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“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents...” --James Madison

“Any alleged ‘right’ of one man, which necessitates the violation of the rights of another, is not and cannot be a right.” — Ayn Rand

“Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition.” --Thomas Jefferson, Notes on Virginia, Query 19, “Manufactures” [1781]

“The whole aim of practical politics is to keep the populace alarmed, and hence clamorous to be led to safety, by menacing it with an endless series of hobgoblins, all of them imaginary.” – H.L. Mencken

“The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning, but without understanding.” — Judge Louis D. Brandeis

7/29/2010: Who Decides on Health-Care Value?
New rules to micromanage insurance companies could cost patients.
by Newt Gingrich and David Merritt

What would you think if bureaucrats confiscated your iPhone because they decided it didn't provide enough value? State regulators may help the federal government do just that to the health-care benefits of millions of Americans.

The most important element in implementing ObamaCare will be the requirement for health insurers to meet what is called a medical loss ratio. This requires health-insurance plans to split the dollars they receive from insurance premiums into two buckets.

Depending on the type of insurance coverage, 80% to 85% of premiums must be spent on either medical services or "activities that improve health care quality." This bucket includes everything from doctor visits, hospital stays and surgery to prescription drugs and medical equipment. It also includes programs to help patients cope with chronic diseases and reminders to take prescribed medications. The remaining 15% to 20% of premiums falls into a smaller bucket of "administrative" expenses like overhead, marketing, profits, compensation and agent commissions.

Regulators will soon decide which specific activities fall into which bucket. Forcing a wide range of services and benefits into the smaller administrative bucket puts them in direct competition with other critical aspects of a health insurer's business, as health plans will be compelled to cut back on those activities labeled "administrative" to meet new federal requirements. Plans will be forced to choose between priorities that benefit patients—such as preventing health-care fraud and reducing unnecessary services—and other priorities like creating new technological innovations or upgrading equipment.

Many see this debate as an underhanded way for the federal government to cap insurers' profits and control executive compensation. But this is much more than a technical fight between bureaucrats and health plans. The implications for patients are enormous.

Is giving patients access to a team of nurses to discuss and monitor their health really an administrative function? What about a fraud-prevention program that targets criminal providers who endanger patient care? State regulators at the National Association of Insurance Commissioners have indicated that they think both are. And bureaucrats at the Federal Department of Health and Human Services will rely heavily on their recommendations.

Take, for example, programs that apply standards to help reduce unnecessary imaging, like MRIs and CT scans. Research reports have shown that patients receiving many imaging services have an increased cancer risk, so preventing excess imaging would improve patients' health. Yet a health insurer's program that works with a physician to discuss repeated imaging services would not be deemed an activity that improves a patient's health-care quality. State regulators are poised to consider these activities part of the administrative "cost of doing business."

Another example is fraud prevention. According to the National Health Care Anti-Fraud Association, up to 10% of all health-care spending is stolen by criminals preying on the system, from kickback payments and billing for services never provided, to medical identity theft and phantom medical equipment providers. Some crimes harm patient safety by exposing patients to drugs and treatments they don't need or, in the case of medical identity theft, creating inaccurate health records that could result in improper treatment during emergencies.

Many health plans have robust antifraud programs to prevent and combat these crimes. They have invested in cutting-edge technologies and hired teams of investigators to target criminals whose fraudulent and abusive activities raise costs and insurance premiums. Blue Cross Blue Shield plans created the Anti-Fraud Strike Force to work with law-enforcement officials to root out fraud, and recovered and saved nearly $510 million in 2009 alone.

But these critical services, along with many others, may be deemed to be administrative expenses even though they demonstrably improve quality and lower costs. By labeling them administrative expenses, regulators will disincentivize health plans from investing in these kinds of essential programs. Costs will continue to go up and the quality of individual health will go down. This can be avoided only if regulators make their rules flexible enough to continue to provide these essential services.

Bureaucrats now have the power to force private health plans to make business decisions based on regulations rather than on what is best for company or customer health. This kind of governmental micromanaging of health care—seen nowhere else in our business sector—is anathema to the free market. More importantly, it endangers the lives and well-being of millions of Americans.

Mr. Gingrich is former Speaker of the House and founder of the Center for Health Transformation. Mr. Merritt is vice president and national policy director at the Center for Health Transformation.

7/24/2010: We Have Seen the Future by Thomas G. Donlan
Businesses Flee the Formerly Golden State

For decades, Californians took pride in saying, “Wherever the country is going, California will get there first.” Freeways, free love, state-supported higher education, space technology and computers created a utopia of runaway growth. Americans moved to California by the millions for new jobs and new lifestyles.

More recently, Californians have been disillusioned and dispossessed. High taxes were necessary to pay for the goodies dispensed by government; outraged citizens tried to keep the goodies and let the state borrow to pay for them. Borrowing, however, turned out to be a tax deferred, not denied.

The state government has taken the people’s anger out on business. Running a business in California requires negotiating a thicket of regulation, fees, workers’ compensation costs and lengthy processing of permits. As they used to say in other such jurisdictions, “Everything that is not compulsory is forbidden, and everything that is not forbidden is compulsory.”

California boasts a pro-consumer, anti--producer, legal system The prize for business success in California is the privilege of paying high taxes—or the exercise of one remaining commercial freedom, the freedom to leave the state.

Joseph Vranich, a consultant in Irvine, keeps tabs on business emigration because he makes a good living helping companies depart. He calls himself a “business relocation coach,” and business is booming. Using public information, he tallied 85 corporate departures, partial or complete, between Jan. 1 and July 20, 2010. That’s twice as many as he counted in all of 2009, and nearly three times as many as in the three years before that. He keeps the tally on a blog, http://thebusinessrelocationcoach.blogspot.com/

Vranich reports: “Companies of all types are reducing their California footprint. The list includes well-known California-based firms like Google, Hilton, Genentech, Yelp, Apple, Facebook, and DirectTV. Meanwhile, lesser-known family-owned companies are leaving the state completely, but they prefer to stay out of the limelight, and their moves are difficult to track.” He adds: “The exodus of known capital and jobs is the tip of the iceberg. The losses are deeper than are recorded here. California is in an economic state of emergency that will only get worse because the state government shows no sign of being less hostile to business, and because more companies will be leaving.”

Texas is the state benefiting the most from the California exodus, Vranich says. The next four are Colorado, Arizona, Nevada and North Carolina.

At the head of Vranich’s list is the shutdown of Toyota’s plant in Fremont, outside Oakland. About 4,700 workers were laid off there, and Toyota moved some of their work to Texas and Ontario. Toyota has also restarted construction of a new plant in Mississippi that will produce the same model car that was built in Fremont.

One consolation: California is not leading the U.S. in the job-destruction follies. The industrial Northeast went down this path, starting in the 1920s. New York City lost the bulk of its corporate headquarters in the 1960s. The Midwest, formerly America’s Heartland, became the Rust Belt in the 1980s.

California, however, has one new industry abuilding. Oakland aspires to become “the Silicon Valley of cannabis.” The city council voted last week to license—and tax—large-scale indoor marijuana farms. And a statewide referendum this fall will offer voters the chance to approve legal consumption of marijuana—with a tax attached.

If California does lead the nation to legal dopery, the next step is obvious. California will tax and regulate the new industry right out of the state.

Pay to Play
Goldman Sachs buys a $550 million back-to-business license.

There were lots of losers when the Securities and Exchange Commission settled its case against Goldman Sachs. The SEC agreed to drop the biggest part of its civil- fraud charges and lost another particle of its vanishingly small credibility as an arbiter of securities law. Goldman Sachs paid a $550 million fine for nothing, since it did not admit doing anything illegal.

Goldman said it was a “mistake” not to disclose the risks of a deal to IKB Deutsche-industriebank and Royal Bank of Scotland. But the significant mistake in the deal was that the two banks were so hungry for easy money that they didn’t notice the real-estate bubble was bursting. The SEC theory was that Goldman should have warned IKB and RBS that a hedge fund had helped select the mortgage-backed securities to make them as risky as possible.

Goldman Sachs also may have lost a bit of its reputation for fair dealing, although that never has had much value in the Wall Street jungle. Traders will trade with anyone, as long as they believe they will be paid if they win.

Other losers included the two Republican members of the SEC, who voted against bringing the charges last April and voted July 15 not to settle the case without a trial. They were right on principle both times, for which their names will not go down in history.

Standing firm on principle—so far—is the smallest fish in the barrel. A Goldman trader named Fabrice Tourre who helped sell synthetic collateralized debt obligations and related credit-default swaps continues to deny any wrongdoing. His bravery now matches the bravado he displayed at the time in e-mails to his girlfriend. He’s unlikely to come out a winner, of course—defying the SEC isn’t healthy for a young man with ambition.

The biggest losers are the people of the U.S., and not just those who make their living trading securities. All citizens have a right to know what the law is; they have a right to know when and why the cops will muscle in on their business.

Wall Street lost that right in 1933. Securities law is whatever the SEC’s Division of Enforcement says it is. Traders know that making the wrong bet at the wrong time occasionally will be declared fraud, just as they know that a payment will absolve them.

7/21/2010: Obama’s Economic Fish Stories by Michael J. Boskin
On unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.

A president’s most valuable asset—with voters, Congress, allies and enemies—is credibility. So it is unfortunate when extreme exaggeration emanates from the White House.

All presidents wind up saying some things that make even their own economists cringe (often the brainchild of political advisers unconstrained by economic principles, facts or arithmetic). Usually, economic advisers manage to correct these problematic statements before delivery. Sometimes they get channeled into relatively harmless nonsense, such as President Gerald Ford’s “Whip Inflation Now” buttons. Other times they produce damaging policies, such as President Richard Nixon’s wage and price controls. The most illiterate statement was President Jimmy Carter’s late-1970s plea to the Federal Reserve to lower interest rates to combat high inflation, the exact opposite of what it should do. Not surprisingly, the value of the dollar collapsed.

President Obama says “every economist who’s looked at it says that the Recovery Act has done its job”—i.e., the stimulus bill has turned the economy around. That’s nonsense. Opinions differ widely and many leading economists believe that its impact has been small. Why? The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama’s vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories.

So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.

The president does not say that economists agree that the high future taxes to finance the stimulus will hurt the economy. (The University of Chicago’s Harald Uhlig estimates $3.40 of lost output for every dollar of government spending.) Either the president is not being told of serious alternative viewpoints, or serious viewpoints are defined as only those that support his position. In either case, he is being ill-served by his staff.

Mr. Obama’s economic statements are increasingly divorced not only from competing viewpoints but from those of his own economic advisers. It is surprising how many numerically challenged pronouncements come from this most scripted and political of White Houses. One slip is eventually forgiven, but when a pattern emerges, no one believes it is an accident.

For example, on the anniversary of the stimulus bill, Mr. Obama declared, “It is largely thanks to the Recovery Act that a second Depression is no longer a possibility.” Yet his Council of Economic Advisers just estimated the stimulus bill’s effect on GDP at its trough was 1%-2%.

The most common definition of a depression is a long period in which GDP or consumption declines at least 10%. The decline in GDP in the recent recession was 3.8%, in consumption 2%. No one disputes the recession was severe, but to reach a 10% GDP decline requires tripling the administration’s estimate (three times their 2% effect) added to the actual 3.8% decline. On the alternative consumption standard, the math is even more absurd. The depression statement isn’t credible. The stimulus bill has assumed certain mystic powers in administration discourse, but revoking the laws of arithmetic shouldn’t be one of them.

The recession would have been worse if not for the Fed’s monetary policy and quantitative easing. Also important were the unmentioned automatic stabilizers—taxes falling more than income, cushioning declines in after-tax incomes and consumption—which were far larger than the spending and tax rebates in the stimulus bill. Arguing that all these policies (including injecting capital into banks, which was necessary but done poorly) may have prevented a depression is perhaps still an exaggeration but at least is within hailing distance of plausibility. On that scale, the effect of the stimulus was puny.

On his recent “Recovery Tour,” Mr. Obama boasted, “The stimulus bill prevented the unemployment rate from “getting up to . . . 15%.” But the president’s own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%. So Mr. Obama claims that the stimulus bill was several times more potent than his chief economic adviser estimates.

Perhaps the most serious disconnect concerns the impending expiration of the 2001 and 2003 tax cuts, which will raise the top two income tax rates and the rates on dividends and capital gains. If these growth inhibiting tax increases occur—about $75 billion in tax increases next year, $1.4 trillion over 10 years—there will be serious economic damage.

In the most recent issue of the American Economic Review, Ms. Romer (and her husband David H. Romer) conclude that “tax increases are highly contractionary . . . tax cuts have very large and persistent positive output effects.” Their estimates imply the tax increases would depress GDP by roughly half the growth rate in this so-far-anemic recovery.

If Mr. Obama is really serious about a second stimulus, by far the best thing he can do is have Congress quickly extend the expiring Bush tax cuts, combined with real spending cuts set to take effect as the economy improves.

The president badly needs to make more realistic pronouncements. No one expects him to say his policies have failed (although most have delivered far less than claimed at large cost). A little candor about the results of experimentation in uncharted waters would go a long way. But at the very least, his staff needs to avoid putting these exaggerations on the teleprompter. It undermines confidence and raises concerns about competence. It’s doing nobody any good—not the economy and certainly not Mr. Obama.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.

7/21/2010: letters to the Wall Street Journal:

...Just a few days ago I received the June 2010 issue of the American Economic Review, the flagship journal of academic economics. The current issue contains an article by CEA Chair Christina Romer and her husband David Romer on the macroeconomic effects of tax changes. Their paper examines “all major postwar tax policy actions” and concludes that “tax increases are highly contractionary.” For emphasis, the authors add that this finding is both “strongly significant” and “highly robust.”...

E. Frank Stephenson, Chair

Department of Economics

Berry College, Rome, Ga.

The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks by Christina D. Romer and David H. Romer
[full text not available to non-subscribers]

Abstract: This paper investigates the impact of tax changes on economic activity. We use the narrative record, such as presidential speeches and Congressional reports, to identify the size, timing, and principal motivation for all major postwar tax policy actions. This analysis allows us to separate legislated changes into those taken for reasons related to prospective economic conditions and those taken for more exogenous reasons. The behavior of output following these more exogenous changes indicates that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes.

7/20/2010: Abolish State Income Taxes by Richard Rahn

Did you know there are nine states that have no state income tax?

The non-income-tax states (see accompanying chart) are geographically and economically diverse, ranging from the state of Washington in the Pacific Northwest, to Texas and Florida in the South, and up to New Hampshire in the Northeast.

Why is it that some of the states with the biggest fiscal problems have the highest individual state income tax rates, such as New York and California, while some of the states with the least fiscal problems have no state income tax at all?

High-tax advocates will argue that the high-tax states provide much more and better state services, but the empirical evidence does not support the assertion.

On average, schools, health and safety, roads, etc. are no better in states with income taxes than those without income taxes. More importantly, the evidence is very strong that people are moving from high-tax states to lower-tax-rate states — the migration from California to Texas and from New York to Florida being prime examples. (Next year, the combined federal, state, and local income tax rate for a citizen of New York City will be well over 50 percent, as contrasted with approximately 38 percent for citizens of Texas and Florida.)

If the citizens of California and New York really thought they were getting their money’s worth for all of the extra state taxation, they would not be moving to low-tax states.

The obvious question then is, Where is all the extra money from these state income taxes going?

It is going primarily to service debt, and to pay for inflated salaries and employee benefits. It is interesting that the high-tax-rate states also, on average, have much higher per capita debt levels than states without income taxes. (Alaska is an outlier because it has its oil reserve to borrow against and actually gives its citizens a “dividend” each year.)

The biggest additional burden the high-tax states have is unionized government worker contracts. My Cato colleague Chris Edwards notes: “Half of all state and local spending — $1.1 trillion out of $2.2 trillion in 2008 — goes toward employee wages and benefits.”

His study showed that, on average, total hourly compensation for state and local government workers was 45 percent higher than for equivalent private-sector workers.

In addition, the government workers are rarely fired even those with poor job performance. Importantly, the differential was much greater in states where more than half of the state employees were unionized, and these were all in states with state income taxes, with the exception of Washington.

High rates of unionization of public employees and high rates of debt go hand in hand. Those states whose government workers are less than 40 percent unionized have median per capita state debt of $2,238, while those states where unionization rates are over 60 percent have a median per capita state debt of $6,380.

High rates of unionization tend to lead to excess staffing, unaffordable benefits, and pensions.

There have been a number of both empirical and theoretical studies showing the negative impacts of state income taxes and particularly those with high marginal rates on economic growth within the state.

A recent study published in the Cato Journal by professors Barry W. Poulson and Jules Gordon Kaplan, which was carefully controlled for the effects of regressivity, convergence, and regional influences in isolating the effect of taxes on economic growth in the states concluded: “Jurisdictions that imposed an income tax to generate a given level of revenue experienced lower rates of economic growth relative to jurisdictions that relied on alternative taxes to generate the same revenue.”

State Income Tax Rates and Debt (All Figures Percent)

States	Income Tax	State Debt as % of Income
Without Individual Income Tax
Tennessee	0	2.02
Texas	0	2.70
Nevada	0	4.07
Wyoming	0	4.90
Florida	0	5.20
Washington	0	7.93
South Dakota	0	10.95
New Hampshire	0	14.10
Alaska	0	24.01
Highest Individual Income Tax rates
Iowa	9.28	6.47
Maryland	9.23	7.26
California	10.55	7.55
Oregon	11.36	8.61
Hawaii	11.00	11.89
New Jersey	9.06	12.01
New York	10.67	12.22
Vermont	8.95	13.12
Rhode Island	9.9	20.04

The state of New York is a poster child for what not to do. At one time, it was the richest and most populous state. But at least going back to the Harriman and Rockefeller administrations decades ago, it decided it could tax and spend its way to prosperity. (Note: New York City residents face a maximum combined state and city income tax of over 12 percent, while those in many New York counties pay a little less than 9 percent, giving the state an average maximum tax rate of almost 11 percent.)

The results have been the opposite of what was promised.

New York’s relative population, economic growth, and per capita income have all declined, particularly in relation to those states without a state income tax.

In the past year, per-person taxes have increased by $419 in New York, far higher than any other state. (Note: They went up only $1 in Texas. Is New York or Texas now better off?)

Income taxes, as contrasted with consumption (i.e., sales) taxes and modest property tax rates, are far more costly to administer and do far more economic damage (by discouraging work, saving and investment) and are far more intrusive on individual liberty.

The states without state income taxes overall have had far better economic performance for most of the past several decades than have the income tax states — particularly those with high marginal taxes.

The Tea Party movement indicates that it might be the right time politically for politicians in the income tax states to call for those taxes to be phased out.

Good economics might actually be good politics this year.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

7/20/2010: Fascism will come at the hands of perfectly authentic Americans who have been working to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyze opposition and command public support; marshaling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our nation’s greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination, all to be done under the authority of a powerfully centralized government in which the executive will hold in effect all the powers, with Congress reduced to the role of a debating society. — John T. Flynn, As We Go Marching [1944]

7/19/2010: Intellectuals and Human Nature by Mike Adams

Recently, several “intellectuals” convened to deal with a problem so serious it could not be tackled by just one college professor. The question was this: How can professors stop an epidemic of students missing their examinations without jeopardizing student grades by resorting to point deductions?

The problem was so serious that the handful of intellectuals who first noticed the problem – and noticed others noticing the problem – sent out a mass email inviting others to attend a “brown bag” luncheon to brainstorm. They were searching for “solutions”, which would stop short of actually punishing students for missing their examinations.

I certainly have no problem with professors getting together to find “solutions” to difficult “problems.” But I do have a “problem” with the way these professors were characterizing their “problem.”

A better description of their “problem” – one that better reflects its magnitude – would sound something like this: How can we retain the secular/ progressive view of human nature, which is needed to justify secular/ progressive policies, in light of a wealth of evidence to the contrary?

The thoughts of the professors responding to the mass email were enlightening. One complained that she wanted to give her students the benefit of the doubt, but they constantly pushed and tested her. The more she withheld punishment, the more prevalent the undesirable behavior.

Another observed that the more often she does nice things for students, the more often they take advantage of her. She seemed perplexed by the fact that rewarding a missed exam with another administration, thus giving the student more time to prepare, led to more missed exams.

The dilemma of the perplexed professors highlights the fundamental difference between the conservative and the progressive views of human motivation. The former suggests that you can sometimes threaten to do bad things to people and expect good things in return. The latter suggests that you can promise to do good things for people and expect good things in return.

In the 1960s, our government began to put the progressive view of human nature to the test. We launched a War on Poverty in an effort to build a Great Society. Soon, we began to see mountains of data refuting the secular/ progressive view of human nature.

By the end of the first decade of our efforts to build a Great Society, crime in America had skyrocketed to unprecedented levels. The 1960s saw record increases in crime rates, which have yet to be broken.

Progressives thought that giving people welfare, food stamps, and huge increases in the minimum wage would all be nice favors, which would be returned in the form of greater citizen conformity. The fact that it didn’t work has done little to shake the foundations of progressive faith in human decency.

Since the failed effort to build a Great Society there have been repeated calls to build more prisons in order to clean up the mess progressives have created. But, for years, progressives have fought tooth and nail to prevent or slow the expansion of prisons.

The result, of course, has been an increase in homicides and gang-rapes in prison due to prison overcrowding. In short, the progressive view of human nature has produced more violence among both free and captive populations. More people are dying everywhere but the progressive vision of human decency is immortal. It cannot be slain by any wealth of empirical evidence.

More recently, we have seen the effects of progressive gun control policies. Like prisons, guns are reminders of human depravity, which the progressive cannot accept. And so the progressive seeks to ban guns. Nonetheless, in 2008, the Supreme Court lifted a ban on handguns in Washington D.C., which resulted in a 25% decrease in homicides the next year.

The D.C. homicide data speak volumes about human nature. The presence of guns is a threat, which helps many depraved individuals conform to the dictates of the law. Nonetheless, progressives still fight the very reforms that have helped preserve innocent lives. They do so because it is more important that they preserve their vision of human decency.

It isn’t surprising that progressives who cannot manage a classroom cannot also manage “society.” It would be better if the progressive would confine her decision to accommodate, rather than punish, irresponsibility to the classroom. But intellectuals rarely keep their ideas to themselves. They are obliged to impose them on “society.”

Replacing the Judeo-Christian view of human nature with the progressive view of human nature has proven to be a bad idea. And bad ideas have bad consequences for fallen human beings. But progressive hope for the secular transformation of human nature springs eternal.

7/18/2010: Welcome to Obama’s ‘Teleprompter Depression‘
by Wayne Allyn Root

As a common-sense small businessman, I have a front-row seat to a slow-motion economic Armageddon that will be written about, discussed and debated for decades to come.

But big-shot economists don’t listen to guys like me. They scoff as I keep predicting in commentary after commentary that small business is suffering a catastrophe of epic proportions -- leading this nation toward levels of unemployment and economic crisis that will rival or surpass the Great Depression.

President Barack Obama is literally taxing small business to death.

I do not believe the tragedy that is unfolding before our eyes is a mistake, coincidence or due to incompetence. I believe my old college classmate Obama (Class of ‘83 Columbia University) is a Marxist purposefully trying to destroy capitalism by overwhelming the system, thereby creating a distraction giving him cover to redistribute America’s wealth to his voters (those who create no jobs, pay few taxes, depend on government handouts for survival or work for government or unions). As a bonus, he gets to bankrupt the group (small business) that contributes virtually all the money to his political opposition. This is truly a “Marxist Triple Play.”

Consider a few highlights of Obama’s reign of destruction:

1) The biggest income tax increase in the history of America will take effect on Jan 1. The new tax increase falls almost 100 percent on small business owners and high-income taxpayers (whose contributions happen to fund Obama’s political opposition). As a result, many more jobs will be lost and more businesses closed.

2) A dramatic 60 percent capital gains tax increase (from 15 percent to 23.8 percent effective rate, including new universal health-care taxes) will accompany the big income tax increase. More jobs will be lost, more businesses closed.

3) Taxes on dividends will increase from 15 percent to 39.6 percent, and then another 3.8 percent by 2013 for Obama’s new health-care taxes. Stocks will be crushed and older Americans will be devastated (because they live off dividends, investments and bank interest). More lives ruined, more jobs lost.

4) New taxes on income, investments and even tanning bed users soon take effect to pay for ObamaCare. Worse,18,000 new IRS agents will be hired to enforce these taxes (at a cost of billions annually in new government employee salaries, pensions and benefits). More jobs lost.

5) The pending cap-and-trade legislation threatens dramatic new taxes on anyone who owns a business, owns a home, owns an auto or buys products manufactured or delivered through the use of energy. Once again, the more you own, the more you’ll be taxed. More jobs will be lost, more manufacturing jobs sent overseas, more homes foreclosed.

6) The pending financial reform bill threatens onerous new rules, regulations and taxes on banks and Wall Street. More jobs will be lost (and more banking and financial jobs sent overseas).

7) The pending new jobs bill threatens gigantic new taxes on every Sub Chapter S corporation in America. More jobs will be lost and more small businesses ruined.

8) The threat of a gigantic new national sales tax (VAT) on everything manufactured, bought and sold in America looms large. Fewer jobs, reduced consumer spending, more businesses closed forever.

9) Obama is pushing for the reduction or elimination of tax deductions (such as mortgage or charitable contributions) for high-income earners (mostly small business owners). More jobs lost, reduced charitable contributions, and the real estate industry damaged beyond repair.

10) The threat of bans or restrictions on offshore oil drilling being put permanently into place. More jobs lost (and more jobs sent overseas where drilling is welcomed). As a bonus for Obama, he gets to ruin the Texas economy.

11) All signs indicate that Obama will soon propose to take the income cap off FICA (Social Security) taxes. If this were to happen, a successful small business owner (if there are any left) could see his or her FICA taxes alone go from an already bloated and burdensome $15,000 per year to an unimaginable $150,000 (or more). In U.S. history, no taxpayer has ever seen a ten times tax increase in one year. This devastating nightmare will wipe out small business and cause people who Obama calls “rich” to lose their homes and businesses.

12) A new IRS law (with the passage of ObamaCare) requires business owners to file thousands of new forms each year documenting virtually every expenditure made by their business. As a result of this blizzard of new paperwork, small business faces ruin.

13) Let’s not forget the gigantic tax hikes on the state and local level for income taxes, sales taxes, property taxes and new taxes disguised as “user fees.” Local taxes are already at levels that taxpayers and small businesses can no longer afford to pay.

14) Finally, Obama refuses to consider lowering the second highest corporate tax rate (40 percent) in the industrialized world. As a result, more businesses will choose to leave the United States (and more jobs will be sent overseas).

Each of these taxes and proposed taxes is a job killer. Taken together, the Obama regime’s policies are the equivalent of General Sherman’s march to the sea -- leaving a tragic path of destruction in its wake. Obama has launched an unprecedented, overwhelming, death-by-tax assault on the groups that fund fiscally conservative causes and candidates: taxpayers and business owners.

And you wonder why there are no jobs? You wonder why there is no recovery? This is the “Teleprompter Depression.” Every time Obama steps in front of a Teleprompter another thousand businesses die.

Wayne Allyn Root, a former vice presidential nominee for the Libertarian Party, writes from Henderson. His column appears every other week.

7/17/2010: from the Weekend edition of the Daily Reckoning

For every action, there is an equal and opposing reaction. One nation’s export is another’s import. A distressed sale for one person is a bargain purchase for another. For one a loan; for another a debt.

Your wayfaring editor spent the past few weeks traipsing around the Far East. From our former home city of Taipei, to Hong Kong, and then on to the bustling Chinese mega-cities of Shanghai and Beijing. This is where the rest of the world’s debts are piling up. Hong Kong, for instance, is like New York...but with economic growth and job opportunities. Shanghai, in turn, is similar to Hong Kong...but on steroids. And the sprawling concrete jungle of Beijing, with its meddling central planners and depressing government buildings, is not really so dissimilar to Washington DC...except that it has cash to fund its mistakes, of course, whereas DC must borrow (or steal) the hell-bound dollars from others, including, mostly, the Chinese.

It’s been an interesting journey...and a fascinating glimpse at the opposing reactions to the tired old “developed” world’s actions. Here, wealth is piling up so fast even governments can’t waste or misallocate it quickly enough.

There is no purpose for the U.S. to stay longer in either of these wars. Keeping troops in Iraq and Afghanistan will only lead to more mothers who have lost children, wives who have lost husbands, husbands who have lost wives, and children who have lost parents. — Thomas Gale Moore, “More Lives Lost in Vain“ [July 13, 2010]

7/15/2010: Act 1 Puts End To Reaganism; Now, For Act 2
By Charles Krauthammer

In the political marketplace, there’s now a run on Obama shares. The left is disappointed with the president. Independents are abandoning him in droves. And the right is already dancing on his political grave, salivating about November when, his own press secretary admitted Sunday, Democrats might lose the House.

I have a warning for Republicans: Don’t underestimate Barack Obama.

Consider what he has already achieved. ObamaCare alone makes his presidency historic. It has irrevocably changed one-sixth of the economy, put the country inexorably on the road to national health care and, as acknowledged by Senate Finance Committee Chairman Max Baucus but few others, begun one of the most massive wealth redistributions in U.S. history.

Second, there is a major financial overhaul, which passed Congress on Thursday. Economists argue whether it will prevent meltdowns and bailouts as promised. But there is no argument that it will give the government unprecedented power in the financial marketplace.

Its 2,300 pages will create at least 243 new regulations that will affect not only, as many assume, the big banks, but just about everyone, including, as noted in one summary, “storefront check cashiers, city governments, small manufacturers, homebuyers and credit bureaus.”

Third is the near $1 trillion stimulus, the largest spending bill in U.S. history. And that’s not even counting nationalizing the student loan program, regulating CO2 emissions by EPA fiat, and still-fitful attempts to pass cap-and-trade through Congress.

But Obama’s most far-reaching accomplishment is his structural alteration of the U.S. budget. The stimulus, the vast expansion of domestic spending, the creation of ruinous deficits as far as the eye can see are not easily reversed.

These are not mere temporary countercyclical measures. They are structural deficits because, as everyone from Obama on down admits, the real money is in entitlements, most specifically Medicare and Medicaid.

Only Half Done

ObamaCare freezes these out as a source of debt reduction. ObamaCare’s $500 billion in Medicare cuts and $600 billion in tax increases are siphoned away for a new entitlement — and no longer available for deficit reduction.

The result? There just isn’t enough to cut elsewhere to prevent national insolvency. That will require massive tax increases — most likely a European-style value-added tax. Just as President Reagan cut taxes to starve the federal government and prevent massive growth in spending, Obama’s wild spending — and quarantining health care costs from providing possible relief — will necessitate huge tax increases.

7/14/2010: Obama’s hubris drives his plummeting poll numbers
by Richard Rider

President Obama’s popularity continues to head south. Explanations abound. Here’s mine.

Obama’s problem is that, as the quintessential central planner, he had every confidence he could “make it all work” — what Nobel Economist Friedrich Hayek called “the fatal conceit.” Obama made scores of performance promises, and delivered on almost none of them — while screwing things up royally because of the “Law of Unintended Consequences.”

It’s not so much that he lied as a candidate — I think he actually BELIEVES what he says. But he’s working in a job that is WAY above his capabilities and understanding. Even worse, all his advisers come from the same DC Disneyland School of Economics.

Unfortunately for Obama, snippets of every major smug, unfulfilled promise he made on the campaign trail are now showing in dozens of derisive videos posted on You Tube and other Internet sites.

In short, Obama is an articulate, even charismatic dolt who — as the “Peter Principle” predicted — has now risen to his level of incompetence.

7/10/2010: Dale Ogden attended the South Bay Open Carry Street Cleanup today in Hermosa Beach. A Press Conference started the event, featuring Harley Green, founder of SBOC. Two Libertarian candidates, Dale Ogden for Governor and Ethan Musulin for Assembly 53^rd District.

About 15 or so citizens, men and women, openly carried firearms while a group of about 25-30 people picked up trash along 8^th Street and the Strand. There were representatives from several publications including the local Hermosa Beach papers, the “Patch” and “Easy Reader” and the Daily Breeze and Los Angeles Times.

Daily Breeze: Packing trash and packing heat
By Josh Grossberg Staff Writer

LA Times: Openly bearing arms, beachgoers cite their rights
Members of a South Bay group hope to win public acceptance of the public display of firearms.

LA Examiner has some great articles and lots of photos:

Right to carry a concealed handgun passes hurdle - Part 1

Guns in Hermosa - Just another day at the beach - Part 2

LAPD’s Death Squad

‘Such as’ does not mean ‘only’ - D.C. v Heller gun rights decision

7/19/2010: Reflections from the August 2010 issue of Liberty Magazine

Obey or else — Here’s what is known for sure: during a routine stop at the Blue Water Bridge, waiting to cross into the U.S., American border patrol agents detained Canadian science fiction writer Peter Watts after he stepped out of his car. From that point, accounts vary more than a bit.

The patrol claimed that Watts was combative and threatening, and that once he had been (they claim) lawfully placed under arrest, he resisted to the point of choking one of the guards who was attempting to subdue him. Watts unsurpris- ingly tells a different tale: he stepped out of his car to ask why he was being held up. When told to get back into his car, Watts by his own admission did not comply immediately — at which point he was beaten, maced, armlocked, and ground face-first into the concrete.

In the end, Watts was charged not with assault but with felony “resistance” — an extraordinarily broad charge that includes everything from full-on physical battering to “failure to comply with a lawful order.” In court, the presiding officer against testified that Watts attempted to choke him; fortunately, Watts had a passenger with him who was able to dispute that charge — doubly fortunate, since the video of the incident was, as with so many documentations of such incidents, mysteriously lost somewhere on the way to the courtroom. That left only the charge of “obstruction,” of which Watts was by his own testimony guilty.

Jury nullification was made for exactly such cases as this, but statements from the jurors indicated they were loath to apply it. One noted that Watts “was not violent, he was not intimidating, he was not stopping them from searching his car. He did, however, refuse to follow the commands by his non-compliance.” We’ve reached a point where, as Cory Doctorow noted, “if you don’t comply fast enough with a customs officer, he can beat you, gas you, jail you, and then imprison you for two years.” That was the sentence Watts could have gotten, though in the end he was let off with a fine — that’s right, he had to pay for the privilege of being beaten by U.S. officers, and had to act grateful they weren’t going to lock him up at the end of it.

And the financial cost doesn’t end there — as a science-fiction writer, a significant portion of his income came from book signings and convention appearances, but as a convicted felon, the American market is now closed off to him. Nor can he visit his sick brother in New York. If there is any remedy, it will come from a civil lawsuit against the Border Patrol agents who, again in the words of one juror, “escalated the situation with sarcasm and miscommunication . . . in my opinion, they committed offenses against Mr. Watts.” Until then, he can only brood on the cost of asking “Why?” to power. — Andrew Ferguson

Bottom feeders — In the weeks leading up to passage of the statist self-aggrandizement imprecisely called “financial reform,” the Obama Administration’s Big Labor masters concocted an anachronistic public relations campaign called “The Showdown on Wall Street.”

This Showdown consisted of hundreds of mumbling halfwits, bused in from the outer boroughs, shuffling through six blocks of office building lobbies in lower Manhattan. Pushing them along was a brain trust of Big Labor bosses and radical poseurs. As one press release boasted:

The Showdown on Wall Street is co-sponsored by the AFLCIO and National People’s Action and includes the following New York City Community Organizations: Brooklyn Congregations United from the PICO National Network, Community Voices Heard, Families United for Racial and Economic Equality, The Good Old Lower East Side, People United for Sustainable Housing, Make the Road New York, NYCAHN/VOCAL, The Northwest Bronx Community and Clergy Coalition, Syracuse United Neighbors and endorsed by The Neighborhood Economic Development Advocacy Project.

You’re no doubt familiar with the AFL-CIO, which is managing to squeeze a few last dollars from dying industries across the land. According to Richard Trumka, who currently presides over this group: “America is about more than making easy money and looking out for number one. Our lives and our livelihoods are all bound together. And we are all paying the price for those who knew no limits on their greed.” By implication, Trumka is a better man because he knows the limits on his.

Evidently, some things never change: The top of each Ivy League class goes to work for Goldman Sachs; the middle heads to grad school; the bottom writes speeches for labor bosses.

You may not be familiar with the cosponsoring organization, National People’s Action. Here’s some unreconstructed agitprop from its web site:

National People’s Action (NPA) is a Network of community power organizations from across the country that work to advance a national economic and racial justice agenda. . . . All people, regardless of race, class, gender, and national origin must be ensured a high quality of life.

NPA was started in the early 1970s by Gale Cincotta and Shel Trapp. They are generally credited with writing the first draft of the Community Reinvestment Act (CRA). So, there’s some irony in the group’s recent kvetching. The housing bubble that crashed in 2007–8 was an unintended (I imagine) consequence of the “economic justice” that Cincotta and Trapp sought in the CRA.

Of course, irony is lost on most of the “community organizers” and other dolts drawn to the economic and social justice industries. That may be a feature rather than a bug, though. It’s easier to control the narrative when you attract the dumbest, most gullible people. — Jim Walsh

Doomed to repeat — I have taken many graduate political science classes during my years in academia. In almost every one, at one point or another, the professor posed a certain question. I doubt this question is unique to political science graduate seminars. I expect that it is asked in many other social science and humanities classes. The question is: does society learn?

When I first heard the question as a young graduate student, I found both it and the debate that followed it very interesting. The professors’ intent was to get us to think about whether society evolves, whether it learns from knowledge of mistakes, or of history. But after hearing the question in class after class, it grew tiresome — especially since there was never a definitive answer.

Lately, the more news I read about the Obama administration, Congress, and government bureaucracy at all levels, the more this tiresome question comes to mind. Like other libertarians, I find it troubling. The idea of society learning, rather than individuals, is fundamentally problematic. Initially, I thought the appropriate question should be, “Do people learn?” But the more I’ve been thinking about it, the more I believe the question is, “Does society learn?” and that the answer is no.

The key is “society.” Individuals have the potential to learn — from history, from good and bad experiences, from mistakes. But society cannot learn. Groups cannot learn. Groups always repeat the same mistakes and atrocities in attempting to manifest well-intentioned ideas that are “fair to everyone” or “good for mankind.”

From its inception, America’s free society has been based on individual rights. Yet the present administration, Congress, and bureaucracy seem intent on changing a society based on individual rights to one based on human or group rights. Their efforts at universal healthcare, cap and trade, and wealth redistribution all elevate group rights over individual ones. When individual rights are valued and protected, individuals can exercise their capacity to learn, and are likely to avoid past mistakes and atrocities. When rights are no longer considered individual but human or collective, then “society” or “the community” becomes an entity in and of itself, of greater importance than its individual members. In such a condition it is left to society to learn. And individuals inevitably suffer because society never does. — Marlaine White

7/5/2010: Obama: Bumbling Incompetent…or Bumbling Marxist?

Welcome to “the Teleprompter Depression.” Each Time Obama Steps in Front of a Teleprompter, Another Business Dies.

As a common-sense small businessman, I have a front row seat to a slow motion economic Armageddon that will be written about, discussed and debated for decades to come. Big shot economists don’t listen to guys like me. They scoff as I keep predicting in commentary after commentary that small business is suffering a catastrophe of epic proportions- leading this nation towards levels of unemployment and economic crisis that will rival or surpass the Great Depression. Just last week, the Bureau of Labor Statistics quietly reported that the labor force dropped by roughly one million people during just the last two months. If those numbers were added into the unemployment numbers, it would shock and terrify the American people.

I do not believe the tragedy that is unfolding before our eyes is a mistake, coincidence, or due to incompetence. I believe my old college classmate Obama (Class of ‘83 Columbia University) is a Marxist purposefully trying to destroy capitalism, by overwhelming the system, thereby creating a distraction giving him cover to redistribute America’s wealth to his voters (those who create no jobs, pay few taxes, depend on government handouts for survival, or work for government or unions). As a bonus, he gets to bankrupt the groups that contribute virtually all the money to his political opposition. This is truly a “Marxist Triple Play.”

Consider a few highlights of Obama’s reign of destruction:

#1) The biggest income tax increase in the history of America will take effect on Jan 1st, 2011. The new tax increase falls almost 100% on small business owners and high-income taxpayers (whose contributions happen to fund Obama’s political opposition). As a result, many more jobs will be lost and more businesses closed.

#2) A dramatic 60% capital gains tax increase (from 15% to 23.8% effective rate, including new universal healthcare taxes) will accompany the big income tax increase above. More jobs will be lost, more businesses closed.

#3) Taxes on dividends will increase from 15% to 39.6%, and then another 3.8% by 2013 for Obama’s new healthcare taxes. Stocks will be crushed and older Americans will be devastated (because they live off dividends, investments, and bank interest). More lives ruined, more jobs lost.

#4) New taxes on income, investments, and even tanning bed users soon take effect to pay for Obamacare. Worse,18,000 new I.R.S. agents will be hired to enforce these taxes (at a cost of billions annually in new government employee salaries, pensions and benefits). More jobs lost.

#5) The pending Cap and Trade legislation threatens dramatic new taxes on anyone who owns a business, owns a home, owns an auto, or buys products manufactured or delivered through the use of energy. Once again, the more you own, the more you’ll be taxed. More jobs will be lost, more manufacturing jobs sent overseas, more homes foreclosed.

#6) The pending financial reform bill threatens onerous new rules, regulations and taxes on banks and Wall Street. More jobs will be lost (and more banking and financial jobs sent overseas).

#7) The pending new jobs bill threatens gigantic new taxes on every Sub Chapter S corporation in America. More jobs will be lost and more small businesses ruined.

#8) The threat of a gigantic new national sales tax (VAT) on everything manufactured, bought and sold in America looms large. Fewer jobs, reduced consumer spending, more businesses closed forever.

#9) Obama is pushing for the reduction or elimination of tax deductions (such as mortgage or charitable contributions) for high income earners (mostly small business owners). More jobs lost, reduced charitable contributions, and the real estate industry damaged beyond repair.

#10) The threat of bans or restrictions on offshore oil drilling being put permanently into place. More jobs lost (and more jobs sent overseas where drilling is welcomed). As a bonus for Obama, he gets to ruin the Texas economy.

#11) All signs indicate that Obama will soon propose to take the income cap off FICA (Social Security) taxes. If this were to happen, a successful small business owner (if there are any left) could see his or her FICA taxes alone go from an already bloated and burdensome $15,000 per year to an unimaginable $150,000 (or more). In U.S. history, no taxpayer has ever seen a TEN TIMES tax increase in one year. This devastating nightmare will wipe out small business and cause people that Obama calls “rich” to lose their homes and businesses.

#12) A new I.R.S. law (with the passage of Obamacare) requires business owners to file thousands of new I.R.S. forms each year documenting virtually every expenditure made by their business. As a result of this blizzard of new paperwork, small business faces ruin.

#13) Let’s not forget the gigantic tax hikes on the state and local level for income taxes, sales taxes, property taxes and new taxes disguised as “user fees.” Local taxes are already at levels that taxpayers and small businesses can no longer afford to pay.

#14) Finally, Obama refuses to consider lowering the 2nd highest corporate tax rate (40%) in the industrialized world. As a result, more businesses will choose to leave the U.S. (and more jobs will be sent overseas).

And you wonder why there are no jobs? You wonder why there is no recovery? This is the “Teleprompter Depression.” Every time Obama steps in front of a teleprompter another business dies.

Each of these taxes and proposed taxes is a job killer. Taken together, the Obama regime’s policies are the equivalent of General Sherman’s march to the sea- leaving a tragic path of destruction in its wake. Obama has launched an unprecedented, overwhelming, death-by-tax assault on the groups that fund fiscally conservative causes and candidates: taxpayers and business owners.

There are only two reasonable explanations. Obama is executing a bumbling Marxist scheme to destroy capitalism, expand government to Soviet-like levels, and turn Americans into dependent serfs begging for government to save them, clothe them and feed them. “Bumbling” because the plan never works- eventually Obama will run out of taxpayers to rob, thereby bankrupting his own programs and bringing down his government. Or the other choice is that he is truly the most incompetent bumbling President in modern history. I’ll leave it to you to decide.

Either way -- God help America.

7/4/2010: Dale Ogden will be at the South Bay Open Carry event, Hermosa Beach Street Cleanup

Date: Saturday, July 10, 2010
Time: 11:00am - 2:00pm
Location: 8th St & Valley, Hermosa Beach, CA

Description: South Bay Open Carry is planning this event. Dale Ogden will be there. There will be a press conference at 11:00 am. SBOC Members please arrive around 10:00 am to get parking and setup.

Go to http://www.southbayopencarry.org/events/ for more information.

7/3/2010: from the June 30, 2010, issue of the Daily Reckoning
The Daily Reckoning Presents

Socialist Pigs

Capitalism produces. Socialism distributes. The two systems do not coexist comfortably with one another. In fact, they are inimical.

Some of the most celebrated champions of socialism have coined terms like “greedy capitalist” or “capitalist pig.” By implication, a socialist is neither greedy nor a pig. But economic history suggests that socialists are just as porcine as their capitalist counterparts…maybe even more so.

One need only look to the recent goings on in Australia, your editor’s country of birth, for a glimpse into the real world outcomes of this ideological struggle. Kevin Rudd was last week ousted from Prime Ministership after a botched attempt to impose a “super profits” tax on the most productive sector of the Australian economy – the mighty mining sector. We provided a few details in Thursday’s issue:

“The story is a classic ‘producer vs. parasite’ tale…Rudd, like any other socialist bully would do, attempted to sell the tax to the Australian public under the familiar ‘fair share’ slogan.

“‘The infrastructure needs of this state are vast and on the existing tax base cannot be funded,’ Rudd told Australian reporters while on a recent visit to Western Australia, the nation’s largest mining state. ‘We say the sector of the economy most able to share a greater part of the burden for funding our infrastructure needs for the future is in fact our most profitable mining companies.’

“If this sounds like thinly veiled Marxist rhetoric,” we remarked, “that’s because it is. As the founder of that ill fated, though persistently insidious ideology himself famously noted: ‘From each according to his ability, to each according to his need.’”

One might be forgiven for thinking that, after Rudd’s spectacular political decapitation, replacement Prime Minister, Julia Gillard, would think twice before trying to kill the goose laying all of Australia’s golden eggs. Alas, it was out with one parasite, in with another.

Ms. Gillard is certainly aware of the research released by the Western Australia Chamber of Commerce and Industry that suggests the “super profits” tax, as it stands, would have erased $4.4 billion and 17,000 jobs from the West Australian economy next year - before the tax was even scheduled to be implemented in 2012. The study further predicts the cost to the state’s economy would have risen each year to total $60 billion and 100,000 jobs lost by 2020.

And yet…Gilliard revealed her parasitic DNA within hours of nabbing the Prime Minister’s post.

“I want to make sure Australians get a fair share of our mineral wealth,” she declared, “But we want to genuinely negotiate…”

Gillard is widely expected to push for a slightly diluted version of the “super profits” tax. “I am throwing open the door to the mining industry,” she said just last week, “and I ask that in return, the mining industry throws open its mind.”

As warm and fuzzy as those sentiments may be, the fact remains that such featherweight idealisms invariably end up weighing a stone…and that is a burden the strongest, most able members of society are usually expected to shoulder. But theft is still theft…even if it is watered down a tad. Don’t expect the industrialists to take her play-nice politico-doublespeak lying down.

Although he welcomed the new leadership’s change of tack, Atlas Iron chief executive, David Flanagan, was unequivocal in his assertion that tax must be axed.

“We’ve been screaming blue murder to anyone who will listen about what the problems are with this tax,” he told The Australian this week.

Australians have been getting a pretty “fair share” of the local mineral wealth for some time now anyway. Those who risked their capital and bought even a single share of BHP Billiton, Rio Tinto, Fortescue Metals, Atlas Iron et al., were richly rewarded over the past decade as the geologic and geographic blessings of the “Lucky Country” and, more importantly, the efforts and initiative of its mining companies, paid off handsomely. (Of course, China and India’s voracious appetite didn’t hurt, either.)

In addition to capital appreciation and regular dividends for shareholders, ordinary, working Australians have also exacted what might be seen as a “fair share” of the local resource wealth. Through compulsory contributions to Australia’s Superannuation Fund – a scheme not entirely dissimilar to America’s Social Security, though decidedly healthier…at this point, anyway – working Australians have a large, indirect holding in the nation’s mining giants. Working Australians, therefore, saw the value of their retirement savings appreciate, more or less, alongside the rise and rise of the very companies the “super profits” tax sought to penalize. [Those same workers, not coincidentally, were among the first to see the value of their retirement nest egg shrink as the share prices of the nation’s mining companies collapsed after the proposed tax was first run up the national flagpole.]

Of course, all this is to say nothing of the tens of thousands of hard-working individuals who actually spend their days and nights thousands of feet below Australia’s rusty red surface actually digging the stuff up…and the carpenters, plumbers and electricians who build and service lodgings to house them…and the local businesses that profit from an influx of workers to the region…etc., etc., etc… (Not to mention the exorbitant taxes each and every link in this value chain already pay!)

After all, a barrel of oil or a ton of coal is worth nothing until it is first brought to market. Invariably, that process takes an immense amount of capital, the expertise to extract said resources and the gumption to actually get one’s hands dirty doing the job.

At the end of the day, those who deserved a “fair share” of the resource wealth got exactly what they deserved: a share commensurate to the effort they put in. By contrast, those who don’t work, don’t pay into Superannuation, don’t build or service mining towns in some way, don’t risk their capital by investing in those “conspicuously productive” companies; those who don’t actually contribute anything to the process of bringing the product to market at all, get exactly what they deserve: nothing.

People seem to think that just because they have an emu and a big red kangaroo on their passport they are somehow entitled to a bounty of riches…riches someone else must earn for them, no less. They define a “fair share” as a Divine Right handed down to them the moment they were born – coincidentally – in a resource rich land.

People of such a mind should consider asking how their poor brothers and sisters are faring in Venezuela, or Mexico, or Iran, or Nigeria or, for that matter, just about anywhere else on the African continent. These lands all enjoy an abundance of natural riches…and an abundance of government involvement in “distributing” the profits. And yet, curiously enough, the people living under these supposedly benevolent regimes are among the most repressed and impoverished on earth. Hmmm…

Socialist maxims may score high marks for eloquence and pathos; but they score very low marks for economic wisdom. Capitalism produces. Socialism distributes. Without capitalism, socialism cannot function. In other words; socialism needs capitalism.

Intriguingly, the inverse is not also true. Capitalism has no need of socialism whatsoever. Capitalism distributes wealth by creating opportunity, forged in the crucible of open competition. Capitalism amasses the capital that invests in the enterprises that enable others to advance their financial conditions. Capitalism does not confiscate wealth and redistribute it. Capitalism multiplies wealth…and in the process redistributes opportunity.

Of course, productivity and wealth creation does not come from penalizing the most productive members of society. It comes from standing aside and allowing them to do what they do best, be that excavating minerals, building cars or growing bananas.

Left alone, the free market operates as a kind of evolutionary arms race. Companies compete to offer the same product at a better price, or a better product at the same price. Those that cannot keep pace eventually whither and die. Through this “survival of the fittest” process, prices are over time driven down and the quality of goods and services forced higher. In this fashion, those at the lower end of the socio-economic spectrum benefit most from the toils of companies competing to capture their business. And, the best part is that nobody has to steal a penny to pay for it. The “capitalist pigs” will finance the whole operation themselves…if only the safety-net socialists would get out of the way and let them.

Cheers, Joel Bowman,
for The Daily Reckoning

7/3/2010: Why Is the Gulf Cleanup So Slow?
There are obvious actions to speed things up, but the government oddly resists taking them.

Destin, Fla.

As the oil spill continues and the cleanup lags, we must begin to ask difficult and uncomfortable questions. There does not seem to be much that anyone can do to stop the spill except dig a relief well, not due until August. But the cleanup is a different story. The press and Internet are full of straightforward suggestions for easy ways of improving the cleanup, but the federal government is resisting these remedies.

First, the Environmental Protection Agency can relax restrictions on the amount of oil in discharged water, currently limited to 15 parts per million. In normal times, this rule sensibly controls the amount of pollution that can be added to relatively clean ocean water. But this is not a normal time.

Various skimmers and tankers (some of them very large) are available that could eliminate most of the oil from seawater, discharging the mostly clean water while storing the oil onboard. While this would clean vast amounts of water efficiently, the EPA is unwilling to grant a temporary waiver of its regulations.

Next, the Obama administration can waive the Jones Act, which restricts foreign ships from operating in U.S. coastal waters. Many foreign countries (such as the Netherlands and Belgium) have ships and technologies that would greatly advance the cleanup. So far, the U.S. has refused to waive the restrictions of this law and allow these ships to participate in the effort.

The combination of these two regulations is delaying and may even prevent the world’s largest skimmer, the Taiwanese owned “A Whale,” from deploying. This 10-story high ship can remove almost as much oil in a day as has been removed in total—roughly 500,000 barrels of oily water per day. The tanker is steaming towards the Gulf, hoping it will receive Coast Guard and EPA approval before it arrives.

In addition, the federal government can free American-based skimmers. Of the 2,000 skimmers in the U.S. (not subject to the Jones Act or other restrictions), only 400 have been sent to the Gulf. Federal barriers have kept the others on stations elsewhere in case of other oil spills, despite the magnitude of the current crisis. The Coast Guard and the EPA issued a joint temporary rule suspending the regulation on June 29—more than 70 days after the spill.

The Obama administration can also permit more state and local initiatives. The media endlessly report stories of county and state officials applying federal permits to perform various actions, such as building sand berms around the Louisiana coast. In some cases, they were forbidden from acting. In others there have been extensive delays in obtaining permission.

As the government fails to implement such simple and straightforward remedies, one must ask why.

One possibility is sheer incompetence. Many critics of the president are fond of pointing out that he had no administrative or executive experience before taking office. But the government is full of competent people, and the military and Coast Guard can accomplish an assigned mission. In any case, several remedies require nothing more than getting out of the way.

Another possibility is that the administration places a higher priority on interests other than the fate of the Gulf, such as placating organized labor, which vigorously defends the Jones Act.

Finally there is the most pessimistic explanation—that the oil spill may be viewed as an opportunity, the way White House Chief of Staff Rahm Emanuel said back in February 2009, “You never want a serious crisis to go to waste.” Many administration supporters are opposed to offshore oil drilling and are already employing the spill as a tool for achieving other goals. The websites of the Sierra Club, Friends of the Earth and Greenpeace, for example, all feature the oil spill as an argument for forbidding any further offshore drilling or for any use of fossil fuels at all. None mention the Jones Act.

To these organizations and perhaps to some in the administration, the oil spill may be a strategic justification in a larger battle. President Obama has already tried to severely limit drilling in the Gulf, using his Oval Office address on June 16 to demand that we “embrace a clean energy future.” In the meantime, how about a cleaner Gulf?

Mr. Rubin, a professor of economics at Emory University, held several senior positions in the federal government in the 1980s. Since 1991 he has spent his summers on the Gulf.

7/3/2010: Unemployment is much worse than the moron Leftist-in-Chief says it is. Consider:

If you counted all the people who would take a job if they could find one as unemployed, the unemployment number would be closer to 11%. As an aside, if I have any real beef with the BLS over how they create their data, it is this last point. If you would take a job if you could get one, you should be counted as unemployed. Period…

The Household Survey was rather dismal. (This is where they call households and ask about their employment situation.) The survey showed a loss of 301,000 jobs, or 363,000 jobs if you adjust it to match the Establishment Survey. Not pretty.

Maybe a better way to look at unemployment is to look at the percentage of the total population that has a job. That number has been rising off and on for almost 50 years as more and more women have moved into the labor force. But notice the large drop over the last year - almost 5% of working people in the US have lost their jobs. [John Mauldin]

7/2/2010: from the Daily Reckoning

...As dear readers know, the feds can’t really make bad debt go away. All they can do is move it around. The parties to the transaction - creditors and debtors - usually decide among themselves who bears the losses. Typically, if the debtor can’t pay, the creditor loses his money. But when the feds step in almost anything can happen. But nothing good.

The general government plan is to collectivize losses - either by moving them onto the taxpayers or by moving them onto the general public. When the government borrows money to fund its bailouts and boondoggles, for example, it is taking losses away from the people who deserve them and sticking them on the taxpayer.

If they can manage to boil up a little consumer price inflation that is even better. Then losses seem to disappear into the air...like noxious fumes. The entire public breathes them in and gets a little lightheaded. It doesn’t know what to think or who to blame.

In the present case, some economists favor sticking taxpayers with the losses. Others are squarely against it, preferring to force the losses on the general public by means of inflation.

The trouble is, these cockamamie plans tend to have unanticipated consequences.

The Japanese feds really pulled a fast one, in this regard. They borrowed from their own people in order to fund a 20-year bailout/boondoggle program. The idea was to provide “counter-cyclical stimulus.”

Naturally, the stimulus never seemed to stimulate anything but more stimulus. The program went on for two decades...and, as far as we know, the Japanese economy is still limping along.

The effect economists did not anticipate was that the economy did not take off. Instead, there followed two decades of on-again, off-again slump. Which is why it would have been better to let the creditor and debtors work out their problems on their on...let them take their losses back in 1990...and be done with it!

Another unanticipated result has not yet been fully realized. The government took savings from Japanese households and spent it. Now, a whole generation of Japanese old people looks to government bonds as the source of its retirement wealth. Trouble is, there is no wealth there. The feds took credits and turned them into debits. They took the surplus wealth of an entire generation and squandered it. Now, instead of looking to stored-up wealth for their retirements, the Japanese have to hope that the next generation will be kind enough - and able - to keep up with the debts laid upon them.

Trouble is, the next generation has too much debt to carry. Government bonds outstanding equal nearly 200% of GDP. At zero interest rate, it’s not too hard to keep up with the interest payments. But even the Prime Minister is beginning to wonder how those debts will ever be repaid. And interest rates will not stay low forever.

Imagine that inflation rose...and that investors got nervous. Imagine that the carrying cost of that debt rose in Japan as it did in the ‘70s in the US. At 10% interest, the cost would be one fifth of GDP - or about as much as the entire government budget.

Obviously, the system will fall apart first...leaving Japanese retirees with a lot less money than they thought they had…

7/1/2010: Obama and the Fiscal ‘Road to Hell‘ by Karl Rove
G-20 leaders don’t agree with the president that more spending will revive the economy. Nor do most Americans.

At last week’s G-20 meeting, President Barack Obama achieved a two-fer. He suffered a significant international defeat, and he increased the chances his party will suffer a major domestic one this fall.

Mr. Obama’s international defeat was self-inflicted. He went to Toronto to press other major nations to do as he has done: Expand government spending, or suffer, in the president’s words, “renewed economic hardship and recession.”

Canada, Germany, Great Britain and most other countries declined Mr. Obama’s invitation. The German economic minister “urgently” prodded America to cut spending at a press conference on June 21, prior to the G-20 meeting. The president of the European central bank took direct aim at Mr. Obama’s argument, telling the Italian newspaper La Repubblica on June 16 that “the idea that austerity measures could trigger stagnation is incorrect.”

The European Union president, Czech Prime Minister Mirek Topolanek, tore into Mr. Obama’s stimulus and other spending policies in a stunning address to the European Parliament in March 2009, calling them “the road to hell” and saying “the United States did not take the right path.”

If it sounds strange to have European leaders lecturing the U.S. about fiscal restraint, it should. But that is where America finds itself after Mr. Obama’s 17-month fiscal orgy.

The other flaw in his G-20 appearance is domestic. The president’s statements that more deficit spending was “necessary to keep economic growth strong” and his cautioning against “the consequential mistakes of the past” when stimulus spending “was too quickly withdrawn” puts his administration and party squarely in favor of policies unpopular with most Americans.

Since 2000, the Gallup organization has asked voters what they believe will be the most important problem for the U.S. in 25 years. This year Americans are saying the challenge will be the deficit. And last month, almost eight in 10 voters surveyed by the Associated Press called the federal budget deficit an “extremely” or “very important” issue.

There was more bad news Tuesday for Democrats from recent focus groups conducted in battleground congressional districts in Iowa, Ohio, New Jersey, Arkansas and Florida.

A report on these focus groups issued this week by Resurgent Republic (a group I helped found) showed that both political independents and tea party participants passionately denounced federal spending and deficits, using words like “reckless,” “out of control,” “unnecessary” and “unhelpful.” The evidence suggests that both groups remain deeply skeptical of Mr. Obama’s stimulus package and are unpersuaded by the administration’s arguments in its favor.

The authors of the Resurgent Republic study concluded that both independents and tea party voters believe “nearly unanimously” that reckless government spending, not lack of tax revenues, is responsible for the deficits. This goes to the very heart of the modern Democratic agenda with its guiding philosophy of bigger government and higher taxes.

All of this negative news is wearing on the president. At the G-20’s concluding news conference, Mr. Obama—brittle and petulant—attacked GOP critics “who are hollering about deficits,” saying he would be “calling their bluff” next year by “presenting some very difficult choices.” Then “we’ll see how much of . . . the political arguments they’re making right now are real, and how much of it was just politics.”

The president’s problem is largely a mess of his own making. Deficit spending did not begin when Mr. Obama took office. But he and his Democratic allies have supported, proposed, passed or signed and then spent every dime that’s gone out the door since Jan. 20, 2009.

Voters know it is Mr. Obama and Democratic leaders who approved a $410 billion supplemental (complete with 8,500 earmarks) in the middle of the last fiscal year, and then passed a record-spending budget for this one. Mr. Obama and Democrats approved an $862 billion stimulus and a $1 trillion health-care overhaul, and they now are trying to add $266 billion in “temporary” stimulus spending to permanently raise the budget baseline.

It is the president and Congressional allies who refuse to return the $447 billion unspent stimulus dollars and want to use repayments of TARP loans for more spending rather than reducing the deficit. It is the president who gave Fannie and Freddie carte blanche to draw hundreds of billions from the Treasury. It is the Democrats’ profligacy that raised the share of the GDP taken by the federal government to 24% this fiscal year.

This is indeed the road to fiscal hell, and it’s been paved by the president and his party. Voters will have their chance this November to render their verdict on the Obama years. No wonder Republicans feel confident these days.

7/1/2010: Noemie Emery: Too brilliant to fail

An irresistible force is meeting an immovable object on the field of perception, and causing an odd sort of storm. The irresistible force is the growing idea that Obama has failed as a leader on a number of items: “Engagement” has failed; our allies are angry; the oil keeps gushing, his ideas are job killers; the recession goes on.

His party lost three big elections under his guidance and seems poised for a drubbing. The harder he pushes the country’s laws leftward, the more its politics bend to the right.

David Brooks says, without fixing blame, that Obama has blown the most promising hand ever given a president. In the Hill, A.B. Stoddard is even more caustic: “Seventeen months into office, Obama is increasingly isolated -- from his party, from American voters, and from the world.” People are losing their faith in his leadership, he is “so toxic in battlegrounds” that he cannot campaign for his candidates. “The country is more polarized than ever and Washington is even more a target for voter anger than it was under President Bush.”

The immovable object is the conviction on the part of some who are also his critics that he is the smartest man who has ever held office, and is therefore too brilliant to fail. Citing his “shimmering intellect,” Richard Cohen is at a loss to explain why he hasn’t done anything with it.

“Obama, for all his brilliance, has no real, felt understanding of management structures,” says Tina Brown, describing the failure to handle the oil disaster, without explaining what, beyond talking, Obama has been brilliant at. He can talk up a storm (though of late this has faltered), but so far his shimmering intellect has led him to think that aggressors can be tamed by making concessions; that he should expand the welfare state just as it is proving unworkable (and very unpopular with the American people); and into replicating to an exact degree every mistake made by George W. Bush in handling Katrina in 2005.

Jonathan Alter blames this on Bush, while Cohen calls Obama a “sphinx,” and blames his unsettled childhood. No one advances the more likely conclusion: That Obama seems so much like their idea of brilliance that they assume it of him without too much evidence; or that their perception of brilliance -- often no more than a verbal facility -- isn’t much use in the world.

Nor are degrees from the very best places. Presidents George Washington, Andrew Jackson and Abraham Lincoln had next to no formal schooling, a failed haberdasher from flyover country saved West Europe from Josef Stalin, and one of the two most important presidents of the 20th century was an “amiable dunce” from Eureka College and Hollywood.

There have been many good presidents, and their backgrounds are varied. But none has been a blogger, a pundit, an editor of the New Yorker, or a writer for Vanity Fair.

When and how then does this president’s intellect shimmer? At meetings.

He does seem a genius at chairing a forum, as at the “nuclear summit” in April, where the Washington Post claimed that he shone as a teacher, “calling on leaders to speak, embellish, oppose, and offer alternatives,” coaxing consensus and forging agreements among 45 countries at hand.

The problem was that the value of these things was limited, as the attending countries weren’t menacing anyone, while Iran and Korea, who were not in attendance, went on happily building their bombs.

He isn’t a sphinx, he’s a seminar leader who’s out of his element. And more and more out of his depth.

Read Blogs from Prior Months

Jan 2010 Feb 2010 Mar 2010

Apr 2010 May 2010 Jun 2010

Jul 2010 Aug 2010 Sep 2010

Oct 2010 Nov 2010 Dec 2010

Jan 2009 Feb 2009 Mar 2009

Apr 2009 May 2009 Jun 2009

Jul 2009 Aug 2009 Sep 2009

Oct 2009 Nov 2009 Dec 2009

Jan 2008 Feb 2008 Mar 2008

Apr 2008 May 2008 Jun 2008

Jul 2008 Aug 2008 Sep 2008

Oct 2008 Nov 2008 Dec 2008

January 2008 includes December 2007 & November 2007

Other Old Stuff from dalefogden.net

Other Information about Dale F. Ogden

Dale F. Ogden for Governor
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Dale F. Ogden, Libertarian, for
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Dale F. Ogden, Libertarian, for
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Dale F. Ogden, Libertarian, for
California Insurance Commissioner, 2002

Dale F. Ogden, Libertarian, for
California State Assembly, 2000

Dale F. Ogden, Libertarian, for
California Insurance Commissioner, 1998