One Video That Should Go Viral

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Here's something that's two minutes long, but you'll probably watch it at least 10 times.

The people you'll see are well known to Liberty's readers. They are Mark and Jo Ann Skousen. But what you'll see is . . . Well, just watch it.




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Another Busted Safety Net

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I like to reflect upon the news about our vaunted safety net pension plans — the crowning jewels of our progressive paradise — as they head off a fiscal cliff. The latest report concerns a rather neglected jewel, the Social Security Disability Insurance (SSDI) program, created in 1957 during the Eisenhower presidency.

Under this perhaps well-intended program — assuming that any social program is truly well-intended, a dubious assumption, indeed — workers of any age who become disabled or unable to work because of health issues receive federal support. The idea is that all workers pay a small amount into the SSDI fund, so that the few workers stricken by health issues derive a small but reasonable stipend (on average, about $1,100 a month).

Well, the SSDI will have the dubious honor of being the first federal support program to go bust. It will likely run out of funds in four to seven years — which probably means four years. At that point, it will become a pure negative — an explicit draw on tax dollars collected by the feds from hapless taxpayers.

I can hear readers ululating dolorously, “Why? Why? Why?” The reason is this: during the last decade, there has been an explosion of disabled people. In the year 2000, there were 6.6 million people in the program—a remarkable number in itself. But by last year that number had swelled to 10.2 million, an increase of 55%.

That’s the nationwide figure. In a number of states, however, the rate of increase in disability recipients has been even higher. Examples are New Hampshire at 69% and Texas at 85%. But at the top of the list is Puerto Rico. It has nine of the top ten American zip codes for receiving SSDI disability checks. And it has the highest approval rate (63%!) for disability claims. It would appear that there is a large amount of abuse going on in the Commonwealth of Puerto Rico. As Ivan Gonzalez-Cancel, a local surgeon who is planning on running for governor in 2012, has put it, “The mentality is that it’s ‘big, rich, Uncle Sam’s money.’ ”

The consequence of the explosion of eligibility is that the SSDI program went negative in 2005, and by 2015, the earliest but most likely date, it will be spending $22 billion more in benefits than it takes in. At that point, all of its “reserves” will likely have been exhausted.

Naturally, the program’s advocates have a ready cure: raise SSDI taxes, or hide the deficit in the regular Social Security fund. Of course, what to do when the regular Social Security fund goes bust, they don’t say.




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Update on Laissez-Faire Books

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The January-February 2008 issue of Liberty ran my account of Laissez Faire Books, entitled “Laissez Faire: RIP?” When I began working on the story the previous October, the longtime mail-order service appeared to be in the coffin; but by the time I had it in to Editor Stephen Cox, the business had been rescued by the International Society for Individual Liberty.

Last October, the Society closed the sale of LFB to a financial newsletter company, Agora Financial LLC, which moved LFB’s inventory from Arizona to its offices in Baltimore.

Agora’s owner, Bill Bonner, runs a longtime business serving hard-money clients. He has been blogging at dailyreckoning.com since 1999 with his colleague Addison Wiggin, and, with Wiggin, is co-author of the books Financial Reckoning Day, Financial Reckoning Day Fallout, and Empire of Debt. His most recent book is Mobs, Markets and Messiahs, co-authored with Lil Rajiva. Bonner has written extensively for LewRockwell.com.

I recently spoke with Bonner’s manager for LFB, Doug Hill. He said that Bonner is most interested in economics-oriented books “with a takeaway for investors,” but that the company will make an effort “to carry a lot of the titles that are expected of a libertarian bookstore.”

He said they know they have to compete with Amazon, and they hope to sell some books at prices lower than Amazon’s. Agora’s specialty is direct mail, he said, and “this is the first bookstore we’ve run.”

He said he expects to put together a libertarian board to advise on the selection of books, and to run book reviews. He said LFB will test the use of a printed catalog.




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Is Europe Liberal?

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The EC became the EU in 1992. I lived there at the time, and I wondered if, in socialist Europe, the EU would have a liberal or an illiberal influence. Trade liberalization was an important part of the EC from the beginning, and its successor is still mostly liberal on trade. But then there's everything else, mostly illiberal. And as the EU's powers expand, so does its illiberalism. Although on trade the EU is more liberal than its members, its many new powers are exercised in the interest of the state and its dependents, not in the interest of individual freedoms.

So where does the EU stand on balance? For a long time I wasn't sure. Now I am.

The March 19, 2011 issue of The Economist says that the Euro-zone countries are increasing their bailout of the Euro-basketcase countries, including Ireland and Greece. They lowered the interest rate that they charge to Greece, the country that is most deeply sunk in the basket. But Ireland "received no such concession because it insisted on keeping its low corporate-tax rate." That's right. We are not just a trade union, we are a monetary union; so raise your taxes or suffer the consequences.

On balance, the EU now has an illiberal, anti-libertarian, statist influence on its member states. Taxation and monetary policy are only two examples. There are many more. That little squib in The Economist tipped the scales for me.




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Bubblin' Crude

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Obama Channels Bush Again

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Obama, who has made his political career bashing George W. Bush, especially on the war on terror, has in office pursed a war on terror policy that more or less exactly clones Bush’s. For example, as Donald Rumsfeld cheekily pointed out, despite Obama and other critics savaging Bush for setting up the detention prison at Guantanamo Bay, and despite all of Obama’s promises to close it, he has kept it open to this day. He apparently has come to Rumsfeld’s conclusion that Gitmo is “the least worst place.”

Then there is the recent announcement that, after having suspended military trials (“tribunals”) by executive fiat two years ago, Obama has decided to resume such trials. He may even bring new charges to the military tribunals shortly. By doing this, he not only confirms Bush’s original decision to give terrorists military rather than civilian trials; he completely repudiates Attorney General Eric Holder’s decision to give them civilian trials. No doubt the public outcry over Holder’s attempt to try 9/11 mastermind Khalid Sheikh Mohammed in New York City — an outcry that led to the withdrawal of the idea — helped Obama see the light.

Obama has a fig leaf for his complete reversal: he has added some “due process” rights for the detainees, such as periodic reviews of those held in indefinite custody. But he will now allow the indefinite custody of terrorists. So this is in reality a complete about-face.

It all comes on the heels of last month’s report that Obama had once again signed an extension of the key provisions of the Patriot Act, pending re-passage of the bill in Congress. These provisions include allowing law enforcement to run “roving” wiretaps on several cell phones associated with a target of investigation, allowing law enforcement to get permission from a special court to view the library and business records of suspects in a terrorist investigation, and permitting the FBI to investigate non-American “lone wolf” terrorist suspects.

If Obama had any integrity, or even bipartisanship, he would apologize for statements in the past such as the one that Bush “runs prisons which lock people away without ever telling them why they’re there or what they are charged with.” After all, if that was what Bush was doing (which it wasn’t), Obama is doing the same thing.

If he keeps channeling Bush, Obama may wind up attacking an Arab country that hasn’t attacked us…oh, wait! He just did!

But that is grist for another reflection.




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Dwarfing the State

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I fantasize what the civic society should look like.

Libertarians, at a certain level, see liberal government as the community of peaceful people who would like to be left alone but who also believe that cooperation or agreement will diminish the cost of self-defense against criminals and foreign invaders, the coining of money, and possibly the maintenance of the commons such as roads, bridges, lighthouses and a few others.

These believers in a "grand narrative called government" (using postmodern lingo) are the community of the lawful. Part of enjoying this community is paying taxes in lieu of the perhaps greater cost of buying these services individually.

Those who do not fit into the community of the lawful are outlaws and can be punished or killed if they offend this community. Laws, in this narrative, are formulations that merely mirror the lived lives of the governed, and "legislators" (from the Latin, meaning "bearers of laws") do not make laws, but rather find them in the practices of the peace-loving community.

Note that this civic society encompasses all peaceful citizens in an area or realm of agreement. The key libertarian insight is that they will all agree to only a few things, and that this limits what the government can claim to span. But even this dwarfed government still has to hire officials to formulate and administer laws, and judges to mediate disputes. We in Western societies have adopted "democracy" (really we have a republic) as the mechanism for selecting these administrators, legislators, and judges.

The democratic selection of candidates does not confer on legislators any power to invent new laws, regulations, taxes, impositions, and troubles for the community of the peaceful, if these laws are not already part of the daily practices of the governed. The government should know no more about the citizens than is necessary to collect taxes.

A self-selected portion of the peace-loving citizens can of course voluntarily choose to burden themselves with compulsory healthcare, or a moral code forbidding abortion or abuse of drugs; it can enforce these burdens on consenting adults in the subgroup; but this does not obligate the entire community of peaceful citizens.

We classical liberals disagree with liberals and conservatives about the provenance of what the democratic adventure can claim to do for us. Peace-loving citizens rely on a neutral government to compel members to remit taxes to pay for coinage, a police force, and so on. Other common functions, such as streets, a postal system, and parks can be provided by a government and paid for by fees levied on users, if that be the democratically determined wish; alternatively, they can be provided by profit-making entities. (Streets are merely slits in an ocean of developed private land that landowners need for access. Landlocked land is famously worthless.) In this libertarian cosmos politicking among the peaceful is unnecessary.

The idea and purpose of government, however, have been perverted because significant minorities want help for their special projects, such as wars on concepts (drugs, poverty), foreign misadventures (Iraq), regulations of business, forced contributions for retirement . . . a nearly endless list. Mainstream politicians, anxious to gain election, use their power to appeal to these special constituencies.

As generally peaceful citizens encountered laws and impositions that were foreign to their customs, they realized that they had to shoulder burdens from which they didn’t profit, and more critically, that they too could live out some of their private fantasies if they invested in politics. Government, thus perverted, no longer cultivated agreement among the peaceful. Rather it fostered strife. The community of peace burned itself out in the zero-sum game of politics. Government thus perverted no longer equaled agreement among the peaceful.

In the real world, of course, the libertarian vision of a civic society never really existed, but its opposite, which was articulated by Thomas Hobbes in Leviathan, has prevailed for millennia. Hobbes deemed life lived in the “state of nature” to be “solitary, poor, nasty, brutish, and short.” He advocated a sovereign authority to control civil, military, judicial, and ecclesiastical power. For Hobbes, civil society was one in which all individuals had to cede some of their rights to gain protection. In practice, this perpetuated feudalism, with its kings, nobility, privileges, arbitrary laws with capricious enforcement, endless politicking, and discord, for another century.

In 1776, our Declaration of Independence shone a light on this Hobbesian creation and proclaimed a departure. The American Revolution and the subsequent Constitution crafted a restrained government in which the individual was sovereign. “Common law” evolved in courtrooms. Posses supported enforcement of criminal laws. Usual practices among businessmen were formulated in the Uniform Commercial Codes. Producers kept what they created.

However, within a few generations groups and individuals started demanding special favors and rewarded collaborating politicians at the expense of the many. They wrote laws that went beyond what everyone would have agreed to. Privileges, licensing, regulations, foreign entanglements, draconian punishments for synthetic crimes, taxes, programs, disinformation, bullets, breadlines, bribes, and bosses proliferated.

The remaining dwindling majority discovered that it was more profitable to squabble over its fair share of a fixed pie rather than work to increase its own wealth, and have it plundered. Peaceful society, tranquility lost, fragmented into hostile camps of winners and losers, a crapshoot of who was in the majority of the moment. Lawful society had arced back to Hobbes’s form of the feudal social contract and paradoxically a “war of all against all.”




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We're Number One!

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A report from the Tax Foundation gives us the happy news that as of next month, America will be number one in a new field: corporate income taxes.

The combined federal and (average) state US corporate tax is 39.2%. Among the Organization for Economic Cooperation and Development (OECD) countries — the 34 most prosperous countries, which include all of our major economic competitors — this is exceeded only by Japan, at 39.5%.

During the last decade, nine of the OECD countries cut their corporate tax rates by 10% or more. The biggest tax-cutters were Canada, Germany, Greece, Iceland, Ireland, Poland, the Slovak Republic, and Turkey. The average corporate income tax of the OECD nations, excluding the US, has fallen from 38% in 1992 — which was the first year in which the average dropped below the U.S. level — to 25.5% today.

And 75 of the non-OECD countries have also dropped their corporate tax rates since 2006.

Now Japan has announced that effective next month, its corporate tax rate will drop, too. It will fall by 4.5%, to 35%. England is also lowering its rate next month, from the current 28% to 27%, on the way to a scheduled 24% within three years. That will leave the US with the highest rate in the developed world — a full 10% above the non-US OECD average.

If the US wanted to match the OECD average and China’s current rate (the rate was lowered in 2008), it would have to fall to 20% at the federal level. This is most unlikely under Obama’s regime.

So we will remain less competitive, and wonder why our unemployment remains high.




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Libya: Caveat Emptor

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It is admitted by all that the United States government has failed to clarify the political strategy, or even the short-term military strategy, that is supposed to guide our war in Libya. Of course, the administration intends to overthrow or kill Qaddafi; it is an absurd hypocrisy for its spokesmen to disavow these intentions, claiming that it is simply attempting to prevent harm to “civilians” (e.g., people who are in arms against Qaddafi, trying to overthrow or kill him). Yet it is admitted by all that no one in the United States has the faintest idea of what power structures have evolved in the rebel camp, or of what kind of state will replace the Qaddafi dictatorship.

I am not a foe of military action. And I do not believe that the United States should refrain from all military action across its borders, or that foreign states and rulers have some kind of legitimacy and immunity from attack, simply because they are foreign states and rulers. But I do believe that if we intervene in another country, we should know that our intervention is necessary, in our terms; we should be convinced, above all, that if we go to war to overthrow a foreign government, the government that replaces it will not be just as bad, or worse, in our terms.

Qaddafi is a detestable tyrant. Does that mean that the people who are trying to get rid of him will turn out to be apostles of liberty? How is it that a political culture that generated and put up with a Qaddafi is now expected to produce a real republic? I hope that it does — but what’s the evidence? Note that many long-term officials, collaborators, and sycophants of Qaddafi are now prominent among those insisting that we destroy him.

I well remember talking with other Americans during the time when the Shah of Iran was falling from power. They were jubilant: the Shah was a dictator, and he had done cruel things. I asked whether his opponents might not turn out to be worse. I was greeted with sneers by some and pity by others. And immediately, the enemies of the Shah established one of the most dangerous and disgusting regimes on the face of the earth — with strong support from the people.

I hope this doesn’t happen again.

By the way, is it bad manners to make a hint about payment? Have you heard any of Qaddafi’s enemies, at home or abroad, suggesting that a grateful new republic should reimburse its Western saviors for the vast amounts of, yes, money that its liberation will require? No? You haven’t? Then perhaps these people are not responsible republicans after all.

But sorry; I know we’re not supposed to bring this stuff up. Undoubtedly, the Arab League will reimburse us.




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When Extremism Is a Vice

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Those on the religious right get angry when progressives accuse them of being similar to the Taliban. In their more candid moments, almost as a slip, they will protest that they are much milder: “Not that bad.”

How good is “not that bad”? Is the line that divides them from the crazies firmly in place? Does it waver? What makes Islamic extremists worse than Christian extremists? Is it simply a matter of degree, and can we know with certainty that the line cannot shift — perhaps dramatically, in the blink of an eye?

Perhaps I am more concerned about these questions than most people. I’m a doctrinally orthodox, fairly conservative Episcopalian, and a libertarian Republican. I am also a lesbian and a feminist. I am too much the grateful inheritor of both the conservative and the progressive traditions to sacrifice my commitment to either portion of my heritage for the sake of the other. To contemplate cutting myself off from either would be like debating over which of my arms to amputate.

I think it crucial to remember that both the Right and the Left, in America and elsewhere in the West, grew out of the same Judeo-Christian soil. Americans on both the Left and the Right can affirm the same religious faith and claim the same love of country. This is why, to outside observers, our squabbles over who among us is the truer Christian, or the more patriotic citizen, can seem so absurd.

Outsiders see the family resemblance, even if we don’t. If I were not a woman, I would likely not be a feminist. If I were not a lesbian, I would probably not care much about gay rights. But I would still, if born on American soil in what remains at least nominally a Christian nation, share with most of my fellow citizens a concern for the basic human dignity of those whose voices, in many religious countries, are not heard.

Therein lies the difference. In much of the rest of the world, all human beings are not considered fundamentally equal in worth. Here, there is “neither Jew nor Greek, slave nor free, male nor female, but all are one . . .” There, being Jew or Greek, male or female, gay or straight can mean the difference between slavery and freedom, perhaps even life and death. All too often we take that difference for granted and treat our precious inheritance as a universal given.

Goldwater did not say, and certainly cannot have meant to suggest, that extremism was hunky-dory in absolutely every circumstance.

Freedom is not like oxygen. It does not flow, unimpeded, over the face of the earth. It is often, just like the air we breathe, so obvious to us that we forget it is invisible. But because it is invisible, and because we cannot simply breathe it in, we often forget that it is there. Or that it matters as much to others as it does to ourselves.

“I would remind you,” a hero of mine, Senator Barry Goldwater, once thundered, “that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!” This is, unfortunately, often quoted by those who would use extremism not to defend liberty but to attack it. They get the part about extremism being no vice, but they lose the rest of it completely.

Senator Goldwater is my hero, at least in part, because he also said, “Those who seek absolute power, even though they seek it to do what they regard as good, are simply demanding the right to enforce their own version of heaven on earth. And let me remind you, they are the very ones who always create the most hellish tyrannies. Absolute power does corrupt, and those who seek it must be suspect and must be opposed.”

Those who quote Barry Goldwater for the purpose of promoting not liberty but their own brand of power — even though they often do so in the name of liberty (their own, never anyone else’s) — almost always seek absolute power. At the very least, they use those words as a rebuke against those who would hold their power in check. We should bear in mind that the senator said extremism in the defense of liberty was no vice. He did not say, and certainly cannot have meant to suggest, that extremism was hunky-dory in absolutely every circumstance. Nor have we any reason to conclude that he recommended liberty only to some and not, in equal measure, to others.

The Right has made much of the tendency of some on the Left to regard their familiar heritage with contempt, of the way they sell their western, Judeo-Christian birthright for a mess of multicultural pottage. That birthright should be duly noted and remembered by people who are quick to find fault with America, while neglecting much worse things that happen in other cultures. If it is wrong to fire one gay man from his job because of his sexual orientation, then surely we cannot look the other way, in the name of “tolerance,” when Islamic zealots murder another. If one woman is poked and ogled on an American street because her tank top is revealing, surely it merits no “tolerance” when another is stoned to death because she was the victim of rape.

But there is blindness aplenty on the Right as well. The same hunger for unchecked power burns in the hearts of political fundamentalists, Christian and Islamic alike. There is little to suggest that Christian zealots would not be sorely tempted to extend their own “liberty,” their own power, as far as possible.

“But we’re different,” they plead, and to some degree they’re right. What is not so often duly noted is why. The “secular humanists” they love to denigrate provide the crucial restraining force. The religious ought to thank the nonreligious, for saving them from themselves; but instead they fume. They may even snarl that these heathens ignore the debt they owe to their culture. But they do pay it; they pay it by checking the power of rapacious Christian extremists. The extremists seem not to notice that the rich soil of their own tradition — so honored by them when they find it convenient — is there to hold the humanist heathens firm when the ostentatiously devout betray it.

They can’t get away with what the Islamic extremists do because those damned secular humanists won’t let them — and that, my friends, is nothing less than our Western, Judeo-Christian tradition at work. Thank a godless liberal heathen the next time you see one. He may not realize why he finds homegrown religious tyranny so repugnant. What matters is that even if he knows not why he does what he does, he does it nonetheless.




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The Long, Ugly Road to Libya

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The Arabs and the West Europeans got us into Libya, yet once again we’re the ones who apparently will do most of the heavy lifting.

Airpower has prevented Qaddafi's forces from taking Benghazi and crushing the rebellion. A no-fly zone can be maintained without major losses. However, unless someone close to Qaddafi happens to kill him, he could maintain himself indefinitely in the western half of the country. If he survives, Western advisors, arms, and training will be needed — at a minimum — in addition to air cover, if the rebels are actually to win.

But exactly what will emerge after a rebel victory? That is anybody's guess.

And that’s enough, I think, to be opposed to our intervention.

Now consider Obama's position. The Arab League and America's NATO allies wanted intervention. Critics ranging from John McCain and the buffoons at Fox to insipid leftists like Nick Kristoff were maintaining a drumbeat for intervention, aided by the media generally, which was pumping out stories about the suffering of the innocent rebels and their kin.  Reagan and Eisenhower, and JFK after the Missile Crisis, had the cred to say, "No, not our business." (Whether they would actually have done so about current events in Libya is another matter.) But Obama doesn't. And while I don't believe he's a moral coward, he doesn't have the guts to say that we simply can't afford this.

The basic fact is that the moving forces in our society — in the media, in political circles, and to an extent in the international business and finance community, think we should police the world, or at least those parts of it that they care about.

Funny, isn't it, that there's a civil war in the Congo that has killed more people than any other war fought since World War II, yet nobody discusses doing anything about it. On the other hand, boy Clinton just mentioned that we should have intervened to stop the Rwandan genocide — although he found reasons not to do it when he was president. Left and Right alike in this country want to spend our blood and treasure around the world. They sometimes disagree about where in the world, but the philosophy is the same.

It's a drug we got hooked on after World War II. If there's a problem, we feel an urge to go "solve" it. We’ve never learned the solution to the urge itself: don’t intervene anywhere unless the lives, territory, or truly vital interests of the American people are involved. It's the interventionist philosophy, combined with the thoroughgoing welfare state created by LBJ and his zealous accomplices that has brought us to the brink of bankruptcy. We spend ourselves  —  economically, emotionally, morally  —  crusading abroad, when we should be conserving our strength and building a better society here at home.




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How to Hunt RINOs

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A valuable lesson in how to purge the Republican party of big spenders of other people's money (aka RINOs, “Republicans in Name Only”) has been taught to us all by the voters in Miami-Dade County, Florida. They just voted to recall their mayor, one Carlos Alvarez, RINO extraordinaire.

Alvarez had been reelected in 2008 by a large majority. What caused the recent shift in voter sentiment? He pulled a typical RINO stunt after his reelection: he agreed to a plan that raised property taxes sharply and gave even more money to unionized public employees. He went along with raising the employees' pay and unfreezing their benefits, and covered it by jacking up property taxes on two-fifths of property owners by an average of 13%.

Alvarez had earlier agreed to hand over copious quantities of taxpayer cash to build a new baseball stadium for the Florida Marlins.

This struck the voters as profligate and insulting, considering that the jobless rate in the county is 12%. The property taxes used to reward the public employee unions, and the multimillionaire athletes and team owners, are coming out of the hides of people struggling to pay their food bills.

The recall campaign was funded in part by a wealthy businessman angered by reckless spending. Alvarez was voted out by 88% of the votes cast. Good riddance to a gross RINO.




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The Liberty Dollar: An Update

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Bernard von NotHaus, creator of the Liberty Dollar, was convicted in federal court in Statesville, N.C., on March 18. The Justice Department said he was found guilty — not of counterfeiting or of fraud, neither of which he was accused of, but “of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.”

Readers of this story in Liberty (“Attack on the Liberty Dollar,” March 2008) would have had little doubt of the outcome. The federal code, 8 U.S.C. 486, says:

“Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.”

Von NotHaus always asserted that Liberty Dollars were lawful, arguing that the Constitution’s grant of power to Congress to coin money was not exclusive; that in the 1800s private mints were allowed to issue precious-metal currency, and that Liberty Dollars were not “coins” because they were not legal tender. Given the law cited above, none of these arguments was likely to persuade a federal court. In that sense von NotHaus was much like the tax protesters who argue that the federal income tax is illegal, or unconstitutional, or that it’s voluntary, and who try to win their arguments by asserting in a louder voice and a higher tone that they are right. These people invariably lose. It takes a while, because the government is slow, but it eventually gets them.

In announcing its victory, the Justice Department made its own political statements. According to US Attorney Anne Tompkins, “attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism. While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country. We are determined to meet these threats through infiltration, disruption and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”

Trying to trade a privately minted coin of 999 fine silver for goods or services is hardly terrorism. Who would be terrified by it?

Liberty Dollars were indeed an attempt to undermine the public’s faith in US dollars, but they were never a “clear and present danger” to the Treasury, because no bank ever accepted them, and under the regulated system we have, no bank was ever going to accept them.

Von NotHaus’ organization was an economic venture set up to earn money — US-dollar money. It could sell Liberty Dollars at a profit into the collectible market, because the coins are beautiful and are of pure metal, and because of the political statement they make. (Several versions replace Miss Liberty with the head of Rep. Ron Paul.) But as a circulating currency, the Liberty Dollar was a failure. Probably it had the most success around Asheville, NC, where it had a diligent agent who is now facing prosecution as well. But he made such a poor living at it that he had to give up his storefront and operate out of his house.

The Liberty Dollar was a political act, a statement by a libertarian that he would offer the people a currency of valuable metal, now that the Treasury no longer did. Von NotHaus said as much, and he ambitiously named his company the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code. He did this openly. An act of civil disobedience? Yes. But a conspiracy? My dictionary defines conspiracy as “a secret plan to commit a crime or do harm, often for political ends.” There was nothing secret about the Liberty Dollar. Von NotHaus took as much publicity as he could get.

For all the various counts he has been pronounced guilty of, Von NotHaus, 67, could be sentenced to as many as 25 years in prison and a fine of $250,000. The federal government is also asking the court for the 16,000 pounds of copper and silver Liberty Dollars and precious metals it seized, said to be worth nearly $7 million.

As I write, the “buy it now” price on eBay for a 1-ounce 999 silver Liberty dollar denominated at $20 is $50.




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This Could Be the Start of Something Big

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The first battle of the 2012 campaign has just ended — and it doesn’t bode well for the Democrats, in the short run at the state level, or in the long run at the federal level.

The location was Wisconsin, historically a stronghold of organized labor, the Democratic Party, and the Left generally. But the state has been trending rightward in recent elections, and last year it elected a Republican, Scott Walker, as governor, and a majority of Republicans to the state legislature. Interestingly, however, these are not the sort of Republicans you would expect from a somewhat purple state — RINOs (or Republicans in Name Only) — but honest-to-God RCCs (Republicanos con Cojones).

Governor Scott Walker clearly has a pair. During his campaign, Walker made it clear that he was serious about reducing spending, especially the outrageous compensation packages that public employee unions had negotiated in sweetheart deals with past Democratic administrations. The pattern in Wisconsin was similar to what happened in most other states: a vicious cycle of crony unionism. Public employees unionize, use their massive dues to elect sympathetic politicians, then in bargaining with those politicians receive lavish compensation packages. This enables the unions to collect even more dues, elect even more sympathetic politicians, and get even more of the taxpayers’ dollars. It’s very convenient — for the unions.

In the 2008 election cycle, unions (now predominantly unions of government employees) gave about $400 million to Democratic campaigns, especially Obama’s. Heck, AFSCME (the American Federation of State, County and Municipal Employees, the biggest government workers’ union) alone gave the Dems $90 million during the last (i.e., 2010) election cycle.

The public choice tipping point occurs when the pain inflicted on citizens by the rentseekers who have captured a government agency becomes too great to ignore.

So the money that taxpayers pay in salaries to the public employees provides (in the form of union dues) the funds that elect politicians who will in turn raise taxes and give more money to the public employees (and hence their unions). The public, rationally ignorant — that is, having better things than state politics to worry about (such as earning an honest living) — are typically oblivious to the corruption, until the deficits and taxes become outrageously high. That point, which you might call “the public choice tipping point,” occurs when the pain inflicted on the citizens (in increased taxes, increased costs of compliance, or decreased liberty) by the rentseekers who have captured a government agency becomes too great to ignore.

Perhaps the classic illustration was the transition to the all-volunteer army. We kept the draft going from World War II through the Korean War, and long past. It took the debacle that was Vietnam and the student protests it aroused to get the government to change from conscription to a volunteer services model.

Governor Scott took office with the state deficit already at $137 million, but slated to rise to $3.6 billion in the next two years. As he promised during his campaign, he introduced legislation that requires the state employees to contribute more to their health and pension funds. Specifically, his law requires public workers to pay 12.6% of their healthcare insurance premiums from their pay, and contribute 5.8% of their pay to the pension system — an amount that is still quite low compared to similar amounts in private industry.

In so doing, he went to the heart of the state’s fiscal woes. The public sector unions had sweet compensation packages, ones that include not only high pay but also incredible perks (tenure, virtually free healthcare, and pension plans requiring little employee contribution). The average compensation for Wisconsin public school teachers is over $101,000 per year — for essentially eight months of work.

But Walker also proposed to eliminate the power of government workers (except firefighters and police officers) to bargain collectively for non-salary compensation, and eliminate the state’s role of “enforcer” in collecting dues from employees for the union. His legislation further required annual union elections, in which a majority (as opposed to a mere plurality) of workers must approve the union.

Here, Walker showed real understanding of the problem: if he just asked for increased employee contributions to their health and pension plans, the unions might have gone along this year, but the minute the public’s attention was diverted, they would just get those concessions rescinded, especially if union dues elected a Democratic governor. Government worker unions fully understand rational ignorance.

A recent report shows that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently.

Initially, the unions fought all the provisions of the law, but as the public learned about the lavish compensation packages government workers receive, public sympathy evaporated. Also responsible for reducing taxpayer sympathy was the report that emerged, just as the controversy was getting intense, that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently. According to the US Department of Education, in last year’s National Assessment of Educational Progress tests only 2% of Wisconsin eighth-graders scored as “advanced” in reading, and only 32% as “proficient.” The remaining 66% were below proficient (44% rated “basic,” 22% “below basic”).

The taxpayers of Wisconsin have paid exorbitantly for this laughably lousy quality of education. They pay more per public-school student than any other Midwestern state.

So the unions modified their demands. They said they would agree to increased contributions to the healthcare and pension plans; they claimed that they objected only to the loss of collective bargaining “rights” — allegedly “natural rights” as fundamental as free speech. And with their PR plan in place, they went to war.

The unions employed all their classic tactics. Of course, teachers called in sick en masse, cancelling classes and snarling the schools. There were weeks of massive demonstrations, with as many as 100,000 demonstrators on the streets of Madison, occasionally closing the capitol down, with the usual chanting, screaming and pushing, all aimed at intimidating Walker and the Republicans into submission. Many of the demonstrators were paid for and bused in by the unions in a classic display of “astroturfing.” The protestors were egged on by the usual repellent, aged leftist icons, from Jesse Jackson to Michael Moore to Susan Sarandon. And the unions paid for endless ads aimed at demonizing Walker and the Republicans in the legislature.

In the meantime, the Democratic state senators left the state, in order to deny the Republicans a quorum for considering the governor’s legislation.

Also in the fight — while of course pretending to be above it all — was President Obama. He clearly viewed Wisconsin as the first battle in his reelection campaign, and promptly accused Walker of “assaulting” workers’ rights.

Against this formidable array of foes and this well-strategized campaign, Walker stood firm. After an extended period of what seemed like stalemate, the Republicans figured out how to separate the essential restrictions on unions and make them legislation not requiring a special quorum. They passed the legislation, and Walker signed it into law. The deed was done.

Walker took a major hit in his poll numbers, yet his victory should worry the Dems about the next election, and elections thereafter, at least at the state level.

One cause for worry is the fact that in the battle of Wisconsin the unions had to expend a lot of money — for ads, for demonstrations, for agitprop in general — cash that now isn’t available for the 2012 election cycle. Second, they face a loss of membership. Average yearly union dues are in the range of $700 to $1,000 in Wisconsin, and now that the government won’t be deducting those dues, members may decide they no longer want to pay. One suspects that fear of lost members and members’ dues is what really drove the unions to fight so furiously.

Many of the demonstrators in Madison were paid for and bused in by the unions in a classic display of “astroturfing.”

If similar battles occur in other states, such losses will bite the unions hard. And it may well happen. After all, if the economy in Wisconsin responds well to Walker’s actions, he will rise again in the polls, and that would encourage other governors to follow his lead. Indeed, similar battles have already been going on elsewhere. In Ohio, Republican Governor Kasich is trying to limit public employee bargaining “rights” and is facing demonstrations because of it. In Indiana, Republican legislators have introduced right-to-work legislation that will apply to all unions, and they also saw their Democratic colleagues walk out the door. (While Republican Governor Mitch Daniels doesn’t support this right-to-work movement by his colleagues in the legislature, he did manage to get a law restricting the right of public employee unions to bargain collectively back in 2005).

Republican leaders at the state level — in the face of burgeoning state budget deficits now totaling about $125 billion for the 50 states — seem to appreciate the urgent need for measures that limit the power of unions to game the system. The three most effective measures appear to be laws limiting the collective bargaining privileges of public employee unions, right-to-work laws allowing all workers the right not to be forced to support their unions, and paycheck protection laws that require unions to get the explicit consent of workers before using their union dues for political purposes. These types of laws are kryptonite to the unions.

All of this raises an interesting question. Why are Republican leaders suddenly so bold at the state level, but still so timid at the federal level? Why are some state Republicans willing to address growing deficits in their states, even at the cost of taking on the special interest behemoths that are the unions, while Republicans in Washington seem reluctant to address the federal deficit, which dwarfs into insignificance the state deficits?

A number of reasons explain the disparity. First, the 2010 Republican electoral triumph was manifested more on the state than the federal level. Yes, the GOP took back the House of Representatives, but (because of some unwise voter choices in the primaries, and the large numerical advantage that the Democrats had enjoyed in the Senate before the election) failed to get even a tie in the upper house. You can’t stop a devoutly leftist president — one willing to use the formidable power of the executive branch to keep increasing the size and regulatory scope of the federal government — when you don’t control Congress.

Second, most state constitutions require budgets to be balanced, whereas the federal constitution has no such requirement. This means that to handle the rapidly rising costs of public employee salaries, healthcare expenses, and pension payouts, most states can only raise taxes or float bonds. But taxpayers are already financially stretched to the limit, and bonds are costing more as investors find out how shaky state and municipal finances really are. The recent revelations that states and municipalities already have taken on $3 trillion in bonded indebtedness, and are about $3.5 trillion underfunded in pension and healthcare liabilities, have really hurt the market for muni bonds.

The federal government has a seductive option not open to the states: just print more money. This is of course precisely what the Fed is doing right now.

Add to this the possibility — dare I say the likelihood? — of a bankruptcy in a big city (my favorite candidate is my hometown, Los Angeles). In that event, or the event that a state defaults on its bonds (my favorite candidate is my home state, California), the market for muni bonds would dry up immediately, and with it the ability of states to borrow money at reasonable rates.

The third major difference between the challenges confronting state-level and federal-level Republican leaders has to do with competition. If the politicians in a state jack up taxes to solve a budget shortfall, the productive people (aka taxpayers) and businesses can and will move elsewhere.

This has already had an effect even in such historically high-tax states as New Jersey and New York, where there is now a broad awareness of how many of their productive people and businesses have fled to low-tax havens such as Florida and Texas. The old phrase “Gone to Texas” is now a frightening motto now to the high-tax states.

But the federal government faces no such competition. If I leave California for Florida, the cultural adjustment is minor. To move from America to another nation takes a major adjustment, one far too expensive for most people to make. And most other nations where American might otherwise want to live have equally statist governments.

The fourth major difference lies in the power to print money. Faced with deficits, states have only three options: borrow money, cut spending, or raise taxes. But the federal government has a seductive fourth option: just print more money. This is of course precisely what the Fed is doing right now. It allows all politicians at the federal level to avoid cutting programs and thereby incurring the wrath of special interests.

There is a fifth difference, and it is the most important. On the state level, the Republicans are moving to cut lavish government worker benefits, which are the major cause of the state budget problems, because most citizens are not themselves government workers. The other major choices — raising taxes and cutting programs — are politically unpalatable. Try convincing the average voter that we need to eliminate half the firefighters so that the few who are left can get lavish pay and retire at age 50 on a $250,000 pension for life.

But on the federal level, the programs most responsible for bankrupting this nation are Social Security, Medicare, and Medicaid, not federal employee compensation (or defense spending or discretionary spending in general). Those programs are still popular among Americans, even Tea Party members. A recent poll reported in Policy Review is telling on this point. If you ask Americans where we should cut, the results are dismal. On Social Security, only 9% of the respondent’s would cut it, compared to 84% who would rather increase it or keep it the same. Medicare? Only 12% would cut it, compared to 82% who want to increase it or keep it the same. Medicaid gets only 15% support for cutting, versus 78% who want to increase it or keep it the same. About the only federal project that Americans want to cut is foreign aid.

So in the short term, it is doubtful that Republicans will step up to cut these programs, and if they did, they would probably be hurt politically. But long term, the fiscal crisis that many states are now facing will hit the federal government. The three programs I identified are estimated to face long-term underfunding to the tune of over $100 trillion. As each year passes, their deficits will only balloon. At some point, rational ignorance concerning them will tip into rational knowledge — to the grave damage of the political party that created, expanded, and repeatedly campaigned on them.




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Are Crises Good for the Economy?

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Could Japan’s latest crisis help it economically?

Those who believe in Keynesian economics might answer yes. For them, destruction is creation because it “creates jobs” and otherwise “stimulates the economy.” Taking an opposite, more rational, view economists of the Austrian school would either laugh Keynesian theory off, or if they were more considerate, expound Bastiat’s broken window fallacy: there must be something wrong with the idea that if we all go around breaking windows, somehow we’ll be better off, because the windows will have to be repaired. The problem with notions like this is that we see the creation of a new window; we see money going into the workmen’s hands; but we do not see all the beneficial projects that cannot go forward because the money for them has been spent on mere repairs.

The broken window fallacy notwithstanding, there seems to be something that enables crises to revitalise an economy. While crises destroy wealth, sustained crises also weaken government, a hostile, anti-development institution. It is the latter event that eventually can have a huge favorable affect on society.

This is what India has experienced.

I lived in Bhopal in 1984 when the Union Carbide gas leakage swept the city, killing thousands and thousands of people within the hour. Hundreds of thousands were seriously sick. The same year, Indira Gandhi, the Prime Minister, was killed by her bodyguards, producing a very weak government. Massive Hindu-Sikh riots occurred all over the country. Sikh terrorism in support of the separation of Punjab and troubles in Kashmir kept us on edge for the rest of the decade. Then, in 1991, Rajiv Gandhi, who had just completed his term as Prime Minister, was killed, presumably by the same ammunition that he had supplied to the Tamil Tigers, a Sri Lanka-based terrorist organization. Around the same time, help from the USSR to India ceased, as the USSR ceased to exist. Nineteen ninety-two was a year of major Hindi-Muslim riots all over India. Massacres took place that competed with what Rwanda had experienced in terms of brutality. The economy was in a terrible shape, and India came very close to a default on its international commitments. In short, India was crumbling in 1992 and the government was extremely weak.

Let’s look at what was behind some of these events.

Punjab was not only the breadbasket of India, but huge fund transfers were happening from Punjab to the rest of the country. Supposedly bad elements in the Punjabi society, who had earlier been encouraged by Indira Gandhi, took leadership in the quest for a separate state, and the Indian government’s response was pathetic. Indira Gandhi sent army commandoes to attack and occupy the holy place of the Sikhs, the Golden Temple. A sane approach would have been for the Indian government to cut off the water and food supply to the temple. In that event, the terrorists (if that is what they actually were) would eventually have walked out without a shot being fired. But Gandhi wanted to humiliate the Sikhs. So her humiliated Sikh bodyguards killed her. Thereafter leaders in the Congress Party orchestrated anti-Sikh riots. India was in flames.

When a crisis hits, the first thing that fails and escapes is the government.

(One of the biggest regrets that I live with is the fact that in a fit of nationalistic fervor, I sent all my savings, which for a teenager in a poor country were a mere couple of dollars, to help the families of the dead army commandoes.)

The Bhopal gas tragedy happened in the place where I lived. I was awakened very early in the morning by the sounds of sirens and a smell in the air. Until then, ambulances and fire brigades, if they existed, usually did not use sirens, because they were usually not in working order. The working sirens were on the cars of all the petty politicians and bureaucrats. Reaching the rooftop of my house to see what was happening, I saw a stream of cars with sirens and emergency lights leaving the city — they were all running away. The people of Bhopal were soon to learn that when a crisis hits, the first thing that fails and escapes is the government. Not only were the government and the army (which has a huge existence just outside Bhopal) no longer in sight for a very long time, but given that most of the services — medical, water and electricity, sanitation, banks, intercity transportation and railway — were in the monopolistic hands of the government, it became extremely difficult for the city to get back on its feet. Comfortably sitting hundred of kilometers away from Bhopal, the head of the city was issuing statements that nothing was wrong, while carcasses rotted on the streets. He was making absurd decisions, such as banning the sale of gasoline to stop people from leaving the city.

At the same time, the Indian government was financing and arming Tamil Tigers. Prabhakarn, the Chief of Tamil Tigers, was hosted in Delhi. Starting his pro-Tamil Tigers mission, Rajiv Gandhi sent a naval ship, the Island Pride, a name chosen to humiliate Sri Lanka. It seems, in his naïveté (something that had killed his mother), Rajiv was trying to earn Indian votes. The Tigers, a poisonous snake that Rajiv had encouraged, eventually bit him with his own ammunition.

Given the weakened Congress party, Hindu fanatics were growing in power. They were soon to demolish a mosque in the city of Ayodhya, in 1992. The result was widespread massacres in many parts of the country. Distrust between Hindus and Muslims was at its peak. On top of it the economy was in shambles. It seemed that India would only get worse.

I do not wish to minimize the suffering caused by the events of 1984 to 1992. But in hindsight, it seems that something else was happening. By seriously weakening a cancerous growth, the government, the time of troubles created an opportunity to revitalise the society and the economy. It formed the lurid background of what is now a thriving economy. Indian government, the cancer, never recovered its control over society. The private economy had a breathing space, a space in which it could grow. It was as if a strong chemotherapy had been performed. The government was too confused and lost to control the IT industry, when it began to sprout.

The broken window fallacy is still a fallacy, an irrational approach to understanding economics. Destruction cannot be construction. Massacres are just that. There is no humanity in it. But crises can do one thing very important. While destroying the healthy tissue, they can also weaken the cancer, the government. Crises convey to those who survive the important idea that they must not trust in the government, for government is the first to leave when a crisis hits. Crisis teaches self-reliance.




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Unsolicited Advice

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The current state of our union has generated many opportunities to share libertarian perspectives on the economy, the constitution, and civil rights; but until I picked up the January-February issue of the Atlantic, I hadn’t seen much opportunity for sharing the libertarian outlook on social and personal relations. In that issue’s book review section there was a piece (no pun intended, you’ll get it as you read along) called “The Hazards of Duke.”

The article, by Caitlin Flanagan,loosely discussing several works (Girls on the Edge: The Four Factors Driving the New Crisis for Girls, I Hope They Serve Beer in Hell, andThe Company She Keeps), disparages Duke University (rightly in many ways), discusses alcohol consumption by young women, and pontificates about differences between male and female perspectives on sex. But its main focus (and the lens through which it views the preceding list) is on a relatively recent internet sensation — Karen Owen’s F*** List — a graduate’s mock senior thesis about her sexual escapades with 13 Duke athletes (“officially” titled — “An Education Beyond the Classroom: Excelling in the Realm of Horizontal Academics”).

Flanagan presumes a great deal about Karen Owen and her thesis, telling us much more about her own attitudes than about Owen. Shedivines Owen’s motivation — revenge on the men who discarded her — tagging it as a theme for women through the ages. She also identifies direct causes for Owen’s actions. For example, she cites a letter to Duke’s school newspaper, written in response to Owen’s thesis, and the surrounding controversy, by sorority members distancing themselves from Owen. According to Flanagan, this “served to underscore the disdain that the actual Karen Owen seems to have engendered in her fellow students, whose closed social system offered her no safe harbor.”

After reading Owen’s “brief communications with the press,” Flanagan contends that it’s hard to believe Owen’s claim that the email she sent to “only three friends” was not for public consumption, but it’s “not at all hard to believe that Owen had only three friends in college.” She then weighs in on Owen’s mental and emotional state: “The overwhelming sense one gets from the thesis is of a young woman who was desperate for human connection, and who had no idea how to obtain it.” The author further laments that poor treatment by one of her early partners “broke [Owen’s] heart and her spirit” and sent her on a self-destructive path.

That’s a lot of presumption.

The article describes a Fox News segment, hosted by Megyn Kelly, discussing Owen’s thesis. Not trusting the author for objective description, I watched the Fox News clip online. The segment included Kelly and two other female legal commentators. After discussing Owen’s possible financial motivations, Kelly said, “I gotta go off topic from the law because I have two beautiful women here who are college and law school graduates. What could she be thinking? First of all, she slept with 13 guys. . . . . I personally, reading this, was disgusted.” One commentator responded, “Disgusted, yeah. She’s dirty. Yeah, I don’t like it at all. I was like ‘Oh my God,’ this is so unbecoming.” After more banter, Kelly said, “I can tell you, having dated the captain of the lacrosse team at Syracuse, men do not respect women who do this.” She added, “You may sleep with half the lacrosse team. They don’t think that’s a great thing. They don’t talk about how great you are. They talk about what a joke you are. So that’s a word to the wise.” Thanking her guests, Kelly closed by saying, “This has nothing to do with the law, but my own unsolicited advice for young women. Don’t sleep around. Don’t be easy. It’s not empowering. It’s embarrassing. You will be the butt of men’s jokes. You will not be respected and you may be humiliated as this woman is now.”

That’s a lot of condemnation.

I looked up Owen’s “thesis” online and found what appeared to be the original power-point on YouTube. Reading it, I did not see the “little girl lost” who was discovered by Flanagan. I just saw someone who was objectively, and at times humorously, evaluating sexual partners from her college years. I was not the only one to see a discrepancy. Looking online for jezebel.com’s interview with Karen Owen, I discovered that a good number of posters, and the reporter who talked with Owen after her list went viral, took Flanagan to task for her many assumptions.

I believe I can identify several different perspectives on this.

The liberal perspective. Flanagan’s theme is clear. Karen Owen was a victim of an alpha-male, athlete-loving, cliquish, misogynist university culture. Her sexual exploits were not her own. Her desires were shaped — nay, deformed — by careless man-boys and a patriarchal system that coddled them. This is not her fault. Duke’s system failed Owen. It “offered her no safe harbor.” Owen deserves our pity. Something must be done, so other girls don’t suffer her fate.

The conservative perspective. Megyn Kelly’s commentary and advice are representative, and painfully traditional. She admits that her advice was unsolicited, yet she was compelled to give it, and keep giving it. It was advice laden with well-wornresentments and prescriptions for proper social and personal behavior for young ladies. It was imparted to viewers as if Mrs. Cunningham were having a serious talk with her daughter on “Happy Days.” Owen is not a good girl. She’s a bad girl. “She’s dirty.” What Owen did was wrong, immoral, disgusting. No self-respecting, young lady does that. It is bad, bad, BAD! SHAME!

Liberals say it’s not her fault. Conservatives say it’s all her fault. Both conclude that Owen is unfortunate. One scolds. One patronizes. Both warn: don’t act this way. It’s bad!

Now, I am no fan of Duke or its athlete-loving culture, but it’s clear from Owen’s own writing that she chose to do certain things with certain people. And she admits enjoying most of her liaisons. There is no accusation of rape or sexual assault, which are criminal acts. There is no blame to be borne here. Though I am a feminist, I do not share Flanagan's sentiments. The Duke University system did not fail Owen. It owed her little beyond an undergraduate education. As for the earnest advice from Ms. Kelly, it is paternalistic, and the shaming aspect is obnoxious. It’s what prompts so many non-Republicans to shout, “Get out of our bedrooms!” And to what purpose did Kelly cite the beauty of her guests? I graduated from college and law school and am now in the dissertation stage of a Ph.D. program. If I tell you what I look like, will that lend any more or less authority to this reflection? Moreover, Kelly’s claim of insight gained by dating the captain of the Syracuse lacrosse team is laughable. Nowhere in her thesis does Owen make any claim that what she was doing was dating. As to Kelly’s traditional invectives against Karen Owen and her exhortations not to sleep around and not be easy, that’s a decision for each individual adult woman to make for herself. Besides, there are two sides to that coin. As Mae West said, “When women go wrong, men go right after them.”

So now, a libertarian perspective. Entering college, Karen Owen was likely 18 years old — old enough to vote, old enough to go to war, and old enough to experiment in various social behaviors. Her thesis does not represent a giant step backward for women, or a giant step forward either. It is simply one individual’s description and humorous assessment of her past activities. It is nothing more, nothing less. As to the other people involved in those activities, they deserve no sympathy because of the publicity she gave them. They, as individuals, each chose to engage in sexual activity with Ms. Owen. If any of them are unhappy that Owen disclosed those activities, every choice has consequences, good or bad. If Owen wants to discuss or analyze these acts, she is free to do so. As are they. While such “postgame analysis” may be in bad taste, there is no law against it, nor should there be. It is simply an additional risk to the already risky act of the college hookup in the internet age.

Though I did not fully appreciate it in my youth, as a mature libertarian I value the advice my father always gave me about social and personal situations: “Be discreet.” He did not mean secretive. He meant that you should think about what you do, and with whom you do it, because all actions have consequences, some quite unwelcome. That’s good advice, solicited or not.




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Rewarding Yale-ness

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I thought I already knew what was wrong with US News’ rankings of “Best Colleges,” so I was slow to reach for Malcolm Gladwell’s recent piece in the New Yorker, The Order of Things” (Feb. 14 and 21). But (to use our past president’s wonderful locution), I misunderestimated Gladwell’s contribution, a portion of which I will share here.

People who follow higher education know that US News’ rankings rely heavily on inputs, not outputs (e.g., not the learning the schools impart but the amount of resources spent), and that they use estimates of reputation for a good part of the ranking (22.5%).

But the problems with US News’ rankings apparently go deeper or at least are more complex. Gladwell argues that it is impossible to come up with a single ranking of heterogeneous institutions (as US colleges are) on multiple dimensions — as US News tries to do — without making “implicit ideological choices.” He says that those choices mean that schools that enable more students to get better educations are always going to be low on the list.

To be specific: universities that currently rank in the middle of US News’ list can’t improve their rankings, for two reasons. A University of Michigan sociologist who studies rankings has found that the university presidents who take the reputation survey (some are expected to “evaluate” more than 200 peer institutions) depend heavily on the existing US News rankings for their evaluations! In other words, the reputation process is circular.

Second, student selectivity swamps measures of effectiveness. Here’s how it happens. US News does have what Gladwell calls an “efficacy” measure, “graduation rate performance.” Since graduation rates depend largely on the selectivity of the incoming students, this measure “compares a school’s actual graduation rate with its predicted graduation rate given the socioeconomic status and the test scores of its incoming freshman class.”

If the graduation rate is higher than expected, the difference raises a school’s score, because the school is graduating more students than would get through on the basis of selectivity alone. (There might be some question about this as a measurement of efficacy, but that’s not my point right now.)

The problem, says Gladwell, is that “no institution can excel at both.” For example, Yale is so high on the selectivity scale (it’s ranked first among national universities) that its “predicted graduation rate” is 96. Thus, its efficacy rate can’t be more than four, and it’s actually two. In contrast, Penn State, which has the lowest ranking of the top 50 national universities, is not as selective as Yale. But it does very well on the graduation measure; its expected graduation rate is 73% and its actual graduation rate is 85%, giving it an “efficacy” score of 12, the highest in the top 50.

But US News gives twice as much weight to selectivity as to efficacy — a completely arbitrary choice and, according to Gladwell, the wrong measure in terms of social benefit (although from the perspective of the student seeking prestige, it may be the right choice).

Finally, the rankings leave out price. Although Gladwell doesn’t recalculate the top 50 universities with price as a factor, he does so with law schools, since an Indiana University law professor has conveniently laid out the chief US News criteria in a spreadsheet. The expected schools are there, led by the University of Chicago, Yale, and Harvard. If Gladwell makes price a factor and gives it equal weight with the US News’ other criteria for law schools, two new schools pop up on the list. The upstarts are Brigham Young University and the University of Colorado.

Gladwell suggests that a school should be rewarded for being affordable, but this is beyond the pale for US News. As a result, says Gladwell, “the Yales of the world will always succeed at the US News rankings because the US News system is designed to reward Yale-ness.”




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Hell No, I Won't Go to Libya

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I've declared myself officially neutral in the Libyan civil war.

"Yeah? Well, who asked you, anyway?"

But that's my point. I believe that someone in America should admit his ignorance about which side of the Libyan conflict is good for life, liberty, and the pursuit of happiness. My guess is: neither. It also makes me feel a little strange, just listening to phrases like "a U.S.-provided no-fly zone in Libya." I can't help thinking that there must be a reductio ad absurdum in there someplace.

And speaking of reductios: have you noticed the peculiar behavior of Western correspondents who actually get anywhere near a battlefield in Libya? Every one of them is a huge propagandist for Qaddafi's foes — as, of course, they have a perfect right to be — yet many of their reports from the front sound like this: "Rebel forces are right ahead, hidden behind the ruins of that sentry post, hoping that Qaddafi's air force won't find them there." "Rebel leaders are marshalling their forces ten miles down the road, hoping to hold the city, but without much ability to do so, since they have only two tanks at their disposal." "The latest air strike came 500 feet from the rebel fortification, over on the left, about 50 feet behind that hill. Another strike would wipe them out, if the planes took better aim."

If these are the rebels' friends, I wouldn't want to be the rebels.




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The Tail Slapping the Dog

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I grew up in a blue-collar world listening to jokes and snide remarks about government workers. They were uttered frequently by my father, and the fathers of most of my friends, especially during tax season. I came to perceive that government, at all levels, was riddled with chumps, lackeys, and dullards — people who couldn’t make it in the private sector but found a home in the lackadaisical workplace of government.

It was tacitly assumed that public employees earned less money than their private sector counterparts and that “psychic income” explained their willingness to do so. Psychic income has been defined as “something apart from money that you get from your job, and which gives you emotional satisfaction such as a feeling of being powerful or important.” Anyone who has dealt with government bureaucrats (from IRS agents to building inspectors and DMV clerks) can attest to its allure. My father probably would have described psychic income as a negative salary differential that gave this army of self-important, insecure underachievers a pass. That is, as long as they made less money, their shoddy (good enough for government) work could be tolerated.

That was back in the late 1960s. The Great Society was shifting into high gear. Big government was booming, and the demand for government workers was exploding. In those auspicious days, the job of many public servants was to invent jobs for more public servants. As government revenues continued (1969 to the present) to grow more than 15 times faster than median income, additional public servants were needed just to spend the extra tax money.

During the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

But my father’s suspicions about the negative salary differential were partly wrong. Federal civil servants were already making more money than their private sector brethren. And they, as well as state and local public servants, were on track to make much more. I didn’t have the heart to tell my father that the lower salary — the only redeeming characteristic of the shiftless and slothful government workforce — was an illusion. And the grudging tolerance of his generation was being augmented by the unwitting generosity of mine to unleash relentless public sector growth. My generation rewarded public sector workers with unprecedented income — both real (salary and benefits) and psychic (power and importance), sweetening the deal with unprecedentedjob security. The tail began wagging the dog.

Today, the average federal civilian worker earns twice as much in wages and benefits as the average worker in the private sector ($123,049 vs $61,051, annually). The benefits (healthcare, sick days, vacation time, retirement plans, etc.) are profligately generous, as are the taxpayer contributions that pay for them. For example, in 2007, state and local governments paid an average of $3.04 an hour toward each employee's retirement; private employers paid only $0.92/hour. And, in recent years, the pace (of both hiring and wage increases) has accelerated. For example, when the recession started, the Department of Transportation had only one person with a salary of $170,000 or more. That number has now reached 1,690. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009.

We are told (by President Obama and many others) that such obscenely generous compensation is required for attracting the best and the brightest to run government programs. Just think of the mess that Social Security, Medicare, Medicaid, the Postal Service, Amtrak, public housing, education, etc. would be in if managed by less competent professionals. And who could do a better job fighting the wars against poverty, drugs, cancer, AIDS, etc. than the people presently employed? With successes such as these, no wonder they have moved on to protecting us against such menaces as trans fats, sugar, secondhand smoke, bicycles, and toys (the lead-painted ones from China and the obesity-inducing ones from McDonald’s).

And since we must be regulated in both good times and bad, public service is a recession-proof industry. During the recent recession, the federal government added 192,700 jobs (+ 9.8%). State and local governments added a paltry 33,000 (+ 0.2%), but the private sector lost 7.3 million (-6.3%). The average federal government salary increased 6.6%; the average state and local government salary increased 3.9%. To summarize, during the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

It has reached a point where even big-government advocates have become appalled. For example, Mort Zuckerman, billionaire businessman and generous contributor to the Obama campaign, has recently discovered that “public workers have become a privileged class — an elite who live better than their private-sector counterparts. Public servants have become the public's masters."

It is of no small significance that the big gainers in the government hiring binge are regulators, lawyers, and public health and safety experts. They are the most annoying of public servants. Operating as social engineers, and under the assumption that without their guidance we (individuals, families, and businesses of all types and sizes) will make bad decisions, they serve two principal purposes: (A) ensuring that we obey every silly law with childlike compliance, and (B) writing more silly laws. This is the tail slapping the dog.

Feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions, managed to come up $7 trillion short, and now expect taxpayers to foot the bill.

Much of the sting from the slap comes from their colossal ineptitude. They are simply terrible at what they do. The vigilant financial regulators who protected us from the subprime mortgage debacle are a case in point. They include the elite that was running HUD, Fannie Mae, Freddie Mac, and the SEC (whose crack securities experts were downloading porn while credit default swaps and Bernie Madoff ran amok). Their predecessors were equally inadequate in preventing the S&L crisis, the junk bond fiasco, the Enron and WorldCom scandals, and the dotcom bubble.

It should be no great surprise, therefore, that our public masters running government pension funds have reached no higher level of competence. According to a recent report from the Employee Benefit Research Institute, federal pension plans now have unfunded liabilities exceeding $1.6 trillion. Unfunded state and local pension liabilities are estimated at $3.6 trillion. With healthcare benefits added in, state and local government unfunded retirement liabilities could be as large as $5.2 trillion. Consequently, our children face a huge future slap in the form of a tax bill approaching $7 trillion. To summarize: feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions (at a rate three times that of theprivate sector), managed to come up $7 trillion short, and, instead of going to jail, now expect taxpayers to foot the bill.

Then there is Public Service Recognition Week (PSRW), a nationwide campaign honoring public servants and educating citizens about the sacrifices they make while serving the nation. Federal, state and local public servants spend the first week of every May honoring themselves and bragging about the terrific jobs they are doing. They have exhibits showcasing “the innovative and quality work performed by public employees.” They even have parades “recognizing and thanking their unsung heroes.” This is the tail slapping the dog with disdain.

Public servants have come a long way from the banal, ambitionless, unproductive horde of my father's generation.They are now grossly overpaid, insidiously more powerful, and routinely unaccountable for bad, often abysmal, performance. No doubt most are good people with good intentions, some making legitimate sacrifices. I would go to a parade honoring most policemen, firefighters, teachers, and emergency workers. But there should also be a parade ridiculing those whose malfeasance, indolence, or avarice has failed the public and contaminated the perception of civil service. Regrettably, such a parade could not be held; it would last well over the week allotted.

Today there are simply too many public servants — even good ones. With staggering deficits and staggering public debt, we can no longer afford them. Public resentment deepens the more their compensation is scrutinized, as all levels of government begin trying to cut their budgets. Most are overpaid, especially at the federal level. And today's administrators, regulators, inspectors, social engineers, and the like have painted a disturbing "public masters" portrait of themselves. Furthermore, psychic income as a reward for sacrifice is a thing of the past. As public sector payrolls expand during private sector contraction, it's difficult for taxpayers to see the sacrifice. Public servants have become the "haves," and taxpayers, who pay their salaries, have become the "have-nots." Psychic cost — the economic burden of the government workforce — is a more realistic concept.

From 1787 through the 1920s, federal government spending didn’t exceed 4% of GDP, except in wartime. It has now reached 25% of GDP. Combined federal, state, and local government spending has reached 43% of GDP, and the average taxpayer has to work from January 1 to the middle of each April to pay for this largesse. But even that is not enough. In recent years, federal spending has exceeded tax revenue. It has taken an unprecedented leap since 2008, producing today's massive annual budget deficit of $1.5 trillion. To pay off this deficit, the average taxpayer would have to work until mid-May —and consequently have to miss the Public Service Recognition Week parades.

quot;public masters




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The Hollow Revolution

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On the morrow of Governor Scott Walker’s brilliant tactical victory in Wisconsin (stripping the public employee unions of collective bargaining rights while Democratic lawmakers loitered in Illinois), it is perhaps timely to examine the “revolution” of November 2010. In the November elections the Republicans made major gains not only in statehouses across the country, but also in Congress. Sixty House seats changed hands. Eighty-seven freshman Republicans, most of them backed by the Tea Party, entered the House in January with a mandate to bring federal spending under control.

What has resulted from this? Has the Republican sweep produced legislation to reform entitlements, curb defense spending, and eliminate entire chunks of government (the Department of Education, for example)? Make no mistake, nothing less is required if the astronomical budget deficit (almost $1.5 trillion this year) and the crushing national debt (now equal to 100% of GDP) are to be tamed.

Well, the answer is no. After all the electioneering, all the emotion and bloviation about the terrible fiscal crisis America faces, the Republicans produced a plan to cut $100 billion from domestic discretionary spending. That $100 billion represented about 7% of the deficit. And of course the figure was quickly negotiated down to 61 billion, then 32 billion. In any case, domestic discretionary spending is not the problem, or at least represents a minor and noncritical aspect of the problem.

Only real entitlement reform and a willingness to reduce America’s commitments around the world (ergo the defense budget) can cure the fiscal illness that is killing America. And despite the willingness of a few politicians in Washington, DC — Paul Ryan and Rand Paul spring to mind — to enact real reforms, neither of the major parties will ever summon the will to do so. The Democrats will remain in thrall to the teachers’ unions and the trial lawyers and the 43% of Americans who pay no federal tax; the Republicans will continue to craft sweetheart legislation for the corporate donors that fund their party. Neither party dares touch a hot button like agricultural subsidies. And both, apparently, remain convinced that America must bestride the globe militarily, despite the absence of any overweening threat to the American people.

The smaller, statewide revolutions initiated by Walker, Governor Christie of New Jersey, and Governor Kasich in Ohio may offer glimmers of hope. But we shall have to see what the next round of elections brings. If these states fall back into the Democratic column in 2012 and 2014, the work of these governors will be undone. And we shall be back to square one.

In any case, Washington will never change in a fundamental way, even if the Republicans sweep the Senate and the White House in 2012 (don’t hold your breath). We are fated to live in interesting times.




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Green Dreams, Green Nightmares

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A rush of recent reports on energy has much to say about the fundamental foolishness of the green vision of energy production, the vision long regnant in academia, and the one that informs the Obama regime.

The green vision — really, the green dream or delusion — is that the world is running out of fossil fuels, and we need to switch to so-called renewable or sustainable sources, such as solar power, wind power, and biofuels. (These “renewable,” allegedly low-pollution green options never include nuclear or hydroelectric power, both of which are proven to be cost-effective and clean — a point to which I will return shortly). If we just embrace these “new” energy sources, the greens aver, jobs will just multiply magically.But if we continue to use fossil fuels, we are doomed to economic stagnation.

The first report is the happy news that the number of new American oil wells is increasing at a pace not seen in over three decades.

According to the major oil drilling company Baker Hughes, it installed over 800 new oil rigs last year, over twice the previous year's (2009) total, and a tenfold increase over the yearly average during the late 1990s.

These rigs are placed to tap so-called “unconventional reservoirs,” squeezed into shale rock strata. Ten years ago these shale oil reservoirs were written off, but the increase in oil prices and in the level of oil-drilling technology have now opened them up.

The story mentions several promising shale oil fields, including the Eagle Ford formation (stretching from southern Texas into northern Mexico), the Bakken formation (in North Dakota), and the Monterey formation (in California). These formations currently produce about half a million barrels a day. It is now projected that production will hit 1.5 million barrels per day in four years, the equivalent of what we currently get from the Gulf of Mexico, which is roughly about 30% of current total domestic oil production. This will go far toward making up for declining production from our conventional fields in Alaska and the Gulf of Mexico.

The Bakken formation is yielding oil faster than can be sent through pipelines to market, so the oil companies are shipping it by road and rail. The companies have had to open camps to house all the workers needed, and North Dakota has unemployment at less than half the national average (its rate is 3.8%, to be exact). As another article notes, the Bakken field produced 113 million barrels in 2010, up from 33 million the year before.

If the Bakken and Eagle Ford oil fields pay out as expected (they are projected to yield an eventual four billion barrels of oil), they will wind up as the fifth- and sixth- biggest US fields ever found. By 2020, shale oil fields could allow us to cut our imports of foreign oil by 60%, which (at $90 a barrel) is $175 billion less we give foreign dictators. And another article reports that the EIA estimates that with these new fields, American petroleum production will increase 14% by 2020.

A more recent news item gives us more detail about the new shale oil drilling technology. It involves drilling down and then horizontally into the rock, then pumping a mixture of sand, water, and small amount of chemicals in to crack the rock and loosen the oil molecules. Drillers figured out how to make the shale crack more extensively, and that made the extracted oil cheaper than had ever been thought possible.

This process, called fracking, has proven very effective in freeing natural gas, as I noted in an earlier piece. It is beginning to pay off big time in oil production as well.

With this method, new fields are being opened, such as the Leonard formation (which straddles New Mexico and Texas), and the Niobrara formation (which underlies Wyoming, Colorado, Nebraska, and Kansas).

Now, last year, as shale oil technology started proving itself a tremendously effective method for extracting oil, environmentalists immediately arose in opposition. Rep. Henry Waxman (D-CA) held hearings investigating fracking, and the environmentalist Left produced a documentary (Gasland) alleging that the technology was poisoning groundwater. But all the EPA studies have shown that fracking is safe, and even the Environmental Defense Fund seems comfortable with it.

So much for the death of petroleum. Turning now to renewable-green energy sources, some interesting stories are worth noting. Let’s begin with the report that France’s solar program is in trouble.

Two years ago, the French National Assembly passed a law requiring France’s national utility, Electricité de France (EDF), to buy all the power produced by newly installed solar panels at $745 per megawatt-hour, roughly ten times the market price for electricity. The goal was to increase the number of people installing solar panels on their roofs.

The Chinese-manufactured solar panels have a large “carbon footprint” — meaning they were produced by using large amounts of power generated by the burning of dirty coal.

The intended result was that applications for rooftop panel array connections rose — from 7,000 applications a year before the subsidiary to about 3,000 a day by December of last year. But there were unintended, though embarrassingly foreseeable, consequences. One was that the cost to EDF of buying solar power has exploded to $1.4 billion a year, and is threatening its financial health. EDF saw its stock drop by 20% in 2010 (compare that to a 3.7% drop for Europe’s Stoxx 600 Utilities Index). EDF is now $78 billion in debt, a situation that has caused it to defer modernizing its 53 nuclear reactors (which provide 75% of France’s electricity). And it has had to jack up the surcharge that consumers who don’t use solar panels have to pay.

A second consequence is that the solar panels are being purchased from China, thus shifting jobs from France to there. Worse, the Chinese solar panels have a large “carbon footprint” — meaning they were produced by using large amounts of power generated by the burning of dirty coal!

Then there is the report about an ethanol plant, Range Fuels, that in 2007 received startup subsidies of $76 million from the federal government and $6 million from the lucky state of Georgia, where it was supposed to open a plant making ethanol from pine chips. The next year, it got a loan for $80 million, guaranteed by taxpayers under the “Biorefinery Assistance Program.”

The reason the Bush administration started pushing this “advanced biofuels cellulosic ethanol” program (essentially, a program for producing ethanol from switch grass and other biomass) was that corn-based ethanol was already rapidly acquiring a bad reputation for excessive costs and a low yield of energy outputs. Cellulosic ethanol looked like a better prospect.

Georgia politicians were so excited by the smell of pork that they started calling their state “the Saudi Arabia of Pine Trees.” The Saudi Arabia of pine trees!

Well, guess what? Range Fuels just closed, having never produced even one shot of ethanol. Gone with the wind, as they used to say in Atlanta. And all the subsidy money gone with it.

Honest to God, you couldn’t make this stuff up.

 




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V.I.P. Treatment

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Reclaiming the Word “Liberal”

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I propose that we call left-liberals just that, not “liberals” without qualification. Doing so would help reclaim the original name of an honorable old political tradition. It would resist the purloining and perversion of the word “liberal” as used in the United States. It would avoid ambiguity by bringing American usage into line with usage in much or most of the world outside the United States, where the word “liberal” retains its classical meaning, as I shall try to show. Left-liberals contrast sharply with classical liberals; they incline to interventionist and redistributionary policies extending into ever more aspects of life.

John Kekes’ Against Liberalism (1997), although a generally meritorious work, illustrates the ambiguous use of words. From a self-styled conservative, I expected an attack on his doctrine’s classical rival. But no: Kekes muddles classical and left-liberalism together, making his attack less incisive than it might have been.

Beyond inviting misunderstanding, controversialists put themselves at a disadvantage when they let their opponents define the terms of debate. When classical liberals and conservatives let “liberal” be purloined and even use it themselves (as a term of abuse), they concede too much to their opponents.

Words and Policy

The word “liberal” derives from the Latin for “free.” Classical liberals do not all share the same detailed understanding of their values; but to minimize repetition in what follows, it is convenient to list typical characteristics. Classical liberals typically believe in the importance of individual responsibility; in the freedom to live one’s own life, to travel, to change residence, and to choose one’s own occupation; in freedom of speech and press; in tolerance of the opinions and lifestyles of dissenting minorities; in capitalist enterprise with secure property rights and free markets for domestic and international trade; in freely and honestly elected representative government of defined and limited powers that protects human rights; in the rule of law, equality before the law, independent administration of law and justice, and separation of church and state.

Left-liberals share many of these values, of course; the chief difference concerns the character and scope of government, which affect the degree of respect that left-liberals have for others among those values.

Liberalism, if not yet so called, became a powerful force in the Age of Enlightenment. It rejected hereditary status, the divine right of kings, absolute monarchy, and established religoin. Leaders of the American and French Revolutions used liberal philosophy, including insistence on consent of the governed, to justify overthrowing tyrannical rule. The 19th century brought more or less liberal governments to countries in Europe and the Americas.

When classical liberals and conservatives let “liberal” be purloined and even use it themselves (as a term of abuse), they concede too much to their opponents.

An early political use of the term “liberal” dates from the Cortes of Cádiz, which adopted the Spanish constitution of 1812. There the conservatives derided their majority opponents as “liberals.” The liberals wanted to carry on the Enlightenment philosophy of Charles III, adding several ideals of the French Revolution. They fought for civil liberties and against absolute monarchy. Even though the constitution of 1812 remained in effect only for brief intervals, it served as a model for liberal constitutions of Latin countries in the nineteenth century. (These facts are found partly by Googling for “liberals” and “liberals Cadiz” and in the Wikipedia entry on “Constitución española de 1812." Club Liberal Español is also useful.)

Elsewhere also, and perhaps especially in Great Britain and its colonies, liberal aspirations included removing various restraints on residence, occupation or employment, and property ownership; increasing the flexibility of land inheritance; modernizing onerous old legal structures and practices; removing various legal discriminations; extending the franchise and (in Britain) remedying the over-representation of rotten boroughs in Parliament. Workers eventually gained the right to form unions.

How, then, did the word “liberal” acquire its changed meaning? Well, the early liberals worked for freedom from burdensome and oppressive old laws and regulations. Liberalism meant action. The ideal of change toward increased freedom and modernity drifted into accepting change almost for its own sake — or so I conjecture. Many conditions in the world plausibly seemed open to improvement — even in the liberal direction — by changing or adding some laws and regulations.

The case for a typical one of these interventions, taken by itself, may indeed be strong; yet a great accumulation of individually plausible interventions may become oppressive and make the task of monitoring government all the more difficult. Overlooking this point commits the fallacy of composition, the fallacy of supposing that what is true of the individual case is therefore true of such cases taken together. (The standard example compares one spectator standing up to see a parade better, and all standing up to see the parade.)

Even so, advocates of each particular intervention tend to focus on it, not perceiving or worrying about the fallacy. Some interventions may have unintended side effects that seem to require still others as correctives (as Ludwig von Mises explained). Ongoing growth of government activity motivates special interests to seek more interventions on their own behalf or in self-defense against privileges given to others. The political expediency of a “moderate,” middle-of-the-road position — the Hotelling effect, so called following Harold Hotelling’s article in the Economic Journal (1929) — allows the more active side of the road to drag along what is considered the respectable middle, thus reinforcing the drift. Many or most participants in an interventionist drift may well be high-minded people; but the drift does offer opportunities to control freaks, who may relish the prospect of power for their own purposes in a semi-socialist state.

The original term “liberal” persists, in the United States, anyway, even for an orientation that has metamorphosed into almost its opposite. The process illustrates the Hegel-Marx notion of a change of quantity into quality, of degree into kind (as rising temperature changes ice into fluid water and then into steam). An itch to change things has taken hold, with politicians and special interests constantly imagining what further government interventions into what further aspects of life might do some good.

Participants in the Drift of Meaning

John Stuart Mill illustrates a stage in the slide toward left-liberalism. Mill was a genuine classical liberal, concerned with removing interferences with individual freedom. He was an early feminist, urging that women should have fully as much control as men over their own persons and property. His On Liberty is a classic defense of the individual’s right to act as he wishes, even mistakenly, provided only that he does not infringe on the rights of others. He championed freedom of speech and controversy and freedom even from pressures to conform to general opinion; he valued eccentricity. On Liberty urged the benefits of private enterprise and the spirit of innovation.

In the last chapter of his Principles of Political Economy, a chapter entitled “Of the Grounds and Limits of the Laisser-faire or Non-Interference Principle,” Mill reviews the various arguments against extending the scope of government. Still, he considers how government intervention might enhance freedom. He distinguishes between two types. One is “authoritative interference” — requiring or forbidding private actions. A second type, alternative to commands and penalties, includes giving information and advice. But the scope for intervention, as imagined by Mill, is much wider.

Liberalism meant action. The ideal of change toward increased freedom and modernity drifted into accepting change almost for its own sake.

Mill wants to free individuals from finding their future selves bound by very long-term contracts. He would accept intervention when the consumer has inadequate knowledge of the market or is unable to judge the desirability or quality of some good or service, education perhaps being an example. Intervention might be justified when some persons exercise power over others, as over children and animals. The government might intervene to remedy defects of delegated decisions or management, as by giving shareholders more power over the companies they own. Intervention might help give effect to the desires of the persons concerned, as when, for example, workers might want shorter hours but could hardly demand them individually rather than collectively. Mill sees a case for public alongside private charity. Government might properly regulate or own such natural monopolies as gas and water. It might pursue any object of general interest in default of private action — roads, docks, harbors, canals, irrigation, hospitals, schools and colleges, a national bank, a manufactory, a postal service, an established church. (He even mentions printing presses!) Private alternatives would not be banned; private and public education might exist alongside each other. Government should regulate the colonization of new lands (e.g., Australia). In general, government might undertake any beneficial activities that private agencies would find unprofitable; it could support what are now called positive externalities. Mill’s example was voyages of geographical or scientific exploration; nowadays we might think of the space program.

Earlier in his Principles (Book II, Chapter I), Mill expressed some interest in and even sympathy for socialism in some sense or other. The decision between it and the present system of private property “will probably depend mainly on one consideration, viz. which of the two systems is consistent with the greatest amount of human liberty and spontaneity” (Ashley edition, 1929, p. 210). “It is for experience to determine how far or how soon any one or more of the possible systems of community property will be fitted to substitute itself for the ‘organization of industry’ based on private ownership of land and capital. . . . [However,] the object to be principally aimed at, in the present stage of human improvement, is not the subversion of the system of individual property, but the improvement of it, and the full participation of every member of the community in its benefits” (pp. 216–217). Thus, even Mill’s interest in (though not commitment to) socialism reflected his concern for individuality and personal freedom and opportunity.

I get the impression from his Principles that Mill’s acceptance of intervention and his interest in socialism were rather reluctant. He wanted to serve and enhance the autonomy and effectiveness of the individual; personal freedom was his touchstone, but he thought that wise government guidance could enhance it. He wanted to give a fair shake to doctrines or practices that he himself may have contemplated only reluctantly or tentatively.

Like Mill, Thomas Hill Green (1836–1882) exemplifies the drift (especially in his lecture on “Liberal Legislation and Freedom of Contract”; see also the Wikipedia entries on Green and on “Social Liberalism”). He was a philosopher, adherent of the Liberal Party, political radical, temperance campaigner, and prominent figure among those, also including L.T. Hobhouse and John A. Hobson, who became known as the New Liberals. These men used the classical language of liberalism in support of state intervention in economic, social, and cultural life. Green favored factory legislation for safety and health, restrictions on child and women’s labor, public schools, reform of inheritance of land, protection of tenant farmers against arbitrary landlords, and restrictions on the sale of alcohol. He defended such interventions against the objection that they impair freedom of contract.

In distinguishing between negative freedom and positive freedom, Green made a now notorious play on words. He called the latter “true freedom,” charitably interpreted to mean individuals’ efficacy in pursuing their own interests and in political participation. Sir Isaiah Berlin made the same distinction in his “Two Concepts of Liberty” (1958), but he did so to warn against the equivocation involved.

Even Mill’s interest in (though not commitment to) socialism reflected his concern for individuality and personal freedom and opportunity.

John Maynard Keynes, member of the Liberal Party in Britain, was arguably a figure in the leftward drift. At least two schools of interpretation of his General Theory demonstrate the ambiguity of his position. One school stresses his evident appreciation of private property and a market economy; he had no particular quarrel with how the price system allocates resources. Writing during the Great Depression of the 1930s, however, he did worry about a persistent tendency toward lack of enough total demand to maintain prosperity with full employment. That defect could be remedied rather straightforwardly by monetary policy and especially by government fiscal policy, both without detailed control over the allocation of labor and other resources. On this interpretation, Keynes remained basically a classical liberal. The rival interpretation sees him as a meddlesome interventionist, or worse. It takes literally some of his stray remarks, such as his comment about the “socialization of investment,” as if he meant more than policy to stimulate enough investment to absorb otherwise excess saving — as if he did envision widespread government ownership of the means of production — in a word, socialism. Actually, he did not go that far.

The Oxford Liberal Manifesto of 1947/1948, written by Salvador de Madariaga and adopted by delegates from 19 countries, also illustrates how classical liberalism became stretched. Unsurprisingly, it urges protecting the standard freedoms and enhancing the several components of political liberty. But it goes further. Its concern for the freedom and wellbeing of persons extends to education; security from the hazards of sickness, unemployment, disability, and old age; and continuous betterment of conditions of employment and housing. Economic freedom must be protected from monopolies and cartels. “The welfare of the community must prevail and must be safeguarded from the abuse of power by sectional interests” (Wikipedia entry and text of the Manifesto).

So the Manifesto almost welcomes myriad detailed interventions. It allows politicians opportunities to perceive or invent ills that their legislation and regulation might remedy. In H.L. Mencken’s much quoted exaggeration, “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” As if to illustrate Mencken’s point, a recent call-in session on C-SPAN recognizes appropriate federal government concern about . . . bedbugs.

The word “liberal” in the sense of left-liberal is (or was until quite recently) accepted gladly, and even as a self-congratulatory term, by American adherents of that political persuasion; and most do so use it still. However, many conservative politicians and commentators, such as Rush Limbaugh, have come to use it as a pejorative. Thus even conservatives join in perverting the unmodified word to mean incessant leftward change.

International Usage

This drift toward perverting the word has not occurred, however, in all writings and all countries. In some English-speaking countries outside the United States (Canada, Australia, and the United Kingdom), usage of the term “liberal” seems to be complicated by their having thus-named Liberal (or Liberal Democratic) political parties. But in the UK, anyway, the classical usage still seems to prevail. The London Economist does routinely and unambiguously so use the word. For example, its issue of 16–22 October 2010 hails Mario Vargas Llosa, winnner of the Nobel Prize for literature, as “A Latin American Liberal”: “His liberalism is universal, inspired by such thinkers as Karl Popper and Isaiah Berlin.” In most other countries and languages, also, “liberal” means classical advocacy of a free-market economy; personal rights, liberties, and responsibilities; equality before the law; and a democratic element in limited government.

Liberal policies could plausibly drift into left-liberal interventionism, as I have argued, without any sharp break point bringing a change in terminology. But why did the change of meaning occur mainly in the United States while “liberal” retains its classical meaning in so many foreign countries? Well, in some developing countries where free markets and democratic politics have not yet fully emerged, classical free-market liberalism may still be only an aspiration of an intellectual minority and not yet an actuality subject to being democratically corrupted by organized interests; the process described by Mancur Olsen in his Rise and Decline of Nations (1982) has not yet taken hold. But this mere conjecture leaves unsolved the puzzle of why “liberal” or “liberalism” does indeed retain its classical meaning in many countries outside the United States.

As if to illustrate Mencken’s point, a recent call-in session on C-SPAN recognizes appropriate federal government concern about bedbugs.

But it does. Evidence follows. The Atlas Foundation, founded by Sir Antony Fisher and now headquartered in the United States, is an umbrella organization for classical-liberal programs and thinktanks around the world. Atlas lists many dozens of them that it supports or that cooperate with it. I tried to find all of these web sites (and also found a few others). Unsurprisingly, most by far of the American thinktanks use “liberal” or “liberalism,” if at all, in the American leftist sense. In other countries, also, by no means do all or even most of the free-market thin tanks explicitly label themselves “liberal” either by their names or in their homepage self-descriptions. That is understandable. They may not want to risk frightening away potential supporters by one explicit label. They do, however, express sympathy with the tenets of classical liberalism, which they review.

Yet some do explicitly name themselves. Examples include Club Liberal (Spain), Unión Liberal Cubana (located in Spain), Instituto Liberal (Brazil), Instytut Liberalno-Konserwtywny (Poland), Liberaljnaja Missija (Russia), Association for Liberal Thinking (Turkey), Center for Liberal-Democratic Studies (Serbia), Centre for Liberal Strategies (Bulgaria), Liberal Group (India), Liberal Network Europe (Bulgaria), Liberales Institut (Switzerland), Libertarni Klub (Slovenia), Eurolibnetwork (France), Liberal Youth Forum (India), and Red [Network] Liberal de América Latina (16 countries).

Tanks describing though not actually naming themselves as liberal include Free Market Center (Serbia), Free Market Foundation of Southern Africa (South Africa), Fundación para el Análisis y los Estudios Sociales (Spain), Institut Constant de Rebecque (Switzerland), Institut Turgot (France), Institute for Development and Social Initiatives “Viitorul” (Moldova), Institute for Economic Studies Europe (France), Instituto de Ciencia Política (Colombia), Instituto de Estudos Empresariais (Brazil), Instituto Liberdade (Brazil, formerly named Instituto Liberal do Rio Grande do Sul), Istituto Acton (Italy), Istituto Bruno Leoni (Italy), Liberté Chérie (France), Mont Pelerin Society (international), Prague Security Studies Institute (Czech Republic), Center for Political Studies (Denmark), Centre for Independent Studies (Australia). The Centre for Civil Society (India) straightforwardly calls itself “liberal,” as in announcing a “Colloquium on the Indian Liberal Tradition” and issuing invitations to the 2011 regional meeting of the Mont Pelerin Society, whose theme would be “India as a Global Power: Practicing Liberal Values at Home and Abroad.”

In addition, many of the tanks not explicitly so naming their philosophy do present articles or other content using the word “liberal” (or “liberalism”) in the classical sense. Examples include Andes Libres Asociación Civil (Peru), Center for Free Enterprise (Korea), Center for Institutional Development (Romania), Centro de Investigación y Estudios Legales (Peru), Centro para la Apertura y el Desarrollo de América Latina (Argentina), Education Forum (New Zealand), Eudoxa AB (Sweden), F.A. Hayek Foundation (Slovakia), Free Market Center (Serbia), Fundación Pensar (Argentina), Imani Center for Policy and Education (Ghana), Instituto de Libre Empresa (Peru), Free Market Center (Serbia and Montenegro).

Why did the change of meaning occur mainly in the United States while “liberal” retains its classical meaning in so many foreign countries?

Many institutions indicate their orientation by naming themselves after classical liberals. A list, partially overlapping the preceding ones, includes: John Locke Foundation (US), Locke Institute (US), James Madison Institute (US) Henry Hazlitt Foundation (US, now dissolved), Alexis de Tocqueville Institution (US), Bastiat Institute (US), Milton and Rose D. Friedman Foundation (US), Istituto Bruno Leoni (Italy), Adam Smith Institute (UK), Adam Smith Society (Italy), Adam Smith Centre (Poland), David Hume Institute (UK), Institut Turgot (France), Institut Constant de Rebecque (Switzerland), Fundación José Ortega y Gasset (Spain), many named after F.A. Hayek (Austria, Slovakia, Russia, Germany, Canada), and many named after Ludwig von Mises (US, Belarus, Belgium, Mexico, Argentina, Russia, Brazil, Romania, El Salvador, Czech Republic, Slovakia).

Conclusion

It is understandable how change in the liberalizing direction might have gained momentum and drifted into change valued almost as itself. But where should an originally admirable drift stop? It is odd that continual change through legislation and bureaucratic regulation, however democratically adopted, should be made a philosophical ideal. Political philosophy might better present a stable vision of the good society, one in which individuals can successfully pursue their own goals in life in peaceful and productive cooperation with others through trade and otherwise.

A stable society does not mean stagnation. A stable political framework does not obstruct — it fosters — an environment of progress in science, technology, and culture, a rising standard of living, and a widening of people’s opportunities.

Reclaiming the word “liberal” in its classical and international sense will help clarify discussion of such issues. Instead of outright and confusingly reversing how the word “liberal” is commonly used in the United States, qualifying it as “left” serves clarity.“Left” is not an abusive term employed instead of argument; it describes but does not in itself evaluate. Conceivably left-liberals are correct about the issues that concern them. Furthermore, they typically regard being politically somewhat to the left of center as the moral, humane, compassionate, and progressive position. In the many parliaments where the seating pattern distinguishes between left and right, delegates seated on the left are not ashamed of sitting there.

Two alternatives to the terminological rescue that I suggest come to mind. The left-liberals might be renamed “progressives.” Some of them call themselves that already; and some conservatives, such as Glenn Beck, even use “progressive” as a term of abuse. However, the word already names a specific policy stance in early 20th-century America. Furthermore, it concedes an undeserved terminological advantage to the “progressives,” as if they were for progress and their opponents were against it.

Or classical liberals might give up, concede the unqualified term “liberal” to their opponents, and call themselves “libertarians.” But one might plausibly distinguish between libertarians and classical liberals. I sometimes say, only half in jest, that libertarianism is classical liberalism for children, while classical liberalism is libertarianism for adults.

Most briefly, explicitly distinguishing between left and classical liberalism will promote clarity in discussion, particularly when international usage is taken into account.




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Liberté

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NewsBiscuit recently reported that in the wake of Wikileaks revelations, the truth has finally been admitted: "The 'French language' is indeed a one thousand year old hoax. The president of France revealed that what purported to be his native tongue was in fact complete gibberish, admitting the French really speak English, except in the presence of the British."

Here are my comments about this terrible revelation.

It’s a wonder the hoax lasted so long, the deceit was so transparent and so unsophisticated. Take the alleged French word for “table,” for example. It’s simply: “table.” They did not bother to change even a single letter. Or take the supposed French word for “intelligence.” It’s just the regular word “intelligence” pronounced in an affected and effeminate way.

Only once in a while did the French make even a small effort to appear to have their own distinctive language. So, for example, they took the English word “connoisseur” and made it “connaisseur,” turning an "o" into an "a" in the middle of the word to try to trip up the unaware and the naïve. Frequently, they just added an "e" at the end of a normal word in a paltry attempt to appear different. This goes, for example, for the longest word in the alleged French language, “anticonstitutionalisme,” which shows with pathetic clarity that it’s simply pseudo-English.

To be completely fair, the engineers of the hoax of a distinctive French language managed two clever defenses that retarded significantly the unavoidable uncovering of their treachery. I refer here to “irregular verbs” and to so-called “false friends.”

Every young American, or Englishman, or Australian, who was ever forced to learn the French “language” first went through an obligatory period of intimidation. They were all told that they had to master “irregular verbs,” like this: “je vais, j’irai, j’allais, [que] j’aille.” (I go, I will go, I used to go, that I go). They were all told of the three hundred verbs like this that they must master without fail. Naturally, as you would expect, all those young people quickly became discouraged. And, of course, their mass failure only served to reinforce, over time, the myth of a separate French language. The French themselves have never heard of such barbarity. In private, they used words like you and I (“you and me”?).

The second obstacle placed in the paths of students, the so-called “false friends,” was thrown at random into the pseudo-language by the perpetrators. Thus, “deception” means “disappointment,” “entree” means “hors-d’oeuvre,” and the old English word “mercy” was robbed of its final "y" and replaced with an "i." Then they tell you it means only “Thank you” in their pretend-language.

Had we been more observant, we would have uncovered the deception much earlier, noting the curious lack of certain words, in the imaginary French language. Thus, it has no word for “fun” and, on the Internet, it uses “LOL” to mean exactly “LOL.”

We were had. Dommage!




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Greenbacks and Green Energy

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Larry Kudlow kicked a hornets’ nest when he suggested last month that the riots that were then breaking out in Algeria, Egypt, Jordan, Libya, Morocco, and Yemen were caused not just by indigenous anger at tyrannical regimes but by skyrocketing food prices. Kudlow noted that Egypt in particular is the world’s largest importer of wheat, and rising wheat prices had pushed the Egyptian annual inflation rate to over 10%.

Kudlow suggested that the Fed’s easy-money pump priming may be in part to blame. As he noted, commodities are typically priced in our currency, and the Fed has been producing it as fast as rabbits on meth. The CRB food index is up 36% in one year, and inflation is blossoming around the world — in Latin America, Asia (China and India especially), and now even in the EU.

Kudlow was (as usual) quite prescient. Recent stories confirm the increasing squeeze of food inflation. First is the report that the dollar’s rapid descent is hurting many people in undeveloped countries, such as the Philippines. A large percentage of Filipinos work abroad for American employers, or for employers in countries (such as Hong Kong and Saudi Arabia) whose currencies are closely tied to the dollar. As the American dollar loses value, the funds that Filipinos who work abroad send home to help their families also lose value. Considering that remittances from abroad account for about 10% of the country’s economic output, this is causing immense hardship.

The once-lowly Philippine peso has appreciated against the dollar by over 15% in the last three years. So the dollar’s fall is hurting a lot of people. One woman quoted, who uses her husband’s remittances to feed and educate their three children, has seen the number of pesos she gets from him go down by nearly 25% over the last few years.

The problem is the same for China, India, and Mexico, all countries with large numbers of workers paid in dollars or dollar-linked currencies.

Besides the Fed’s endless pump-priming, another cause of food inflation has been the continuing boondoggle called the ethanol program. For years, the federal government has been shoveling tens of billions of dollars at corn growers to get them to produce corn for making ethanol for fuel.

Now, this program has long been criticized as a way of replacing petroleum. It is hugely costly, especially when you consider how much energy it takes, in fertilizers, planting, harvesting, and shipping the corn. Why, even Al Gore — the über-Green — is now questioning the wisdom of the corn-based ethanol program.

Not as much comment has been made on the role our massive ethanol program plays in jacking up food prices. Since now roughly 40% of America’s corn (which means 15% of all corn produced worldwide) is being used for ethanol, corn prices have skyrocketed, increasing food prices in countries (such as Mexico) where corn is a major staple for people or a major source of cattle feed.

Moreover, the billions of bucks shoveled out by the federal government have induced many farmers to switch from growing wheat to growing corn, thus helping to drive wheat prices up even further.

Just as Gore now doubts the wisdom of using corn-based ethanol as a substitute for petroleum, no less a luminary than Bill Clinton is wondering whether the ethanol program isn’t causing food riots and political instability all over the world. He expressed these heterodox thoughts at the Department of Agriculture’s annual Agricultural Outlook Forum. While he said he still believes in corn-based ethanol, he urged farmers to consider the effects of their choices on developing countries.

He was being ludicrously timid. The corn-based ethanol program should have its subsidies ended immediately. Then we would see what the real price — set by supply and demand, not by Congress — should be. My bet is that the industry would shrivel up rapidly, freeing grain for human consumption.

As the cliché has it, what goes around comes around. A recent story reports that the global food inflation is now hitting American stores. The U.S. Department of Agriculture estimates that US food prices will jump 3% to 4% this year — hardly news to anyone who has shopped for food lately.

In fact, consumers would have felt the sting of inflation earlier and deeper, except that supermarkets have not been passing on the full hit, for fear of hurting sales. But as prices for food commodities keep rising, sooner or later the full cost of those increases will have to be paid by the American consumer.

At that point, perhaps we will see food riots. Or at least see Obama join Egypt’s Mubarak as a toppled leader.




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How to Build a Marionette

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On January 18, 2011, on the floor of the House of Representatives, Congressman Steve Cohen of Tennessee said that those who characterize the new healthcare law as a “government takeover of healthcare” are purveyors of the “big lie. Just like Goebbels.”

A quick browse round the web reveals wide agreement that Mr. Cohen’s insertion of the Reich Minister’s name into the healthcare debate did little to encourage reasoned discourse. The next day, Mr. Cohen himself felt the need to clarify, saying, "Not in any way whatsoever was I comparing Republicans to Nazis."

A consensus seems to have emerged that, while the congressman is given to using inappropriate language, he means well, and that the matter should be gently set aside. I agree, and will do so right after addressing two small questions.

The first is straightforward: Is it a “big lie” to say that the implementation of the new healthcare law would result in a “government takeover of healthcare?” The second question is more speculative: what would Dr. Goebbels have thought of the new healthcare law?

Regarding the first question, anyone who considers the increased government regulation contained in the new law to be inadequate would almost certainly find the “takeover” accusation questionable. Those who favor the single-payer system of government-run universal healthcare insurance, for example, would probably find the characterization of the new law as a “government takeover” simply laughable. Their fondest hope is that the government will become the sole insurer of health, eliminating the need for private health insurance entirely. Because that hope is not fulfilled by the new law, from their vantage point the “big lie” charge may seem true. After all, they want a government takeover. It seems likely that Politifact, the Pulitzer-winning website that first called the “government takeover” charge the “biggest lie of 2010,” shared that hope.

But there is more than one way to take over a healthcare system.

Guess how many Americans already have their health insurance provided by the government? Come on, have a go.

According to the National Council of State Legislatures, more that 90 million Americans were covered by Medicare and Medicaid in 2009. The website Health Policy Gateway gives us additional government-insured group totals, also for 2009: 11 million covered by the military system, 7.8 million covered as federal employees, and 30.3 million covered as state and local employees. The Indian Health Service tells us that it serves some 1.9 million Native Americans. The Bureau of Justice Statistics counts 2.4 million who get their government healthcare behind bars.

So, even before the new law was passed, the government, in one form or another, was already insuring about 143 million Americans, or about 46% of the 2010 US Census total of 308 million. Not quite half.

How about the other half?

Under the new law, the government becomes a puppeteer and private health insurance companies its marionettes. Let’s look at a few of the strings.

The first string is called “guaranteed issue,” which means that the insurance companies will no longer be allowed to deny coverage to anyone, regardless of pre-existing conditions. They’ll have to take all comers.

The second is “community rating,” which means that insurance companies will be required to charge the same amount to all people of the same age, sex, and geographical location — again, no matter how serious the pre-existing conditions, and no matter what other risk factors may be present. One size fits all.

The third string is “minimum coverage standards,” which means that the minimum scope of coverage will be decided by the government. Have it our way.

The fourth string is “rate review regulation,” which means that Health and Human Services will judge whether proposed premium rate increases are unreasonable or excessive. (At this point the regulations indicate that while HHS will issue its judgment, “whether or not an insurer can implement an increase determined to be unreasonable by a state will, of course, depend on state law.”)

Now imagine that you are a healthcare insurer. Under this law, you have to sell insurance to everyone who wants it, you have to charge them all the same amount (except for age, etc.), your product (scope of coverage) will not be determined by you, and the amount that you can charge is subject to the approval of the government, whether state or federal.

If you are running an insurance company and you are told what you must sell, what you must charge for it, and to whom you must sell it, you are not running an insurance company.

The health insurance industry will be like a giant Howdy Doody, with Secretary Kathleen Sebelius holding the strings.

Note that this list is not comprehensive and does not include, among other things, the bizarre part of the law that compels citizens who are otherwise uninsured to buy health insurance from Mr. Doody.

So, regarding the first question, while it may be an exaggeration to say that the new healthcare law in itself constitutes a “government takeover of healthcare,” calling it a “big lie” stretches the truth. After all, whoever controls health insurance controls the health providers by deciding who will be paid how much for which procedures. There must be a way to put it more fairly. How about this: if implemented as written, the new healthcare law would constitute, in what has been a decades-long journey down the road of ever-greater government control and regulation of the country’s healthcare system, a great leap forward.

Now, what would Dr. Goebbels have thought of all this?

While the National Socialist Party never implemented a single-payer system, it did build on the government-sponsored healthcare system created by Kaiser Wilhelm II. In 1934, a national director was appointed for all sickness funds. Another director was created to be responsible for all other insurance funds. Both these directors reported directly to the central government. Then, all funds, community health services, and non-governmental healthcare organizations were put under direct central government leadership. By 1945, health insurance had been expanded to all pensioners, and accident coverage had been expanded to cover all workers, regardless of occupation. A 12-week, job-protected maternity leave had been introduced, and limitations on sick leave had been eliminated. In short, during the Third Reich, in keeping with Hitler’s leadership principle, or Führerprinzip, the central government increased its control of all aspects of the healthcare system. (See James A. Johnson and Carleen Harriet Stoskopf, Comparative Health Systems: Global Perspectives for the 21st Century, Jones & Bartlett, 2009.)

One can’t be sure, of course, but it seems reasonable to say that Goebbels approved of these developments in the healthcare system of Germany. He was, after all, a committed National Socialist and a close friend of the Führer. It also seems reasonable to infer that, were he alive, he would approve of America’s new healthcare law, which has the same sort of centralization of control that was evident in Germany during the decade from the mid-’30s to the mid-’40s.

In pointing this out, it needs to be said that I am not in any way whatsoever comparing supporters of the new healthcare law to Nazis.




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Defining Democracy Down

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The subject this time is babies, dictators, and democracy.

Here’s how it fits together. Since the last Word Watch, the Islamic world has been convulsed by revolutions and attempted revolutions. The American media have responded as they usually respond — with the dumbest kind of coverage imaginable, intended for the edification of the dummies, the babies, that they believe the rest of us to be.

Example: on February 22, Fox News anchorman Shepard Smith expressed amazement at the fact that Muammar Qaddafi (the Man of a Thousand Spellings), who has ruled Libya for 42 years and who had, at that point, been besieged by protestors for about two days, had not yet surrendered his power. This, to Smith, was “unprecedented,” shocking, disgusting! What could it mean? When would Qaddafi quit? We’re waiting here!

Smith’s attitude was merely an elongation of attitudes already manifested by his colleagues at CNN and the FCC-regulated networks, not to mention the White House. We’re tapping our fingers . . . still tapping . . . still tapping. Now we're tapping our feet as well. Listen, bub, are you gonna quit in time for the six o’clock news or what?

Well, how dumb can you get? How uninteresting can you get? The passion of revolt, the drama of power, the lessons of history, the contingencies of human emotion, the intricacy of human societies . . . . Forget it. When will he quit? He should’ve quit by now. And the same thing had happened a few days earlier, in the case of Egypt’s Hosni Mubarak.

In this atmosphere, it was nothing for foreign correspondents to morph themselves into incarnations of “the democracy movement,” wherever they thought they had found it, heedless of their foreign citizenship and their glaring lack of political knowledge. “We are all Egyptians now!” proclaimed many American welcomers of Mubarak’s fall. I don’t mind that Mubarak fell, although I would like to know who will replace him. But I am not an Egyptian, nor do I walk like one.

It was nothing for foreign correspondents to morph themselves into incarnations of “the democracy movement,” heedless of their foreign citizenship and their glaring lack of political knowledge.

David Hume, who had an important, though not a crucial, influence on libertarian thought, observed that “in reality there is not a more terrible event than a total dissolution of government, which gives liberty to the multitude, and makes the determination or choice of a new establishment depend upon a number which nearly approaches to that of the body of the people.” I’m not sure that this is true, though I suspect it is. A "total dissolution" of government by the mob is plainly not what even anarchist libertarians ever had in mind, because it is likely to lead to a new and terrible establishment of power. Shouldn’t a more reserved, conceivably more skeptical, point of view be entertained, if only for a moment, when the media report on the furor of “democratic” crowds?

I’ll return to “democracy” a little later. But here’s Shep Smith, in his impatience for the overthrow of Qaddafi: “If the military doesn’t turn on him, we’re looking at a real possibility of genocide.”

Genocide? Did he say genocide? An attempt to exterminate a whole people? Was Qaddafi attempting to exterminate his fellow Libyans, as the Nazis attempted to exterminate the Jews? Of course not. All we saw in Libya was a revolution and perhaps the beginning of a civil war. Insurgents were attempting to overthrow an absolutist government, and the government was responding as such governments are wont to respond.

Now, this rhetorical redefinition of a morally important word, “genocide,” is disgusting in itself. But consider Smith’s summary of the reasons for his attack on Qaddafi: “This man has sent foreign mercenaries out to murder citizens? Come on!”

It is wrong, by definition, to send people out to “murder” other people. But that isn’t genocide. And the claim that it happened isn’t proof that it happened. Maybe it did. It’s the job of the media to report on that, not to provide us with moral labels in place of news. On all the networks and news services, Mubarak and Qaddafi have been habitually identified, for the benefit of Americans who presumably require such identifications, as “brutal dictator Hosni Mubarak” and “brutal dictator Muammar Qaddafi.” I’m not concerned about the insult to Qaddafi, who is certainly a brutal dictator, or about the insult to Mubarak, who may well have been such; I’m concerned about the insult to the audience. Fox’s slogan is, “We report; you decide.” Well, only in some cases. In others, the audience is assumed to consist entirely of babies, who must be told what to “decide.”

An adult listener might still be curious to know how this insane person could possibly have continued in charge of an ancient, populous country for four long decades.

Actual information about the regimes of the North African authoritarians would be of interest, perhaps of compelling interest. But you could spend (and I have spent) many hours watching network coverage of North African events without ever hearing any presentation of political facts that lasted longer than a minute. One example was the treatment provided by Piers Morgan, the new messiah-interviewer at CNN. On February 22, Morgan modestly stated that CNN had “oversold” him to its audience — a claim he had already proven by his long, lugubrious, pointless conversations with people who asserted some knowledge of Libya. Most of these people were just oohing and ahing about how terrible Qaddafi is, but whenever any of them tried to fill the audience in on the nature of Libyan politics — the tribal divisions, the ideological divisions, the historical divisions, the people's inexperience with self-government — Morgan gave them short shrift. He asked no follow-up questions. He asked for no background information. He asked for no supporting facts. He switched to questions like, “So what is Qaddafi really like?”, and he soon tired of answers that went beyond “He’s a brutal dictator.”

His colleague Anderson Cooper was worse. Rather than presenting Qaddafi’s rants as the news they were, and letting them speak for themselves, he insisted on telling his audience how to think — and even not to think — about them. Introducing a one-minute clip of Qaddafi’s February 22 address, Cooper said, “He’s almost comical in his appearance, but don’t be fooled by his buffoonery.” Thanks, Anderson! I’m a baby, so I’m easily fooled. But you’ve kept me from swallowing that rattle.

After the Qaddafi clip, Cooper introduced Ben Wedeman, CNN’s correspondent in eastern Libya. Wedeman wanted to put Americans at ease with the Libyans. About Libyans’ opinion of Qaddafi he said: “They know he’s insane.” Well good; I'm glad to hear it. But an adult listener might still be curious to know how this insane person could possibly have continued in charge of an ancient, populous country for four long decades? Didn’t anybody know he was insane? If people knew, why didn’t they do something about it? If they didn’t know, what does that say about the Libyan body politic? And what does all this tell us about the possibility of a real freedom movement in Libya? These questions weren’t worth pursuing, either by CNN or by its rival, Fox.

Among other things, this is a commentary on the American media’s abject devotion to the great and mysterious idol, Democracy. No questions must be allowed to interfere with the liturgy of this god, as recited daily by its media priests. At the same time, I haven’t heard a single question from the media about the authoritarian language that our own government has been using about recent events in North Africa. What kind of government is it that announces to a foreign nation that its leader “must go”? Answer: the Obama regime, first about Mubarak, then about Qaddafi. If the gentlemen in question had possessed any sense of humor, they would have made speeches in which they proclaimed that Obama “must go!”

No questions must be allowed to interfere with the liturgy of the god Democracy, as recited daily by its media priests.

As readers of this journal may remember, I have zero respect for the idea that the boundaries of dictatorial states are somehow sacred and that no armed forces must ever cross them. Those borders aren’t sacred to me. Yet the arrogance of the Obama administration takes my breath away — despite the fact that there’s a long tradition of this: the Bush administration showed the same arrogance, and so did most other administrations, all the way back to Woodrow Wilson. Arrogance, and hypocrisy. When American administrations demand “democratic reforms” in other countries, they never ask themselves whether it’s democratic for foreigners to dictate to the people who live there.

But speaking of democracy in the Middle East, let’s consider the “democracy” movement in Wisconsin, where state-employee labor unions are desperately trying to block the governor and legislature from passing a bill cutting their funds and limiting their power. The Republican governor was elected, four months ago, on a platform of doing exactly that; the legislature, elected at the same time, is overwhelmingly Republican and prepared to follow through on the scheme, if it can get just one Democratic senator to show up and make a quorum. Well, that’s democracy, isn’t it? But no: in the name of “democracy,” union hordes invaded and occupied the capitol, attempting to shut down the government, and Democratic legislators, unanimously friends of big labor, fled the state. Leftist demonstrators continue parading up and down State Street in Madison, carrying signs likening the governor to Qaddafi and Mubarak. They also carry signs announcing their own righteousness, signs saying, “This Is What Democracy Looks Like.”

When American administrations demand “democratic reforms” in other countries, they never ask themselves whether it’s democratic for foreigners to dictate to the people who live there.

We see again the kindergarten approach. What do you think democracy is, children? You don’t know? Well, here’s a pretty picture. But when normal adults see such a slogan, employed by such people, their first impulse is to laugh. Democracy? There was an election; the voters said what they wanted; it just didn't happen to be what the protestors wanted. So who's on the side of democracy — the protestors, or the voters they oppose? And notice, this is a rebellion of people who are getting paid by the voters, people who insist that they have a right to as much pay and power as they can get, no matter what the voters want. Doesn’t that sound more like dictatorship than democracy?

Strangely, however, the protestors’ slogans strike most of the media as cogent indeed. To cite only one of many amusing instances: on February 26, at 3:00 p.m. (EST), CBS Radio’s hourly news offered a report from Madison. It consisted of the following: Young woman’s voice speaking over the noise of demonstrators. Young woman: “This is what democracy looks like. These are the people of Wisconsin, fighting for their rights.” End of report.

The woman may have been one of the demonstrators, or she may have been a CBS correspondent in Madison. The absence of identification allowed listeners to make up their own minds about the provenance of the propaganda. The difficulty of deciding who she was exemplifies how hard it often is to distinguish nonsense from "news," leftist agitprop from normal media blather. Of course no question was asked, no remark made, about any of the brutally obvious issues that the “report” raised. Would you expect there to be? No, not unless the babies in charge of the news were replaced by intelligent people who respected the intelligence of their audience.

You might remark, as many libertarian thinkers have remarked, that “democracy” is not a word that (pace the media) is simply synonymous with “good.” You might make the historical observation that unlimited democracy — democracy without legally enforceable respect for rights or a government of limited powers — has often resulted in predatory regimes. You might record your skepticism about the legitimacy either of crowds shouting in the streets or of dictators who advertise themselves as the embodiments of crowds shouting in the streets. If you did that, you would be expressing nothing more than common sense and common knowledge of the world. But common sense and common knowledge will never get you a job in the information industry of America.




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Marque and Reprisal

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The AP reports that Erik Prince, founder of Blackwater US, is involved in training 2,000 Somali recruits to fight pirates who operate on the African coast. The financing for this venture “is being moved through a web of international companies, the addresses of which didn't always check out when the AP sought to verify them.”

I’d hoped that the US government would have followed Congressman Ron Paul’s suggestion and used its constitutional authority to fund such operations. Article I, Section 8 of the Constitution authorizes Congress to punish piracy and felonies committed on the high seas. The next clause allows Congress to grant letters of marque and reprisal, to address the special situation in which American ships, property, and interests are menaced, but no other government is involved.

War is not declared. Money for rewards is passed like an ordinary spending bill. Privateers using their own arms and wits are authorized to make money by taking the property of an offending foreigner. A sharply defined goal can be set and only success rewarded. The cost of using mercenaries is minimal, and America’s reputation and diplomatic interests are not on the line. No US serviceman will die.

In Somalia, Prince and his roughnecks can make a profit and pay market compensation to mercenaries who might lose lives or be injured while carrying out their assignments. America can plausibly deny responsibility for the sometimes distasteful aspects of war.

In 2001 Paul suggested that Letters of Marque and Reprisal be issued to kill or capture Osama bin Laden, who was hiding in ungovernable areas of Afghanistan. A force of irregulars, highly motivated by a generous bounty, would have neutralized bin Laden if anyone could have. Mercenaries would not have been distracted by the mirage of bringing “democracy and a strong central government” to the proud and independent anarchists farming that expanse of gravel.

But I expect too much; our Constitution languishes on life support in Washington. War is the health of the state.




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Debt Approaches Historic High

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A recent report went virtually unnoticed, given the uprisings of oppressed peoples from Libya and Egypt to Wisconsin and Indiana. (In the last two cases I refer to the uprisings of the taxpayers against the tax eaters.) It turns out that the government debt of this fabulously progressive nation now exceeds its GDP.

Yes, if you add what the federal, state, and local governments owe to creditors, the sum exceeds what the country produces in a year, which is about $15.1 trillion. This includes the $2.4 trillion in debt owed by states and municipalities, and the debt owned by the fraudulently named Social Security Trust Fund, not to mention the now $14.17 trillion owed by the federal government.

We are approaching the all-time high mark in US debt to GDP ratio, which hit 122% in 1946, just after World War II. We were able to pay down that debt fairly rapidly, but prospects for rapidly paying down our current debt are dim.

In the years after WWII, we had a young labor force, high personal savings rates, and a population that had deferred buying consumer goods during the war. Also, defense budgets were cut dramatically in the face of peace.

But now we have the most rapidly aging population in our history, a low personal savings rate, and consumers who are pretty well tapped out. Under Obama’s policies, we face high unemployment and tepid growth for the indefinite future, along with the specter of unleashed inflation.

From the late ’40s through the ’60s, entitlement programs were much more limited than they are now. They expanded dramatically under Lyndon Johnson, then exploded with Obamacare, which has the potential of giving “free” healthcare to as many as forty million more people (if illegal aliens get covered).

Social Security is now in the red and likely to stay there. And the first of the 78 million Boomers became eligible for Medicare this year. Moreover, we are only now learning about the trillions of dollars in unfunded pension and healthcare entitlements of government employees.

Until recent times, the US was the preferred place of worldwide investment, because of our relatively free economy. But now, with massive new regulations here — from Sarbanes-Oxley (the law that was passed after the Enron debacle to regulate corporate accounting) to the Dodds-Frank finreg monster (the Wall Street Reform and Consumer Protection Act) — and ever freer economies in Asia and elsewhere, more investment money is flowing abroad.

After WWII, there was broad bipartisan support for free trade; people had seen the role that protectionism played in extending the Depression and helping to bring about a cataclysmic world war. But over the past few years, we have turned our back on that consensus.

Finally, we have at the helm the most radically leftist and the most economically illiterate president ever elected – and also the most profoundly incompetent president, managerially.

It will take a long time to dig out of this mess.




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