Who are the Real PIGS?

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As Europe continues to flounder, and as people continue to wonder whether (or more likely, when) Greece is going to default on its sovereign debt, various commentators have bandied the epithet “PIGS” (or “PIIGS”, depending on which nations a commentator wants to include).

By this acronym they refer to a group of countries — Portugal, Ireland, (Italy), Greece, and Spain — that have borrowed profligately, unlike such disciplined places as France, Germany, and the United States. What the miserable PIIGS need to do is start getting their snouts out of the troughlearn to manage their economies efficiently, as their betters do.

It’s obvious that the PIIGS need to liberalize their economies and better manage their fiscal houses. But the morally supercilious tone of the commentary annoys me. I don’t think the US or the major European states are in any position to be giving lectures. Their own levels of debt are outrageous, too.

A recent report brings the point home. If you don’t look at sovereign debt by sheer amount, but look instead at per capita debt — that is, take the aggregate national debt and divide it by the number of citizens in a country — you will see that the PIIGS aren’t as piggish as we are.

Spain’s per capita debt is $18,395. Portugal’s is slightly more, at $19,989. But France’s per capita debt exceeds these two by a wide margin. It’s $33,491.

Again, Greece is outrageous at $38,937, Italy at an amazing $40,475, and Ireland — Erin go Bragh!—at a staggering $43,887.

But the US, the paragon of fiscal rectitude, already stands at $44,215 per capita — more porcine than any of the PIIGS. And under Obama’s latest budget plan, that debt will reach $75,000 per capita (in current dollars) within a decade.

Americans can truly join the PIIGS as they squeal “Oink! Oink!”




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The Give Back Game

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This morning when I arrived at my job as the Director of Learning Centers for the college where I teach, the following directive was waiting in my inbox: “Join us for a celebration of service as We Give Back!” My first thought was, “Give what back? Did we borrow something?” I certainly don’t remember taking anything that doesn’t belong to me. Well, I did take a pencil home once. I suppose I could give that back. But I don’t see any reason to celebrate its return with a bunch of hoopla and publicity.

The point is, I’m tired about all this “let’s give back” rhetoric. If my college is really concerned about “giving,” how about “Let’s Give Teachers Enough!” Most of the teachers I know work second jobs and take on extra courses in order to supplement their meager incomes. We do all the teaching, and we get paid half what the administrators earn. If that. No wonder they feel guilty.

Moreover, we have our own service projects, thank you very much. I happily do things for my church, my family, and my friends. I consider teaching itself to be a community service project of sorts. But I don’t keep score. I’m not “giving back.” I do it because I want to. I don’t need to get involved in some do-good project at the school where I work, just so they can publicize it and make themselves look good. If they think they’ve taken too much from someone, they can give it back themselves.

Come to think of it, I use my own pens, pencils, and paper supplies at school so often that I don’t really need to feel guilty about taking that pilfered pencil home. In fact, I think I used it to grade papers. On my own unpaid time. Now who’s going to give that back?




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More Solyndra Stink

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The stench of corruption that characterizes the Solyndra scandal — the affair of the so-called green energy company, run by a billionaire Obama crony, that cost taxpayers a fortune — permeates the whole green energy scene.

But a recent article — amazingly, in the Washington Post, hitherto a bastion of Obama Regime support — turns over yet another rock, exposing yet more maggots crawling around the putrid Department of Energy (DOE).

What is humorous about this piece is that it focuses on “venture capitalists” who were in on the, shall we say, less idealistic side of the green industry.(Obama, by the bye, raised more than twice as much campaign money from the venture capital industry as did his rival McCain.) The listed include many worthy luminaries.

  • Sanjay Wagle was a major fundraiser for Obama in 2008, leading a group of greenies called “Clean Tech for Obama.” He then left his company, Vantage Point Venture Partners, to join the DOE team in charge of doling out $80 billion in green energy subsidies. Is it any coincidence, comrades, that companies in which Vantage Point had invested raked in $2.4 billion from the DOE slush fund?
  • David Danielson left General Catalyst to join Obama’s DOE. Subsequently, the DOE handed out $105 million to three companies backed by General Catalyst. The DOE denies any connection here — pure coincidence.
  • David Sandalow is a longtime Democrat player (he was part of the Clinton Administration as well as a fellow at the Brookings Institute, a liberal thinktank). He was paid nearly a quarter of a million dollars by venture capital company Good Energies (don’t you just love these names?) the same year he left it to join the DOE (2008). Again, according to the DOE, it is pure coincidence that SolarReserve, one of the companies invested in by Good Energies, scarfed up $737 million in DOE loans.
  • Steven Spinner (a marvelously Dickensian moniker) raised over a half-million bucks for Obama. He was then made a loan advisor to the Green Regime’s DOE, which awarded venture capitalist firm Wilson Sonsini’s client firms $2.75 billion in various forms of financing. By another astonishing coincidence, Spinner’s wife just happened to be working for — Wilson Sonsini!
  • John Roos was a major “bundler” for Obama’s 2008 race. He was also CEO of Wilson Sonsini when its clients received all that DOE pelf.
  • Steve Westly was another big donor-bundler for the Obama campaign. He is the founder of venture capitalist firm Westly Group. He also served on the DOE advisory board, the same DOE that forked over $600 million to companies invested in by the Westly Group.
  • David Prend is head of the venture capital firm Rockport Capital. Prend has long been affiliated with the DOE, going back to the most recent Bush administration, and continued his role under Obama. Companies supported by his firm (including the infamous Solyndra) received $668 million in money from the DOE.

Some years back, I reviewed a great book by Arthur Brooks, Who Really Cares?, which showed conclusively that progressive liberals are actually far less charitable on average than people who don’t support redistributionist governmental policies. That is, progressive liberals generally were shown to be liberal only with other people’s money.

What is emerging now is a corollary to that thesis. It is now obvious that venture capital firms run by progressive liberals venture only other people’s capital.




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Safety Nets and Slippery Slopes

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There’s been a theme hammered in dull thuds recently by the establishment media: anyone who opposes expansion of the welfare state is a hypocrite because everyone is on the dole. The New York Times has run several such stories; lesser outlets have followed suit.

Before you gag on this rancid bit of partisan meat, let me say that I think this is a hopeful sign. The hacks are framing the argument in this way because they expect criticism of the welfare state to pick up through the course of this election cycle. As it should. They hope to inoculate the administration against such criticism; in the process, though, they’ll draw attention to related issues that don’t help their cause. These related issues include:

  • the sloppy logic and language of welfare advocacy,
  • the growing role of moral hazard in public policy,
  • the effect of high marginal tax rates on productivity, and
  • the slippery slope of unintended consequence.

Let me sketch out quickly how these all connect with one another.

The recent charges of hypocrisy are merely the latest example of the establishment media’s obtuseness and doublespeak on the topic of welfare. In the statist catechism, the terms “safety net” and “earned entitlement” are supposed to refer to sharply distinct sorts of programs — the former involves straightforward income redistribution, the latter involves a group of programs into which beneficiaries have paid. But the two are often confused. The headline of one Times article reads “Even Critics of Safety Net Increasingly Depend on It.” The article proceeds to focus on the effects of growing middle-class dependence on Social Security and Medicare, which are supposed to be “earned entitlements” and not part of the “safety net.”

The jargon is all so imprecise and indirect that the headline-writing mediocrities at the Times might be forgiven for getting confused.

Of course, there might be a more devious impulse at work — intentionally confusing programs into which people have paid with those into which they have not might be an attempt to blur important distinctions. To make “middle-class” recipients of earned entitlements the moral equivalents of the “poor” recipients of safety-net money. And if everyone’s the same, statist catechism goes, no one can criticize.

The “moral” in this equivalence gets to my next point. The sloppy logic and fuzzy language — intentional or not — may create only an ersatz version of moral equivalence but it encourages very real moral hazard.

Moral hazard has been an interest of mine for a number of years. It takes various forms in various circumstances, but the common conclusion is simple: If people are insulated from the effects of bad outcomes, they produce more bad outcomes.

In matters of public policy, the most evident example of moral hazard is a high marginal tax rate. And this is more closely related to welfare policy than it might seem on first glance.

On the low end of the income spectrum, a high marginal tax rate creates a permanent underclass; on the high end of the income spectrum, it encourages productive people to go Galt. More important, the moral hazard of taxing people stupidly creates a slippery slope; when a person drops down the socio-economic ladder, it becomes harder for him to climb back up.

If a person’s annual income falls from $40,000 to $20,000 because of a lost job or a business reversal — but that person picks up $15,000 in benefits as a result — he’s being insulated from the effects of his lower income. The benefits, which he’ll lose if his income recovers, become part of the effective marginal tax rate that discourages the climb back to $30,000 or $40,000. He’s more likely to accept his reduced circumstances and welfare benefits. Said another way: the same mechanism that acts like a safety net to someone sliding down the slope can act like a barrier to someone scrambling back up.

The problem with managing marginal tax rates is that tax systems are crude tools. The U.S. income tax tables create a roughly-hewn “stair-step” system of increasing rates. And the government benefits made available to low-income earners exaggerate the steps. At some points, a slight increase of income results in a much larger effective tax rate. In these cases, the slope isn’t just slippery — it’s negative. One solution to a negative slope would be modify the tax table to include thousands of tiny steps rather than a few rough ones; another would be to reject the step system entirely and move to a nonlinear formula for calculating the income tax rate each earner pays.

If the establishment media is right and everyone is on the dole, we need to criticize the welfare state more. Not less.

In the 1970s, Milton Friedman suggested a third option that he called the “negative income tax” (based on earlier proposals by Henry Hazlitt and Juliet Rhys-Williams). This negative tax would replace all other benefits; instead of numerous programs subsidizing food, shelter, child care, health care, etc., there would just be one lump-sum payment which would be phased out gradually as a person’s income increased. His idea was mauled and transformed into what we know today as the Earned Income Tax Credit; but the current incarnation is a far cry from what Friedman had in mind. His goal was to minimize bureaucracy and control fraud in the welfare apparatus. Our system today, an income redistribution scheme that pretends to be an “earned entitlement” program, maximizes all of that.

We’ve always known that income redistribution strips all parties — sponsors and beneficiaries — of their humanity and, especially the beneficiaries, of their dignity. Forty years ago, Daniel Patrick Moynihan predicted that the U.S. welfare state would damage beneficiaries, precisely as it has. If the establishment media is right and everyone is on the dole, we need to criticize the welfare state more. Not less. And we need to get rid of any administration that enables it, even if the alternatives aren’t inspiring.

This sharp truth will cut through hacky charges of hypocrisy from outfits like The New York Times.




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Insurance: For Me or Thee?

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Once upon a time, before we got married, my wife Tina got a ticket for driving without insurance and decided to contest it pro se. Her argument to the judge was simple: insurance was designed to protect the insured from potential losses to herself — not to protect a third party. Anyone she might harm had recourse to indemnification by demanding recompense either voluntarily or through civil action — the traditional recourse for most torts. She added, for good measure, that compulsory insurance laws were a racket — nothing more than rentseeking, insurance industry full-employment legislation.

At the time, Tina was very poor and couldn’t afford insurance. Burdened by a heavy student-loan debt and no job prospect, she was treading water running a one-woman cleaning business. Her $300 Chevy Nova was basic transportation. She had no other assets and was living in a $150-per-month apartment on the wrong side of town.

The judge — in a totally unnecessary flourish of engagement — cited these very reasons to show that mandatory insurance was necessary. Tina retorted that you can’t squeeze blood from a turnip; that, traditionally, once the perpetrator’s assets, however large or small these might have been, had been exhausted in compensation, that was all she wrote; that, in essence, mandatory insurance schemes forced the poor to cover wealthier people who could afford to insure themselves against damages perpetrated by those who could barely afford food and a roof.

Of course, she lost, but the judge admired her spunk and charged her only half the usual fine. While trying to settle up at the cashier's window, she argued her case to the cashier too. He asked her if she was black or Mexican or Indian and pregnant. She wasn’t, so she didn’t get off.

With the prospect of mandatory health insurance coming in 2014, will we get off? Where will the unfunded mandates stop?

Mandatory car insurance is premised on the assumption that driving is a privilege, not a right. Therefore, greater state control is justified. The counter-argument is that people have a right to travel; that driving a vehicle is the modern equivalent of using a horse, and that horse travel was never considered a privilege. It was a necessity.

Alongside the privilege argument (which actually came later) was the “assurance” argument, the argument that there is “no way of assuring that even though fault was assessed the victim of an automobile accident would be able to collect from the tortfeasor” (as Bill Long recounts in Automobile Insurance: A Brief History).

This argument prompts the question: since there is no assurance that a victim may be able to collect damages from a pedestrian, bicycle, equestrian, horse and buggy; or any other type of accident — including accidents on property normally covered by homeowner’s, renter’s, or liability insurance — will we one day be forced to buy these also? I can just imagine governments requiring panhandlers and the homeless to carry liability insurance to make it easier for citizens to collect damages from unfortunate encounters with them.

The “assurance” argument is better described as a “convenience” argument: an argument about providing a convenience for insurance companies and the better-off, at the expense of the poor. (The uninsured better-off face serious loss, if not destitution, when at fault.)

With the invention of the automobile in the late 19th century came the inevitable side effect of automobile accidents.These were perceived — rightly or wrongly (and probably as a natural response to a new and untested technology) — as more frequent and more harmful than previous, more familiar torts. Therefore, it was thought, new laws were required to govern automobiles.

Connecticut led the way in 1925 with a modest “financial responsibility” law. This required any vehicle owner involved in an accident with damages over $100 to prove "financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least $10,000."This early financial responsibility requirement applied to vehicle owners only after their first accident. In the same year, Massachusetts passed the first compulsory insurance law as a prerequisite to vehicle registration.

Mandatory insurance schemes force the poor to cover wealthier people who could afford to insure themselves against damages perpetrated by those who could barely afford food and a roof.

By and large, traditional tort practices remained effective, since — for over 30 more years — no other state saw a need to enact special automobile accident legislation. Then, in 1956, New York passed its compulsory insurance law, with North Carolina following suit the next year. Today, every state bar New Hampshire has some sort of compulsory insurance scheme, and even it has a “personal responsibility” requirement.

Minimum insurance coverage requirements vary wildly from state to state, since estimating the cost of an accident before it occurs is very difficult.The requirements are often expressed in tripartite form — as, for example, in Alaska’s and Maine’s laws, with the highest requirement at 50/100/25, or in the District of Columbia’s, at 10/25/5. These numbers are shorthand for thousands of dollars and refer, in sequence, to: "bodily injury per person/bodily injury per accident/property damage."

After an accident, and once these limits have been reached — again, that’s all she wrote. Limits on insurance coverage have no relationship to liability limits, which are determined only by a judgment and restricted only by one’s net worth.

How effective is the mandatory auto insurance system? An Insurance Research Council study estimated that about 15% of the US population is uninsured — in Colorado, almost 23%.

Many of the logical shortcomings in the mandatory car insurance laws must be evident to people generally, because there is no political will to enforce them effectively. In most states, it's pretty easy to avert the mandates. Most people who fail to comply with the laws do so because they cannot afford the additional cost. It doesn't seem that the will exists to remove these people's means of transportation, and often their means of earning a living. (California and New Jersey, however, have taken a perverse approach toward incentivizing compliance: if uninsured drivers are victims in an accident, they are — by law — prevented from recovering non-compensatory damages, such as damages for “pain and suffering” from the perpetrator.)

Instead of being fined or having their vehicles taken away, motorists are ordinarily given a ticket, and the fee is waived when they show up in court with proof of insurance. Naturally, they can then cancel the coverage or cease making payments once the court date has passed. All this does is create a hassle for the uninsured who happen to get caught, and increases the paperwork for the insurance companies — a small price to pay, I assume — that minister to the captive market.

Do states that have more uninsured drivers actually have lower fatality rates or lower accident rates, because uninsured drivers will presumably drive more cautiously? This is a milder form of economist Walter Williams’ thought experiment, in which he mused that traffic accident rates would decline dramatically if every car’s steering wheel were equipped with a razor-sharp rapier extending from the center of the wheel to within a few inches of the driver’s sternum.

Many of the logical shortcomings in the mandatory car insurance laws must be evident to people generally, because there is no political will to enforce them effectively.

Would the costs to the auto liability system be lowered if we had no mandatory coverage? Perhaps. The narrowing of the base might work against the lowering, but the reduction in regulation would certainly promote it. On the other hand, rates might increase with a broader use of uninsured and underinsured coverage — a pittance to pay for greater freedom of choice and much more convenience.

Soon after the enactment of the first mandatory car insurance laws, the imposition of compulsory social insurance (or retirement insurance) in the form of Social Security became a reality. Lately, after some of the floods, hurricanes, and tornados that have devastated various regions of the country, precipitating massive federal and state relief programs, mandatory flood insurance has been proposed.

Today we are faced with the prospect of compulsory health insurance, beginning in 2014 — if the Supreme Court upholds the constitutionality of Obamacare, a program being challenged by several states because of its compulsory nature.

One major provision of the new Health Care Act requires employers above a certain size to buy health insurance for their employees — definitely a third party mandate. The irony of this requirement is that the practice of employer-provided health insurance began during World War II as a way for businesses to get around government imposed wage and price controls. Since employers couldn’t offer salary hikes, they began to offer perks which, by some loophole in the wage and price control legislation, were not considered pay raises. Yesterday’s dodge becomes today’s mandate.

Advocates of compulsory health insurance argue that it is in the best interest of every individual. It broadens the base of insured people, thereby lowering premiums. But this argument hides the underlying logic of compulsory health insurance: whether or not it actually benefits individuals, it benefits third parties — insurance companies, paying patients (mostly insured), hospitals, and taxpayers, all of whom, to one degree or another, now pick up the tab for deadbeat patients (mostly uninsured).

Only a small minority of uninsured patients are destitute. For the rest, being uninsured is a lifestyle choice made possible by the widespread requirement that hospitals treat the seriously ill regardless of their ability to pay. The repeal of such laws would provide the strongest incentive for everyone to choose to buy insurance, while the truly destitute would rely either on charity or on Medicaid.

Insurance was invented to protect people from unforeseen losses to themselves, not to protect third parties. Transferring the definition of insurance into the realm of bonding muddles the distinction. Some states, such as Arizona, recognize this and offer a bonding option — based on the premise that driving a car is a privilege, and on the state constitution’s prohibition against forcing an individual into any sort of a private contract. But it’s a messy compromise, with folks overwhelmingly choosing insurance instead of bonding.

And when it comes right down to it, isn’t it reprehensible for a majority that is mostly well-to-do to force a less well-off minority to buy insurance merely for the majority’s convenience?




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The Green Jihad's Human Toll

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In a few prior pieces, I explored in some detail the Obama Regime’s green energy jihad. Essentially, its goal is to “solve” the “crisis” of global warming by forcing Americans (but not the Chinese, Indians, Brazilians, or anyone else) to switch from plentiful, relatively inexpensive domestic fossil fuels to so-called green energy sources (solar, wind, and biofuels — but not nuclear), fuels that are orders of magnitude more expensive.

This jihad has two fronts. First, the Regime is shelling out massive amounts of taxpayer money to solar, wind, and biofuel companies — usually those that have greased the palms of the corrupt Regime, and often those that have failed despite the insane subsidies lavished on them. Second, the Regime puts every possible regulatory hurdle in front of domestic fossil fuel production, doing its uttermost to stifle the renaissance in American fossil fuel energy production created by recent technological advances.

Two recent stories illustrate the toll in human suffering that this green jihad is inflicting on the American people. The first story notes that the US House of Representatives is — finally! — expanding its probe into the green energy programs spawned by this administration. For example, it is looking at the $500 million in taxpayer cash spent on a “job training” program for “green” industries.

This costly Department of Labor program (part of the “stimulus” bill that stimulated only graft) started with the grand promise of training about 125,000 people and putting at least 80,000 of them into jobs. Well, after a year and a half, the program has trained only about 53,000 people, and placed a ludicrous 8,000 in actual jobs. Yes, that’s about $62,500 per job. One wonders, besides, why those people couldn’t have been trained directly by the companies hiring them.

This criticism has raised howls of outrage from the green brigades. Perhaps the most asinine came from Assistant Secretary of Labor Jane Oates, who defended the program on the ground that is wasn’t intended to provide immediate jobs. So I guess she’s admitting that when Obama said the stimulus projects were “shovel-ready,” he was shoveling lies. Oates proclaimed piteously, “It’s like coming to me three days after I join Weight Watchers and yelling at me because I didn’t lose 62 pounds yet.”

No, sweetheart, it isn’t anything like that. A proper analogy would be this: you force me to pay a half-billion bucks to send you to Weight Watchers (a program you could have paid for yourself), under the theory that you will lose 62 pounds, and a freaking year and a half later you have lost only 6 pounds. Get it?

The second story is about the cost of the Regime’s May 2010 moratorium on all offshore drilling in the Gulf of Mexico, because of BP’s deepwater spill. After fighting with the courts for six months, yes, the Regime lifted the moratorium. But ever since, it has stalled the issuance of the requisite permits. (This stall is called the “permitorium.”) Since the lifting of the moratorium, the number of deepwater permits granted has been 71% lower than the average before the spill. Shallow water permits have dropped 84% from their historic average.

The predictable result has been the destruction of a horrendous number of medium and small businesses, with a concomitant loss of jobs. The Greater New Orleans economic development agency has reported the results of a survey showing that 53% of businesses responding have not hired any workers since the moratorium, and 49% have had to lay off workers. Of the 47% that did hire workers, most were just replacing departing employees or hiring in small numbers, and most of them have reduced hours or wages.

That is because the companies are hurting. 82% of the owners reported losing personal savings as a result of the moratorium-permitorium, with 13% completely emptying their savings accounts. 76% of the companies lost cash reserves. 27% lost more than half of them. Only 59% are now profitable.

Few green jobs created, many fossil-fuel jobs lost — all to satisfy the environmentalist extremists who feed donations to the Green Regime.




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Insurance — Against What?

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The brouhaha over whether Catholic institutions should be required to provide insurance coverage for contraception highlights everything that is wrong with medical insurance today. And Obama’s “compromise” of requiring insurance companies to provide contraception for free, thereby sidestepping the argument that Catholic institutions shouldn’t have to pay for it, is even worse.

No one should use insurance to pay for contraception. It is a regular, pre-planned expense of daily living. There is nothing to “insure.” There is no guesswork in whether a person will need it or not. It is the best example of the current problems with medical "insurance."

The purpose of insurance is to protect against unexpected catastrophic expenses — the kind of costs you wouldn’t be able to cover on your own. It is a way of hedging your bets against disaster. People pool their money, and whoever has a disaster gets to take money out of the pot. If too many disasters occur, the pool runs dry. The only remedy is to increase the amount each person pays into the pool, and decrease (through healthier, safer living) the number of disasters that individuals can’t pay for themselves.

Some people may never “get their money’s worth” out of their insurance premiums, because they remain healthy and accident-free. And that’s a good thing.

Insurance is the lottery you don’t want to win.

We have to stop thinking about insurance as some kind of unlimited prepaid plan in which everyone scrambles to “get their money’s worth.” For an insurance program to work, there need to be more healthy people than unhealthy people. Insurance premiums always have to outweigh medical payments. But when we start covering every little doctor’s appointment and medical expense, there isn’t enough money left for the true disasters without vastly increasing the premiums.

Contraception is a perfect example. There is nothing catastrophic or unexpected about its cost. If a person is having sex and doesn’t want to make a baby, the cost of contraception is as regular and predictable as clockwork. There is no unexpected event to insure against (unless the contraception doesn’t work — but that’s a different medical event). There is no reason to insure against the possibility that you will have sex.




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Arctic Warming

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The Arctic region is beginning to get hot — but not for anything having to do with “global warming.” No, international tensions are increasing, because of the increasing international demand for fossil fuels.

As Alan Dowd of the Fraser Institute notes in a recent piece, the Arctic is attracting rapidly growing geostrategic attention.

The place is amazingly rich in fossil fuels. The US Geological Survey puts total Arctic oil reserves at 90 billion barrels of oil, or about 13% of estimated undiscovered reserves worldwide, and 1,670 trillion cubic feet of natural gas, or about 30% of the world’s undiscovered gas.

Those are just the conventionally available fuels. God alone knows how much unconventional fossil fuel energy (shale oil and gas, methane hydrates, and so on) lies beneath that frigid sea.

These resources are becoming more and more commercially attractive, for several reasons. First, the Green Regime in Washington has worked to strangle our own domestic production, hoping to shift America to dependence on so-called green energy (wind, solar, and biofuels). Second, Middle East production is increasingly expensive. Finally, as formerly poor countries such as India and China become ever more industrialized, their consumption of fossil fuels is growing. The Energy Information Agency projects a 20% increased in world oil usage over the next 18 years.

This is leading inexorably to friction among nations that have claims in the Arctic: the United States, Canada, Russia, and Norway (together, to a lesser extent, with Sweden and Finland). And it is no surprise the form that this increasing tension is taking: Russia, under the Putin Regime, is pushing to control the lion’s share of the region’s energy wealth.

Russia’s intentions are easy to read from its actions. A 2007 Russian expedition planted the Russian flag on the North Pole. Its leader boasted, “The Arctic is ours!” A year later, a Russian general said that his country was planning to train troops to engage in combat in the region, noting cheekily that “wars these days are won and lost before they are launched.” A year after that, Russia announced that it was opening a string of bases along its northern tier. And last year, it announced plans to deploy 10,000 troops in the region to “defend its Arctic claims.”

And there has been a dramatic increase in Russian bomber interceptions by Canadian and American fighters (up from eight between 1999 and 2006 to 45 between 2007 and 2010). All this is evidence that Putin wasn’t joking when he recently said, “Russia intends without a doubt to expand its presence in the Arctic. We are open to dialogue, but naturally, the defense of our geopolitical interests will be hard and consistent.”

In reaction, both the Bush and the Obama administrations have reaffirmed our national security interests in the region. The US keeps 20,000 troops in Alaska and is conducting “Northern Edge” exercises meant to train our forces in defending the Arctic and keeping the waterways open.

Canada is also concerned. It is constructing new military bases in its Northern Territories and is training troops. The Canadian military has conducted joint exercises with the American and Danish military. A few years ago, Norway conducted Arctic maneuvers with 12 other nations, as did Sweden on its own a year later. Now Finland, Norway, and Sweden together are developing a “Nordic security partnership.” And Denmark is beefing up its military forces in Greenland (its legal territory). The pacifist nations appear to be uniting over this matter.

Such happy high jinks! Notice that these countries aren’t fighting over solar panels, wind turbines, or switchgrass farms. No, they’re fighting over fossil fuels. But, then, people don’t argue over what has no value.




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Censoring South Park

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Earlier this year I read an interview with Matt Stone and Trey Parker, the creative duo behind the hit animated comedy South Park, in conjunction with their new Broadway play The Book of Mormon. What struck me was one of them saying that in the episode of South Park in which they lambasted the cult of Scientology, they had wanted to say that Tom Cruise is in the closet. Their lawyer advised them that Cruise could sue them for defamation, so instead they put the cartoon version of Tom Cruise in a literal closet that he refused to come out of. The result was laugh-out-loud comedic gold, but it highlights one of my major peeves about legal causes of action, which is the law of defamation.

Defamation is a cause of action under which a plaintiff can sue a defendant for damage to his reputation. In For a New Liberty, Murray Rothbard wrote that he believed defamation law should be abolished, because a person’s reputation exists in the brains of other people and the plaintiff has no property right in other people’s minds. My concern is broader; I believe that defamation law scares people away from making statements that might offend those among us with the money to hire lawyers. This fear of being sued for defamation chills people's ability to say what they want. It scares them away from criticizing others, even when the criticism might be justified and deserved.

This danger is often poignant in the case of such artistic representations as South Park, which makes deep, meaningful social commentary by making jokes, often offensive ones, directed at people who could easily take offense and who generally have money. The strange thing is that the first amendment has a clause that guarantees freedom of speech. Why isn't the First Amendment regarded as making charges of defamation unconstitutional?

There is a larger and a smaller answer. The larger answer is that the members of the Supreme Court, even the supposedly “textualist” and “originalist” conservatives, do not take the words of the Constitution literally. They make interpretations that twist and mangle it into something that looks like what they want, something that deforms the meaning of the words on paper, written by the Founders. The smaller, more specific answer is that the Supreme Court has grappled with the conflict between free speech and defamation, and has chosen a middle ground that tries reconciles the two.

Why isn't the First Amendment regarded as making charges of defamation unconstitutional?

In the landmark case of New York Times v.Sullivan (1964), an overseer of Southern police officers, sued the Times and members of the civil rights movement under a defamation theory, accusing them of damaging the policemen’s reputation by publishing an ad indicating that the police had committed crimes against demonstrators. Instead of holding defamation unconstitutional, the Supreme Court found for the defendants, holding that when public officials assert defamation they must prove “actual malice,” meaning that the defendant knew his statement was false or acted with reckless disregard for truth. This is a much higher standard than the “negligence” requirement that applies to defamation against private individuals on matters of public concern or the mere “publication” requirement that applies to defamation by private citizens on a matter of private concern. However, after Sullivan the Supreme Court expanded the actual malice rule to cover “public figures” as well as public officials, so most celebrities, such Tom Cruise, must prove actual malice.

Actual malice was designed to prevent censorship. I am sure that the Court believed it was being quite generous by creating such a high barrier to recovery. But because defamation continued to exist, the fear of being sued and the expense of litigation remain a serious impediment to American free speech and to our ability to criticize people of political and social importance. Speaking freely about the flaws (real or alleged) of our political and cultural leadership is a basic requirement for democracy to function.

A more recent important case is Hustler Magazine & Larry Flynt v.Jerry Falwell, a 1988 United States Supreme Court case in which evangelist Jerry Falwell sued a pornographic magazine for printing a joke that accused him of having sex with his mother. The accusation was obviously a joke that no one could take seriously. It was also clearly an example of the use of charges of defamation to censor criticism and take revenge against people who offend you. The jury found against Falwell on his libel claim, but found against Hustler on the “intentional infliction of emotional distress” claim, which is a somewhat similar cause of action that is also used to censor criticism and punish offensive behavior. The jury awarded substantial monetary damages. The Supreme Court, however, found in favor of the magazine on the “IIED” (as lawyers call it) claim, citing the need to protect the American tradition of political satire cartoons, and held that the New York Times v.Sullivan “actual malice” standard for defamation against public figures should also be used in cases involved intentional infliction of emotional distress claims against public figures, in order to protect free speech and create breathing room for vigorous debate. Regarding the right to be offensive towards other people, the court said that offensive speech is protected by the First Amendment.

But again, the Court refused to see the truth sitting right under its nose, which is that the only real purpose of claims of defamation (or intentional infliction of emotion distress claims alleged against plaintiffs because of what they say or write) is to censor speech; and this violates the first amendment. The law of defamation has no place in a society that believes in intellectual freedom for all citizens. We libertarians are basically the only group of people in America who say that the emperor has no clothes and who criticize governmental mistakes that modern-liberals and conservatives ignore or condone. Defamation is an obvious abuse of the law and of the state’s coercive power to repress independent thinking, and we should all get angry about it.




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Signs, Signs, Everywhere Signs

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I collect markers of what I call “roadkill” legislation — roadside signs that demean my intellect or destroy my privileges. My favorite, of course, is “Click it or Ticket”. Get it? How clever of my state’s Humorous Sign Department (staffed by a dozen failed ex-comedians who enjoy fat salaries and a pension plan promising double their salary). The seatbelt sign reminds me that the belt, my strapped in belly, and the car belong to me. So does the road (my taxes). And I recall with sadness decedents, strangled by seat belts, who left this vale of tears after being T-boned or plunged into rivers, while many an unbelted survivor has been tossed from his vehicle toward safety.

Not to mention kids crushed by safety bags. What federal bureaucrat foresaw that? Why does my son ban me from seating my precious grandson in the front seat? “You’ll kill him!” he hollers as we back out of the driveway. Gee, I thought they saved lives.

However, the epitome of the state’s arrogance is “Traffic Fines Double in Work Zone.” It attributes to me the lowest of morals. Let’s see; if I knock down a road worker and it only costs $75, I’ll consider bowling one over and getting to work on time. What’s the calculus? One mashed road worker and congratulations: “Ted, you’re on time this morning”? But doubly fined — $150? That’s apparently enough of a penalty to upset my moral equation. I’d risk a worker’s life for $75, but not for $150. That’s what my state thinks of me. Not very flattering.

Forget occupying Wall Street. What we need is a roadsign protest movement that occupies our nation’s streets, cruising unbelted to a convocation site. Composed mainly of Washington lawyers disguised as farmers in denims and straw hats, they sue the first cop who slaps a seatbelt violation on them. They take it all the way to the Supreme Court, where any properly briefed schoolboy can prove that the Constitution doesn’t even whisper of straps, belts, or suspenders while riding your horse, and it’s clearly an infringement on the comfort of your own body, especially after a large, inflationary meal.

I save the best for last. The newest reminder by the state is that our life expectancy would go up ten years if we discarded our nefarious vehicles in favor of plodding horses, mules, or better yet, large turtles imported from the Galapagos Islands. How safe we would be! I refer here to the “No Texting While Driving” billboard. It doesn’t mention eating corn on the cob, reading War and Peace, or undertaking acrobatic sexual activity. Just texting. What about telephoning? That’s not dangerous when your wife tells you that her sister — the one with two kids — is coming to live with you? In the face of such news you’re not going to make a U-over four lanes of traffic to get to the bar, or end up in the front seat of the car in front of you? Or maybe bail out, converting your car into an unguided missile . . .

In summing up the above on personal safety, I say it is a matter of personal choice unless it infringes the rights of others. Sadly, we live in an age when society has robbed us of any choice in these concerns, as well as others that are much more serious. We’re on a slippery slope.




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