administration, they tend to be overcautious because if they might err, it’s better to err on the side of not letting something happen. They are more likely to be blamed if they allow something that later goes wrong.

When greater regulation is proposed after a crisis, it is assumed the regulators will keep an eye out for a repetition of the most recent problem. But that’s usually not the one to be concerned about. It’s the next, unforeseen problem that is worrisome. What reason is there to believe the regulators would be good at spotting that one?

These difficulties can be summed up by saying that regulation is plagued by the “knowledge problem” almost as much as central planning is. The regulator is nearly as knowledge-deprived as the planner is.

Knowledge Problem

F.A. Hayek described the knowledge problem in his seminal 1945 paper, “The Use of Knowledge in Society.” There he wrote,

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate given resources — if given is taken to mean given to a single mind which deliberately solves the problem set by these data. It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

In this light the government regulator more resembles a bull in a dark china shop than an intelligent guide for the market.

Hayek invoked the knowledge problem in expanding on Ludwig von Mises’s critique of central planning, which demonstrated that without private property and free exchange in the means of production, market prices and hence economic calculation were impossible. The planner can’t possibly know what the multitude in a market “knows.” (The quotes are to indicate that this is not all articulable information.)

Israel Kirzner followed up Mises and Hayek by applying the socialist-calculation critique directly to government regulation of the market in his paper “The Perils of Regulation: A Market-Process Approach.” The value of Kirzner’s argument lies is in his pointing out that although the advocate of regulation — unlike the advocate of central planning — seeks not to obliterate the market but only to modify it, facts of life that inevitably haunt the planner also plague the regulator.

Kirzner shows that along with all the other well-grounded reasons for skepticism about the efficacy of regulation, the Austrian school of economics can make an additional, distinctive case that is tied to one of the school’s core concepts: entrepreneurial discovery:

The perils associated with government regulation of the economy addressed here arise out of the impact that regulation can be expected to have on the discovery process, which the unregulated market tends to generate. Even if current market outcomes in some sense are judged unsatisfactory, intervention, and even intervention that can successfully achieve its immediate objectives, cannot be considered the obviously correct solution. After all, the very problems apparent in the market might generate processes of discovery and correction superior to those undertaken deliberately by government regulation. Deliberate intervention by the state not only might serve as an imperfect substitute for the spontaneous market process of discovery; but also might impede desirable processes of discovery the need for which has not been perceived by the government. Again, government regulation itself may generate new (unintended and undesired) processes of market adjustments that produce a final outcome even less preferred than what might have emerged in a free market.

Kirzner's insights apply to today's financial problems in several ways. First, the immense constellation of market regulations and other interventions works against entrepreneurial solutions to the problems. For instance, there might be investors willing to buy, at a discount, the investment banks’ bad mortgage-backed securities (this has happened in some cases), but why should a bank sell at the low current market price if the treasury secretary might be willing to pay more? Second, uncertainty about what new regulations are coming down the pike can only inhibit profit-seeking problem-solvers who may find their plans nullified by the regulators. Third, when new regulations are enacted, the market’s discovery process will once again be stifled, as disconnected regulators require or forbid conduct without knowing what they are doing or what the consequences will be.

So-called re-regulation, the hot word in Washington now, makes no sense, for even if the current problems were caused by the free market — which they were not — it would not follow that government regulation would produce better results.

In opposing government regulation, no free-market advocate believes the public should be left to the mercy of reckless speculators, short-sellers, and the like, whose activities have the potential to harm bystanders. The public does indeed need protection. What the free-market advocate understands, however, is that regulation is not protection but merely a shoddy, deceptive substitute for the only real protection available: market discipline.

Regulation By John A. Pugsley • December 1980 • Volume: 30 • Issue: 12

Every major industry in the world, including food, commodities, housing, transportation, medicine, energy, and money, is regulated at almost every level of government. Just listing the regulations pertaining to any single industry would take vol umes.

In the field of finance, the government regulates (among other things) the amount of interest each type of financial company can pay on loans, the amount that can be charged for loans, the way interest must be disclosed to borrowers, where finance companies can open offices, what their advertisements can and cannot say, what types of securities can be issued, what must be and what cannot be said about securities, who can sell them, and how the sellers can be compensated for their sales.

In the field of medicine, the government regulates (among other things) who can practice medicine, what schools can teach medicine, what courses are to be taught, what types of medicine are acceptable, where doctors can practice, what prescriptions are allowed, what drugs can be sold, under what conditions drugs can be sold, who can sell them, what education is required for those who sell them, in many cases what can be charged for them, who can manufacture them, and what can be said about them in advertisements.

In the field of transportation, government determines (among other things) who can operate airlines, buses, taxicabs, and railroads, what equipment is acceptable, how often equipment must be serviced, the timetable of service, where passengers can be taken, who can operate the equipment, how much can be charged, what attendants must tell passengers, how passengers must behave while being transported, and how much can be carried aboard the transporting vehicle.

In the transporting of goods, government regulates (among other things) the amount that can be shipped by different types of carriers, what routes carriers can take, how much each carrier can carry, what hours drivers and pilots can operate, what carriers can charge, who can operate transport equipment, how old operators must be, and what training and experience they must have.

Of course, food is perhaps the biggest industry of all, and certainly the most highly regulated. Take the case of a simple hamburger. A study by Colorado State University identified over 41,000 state and federal regulations that apply to this common sandwich. These regulations apply to everything from the grazing of beef cattle to the assembly of the burger at your local fast food outlet.

This is a small sample. Mountains of regulations suffocate every field of human endeavor, from medicine to manufacturing, from construction to energy. The government is out to protect us—from ourselves. How did politicians and bureaucrats become so concerned about our well-being?

The Source of Regulation

On the surface, the government’s regulation of business appears to be a genuine attempt at consumer protection. The regulations are justified on the grounds that they protect us from greed, ensure open competition in the marketplace, and protect our domestic economy. While there is a growing feeling that many government regulations are stifling business because of the inefficiency of the bureaucracy, still, almost everyone is for them in principle. But that is a part of every good sting. The victim must be totally convinced that he is benefiting even as he is being robbed.

The only reason individuals take action is because they believe they will get something they want by taking that action. People, in general, are not altruists. Yet it would seem that there must be some self-sacrificing individuals who are willing to devote their lives to designing regulations to protect us from greedy businessmen who would sell us shoddy or dangerous products. After all, how could a politician benefit from supporting business regulation? It must be that he has a genuine concern for the safety and well-being of the public. Otherwise, why would he work so hard to pass so many laws regulating business?

It’s simple. Politicians who support business regulation are not doing so because of deep-seated concern for public safety—they are merely meeting the demands of lobbyists who are hired and paid by businessmen. With only a few exceptions, the entire body of government regulations applying to business in the world today was designed and created by the very businessmen who are being regulated. These are self-imposed restrictions. However, do not think for a moment that these businessmen are altruists. These regulations are not aimed at them; they are aimed at you. Business regulation is the cleverest of all methods ever devised for taking money from you without your knowledge.

Sound far-fetched? Of course it does. We have been programmed our entire lives to believe that the government acts in the interest of the individual. We believe it is one giant consumer protection agency. In fact, it is nothing of the kind. It is one giant agency programmed to protect the business interests of established firms at the expense of the individual consumer.

Confidence Games Designed to Curb Competition

In real life, there are three ways that a businessman can limit his competition and thus gain your business by default: first, he can get the government to prevent the competitor from offering products at all; second, he can get the government to force the competitor to raise his price; and third, he can get the government to force his competitors’ costs up, thus indirectly forcing up the price.

All three of these methods are widespread confidence games that have been around for centuries. By getting government to limit the introduction of competitive products into the marketplace, any businessman can set his own prices for the same products much higher and you will buy from him without suspecting that he has forced you to do so.

If you still question this analysis, examine the evidence. Take some time and research the records regarding which individuals lobbied for regulations, designed the regulations, and reported violations of the regulations. Time after time, you’ll find that it was not wounded consumers who were responsible, but businesses already active in the market. Established airlines lobbied for creation of a Civil Aeronautics Board, volunteered to draft regulations governing airlines, and then screamed when deregulation was mentioned. Established banks lobbied for establishment of the Federal Reserve. Established trucking firms demanded regulation of interstate trucking; established shipping firms demanded regulation of ocean freight; established railroads demanded regulation of the rails. Established firms do not like competition. It threatens to take away their customers, and lower their profits. Free enterprise is a fine concept when a businessman wants to complain about government interference in his own affairs, but when competition threatens his markets, he is quick to point the political guns at his adversary.

When the entrenched firms succeed in getting the government to regulate their industry, you, the consumer, are the loser. You are not protected by these regulations; you are denied the chance to buy the product of someone who might have been willing to offer you a lower price or a different quality. You are deprived of your chance to set your own values on goods.

Conclusion: Intervention Lowers the Standard of Living

Price controls, wage controls, antitrust laws, professional licensing laws, minimum wage laws, immigration laws, tariffs, and all other forms of personal and business regulation result from the attempt by one individual to limit “your ability to spend your money with whomever you choose, or to sell your property at whatever price you choose.

These laws are justified on the grounds that people are somehow injured because the individual who owns goods or services is asking too high a price for them. If you catch a fish, how is someone else injured if you set a price he thinks is too high? Why is someone else’s opinion better than yours as to what price you should sell it for? Whose fish is it, anyway? Does it belong to you, who caught it, or another individual who wants it, or to all the other individuals who make up society?

When the majority of individuals in a society try to enforce their claim on the production of others through the legal process, they are guaranteeing that their society will have a lower standard of living than if they honor each person’s right to enjoy and set his own value on the fruits of his labor. The standard of living of any nation is directly proportionate to the personal freedom enjoyed in that nation. The people of China and India are not poor because they are stupid; they are not poor because they lack natural resources; they are not poor because they lack modern industrial tools. They are poor because they have lived for decades under social systems in which the established, entrenched classes are able to use law and custom to control the production, price, and sale of all goods and services produced. By removing the ability of individuals to benefit from ingenuity and hard work, they have destroyed the incentive of individuals to produce and save. Without savings, there is no capital for the creation and improvement of the tools of production, and without tools there is only poverty.

Legalized plunder destroys the standard of living of any nation because it attempts to violate all of the economic laws that are an immutable part of human nature. Legalized plunder has strangled China, India, and most of the rest of the socialist or communist world. It is the reason for their abysmally low productivity, and the subsistence-level existence of their citizens.

By the same token, the people of the United States are not rich because of any special intelligence, natural resources, or work habits. We are rich because for the first 150 years after the founding of the nation individuals were allowed nearly total freedom to produce and control the products of their labor. This freedom encouraged individuals to develop habits of hard work and thrift, and to apply their intelligence to the natural resources in order to create the wealth of this nation. As one person after another discovered that government is a willing agent that will plunder others on request, plunder has grown and the rewards of production have fallen. Thus, the freedom that created the nation withers, and so does your standard of living.

4/27/2009: Obama Has Paralyzed the CIA By: Ronald Kessler

In September 1995, John Deutch, the director of Central Intelligence, bowed to congressional pressure and fired two CIA officials because they had recruited Guatemalan military assets who had been involved in political assassinations.

Inside the agency’s amphitheater, known as the “Bubble,” Deutch then told CIA employees that despite the firings, they should continue to take risks in the service of their country. That brought snickers from many of the clandestine officers in the audience.

Deutch laid down the law that recruitment of assets or spies with so-called human rights violations would require high-level approval. Yet who else would know about terrorists and our enemies except those who were themselves involved in treachery?

The message was clear: Stay away from informants who are not politically correct.

Deutch’s effort to recruit Boy Scouts as spies was chilling.

“People retired in place or left,” says William Lofgren, who headed the Central Eurasian Division, which included Russia. “Our spirit was broken. At the CIA, you have to be able to inspire people to take outrageous risks.”

That risk-averse atmosphere, in turn, contributed to the failure to detect the 9/11 plot that killed 3,000 Americans and sent the economy reeling.

Now, President Obama’s release of memos on harsh interrogation tactics and his condemnation of those tactics — though approved by President Bush, the Justice Department, and key members of Congress — is sending an even greater shudder through the intelligence community.

By their very nature, intelligence officers who obtain secrets of other countries or of terrorist organizations are at risk. This is no amusement park.

They meet with terrorists in dark alleys to try to enlist them to spy for the agency. They break into foreign embassies to steal secret codes and install listening devices in homes of terrorists. They pick up top secret military plans from clandestine hiding places. They recruit arms dealers to report on efforts to steal nuclear weapons.

If their work is uncovered, they may be arrested by a foreign power or murdered by a terrorist.

Back when the forerunner of the CIA started in 1942, its first director, William J. Donovan, called it an “unusual experiment.” For his Office of Strategic Services (OSS), the best and the brightest were recruited to embark on a dangerous mission: to penetrate the enemy, learn its secrets, and disrupt its operations through covert means, including sabotage and assassination.

The enemy then was Nazi Germany and Japan, and the nascent intelligence agency was charged with preventing another Pearl Harbor.

Indications of imminent war, properly pieced together, would have compelled President Roosevelt to place the U.S. military on alert and disperse ships at Pearl Harbor. But the strike caught the military by surprise. The attack killed 2,388 people.

In the parlance adopted after Sept. 11, there was a failure to connect the dots. Still, that may not be enough to thwart an attack.

What is needed is penetration of the enemy. Such a penetration usually entails inserting spies into the heart of an organization or government so that its innermost plans and secrets are passed along. That is the job of the CIA.

When George Tenet became director of Central Intelligence in July 1997, he tried to overcome what Deutch had done to the agency. If employees “don’t believe that you believe in them and the mission, you can articulate all the strategy you want and nothing will happen. You can’t do it by yourself: They have to implement it,” Tenet would say.

Within two months of taking over, Tenet established himself as a champion of the agency and a leader who appreciated what is now called the National Clandestine Service. But it would take time to change the culture. Since 9/11, and especially under CIA Director Michael Hayden, the CIA has been operating on all cylinders.

Now Obama has demonized CIA officers for following instructions from the highest levels of the U.S. government. He has raised the specter of prosecutions, saying it would be up to Attorney General Eric Holder whether to charge those who gave legal opinions authorizing the tactics.

Contrary to conservative wisdom, the situation is quite different from what happened when the Church Committee investigated the CIA and held public hearings beginning in 1976. The committee exposed real abuses and a lack of focus, and it ultimately improved the agency.

Back then, the CIA spied on Vietnam protesters, foolishly enlisted the Mafia to try to kill Fidel Castro, embarked on the disastrous Bay of Pigs invasion, and engaged in silly plots like an effort to humiliate Castro with his own people by trying to get his beard to fall off.

In contrast, the CIA’s coercive interrogations were focused, approved by members of Congress, and successful. During initial interrogations, Abu Zubaydah was reluctant to give up individuals who were close to him. After he was waterboarded — which is inflicted on our own special forces during training — he gave up Ramzi bin al-Shibh, a member of Osama bin Laden’s inner circle. In turn, that led to the capture of Khalid Sheikh Mohammed, the architect of the 9/11 plot, and the uncovering of a plot to target the West Coast in a second wave of attacks.

If Obama were genuinely interested in “transparency” and spreading goodwill, he would have released CIA reports detailing those successes.

Obama’s message to the intelligence community was clear: Even if techniques have been approved by the country’s elected leaders, you take your career in your hands if you engage in any operation that could be considered close to the edge. That same message would be sent to the military if the president and Congress declared war and a subsequent administration conducted witch hunts and threatened prosecutions of soldiers who killed the enemy in battle.

As former CIA Director Michael Hayden has said, the effect of the release is to “invite the kind of institutional timidity and fear of recrimination that weakened intelligence gathering in the past, and that we came sorely to regret on Sept. 11, 2001.”

As Hayden points out, releasing the memos discourages foreign intelligence services from cooperating with the CIA for fear their cooperation will be exposed.

No wonder Leon Panetta, the current CIA director, four of his predecessors, and Obama’s counterterrorism advisor John Brennan opposed releasing the memos.

By disclosing the techniques, Obama made it impossible for him or his successors to authorize their use in the future in the event of an imminent future attack. That’s because, as in waterboarding, many of them were intended to create fear but not actually hurt detainees.

Despite failures and gaffes, Donovan’s “unusual experiment” has paid off. Through the most terrifying moments of the Cold War, the CIA penetrated Soviet secrecy, warned of most threats, and allowed policymakers to orchestrate a measured response that eventually led to the collapse of the Soviet Union.

While the CIA failed to uncover the plots of 9/11 and was wrong about weapons of mass destruction in Iraq, as outlined in my book “The Terrorist Watch: Inside the Desperate Race to Stop the Next Attack,” it has scored a dazzling success in the war on terror.

[Editor's Note: Get Ron Kessler's book. Go here now.]

The fact we have not been attacked in more than seven years is evidence that the CIA — along with the FBI — has been successful at penetrating and rolling up plots.

Just as Deutch did, Obama spoke to CIA employees after releasing the memos. As if talking to a kindergarten class, Obama said, “Don’t be discouraged that we have to acknowledge potentially we’ve made some mistakes. That’s how we learn.”

At the same time, he claimed he fully supports CIA officers.

CIA officers feel betrayed by Obama and Congress. Even though they were briefed on the techniques — and some asked why the CIA was not doing even more — members of Congress like Nancy Pelosi are claiming they had no clue about the information they in fact received.

As a result, CIA officers are “slow rolling,” something they may do with politically sensitive assignments: They go through the motions, stall, and ask for lawyer approval at every turn.

“The lesson officers are learning is when you are asked to do anything that entails risk — whether it has to do with the reputation of the agency, the risk of personal failure, or the possibility of criminal liability because people will revisit all the assurances they gave you up front — the lesson is, Don’t take those risks to protect America,” says a former CIA officer who was involved in the interrogations. “Find a way not to do it, or you’ll be sorry.”

“After Sept. 11, the general outcry was, ‘Why don’t we have better overseas capabilities?’” says Porter Goss, who was briefed on the interrogation methods in Congress and later headed the CIA. “I fear that in the years to come, this refrain will be heard again . . . It is certainly not trust that is fostered when intelligence officers are told one day ‘I have your back,’ only to learn a day later that a knife is being held to it.”

At a time when al-Qaida is plotting to wipe out America with nuclear weapons, the president has paralyzed our first line of defense.

Ronald Kessler is chief Washington correspondent of Newsmax.com.

© 2009 Newsmax. All rights reserved.

4/26/2009: Fred Thompson: Obama Loosed 'Dogs of War' on CIA By: Jim Meyers

Former Senator, TV star and presidential candidate Fred Thompson tells Newsmax that President Barack Obama is revealing his “naivete, ineptitude and arrogance” as he deals with matters of national security.

The Tennessee Republican, who now hosts a radio show on Westwood One along with his wife Jeri, also said the “dogs of war have been loosed” over left-wing attempts to single out Bush-era officials for prosecution relating to the treatment of detainees.

Newsmax.TV’s Ashley Martella cited the announcement that the Defense Department is going to release many pictures showing alleged abuse by U.S. troops in Iraq and Afghanistan, and asked Thompson what purpose that might serve.

“None, other than to serve as propaganda tools for our worst enemies,” Thompson said.

See Video: Fred Thompson Slams Obama's National Security Debacle - Click Here Now

“This was set in motion when the president first decided to release” CIA memos on interrogation techniques used on terrorist suspects, Thompson told Newsmax.

“There was no purpose in doing that except to make him look good internationally and to the left wing here at home,” he said. “It did a lot of damage.

“In one stroke of a pen he declassified top-secret documents that people would otherwise go to jail for releasing. It gave al-Qaida and the Taliban a blueprint as to the outer limits of our interrogation techniques.

“We have to remember that [the techniques were used] in the aftermath of 9/11. Congress was briefed on these techniques. Some of them asked if they were really going far enough to get what they needed to get, and it was approved at high levels in the administration.

“They carefully crafted them as best they could to not go too far, and to provide safeguards when they were carrying out these admittedly rough techniques on these people who had this vital information.

“So now we’re really talking about a war crimes tribunal, which this country has never done. We’ve never brought to criminal court prior administrations in this country.

“Harry Truman could have been accused of war crimes, I suppose, for dropping the bombs. President Obama authorized the killing of those three [pirates] in the Indian Ocean not too long ago. Prosecuting these people under these circumstances is something you hear about in banana republics and third-world countries, not the United States of America.

“The president’s opened up a terrible Pandora’s Box and there’s going to be a price to pay before this thing is ended.”

Martella asked if the Obama administration was acquiescing to its far-left base when it released the CIA memos on interrogation techniques.

“I think in this case, in all probability, they thought that they could cater to their left wing, appease their demands, by releasing these memos and then it might not go any further,” Thompson said.

“Because surely they were able to see that this was bad for them the way it’s going to be bad for the country.

“This is going to have ramifications that are far-reaching. They thought they could put the genie back in the bottle after they opened it, and of course appeasement never works that way.

“There was a firestorm. The attorney general’s received 250 names in a petition to urge the appointment of a special prosecutor for this. The left-wing blogs went nuts. They started running television ads and so forth.

“And then after promising that there would be no prosecutions, [Obama] acquiesced and now opened the door for that. So I think it’s a case of naivete, ineptitude and unbelievable arrogance and lack of experience.

“We elected someone who didn’t have two minutes’ worth of experience with regard to matters concerning national security. Now he’s cast in this position and he’s making decisions that are going to have far-reaching ramifications not only abroad, and not only with our enemies, but in dividing our country even further here at home in ways I don’t think we’ve ever been divided before.

“We’re going to have members of Congress testifying against each other if they go down this road.”

Martella noted that Rep. Peter King of New York has said that if Democrats do go ahead and attempt to prosecute Bush administration CIA interrogation lawyers, the Republicans should “go to war” with them.

“That just gives you an example of the atmosphere on Capitol Hill today,” Thompson observed.

“People are angry. People are upset. You’ve got people on the left, you’ve got the Democrats talking about truth commissions, talking about investigations and Congressional hearings and urging prosecution. They’re fighting among each other on the Democratic side as to just how they should go and how far they should go.”

Some of these Democrats are “the same people who were briefed on these techniques back in 2002,” Thompson said, “including Nancy Pelosi, who’s not telling the truth now, who’s trying to parse words and trying to get around the fact that she knew what was going on, as others did back when this happened.

“That creates a new level of animosity like I’ve never seen before, and I served in the Senate for eight years. The dogs of war have been loosed in this country and I don’t know what is going to happen before we see the end of it. But none of it’s going to be good.”

Thompson’s radio show is heard on weekdays from noon to 2 p.m.

© 2009 Newsmax. All rights reserved.

4/22/2009: Words Versus Realities by Thomas Sowell

Much as I hate to be the bearer of bad news, I must report the shocking facts: Medical care is medical care. Nothing more and nothing less.

This may not seem like a breakthrough on the frontiers of knowledge. But it completely contradicts what is being said by many of those who are urging "universal health care" because so many Americans lack health insurance.

Insurance is not medical care. Indeed, health care is not the same as medical care. Countries with universal health care do not have more or better medical care.

The bottom line is medical care. But the rhetoric and the talking points are about insurance. Many people who could afford health insurance do not choose to have it because they know that medical care will be available at the nearest emergency room, whether they have insurance or not.

This is especially true for young people, who do not anticipate long-term medical problems and who can always get a broken leg or an allergy attack taken care of at an emergency room -- and spend their money on a more upscale lifestyle.

This may not be a wise decision but it is their decision, and there is no reason why other people should lose the right to make decisions for themselves because some people make questionable decisions.

If you don't think government bureaucrats can make questionable decisions, then you haven't dealt with many government bureaucrats.

It is one thing to deal with bureaucrats when you are at the Department of Motor Vehicles and in good health. It is something else when you have to deal with bureaucrats when you are lying on a gurney and bleeding or are doubled over in pain on a hospital bed.

People who believe in "universal health care" show remarkably little interest -- usually none -- in finding out what that phrase turns out to mean in practice, in those countries where it already exists, such as Britain, Sweden or Canada.

For one thing, "universal health care" in these countries means months of waiting for surgery that American get in a matter of weeks or even days.

In these and other countries, it means having only a fraction as many MRIs and other high-tech medical devices available per person as in the United States.

In Sweden, it means not only having bureaucrats deciding what medicines the government will and will not pay for, but even preventing you from buying the more expensive medicine for yourself with your own money. That would violate the "equality" that is the magic mantra.

Those who think in terms of talking points, instead of trying to understand realities, make much of the fact that some countries with government-controlled medical care have longer life expectancies than that in the United States.

That is where the difference between health care and medical care comes in. Medical care is what doctors can do for you. Health care includes what you do for yourself -- such as diet, exercise and lifestyle.

If a doctor arrives on the scene to find you wiped out by a drug overdose or shot through the heart by some of your rougher companions, there may not be much that he can do except sign the death certificate.

Even for things that take longer to do you in -- obesity, alcohol, cholesterol, tobacco -- doctors can tell you what to do or not do, but whether you follow their advice or not is what determines the outcome.

Americans tend to be more obese, consume more drugs and have more homicides. None of that is going to change with "universal health care" because it isn't health care. It is medical care.

When it comes to things where medical care itself makes the biggest difference -- cancer survival rates, for example -- Americans do much better than people in most other countries.

No one who compares medical care in this country with medical care in other countries is likely to want to switch. But those who cannot be bothered with the facts may help destroy the best medical care in the world by falling for political rhetoric.

4/22/2009: Civility and Tolerance in the Age of Obama by Michelle Malkin

They told us if Barack Obama were elected, the nation would come together. Souls would be fixed. Spirits would be healed. Public discourse would be elevated. Welcome to civility and tolerance in the Age of Obama:

Celebrity leech/trash blogger Perez Hilton took to the Internet and TV airwaves to humiliate a beauty pageant contestant who gave what he considered an "offensive" answer about gay marriage. Hilton, inexplicably serving as a judge for the Miss USA contest, asked Miss California, Carrie Prejean, whether she supported the legalization of gay marriage. Prejean respectfully answered: "I think that I believe that a marriage should be between a man and a woman. No offense to anybody out there, but that's how I was raised." President Obama, by the way, defines marriage the same way Prejean does.

No matter. Hilton immediately lambasted Prejean as a "dumb b*tch" in a viral YouTube video he taped after the pageant Sunday night. He apologized the next morning for the attack, then retracted his apology, then escalated his divisive rhetoric. On Tuesday afternoon, Hilton told an MSNBC female anchor that he was thinking of an even more vulgar epithet -- the "c-word" -- as he listened to Prejean's answer. The female anchor said nothing. Basking in his new role as thought and speech enforcer, Hilton told CNN's Larry King that beauty pageant contestants must bow to the tolerance mob: "Yes. I do expect Miss USA to be politically correct."

And apparently, the Miss USA organizers agree. Instead of apologizing for Hilton's vile behavior, the pageant director of the Miss California contest, Keith Lewis, sent a note to Hilton throwing Prejean under the bus: "I am personally saddened and hurt that Miss CA USA 2009 believes marriage rights belong only to a man and a woman. … Religious beliefs have no place in politics in the Miss CA family."

But gutter profanity and misogyny do?

At the University of North Carolina at Chapel Hill last week, former GOP Congressman Tom Tancredo came to speak against legislative proposals to provide illegal alien students in-state tuition discounts not available to law-abiding Americans and legal immigrant students. Protesters at the institution of higher learning responded by blocking Tancredo with massive banners and screaming, "No dialogue with hate." Adults in the room stood by while students smashed a window a few feet from where Tancredo stood. Physically threatened, Tancredo was forced to leave without delivering his remarks.

According to campus reports, for a week leftists had prepared to mount a speech-squelching demonstration. The same thuggish tactics have been used at Columbia University, Georgetown University and Michigan State University to shut down speakers who support strict immigration enforcement. The UNC administration apologized for the students' tantrum, but took no steps to examine its own culpability for fostering a climate of intellectual vandalism and intolerance.

The nightly airwaves turned into a soft-porn cesspool last week as liberal journalists derided and slimed hundreds of thousands of Tea Party protesters across the country who oppose reckless taxing and spending by both major political parties. Award-winning CNN anchor Anderson Cooper, mimicking his bottom-of-the-barrel competitors at MSNBC, smugly indulged in sexual puns about "teabagging." MSNBC devoted the entire week to sophomoric sexual slang and innuendo with references to "nuts," Dick Armey and "full-throated" protesters.

And White House adviser David Axelrod calls the Tea Party folks "unhealthy"?

Speaking of unhealthy, angry white liberal actress Janeane Garofalo venomously played the race card: "It's about hating a black man in the White House. This is racism straight up and is nothing but a bunch of teabagging rednecks." The theme was echoed by Jeffrey Kimball, a professor emeritus of history at Miami University in Oxford, Ohio, who castigated the "extreme right" for organizing against Obama because "he's black and he's liberal."

Tell that to the thousands of activists in South Carolina who practically booed and heckled white Republican Rep. Gresham Barrett off the stage at a Tea Party in Greenville last Friday night for supporting the trillion-dollar TARP and embracing the pork-laden stimulus law after voting against it. "Go home!" they shouted. The only color that mattered to protesters: the red ink of government debts.

But in the Age of Obama, there's no room for such nuance and inconvenient truths. A decent young woman is a "dumb b*tch" for holding the same view of marriage as the Obamessiah. A conservative campus speaker is bullied as a hatemonger by wild-eyed hatemongers. A grassroots movement is debased as a bunch of racist vulgarians by a media mob of racists and vulgarians. Civility and tolerance have taken a left-hand turn down a one-way street. So much for changing course.

4/22/2009: Parting Company by Walter E. Williams

Texas Gov. Rick Perry rattled cages when he suggested that Texans might at some point become so disgusted with Washington's gross violation of the U.S. Constitution that they would want to secede from the union. Political hustlers, their media allies and others, who have little understanding, are calling his remarks treasonous. Let's look at it.

When New York delegates met on July 26, 1788, their ratification document read, "That the Powers of Government may be resumed by the People, whensoever it shall become necessary to their Happiness; that every Power, Jurisdiction and right which is not by the said Constitution clearly delegated to the Congress of the United States, or the departments of the government thereof, remains to the People of the several States, or to their respective State Governments to whom they may have granted the same."

On May 29, 1790, the Rhode Island delegates made a similar claim in their ratification document. "That the powers of government may be resumed by the people, whensoever it shall become necessary to their happiness: That the rights of the States respectively to nominate and appoint all State Officers, and every other power, jurisdiction and right, which is not by the said constitution clearly delegated to the Congress of the United States or to the departments of government thereof, remain to the people of the several states, or their respective State Governments to whom they may have granted the same."

On June 26, 1788, Virginia's elected delegates met to ratify the Constitution. In their ratification document, they said, "The People of Virginia declare and make known that the powers granted under the Constitution being derived from the People of the United States may be resumed by them whensoever the same shall be perverted to their injury or oppression and that every power not granted thereby remains with them and at their will."

As demonstrated by the ratification documents of New York, Rhode Island and Virginia, they made it explicit that if the federal government perverted the delegated rights, they had the right to resume those rights. In fact, when the Union was being formed, where the states created the federal government, every state thought they had a right to secede otherwise there would not have been a Union.

Perry is right when he says that there is no reason for Texas to secede. There are indeed intermediate actions short of secession that states can take. Thomas Jefferson said, "Whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force."

That suggests that one response to federal encroachment is for state governments to declare federal laws that have no constitutional authority null and void and refuse to enforce them.

While the U.S. Constitution does not provide a specific provision for nullification, the case for nullification is found in the nature of compacts and agreements. Our Constitution represents a compact between the states and the federal government. As with any compact, one party does not have a monopoly over its interpretation, nor can one party change it without the consent of the other. Additionally, no one has a moral obligation to obey unconstitutional laws. That's not to say there is not a compelling case for obedience of unconstitutional laws. That compelling case is the brute force of the federal government to coerce obedience, possibly going as far as using its military might to lay waste to a disobedient state and its peoples.

Finally, here's my secession question for you. Some Americans accept and have respect for the Tenth Amendment, which reads, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Other Americans, the majority I fear, say to hell with the Tenth Amendment limits on the federal government. Which is a more peaceful solution: one group of Americans seeking to impose their vision on others or simply parting company?

4/14/2009: from the Wall Street Journal's Best of the Web Today

We Have Met the Enemy, and It Is Our Political Opponent

"The Department of Homeland Security is warning law enforcement officials about a rise in 'rightwing extremist activity,' saying the economic recession, the election of America's first black president and the return of a few disgruntled war veterans could swell the ranks of white-power militias," reports the Washington Times.

The report (PDF available here) opens by acknowledging that the department's Office of Intelligence and Analysis "has no specific information that domestic rightwing* terrorists are currently planning acts of violence." So this is apparently mostly or all speculation. In the footnote that goes with that asterisk, the department defines "rightwing" quite broadly:

Rightwing extremism in the United States can be broadly divided into those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration.

Of course, there have been cases of terrorism that fit this description: the Oklahoma City bombing and various attacks in the 1990s on doctors who did abortions come to mind. We cannot fault the Department of Homeland Security for considering the possibility of future such attacks.

But many people on the "right wing" who would never dream of committing acts of terror are appalled by this report. Surely their outrage is no less justified than would be, say, the reaction of the Council on American-Islamic Relations to a similar report speculating on the possibility of domestic terrorism by American Muslims. People on the left love to pat themselves on the back for their open-mindedness and sensitivity to those who are different, but they seldom live up to their professed ideals when dealing with people not on the left.

On the other hand, it's refreshing to hear Janet Napolitano's department talking about terrorism rather than "man-caused disasters."

4/13/2009: Fewer Taxes for Real Economic Stimulus by Ron Paul

Taxes are the issue this week as Americans struggle to make the April 15th deadline to file their returns. It is a good time to contemplate the effects of big government and what it does to our country. The income tax is one of the most egregious encroachments on our liberties today. It is a form of involuntary servitude, which was supposed to have been outlawed by the 13th Amendment.

Tax Freedom Day is defined as the day when the nation as a whole has theoretically earned enough income to fund its annual federal tax burden. For all of the days of the year before this day, you are a slave to government. For 2009, Tax Freedom Day will come on April 13th. Almost a century ago in 1910, before the mistakes of 1913 -- namely the inception of the Federal Reserve and our current income tax, Tax Freedom Day was January 19th, signifying a mere 5% tax burden. Somehow, our country functioned just fine.

If calculated to include government spending and the deficit, rather than just collections, Tax Freedom Day would actually fall on May 29. The annual deficit adds to the growing debt of future generations and adds insult to injury to those that struggle to make this economy work. It is a slap in the face that this is not enough to prevent this crushing governmental burden from falling on the next generation.

For months now, Washington has been desperately throwing taxpayers’ money at various programs to stimulate us out of the recession, to no avail. Seeing hard-earned money confiscated from the people and spent in such wasteful ways, such as the recent bailouts, is almost too much to bear. Getting rid of the income tax altogether, while very beneficial, may be a while in coming. In the meantime, I am fighting for every tax cut or tax credit possible.

I can think of no better economic stimulus than letting people keep their money and spend it how they see fit. For this reason, I am an original cosponsor on a bill that would give Americans a two month employment and income tax holiday, while taking unused TARP money back from the Secretary of the Treasury and putting it in the Social Security trust fund instead.

In addition, I have recently introduced the Child Health Care Affordability Act. If passed this legislation would provide parents with a tax credit of up to $500 for health care expenses of dependent children. I have also re-introduced the Tax Free Tips Act, which would make tips exempt from federal income and payroll taxes. I am also an original cosponsor of a bill that would make permanent the deduction of state and local sales taxes. My bill HR 162 exempts Social Security benefits from income tax.

These are just a few of the many tax related bills I am fighting for in Congress, but without a corresponding cut in the size of government, which I am also fighting for, we are simply adding to the future tax burden of our children.

Posted by Ron Paul (04-13-2009, 12:58 PM) filed under Unspecified

4/12/2009: The Story of a Successful Rescue (and a Democratic Administration’s Attempt to Claim Credit) by JEFF EMANUEL on APRIL 12, 2009

After four days of floating at sea on a raft shared with four Somali gunmen, Richard Philips took matters into his own hands for a second time. With the small inflatable lifeboat in which he was being held captive being towed by the American missile destroyer USS Bainbridge, and Navy Special Warfare (NSWC) snipers on the fantail in position to take their shots at his captors as soon as the command was given, the captive Captain of the M.V. Maersk-Alabama took his second leap in three days into the shark-infested waters of the Indian Ocean.

This diversion gave the Navy Special Warfare operators all the opening they needed. Snipers immediately took down the three Somali pirates still on board the life raft, SEAL operators hustled down the tow line connecting the two craft to confirm the kills, and a Navy RIB plucked Philips from the water and sped him to safety aboard the Bainbridge, thus ending the four-day-and-counting hostage situation.

Philips’s first leap into the warm, dark water of the Indian Ocean hadn’t worked out as well. With the Bainbridge in range and a rescue by his country’s Navy possible, Philips threw himself off of his lifeboat prison, enabling Navy shooters onboard the destroyer a clear shot at his captors — and none was taken. The guidance from National Command Authority — the President of the United States, Barack Obama — had been clear: a peaceful solution was the only acceptable outcome to this standoff unless the hostage’s life was in clear, extreme danger.

The next day, a small Navy boat approaching the floating raft was fired on by the Somali pirates — and again no fire was returned and no pirates killed, thanks again to the cautious stance assumed by Navy personnel due to the combination of a lack of clear guidance from Washington, and a mandate from the Commander in Chief’s staff not to act until Obama, a man with no background of dealing with such issues and no track record of decisiveness, decided that any outcome other than a “peaceful solution” would be acceptable.

After taking fire from the Somali kidnappers again Saturday night, the on-scene commander decided he’d had enough. Keeping his authority to act in the case of a clear and present danger to the hostage’s life, and having heard nothing from Washington since yet another request to mount a rescue operation had been denied the day before, the Navy officer — unnamed in all media reports to date — decided the AK-47 one captor had leveled at Philips’ back was a threat to the hostage’s life, and ordered the NSWC team to take their shots.

Three rounds downrange later, all three brigands became enemy KIA, and Philips was safe.

There is upside, downside, and spin-side to the series of events over the last week that culminated in today’s dramatic rescue of an American hostage.

Almost immediately following word of the rescue, with reports — as they still are — conflicting each other on the order of events (and on the events themselves), the Obama administration and its supporters claimed victory against pirates in the Indian Ocean, and declared that the dramatic end to the standoff put paid to questions of the inexperienced president’s toughness and decisiveness.

Despite the Obama administration’s (and its sycophants’) attempt to spin today’s success as a result of bold, decisive leadership by the inexperienced president, the reality is nothing of the sort.

What should have been a standoff lasting only hours — as long as it took the USS Bainbridge and its team of NSWC operators to steam to the location — became an embarrassing four-day-and-counting standoff between a rag-tag handful of criminals with rifles and a U.S. Navy warship.

On Friday, April 10, as the standoff reached the end of its third day, I called on President Obama to take action to free the American hostage from his Somali captors. I outlined three possible operational tactics that could be used to do so; number 1 was the following:

2 helos, 2 snipers each: pop the [pirates] in their heads, then drop a rescue swimmer to escort the hostage up to one of the choppers. This works best if the hostage is aware of what is happening and can help without getting in the way — say, by hopping overboard as the gunships near, to divert attention and get out of the line of fire. (This was written before the USS Bainbridge tethered the life raft to its stern, an action which eliminated the need for helicopters.)

Instead of taking direct, decisive action against the rag-tag group of gunmen, the Obama administration dilly-dallied, dawdled, and eschewed any decisiveness whatsoever, even in the face of enemy fire, in hopes that the situation would somehow resolve itself without violence — thus sending a clear message to all who would threaten U.S. interests abroad that the current occupant of 1600 Pennsylvania Avenue has no idea how to respond to such situations, and no real willingness to use military force to resolve them.

Any who think they weren’t watching every minute of this are guilty — at best — of greatly underestimating our enemies.

Like the crew of the Alabama, which took swift and decisive action to take back their own ship rather than wait for help from Washington that they knew could not be counted on, Captain Philips took matters into his own hands for the second time in three days this afternoon, leaping into the water to create a diversion and allowing the NSWC team to eliminate his captors. The result, of course, was the best that could possibly be expected: three pirates dead, the captain unharmed, and a fourth Somali man who had surrendered late Saturday night in custody.

One thing that will bear watching will be what the Obama DOJ attempts to do with the captive pirate. My money is on a life of welfare checks, a plot of land (in a red state, naturally), and voting rights in Chicago, New York, and Seattle.

In all seriousness, though, who knows? Obama could decide to get tough on the last surviving participant in the first pirating of an American ship since Thomas Jefferson sent the U.S. Marine Corps to root out and destroy the Barbary Pirates.

However, given the administration’s track record to date, I won’t be holding my breath on that.

4/7/2009: [Obama] The Nuclear Illusionist

"Rules must be binding. Violations must be punished. Words must mean something."

So declared President Obama Sunday in Prague regarding North Korea's missile launch, which America's U.N. Ambassador Susan Rice added was a direct violation of U.N. resolutions. At which point, the Security Council spent hours debating its nonresponse, thus proving to nuclear proliferators everywhere that rules aren't binding, violations won't be punished, and words of warning mean nothing.

Comments: This article is right on target. Obama is as naive as he is narcissistic. His ego is making the world a much more dangerous place, for everyone, except the failed states and terrorist organizations. For them he is a dream come true, a person that believes that if you say smart things nothing bad will happen. Obama is the wrong man, at the wrong time, in the wrong place. But, if life was fair and as equal as Obama wants it to be, he wouldn't be the President, he'd be in Chicago organizing someone's neighborhood.

I agree that President Obama is an illusionary in more than just a nuclear-free world. Our only hope is that President Obama cannot do too great of a harm to our nuclear arsenal by stopping its upgrade to its original potency and reliability during his tenure. As I recall President Jimmy Carter did great harm to our preparedness by reducing our military budget and limiting research. Hopefully, like President Carter, President Obama will be a one term President before our country goes bankrupt.

Mr. Obama is confused. What he sees as "moral authority" people like Kim Jong Il and Osama bin Laden see as "abject moronity". They will not decide to disarm because a nation which has already made clear it lacks the will to use the weapons it has, under the leadership of a man who has pronounced for all to hear that he will never launch a pre-emptive attack, suddenly decides to divest itself of those same weapons it refuses to use. They will, instead, seek to up the ante and, in the case of Mr. bin Laden, or whoever is pretending to be him these days, they may even decide to go for the throat. And Barack Obama will not be there to defend us, because he doesn't believe in such things. But the president should consider how little success George W. Bush had in blaming Bill Clinton for the attacks of 9/11; he will not get to blame Mr. Bush when the inevitable attack that he has invited comes. And when it does come, he will be remembered throughout history right alongside Neville Chamberlain, as a man who refused to see the truth because it didn't fit his preferences.

4/8/2009: The only good Taliban is a dead Taliban; killing any Taliban is a moral act, just like killing Nazis. I grew up thinking the only good commie is a dead commie; that is even more true of Taliban and, probably, the majority (but not all) of Muslims. How can our idiot commie-pinko president apologize to these "people;" how can he negotiate with these animals?

Links to the video of the flogging:

http://www.guardian.co.uk/world/2009/apr/02/taliban-pakistan-justice-women-flogging

http://www.timesonline.co.uk/tol/news/world/asia/article6022878.ece

The Declaration Of Independence Has Been Repealed: by Dick Morris

On April 2, 2009, the work of July 4, 1776 was nullified at the meeting of the G-20 in London. The joint communiqué essentially announces a global economic union with uniform regulations and bylaws for all nations, including the United States. Henceforth, our SEC, Commodities Trading Commission, Federal Reserve Board and other regulators will have to march to the beat of drums pounded by the Financial Stability Board (FSB), a body of central bankers from each of the G-20 states and the European Union.

The mandate conferred on the FSB is remarkable for its scope and open-endedness. It is to set a “framework of internationally agreed high standards that a global financial system requires.” These standards are to include the extension of “regulation and oversight to all systemically important financial institutions, instruments, and markets…[including] systemically important hedge funds.”

Note the key word: “all.” If the FSB, in its international wisdom, considers an institution or company “systemically important”, it may regulate and over see it. This provision extends and internationalizes the proposals of the Obama Administration to regulate all firms, in whatever sector of the economy that it deems to be “too big to fail.”

The FSB is also charged with “implementing…tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms.”

That means that the FSB will regulate how much executives are to be paid and will enforce its idea of corporate social responsibility at “all firms.”

The head of the Financial Stability Forum, the precursor to the new FSB, is Mario Draghi, Italy’s central bank president. In a speech on February 21, 2009, he gave us clues to his thinking. He noted that “the progress we have made in revising the global regulatory framework…would have been unthinkable just months ago.”

He said that “every financial institution capable of creating systemic risk will be subject to supervision.” He adds that “it is envisaged that, at international level, the governance of financial institutions, executive compensation, and the special duties of intermediaries to protect retail investors will be subject to explicit supervision.”

In remarks right before the London conference, Draghi said that while “I don’t see the FSF [now the FSB] as a global regulator at the present time…it should be a standard setter that coordinates national agencies.”

This “coordination of national agencies” and the “setting” of “standards” is an explicit statement of the mandate the FSB will have over our national regulatory agencies.

Obama, perhaps feeling guilty for the US role in triggering the international crisis, has, indeed, given away the store. Now we may no longer look to presidential appointees, confirmed by the Senate, to make policy for our economy. These decisions will be made internationally.

And Europe will dominate them. The FSF and, presumably, the FSB, is now composed of the central bankers of Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Netherlands, Singapore, Switzerland, the United Kingdom, and the United States plus representatives of the World Bank, the European Union, the IMF, and the Organization for Economic Co-operation and Development (OECD).

Europe, in other words, has six of the twelve national members. The G-20 will enlarge the FSB to include all its member nations, but the pro-European bias will be clear. The United States, with a GDP three times that of the next largest G-20 member (Japan), will have one vote. So will Italy.

The Europeans have been trying to get their hands on our financial system for decades. It is essential to them that they rein in American free enterprise so that their socialist heaven will not be polluted by vices such as the profit motive. Now, with President Obama’s approval, they have done it.

4/6/2009: Two Papers in One!

"The argument against unions--that they unduly burden employers with unreasonable demands--is one that corporate America makes in good times and bad. . . . There is a strong argument that the slack labor market of a recession actually makes unions all the more important. Without a united front, workers will have even less bargaining power in the recession than they had during the growth years of this decade, when they largely failed to get raises even as productivity and profits soared. If pay continues to lag, it will only prolong the downturn by inhibiting spending."--editorial, New York Times, Dec. 28, 2008

"In a striking example of corporate hardball, the New York Times Co. has threatened to shut down one of its journalistic jewels, the Boston Globe, unless the New England paper's unions agree to sweeping concessions."--Washington Post, April 4, 2009

4/7/2009: California Labor Law is Bad Law: Suppose you owned a small restaurant with a bar. You typically have one bartender on duty because the volume of business does not justify two employees. As do other such businesses, you pay your bartenders minimum wage, plus you give them free meals, plus they earn tips which usually dwarf their hourly pay.

In order to run the business profitably, your bartenders take their breaks when time permits and eat their meals at the bar so that they can be available to customers. In that regard, you are paying them their hourly wage while you are feeding them for free.

Question: Have you abused your employee?

According to California law, yes. You owe them a civil penalty (not wages) equal to two additional hours pay for each day they worked. Because they were not able to leave the premises during their meal break, you broke the law; and because their "rest" breaks may not have been ten minutes long, you broke the law.

The idiots that wrote the law and the gestapo who enforce the law are disgusting filth. All of the bartenders prefer the arrangement described above but the "law" disagrees. Usually this doesn't matter, but if you fire a bartender (perhaps because he was stealing...apparently not at all unusual for bartenders), then they can go to the state and get a windfall equal to two hours per day for three year. Suppose the bartender worked three days a week, fifty weeks a year, then you would owe $16.00 multiplied by 450 days or $7,200 (which, as a civil penalty, is not taxable to the employee), a nice little severance bonus for a thief.

4/6/2009: "Baskin-Robbins Ice Cream has introduced a new flavor in honor of the 44th President of the United States: Barocky Road.

"Barocky Road is a blend of half vanilla, half chocolate, and surrounded by nuts and flakes. The vanilla portion of the mix is not openly advertised and usually denied as an ingredient. The nuts and flakes are all very bitter and hard to swallow. The cost is $100 per scoop.

"When purchased it will be presented to you in a large beautiful cone, but then the ice cream is taken away and given to the person in line behind you. Thus you are left with an empty wallet, no change, holding an empty cone, with no hope of getting any ice cream."

4/6/2009: Random Thoughts by Thomas Sowell

Barack Obama seems determined to repeat every disastrous mistake of the 1930s, at home and abroad. He has already repeated Herbert Hoover's policy of raising taxes on high income earners, FDR's policy of trying to micro-manage the economy and Neville Chamberlain's policy of seeking dialogues with hostile nations while downplaying the dangers they represent.

It has long been said that uncertainty is the hardest thing for a market to adjust to. No one can generate uncertainty as much as the government, which can change the rules in midstream or come out with some new bright idea at any time, as the current administration has already demonstrated.

Socialists believe in government ownership of the means of production. Fascists believed in government control of privately owned businesses, which is much more the style of this government. That way, politicians can intervene whenever they feel like it and then, when their interventions turn out badly, summon executives from the private sector before Congress and denounce them on nationwide television.

4/4/2009: What Else Are We Wrong About? The danger of nuclear proliferation and other possible fallacies. By Jacob Weisberg

A lot of our premises have turned out to be wrong lately. I'm talking not about evanescent bits of conventional wisdom that have shifted but about overarching assumptions that were widely shared across the political spectrum—big things that experts and nonexperts agreed about—until they were proved false.

For instance, before 1989, virtually all Sovietologists agreed that the USSR was highly stable. Before 2001, few Middle East scholars worried that the United States was vulnerable to a major terrorist attack. Before 2003, everyone from neocon hawks to French lefties agreed that Saddam Hussein had weapons of mass destruction. Before 2008, few economists wondered about the fundamental soundness of the American financial system. Popular opinion echoed the expert consensus on each of these points. Those who challenged the groupthink—such as Soviet dissident Andrei Amalrik, renegade counterterrorism expert John O'Neill, former weapons inspector Scott Ritter, and pessimistic economist Nouriel Roubini—tended to be dismissed as provocateurs, wackos, or (in Ritter's case) worse.

So at a moment when everything we once assumed seems suddenly up for discussion, it may be worth asking the question: What other big stuff could we be wrong about? I'm looking for issues on which the received wisdom may well be completely right—but deserves a stronger dose of skepticism than it usually gets.

Nuclear proliferation is bad. It seems self-evident that countries joining the nuclear club—India, Pakistan, North Korea, and, perhaps, now Iran—create a greater risk of catastrophic war or accidental launch. But in a famous 1981 paper, the political scientist Kenneth Waltz argued that nuclear rivalries help keep the peace because "they discourage states from starting any wars that might lead to the use of such weapons." In this view, nukes are inherently defensive weapons, and the countries that want them do so for good reason. Waltz argues that joining the nuclear club induces restraint and caution, causing irresponsible regimes to behave more responsibly. In this video, he applies his idea to Iraq (where he joined in believing the WMD fallacy) and North Korea. Waltz's argument that "the slow spread of nuclear weapons will promote peace and reinforce international stability" is buttressed by another: You can't stop nuclear proliferation even if you try.

Climate change will be catastrophic. We all know civilization is doomed if we don't reduce carbon emissions, right? Physicist Freeman Dyson disagrees. Dyson (a strong opponent of nuclear proliferation, by the way) doesn't dispute that human activity is causing warming. But he challenges the scientific consensus that warming will be catastrophic. He is skeptical about climate models, which, he has said, "do not begin to describe the real world that we live in." In a New York Review of Books essay, Dyson wrote that warming "is mostly making cold places warmer rather than making hot places hotter." Carbon emissions could make the earth more fertile and prevent harm from a separate phenomenon of global cooling that isn't caused by humans. And if it really turns out that there is a serious problem, genetically engineered carbon-eating trees might fix it.

China is stable. The prevailing academic view of China resembles that of the Soviet Union in the old days, but with far greater measure of admiration. Twenty years after the Tiananmen Square crackdown, the Chinese Communist Party apparatus shows every sign of being in firm control. The economy has continued to grow at 9 percent a year since 1978, fueling China's rise as a global power. There's little sign of opposition. But remember that rising living standards tend to produce political discontent and have driven democratic change throughout most of the rest of East Asia. Samuel Huntington, the late political scientist, argued that regimes become vulnerable at a level of per capita income that China is fast approaching. As its free-market flourishes and access to information grows, it becomes an overwhelming challenge for the CCP to justify its rule and repress challenges to its legitimacy. Why should we assume that China will be immune to demands for democratic change?

Homeownership is better for us. The assumption that owning beats renting has been the basis for American social policy since at least the New Deal, when Congress first insured and subsidized mortgages through the Federal Housing Administration and Fannie Mae. Over time, the long-standing tax deductibility of interests evolved into a specific mortgage-interest deduction. It's a natural assumption that owners have more of a stake in their communities. But even if that's true, why should it outweigh the obvious disadvantages of homeownership? As many more people have discovered lately, it means taking on enormous financial risk. It encourages community involvement at the expense of labor-market mobility. It encourages longer commutes. And at least one study says it makes you fat and unhappy.

Stocks outperform bonds in the long run. The thesis of Jeremey Siegel's Stocks for the Long Run has been the most pervasive financial wisdom of recent decades. Siegel uses historical data to show that since 1802, stocks have returned an average of around 7 percent a year, better than any other asset class, with less risk. Others have claimed that stocks outperform bonds for any isolated 20- or 30-year period since the late 1800s. But in a recent paper, two business school professors contend "that stocks are actually more volatile over long horizons." The better performance of stocks might be the product of specific historical circumstances. But if stocks really have outperformed with lower risk over a long period, that means they've been undervalued relative to other assets. And now that investors recognize the undervaluation, there's no reason it should persist. This Bloomberg chart shows that as of 2009, the 30-year Treasury index has beaten the chief global stock index for the past 30 years.

Detroit can't compete. No one is optimistic about American carmakers right now. For decades, they've been losing ground to better-built, better-value foreign imports. The Big Three bet against fuel efficiency and smaller cars and lost. The inability of GM and Chrysler to sell recovery plans to the government underscores the notion that Detroit suffers from an incurable malaise. But look: American manufacturing practices have greatly improved in the past couple of years. The Big Three's labor costs have come way down. Shanghai GM is China's leading auto manufacturer. Buick recently tied with Ford-built Jaguar in an owner survey as the most reliable car brand. Ford looks as if it might have built the best mid-size hybrid, the 2010 Fusion. There's an argument that Detroit's real problem is its overhang of debt, high health care costs, and pension liabilities—all of which can be fixed through financial restructuring—as opposed to a deep inability to make cars that people want to buy.

We're running out of fossil fuels. When oil spiked at $147 a barrel last summer, the interesting question seemed to be whether we had enough left for the next 40 years or the next 100. But some people believe we will never run out. An essay Dyson wrote about scientific heresy tipped me off to Thomas Gold, an Austrian scientist who taught at Cornell and died in 2004. Gold argued that oil and gas weren't fossil fuels derived from decomposed vegetable mater but were, rather, the products of geological reactions that take place deep underground and leak upward. One experiment conducted by chemists at the Carnegie Institute supports this idea. The scientists found that methane, which is natural gas, could be produced by the interaction of geological elements known to exist miles below the surface of the earth by replicating the pressure and temperature where they're found. As Dyson writes, "The Carnegie Institute experiment shows that there is at least a possibility that Tommy Gold was right and the natural gas reservoirs are fed from deep below." In other words, we might not be running out of gas.

The Cubs will never win the World Series again. Oh, never mind.

Fund of Funds = Den of Thieves