7/30/2012: Race Hucksters
by Fred Reed
God Save Us from Federal Help
I read, with the joy that I usually reserve for recurrent migraines,
that Precedent Obama will establish an Office of African-American Education,
thus furthering the racial Balkanization of the country, providing makework jobs for useless bureaucrats and, predictably,
accomplishing nothing. I read also that the NAACP has filed complaint with
the Department of Education against Fairfax County, Virginia, just outside of
Washington, because its high school for the very bright, Thomas Jefferson
High, doesn’t have enough blacks.
Probably I should give up reading.
It never ends. Charges of discrimination, demands for special
privilege, endless laws, wringing of teeth and gnashing of hands, lowered
standards, no positive results, and start over again.
Readers may not know this, but I suffer from a rare mental condition
called “predictive clairvoyance,” that lets me read newspaper
headlines from far in the future. Really. I’m serious. Psychologists
know about it. This morning I channeled a story from the Beijing Times from
the year 5012 (Beijing being the world capital):
“NAACP files suit against school board over test scores, citing
discrimination and lingering effects of slavery.”
One Charisse Espy Glassman of the NAACP says
(of the Fairfax complaint, not the Beijing, though the two are barely
distinguishable) that the county needs to pour resources into the early
grades, find gifted blacks and Hispanics, and funnel them into Thomas
Jefferson High. It’s because, see, discrimination starts in
kindergarten, blah, blah, blah.
What is the woman smoking? Somebody must have put something in her
drugs. Her delusion is beyond Paraquat. Yes, racial
discrimination exists. This I concede. Racial discrimination pervades
American society, apparently ineradicably, rising over window sills, clogging
storm drains—and all of it in favor of blacks. Try:
Head Start, the federal Department of Education, NCLB, forced
integration, forced busing, free after-school programs, Youth Scholars,
welfare, grants given to universities,medical
schools, and law schools for developing minority outreach programs,
affirmative action in school admissions, government contracts, government and
private-sector jobs, unidirectional hate-crime laws, and so on. And on. And
Everything in America aims at somehow keeping blacks happy. Think this
is just my idea? Walter Williams, the black and sensible columnist, has
written, “Academic intelligentsia, their media, government and
corporate enthusiasts worship at the altar of diversity. Despite budget
squeezes, universities have created diversity positions, such as director of
diversity and inclusion, manager of diversity recruitment, associate dean for
diversity, vice president of diversity and perhaps minister of
Exactly, observably, undeniably. The United States has tied itself into
knots that would baffle a wind-era sailor to keep thirteen percent of the
population placated. And done it unsuccessfully. All we hear is slavery, send
money. We be discriminate, send money. Give us a job we can’t do very
well, or perhaps at all. That is what affirmative action is.
No nation has ever made such desperate, soul-wrenching efforts to
convince a large minority to for God’s sake do your homework. And this
is what it comes to. I say to black parents: Your kids do not do poorly in
school because of discrimination, but because they don’t know the
answers. We evil whites can give you schools and books. We can’t read
them for you. And we can’t make your children read them. That’s
Now, since Ms. Glassman is in Fairfax County, where I once lived, she
might look next door to the District of Columbia. The schools in DC are
entirely under the control of blacks, and the per capita expenditure is very
high. Yet the schools are almost the worst in the country. Why is that, Ms.
Glassman? Might it—just conceivably, you understand: I don’t want
to fall into wild speculation—have something to do with the quality of
teachers hired by the black government, the degree of orderliness required of
the black students, and the degree of insistence by their parents that they
do their homework?
Now, as I look at the figures for Thomas Jefferson High, I see that
64.2 percent of the students are Asian, though Asians are a tiny part of the
population, and only 26.2 percent are whites, who are a huge part of the
population. That is, Asians are wildly overrepresented with respect to my
pale species, in fact by a factor of about ten. Ms. Glassman, do you hear me
whimpering that I be discriminate? That everything is someone else’s
fault? That Asians are mistreating me, send money?
No. I figure that the Asian kids got there because they were smarter
than the whites, or studied harder, or both. I don’t argue that
it’s because my Anglo-Saxon ancestors were mistreated by the Norman
French under Henry II.
Actually it is whites who suffer discrimination. Blacks get into Ivy
schools ahead of us because they can’t do the work, and Asians get in
ahead of us because they can, so we get sqwoze out
from above and below. I feel very sorry for us, send money.
Implicit in all the solemn trumpery about race is that vile and
malevolent whites want to exploit blacks, or see advantage in holding them
down. Oh? I suspect that if rationality were oil, race hustlers would be
about a quart low, so let me explain some facts. Most whites do not want to
hold blacks down. On purely selfish grounds, it is very much in the interest
of whites for blacks to prosper. If all blacks shot into the middle class
tomorrow, we could tax them instead of paying for welfare. We could fire
three-quarters of most urban police departments. We could live in the cities.
We could take the wrong exit into Newark and expect to come out alive.
I don’t know how many blacks could get into Thomas Jefferson if
they tried, you know, like, studying. I do know that the pathetic illiteracy
of so many urban blacks is unnecessary, and that they don’t have to
speak that awful he be, we be, muhfuh, muhfuh linguistic goulash sometimes called ebonics. In France, blacks speak French and in Mexico,
Spanish, not Franbonics or Hisbonics.
Why not English in America?
I know. I’m a dangerous radical.
And I know that anyone who really wanted to improve education for
blacks could look to the Catholic schools of Washington, which do, or did
when I last looked, a far better job than a dimwitted, vote-for-me Office of
African-American Education. How did the artful mackerel-snappers do it? By
demanding courtesy, expelling trouble-makers, insisting on done homework, and
assuming that students were capable of it. Duh.
With Barack Obama, the competition between the private economy and the
public economy is clear.
For a long time, the United States had one economy. Now we have two
economies that compete for America’s wealth: A private economy and a
public economy. The 2012 election will decide which will be subordinate to
the other. One economy will lead. The other will follow.
How the U.S. arrived at the need to choose between two competing
economies reveals a lot about the political polarization in the country. Any history
of the Democratic Party in the 20th century will recognize its roots in the
American labor movement. The party was defined by the names of those unions.
The United Mine Workers. The United Auto Workers. The Brotherhoods of
Teamsters and Railroad Workers. Consider what those names represented: Both
Democrats and Republicans were rooted in the private economy. Unionized
workers knew then that this private economy was where they made their living.
The arguments were over dividing the productive fruits of that economy. That
was your father’s Democratic Party.
From the 1960s onward, the professional Democratic Party began to lose
its relationship with the private economy. Democratic politicians drew closer
to a rising public-sector union movement and its campaign financing, while
the private unions declined. This meant the party itself was slowly
disconnecting from the machinery of the private economy and becoming part of
a rising parallel economy, the public economy of government.
There was one other big event that convinced Democrats that their
public economy was equal to or better than the private economy. It has to do
with the Democratic Party’s moral identity. After JFK’s
assassination, Lyndon Johnson passed the building blocks of the Great
Society, notably Medicare and Medicaid. But most importantly came the Voting
Rights Act of 1965. The legislative events of that period (no matter that
they passed with bipartisan votes) convinced the Democratic Party once and
for all of government’s moral efficacy. Public spending, conclusively,
was now a public good.
Today the private and public economies are in head-to-head competition
for the nation’s wealth—with the private economy calling that
wealth capital or income, and the public economy calling it tax revenue and
making moral claims for spending tax revenue.
Until recently and except for the Reagan years, the Republican Party
has largely been a confused onlooker, uncertain how to embrace the private
economy. In the 1990s, the party embraced the private sector mainly as a
source of contributions via K Street lobbyists. In short, crony capitalism.
With the Obama administration, the tensions between the country’s
two economies clarified. The $831 billion spending bill in 2009 was intended
to stimulate hiring of public-sector workforces but also among the satellite
businesses that are subsidiaries of the public economy. Barack Obama’s
routine use of the traditional private-economy term
“investment”—in energy, education and such—is the
public economy claiming capital for its needs.
President Obama is telling the private economy it must subordinate
itself to the public economy’s moral efficacy. The passage in 2010 of
the Affordable Care Act, with no Republican support, was justified as a
1960s-type act of moral necessity. The private economy, in his view,
can’t compete on that basis.
In the November 2010 elections, the private economy pushed back. Two
years into the financial crisis and amid tea-party insurgencies, Democrats
were swept out of office at every level of government.
These are not small events. Powerful belief systems are in motion
today, and they are slamming into each other. Rep. Paul Ryan in the first
sentence of his now-famous Roadmap budget said, “Rarely before have the
alternatives facing America been so starkly defined.” President Obama,
announcing his ideas on taxes on July 9, said, “What’s holding us
back . . . is a stalemate in this town, in Washington, between two very
different views about which direction we should go in as a country”
Those are the two poles in an historic battle over who runs the
For about 40 years before 2008, spending as a percentage of GDP was
around 20%. In 2009, it rose to 25% and has remained at 24% of GDP. This
isn’t just spending data. These numbers are a proxy for the standoff
between the public economy and the private economy.
Some in the Democratic Party argue that this higher,
“normal” spending level (the White House projects 22+% of GDP
going forward) is necessary to fulfill the commitments our politics have made
to retiring baby boomers and others. The role of the private economy in the
U.S. will be to support the long-term wants and needs in the public economy.
President Obama is right: This is a choice between two paths into the
American future, the clearest choice since the end of World War II. It is a
Barack Obama is explicitly seeking a mandate to make the public economy
pre-eminent. That is the unmistakable meaning of “You didn’t
build that.” His opponent so far is talking about, but not seeking a
mandate for, the other economy. One expects that in time Mitt Romney will
seek a mandate equal to Mr. Obama’s.
Every day it seems, reason and the English language are ravished by
contemporary American politics.
For example, as there is no God-given tax rate, when the rate increases
it is an increase, not the expiration of a decrease. Were it the latter, one
could say that the Bush tax cuts were not tax cuts but the expiration of the
Clinton increases, the Clinton increases the expiration of the Reagan cuts,
the Reagan cuts the expiration of previous increases, and so on. Such is the
thinking of non-effervescent minds that see as a cut a lesser increase in
spending than they advocate, or urge passage of a stupendous, juggernaut,
congressional bill so that they can find out what’s in it.
The nation appears more and more able to eat whatever words are shoved
down its throat. It is told, and does not protest, that Islam is a religion
of peace. Islam is indeed a religion of peace, but it is also, quite
demonstratively and throughout the world in proof after proof day after day,
a religion of war.
As the president travels about, yelling at America and dividing the
population into good people and bad people (the bad ones being, purely by
coincidence, those who don’t vote for him), he has adopted an
extraordinary war cry that might make both Huey Long and Spiro Agnew smile in
their graves: Millionaires and billionaires. Income or net worth, he
doesn’t say, the idea being to grab a billionaire, turn him upside
down, and shake money out of him. But in the president’s logic, this
includes, for example, a couple earning $125,000 apiece. The trick is that
you can indeed get a lot of money out of such people if you call them
billionaires and turn enough of them upside down.
Perhaps the most brazen language diktat has been the mischievous switch
of political colors. Stalin would hardly believe it, but blue now supposedly
signifies the left and red the right. According to Wikipedia and the Washington
Post, so it must be true, the change came in 2000 courtesy of MSNBC and
NBC’s “Today” show. It next migrated to David Letterman at
CBS, and then went bacterial. The spirit of the change is reminiscent of the
cable TV directory that read, “The World’s Best Ho . . .”
when space was clearly available for “tels.”
One can imagine the high-pitched giggling at this naughtiness. Saddling your
political rivals with a symbol to which they have been historically opposed
is an even better and naughtier joke. Either it was that or numbing
It is the fashion of the hip to purge emotion and elaboration from art,
in favor of a cold, conceptualist detachment, whereas people in flyover
country are still stuck in 5,000 years of history and tradition, and sneer
neither at sentiment nor the beating of the human heart. In art, many
conservatives might be red and many liberals blue, but in politics?
Red is the mobile color of passion and engagement, and blue the staid
color of reason and detachment. As you may recall, the left champions radical
change spurred by boundless compassion, while the right wants to check the
passions of human nature as they flow into politics, and to balance opposing
powers in a stable equilibrium. Over time, natural affinities for the two
colors have been confirmed by adoption—communist, socialist, and labor
parties almost always favoring red. But if NBC says to, we had better jump
into line. Most of the country has already done so without a thought. Who
says “old media” is vestigial? They are highly adaptable, or, as
they might say, “Better blue than dead.”
It might be difficult to get this past Putin, but the
“Today” show’s guidance would tell us that the place where
communist apparatchiks reviewed and may yet review rivers of missiles and
goose-stepping soldiers is now Blue Square. The Soviet Blue Army fought the
Germans at Stalingrad. Mao, the leader of Blue China, wrote the Little Blue
Book, which was carried by the Revolutionary Blue Guard as they sang the Blue
China anthem, “The East Is Blue.” And everyone knows that the
flags of countries like the former Soviet Union, the Peoples’ Republic
of China, and North Korea are a brilliant, striking blue, just like the caps
of the Jacobins.
The “blue towns” of Italy, run by the Italian Communist
Party, shared with conservative red bastions the depredations of the Blue
Brigades, which might have made Emma Goldman, famously known as “Blue
Emma,” happy even during the infamous Blue Scare of 1919. Imagine if
you will David Horowitz, a “blue-diaper baby,” clutching a copy
of Tom Clancy’s “The Hunt for Blue October,” as he sits
through Warren Beatty’s movie, “Blues,” which is not about
It may seem as silly as Dr. Seuss:
Red state, blue state!
What? Texas is red?
New York is blue?
What planet is this?
Who the hell knew?
But it’s slightly more serious, because it’s a little,
ignorant tail wagging an old and venerable dog. It is also yet another
example of a Fritz-Lang-like, gratuitous submission to spurious authority.
There are a lot of those these days, as if it were our heritage, which it is
To echo Lenin, a well known Blue, what is to be done? Both change and
charity should begin at home. That is, feed your own children and put your
house in order before you interfere in the affairs of others. Fluffy media
can do what it wants, but perhaps more astute publications might look upon
their longer history, higher quality analysis, and greater seriousness than
the “Today” show, and revert to tradition so that in their pages
Austin is blue and Boston is red. Despite the commands of instantaneous
fashion, there are a lot of people, the true blue, who will not ever believe
a senior fellow at the Claremont Institute, is the author of, among other
works, the forthcoming “In Sunlight, and In Shadow” (Houghton
A version of this article
appeared July 26, 2012, on page A13 in the U.S. edition of The Wall Street
Journal, with the headline: The Hunt for Blue October.
Stool Economics: A Simple Guide to the American System of Taxation
and Distribution by Mac Slavo
Suppose that every day, ten men go out for a beer and the bill for all
ten comes to $100. If they paid their bill the way we pay our taxes, it would
go something like this:
- The first four men (the poorest) would pay nothing;
- The fifth would pay $1.00;
- The sixth would pay $3.00;
- The seventh would pay $7.00;
- The eighth would pay $12.00;
- The ninth would pay $18.00;
- The tenth man (the richest) would pay $59.00.
So that’s what they decided to do. The men drank in the bar every
day and seemed quite happy with arraignment, until one day, the owner threw
them a curve.
“Since you are all such good customers, he said, I’m going
to reduce the cost of your daily beer by $20.00.” Drinks for the ten
men now cost just $80.00.
The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free. But what
about the other six men – the paying customers? How could they divide
the $20 windfall so that everyone would get there “fair share?”
They realized that $20.00 divided by six is $3.33. But if they subtracted
that from everybody’s share, then the fifth man and the sixth man would
each end up being paid to drink his beer. So, the bar owner suggested that it
would be fair to reduce each man’s bill by roughly the same amount, and
he proceeded to work out the amounts each should pay!
- The fifth man like the first four, now paid nothing (100% savings).
- The sixth now paid $2 instead of $3 (33% savings).
- The seventh now pay $5 instead of $7 (28% savings).
- The eighth now paid $9 instead of 12 (25% savings).
- The ninth now paid 14 instead of 18 (22% savings).
- The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before! And the first four
continued to drink for free. But once outside the restaurant, the men began
to compare their savings.
“I only got a dollar out of the $20,” declared the sixth
man. He pointed to the tenth man, “but he got $10!”
“Yeah, that’s right,” shouted the seventh man,
“why should he get $10 back when I got only two? The wealthy get all
“Wait a minute,” yelled the first four men in union.
“We didn’t I get anything at all. The system exploits the
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the
nine sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn’t have enough
money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might start
drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
Hat tip Brother Slavo via David R. Kamerschen, Ph.D. The original author of this simple
guide is unknown.
Even squirrels know enough to store nuts, so that they will have
something to eat when food gets scarce. But the welfare state has spawned a
whole class of people who spend everything they get when times are good, and
look to others to provide for their food and other basic needs when times
The 14th Amendment to the Constitution prescribes “equal
protection of the laws” to all Americans. But what does that mean, if
the President of the United States can arbitrarily grant waivers, so that A,
B and C have to obey the laws but X, Y and Z do not — as with both
ObamaCare and the immigration laws?
Two reports came out in the same week. One was from the Pentagon, saying
that, in just a few years, Iran will be able to produce not only a nuclear
bomb but a missile capable of carrying it to the United States. The other
report said that the American Olympic team has uniforms made in China. This
latter report received far more attention, both in Congress and in the media.
People who lament gridlock in Washington, and express the pious hope
that Democrats and Republicans would put aside their partisan conflicts, and
cooperate to help the economy recover, implicitly assume that what the
economy needs is more meddling by politicians, which is what brought on
economic disaster in the first place. (Skeptics can read “The Housing
Boom and Bust.”)
Racism is not dead, but it is on life support — kept alive by
politicians, race hustlers and people who get a sense of superiority by
denouncing others as “racists.”
One of the arguments for Medicare is that the elderly don’t want
to be a burden to their children. Apparently it is all right to be a burden
to other people’s children, who are paying taxes.
Those who talk as if more people going to college is automatically a
Good Thing seldom show much interest in what actually goes on at college
— including far less time spent by students studying than in the past,
and a proliferation of courses promoting a sense of grievance, entitlement or
advanced navel-gazing and breast-beating.
One of the most dangerous trends of our times is making the truth
socially unacceptable, or even illegal, with “hate speech” laws.
It is supposed to be terrible, for example, to call an illegal alien an
“illegal alien” or to call an Islamic terrorist an “Islamic
terrorist.” When the media refer to “undocumented” workers
or to violence committed by “militants,” who is kidding whom
— and why?
After the charismatic — and disastrous — Woodrow Wilson
presidency, the voters did not elect another president in the next decade who
could be considered the least bit charismatic. Let us hope that history
For more than two centuries, the U.S. military never had a public
celebration of anybody’s sex life — until the recent “gay
pride” event under the Obama administration. Here, as elsewhere, the
gay political agenda is not equality but privilege.
Franklin D. Roosevelt famously said, “We have nothing to fear but
fear itself.” Then he proceeded to generate fear among businesses for
years on end, with both his anti-business rhetoric and his anti-business
policies. Barack Obama is repeating the same approach and getting the same
results — namely, an agonizingly slow economic recovery, as investors
hang on to their money, instead of risking it in a hostile political
If we wake up some morning and find some American cities in radioactive
ruins, courtesy of a nuclear Iran, nobody is going to care whether the president
who lets this happen is the first black president or the last WASP president.
But, in the meantime, many people will keep on voting for symbolism, as if an
election is a popularity contest, like choosing a college’s Homecoming
Queen or Parade Marshal.
There seems to be something “liberating” about ignorance
— especially when you don’t even know enough to realize how
little you know. Thus an administration loaded with people who have never run
any business is gung-ho to tell businesses what to do, as well as gung-ho to
tell the medical profession what to do, lenders whom to lend to, and the
military how to fight wars.
Thomas Sowell is a senior fellow at the Hoover Institution, Stanford
University, Stanford, CA 94305. His website is www.tsowell.com. To find out
more about Thomas Sowell and read features by other Creators Syndicate
columnists and cartoonists, visit the Creators Syndicate Web page at
Copyright 2012 Creators.Com
Academic intelligentsia, their media, government and corporate
enthusiasts worship at the altar of diversity. Despite budget squeezes,
universities have created diversity positions, such as director of diversity
and inclusion, manager of diversity recruitment, associate dean for
diversity, vice president of diversity and perhaps minister of diversity.
This is all part of a quest to get college campuses, corporate offices and
government agencies to “look like America.”
For them, part of looking like America means race proportionality. For
example, if blacks are 13 percent of the population, they should be 13 percent
of college students and professors, corporate managers and government
employees. Law professors, courts and social scientists have long held that
gross statistical disparities are evidence of a pattern and practice of
discrimination. Behind this vision is the stupid notion that but for the fact
of discrimination, we’d be distributed proportionately by race across
incomes, education, occupations and other outcomes. There’s no evidence
from anywhere on earth or any time in human history that shows that but for
discrimination, there would be proportional representation and an absence of
gross statistical disparities, by race, sex, height or any other human
characteristic. Nonetheless, much of our thinking, legislation and public
policy is based upon proportionality being the norm. Let’s run a few
gross disparities by you, and you decide whether they represent what the
courts call a pattern and practice of discrimination and, if so, what
corrective action you would propose.
Jews are not even 1 percent of the world’s population and only 3
percent of the U.S. population, but they are 20 percent of the world’s
Nobel Prize winners and 39 percent of U.S. Nobel laureates. That’s a
gross statistical disparity, but are the Nobel committees discriminating
against the rest of us? By the way, in the Weimar Republic, Jews were only 1
percent of the German population, but they were 10 percent of the
country’s doctors and dentists, 17 percent of its lawyers and a large
percentage of its scientific community. Jews won 27 percent of Nobel Prizes
won by Germans.
Nearly 80 percent of the players in the National Basketball Association
in 2011 were black, and 17 percent were white, but if that disparity is
disconcerting, Asians were only 1 percent. Compounding the racial disparity, the
highest-paid NBA players are black. That gross disparity works the other way
in the National Hockey League, in which less than 3 percent of the players
are black. Blacks are 66 percent of NFL and AFL professional football
players, but among the 34 percent of other players, there’s not a
single Japanese player. Though the percentage of black professional baseball
players has fallen to 9 percent, there are gross disparities in achievement.
Four out of the five highest career home run hitters were black, and of the
eight times more than 100 bases were stolen in a season, all were by blacks.
How does one explain these gross sports disparities? Might it be that
the owners of these multibillion-dollar professional basketball, football and
baseball teams are pro-black and that those of the NHL and major industries
There are some other disparities that might bother the diversity
people. Asians routinely get the highest scores on the math portion of the
SAT, whereas blacks get the lowest. Men are about 50 percent of the
population, and so are women, but there’s the gross injustice that men
are struck by lightning six times as often as women. The population
statistics for South Dakota, Iowa, Maine, Montana and Vermont show that not
even 1 percent of their population is black. On the other hand, in states
such as Georgia, Alabama and Mississippi, blacks are overrepresented.
Finally, there’s a disparity that might figure heavily in the
upcoming presidential election. Twenty-four out of the 43 U.S. presidents
have been 5 feet 11 inches or taller, above our population’s average
height. That is not an outcome that would be expected if there were not voter
discrimination based upon height. Mitt Romney is 6 feet 2 inches tall, and
Barack Obama is 6 feet 1 inch.
Walter E. Williams is a professor of economics at George Mason
University. To find out more about Walter E. Williams and read features by
other Creators Syndicate writers and cartoonists, visit the Creators
Syndicate Web page at www.creators.com.
Copyright 2012 Creators.Com
“The inefficiency of political control of an economy has
been demonstrated more often, in more places, and under more varied
conditions, than almost anything outside the realm of pure science.”
— Thomas Sowell, The Quest for
Since so many in the media cannot resist turning every tragedy into a political
talking point, it was perhaps inevitable that (1) someone would try to link
the shooting rampage at the Batman movie in Colorado to the Tea Party, and
that (2) some would try to make it a reason to impose more gun control laws.
Too many people in the media cannot seem to tell the difference between
reporting the news and creating propaganda.
NBC News apparently could not resist doctoring the transcript of the
conversation between George Zimmerman and the police after the Trayvon Martin shooting. Now ABC News took the fact that
the man arrested for the shooting in Colorado was named James Holmes to
broadcast to the world the fact that there is a James Holmes who is a member
of the Tea Party in Colorado.
The fact has since come out that these are two different men, one in
his 20s and the other in his 50s. But corrections never catch up with
irresponsible news broadcasts. The James Holmes who belongs to the Tea Party
has been deluged with phone calls. I hope he sues ABC News for every dime
This is not the first time that the mainstream media have tried to
create a link between conservatives and violence. Years ago, the Oklahoma
City bombing was blamed on Rush Limbaugh, despite the absence of any evidence
that the bomber was inspired by Rush Limbaugh.
Similar things have happened repeatedly, going all the way back to the
assassination of President John F. Kennedy, which was blamed on a hostile
right-wing atmosphere in Dallas, even though the assassin had a long history
of being on the far left fringe.
But, where the shoe is on the other foot -- as when the Unabomber had a
much marked-up copy of an environmentalist book by Al Gore -- the media heard
no evil, saw no evil and spoke no evil. If people in the media cannot decide
whether they are in the business of reporting news or manufacturing
propaganda, it is all the more important that the public understand that
difference, and choose their news sources accordingly.
As for gun control advocates, I have no hope whatever that any facts
whatever will make the slightest dent in their thinking -- or lack of
thinking. New York’s Mayor Bloomberg and CNN’s Piers Morgan were
on the air within hours of the shooting, pushing the case for gun control
You might never know, from what they and other gun control advocates
have said, that there is a mountain of evidence that gun control laws not
only fail to control guns but are often counterproductive. However, for those
other people who still think facts matter, it is worth presenting some of
Do countries with strong gun control laws have lower murder rates? Only
if you cherry-pick the data.
Britain is a country with stronger gun control laws than the United
States, and lower murder rates. But Mexico, Russia and Brazil are also
countries with stronger gun control laws than the United States -- and their
murder rates are much higher than ours. Israel and Switzerland have even
higher rates of gun ownership than the United States, and much lower murder
rates than ours.
Even the British example does not stand up very well under scrutiny.
The murder rate in New York has been several times that in London for more
than two centuries -- and, for most of that time, neither place had strong
gun control laws. New York had strong gun control laws years before London
did, but New York still had several times the murder rate of London.
It was in the later decades of the 20th century that the British
government clamped down with severe gun control laws, disarming virtually the
entire law-abiding citizenry. Gun crimes, including murder, rose as the
public was disarmed.
Meanwhile, murder rates in the United States declined during the same
years when murder rates in Britain were rising, which were also years when
Americans were buying millions more guns per year.
The real problem, both in discussions of mass shootings and in
discussions of gun control, is that too many people are too committed to a
vision to allow mere facts to interfere with their beliefs, and the sense of
superiority that those beliefs give them.
Any discussion of facts is futile when directed at such people. All
anyone can do is warn others about the propaganda.
Contrary to legend, it wasn’t the federal government, and the
Internet had nothing to do with maintaining communications during a war.
A telling moment in the presidential race came recently when Barack
Obama said: “If you’ve got a business, you didn’t build
that. Somebody else made that happen.” He justified elevating
bureaucrats over entrepreneurs by referring to bridges and roads, adding:
“The Internet didn’t get invented on its own. Government research
created the Internet so that all companies could make money off the
It’s an urban legend that the government launched the Internet.
The myth is that the Pentagon created the Internet to keep its communications
lines up even in a nuclear strike. The truth is a more interesting story
about how innovation happens—and about how hard it is to build
successful technology companies even once the government gets out of the way.
For many technologists, the idea of the Internet traces to Vannevar Bush, the presidential science adviser during
World War II who oversaw the development of radar and the Manhattan Project.
In a 1946 article in The Atlantic titled “As We May Think,” Bush
defined an ambitious peacetime goal for technologists: Build what he called a
“memex” through which “wholly new
forms of encyclopedias will appear, ready made with a mesh of associative
trails running through them, ready to be dropped into the memex
and there amplified.”
That fired imaginations, and by the 1960s technologists were trying to
connect separate physical communications networks into one global
network—a “world-wide web.” The federal government was
involved, modestly, via the Pentagon’s Advanced Research Projects
Agency Network. Its goal was not maintaining communications during a nuclear
attack, and it didn’t build the Internet. Robert Taylor, who ran the
ARPA program in the 1960s, sent an email to fellow technologists in 2004
setting the record straight: “The creation of the Arpanet was not
motivated by considerations of war. The Arpanet was not an Internet. An
Internet is a connection between two or more computer networks.”
If the government didn’t invent the Internet, who did? Vinton
Cerf developed the TCP/IP protocol, the Internet’s backbone, and Tim
Berners-Lee gets credit for hyperlinks.
But full credit goes to the company where Mr. Taylor worked after
leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the
1970s that the Ethernet was developed to link different computer networks.
Researchers there also developed the first personal computer (the Xerox Alto)
and the graphical user interface that still drives computer usage today.
According to a book about Xerox PARC, “Dealers of
Lightning” (by Michael Hiltzik), its top
researchers realized they couldn’t wait for the government to connect
different networks, so would have to do it themselves. “We have a more
immediate problem than they do,” Robert Metcalfe told his colleague
John Shoch in 1973. “We have more networks
than they do.” Mr. Shoch later recalled that
ARPA staffers “were working under government funding and university
contracts. They had contract administrators . . . and all that slow,
lugubrious behavior to contend with.”
So having created the Internet, why didn’t Xerox become the
biggest company in the world? The answer explains the disconnect between a
government-led view of business and how innovation actually happens.
Executives at Xerox headquarters in Rochester, N.Y., were focused on selling
copiers. From their standpoint, the Ethernet was important only so that
people in an office could link computers to share a copier. Then, in 1979,
Steve Jobs negotiated an agreement whereby Xerox’s venture-capital
division invested $1 million in Apple, with the requirement that Jobs get a
full briefing on all the Xerox PARC innovations. “They just had no idea
what they had,” Jobs later said, after launching hugely profitable
Apple computers using concepts developed by Xerox.
Xerox’s copier business was lucrative for decades, but the
company eventually had years of losses during the digital revolution. Xerox
managers can console themselves that it’s rare for a company to make
the transition from one technology era to another.
As for the government’s role, the Internet was fully privatized
in 1995, when a remaining piece of the network run by the National Science
Foundation was closed—just as the commercial Web began to boom.
Economist Tyler Cowen wrote in 2005: “The Internet, in fact, reaffirms
the basic free market critique of large government. Here for 30 years the
government had an immensely useful protocol for transferring information,
TCP/IP, but it languished. . . . In less than a decade, private concerns have
taken that protocol and created one of the most important technological
revolutions of the millennia.”
It’s important to understand the history of the Internet because
it’s too often wrongly cited to justify big government. It’s also
important to recognize that building great technology businesses requires
both innovation and the skills to bring innovations to market. As the
contrast between Xerox and Apple shows, few business leaders succeed in this
challenge. Those who do—not the government—deserve the credit for
making it happen.
A version of this article appeared July 23, 2012, on page A11 in the
U.S. edition of The Wall Street Journal, with the headline: Who Really
Invented the Internet?.
A case study in modern robbery: Targeting the red plastic gas can.
Like 19th century marauders, the trial bar attacks any business it
thinks will cough up money in its raids. The latest victims are the people
who make those red plastic gasoline cans.
Until recently, Blitz USA—the nation’s No. 1 consumer
gasoline-can producer, based in Miami, Oklahoma—was doing fine.
It’s a commoditized, low-margin business, but it’s steady. Sales
normally pick up when hurricane season begins and people start storing fuel
for back-up generators and the like.
Blitz USA has controlled some 75% of the U.S. market for plastic gas
cans, employing 117 people in that business, and had revenues of $60 million
in 2011. The Consumer Product Safety Commission has never deemed
Blitz’s products unsafe.
Then the trial attorneys hit on an idea with trial-lawyer logic: They
could sue Blitz when someone poured gas on a fire (for instance, to rekindle
the flame) and the can exploded, alleging that the explosion is the result of
defects in the can’s design as opposed to simple misuse of the product.
Plaintiffs were burned, and in some cases people died.
Blitz’s insurance company would estimate the cost of years of
legal battles and more often than not settle the case, sometimes for millions
of dollars. But the lawsuits started flooding in last year after a few big
payouts. Blitz paid around $30 million to defend itself, a substantial sum
for a small company. Of course, Blitz’s product liability insurance costs
In June, Blitz filed for bankruptcy. All 117 employees will lose their
jobs and the company—one of the town’s biggest
employers—will shutter its doors. Small business owners have been
peppering the local chamber of commerce with questions about the secondary
impact on their livelihoods.
The tort-lawsuit riders leading the assault on Blitz included attorneys
Hank Anderson of Wichita Falls, Texas; Diane Breneman
of Kansas City, Missouri; and Terry Richardson of Barnwell, South Carolina.
All told, they’ve been involved in more than 30 lawsuits against Blitz
in recent years.
The rest of the plastic-can industry can’t be far behind, so long
as there’s any cash flow available. The American Association for
Justice’s (formerly the Association of Trial Lawyers of America) annual
conference in Chicago this month will feature, with a straight face, a
meeting of the “gas cans litigation group.”
The Atlantic hurricane season started June 1, and Blitz estimates that
demand for plastic gas cans rises 30% about then. If consumers can’t
find the familiar red plastic can, fuel will have to be carried around in
heavy metal containers or ad-hoc in dangerous alternatives, such as coolers.
Trial lawyers remain a primary funding source for the Democratic Party,
but stories like this cry out for a bipartisan counter-offensive against
these destructive raids that loot law-abiding companies merely because our
insane tort laws make them vulnerable.
There was a time, within living memory, when the achievements of others
were not only admired but were often taken as an inspiration for imitation of
the same qualities that had served these achievers well, even if we were not
in the same field of endeavor and were not expecting to achieve on the same
The perseverance of Thomas Edison, as he tried scores of materials
before finally trying tungsten as the filament of the light bulb he was
inventing; the dedication of Abraham Lincoln as he studied law on his own
while struggling to make a living -- these were things young people were
taught to admire, even if they had no intention of becoming inventors or
lawyers, much less President of the United States.
Somewhere along the way, all that changed. Today, the very concept of
achievement is de-emphasized and sometimes attacked. Following in the
footsteps of Barack Obama, Professor Elizabeth Warren of Harvard has made the
downgrading of high achievers the centerpiece of her election campaign
against Senator Scott Brown.
To cheering audiences, Professor Warren says, “there is nobody in
this country who got rich on his own. Nobody. You build a factory out there,
good for you, but I want to be clear. You moved your goods to market on the
roads the rest of us paid for. You hired workers that the rest of us paid to
Do the people who cheer this kind of talk bother to stop and think
through what she is saying? Or is heady rhetoric enough for them?
People who run businesses are benefitting from things paid for by
others? Since when are people in business, or high-income earners in general,
exempt from paying taxes like everybody else?
At a time when a small fraction of high-income taxpayers pay the vast
majority of all the taxes collected, it is sheer chutzpah to depict
high-income earners as somehow being subsidized by “the rest of
us,” whether in paying for the building of roads or the educating of
Since everybody else uses the roads and the schools, why should high
achievers be expected to feel like free loaders who owe still more to the
government, because schools and roads are among the things that facilitate their
work? According to Elizabeth Warren, because it is part of an
“underlying social contract.”
Conjuring up some mythical agreement that nobody saw, much less signed,
is an old ploy on the left -- one that goes back at least a century, when
Herbert Croly, the first editor of The New Republic magazine, wrote a book
titled “The Promise of American Life.”
Whatever policy Herbert Croly happened to favor was magically
transformed by rhetoric into a “promise” that American society
was supposed to have made -- and, implicitly, that American taxpayers should
be forced to pay for. This pious hokum was so successful politically that all
sorts of “social contracts” began to appear magically in the
rhetoric of the left.
If talking in this mystical way is enough to get you control of
billions of dollars of the taxpayers’ hard-earned money, why not?
Certainly someone who claimed to be part Indian, as Elizabeth Warren
did when applying for academic appointments in an affirmative action
environment, is unlikely to be squeamish about using imaginative words during
a political election campaign.
Sadly, this kind of cute use of words is not confined to one political
candidate or to this election year. The very concept of achievement is a
threat to the vision of the left, and has long been attacked by those on the
People who succeed -- whether in business or anywhere else -- are often
said to be “privileged,” even if they started out poor and worked
their way up the hard way.
Outcome differences are called “class” differences. Thus
when two white women, who came from families in very similar social and
economic circumstances, made different decisions and got different results,
this was the basis for a front-page story titled “Two Classes, Divided
by ‘I Do’” in the July 15th issue of the N.Y Times.
Personal responsibility, whether for achievement or failure, is a threat to
the whole vision of the left, and a threat the left goes all-out to combat,
using rhetoric uninhibited by reality.
There is some justification at least in the taunt that many of the
pretending defenders of “free enterprise” are in fact defenders
of privileges and advocates of government activity in their favor rather than
opponents of all privileges. In principle the industrial protectionism and
government-supported cartels and agricultural policies of the conservative
groups are not different from the proposals for a more far-reaching direction
of economic life sponsored by the socialists. — page 107 of
Hayek’s vital 1948 collection, Individualism and Economic Order;
specifically, it’s from the first paragraph of Hayek’s 1947
address, to the inaugural meeting of the Mont Pelerin
Society, entitled “‘Free’ Enterprise and Competitive
President Obama has a message for all the small-business owners in
America who also happen to employ more than half of all Americans: “If
you’ve got a business -- you didn’t build that. Somebody else
made that happen.”
Obama uttered that sentence while campaigning in Roanoke last Friday,
to explain how government deserves a large share of the credit for
businesses’ success because it provides basic services and
infrastructure that businesses use.
“The Internet didn’t get invented on its own,” Obama
continued. “Government research created the Internet so that all the
companies could make money off the Internet.” Moreover, Obama did not
make this statement to argue that government should invest more in basic
research and infrastructure. He was calling for a tax hike to fund more
failing solar firms, bullet trains to nowhere and most of all the
budget-devouring entitlement programs he lacks the courage to fix. He seems
to think successful entrepreneurs should be grateful and eager to pay more.
Only someone who has never signed the front of a paycheck could make
such an ignorant comment. Government research may have helped create the
Internet, but entrepreneurs made it useful and profitable. And as with most,
if not all of the basic infrastructure that modern governments provide,
business entrepreneurs have paid for the Internet thousands of times over
through the tax revenues they created through increased sales and employment
over the years.
Obama repeatedly claims his tax hike proposal will only hit 3 percent
of small-business owners. To put his statement in context, the U.S. Census
Bureau reports more than three-quarters of small businesses have no
employees. (Example: An employed journalist who freelances for pocket money.)
The 3 percent of small businesses that Obama wants to squeeze produce more
than half of all small-business income and account for a hugely
disproportionate share of small-business jobs.
It isn’t easy to understand what it takes to create jobs while
making money, but Obama has proven himself extraordinarily obtuse on the
subject. In just his first three years in office, Obama has approved 106 new
major federal regulations that cost the U.S. economy $46 billion annually,
according to his own administration’s estimate. Under Obama, the per-employee
cost of simply complying with federal regulations -- before any other
expenses or capital investments are accounted for has risen from $8,086 in
2008 to $10,585 in 2010, according to the federal Small Business
Administration. That number will rise again substantially in 2014, when many
firms with more than 50 employees are slapped with stiff fines under
Obamacare’s “employer responsibility” requirement.
Small businesses already pay the price of big government in more ways
than one. Obama should understand if its most successful practitioners are
less than thrilled to have him downplay their accomplishments while making
the case to raise their taxes.
I was Obama’s college classmate at Columbia University, Class of
‘83. Almost every one of my classmates were openly socialist or
Marxist, with many of these leftist radicals calling for an end to capitalism
and “bringing down the system” by destroying the U.S. economy
with entitlements, debt, and crisis.
That’s why I have predicted in thousands of media interviews from
the first days of Obama’s Presidency that Obama is a radical, with a
deep-seated hatred of business owners, a desire to demonize us and destroy
America’s faith in capitalism, and a plan to bring down the system by
overwhelming our economy with debt and crisis- just as we all learned and
discussed at Columbia in our college days.
Well it’s no longer a theory. Obama has come out of the closet.
Obama has decided to come clean with his plans for a 2nd term. In a matter of
48 hours he gave us two hints so big you couldn’t miss his intentions
if you were blind, deaf, or dumb (my apologies to liberal Democrats with this
First, Obama gave notice that every state could receive a
“waiver” to opt out of demanding that welfare recipients must
work to receive their benefits. This isn’t some radical right wing
conspiracy Obama is trying to wreck. This was a bipartisan law of the land
intended to “end welfare as we know it” and passed under Democrat
President Bill Clinton. It has worked mega-successfully (with nary a
complaint) for almost two decades. Why would anyone, who isn’t a
committed radical Marxist intent on exploding entitlements, debt and crisis,
try to end this law? Why indeed.
Obama has showed his true colors. He’s not satisfied with 46
million Americans on food stamps, 11 million on Disability (5.5 million in
just his first term), millions more on unemployment benefits, and tens of
millions on other government handouts. He wants to make it even easier to get
on welfare, without any requirement to work. Going to work might get in the
way of your ability to vote on November 6th.
This is precisely how you explode the numbers of Americans on welfare,
all dependent on government for survival, and all loyal to the Democratic
Party that protects their checks.
Then 24 hours later Obama said words that made me sick to my stomach
and brought tears to my eyes. Words so vile they are an affront to every
American business owner and a reminder of his true beliefs- a deep seated
hate and resentment towards capitalist business owners. Obama said that
business owners owe our success to government. He actually said that if
you’ve built a business, you don’t get the credit. It’s
government who has been by your side. You need to give government the credit.
Obama believes government helped me every step of the way as a
businessman? Really? Honest to God? With that kind of thinking, I think
it’s now safe to say Obama has come out of the closet. Either
he’s a Marxist hell bent on demonizing wealthy business owners and
destroying capitalism, or perhaps he’s high on that drug he enjoyed so much
in his youthful days.
Because the reality is that government has hurt me, every step of the
way. Government has NEVER helped me. But Obama is right about one thing-
government is always by our side. Unfortunately it ruins everything it
Here’s a synopsis of what government has done for me.
They’ve stolen my hard-earned money that I could have used to
expand my business, or start new ones, or invest in stocks and real estate.
Instead it went to government in the form of taxes, fees, licenses and
Don’t forget the rules, regulations and mandates that made it
difficult or near impossible to start a business in the first place.
Or the accountant and tax lawyer bills that could have been put to use
Or the IRS audits that stole valuable dollars and hours that I can
never get back- even though every one of them ended up with me owing not a
dime. But the damage was already done to an innocent man.
Or the millions my public company spent on complying with ridiculous
bureaucratic boondoggles like Sarbanes Oxley- thereby wasting millions of
dollars that could have instead created jobs and shareholder value for my
Don’t forget the bills passed by government that literally wiped
out multiple businesses that I owned (multiple times).
Yes, Obama has a point. Government is always there by my side- stealing
my money, robbing me blind, redistributing what I earned into the hands of
people not willing to work as hard or as smart as me, distracting me with
thousands of pages of regulations, limiting my options, wiping out jobs, and
destroying shareholder value.
Government isn’t a savior or saint. Government is the mafia. They
are organized crime with the weight of the law behind them. And under Obama,
they are hell bent on turning public sentiment against all of us who own
businesses, destroying America’s belief in capitalism, and
redistributing our incomes until our businesses are crippled, or out of
business. Then government is our only place to turn. That much is now clear
after a 48 hour rampage by our President.
If we are to save this economy, capitalism, our jobs, and this
country…one thing is crystal clear- Obama must go.
Wayne Allyn Root is a Capitalist Evangelist
and serial entrepreneur. He is a former Libertarian vice presidential
nominee. He now serves as Chairman of the Libertarian National Campaign
Committee. He is the best-selling author of “The Conscience of a
Libertarian: Empowering the Citizen Revolution with God, Guns, Gold & Tax
Cuts.” His web site: www.ROOTforAmerica.com
River Blindness by James Bovard
Government waste goes unseen in Washington.
It is only a question of time: Washington soon will be convulsed by the
next federal budget crisis. Unfortunately, neither presidential candidate is
offering substantive proposals to curb soaring federal outlays. One side
offers high taxation and high borrowing; the other offers lower taxation and
high borrowing. Washington seems inherently unable to recognize the true
threat to Americans’ future posed by government spending.
Proposals to scrutinize government spending routinely evoke cries of
horror. After President Obama promised in 2009 that his stimulus plan
“cannot and will not be an excuse for waste and abuse,” the
Washington Post published an indignant protest headlined “The Case for
Waste.” In it, George Washington University law professor Steven
Schooner was quoted perfectly expressing the local conventional wisdom:
“Are we capable of grasping the concept that in a struggling economy,
it’s more important to throw money at the problem, even if it’s
possibly inefficient and possibly inaccurate?” The notion of leaving
money in private pockets is never considered—perhaps because it would
be an unnatural act.
Source of Prosperity
It was a common saying in the countryside in the 1930s that “we
cannot squander our way to prosperity.” But in the capital city it was
and is unimaginable that the government could be dragging down the national
economy. The evidence of the benefit of government spending could not be more
obvious to Washingtonians: the booming local economy, the lofty real-estate
values, the ample opportunities for those with college degrees and a
willingness to spend their lives writing unread briefs, memos, and reports.
Further back in history, President Grover Cleveland declared in 1893
that “the waste of public money is a crime against the citizen.”
But today’s Washington experts take a different view of floundering
programs: They can be redeemed with a few more years of trial and more
billions of dollars.
For instance, the National Academy of Public Administration declared in
1994 that if HUD were not operating “in an effective, accountable
manner” within five years, “the President and Congress should
seriously consider dismantling the department and moving its programs
elsewhere.” HUD, of course, remains the prize flounder. At a hearing
last year, current and former inspectors general recounted story after story
of HUD’s having no clue where its money went.
Washingtonians view each billion dollars of government spending as
magic beans that automatically sow blessings across the nation, thanks to the
multiplier. Obama administration officials claimed that the 2009 stimulus
would produce $1.57 in economic activity for each dollar spent, that Food
Stamps generate $1.84 in economic activity per dollar of handouts, and that
each dollar of unemployment benefits produces $2 in economic activity.
Washington refuses to recognize the collateral damage from federal
programs. Subsidized loans allow colleges to gouge students with higher
tuition; agricultural subsidies inflate farmland prices and price out young
farmers; training programs often provide young people with the illusion that
they have marketable skills. Even when subsidies, such as those for ethanol,
boost smog, damage Americans’ car engines, and drive millions of Third
World poor to the edge of starvation with inflated food prices, it is hard to
find anyone in D.C. who will consider ending the programs.
The government is unable to recognize federal failures in part because
the political concept of waste is diametrically opposed to the economic
concept. In economics, if a company produces something that people will pay
for, it can thrive. In politics, if a program provides something people
won’t pay for, it garners votes, campaign contributions, or power. The
more money a program spends, the more gratitude its beneficiaries show to
politicians. The beneficiaries of wasteful programs are often the most grateful.
Regardless of the severity of the next budget crisis, we will see more
charades like last year’s “historic” budget deal, when
Democratic and Republican congressional leaders proudly claimed to have cut
federal spending by $38 billion—out of $3.8 trillion. The Congressional
Budget Office later revealed that the actual amount saved was only $352
million in the current fiscal year.
Unfortunately, a 99% sham rate is about par for spending cuts.
Congressmen will always prefer imaginary budget cuts, as long as government
spending gives them real power to send money back home.
Regardless of the government’s own record, the nation’s
capital presumes that it knows best. Recent gargantuan deficits haven’t
deterred the Treasury Department from lecturing Americans about how to manage
their personal finances. (Get a laugh at http://www.mymoney.gov/.)
Costs of Citizenship
Governments don’t throw away money in a vacuum. With spending
come futile attempts to curb “fraud, waste, and abuse.” The more
of an economy that is subject to political command and control, the greater
will be the lost business opportunities and the harder it will be to create
private prosperity. A billion dollars taxed away pre-empts the equivalent of
5,000 families from buying starter homes, or a million people from taking a
summer vacation, or citizens from buying 40 million new books or 70 million
cases of beer. Any of these private expenditures would create more jobs and
more job security than a stimulus program.
If congressmen have a right to seize and squander other people’s
money, citizens are nothing more than beasts of burden for political
ambition. Until politicians feel an electoral knife at their throats, it will
be business as usual—with a little rhetoric thrown in to delude people
that problems are being solved.
We cannot expect politicians and bureaucrats to reduce the power of
political spending on their own; we must stop rewarding them with our votes.
James Bovard is the author of Attention Deficit Democracy (Palgrave,
2006), Lost Rights (St. Martin’s, 1994), and seven other books.
So far this summer, three California cities have moved toward
bankruptcy and several others are distressed enough that the b-word has left
the lips of their elected and appointed officials – including those in
the two largest, Los Angeles and San Diego.
With the exception of tiny Mammoth Lakes, which sought bankruptcy
protection after losing a lawsuit, the conditions of California’s
financially distressed cities are remarkably similar.
Elected leaders and appointed managers succumbed to hubris and
political pressure, particularly from their employee unions. They committed
their cities to spending on employee salaries and fringe benefits, especially
pensions and health care, and civic improvements that could not be sustained
when the housing bubble burst and revenue declined.
As their gaps between income and outgo widened, officials covered them
with questionable transfers, bookkeeping gimmicks, loans and lies –
hoping against hope that the downturn would be brief and revenue would once
again surge and bail them out.
“For the last 16 years, the budget prepared for the council
showed the city was in the black. The mayor and the council were not given
accurate information,” San Bernardino City Attorney James Penman told
his council members the other night before they voted to join Mammoth Lakes
and Stockton in bankruptcy court.
San Bernardino thus becomes the second-largest city in American history
to pursue bankruptcy – second only to Stockton.
Officials in Stockton, San Bernardino and other upside-down California
cities should bear the onus of their irresponsible decision-making. Their
first responsibility was to protect the financial integrity of their cities
but they allowed other considerations, mostly political, to get the best of
That said, what’s happened at the municipal level is no worse
than what’s happened to state government for similar reasons.
For years, governors and legislators have squandered brief revenue
windfalls on permanent spending and tax cuts, passed budgets based on whimsy,
ignored liabilities (especially pensions and retiree health care), and
covered resulting deficits with ever-more-elaborate accounting tricks and
Democrat Jerry Brown ran for governor on a promise to straighten out
the state’s tangled finances – just as Republican predecessor
Arnold Schwarzenegger had pledged.
But Brown has signed two budgets based on fingers-crossed revenue
assumptions and gimmicks. The first one failed totally and the second hinges
on voter approval of new taxes that have no better than a 50-50 chance of
There’s no provision in federal bankruptcy law for states, nor
should there be.
But make no mistake – at this moment, California is every bit as
insolvent as the cities that are trooping to bankruptcy court.
7/13/2012: Here is the classic example of
that kind of insincerity in both foreign and domestic affairs which permeates
not only avowed motives but also probably the conscious motives of the actors
themselves - that of a policy which pretends to aspire to peace but
unerringly generates war, the policy of continual preparation for war, the
policy of meddlesome interventionism. There was no corner of the known world
where some interest was not alleged to be in danger or under actual attack.
If the interests were not those of Rome, they were those of Rome’s
allies; and if Rome had no allies, then allies would be invented. When it was
utterly impossible to contrive such an interest - why, then it was the
national honour that had been insulted. The fight
was always invested with an aura of legality. Rome was always being attacked
by evil-minded neighbours, always fighting for a
breathing space. The whole world was pervaded by a host of enemies and it was
manifestly Rome’s duty to guard against their indubitably aggressive
designs. They were enemies who only waited to fall on the Roman people....
— Joseph Schumpeter, The Sociology of Imperialism 
This TGIF first ran August 7,
2009. It seems appropriate today.
Health care reformers say they have two objectives: to enable the uninsured
and under-insured to consume more medical services than they consume now, and
to keep the prices of those services from rising, as they have been, faster
than the prices of other goods and services. Unfortunately, Economics 101
tells us that to accomplish those two things directly—increased
consumption by one group and lower prices—the government would have to
take a third step: rationing. The reformers are disingenuous about this last
step, and for good reason. People don’t like rationing, especially of
But some defenders of government control acknowledge that rationing is
the logical consequence of their ambition. They parry objections by saying in
effect: “So we’ll have to ration. Big deal. We already have
rationing—by the market.”
For example, Uwe Reinhardt, an economics
professor and advocate of government-controlled medicine, writes, “In
short, free markets are not an alternative to rationing. They are just one
particular form of rationing. Ever since the Fall from Grace, human beings
have had to ration everything not available in unlimited quantities, and
market forces do most of the rationing.”
Sadly, interventionist economists are not the only economists who talk
this way. Most free-market economists would agree that where there is
scarcity there must be rationing and that the most efficient way to ration is
by price, that is, through the market.
This is factually wrong and strategically ill-advised. As we’ll
see, markets–even completely free markets–do not ration. Thus the
health care debate is not about which method of rationing—State or
Let me be clear about what I am not denying. I am not denying that
economic goods are by definition scarce and that at any given time we must
settle for less of them than we want. I am also not denying that the
marketplace is relevant in determining who gets how much of those scarce
I am denying that this is appropriately called “rationing.”
Markets Don’t Do Anything
To see that the market does not ration one need only see that
“the market” doesn’t do anything. To talk as if it does
things is to reify the market—worse, it is to anthropomorphize the
market, ascribing to it attributes — purposes, plans, and
actions—that only human beings possess. We may also see this as another
instance of literalizing a metaphor, which, as Thomas Szasz has so often
warned, is fraught with peril.
I’m not saying that economists don’t realize this diction
is a metaphor. Of course they do, and there’s no harm in using this shorthand
among those who understand it as such. The problem, as I see it, is that the
general public doesn’t fully grasp the metaphorical nature of these
statements. For the sake of public understanding, free-market advocates
should not welcome a debate in which they begin by saying, “Our method
of rationing is better than your method of rationing.”
Better to respond to the interventionists this way: The market does not
ration or allocate. The market does not do anything. It has no purposes or
objectives. It is simply a legal framework in which people do things with
their justly acquired property and their time in order to pursue their own
Mises and Hayek
This is squarely in the Austrian conception of the market as set out by
Ludwig von Mises and F. A. Hayek. The market order “has no specific
purposes but will enhance for all the prospects of achieving their respective
purposes,” Hayek wrote in volume two of Law Legislation, and Liberty.
The market was never set up by people to achieve a purpose. It is not a
device or an invention aimed at satisfying an intention. “Market
mechanism” is a metaphor. The market — as a set of continuing
relations among people — emerged, unplanned and unintended, from
exchanges, initially barter, in which the parties intended only to improve
their respective situations. Lecturing at FEE . . . , Israel Kirzner recalled
that one of the first things Mises said to him as a graduate student was,
“The market is a process,” by which he meant “a series of
activities.” This is similar to what the French liberal economist Destutt de Tracy (1754–1836) wrote in A Treatise on
Political Economy, “Society is purely and solely a continual series of
Mises, Hayek, and Tracy help us to sort out the rationing question. I
submit it makes no sense to say that an undesigned series of exchanges
rations goods. If we were to observe a free market (wouldn’t that be
nice?), what would we see? Rationing? Allocation? Of course not. We would see
people exchanging things—factors of production, services, and consumer
goods—for money. Where would they have gotten those things? From
previous exchanges or original appropriation from nature.
When a person buys five apples in a grocery store rather than ten because
he wishes to use the rest of his money for other purposes, it seems entirely
wrong to say the market (or even the grocer) has rationed the apples. The
customer makes his choice on the basis of his preferences and the money
available (which is the result of previous transactions).
It is true that as a result of market exchanges, goods and resources
change hands and (except for land) locations. But in no sense is this
rationing or allocation. The resulting arrangement of resources is simply a
product of many transactions. Of course, people’s choices of what and
what not to buy and sell at which prices create an arrangement of goods and
resources that tends to be intelligible in terms of consumers’
subjective priorities. But that does not warrant calling the process
rationing or allocation.
Those words—especially ration, which shares its root with
rational–suggest conscious decision-making—as part of a
plan—by an agent. In a free market there is no consciousness overseeing
this “distribution”—another inappropriate word when it
comes to describing the market process.
I am not saying anything that a good economist or thoughtful person
doesn’t know. I am merely pointing out that we can be more effective in
the health care debate if we are more precise in our language. We do not face
a choice between methods of rationing medical services. We face a choice
between rationing according to a bureaucratic plan and being freed to engage
in mutually beneficial exchanges.
in Smoke by Gary Jason
With the recent release of yet another dismal jobs report, commentators
in the MSM have begun to ask, “Why aren’t jobs being
created?” They should have been asking themselves this question for the
last 40 months, but, hey, better late than never.
Yet the possibility that the explosive growth in regulation might play
a role in deterring job growth is not something they spend much time
It should be.
A recent story gives us a fresh illustration of the role that
regulation plays in destroying jobs. (By “regulation,” I mean all
increases in statutory law, rulings by regulatory agencies, and expansions of
common law aimed at controlling business activity.) It concerns a business
that I, a nonsmoker, never heard of, one that has never been destroyed by
It turns out that in the face of huge taxes on cigarettes produced by
the major tobacco companies, many cigarette smokers started frequenting small
stores that owned “roll-your-own” (RYO) cigarette machines. The
RYO machines allowed customers to buy loose tobacco, especially pipe tobacco
(taxed at a far lower rate than manufactured cigarettes) and paper tubes in
the shop, and use the RYO machine to churn out a carton of cigarettes in just
a few minutes.
For a devoted smoker, the attraction of RYO shops is clear. They save
about half the price of regular cigarettes. And they allow smokers to blend
different and more flavorful tobaccos together, and use both tobacco and
paper that are free from many of the chemical additives.
But naturally, the attractiveness of the shops angered two powerful
groups. First, it pissed off puritan “progressives” who just
cannot stand people smoking, and are always conducting an anti-smoking jihad.
Not content with insane taxes on people who choose to consume a lawful
product, they want to stop it altogether.
Second, it pissed off the major cigarette makers — aka Big
Tobacco — who hate seeing customers choosing to buy cheaper in little
shops around the country.
So in a classic case of rent seeking (businesses manipulating the
regulatory system to hurt their competition, rather than producing a better
or cheaper product) Big Tobacco found a politician — the truly
execrable Sen. Max Baucus (D-MT) — to insert a small amendment to a
massive transportation bill that redefines RYO shops so that they fall under
the same category as Big Tobacco cigarette manufacturers, thus imposing a
massive tax increase on them — one that is intended to destroy them,
and probably will.
Baucus of course was happy to do this for the campaign cash Altria and
other Big Tobacco companies shoveled at him. And those Big Tobacco companies
are happy to stomp out of existence a group of little competitors. And Obama
— who never met a regulation he didn’t like — was happy to
sign the bill.
But the small businesses that bought the RYO machines have been
screwed. Over a thousand of these machines (they cost over $36,000 each) were
purchased, but are now virtually useless.
So, for example, Robert Weissen and his partners,
who own a chain of six RYO shops in Las Vegas (cheekily named “Sin City
Cigarette Factory”), says he will have to shut down the machines and
lay off 40 people.
There are eight million regulations in our “progressive”
(i.e., neosocialist) economy. This has been the story of just one of them.
About this Author: Gary Jason
is a philosopher and senior editor of Liberty, and the author of the new book
Dangerous Thoughts (available through GaryJasonBooks.com
employees have doubled in 40 years while student enrollment has increased by only
8.5%—and academic results have stagnated.
President Obama said last month that America can educate its way to
prosperity if Congress sends money to states to prevent public school layoffs
and “rehire even more teachers.” Mitt Romney was having none of
it, invoking “the message of Wisconsin” and arguing that the
solution to our economic woes is to cut the size of government and shift
resources to the private sector. Mr. Romney later stated that he wasn’t
calling for a reduction in the teacher force—but perhaps there would be
some wisdom in doing just that.
Since 1970, the public school workforce has roughly doubled—to
6.4 million from 3.3 million—and two-thirds of those new hires are
teachers or teachers’ aides. Over the same period, enrollment rose by a
tepid 8.5%. Employment has thus grown 11 times faster than enrollment. If we
returned to the student-to-staff ratio of 1970, American taxpayers would save
about $210 billion annually in personnel costs.
Or would they? Stanford economist Eric Hanushek
has shown that better-educated students contribute substantially to economic
growth. If U.S. students could catch up to the mathematics performance of
their Canadian counterparts, he has found, it would add roughly $70 trillion
to the U.S. economy over the next 80 years. So if the additional three
million public-school employees we’ve hired have helped students learn,
the nation may be better off economically.
To find out if that’s true, we can look at the “long-term
trends” of 17-year-olds on the federal National Assessment of
Educational Progress. These tests, first administered four decades ago, show
stagnation in reading and math and a decline in science. Scores for black and
Hispanic students have improved somewhat, but the scores of white students
(still the majority) are flat overall, and large demographic gaps persist.
Graduation rates have also stagnated or fallen. So a doubling in staff size
and more than a doubling in cost have done little to improve academic
Nor can the explosive growth in public-school hiring be attributed to
federal spending on special education. According to the latest Census Bureau
data, special ed teachers make up barely 5% of the
K-12 work force.
The implication of these facts is clear: America’s public schools
have warehoused three million people in jobs that do little to improve
student achievement—people who would be working productively in the
private sector if that extra $210 billion were not taxed out of the economy
We have already tried President Obama’s education solution over a
time period and on a scale that he could not hope to replicate today. And it
has proven an expensive and tragic failure.
To avoid Greece’s fate we must create new, productive
private-sector jobs to replace our unproductive government ones. Even as a
tiny, mostly nonprofit niche, American private education is substantially
more efficient than its public sector, producing higher graduation rates and
similar or better student achievement at roughly a third lower cost than
public schools (even after controlling for differences in student and family
By making it easier for families to access independent schools, we can
do what the president’s policies cannot: drive prosperity through
educational improvement. More than 20 private-school choice programs already
exist around the nation. Last month, New Hampshire legislators voted to
override their governor’s veto and enact tax credits for businesses
that donate to K-12 scholarship organizations. Mr. Romney has supported such
state programs. President Obama opposes them.
While America may have too many teachers, the greater problem is that
our state schools have squandered their talents on a mass scale. The good
news is that a solution is taking root in many states.
Mr. Coulson directs the Cato
Institute’s Center for Educational Freedom and is author of
“Market Education: The Unknown History” (Transaction, 1999).
7/8/2012: I used to say that the
Republicans were merely Democrats with a 10% discount, but with the
ventriloquist’s dummy and income re-distributer-in-chief in the White
House, the discount is likely to be much larger in 2013.
If using insurance to pay for everything is such a marvelous idea, why
not expand the concept? How come, for example, we tolerate paying for tire
rotations and oil changes out of pocket?
Why not carry Car Maintenance Insurance (CMI) instead? Wouldn’t
this make owning a car more affordable? More fair?
Is it not outrageous that so many millions of Americans aren’t
I’ve asked people who defend Obamacare about this. They
immediately see the silliness of using insurance to cover minor routine car
maintenance. But somehow, they don’t connect the logical dots and grasp
that the same reasoning applies to minor routine maintenance of one’s
body, too. People in this country didn’t always whip out an Aetna or
Blue Cross card – and fill out myriad Byzantine forms – when it
was time to settle up with their doc. They opened up their wallet or their
purse and handed the man (or his nurse/office manager) a $20. There was no
need for an entire staff of sour-faced fraus to handle the endless reams of
paperwork – each paper-rustling sour-faced frau costing the doc (and
thus, you) a considerable chunk of change.
There was no army of cube workers down the line processing your
paperwork – and doing all in their power to dodge the bill and send it
back to you.
It was a pretty good system. It
still works pretty well, too – when it comes to fixing our cars. We
carry insurance for catastrophic – or at least, major – events.
But we don’t - yet – expect – CMI to cover our next $29.99
oil change or tire rotation. Because most people still seem to understand
that it would drive up costs – and not just a little bit –
because routine maintenance is, well routine. It’s going to be
necessary. One hundred percent certainty. Which in the context of insurance
means it would be madness to use insurance as a way to pay for it. Because
the whole point of insurance is to reduce the cost of the relatively isolated
catastrophic event by pooling resources. One hundred people pay in – in
relatively small amounts – to defray the cost (at a reasonable cost to
each person paying in) of a loss or damages incurred by a relative handful.
Most of the people paying in don’t take out – collect a payment.
They pay in to insure themselves against the possibility of having to deal
with a huge bill for something unexpected – something they hope will
never happen. And which very probably won’t happen.
This is what makes insurance make economic sense.
But if it is known going in that everyone paying in will also expect a
payment – that the insurance will be used to pay for everything, no
matter how minor and not just the unexpected exceptional event – well,
now you’re just playing a variant of musical chairs.
Only when the music stops playing, none of us have a place to sit.
What good does it do me to use insurance to pay for an oil change when
the cost of that insurance is much higher than the amount I’d be paying
if I just paid for such routine maintenance out of pocket? Sure, I’m
“covered” – but that’s not much security (a treasured
thing in the Age of Clover) when said
coverage is unaffordable. And as a consequence of which, the services
rendered are inexorably rendered less often as those rendering them do their
best to staunch the financial hemorrhaging.
Which is precisely what has happened as regards “health care”
– precisely because people have become accustomed to not paying for
“routine maintenance” directly, out of pocket, as they would
– as they still do – when it comes to their cars. They see the seemingly inexpensive $20
co-pay and think happy thoughts about affordable care. That they are
They universally neglect to consider the annual fee – typically
in the many thousands of dollars – for the insurance itself.
It never occurs to them, apparently, that it might be a better deal to
pay $50 out of pocket when Junior has the sniffles – instead of $4,000
a year for the covers-it-all insurance. That they’d have money in the
bank – as opposed to their money in the insurance company’s bank
account – if they paid for the small stuff themselves, directly –
cutting out the expense of all the middlemen involved in the transaction when
insurance is involved. If they only used insurance in extreme circumstances,
to cover the big ticket items – the unforeseen, unlikely occurrences
that may occur – but which usually (for most people) don’t. Then, their overall costs would be
much lower – simply because they’re not paying for everything for
everyone - just some things for
some people sometimes.
They get it when it comes to their cars.
They pay their wrench directly. He gives them a bill, they settle up
– it’s done. The wrench does not need a front office full of
sour-faced fraus – each frau costing him $40,000-plus a year in wages
and benefits – to deal with make-work paperwork over an oil change or a
tune-up. As a result, he is able to charge less for the work he does –
because there’s much less overhead.
Specifically, there are fewer useless eaters to feed.
Just imagine how much an oil change would cost if your mechanic had to
have that office full of fraus. If he had the overhead that your doctor has.
If every little thing launched reams of paperwork – as opposed to a
simple invoice, a receipt – and a thank you for your business.
If oil changes were “covered”
– a la routine visits to the doctor – people would probably avail
themselves of oil changes more often as opposed to when necessary. And they would
probably be more likely to abuse – or at least, neglect – their
After all, the repairs are “covered.”
But it’d cost us all a small fortune – for even the small
This is exactly what’s happened with regard to health care. And
instead of addressing this fundamental – and should-be-obvious –
problem, the problem has been institutionalized and made the very basis of
the whole sorry program.
Math skills – and common sense – are in short supply these
Which is why we got HMOs. Which led inevitably – inexorably
– to the idea of Obamacare for the innumerate and economically
Just wait until the idea is applied to car “health care.”
Because it’s coming, too...
This was not the employment report either the American worker or the
Obama campaign wanted to see right now. The Labor Department said the U.S.
economy created just 80,000 jobs in June, less than the 90,000 economists had
been forecasting. And private-sector job growth was just 84,000, down sharply
from 105,000 in May. Not doing fine.
The unemployment rate stayed at a lofty 8.2%.
As a research note from RDQ economics put it: “The good news is that
employment growth is not slowing further but there is no sign of it picking
up either. At this pace, job creation is not fast enough to lower the
unemployment rate with the labor force growing at close to 150,000 per month
on average.” Shorter: Stagnation Nation
This continues to be the longest streak — 41 months — of
unemployment of 8% or higher since the Great Depression. And recall that back
in 2009, Team Obama predicted that if Congress passed its $800 billion
stimulus plan, the unemployment rate would be around 5.6% today.
Just 75,000 jobs were created, on average, per month in the second
quarter vs. 226,000 in the first quarter. And for the year, monthly job
creation has averaged just 150,000 vs. 153,000 last year. Both numbers are
But those top-line numbers actually overstate the health of the labor
– If the size of the U.S. labor force as a share of the total
population was the same as it was when Barack Obama took office—65.7%
then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. Even if
you take into account that the LFP should be declining as America ages, the
unemployment rate would be 10.5%.
– The broader U-6 unemployment rate, which includes “all
persons marginally attached to the labor force, plus total employed part time
for economic reasons,” is 14.9%, up a bit from May.
– The average duration of unemployment ticked up to 39.9 weeks.
– It will take 219,000 net new jobs a month for unemployment rate
to be below 8% on Election Day if current participation rate holds steady.
– Job growth during the three-year Obama recovery has averaged
just 75,000 a month for a total of 2.7 million. During the first three years
of the Reagan Recovery, job growth averaged 273,000 a month for a total of
9.8 million. If you adjust for the larger U.S. population today, the Reagan
Recovery averaged 360,000 jobs a month for a three-year total of 13 million
– The U.S. work force remains shrunken with just 58.6% employed:
None of this should be surprising. The economy grew a bit less than 2%
last year, and we averaged about 150,000 new jobs a month. We are growing a
bit less than 2% this year, and job growth is averaging about 150,000 jobs a
month. And there are few signs the rest of the year will be any better. And
given a) how the eurocrisis is AGAIN flaring up, and b) China continues to
slow, it sure seems like 2% growth and 8% unemployment is a best-case
scenario with plenty of downside risk — for the economy and the Obama
Pethokoukis is a columnist and blogger at the American Enterprise Institute.
Previously, he was the Washington columnist for Reuters Breakingviews,
the opinion and commentary wing of Thomson Reuters.
Pethokoukis was the business editor and
economics columnist for U.S. News & World Report from 1997 to 2008. He
has written for many publications, including The New York Times, The Weekly
Standard, Commentary, National Review, The Washington Examiner, USA Today and
Investor’s Business Daily.
Pethokoukis is an official CNBC
contributor. In addition, he has appeared numerous times on MSNBC, Fox News
Channel, Fox Business Network, The McLaughlin Group, CNN and Nightly Business
Report on PBS. A graduate of Northwestern University and the Medill School of
Journalism, Pethokoukis is a 2002 Jeopardy! Champion.
When Congress won’t do what he wants, he ignores it and acts
The ObamaCare litigation is history, with the president’s
takeover of the health sector deemed constitutional. Now we can focus on the
rest of the Obama imperial presidency.
Where, you are wondering, have you recently heard that term? Ah, yes.
The “imperial presidency” of George W. Bush was a favorite
judgment of the left about our 43rd president’s conduct in war,
wiretapping and detentions. Yet say this about Mr. Bush: His aggressive
reading of executive authority was limited to the area where presidents are
at their core power—the commander-in-chief function.
By contrast, presidents are at their weakest in the realm of domestic
policy—subject to checks and balances, co-equal to the other branches.
Yet this is where Mr. Obama has granted himself unprecedented power. The
health law and the 2009 stimulus package were unique examples of Mr. Obama
working with Congress. The more “persistent pattern,” Matthew
Spalding recently wrote on the Heritage Foundation blog, is “disregard
for the powers of the legislative branch in favor of administrative decision
making without—and often in spite of—congressional action.”
Put another way: Mr. Obama proposes, Congress refuses, he does it
For example, Congress refused to pass Mr. Obama’s Dream Act,
which would provide a path to citizenship for some not here legally. So Mr.
Obama passed it himself with an executive order that directs officers to no
longer deport certain illegal immigrants. This may be good or humane policy,
yet there is no reading of “prosecutorial discretion” that allows
for blanket immunity for entire classes of offenders.
Mr. Obama disagrees with federal law, which criminalizes the use of
medical marijuana. Congress has not repealed the law. No matter. The
president instructs his Justice Department not to prosecute transgressors. He
disapproves of the federal Defense of Marriage Act, yet rather than get
Congress to repeal it, he stops defending it in court. He dislikes provisions
of the federal No Child Left Behind Act, so he asked Congress for fixes. That
effort failed, so now his Education Department issues waivers that are
patently inconsistent with the statute.
Similarly, when Mr. Obama wants a new program and Congress won’t
give it to him, he creates it regardless. Congress, including Democrats,
wouldn’t pass his cap-and-trade legislation. His Environmental
Protection Agency is now instituting it via a broad reading of the Clean Air Act.
Congress, again including members of his own party, wouldn’t pass his
“card-check” legislation eliminating secret ballots in union
elections. So he stacked the National Labor Relations Board (NLRB) with
appointees who pushed through a “quickie” election law to
accomplish much the same. Congress wouldn’t pass “net
neutrality” Internet regulations, so Mr. Obama’s Federal
Communications Commission did it unilaterally.
In January, when the Senate refused to confirm Mr. Obama’s new
picks for the NLRB, he proclaimed the Senate to be in “recess”
and appointed the members anyway, making a mockery of that chamber’s
advice-and-consent role. In June, he expanded the definition of
“executive privilege” to deny House Republicans documents for
their probe into the botched Fast and Furious drug-war operation, making a
mockery of Congress’s oversight responsibilities.
This president’s imperial pretensions extend into the brute force
the executive branch has exercised over the private sector. The auto bailouts
turned contract law on its head, as the White House subordinated
bondholders’ rights to those of its union allies. After the 2010
Deepwater Horizon oil spill, the Justice Department leaked that it had opened
a criminal probe at exactly the time the Obama White House was demanding BP
suspend its dividend and cough up billions for an extralegal claims fund. BP
paid. Who wouldn’t?
And it has been much the same in his dealings with the states.
Don’t like Arizona’s plans to check immigration status? Sue.
Don’t like state efforts to clean up their voter rolls? Invoke the
Voting Rights Act. Don’t like state authority over fracking? Elbow in
with new and imagined federal authority, via federal water or land laws.
In so many situations, Mr. Obama’s stated rationale for action has
been the same: We tried working with Congress but it didn’t pan
out—so we did what we had to do. This is not only admission that the
president has subverted the legislative branch, but a revealing insight into
Mr. Obama’s view of his own importance and authority.
There is a rich vein to mine here for GOP nominee Mitt Romney.
Americans have a sober respect for a balance of power, so much so that they
elected a Republican House in 2010 to stop the Obama agenda. The
president’s response? Go around Congress and disregard the
constitutional rule of law. What makes this executive overreach doubly
unsavory is that it’s often pure political payoff to special interests
or voter groups.
Mr. Obama came to office promising to deliver a new kind of politics.
He did—his own, unilateral governance.
7/5/2012: “Perhaps it is an inner need that impels the
socialist to his ideology, for I have never met an
advocate of government intervention who did not admit, inadvertently, his own
capacity for commissariat functions. He always has a plan, to which others
must submit, and his certainty that the plan will produce the contemplated
results does not permit him to brook criticism. Always he is the fanatic. If
you disagree with him it is not because you are in error; it is because you
are sinful.” — page 219 of the 1980 collection of Frank
Chodorov’s best writing, Fugitive
LOS ANGELES - A state appeals court affirmed the legality of medical
marijuana dispensaries under California law and rejected bans imposed by
A three-justice panel of the 2nd District Court of Appeal held Monday
that Los Angeles County’s ban on medical marijuana is
“preempted” by state law. The decision reverses a preliminary
injunction granted to the county by Los Angeles Superior Court Judge Ann
Jones in May 2011. “Los Angeles County’s total, per se nuisance
ban against medical marijuana dispensaries directly contradicts the
legislature’s intent,” Justice Robert Mallano
wrote in the 19-page unanimous decision. The county sued the Alternative
Medicinal Cannabis Collective in March 2011. Principal Deputy County Counsel
Sari Steel could not be immediately reached.
“The court of appeal could not have been clearer in expressing
that medical marijuana dispensaries are legal under state law, and that
municipalities have no right to ban them,” said Joe Elford, Chief
Counsel with Americans for Safe Access, a medical marijuana advocacy group.
“This landmark decision should have a considerable impact on how the
California Supreme Court rules in the various dispensary cases it’s
currently reviewing.” On July 24th, the city of Los Angeles is
scheduled to vote on a dispensary ban similar to the one enacted by the
County, but just rejected by the court of appeal.
“The (appellate court) decision puts a giant wrench into the
plans of City Attorney Trutanich to persuade the City Council to enact a
ban,” said Elford.
7/3/2012: Democracy Reaches
interesting missive from the Laissez Faire Book Club]
Government finance at all levels seems to be unraveling.
The city of Stockton, California, declared bankruptcy -- the largest
city in U.S. history to do so. North Las Vegas, Nevada, would be in the same
boat if the state of Nevada allowed for it. Michigan’s state government
has taken over the management of four cities, and the state’s largest
city -- Detroit -- has a $200 million deficit and has made a deal with the
governor for the state to have a hand in fixing the city’s financial
On the federal level, the bond rating agencies -- S&P and
Moody’s -- have dared to downgrade the government’s debt.
Solvency itself is wholly dependent on the printing power of the Fed.
On the other side of the pond, Greece is an accident that keeps on
crashing. Spain’s government is propping up its banks with European
Union help, so that these banks can keep prop up the government by buying the
government’s bonds -- the equivalent of two drunks holding each other
up. And the sad fact is Italy, Portugal and possibly France are not far
In a recent interview, Hans-Hermann Hoppe -- the author of the
forthcoming The Great Fiction: Property, Economy, Society and the Politics of
Decline, which can be yours free, along with so much more, if you become a
member of the Laissez Faire Club -- explained:
“... it is democracy that is causally responsible for the fatal
conditions afflicting us now. The number of productive people is constantly
decreasing, and the number of people parasitically consuming the income and
wealth of this dwindling number of productive people is increasing steadily.
This can’t work in the long run.”
Democracy is just a wealth-distribution (and ultimately
wealth-destruction) scheme that pits the taxpayers vs. the tax eaters. In the
case of Europe, Germany and the Netherlands produce and save, while Greece,
Spain, Portugal and the rest consume. Eventually, a bankruptcy will bring to
light the truth about democracy, which, Hoppe explains:
“... is nothing more than an especially insidious form of
communism, and that the politicians who have wrought this immoral and
economic madness and who have thereby enriched themselves personally (never, of
course, being liable for the damages they have caused!), are nothing more
than a despicable bunch of communist crooks.”
Over here, the day of reckoning for the U.S. may not be far off. Alan
Hall, writing for the May edition of The Socionomist, writes that the era of
big entitlement spending in America is over. Since the Great Depression,
government entitlements have exploded, up 17-fold, as a percentage of total
personal income. Hall uses Elliott Wave nomenclature to describe the
“advance in entitlements from the Great Depression fits within a
classic parallel trend channel drawn off the lows of waves 2 and 4.
Elliotticians will also observe that wave 4 in entitlements is testing the
upper parallel of the channel and needs only one more decline and rally to
complete the pattern.”
Socionomics is all about the collective mood of society and how it is
reflected in financial markets, politics, fashion and so on. Hall points out
that entitlement growth slows during positive mood changes (3% average gain)
and accelerates dramatically (215% on average) during negative mood phases.
Americans are more dependent on government benefits than any time in
history, according to Hall’s work. “Seventy-five years of
positive mood trend has entrenched the idea that the state can afford to
support an ever-expanding percentage of its citizens, including even the more
affluent,” Hall writes.
Government help is not just for poor people anymore. Binyamin Appelbaum
and Robert Gebeloff point out in a New York Times
article l that government benefits to the bottom fifth of households had
declined from 54% in 1979 to 36% in 2007. Applebaum and Gebeloff
“The government safety net was created to keep Americans from
abject poverty, but the poorest households no longer receive a majority of
government benefits. A secondary mission has gradually become primary:
maintaining the middle class from childhood through retirement.”
The Congressional Budget Office (CBO) figures that with an aging
population, the trend is clear: Benefit programs will increase nonstop for
the next 25 years.
But the Socionomist folks at Elliott Wave Intl. believe there will be a
major negative mood extreme around 2016, and there will be a reversal of
historic proportions four years from now.
Even the Treasury Department concedes there will be a problem by 2080,
when entitlement expenditures could exceed 60% of GDP, “making the
federal government’s fiscal path even more unsustainable...”
However, government’s largesse will hit the wall long before
then. Entitlement spending reached 102% of total federal tax receipts last
year, so paying for the rest of government is covered by borrowing and
printing, only allowed because of the dollar’s reserve currency status.
But the last grain of sand is about to hit the bottom of the reserve currency
Professor Hoppe doesn’t make his points with graphs and waves,
but instead uses logic to theorize that democracy is not the wonderful system
that American presidents spend so much money and so many lives spreading
around the world. Democracy, simply, in Hoppe’s view, decivilizes
society. Civilized people save and plan so as to take care of themselves and
their families in the present and future. Fiscal conservatism and prudence is
valued in a nondemocratic society, as are sound ethics. Democracy undoes the
tendency for people to act cooperatively and responsibly.
Politicians constantly look to appease voters with more benefits to
care for them from cradle to grave, so as to win the next election. At the
same time, the bureaucracy that hands out the benefits grows larger and
larger and is unaccountable to anyone -- especially voters.
As the old saying goes, “No matter who wins, the government is
In order to distribute these benefits, the government must violate
property rights. Government produces nothing; it must take from one group in
order to give to another. Hoppe makes the case that individuals are powerless
to protect themselves from government theft and view taxation as they would
natural disasters. This alters the behavior of producers, who will tend to be
less future-oriented, given that government is constantly stealing from them.
This continuous theft, overtly through taxation and subversively by way
of inflation, raises the producers’ time preferences, and they divert
resources from producing future goods to present consumption. Over time,
democracy leads to a lower level of capital being accumulated. With less
capital, society is not only poorer, but less civilized.
In Democracy: The God That Failed, Hoppe explains:
“if government property-rights violations take their course and
grow extensive enough, the natural tendency of humanity to build an expanding
stock of capital and durable consumer goods and to become increasingly more
farsighted and provide for evermore distant goals may not only come to a
standstill, but may be reversed by a tendency toward decivilization: Formerly
provident providers will be turned into drunks or daydreamers, adults into
children, civilized men into barbarians and producers into criminals.”
So what has kept this destructive force -- democracy -- alive for so
long? Ironically, capitalism. Hoppe responds:
“That the whole democratic house of cards has not yet completely
collapsed speaks volumes about the still tremendous creative power of
capitalism, even in the face of ever-increasing governmental strangulation.
And this fact also allows us to conjecture about what economic
‘miracles’ would be possible if we had unimpeded capitalism
liberated from such parasitism.”
So many people mistakenly tie democracy and capitalism together, when
in fact democracy keeps capitalism from making all producers prosperous.
Laissez-faire is not a matter of electing the right person; it means simply
“leave it alone,” something politicians cannot seem to do.
Douglas E. French, Senior
The Laissez Faire Book Club