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Mandated spending is pushing on thread.

August 31, 2010 8 comments

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The folks over at Econ Stories made history in January of this year when they released Fear the Boom and Bust, the first popular, Ke$ha-endorsed rap video about economics. The video depicts world-renowned economists John Maynard Keynes and Friedrich August Hayek arguing about how the federal government’s fiscal and monetary policies affect the “Boom and Bust” business cycle, focusing on the parallels between the Great Depression and the housing and lending collapse which began near the end of the Bush administration and has continued throughout the Obama administration.

As with any rap, the main feature of the video is its lyrics, which contain the topic of today’s discussion: “Your focus on spending is pushing on thread.” This line is a rather esoteric reference, by way of clever metaphor, to monetary asymmetry. These are daunting words, but they actually refer to a very intuitive concept which has eluded policy-makers and even many economists for over a century. The aim of this post is to help the average observer understand just what is meant by the phrase “pushing on thread,” as well as to provide a conceptual base for further investigation of how ignorance of economics has had grave consequences for nations around the world.

The best way to discover economic principles is through thought experiments that investigate cause-and-effect relationships. Suppose, for example, that the average individual eats out at restaurants or bars about twice a week. If the government were to impose a law mandating that no person may eat out more than once a week, it would obviously have a negative impact on economic activity. In fact just about everyone can guess this if asked. Unfortunately, not so many of us can really explain precisely what is meant by “economic activity” or how the government’s new rule reduces it. Nevertheless, we understand instinctively that economic activity must be depressed by forbidding people from eating at restaurants.

What actually happens in a situation like this is as follows: Consumers, who at any given time have only a certain amount of liquid assets (money) they can spend, are willing to spend some of their assets at restaurants. However it may be that they decided to eat out twice a week, that’s what they’re willing to do. When the government declares that they may not do this, it prevents economic transactions from occurring. This is “bad” for one simple reason – people wanted those transactions to occur. Specifically, restaurant owners and restaurant customers wanted to make an exchange of money for food. They wanted to do this because each of them valued what the other had more than what they were giving. The customer would rather have a meal, and the owner would rather have cash. If the transaction occurs (the customers eat at the restaurant), everyone feels better off than before. If the government prevents this, economic activity – specifically, the exchange of assets in a beneficial way – is diminished.

Such a law won’t cause all of the consumers’ wealth to go to waste, of course. By preventing people from patronizing restaurants, the government induces them to do something else with their money. However, whatever it is that they decide to do, it is important to remember that it will always be their second choice. They would rather have spent their money on eating at a restaurant than whatever they spend it on instead. Therefore, the value of what they buy with the money they would have used at restaurants will be less to them. They will be worse off. Similarly, the restaurant owners will be worse off, even if they leave the restaurant industry and take up another profession. This is their second choice profession – it was not the most appealing and profitable venture for them. The transactions that people wanted to make to increase their lot in life have been prevented by the government, and whatever is substituted is by definition less beneficial.

Thus it is now clear precisely how a government mandate against eating out more than once per week reduces economic activity, in the sense of forcing a real reduction in beneficial transactions. The concept of pushing on thread enters if the government attempts to employ the reverse idea. Suppose, now, that a law is passed which requires each person to eat out at least three times per week. Remember the assumption that the average individual eats out twice per week. If limiting the amount that people can eat out has the effect of reducing economic activity, perhaps mandating that people eat out more often will increase economic activity. Certainly, restaurant owners might tend to think so. As there will be more transactions in the restaurant industry, revenue will go up for restaurant owners, some of which will be passed on to their employees. Indeed, more restaurants will be built, and that will create jobs in construction, cooking, and waiting. Consumers will have more meals, and probably better ones, too.

It would be great – right? Not at all. Mandating more consumption of products and services does not have the opposite effect as mandating less. If anything, it actually has the same effect, as total per-capita product still declines. This is the essence of the “pushing on thread” metaphor. If the government’s policies impacted the economy in a manner that were so easily manipulable and reversible as, say, a door – pull to open, push to close – then it is doubtful such highly educated experts would be hired to determine the government’s policies. Instead, though, the effects of policy are complicated, and the more they are analyzed, the more depressing the conclusions become. Mandates and regulations pull down, but can not push up, on the health of the economy.

To see how this is so, recall that consumers have only a certain amount of money to spend at a time. They must budget this money somehow; spending infinitely is not an option. Therefore, as people are forced to spend more and more at restaurants, they must by definition make sacrifices elsewhere. Perhaps before a person went out to eat twice a week and went to the theater once. Now he goes out to eat three times, but stops going to the theater to compensate. This, again, is not an even trade-off. He is actually worse than before, because he has stopped doing something he wanted to do – going to the theater – in favor of a second choice option. He didn’t want to spend all that money at a restaurant, so he is by definition worse off if he is required to do so.

Similarly, the business owners also take a hit in productivity. Obviously the owners of pre-existing restaurants will see a rise in profits if a law were passed requiring more visits to restaurants. Yet what is also true is that the owners of theaters must see a decline in profits, as well. As restaurants are built in the weeks and months after the law is passed, so also theaters are closed. Small business owners and their employees will shift industry. People will quit their jobs as theater directors and go to work in food service. Again, this is a second choice. Again, it is by definition worse than what was in place before. The converts from other industries to the food industry are taking jobs they weren’t trained to do in order to satisfy a fabricated demand that doesn’t really exist except that the government requires that it does.

Economists and politicians may preach about the stimulus effects of increased spending in the restaurant business. The newspapers scream headlines about the new jobs created by constructing more restaurants to meet the growing demand. Yet all of this is in the spirit of the broken window fallacy, commenting on the visible benefits of a transaction while ignoring the unseen opportunity costs. The idea put forth is that any economic transaction is by definition a good one, when in fact only a voluntary exchange benefits both parties involved. When praising the activity generated from a mandate to consume, it is necessary to ignore or dismiss the activity which would have occurred in the absence of the mandate – and that activity would have been preferable to both consumers and producers.

One might imagine that policymakers and politicians had by now come to understand the lesson in this simple parable of restaurants. At the very least, they certainly have hired economists and analysts who are too educated to fall for the basic fallacy of pushing on thread – of assuming that the opposite of an action which produces a result will produce the opposite result. Since elected officials tend to be of above average intelligence and education level, and since the federal government has many panels of experts with decades of experience in economics, it is to be expected that, although government policies may not always be perfect, they aren’t as utterly naive as requiring people to eat at restaurants and then declaring an improvement in the economy.

Aren’t they? It seems not, as the past three years have revealed an ever-increasing role of government spending and government-supported consumer spending in the name of “stimulating” the economy, without much consideration for the fact that it is impossible for such policies to increase total productivity at all. Remember the Bush package, when you and your significant other got mailed a check for six hundred dollars in order to stimulate the economy? The stated goal of this policy decision was to prevent an economic collapse and help boost GDP in the face of an expected moderate decline.

Well, it didn’t work at all. GDP ended up dropping far more than predicted, not in spite of the stimulus, but because of it. In fact, Bush’s idea failed so completely that Obama expanded upon it and extended it to affect more people. At every turn, with every new stimulus program, of which there have been about a half dozen since the housing crisis began three years ago, the federal government has sworn that there would be a demonstrable increase in GDP as a result, and every time real GDP (adjusted for inflation) has actually fallen.

This is by no means the extent of the damage – examples of government destruction rationalized as construction abound. It turns out that Barack Obama actually pulled the “mandate that people eat out” trick, only he did so with cars. The infamous Cash for Clunkers program, which one might argue is better termed “the General Motors bailout,” required Americans to buy new cars – with their own money, funneled through the federal government by taxes. Essentially, Obama offered a subsidy, funded out of tax-payer money, for people to scrap old cars and buy new ones. The program was sold on the claim that the act of buying new cars would spur economic growth.

It did not accomplish this, and it could not have under even the most generous interpretation. The philosophy of the program was flawed at its core, because it presumed that the activity generated by purchasing new cars must be good activity – ignoring the fact that, if it were beneficial to buy a new car, people would simply do that on their own. By taking tax dollars, which are of course collected by force, and demanding that they be applied to the purchase of automobiles, the government incentivized allocating resources to one particular sector of the economy, but by definition took resources away from other sectors where consumers would rather have used them. Requiring that people spend their money on a new car is no different from requiring that they spend it at a restaurant, and the damage done is exactly the same. Whatever else people would have spent their money on instead if given the choice, that was better for them than the purchase they were forced into. Ultimately, though, this was lost on policymakers, because they rationalized their decisions by observing the economic activity of buying cars and ignored everything else that money could have been used for.

When the government gets worried by how much of people’s money it is taking to fund purchases they didn’t choose to make, it has another card to play, which is monetary inflation and deficit spending. For a hundred years, Keynesian economists and federal-level politicians have struggled to convince the world – both the people in it and physics itself – that monetary policy allows the government to spend money it doesn’t actually have, if it’s careful enough. All manner of nuanced methods have arisen towards this aim. From the esoteric quantitative easing to tried-and-true manipulation of bonds and printing presses, an academic field and a sector of industry has grown up around selling the notion of the free lunch. The government, it is claimed, can fund programs with other methods besides simply taking money from individuals.

This, unfortunately, is not true. The government cannot create wealth out of thin air, no matter what elaborate practices its banks may employ. Whatever government money is not taken from individuals expressly through taxation is ultimately taken through inflation, the devaluation of savings accounts. When the government bails out banks with trillions of dollars of unofficial spending, this money is taken from the savings accounts of all Americans, especially the middle class, whose combined liquid assets represent the bulk of non-industrial capital. Literally, dollar bills and other written representations of money are created by the government, which the elites call “injecting money into the economy,” and the result is that the value of the dollar declines.

As the dollar is weakened, the ability of savings to buy real products and services decreases proportionally. That means that a person who used to be within a month of having enough money saved up to buy a boat, or who had savings to support his family for a year in case he lost his job, or who was preparing to send his children off to college, is now able to buy less than he otherwise would have with the same amount of dollars. This, then, is the cost of the bailout, and fits the exact same model as the fabled restaurant mandate. The government forces individuals to forgo purchases they otherwise would have made voluntarily in order to pay for a mandated bailout of corporations whose unwanted products and services failed to produce profits – all in the name of stimulating the economy.

The economic crisis has lead to the government fully doubling the monetary base in just a few short years. The long-term consequences of this will be the establishment of recession conditions as the “new normal.” The economy will not improve – it cannot improve – so long as the government continues its policy of mandating spending at levels above what would naturally occur. The American middle class individuals do not want to dig into their savings to bail out enormous banking corporations that have mismanaged their money. They do not want to buy new cars at a time when their income level is uncertain and the bare necessities are of immediate concern. When the government disrespects their decisions in managing their finances, it is only destroying any hope of recovery. Policies that focus on spending are pushing on thread, trying to create a stimulus but ultimately just allocating precious resources where they don’t belong. If Americans want a better future for themselves, the only option is less spending, less mandating, and less government.


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2012 presidential candidate Gary Johnson speaks in Raleigh

August 19, 2010 4 comments

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Could a libertarian be the next president of the United States of America?

Well, not quite. But if former governor of New Mexico Gary Johnson has his way, libertarians could see their strongest – if admittedly still rather weak – ally in the White House since before the World Wars. Unlike all presidents in recent memory, Mr. Johnson has a real grasp of the damage that the military-industrial complex has done to America through corporate lobbyists working government contracts who provide incentives for leaders to instigate and prolong unnecessary wars. Equally anomalous is his real track record of actually reducing the size of government in his home state by cutting unnecessary bureaucracies and decreasing funding for programs that failed to live up to their promised potential. Gary Johnson supports the legalization of marijuana and a dramatic reduction in federal involvement in policing other drugs, believing that prohibition as a concept cannot succeed due to the inability of government to enforce it without adopting draconian policies and spending enormously on prisons and police. Along the same vein of thought, he opposes the Department of homeland Security’s ever-increasing border patrol operations and supports amnesty for illegal immigrants that would not confer upon them citizenship, but rather the right to work and move freely throughout the country coupled with the obligation to pay the same taxes as citizens. While governor, Mr. Johnson never raised taxes a penny and still managed to improve the financial situation of New Mexico. Add to all that his belief that education can and should be almost entirely privatized and a non-federal issue, and it’s clear he has a real and meaningful history of promoting freedom across a broad spectrum of issues, even in areas where the political climate is especially unfriendly to the libertarian cause.

So what’s in these videos?

Gary Johnson speaks about his political views, personal philosophy, and career as governor of New Mexico in videos 1, 2, and 3. He begins taking questions in video 4, where he takes a question paraphrased from Reddit Libertarians. Questions continue throughout videos 5, 6, and 7. I apologize for the fact that it’s hard to hear some of the questions. If it makes you feel any better, I couldn’t hear half of them when I was physically present. Try putting on headphones; they are usually louder than built-in speakers.


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Missouri Referendum Nullifies Obama’s Healthcare Bill

August 4, 2010 3 comments

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Last night, a critical referendum, Proposition C, passed by an overwhelming majority in Missouri. According to two initial reports (here and here), the proposition passed with more than 71 percent of the voters in favor.

By passing this proposition, which nullifies and overturns the unconstitutional health insurance mandate signed by president Barack Obama earlier this year, Missouri joins Louisiana, Virginia, Idaho, and Utah as the fifth state to fully nullify the mandate. Four of these states are controlled by a Republican majority; Louisiana is the outlier with a strong Democratic majority. More information can be found at the Tenth Amendment Center.


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Open borders, no excuses.

July 23, 2010 7 comments

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The first major lesson taught to a child in any American history class is the timeless story of the explorers, craftsmen, and pilgrims who left the European mainland to settle the New World centuries ago. Their motivations are known universally: They sought freedom from persecution, a new environment and culture to call their home, and, of course, an opportunity for very large profit. We remember their story as one of great heroism and moral triumph. Even though some chose the path of violence when interacting with the natives, still, overall, they worked hard, planned wisely, and eventually rose to achieve a higher standard of living and a more beautiful society through the productive actions of individuals. It is their struggle that formed the basis for the concept now known as the American Dream – the idea that America is a place where any motivated, industrious individual who will stay focused on his own life can ultimately fulfill his highest ambitions. Through the successes of the first immigrants, America became the land where nobody says, “That’s enough success.”

In modern America, though, this hallowed ideal has been flipped straight upon its head by many members of an intellectually lazy society and the careful obfuscaters of moral truth who guide them. Indeed, it shows great cunning and foresight on the part of the useless, parasitic busy-bodies who run the upper machinations of America’s legal system that they managed to turn the largest association of proud Americans and government skeptics – the religious right – against itself with regard to immigrants in the modern age. The Christian conservatives, who value a lifestyle of independence from government operatives and generally don’t feel that they need the government’s so-called “services”, cling to the border patrol and any macho-man politician who will break with politically-correct tradition by insulting Mexican immigrants as if their very lives depended on it. In some cases, they may even literally believe that this is the case. The problem with this perspective is quite simple to identify: There is simply and unequivocally no reason whatsoever that the government should control immigration in any way.

Every argument – or, “argument” – that has ever been raised in favor of immigration control is easily identifiable as deeply fallacious. At the outset, government action, which occurs by definition through the initiation of force against individuals, is unjustifiable when used preventatively against crimes that are imagined to occur. For the exact same reason that the government has no authority to confiscate a portion of every working man’s paycheck in the name of “social security”, so also border controls are just as evil. Immigration law is not law used to block, punish, or deter actual criminal activity, where there exists an assailant and a victim. It is an arbitrary prohibition, the punishment of a victimless crime. It is as unsubstantiated and subjective as asserting that a man has a right to drink alcohol in the privacy of his own home, but cannot also smoke marijuana, because that would be too dangerous.

After all, if walking across an imaginary line in the ground is something that requires the government’s permission, the government may just as well not allow any of it. Legal immigration could be capped at a quota of half a million people per year, or even zero people per year. Either way would be equally appropriate and morally valid, if the government had the authority to prohibit people from relocating. One cannot avoid the conclusion that the underlying assumption behind immigration law – the idea that borders represent a moral imperative in their own right, independent of any other justification – is deeply flawed and can straightaway be reduced to total absurdity.

With that assumption summarily destroyed, what remains in the void is a burning question: “Under what circumstances can there be a legitimate reason to enforce border control?” Indeed, a closer look reveals that there are no such circumstances. There is no violence, no infringement upon the rights of individuals, inherent in the action of traveling across a border. No assault is conducted; no person or property is harmed. Nor is immigration regulation necessary for the implementation of the more defensive functions of government. The FairTax and other taxes on final consumption do not require a list of citizens and permanent residents. The police are already available to protect everyone when necessary. The American courts can and should have a precedent of hearing any cases directly related to an action that transpired within the country. So the only government institutions left unaccounted for are, of course, the obviously illegitimate ones. An enumeration of the citizenry is reserved for functions such as welfare, income tax, espionage, and other corrupt and inexcusable violations of liberty. Lists of legal citizens and documentation of residences serve only to allow the imposition of property taxes, give the IRS too much authority to audit, and tempt demagogues to create terrorist lists in the name of national security. The government would have a much harder time invading the privacy of civilians if a certificate was not legally required for the simple fact of existing. If, for example, allowing uncontrolled immigration made enforcing the income tax so cumbersome and flawed that it had to be abandoned, that would truly be a wonderful day in American history.

Even with the victimless nature of the “crime” of illegal immigration identified, though, some authors and citizens continue to rebel against the obvious logical conclusion that the borders must be opened. This is where the brilliance and power of the social architects who oppose freedom and prosperity really shines. They argue distractions and obfuscations long after the core principles are elucidated. For example, one oft-repeated mantra is that opening the borders would violate the Rule of Law and thus expose society to any number of horrific effects. Amnesty for illegal immigrants is predicated on motives which could just as easily be used to justify amnesty for murderers, it is said. Columnists emphasize that illegal immigration is wrong because it is illegal, and therefore must be stopped. This argument, though, is self-defeating and evil. One cannot overstate the destructive capacity of deriving morality from legality. If breaking the law is morally wrong simply because it is breaking the law, then no form of dissent can ever be justified. If the government imposes a 99% income tax, or outlaws the possession of all weapons down to thumbtacks, surely the citizenry must obey, for that is the law. Clearly, laws which violently punish innocent individuals must be disregarded. In fact, the Rule of Law is a doctrine originally conceived for limiting governments, not civilians.

The aggravators frequently distract from the principles at stake by accusing illegal immigrants of harming the economy. Surely the enormous welfare benefits which are paid to illegals, in spite of the liberals’ frantic cries that this does not occur, must represent a significant portion of the national debt. Add to this the fact that it is all too easy for an undocumented immigrant to avoid the income tax while simultaneously outcompeting unskilled American citizens for the precious few remaining jobs in this depressed economy, and the sum of it all is one heck of a powerful argument … against government interventionism. This is the ultimate crux of the distractors’ and racketeers’ fallacious logic. They are unwilling to acknowledge that, in the most literal sense, all of the problems they attribute to illegal immigrants are actually caused by the government itself. The massive national debt occurs, not because illegal immigrants happen to be receiving welfare payouts, but because the government is willing and quite eager to tax and spend money from the working class in the first place. The unenforceability of the income tax is not a consequence of the population of undocumented immigrants, but rather of the illegitimate and frankly quite ridiculous nature of the tax itself. Finally, the jobs argument really attacks the government-imposed price floor on labor, which all economists agree will create shortages and reduce economic productivity. The logical position for any freedom-lover to take is that of opposition to the government interference that has rendered immigrants a resented class. The immigrants themselves are at worst guilty of being caught in the crossfire between middle class and bureaucracy.

Immigrants do not and cannot cause the federal debt to rise. Only government controls government spending. Uncovering this self-evident truth gives great insight into why illegal immigration is such a hot-button issue among the news media and liberal and conservative politicians alike. Establishment officials naturally fear authors and philosophers from the right wing, because the right’s opposition to government spending and waste puts the various government-corporate complexes and bureaucracies at risk. If the conservatives got their way, politicians and lawyers might have to find useful jobs instead of pushing papers at other people’s expense. Similarly, the establishment fears the left’s thinkers, as well. If any of a number of different liberal activists achieved real political pull, the government would not be able to arbitrarily outlaw simple personal behaviors. People could not be arrested and fined for harmless decisions. This, too, threatens to leave bullies of law enforcement out on the streets looking for work.

A simple solution to the government’s major problem is for the law enforcement and the bureaucracies to adopt a mutually beneficial stance of misdirection. Allegedly conservative officials dodge anger over government from real conservative voters by decrying those awful illegal immigrants for making the debt so high. Then, of course, it is not the fault of the Republican Congressmen that the debt keeps rising all the time. It must be blamed on the crazy liberals with their destructive love of illegals that somehow magically makes it impossible for Republicans in Congress to just vote “No” on spending bills. The liberals join in lock-step, demonizing the conservatives for ostracizing illegals, but not actually promoting a message even remotely related to true freedom. The two parties ultimately work together to increase border patrols, shoot innocent people, and not actually put any significant dent in the flow of illegal immigrants. A naive observer might wonder why so much effort is spent stopping illegal immigration when so little results are achieved. A libertarian observer, however, would note that the effort and expense was the goal all along. The government is simply generating more government activity. Stopping illegal immigration is one of hundreds of imagined causes the bureaucrats from the right and the left created to rationalize that. A few thousand people die, a few hundred thousand have their lives uprooted, but millions still make it through, because succeeding was never the object. Conservatives are mad at illegals instead of at the government that is wasting money, liberals have jobs and a way to buy votes by pretending to sympathize with illegals yet not taking any real action to open the borders, and the cycle continues.

If it should now be supposed that advocating for amnesty is the correct path toward freedom, let that idea be put to rest immediately. To use the word “amnesty” would imply that traversing an unseen line in the desert was ever a real crime at all. What would be appropriate at present is for lawmakers to agree that preemptive regulation against victimless crimes has not ever been a morally legitimate or practically feasible government scheme, that all who have been imprisoned by border patrol were thus mistreated, and, most astonishingly of all, that projects, codes, fences, arms, and soldiers dedicated to controlling the natural migration of human populations are and always have been a big-government racketeering project, that they are a waste of money designed to create work for talentless bureaucrats who otherwise would be incapable of competing in the job market, and that every working American would enjoy a much better quality of life without them.

The economic damage caused by the desire to prosecute against the victimless crime of traversing borders is difficult to estimate. Right off, it can be guaranteed that the entire cost of all border patrol officials as well as all the bureaucrats that handle paperwork for legal immigrants is entirely wasted money. Furthermore, had those workers not been employed in a destructive task, they could have sought jobs elsewhere, so their entire productive capacity over the span of their careers is potential profit and innovation which has not been brought to fruition. Finally, the tangible expenses of border patrol includes all the armaments and buildings used in the racketeering project. These expenses in total number in the trillions when considered over the past few decades. Then there are intangible and almost inestimable costs such as the productive power of more and cheaper labor as well as the interest accumulated on all the past expenses. Immigration control has been a continuous and severe blight on the United States economy for as long as anyone can remember. The accumulated cost with interest now exceeds that of the war in Iraq, the TARP bailouts, and the amount of money necessary to feed the entire continent of Africa for several years.

The unavoidable conclusion finally surfaces. Immigration laws are a racket and an excuse. They provide liberals with a moral crusade and demonizing talking points to draw attention away from confronting the economic sensibilities of the conservatives. Conservatives use them as a cover-up to hide their own unwillingness to actually cut government spending and repeal unnecessary laws. Ultimately, the dichotomy reveals itself to be just like all others – not one of left versus right, but of ordinary, freedom-loving individuals versus busy-bodies, elitists, and bigots. To employ a phrase that has recently become very popular in Washington, we need real solutions. Those real solutions are straightforward and obvious. The government can solve spending problems by just not spending. The abundance and frequency of illegal immigration can be solved by not outlawing non-violent behavior. As for what will be done with the new-found problem of massive unemployment among legislative paper-shufflers, department big-wigs, and bullying border gun-toters with badges, true American patriots neither know nor care.


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Tea Party Plans for Success at 912 Protests in 2010

July 14, 2010 1 comment

This year’s 912 protests promise to be truly extraordinary, as an unexpected and powerful coalition of conservatives, libertarians, new patriots, and principled Americans has formed to plan and oversee the events. The Tea Party Patriots recently released this announcement in preparation for the protests. In it, they explained that the operation now boasts the support of “partners at FreedomWorks, Institute for Liberty, the Ayn Rand Center, the National Taxpayers Union, and the Patrick Henry Center.” The intellectual diversity represented by these various groups, in particular with the inclusion of the notoriously atheistic and anti-Republican Ayn Rand Center, underscores the Tea Party’s commitment to fiscal responsibility, individual liberty, and government openness, rather than to any party lines or hidden agenda.

Perhaps even more impressively, the 912 protests of 2010 will have focal points in three separate cities: Washington, D.C., Sacramento, CA, and St. Louis, MO. The protests were big back in 2009 with just one central event, with about 75 thousand limited government advocates demonstrating on the streets of D.C., and tens of thousands more spread in various smaller cities across the nation. The Tea Party’s decision to expand into three cities this year shows confidence that their plans will be even more successful, possibly even reaching D.C.-sized demonstrations in each region of the States. This ambitious attitude likely stems not only from the large coalition of supporters which the Tea Party has built since 2009, but also from the mounting urgency of making a lasting impression on Congress and America before the mid-term elections 52 days later.

The 912 Project was created by Glenn Beck in March of 2009 to remind Americans of the core values like love of freedom, responsibility and accountability, and respect for God and fellow men that we all felt on the day after the 9/11 terrorist attacks. Over the next several months, the project evolved as the aspects of accountability and freedom were amplified, until they spawned a nationwide taxpayer rally to get the government back to serving the interests of the people, rather than destroying wealth in the false name of American values. The taxpayers’ march on Washington on 9/12/2009 was unprecedented in its size, scope, and influence.

Now the Tea Party Patriots plan to do it all again by coordinating cross-country travel and organizing what could be one of the largest taxpayer demonstrations in the history of the world. Most major cities across the nation will have local events on the big day, but everyone is strongly encouraged to make travel plans to attend the marches in D.C., St. Louis, or Sacramento if at all possible. I will be heading to D.C. from the Raleigh-Durham area. Anyone who wants to join (and you really all should!) can subscribe to my blog by clicking the grey button in the upper-right corner of the screen. You will then receive email updates as I negotiate travel plans from Raleigh to D.C. When enough people are on board, the costs really will not be high, and of course the demonstration itself is free!

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How to Stop All Oil Spills – And Why the Government Has Never Done It

May 25, 2010 3 comments

To listen to the audio version, play the video below. To read the transcript, simply scroll down.

All right, friends. I’m supposed to be running a level-headed show here, but tonight, I am mad. I am very mad, because once again the demagogues are creating a racket by touting themselves as defenders against a real problem that Americans face and instead creating more of the same problem. It has now been 36 days since the Deepwater Horizon oil spill began, and there is no end in sight. Dozens of millions of gallons have already entered the Gulf, which is probably about how many dollars the news media and lawyers are making right now complaining and failing to produce any solution. Of course no solution has been found, because the government’s policies towards drilling ignore philosophy and human nature.

At every turn, at every new spike in pollution of the air and the sea by some careless mega-corporation, the federal government has responded by issuing greater regulation and tightening controls on industry in a racketeering attempt to say they did something. Better to pass an imperfect law than no law at all, right? But their strategy has never worked. There’s a million and ten ways for a company to pollute, accidentally or otherwise, and the nature of legislation is to be reactive. To stop pollution, we need policies that are proactive. We need to be able to anticipate catastrophic environmental damage before it occurs – not yell and legislate about it afterwards. The government cannot accomplish this. For the past century, it has been passing progressively more and more laws regulating businesses that deal directly with the environment, and yet oil spills keep happening, each one seemingly worse than the last. The polar ice caps are still melting, and the only response the feds have ever conceived is more barriers to entry in industry, more government-mandated inspections of rigs, and more taxing and spending. This has gradually increased the real cost of oil for middle class Americans and has never stopped corporations from inflicting collateral damage on the environment through misuse of communally-owned resources.

All of that, though, I have learned to begrudgingly accept. What has gotten me so enraged tonight is the fallacious sense of inevitability with which the whole ordeal is discussed. As soon as the extent of the damage of the spill came to light, the liberals immediately responded with their demands to punish the big, mean corporations for damaging our environment. They said we need more regulation and more government action against big business to show British Petroleum that they can’t just pollute our waters without some accountability. Then the conservatives replied with their predictable economic concerns. “Wait!”, they said. If you try to punish the oil companies by fining them and restricting their business, the cost will just roll over to consumers, raising the price of gas! Barriers to entry will reduce competition in the industry even further, and it will be more difficult for average Americans to maintain their standard of living. That’s the argument you hear – and you here it day in and day out. Take your pick, they say – either allow the corporate big wigs to wreak havoc on society and the planet without any accountability, or cripple the oil industry in regulation and let the American middle class take the hit anyway. And they give you those choices as if it is just natural – As if that’s just how things are supposed to be!

I am here to tell you that I don’t buy it. I don’t accept this dichotomy. The Republicans scream to protect the industry and the Democrats scream to protect the planet, and the result is that neither achieves any success. Government swoops in and does what it does, and when all is said and done, we keep having oil spills and the price of gas keeps going up. It is time for a philosophically different approach to drilling for oil. It is time to implement freedom and responsibility – to allow businesses to compete with one another in a free market to drive down the cost of oil while at the same time placing upon them the responsibility to maintain their own resources, free of pollution. Over the past century, we’ve had plenty of Democrats and plenty of Republicans take office and enact their plans to absolutely no avail. It is time for a new solution – the Libertarian solution.

In a Libertarian’s perspective, the Gulf oil spill is just one of millions of examples of what’s known as “The Tragedy of the Commons.” The tragedy goes like this: When individuals use resources that are owned by the community, it is in the interest of each individual to use the resources in a manner that is not in the interest of the community as a whole. The Commons gets depleted, because each person takes from them recklessly, conserving nothing for the future lest the others should get it first. To a Libertarian, the solution is self-evident: Do not have a Commons. When every individual actually owns a certain portion of the resources, it is in each person’s interest to conserve his own property, and he does not have the right to damage or intrude upon another person’s property.

What I am telling you here is that the only way to prevent oil spills is to privatize the oceans and release all government control of the oil industry. It isn’t hard to achieve. Simply auction off the waters in sections to whomever will develop them. Let the proceeds help pay off the federal debt. Each company or person that buys a section receives a deed to it just like land owners do. Then the protocol for polluting someone else’s waters is just as it would be dumping oil in your neighbor’s backyard: You can’t. If you do, your neighbor will sue you in a civil court.

In essence, what this will achieve is the complete freedom of the oil companies to compete amongst themselves to find the most efficient way of delivering oil to Americans cheaply while also internalizing 100% of the costs associated with pollution. By disincentivizing pollution instead of yelling about it, we will put an end to oil spills. No longer will companies be able to undertake careless practices and make tax-payers and their neighbors accept the consequences. There will be no more discussion of a “cap” for collateral damages; there will simply be no collateral damages. Anyone who commits an act of pollution will be taken to court by a complainant who will actually own property that suffered demonstrable damage. This contrasts sharply with our current system in which British Petroleum is essentially on trial against the government for crimes it allegedly committed against the whole planet. When all resources are in the hands of well-defined owners, there will be no more ambiguity of finger-pointing, no more argument about who hurt whom and how. Pollution will be unprofitable, plain and simple.

Perhaps you wonder, if this solution is so simple and effective, why it has not been tried before. The answer is just as obvious as freedom itself. Neither the government nor the corporations have any interest in adopting a policy of freedom and responsibility, so no such policy is ever considered. The concern that government regulation will harm big business is in itself a racket and a false source for angry punditry – government regulation is the source of big business. Does anyone know when was the last time that a new oil company was started? Of course you’ve never heard of a start-up in the oil industry making it big. The barriers to entry are insurmountable. The more the government legislates to try to save the environment, the more impossible they make it for anyone to get approved to start a new drilling project to compete against existing corporations. Through environmental demagoguery, they systematically reduce individual freedom. In doing so, the government creates an oligopoly through which all American industry is dependent upon a select few oil companies. These companies are in a position to demand whatever they want, because the American lifestyle cannot persist without oil. As such, they are never held truly accountable because to punish them as they deserve would cripple society – and so, there is no responsibility, either.

To privatize the oceans and regard them as resources to be used freely without causing damage to other people’s property would break the intimate relationship that corporate lobbyists have established with legislators. When legislators no longer interfere in business, corporate lobbyists no longer have any reason to win their favor. The billions of dollars spent on maintaining large legal departments and publicizing court cases to pressure legislators and raise public concern would no longer be necessary. The savings would roll over into lowering gas prices for you and me. The racket would end. We would stop seeing Congressmen and business executives speaking on the news every day about the ongoing controversies and the need for taking some unspecified action to calm everyone’s anger. Instead of shouting at bad behavior, we’d be disincentivizing it. True freedom and responsibility is the only way to end the tragedy.

Thank you for your time. The Worst-Case Scenario now has a Facebook page. Find out more on the Connections and Networking page.

“Football” Congressman Exposed: He’s a Big Annoying Meanie!

January 31, 2010 1 comment

My friends at the libertarian Reddit recently informed me of the Department of Justice’s bizarre letter to Senator Orrin Hatch (R-Utah) regarding restructuring of – not the economy, health care, or gay rights, no – college football. Specifically, CNN Political Ticker reports that Senator Hatch raised a complaint with the Obama administration about the lack of a national championship in college football, which he views as the result of violations of the Sherman Anti-Trust Act on the part of the Bowl Championship Series (BCS). Perhaps that sounds a little strange, as if the government is taking the Sherman Act and using it to change the policies of the private sector in a manner only tangentially related to trust-busting. Indeed, it is exactly that, as Obama was actually quoted in the Wall Street Journal as saying he would “throw [his] weight around a little bit” in college football in order to get a proper playoff system established. The claim that the government is throwing its weight around in private affairs is one I expect to hear Rush Limbaugh making on a slow news day, not Obama openly stating as a bragging point.

When I read about this atrocity, I had to wonder about Senator Hatch and his political ideology. Whereas the Republican platform claims to advocate a limited federal government and interference in private affairs only when it is necessary for the public security, it seems improbable that Hatch could believe the lack of a college football championship is a threat to anyone’s security. What I found surprised me perhaps more than it should have. Although the senator has a moderate amount of respect for fiscal responsibility, repeatedly voting against economic stimulus bills and advocating a balanced budget, his honest Republicanism and regard for the Constitution ends there. On the issues, Senator Hatch is a neocon, a theocrat, and a big fat bully. He has a history of arbitrarily doing just what Obama loves – throwing his weight around – whenever he sees something that he does not like.

The senator’s concept of rights and free speech is odd, to say the least: “…we must amend the Constitution to restore the historic right to protect the flag. … We are not interested in diminishing free speech. But, by restoring the traditional power to prohibit the physical desecration of the flag, we are drawing the line between legitimate free speech and destructive conduct.” Democrats and Libertarians in the audience will wince at the idea of an amendment to prohibit flag-burning. But Republicans and all rational persons should writhe in agony at the use of the phrase “right to protect the flag”, which means, “right to use violent force to protect the flag” (as that is the only way the government can enforce any law), which means, “right to use violent force to stop other people from destroying property they created and own as a public statement.” Apparently Hatch believes that just after the rights to life, liberty, and the pursuit of happiness comes the right to force other people not to destroy something they own if it runs contrary to customary social values.

This arbitrary and inexplicable concept of rights may explain why, in 2004, Senator Hatch tried to outlaw the internet. Being that he was irritated with the rampant copyright violation on the internet, and obviously had never committed this crime himself, Senator Hatch proposed the INDUCE Act, which would have changed copyright legislation so that anyone who deliberately facilitates copyright violation would be tried for the violation itself. The bill qualified ‘deliberate inducement’ of violation by “whether the activity relies on infringement for its commercial viability.” What websites and services rely on copyright infringement for their commercial viability? To put it simply, all of them – or at least all of the ones you and I visit on a daily basis. The internet is a highly competitive economy, and most high-traffic sites operate on a fairly low profit margin. Cut out ten percent of their gross revenue, and they become inviable. What percentage of the page views on sites like Google, Youtube, MP3Raid, MegaVideo, and even Wikipedia derive from searches for illegitimate material? Not all or even most, but enough. Even Facebook would be dragged into court, as a common use among teenagers for the site is the redistribution of photographs of friends, which (believe it or not) is in violation of international copyright law. The point to recognize here is that relying on copyright violation for economic viability does not mean dealing explicitly in illegal transactions – it simply means benefiting from them to a significant degree. The very same network effect that makes the internet such a valuable resource also makes it impossible to completely separate oneself from the crime committed on it.

Orrin Hatch also voted in favor of federally prohibiting homosexual marriage while attempting to prohibit it Constitutionally. When Stephen Colbert and the progressives complain about the angry-white Christian-right, Senator Hatch is the sort of man they target. His inconsistent principles and inappropriate use of the term ‘rights’ to describe bullying by the government give the freedom-loving conservatives a bad name. He hangs tightly along party lines on denouncing welfare and blocking excessive spending, but party lines are his only motivation – he cannot be construed to have a philosophical understanding of the failures of government while he still views it as a morally acceptable way to force his Christian values  and personal whims on the population of the United States. As a pious Mormon, Senator Hatch ought to ask himself whether Jesus would use political power to change the game of football.