Who’s on the Inside Track?

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It seems amazing that the mainstream media ignored a recent IMF report that now estimates that China’s economy will surpass that of America in five years. That’s right — China’s real GDP will exceed ours by 2016. This adds to the cloud already hanging over the U.S dollar — because of our twin habits of printing dollars like mad (pardon me, “quantitative easing”) and running massive deficits (pardon me, “investment spending”).

What is really stunning is that only a decade ago our economy was triple the size of China’s.

As the Chinese become dominant, questions arise. How will this authoritarian regime conduct itself vis a vis the other nations in the region? Will it look to expand its imperial reach? Will it look to exact revenge against Japan for past injustices? We can only guess, but given the treatment the Chinese have meted out to the hapless Tibetans, the explosive growth of China’s military, the cynical way China helped Pakistan (the archenemy of China’s perceived rival India) develop nuclear weapons, as well as the missiles to deliver them, and the way China uses North Korea as a thorn in the side of its perceived Pacific rivals Japan and the US — the future looks challenging.

I said that it “seems amazing” that the media hasn’t mentioned the surprising closeness of our economic eclipse by the Chinese. In truth, however, it is not amazing. The mainstream media is the cheerleading squad for the Obama regime, and the fact that China has made such strides is in great measure due to the extended recession and feeble recovery caused by Obama’s policies. Compare America’s persistently high unemployment and anemic growth in this economic recovery to the features of past recoveries, and you will be depressed by the difference.

America has retreated from classically liberal economic policies, even as China has used them to grow rapidly, even in the context of a corrupt political regime. For the results, we have only ourselves to blame.




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Duh . . . Winning!

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I became a Republican so I could vote, in the 2012 primary, for the most libertarian-congenial candidate. Already I am wondering whether this will do any good.

Do I want to be lectured on morality by serial adulterer Newt Gingrich? Can I trust America will be safeguarded from creeping Sharia law by some moralist like Rick Santorum? May I hope the federal takeover of our healthcare system will be rolled back by Mitt Romney, whose plan in Massachusetts so inspired Obamacare? And behind the wild rhetoric and Bride-of-Chucky eyes of Michele Bachmann, can I be certain rationality reigns?

Both the Republican and the Democratic “teams” are in the same league. The overriding concern of both parties is the league’s survival. Each will win a few, each lose a few. But they are both deeply invested in the league — and in the big show it gives the fans.

When Team Red is in ascendancy, libertarians should probably reach as many as possible of those fans in blue jerseys with the bags over their heads. When Team Blue is back on top, we should peel off as many as possible of their disgruntled opponents.

It’s tempting to think there must be a shortcut — that one entire franchise can be purchased by reason and principle. Some will follow reason and principle, but many will not. In every era, many in the citizenry are simply fanboys and fangirls in red or blue jerseys, rah-rahing for their side.

Libertarians tend to want to change the game. We don’t usually think of politics as a game, which may be why we fare so poorly in it. We view the public square as a place for debate, for the engagement of thinking minds. If we sign up to play on one team or another, perhaps we lose something greater than a game. We may lose the chance to make politics something more than the silly, childish bloodsport it has always been inclined to be.

To win maximum public support, libertarians need players on both teams. I’m becoming less optimistic about the prospect of simply capturing the Republican flag and giving up on the Democrats. When I speak with left-leaning friends and relatives, I find them more willing to listen than many libertarians realize. The term “libertarian” has been tainted for them, freighted with all sorts of nonsense that has nothing to do with who we are or what we believe. But they understand government force, because it has been used against them and they live under the constant cloud of its return.

We have been seduced into hoping the GOP has finally gotten it, because it’s become fashionable for people in that party to call themselves libertarians. Some really do understand what that means, but for a frightful number of others, this is only the latest ploy for winning back power. Once they can take the bags off their heads, they’ll return to calling us dope-smoking hippie peaceniks and accusing us of opposing all that’s holy. They’ve done it too many times for us not to suspect they might do it again.

If we want a clearer picture of where these newly-minted Republican “libertarians” want to take this country, we need to pay closer attention to their presidential popularity polls. If polls can be believed as to the general direction of the party, any one of the players currently enjoying big numbers in the GOP will end this exercise in vanity with a second Obama term. Yet polling also shows that no more than half the population wants that. What do they really want instead?

All the leading contenders peddle the notion that more power will win the game, that if they’re nominated, their team can be champ again. If most Republican voters were not still stuck in this fantasy, they would be supporting very different people. But those who will really decide the contest are in the swelling mass of independents who are disaffected with the very idea of league play.

These people give every indication of being more open to libertarian ideas than they have been in years — perhaps ever. They lean libertarian, but describe themselves — in increasing numbers — simply as independents. They are no longer content merely to root for a team. If we don’t want to lose them, perhaps we shouldn’t join one.




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Explaining the US Debt Crisis — To My Teenagers

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Hey kids, pause American Idol for a moment and let me "lay some wisdom on you," as your generation likes to say.

It's about the US debt and what it means to you. If you pretend convincingly that you're fascinated by what I have to say, we'll go out for pizza, OK? Great.

Now, it’s hard to wrap our heads around billions and trillions of dollars, so let’s bring these numbers down to a human level so we can get some perspective. Let's scale it down to the size of a family budget. We'll divide the actual numbers by one billion, and talk about months instead of years.

So let's pretend that we are a family of criminals [the US government] living in a pretty rough neighborhood [the world].

Our family takes in a lot of money [government revenues] by picking pockets, mugging, and running shakedowns and con games. Heck, we even do some counterfeiting. And we spend it all as soon as we get it [government expenditures]. But every month we need $1,500 more than we take in. So every month I borrow that shortfall [the deficit] from the neighborhood loan shark, and we spend it.

The funny thing is, I already owe him $14,000 so far [the debt]. But he’s been pretty patient, for a convicted homicidal maniac [the Chinese government]. I guess he’s been cleaning up his image.

What’s worse, I’ve been running a pyramid scheme that's gotten a little out of control, and people are beginning to catch on. I've already promised about $100,000 [total unfunded liabilities], spread out over the next few months, to pretty much everyone in our extended family [voters with entitlement programs]. Some are well-off and won't miss their share, but some are desperate and could really use the money I scammed. Either way, they’re all going to sue me when they find out — but too bad, I already blew the money long ago.

Anyhoo, I sat down with Mom to figure a way out of this mess. I [a Republican] bravely proposed spending $100 less this month, but she [a Democrat] screamed, “What about the children!” and said it would be an unacceptable cut in our standard of living. She said we should open more credit cards in your names [borrowing], mug more people [taxation], and try some more counterfeiting [“quantitative easing”].

Finally we agreed that things will work out somehow. We just need to spend $30 less this month [the 2011 budget deal].

So I called up the loan shark and explained that he’ll eventually get all his money back —  we crossed our hearts and promised on our kids' lives  —  if we can just borrow another $1,470 this month, while we figure things out.

I figure we can always just give him counterfeit money, so we're good!

By the way, he said to say "Hi" and that he's really, really, looking forward to meeting you kids soon.

So that's what the debt crisis is basically all about. Now, who's up for pizza?

What? Whaddya mean you're not hungry?




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Taxing the Ether

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Here’s the instinctive mindset of the Democratic Party: “If it moves, tax it. If it doesn’t, tax it even more.” If you need proof, consider the frantic attempts by desperate Democrat governors in high-tax states to tax commerce conducted on the internet.

One story about this comes out of California, notoriously one of the most economically ignorant and fiscally incontinent states in the nation. It appears in a Los Angeles Times editorial lauding the efforts of Democrats in the state legislature to try to apply California’s outrageously high sales taxes — nearly 11%, counting state and localities together — to purchases on the internet, targeting especially the dominant internet retail giant Amazon.com. The LAT (always an affirming voice for redistributionist tax-and-spend government) argues that the state is “owed” millions in tax dollars for sales over the net. The paper, natch, supports a bill by Berkeley Dem Nancy Skinner to require internet retailers to collect sales taxes.

The LATviews this as fair — what is the difference, it asks, between buying your shoes at the local store and purchasing them at a store based in Nevada? And, the rag pompously avers, this is the law.

It cites the 1992 Supreme Court ruling (Quill Corp. v. North Dakota) that held that out-of-state mail-order companies (and presumably, by inference, internet retailers) with no physical presence (i.e., no actual stores or warehouses) in a state could not be compelled to collect sales taxes from customers in that state — although the court allowed states to try to collect taxes from such customers directly. So this is the law.

According to the LA Times, people who buy over the internet are both legally and morally (morally?) obligated to pay sales taxes on their purchases. It argues that Amazon and other online stories deliberately encourage consumers to evade their legal and moral obligation by failing to inform them of that obligation on their websites. Not only must the internet help to suck in taxes; it must also lecture people about their ethics.

In an effort to grab more taxes — as opposed to cutting spending — Gov. Quinn cost his state jobs.

The LAT not only endorses legislation that would require any internet company to collect sales taxes from purchases by Californian customers if that company has any affiliates (suppliers) in the state; it also recommends a national bill that would explicitly require all internet companies to collect sales taxes on half of all states that want their citizens’ purchases taxed—and which of them wouldn’t? The LATconcedes that so long as the Republicans have a check in Congress, such a bill won’t ever be passed, but the grand vision is of every vendor of five-dollar trinkets to become an IRS agency, assiduously divvying up its surplus value in accordance with the 50 tax codes of the 50 states, plus Puerto Rico, Guam, and the District of Columbia.

At the time the LAT piece was published, rumors were circulating out of Sacramento that the state Board of Equalization — the agency responsible for collecting California state taxes — would be hiring computer geeks to find out ways of looking at internet traffic to discover which criminal Californians are daring to buy on the web. This, needless to say, caused considerable consternation—not to mention considerable concern about the morals of internet aficionados who would thus be involved in killing the internet.

But the LAT’s case is patently defective. Why the devil should a business like Amazon, which uses none of California’s police or fire services (since it has no bricks-and-mortar locations in the state), much less its educational enterprises, have to pay the state a nickel? And why should Amazon customers within the state have to pay any more than they do right now? They already support the schools with their property taxes. Their sales taxes, collected at the stores that actually exist within the state, support the police, the fire department, and the other agencies that protect those stores. Where does one’s moral and legal obligation stop?

And the consequences from trying to tax the internet are likely to be counterproductive to the states that do it, as a piece in the Wall Street Journal reports. The WSJ — which understands economics approximately a thousand times better than the LAT understands it — points out the obvious: if a state (like California) tries to saddle (say) Amazon with collecting sales taxes for that state because Amazon has affiliates within it, then Amazon will just drop those affiliates.

Indeed, as the WSJ piece recounts, this is just what happened recently in Illinois (a state in even worse fiscal shape than California, if that be possible). The tax-happy Democratic Governor Pat Quinn signed a law applying the state sales tax to internet purchases in Illinois, and it took Amazon only a few hours to announce that it was immediately halting purchases from and affiliation with the 9,000 small Illinois businesses with which it had been doing business — business profitable for Illinois as well as for Amazon.

So, in an effort to grab more taxes — as opposed to cutting spending — Quinn cost his state jobs. Either a discontinued affiliate will stay in Illinois and see its sales plummet (which will then necessitate cutting its workforce), or it will — as some are already doing — move to an adjacent state (such as Indiana) that manifests less tax madness.

Rhode Island, which like Illinois and a few other states (Colorado, New York, and North Carolina), had earlier passed an “Amazon tax bill,” has collected only peanuts in extra sales tax revenues. A study by the Tax Foundation shows that when you factor in the lost jobs from affiliates cutting back, closing down, or moving away, the state probably lost revenue.

The LAT editorial suggested that to prevent internet companies from dumping affiliates in a state that imposes an Amazon tax, what we need is a federal law forcing all internet companies, wherever located, to collect taxes from all customers, wherever located, and remit those funds to the customers’ respective states.

That insipid argument is based on the absurd premise that if we pass a national Amazon tax, Amazon couldn’t drop all of its national affiliates. But it sure as hell could, and just move its central operations to (say) Mexico and all its affiliations to businesses in other countries. That would be yet another example of government greed, triumphant.




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Poverty and Crime

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If you’re like me, you have been instructed, from your youth on up, that crime is caused by “conditions” — meaning economic conditions, meaning poverty. You’ve also been told that crime can be reduced, or even eliminated, by the abolition of poverty — which, of course, can come only by means of massive government action.

These were some of the ruling theses of President Lyndon Johnson’s War on Poverty, which continues in its thousand institutional forms unto this day, more than four decades after he declared it.

The theses were always vulnerable, on their face. What do you mean by “crime”? Do you mean a Hollywood producer’s rape of a female staffer, who is too afraid to report the crime? Do you mean a party in West LA, where rich people snort a barrel of coke, and are never caught? Or do you mean a guy who’s pushing weed in Fresno, or a girl who’s arrested for prostitution on the streets of Grand Rapids? Do you mean crime that’s successfully prosecuted, or do you include crime that never gets recorded?

And the thesis has long been vulnerable to the evidence. Johnson’s War on Poverty immediately preceded an enormous wave of crime. The hundreds of billions of dollars that American communities spend on welfare has not demonstrably reduced the incidence of crime, however you want to define that term. Most serious analysts believe those dollars have increased it, by fostering a culture in which principles of individual responsibility are no longer considered necessary.

But wait a minute: what is “poverty,” anyhow? What’s the standard? What’s the definition? Was “poverty” the welfareless condition of virtually all Americans in the 1920s? If so, was it the lack of government welfare that induced millions of people to violate the Prohibition laws, and some thousands of them to kill and maim their fellow-citizens in pursuit of profits from that violation? In a larger sense: isn’t poverty relative? The poor of the 1950s were much richer in absolute terms than the poor of the 1920s, yet fewer people were sent to prison in the 1950s. The poor of the 1980s and 1990s were richer still; yet a much larger proportion of the populace went up the river in the 1980s and 1990s than in the 1950s.

Now comes the following announcement from a website in my town (voiceofsandiego.org), about the FBI’s new report on crime in America during 2010, the year of a great depression, especially here in far southern California:

“In San Diego, the number of violent crimes — murder, rape, robbery and aggravated assault — dropped 5.3% from the previous year and the number of property crimes — burglary, theft and vehicle theft — dropped 4.6%. (Nationwide, violent crime dropped 5.5% and property crimes were down 2.8%.)”

The author adds a reference to the prevailing wisdom:

“Nationwide crime declines in recent years have continued to puzzle criminologists, who expected worsening economic conditions to lead to more crime.”

Experts might be puzzled, but no one with any sense, or historical perspective, would suffer their fate. Officially recorded crime went down during the 1930s — the time of the Great Depression. Why shouldn’t it go down in 2010?

We can’t quantify the sources of crime, but we should know this: crime, and the definition of crime, has less to do with “economic conditions” than with community mores, individual opportunities, and (in a reverse sense) government action. When the government declares alcohol or drugs to be illegal, “crime” automatically results. But when individuals and communities hunker down in order to get through a period of relative poverty, crime may well diminish. Only God knows the exact linkages, but it’s not puzzling that people whose families are making less money than before may respond by doing something legitimately and dependably profitable rather than something criminal.

Indeed, as William Blake commented two centuries ago, the idea that poverty causes crime is a slander on poor people. It ought to be resisted by every person of generous mind, and especially by all of us — and there are many, many of us — who have struggled to come out on the other side of bad “economic conditions.”




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Keeping an Eye on the Iceberg

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I have often reflected on the looming fiscal disasters that are Social Security and Medicare. As several recent articles suggest, our economy is still heading toward the financial iceberg.

The first report comes from the trustees of these two Ponzi programs. It shows that the financial outlook of both has worsened dramatically over just the last year. It confesses that the so-called Medicare trust fund will be empty by 2024, five years earlier than predicted by the trustees just a year ago. Assuming current revenues, and no unusual increases in the costs of medical care (a dubious assumption indeed), Medicare will only be able to pay 90% of its promised benefits after its trust fund is depleted.

Social Security is also in deep trouble. Last year, it started running a deficit between taxes paid in and benefits paid out. The trustees’ report indicates that from here on out, this deficit will be permanent, and will rapidly increase in magnitude. As another report notes, Social Security will exhaust its “trust fund” by 2036 — one year earlier than last year’s estimate — at which point it will have to slash its benefits by 23%.

This second report confirms a prior reflection of mine that the separate trust fund for the Social Security Disability Insurance program will actually be gone by 2018, if not sooner.

Yet another recent piece sheds light on why SSDI is going off the cliff so quickly: at least some of the 1,500 judges who administer the program just hand out “disability” awards without any real scrutiny of the merits of the claims being made.

This fascinating story centers on Judge David B. Daugherty, who routinely rubber-stamps all requests for disability that come before him. Last year, of the 1,284 cases he saw, 1,280 were greeted with benefits. This year, he is being even more generous with our money, awarding benefits in all 729 cases received. Judge Daugherty has often listened to 20 cases a day, spaced 15 minutes apart, and many from one local lawyer to whom he appears to be particularly sympathetic. His near-100% record awards contrasts with the average of 60% for the system as a whole.

Daugherty is just a particularly egregious example of an entitlement system run amok. Many of the SSDI judges award taxpayer money to claimants without any hearing at all, or merely by looking at the medical evidence submitted by claimants’ attorneys. The SSDI paid out an amazing $124 billion in benefits last year — and the sum will only balloon, making it the first of the entitlement programs to go bust (in a technical sense: naturally the taxpayers will be forced to pick up the tab).

Of course, the point needs to be re-emphasized that all these so-called “trust funds” are just government IOUs issued to cover the surpluses they ran while the Baby Boomers were at their peak earnings. The surplus funds were spent running the government. The “trust funds” are thus the moral equivalent of the “special purpose entities” set up by the crooks at Enron to hide its debt. Their function is to push debt onto entities that are apparently separate from the main organization, which actually owes it. Alas, since Congress exempted itself from the provisions of the Sarbanes-Oxley Act, the feds can get away with this fraud (a point I have explored elsewhere).

The accelerating deficits have moved no less a luminary than Tim Geithner, our incorruptible Treasury Secretary and head of the Social Security and Medicare trustees, to tell us that the report makes clear that we need to act “sooner rather than later.” Yeah, but Geithner didn’t indicate how his call for action squares with the views of his boss Obama, who has steadfastly refused to state where he would cut entitlement programs — even as he created a huge new one in the healthcare field.

The few brave souls who have called for reforming the entitlement programs — most heroically Republican Congressman Paul Ryan — have gotten scant public or media support. (Even Newt Gingrich has attacked Ryan’s call for reform, calling it “right-wing social engineering.”)

The estimable economist Veronique de Rugy, commenting on the recent trustees’ report on the Medicare-Social Security mess, makes the point that these Ponzi schemes transfer money from the young to the elderly population. What she doesn’t note is that the reason they are still so generally supported is that the elderly vote religiously, while younger people vote only sporadically — and children, who must in the end pay for all these deficits one way or another, have no vote whatsoever.




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Doomsday Update

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May 21 has come and gone, and so far as I can tell, Judgment Day has not occurred. Whether that’s good or bad is a debatable question.

What is not debatable is the discrediting of one of the world’s best publicized prophecies, and one of the few prophecies specific enough to be fully disconfirmable. I refer, of course, to the Family Radio network’s prediction that the Rapture and the beginning of Judgment would occur on May 21, 2011.

Harold Camping, Family Radio’s “Bible teacher,” went down with his flag nailed to the mast. Throughout last week, he told callers on his daily call-in program that he wouldn’t even consider questions about the possibility that the Rapture wouldn’t happen on the 21st. On May 17, for instance, he remarked, “If you were talking to me three or four years ago, I would have said, well, there’s a high likelihood [of climactic events in 2011]. . . . But beginning about three years ago, God has shown us proof after proof and given us sign after sign. . . . I know absolutely, without any shadow of a doubt whatsoever, that it is going to happen on May 21. . . . It is absolutely going to be May 21. The Bible guarantees it, without any question. So we cannot countenance any other idea. It is absolutely going to happen.”

Liberty provided one of the first nationally published heads-ups and explanations about this matter in its December issue, in the article entitled "An Experiment in Apocalypse." Early this month I continued the discussion. The topic has proven surprisingly interesting to our readers, as it has to millions of other people, worldwide. I am receiving a lot of requests for updates, and I will provide them.

The really interesting thing, of course, isn’t the fact that Family Radio has been proven wrong. The interesting thing is seeing how individuals and institutions respond to the disconfirmation of ideas that they regarded as fully justified by reason and authority. Full evidence about Family Radio’s response will take a while to come in. Its offices were closed over the weekend (starting on Friday, May 20), and all or almost all programming from then till now has been prerecorded. (I write in the early evening of May 22.) The swarm of media attention simply washed over the recumbent form of Family Radio, occasionally sweeping out one or another follower who discussed his disappointment in vague, colorless terms.

But we can expect to learn more, and I have already learned some things. One interesting thing to me is the fact that throughout May 20 and 21 — even as late as 6:30 p.m. on the latter day — the station was still broadcasting invitations to call up and order “Judgment Day, May 21” pamphlets and bumper stickers — thus making itself even more ridiculous than it would have become, had it simply ceased all ads for mail-order material several days before.

Nevertheless, even the most ridiculous things in life happen because somebody decides to make them happen. Somebody — and a number of people would have to be involved — decided to keep running those ads. Somebody scheduled them. Somebody provided them to local stations. Somebody at the local stations ran them. In only one instance (at 1:25 a.m., PST, on the purported day of Rapture) did I hear evidence that an ad might have been spiked by the national network or my local station, with four minutes of music substituted. As I write, Family Radio’s website still declares in bold letters: “Judgment Day, May 21, 2011: The Bible Guarantees It!”, and its clock says there are “00 Days Left.” Yet someone at Family Radio switched Camping’s prerecorded lecture, which runs on Saturday evening and Sunday afternoon, from one of his constant Judgment Day diatribes to a discussion of divorce (he’s against it) that was broadcast “25 or 26 years ago,” according to the prerecorded announcement — which also says that copies of the divorce lecture will be “available this week” if you call or write for them. Divorce is exactly what would interest you, on Judgment Day or immediately afterward, right? It should be noted that on May 10, a woman called in to ask Camping about that very topic, divorce, and he told her that “it’s all academic,” because the world was ending and her husband wouldn’t have time to divorce her anyway.

Absurdity upon absurdity. But what do these absurd contradictions mean?

They may show the depth of institutional inertia, even within a relatively small, voluntary organization, an organization, mind you, that is operated by zealots, not by the pension-pursuers at the DMV. The thinking may have been, “We’ll just keep running whatever we’ve been running, whether it makes sense or not. That’s what we do” — even if it makes our own cause ridiculous. If Family Radio can achieve inertia like this, imagine what a government can do, in the face of all the evidence against its theories and programs.

The contradictions may, however, indicate something exactly opposite to inertia, but equally significant. They may indicate that dissenters within Family Radio, of whose existence there has already been a good deal of evidence, decided to assist the organization in rendering itself absurd, thus making the ousting of its current leadership more likely. These people could have halted the post-Doomsday ads for Doomsday literature; they could have snaked out some lecture that wasn’t about (of all things) divorce. But they used their individual initiative to do something more complicated.

That’s a guess. But here’s the idea, in brief: what happens within organizations and individuals is a contest between inertia and initiative, each with its own set of rewards: security, stability, and conservation of energy on the one hand; new opportunities (for power, for revenge, for simple rightness) on the other. If enough data emerge, the next stage of Family Radio’s existence will constitute a fascinating experiment in conflict, institutional and individual.

I will keep on this beat. My own prediction is that Mr. Camping will be ousted from leadership during the coming week by irresistible forces of change in the organization he founded. But this prediction is disconfirmable. Stay tuned.




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The Audacity of a 1% Hope

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Federal Judge Roger Vinson of the Northern District of Florida has declared Obamacare unconstitutional in a lawsuit joined by numerous states seeking to escape from the onerous burdens that the law places upon them. But when I read that his rationale is that the mandate requiring people to buy health insurance exceeds the power of Congress under the commerce clause, I became a little bit sad — sad not because Judge Vinson is just dangling the dream of a new attempt to use commerce clause jurisprudence to limit the government’s meddling in the economy, but because there is only about a one in 100 chance that the United States Supreme Court will agree with his reasoning.

There was a time when Congress could only pass laws authorized by the specific enumerated powers of the Constitution. (This is ostensibly still true, but most congressmen don’t take it seriously.) One of those powers, indicated by the commerce clause, is the major one that Congress uses to destroy — I mean, to regulate — the economy. The commerce clause states: “Congress shall have power… to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” In my constitutional law class final exam two years ago, I argued that the commerce clause clearly gives Congress precisely the same power to regulate economic activity within a state that it has to regulate economic activity within foreign nations, and since we obviously cannot march into France and order them to have a minimum wage or a health insurance mandate, and we can really only regulate goods from France that come across the Atlantic Ocean, the commerce clause means that Congress can only regulate goods that physically cross state lines. I got an A in the class.

However, most lawyers don’t think that way. Even back in the 1800s the commerce clause case law said that Congress could regulate anything that did not take place entirely within one state. There was a time before the New Deal when the Supreme Court still took the commerce clause seriously and tried its hardest to allow Congress only to regulate interstate commerce. But this interfered with the New Deal. So, after FDR threatened the court with his infamous court-packing scheme, the Court made a “switch in time that saved nine,” in the landmark case of NLRB v. Jones & Laughlin Steel Corp. (1937); it began to undermine the commerce clause by permitting the commerce power to extend wherever commerce within one state had effects across state lines.

Later, US v. Darby (1941) made it clear that the commerce clause was now a joke and Congress could do anything it wanted. To throw a little paint on the feces, the Court decided Wickard v. Filburn (1942), which said that a private individual’s private behavior within one state could be “interstate commerce” under an aggregation theory that proposed the questions: “What if everybody did this? Would the aggregate cumulative effects have an impact on interstate commerce?” This meant that a person growing tomatoes in his own farm for his personal consumption could be engaged in interstate commerce, even though the tomatoes never left his farm, because he was somehow magically connected to all the other tomato farmers out there — a conclusion that is ridiculous only if one does not understand that it is a mere pretext for socialism. FDR’s supporters argued that economics had somehow fundamentally changed since America’s founding, and the law needed to change with it.

Commerce clause jurisprudence remained buried for decades, but in a shallow grave. In the 1990s, Chief Justice Rehnquist, with help from Justice Thomas and the Court’s other conservatives, tried to revive the distinction between economic and noneconomic, and national and local, in cases such as US v. Lopez (1995), which struck down a gun ban under the commerce power, and US v. Morrison (2000), which struck down an anti-gender violence law as having nothing to do with interstate commerce. Then Justice Scalia murdered Rehnquist’s commerce clause revival in Raich v. Gonzales (2005), saying that the commerce power authorized the criminalization of medical marijuana because of the necessary and proper clause: “Congress shall have power . . . to make all laws which shall be necessary and proper for carrying into execution the foregoing powers.” For some reason, Scalia failed to understand that the necessary and proper clause is irrelevant if Congress cannot pass a law under the commerce clause in the first place.

The fate of America’s healthcare system now turns on how the Supreme Court will interpret the commerce clause, whether the justices will hold that the aggregate effects of choosing not to buy health insurance constitute interstate commerce. I predict that the vote will go along political ideological lines, as the choice of whether to take the commerce clause seriously as a limit on Congress’s power is as much a political as a legal decision. But there is no way to tell how Justice Kennedy will vote, and it is still too early to tell how Obama’s appointees will vote. Still, I estimate that there is only a 1% chance that Obamacare will be struck down. It has been many decades since the commerce clause limitation had teeth; and the Court will be afraid of accusations that it is frustrating the will of the American voters if it strikes Obamacare down, even though it is the role of the judiciary to check the tyranny of the majority, and most Americans don’t like Obamacare, anyway.

Nonetheless, if libertarians are to make ourselves known in the legal world, then the commerce clause is one of the main weapons that will need to be in our arsenal. We can hope that one day our constitutional jurisprudence will return America to the Founding Fathers’ vision of a federal government that cannot do whatever it wants. As my constitutional law professor was fond of saying, constitutional doctrines fade away, but they can always come back, and there are libertarian legal doctrines from American history that we can revive if and when we develop the power to make our voices heard in within the legal system.




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Awesome, Dudes!

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Recently, I drove down the Southern California coast to attend a philosophy conference in San Diego. All along the way, and when I later sat in my hotel room overlooking the harbor, I kept thinking: how can a state as beautiful and as blessed as this one be so screwed up?

But an article I read just the other day helps me see, once again, the problem with California. The problem is its deeply demented government.

The story reports that Newport Beach, a wealthy city south of LA, is paying all but one of its full-time lifeguards over $100,000 a year in salary and benefits. $100K a year! And over half of them earn over $100,000 a year in salary alone! In fact, the two highest-earning lifeguards earn well over $200,000!

Additionally, these lifeguards retire after 30 years (or as young as age 50) with a pension of 90% of their highest salary.

Now, granted, Orange County, where Newport Beach is located, is one of the wealthiest counties in the US. But even in Orange County, the median household income ($71,735) is far lower than what these dudes and dudettes earn.

This of course raises a fascinating question: if the freaking lifeguards are earning this kind of money, what is the city paying its other workers? I shudder to think what the city is paying its police and firefighters. And can you imagine what the city officials must be getting?

Here, it just gets crazier, day by day.




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Strauss-Kahn, Exemplar of Socialism

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The libertarian critique of socialism, or “social democracy,” has usually gone something like this:

The socialist program demands a planned economy. A planned economy can result only from plans. Plans must be made by a group of experts who are not subject to the vagaries of the electoral process. To form and implement their plans, the planner-kings must know everything crucial to the economy. They must know everything significant to their own plans, and be able to predict everything significant that may result from them.

But that is impossible.

This being true, the people who become planners will be those who are either stupid enough to believe that Plans can succeed or cynical enough to care only about the personal power that can be acquired by Planning.

The libertarian critique has a logic that no socialist program ever possessed.

Now we witness the reductio ad absurdum of the socialist idea: Dominique Strauss-Kahn, head of the International Monetary Fund, chief honcho of the French Socialist Party, and prospective president of France, who was arrested Saturday on charges of trying to force a maid in his $3,000 a night hotel suite to have sex with him.

Suppose that the charges turn out not to be true. Suppose that Strauss-Kahn’s nickname, “the great seducer,” means nothing. Suppose that consensual sex is nobody’s business but one’s own. Suppose all these things — the last of which is certainly true. The $3,000 a night hotel remains a problem.

As a self-chosen representative of socialism, and an anointed planner of the world's economy, Strauss-Kahn has supposedly devoted his life to the good of the people. How, then, $3,000 a night? On what premise must the people of the world pay for that?

I’ll tell you. The premise is that Strauss-Kahn, a product of those inner-circle French schools whose graduates automatically get high government jobs, deserves his perquisites of office, because he is somehow qualified to plan the world's economy.

Is he?

No. And anyone who thinks that he himself is so qualified, and uses that idea to justify his perquisites of office, is likely to present a strange moral profile.

World economic planning is allegedly justified on humanitarian and charitable grounds. Planners, allegedly, exist to help people, especially the deserving poor. Planners are supposed to be performing an altruistic work, the modern form of a religious mission. Yet among these managers of the world economy there is a strange absence of people who live in modest circumstances, practice some kind of religious or ethical discipline, or have anything to do with normal human beings, except when the maid arrives a few minutes early in their $3,000 a night hotel suite.

There are plenty of smart people in this world. Many modest people, skeptical of their own conclusions because they are actually in touch with their fellow citizens and knowledgeable about their lives, are also smart people. Strangely, many of these smart people are socialists, but their ambition is not to become world socialist leaders.

Why?

Because the idea that a small group of people is smart enough and knowledgeable enough to plan the financial lives — in fact, the lives — of six billion people is an idea that no one with any ethical understanding would apply to himself. An ordinary moralist would ask, “Who am I to do that? I don’t know enough. I could never know enough.”

Strauss-Kahn presents little evidence of any such moral or practical reflection. But what he did with his life was predictable, under the modern socialist system. A beneficiary of unmerited advancement, he did his best to “stabilize” the world’s economy by using political means to get the productive countries to support the spendthrift countries. He who wasn't producing anything himself.

I don’t presume that an alcoholic is incapable of becoming a good author. Faulkner did. Hemingway did. And I don’t presume that a “great seducer” is incapable of becoming a great thinker. Plenty of examples argue otherwise. But I do not presume that a drunk will be good at running an airline. I do not presume that a person who lacks discretion even about consensual sex affairs will have enough discretion to plan the future of six billion humble families.

To put this in another way: how did someone as stupid as Dominique Strauss-Kahn become one of the small group of people appointed to oversee the fiscal life of planet earth?

The answer is: the logical necessities of the socialist idea. If you want socialism, you are voting for fools like Dominique Strauss-Kahn. You may not know it, but you are. Otherwise — I’m sorry, you can’t have socialism on any other terms. The fact that Strauss-Kahn rose to the top is only a sign that the rest of the candidates were actually less competent than he.

To conclude: if you want someone running your life, and the life of the world, you can be assured that it will be someone like Dominique Strauss-Kahn — and if not him, then worse.




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