Tuesday, November 19, 2013

Cooperation: A Free Market Model for Environmental Protection

Utah is blessed with some of the most amazing landscapes in the country. From the curious rock waves of Zion’s slot canyons to the Salt Flats in the west desert, tourists from around the world want to visit this state. Utah is also a bustling hub of energy and resource development, providing valuable jobs and affordable energy. Balancing these usually competing interests has been a difficult challenge, and not just since environmental activist Tim DeChristopher hijacked an oil and gas auction in December 2008.
IACX Energy, a Dallas-based helium gas producer, decided to avoid the possibility of litigation or activist-inspired regulatory compulsion by going directly to their would-be adversary and working together to craft a “win-win” agreement that augments drilling in a proposed wilderness area. By drilling horizontally to the intended underground helium dome instead of vertically, IACX gets its gas and the Southern Utah Wilderness Alliance  protects valuable wilderness. “Let’s face it—when you’re on federal land, you have many stakeholders,” IACX president Scott Sears told KUER.  ”And I think the worst thing you could do is just barge in like a bulldog and say, ‘This is mine and I’m gonna do whatever I want and to heck with the rest of you.’”

This sort of cooperative agreement stands in stark contrast to the combative, rhetoric-laden battles between property owners/lessees, legislators, and environmental activists. Regardless of where you come down on the environmental debate, you have to admire a legally entitled company that takes the initiative to engage a non-profit, instead of waiting for them to lobby the legislature for proxy enforcement by fiat. Other business owners and executives should take note; in industries that have a residual impact on surrounding areas and/or future generations, it makes good business sense to cooperate with other stakeholders. The more this happens, the less we’ll see frivolous, one-off regulations added to state code.
Let’s go a little deeper though, and examine the idea of primacy in property rights discussions. The most common and perhaps important function of courts is to settle private property disputes, which include, by extension, our persons, effects, long-term health, and in some cases even quality of life. Since our livelihood is derived from combining labor and resources, any third-party action that deprives a person of this ability to exercise prior property rights constitutes a tort. Cases involving pollution of air, water, audible, olfactory, or visual environments, and miscellaneous other nuisances can be difficult to adjudicate in a legal system that doesn’t fully understand and respect private property. However, these quality of life measures are not unimportant to those who have worked to maintain or improve their property.
Take the case of the BP oil spill as an example of how not to protect the environment or do business. Environmentalists, having become accustomed to and dependent upon regulatory pressure against big corporate oil, ran into an unsympathetic administration that was hungry for more energy to combat sky high energy prices. Since private ownership of seas and sea floors is unheard of, there is no one but a legislator (beholden to public whim) who has enough power to deny access to these resources. There exist no neighboring property owners to object to proposed uses that may ex ante create problems for them or devalue their property. All it took for BP to secure access to the resources below the sea floor was a permit to drill, so they went at it with reckless abandon.
This turned out to be a disastrous business decision and an even bigger ecological disaster. Had BP approached stakeholders along the affected coasts prior to deploying the Deep Water Horizon, they surely would have been counseled to take additional steps and employ redundancies to avoid or reduce the impact of oil spills. However, with the scope of most spills limited to a few square miles, the lack of immediate adjoining property ownership made this type of outreach unlikely. In other words, the lack of private property in the gulf and preeminence of political stewardship over “public property” make this area, and consequently every other resource rich, publicly managed property, a ticking time bomb.
While many, myself included, have a problem with SUWA’s usual tactic of pressuring the federal government to designate just about every open space as a national monument as a means of preventing most forms of recreation and development, one has to acknowledge that environmental stewardship and protection is an important precursor to long-term prosperity in a world dependent upon allocation of scarce resources—which is why the IACX/SUWA agreement is so important. If more stakeholders can come together to tackle tough issues surrounding the need for responsible development we are more likely to avoid ecological encroachments and disastrous federal land grabs in the future.
Because society’s general antipathy towards private property makes the purest free market solution unlikely, it is incumbent upon responsible business owners to be proactive in seeking win-win solutions to resource exploitation by cooperating not just with neighboring property owners, but also with special interest groups, as a path to legal indemnification and responsible stewardship.
It’s not just good PR—it’s good business.

Tuesday, March 12, 2013

Senate Bill 226 Moves The Needle…In The Wrong Direction

A newly proposed bill that would extend Utah’s taxing authority to out-of-state businesses is making its way through the Utah Senate.  It comes as no surprise that the bill, which is already being flagged as unconstitutional, is being sponsored by a Utah Republican lawmaker, Sen. Wayne Harper.  Despite all the rhetoric about their desire to lower taxes and thus improve living standards for Utahns, the data suggests Republicans are just as willing to dip into your wallet to benefit certain privileged lobbyists or special interests as Democrats.  After all, taxes and penalties on business are always passed on to consumers.

The bill, in effect, would mandate that out-of-state businesses, using Utah companies to advertise their products and services, collect a sales and use tax from Utah customers.  Aaron Schubach, owner of Standard Optical, arguing for the bill (and his own special interest) notes that the $180 million in anticipated tax revenue could be reinvested in schools, government insurance expansion, “and some of those other things”.  I’m sure he’s right.  There’s always some pet program out there to throw money at when you have as large a budget surplus as Utah does.  Undoubtedly, Standard Optical, like brick and mortar bookstores, pet stores, and pharmacies, is feeling the pressure of competition from online retailers like 1-800-CONTACTS which figured out a more cost-effective business model and is capitalizing on it. 

The genius of this bill is that it doesn’t directly affect Utah businesses (like 1-800-CONTACTS or Overstock.com), since it specifically targets out-of-state businesses.  Why then would in-state, e-commerce companies take a position against a bill that would apparently give them competitive advantage over out-of-state businesses?  The answer is found in the classic oversimplification of economic consequences used by special interests and lawmakers to foist new taxes and legislation on the masses.  By pointing only to the immediate consequence our wise legislators look like advocates for local businesses, schools, and citizens.  However, the unintended consequence of this bill surviving a vote and imminent Supreme Court challenge would be that all states could then go after out-of-state businesses for sales and use tax collection.  The question needs to be asked:  If use tax collection from Utah taxpayers is already the law, why then press private, out-of-state businesses to collect it on behalf of the states?  This creates a burden and cost on these businesses that does not currently exist, which will eventually be passed on to consumers in Utah and elsewhere.  The real reason for sponsoring a bill that makes an end run around Utah’s unsuccessful collection of use taxes from its own citizenry, is that lawmakers recognize that most Utahns don’t pay the use tax; hence the $180 million dollar figure which was not randomly pulled out of thin air.

In some respects, Mr. Schubach and other advocates like Scott Hymas of RC Willey are sympathetic characters.  They are paying taxes that their competitors don’t have to.  That is unfair (unless they believe that those taxes benefit them or their companies through improved local education, Medicaid, and “some of those other things”; which out-of-state businesses don’t enjoy to the same degree).  However, their proposed remedy for this burden placed upon their respective businesses by the state is to encourage the state to place the same burden upon others; much like a disgruntled sibling who derives joy from the punishments of his brothers and sisters.  Rather than adapting more fully to the changing consumer model, Schubach and Hymas have chosen to support the expansion of taxing authority beyond Utah’s constitutional limits; to get back at those pesky online stores which save Utah consumers too much money. 

A better solution would be to advocate for lower taxes across the board.  This solution puts more money in the hands of Utah consumers directly, a good deal of which would be spent in-state.  The more money people have, the less they quibble about spending an extra $20 on a pair of corrective lenses or a couchside lamp; especially when they can walk out of the store with them immediately, rather than wait for shipping.  In this way Schubach, Hymas, and others could capitalize on one of the few advantages they have over online stores, while making life better for all Utahns.
I recommend reducing or eliminating sales tax altogether to boost consumer spending, improve quality of life for individuals and families, and build upon Utah’s reputation as a great place to live, work, and run a business.

Why Economics Should Matter To You

This may be a difficult article for many to read.  We like our news spoon-fed and interpreted for us, broken down to the “nitty gritty” of what we think really matters. Rather than take the time to understand the causes of our present state, most simply want to know where we are heading and how to fix this mess we’re in. Those skilled in the art of statistical, economic, and political distillery are well aware of this general malaise and use it frequently to promote a particular agenda. In the spirit of full disclosure, I am trying to do the same. My motive, however, is to increase understanding and to encourage individuals to more stridently defend those rights that are naturally theirs.

When I was first introduced to what some call the “dismal science” in a university economics course, I was a bit confused by the jargon, equations, and the mental gymnastics necessary to arrive at (what can only ever be) an approximation of outcomes, based completely on the quality of the inputs. I say approximation because modern economics is concerned with mathematical models that attempt to quantify the aggregate effect of billions of interactions; any one of these interactions not performing as predicted could conceivably throw a wrench in the whole model. In other words, economic modeling has not arrived at a point where the random preferences of billions of people interacting can be mathematically predicted, so we’re stuck with a choice to:
  • force the imperfect conclusions of a model on people who do not always act according to the desires of central planners; or
  • allow individuals to make decisions freely in a marketplace of competing ideas, products, and services.

Most politicians and bureaucrats prefer the first choice, simply by virtue of their position as some of the chosen few who get to act upon others. These social engineers supposedly care for us and make decisions which are in our collective best interest. This is the world in which we live.

Somehow, we all know deep down that this is not right. We want to captain our own ships, be the masters of our own fate. However, when faced with real world manifestations of control, we make excuses for our passive obedience. We casually accept the various edicts of government regulators, yet bristle at the meddling of the neighborhood busybody telling us to park somewhere else, pull our weeds, or cut down a tree obstructing their view. So, does one meddler have any more right to know and direct your business than another?

Those who subscribe to the classical or Austrian view of economics see no difference between these two forms of intervention. Classical economics concerns itself with rational decision making, market preference, and cause/effect. In the classical view, intervention distorts how or whether we satisfy our natural hierarchy of needs. These distortions have a multiplier effect as bad decisions lead to equal or opposite bad reactions by other market participants, necessitating more intervention, and causing further harm. This cycle continues to spiral until we experience an artificial boom or bust as a result. Without this multiplier effect the business cycle still has hills and valleys, but nothing like the peaks and gorges we’ve seen over the last 80 years. Economic manipulation has given us the Great Depression, the Oil Shocks of the 70s, Black Monday, the Dot-Com Bubble, the Real Estate Bubble, and the Great Recession.

Economics should therefore matter to you and I because we are all affected by this turmoil. Those placed in positions of power who then attempt to centrally plan a diverse and uncontrollable economy wreak havoc on our personal finances, creating unemployment, higher insurance premiums, more expensive bills, and a variety of other outcomes that cause significant and intimate economic hardship.

One of the most powerful interventions promoted and implemented by central planners is interest rate manipulation. In a future installment we’ll discuss the purpose and importance of interest rates in a free market and the way rates are manipulated to force certain economic outcomes (in violation of the free market).

Utah's Hairbrained Scheme To Protect Special Interests Needs To Be Upbraided

A recent dust up in Utah courts pitted African hair braiding specialist, Jestina Clayton, against the State of Utah, over a current statute that requires 2000 hours of cosmetology coursework to become a licensed hair braider.  Clayton, 30, who learned how to braid at age five and has been practicing longer than most cosmetology students have been alive, won the case on the basis of her constitutional right to earn a living. The judge cited the lack of evidence for any threats to public safety as grounds for his decision.

I applaud U.S District Judge David Sam for this common sense and correct opinion.  In doing so we recognize that while many can see the restrictive absurdity in making a hair braider take 2000 hours of coursework, there are many who still believe that some licensure is necessary for hair braiders and other common service providers. Enter Republican Rep. Jim Dunnigan, who wants to “reduce” the licensure requirement to 300 hours despite a judge’s opinion stating no credible threat to public safety exists.  This all sounds well and good if all you’re trying to do is move the needle on bureaucratic overreach.  However, we interpret the judge’s decision as a mandate for the legislature to remove this particular licensure provision completely or supply evidence that there is a threat to public safety—something no lobbyist or special interest has been able to do. We therefore support legislation, which we expect to be introduced in the 2013 general session, that will require state officials to demonstrate a clear public safety threat prior to imposing such burdensome regulations.

Clayton’s case has exposed a single egregious example of state overreach and overregulation, but it also suggests that other similar statutes may exist. We are willing to give our legislators the benefit of the doubt that perhaps they were unaware of this burdensome statute, since it and many others are probably buried in the depths of obscure, outdated state code.  However, in view of our state’s reputation for conservative governance and given our state’s heavy conservative bent, it would seem a popular and appropriate opportunity to dig deeper into all existing occupational licensing requirements and identify cases where such regulation is not at all necessary, and inimical to individual liberty and free enterprise.

Capitulating to special interests or promoting the lesser of two evil propositions simply keeps the door open for future legislative abuses and further erodes essential freedom. I prefer a principled approach to governance and recommends the removal of all licensure requirements that do not quantifiably and demonstrably protect the life, liberty, or property of Utah residents.  In most cases the unintended consequences of licensure laws is ignored while legislators attempt to mitigate the most remote possibilities for abuse or harm in the marketplace.  Most recognize the need for reasonable protection of public safety.  Conversely, a nanny state can severely degrade the ethic of personal responsibility. So, what is the appropriate balance?

We recommend a bias towards personal, familial, and local responsibility whenever possible.  This long-practiced Utah ethic can shield society from many abuses and disasters where regulation often falls short.  It teaches individuals to provide for their own personal, educational, and economic well-being which is truly the best protection against abuse.  It’s time we start seeing with a wider angle lens the real consequences of bureaucratic overreach. We believe that a streamlined government will result in more jobs, better quality of life, and greater economic opportunity for all who live and work in this great state.

Thursday, October 4, 2012

Free Market Healthcare Solutions Already In Place

When I first read this story of a volunteer medical/dental clinic in St. George, I was not as awestruck as others might be. A community of volunteer professional healthcare providers coming together to serve those in need is certainly praiseworthy, but is it rare?  These clinics are in every major city in America. Many smaller communities have them as well. The National Association of Free Clinics (NAFC) puts the number of these clinics at 1,200 nationwide.  There are probably many more that don’t belong to the NAFC or have a slightly different funding or deployment model but still help underserved populations, such as the local cash clinic in my community. So, what makes The Doctors’ Volunteer Clinic of St. George unique?  Perhaps Anthony Young, general counsel to the NAFC, said it best:
“It is a rare community [which] demonstrates responsibility for the improvement of their community’s health in such a manner as The Doctors’ Volunteer Clinic of St. George, without seeking government funding…

Indeed it is!  As a people we’ve become accustomed to “charity” being just another function of government, and a legitimate purpose to impose taxes upon individuals. When we see suffering, many shirk any personal responsibility by assuming that there is a government program to take care of it. Of course, government does not have a face to smile back at when care is provided pro bono. It does not have ears to hear a patient’s heartfelt appreciation for compassionate service rendered. Most importantly, government does not sacrifice any time away from family or recreational pursuits to unselfishly care for another human being. Obliterating this link between the giver and the receiver of service has been the great crime and byproduct of state intervention.
Well, someone forgot to tell the folks at this clinic and their private corporate benefactors that there’s a trough of pork barrel funded slop available if they are willing to give up the spiritual and psychological benefits of honest, charitable service.  Or maybe they simply choose to take payment in hugs and smiles over mammon.
This last point should not be overlooked.  Most employers will testify that employees work for a variety of remunerative benefits, not the least of which are psychological. When asked why the professionals at DVC volunteer, Dr. Paul Doxey, chairman of the board, offered the following reasons:
  • It’s medicine as it should be practiced
  • Patients are universally appreciative
  • Good feeling at the clinic
  • Being able to treat the patient rather than worrying about protecting yourself from liability
  • Satisfaction at the end of the day
How many health care professionals would trade a small portion of their incomes or leisure time for the satisfaction of joyfully practicing their craft without worrying about malpractice lawsuits or  insurance collection? Apparently enough of them to staff at least 1,200 clinics throughout the USA.  The DVC has a part-time, volunteer staff of dozens of professionals which further leads us to ask: if there are tens of thousands of doctors nationwide willing to give time and talent to help others, and myriad private, for-profit corporations willing to sponsor such activities at no small expense, why do we need government in the healthcare business at all? Could it be possible for a system of spontaneous organization, motivated by nothing more than a desire for “good feelings,” to replace the top heavy, wasteful, bureaucratic nightmare that is nationalized health care administration?  The DVC has certainly moved the needle in that direction by tackling the need for basic and preventative services in their community. They can and should serve as a model to replicate elsewhere.
We would not call for the immediate dissolution of health care benefits provided by the state.  Far too many (veterans, elderly, unemployed, illegal immigrants) have become acclimated to and dependent upon such an arrangement and would suffer immediately and significantly as a result.  However, we believe many more communities could benefit from a proactive, personal, and private response to local needs. An infrastructure founded upon personal responsibility, charity, choice in healthcare, and unhindered pursuit of monetary and non-monetary benefits needs to arise preemptively before a doleful electorate will accept the truth of free market superiority in health care.

An Alternative to Financing Public Works

For the last five years the U.S. economy has been in the dumps. Yields on savings and CDs have plummeted. Corresponding borrowing rates have been attractive for households, and, apparently, states and municipalities as well. However, while households have largely redirected their “savings” towards debt reduction and/or taken steps to reduce monthly debt service payments, many municipalities have defied common sense and used the current interest rate environment to take out additional debt—funding new projects and initiatives in the face of a rising debt load.
Today, Utah is at 75% of its constitutional debt limit, and if items such as unfunded pension liabilities are included, Utah is far in excess of 200% of this constitutional restriction. We believe it’s time for the state of Utah and its municipalities to follow the example of the families who comprise them and use this period to get their fiscal house in order—reduce debt, refinance to lower debt service payments, and return to a conservative fiscal situation as measured by historical standards—not the spendthrift standards of other, less responsible states.

We have seen in recent months a spate of municipal bankruptcies across the country. In fact, two records were recently set for largest municipal bankruptcies in U.S. history: one by Jefferson County, Alabama ($4 billion total debt) and one by Stockton, California (population 300,000). In both cases, revenues from taxes and fees did not keep up with the merciless call of creditors, and current leadership had to bite the bullet to preserve a semblance of public services. The illusion that property values would forever increase and cover these future obligations was the perpetual siren song of city and county managers—a prediction that ultimately and predictably fell flat.
By contrast, Utah’s entire General Obligation (GO) debt in 2011 stood at $3.3 billion, a far cry from the free-wheeling levels of some municipalities, but nevertheless representing a large increase from our historical debt levels. Just three years prior, Utah’s GO debt as a percentage of the constitutional debt limit was 28.30%. By 2011, this figure had increased to 77.28%. In other words, Utah was not immune to the recession’s impact on real estate values. While GO debt is not usually funded directly by property taxes, this is still a troubling development.
Utah also has a statutory debt limit which states “GO debt must not exceed 45% of total appropriations” (a fancy word for taxation by legislative fiat). On the surface it looks like Utah runs a conservative percentage, even leaving a surplus of debt capacity. However, the largest line item, Highway Construction Bonds, which in 2011 comprised 83% of all bond debt, is exempted from this so-called limit and has been since the early 90’s. Predictably, this exempted portion of GO debt has more than tripled in the last 3 years, outpacing population growth 118:1.
Either Utah officials are hoping for a triple-digit percentage population boom in the next two decades, or a lot of money is being funneled into jobs programs building our own “bridges to nowhere.” Now I’m no forensic accountant and interpreting this data is not my forte, but it’s quite clear that we have room for improvement. We should not rest on our “best managed state in the nation” laurels and ignore the ominous warning signs presented by high levels of debt. Agents of the state government, as fiduciaries of public funds, must be held to account.
How can we improve the financial picture? Consider this: how many times have you driven by road construction projects without a single working employee to be seen for miles? Each standing barrel on a construction site represents a $.40/day charge to the state. When was the last time you received excellent service at the DMV? How many private sector employees get free health insurance and amazing pension benefits?
The answers are clear. It’s beyond time to privatize more of the functions assumed by the state government. Market forces encourage restraint and fiscal discipline; government exempts itself from these forces to our collective detriment. Last year, state per capita expenditures totaled nearly $4,000. You and I already being forced to write the check—it’s time to demand more bang for our buck (while working to keep more of our bucks!).

Believing In Liberty

There is a long tradition of liberty in this country.  It was a desire for greater liberty that moved early revolutionaries to challenge the greatest empire in the world.  Liberty was the central focus of our nation’s founding documents.  Liberty has, in times past, inspired brave men and women to take up arms in defense of family, faith, and freedom.  Many have willingly sacrificed their God-given right to life, in order to protect liberty for future generations.  History has repeatedly proven that no army can defeat a people motivated by this desire to secure or defend liberty at all costs.  Recall the inspirational words of the patriot, Patrick Henry, “give me liberty or give me death!”  This sentiment is not bound by the American tradition.  Classical antiquity had the famous, republican stoic, Cato, who, in the famed revolutionary-era play by Joseph Addison cries out:

It is not now time to talk of aught
But chains or conquest, liberty or death [i]
The black flags carried by the defenders of Barcelona during the year-long Siege of Barcelona in 1713, read “Live Free or Die” (a motto adopted by the state of New Hampshire in 1945).  The national motto of Greece is “Liberty or Death”.  Honduras’s motto reads, “Free, sovereign and independent”.  San Marino’s motto is most succinct, “Liberty”.  Liberty is a universally desired right, if not always an inheritance.
Because of the exalted status of this natural right you would think it quite an easy task to convince people to fully embrace liberty; yet too often it is treated as a nebulous idea.  We define liberty by its synonym, freedom, but ignore the practical implications of what it means to live in a free society.
So what does it really mean to be free?
I contend that liberty and freedom are best understood in terms of how humans act and interact with each other.  This mechanism of human action is best exemplified in the market process.  By nature, all beings are self-interested creatures.  Even when we give charitably of our substance, we must admit to the gratification we feel when lifting others up.  Adam Smith remarked on what he saw as the nexus between self-interest and charity,
How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him though he derives nothing from it except the pleasure of seeing it. [ii]
We are motivated to take actions that we perceive will have profitable outcomes for us personally; and, as a result, society at large benefits.  Sometimes this is measured in dollars and cents; other times there is an emotional or spiritual dividend.  Furthermore, when two parties meet to discuss how they might fill each other’s needs, they do so with the understanding that either of the two can walk away from the bargaining table at any time.  This process is absolutely essential to liberty.  When we speak of restrictions or infringements upon our liberties, we’re often referring, in a practical sense, to our inability to transact business, freely associate, keep and direct our resources, or live in peace enjoying the fruits of our labors.  These are essential cogs in the wheel of free enterprise.  Free enterprise, as a system, is founded on three basic elements:
1)     Private Property Rights
  • The right to own property is a derivative of our right to life because our lives are spent making decisions about how to direct our faculties, which are our primary possession. 
  • Our labor, mixed with resources, creates a homestead right to physical property.  This concept moved humanity beyond the hunter/gatherer age through to the agricultural, industrial, and technological revolutions.
2)     Freedom of Choice
  • In acknowledging that each person has their own value scale and that value itself is subjective, we must admit also that the choices individuals make in directing their labor and resources, i.e. voluntary exchanges, should be left to them. 
  • Appropriating private property for the “greater good” is an illegitimate violation of personal liberty.
3)     Self-Regulating Markets
  • Adam Smith used the phrase “invisible hand” to describe the process of self-interested buyers and sellers seeking to optimize their outcomes by analyzing factors such as supply & demand.  Fully functioning markets have the least degree of coercive external interference.
  • Government interference in markets creates malinvestments which send the wrong signals to producers and consumers, usually in the form of a distorted price mechanism.  Inevitably, this leads to a boom/bust cycle, unduly harming the most vulnerable members of society.
Many programs, supported by conservatives and liberals alike, fly in the face of the tenets of free enterprise.  Consider the strong support for public roads, regulation of food safety, social security, licensure laws, and public utilities.  While obviously very convenient, these programs are bought and paid for with at least a measure of liberty.
Is it worth it?  Many believe some minimal trade-off of individual liberty for collective security or convenience is justified.  While it is true that viable solutions to today’s problems may be proposed by civil servants, it takes a lot more discipline, and an inclination towards greater personal responsibility, to allow the system of free enterprise to reveal the best solutions.
Prison inmates are provided three square meals a day, a job, a roof over their heads, leisure time, protection, and education… all free of charge; but most would trade all of these conveniences for their freedom.  How ironic that those who benefit the most from a multitude of free government services would be willing to give them up in exchange for their freedom.  The more government provides for us, the less we are responsible for ourselves, and our addiction to convenience and safety moves us ever closer to a state of bondage.
So, the question I pose is this:  Do you really believe in liberty?  Do you believe that free enterprise is the best system for bringing prosperity to the greatest number of people?  Do you believe entrepreneurship, innovation, and ingenuity can solve society’s problems?  If so, you’re ready to see liberty move from theory to practice.  Welcome to the movement.
Author’s Note:  In our next few installments we will discuss why free enterprise is the solution to society’s problems, and what practical steps we can take in Utah to advance a system of free enterprise. 
[i] Addison, Cato – A Tragedy, Act II, Scene 4
[ii] Smith, The Theory of Moral Sentiments, 1759, pt.I, sec.I, ch.I, par.I

Wednesday, May 16, 2012

With all the fighting over the legalization of gay marriage, I thought I would inject a little common sense into the debate and make a suggestion that I see as a win-win for both parties.
Statutory marriage has only existed in the United States since the late nineteenth century. Its only purpose is social engineering, so I proposed returning marriage to the private sphere, thereby relieving the state of its responsibility for administering, certifying, regulating, or mediating marriage.
Here's why this works.
1) We reduce the size of the bureaucracy.
2) There is no implicit or explicit mandate for private individuals, churches, or organizations to recognize the unions.
3) Gay couples can choose from a wide variety of privately chartered, professional secular or religious ministers to perform the service for them and provide them with a legally binding contract that outlines the parameters of the partnership.
4) Religions are free to perform or abstain from performing the ceremonies.
5) Corporations with private charters can set their own policies and let the market reward or punish them accordingly for their level of accommodation for gay marriage.
6) The contractual relationship between gay partners can provide for hospital visitation, inheritance, coordination of benefits, etc without the state injecting itself to deny rights to anyone.
7) Freedom and liberty are expanded for everyone, giving all parties a voice and a choice.
There you go...problem solved.

Friday, May 4, 2012

For Socialism, A Path To Victory

In 2006 I was in Brazil, visiting the South American headquarters of Eli Lilly, with a group of graduate business students from BYU. The company was gracious enough to provide their Regional President to brief us on the state of affairs in the industry and give us a tour of the factory. During the information session following the tour, this executive lauded the Brazilian government's efforts to keep prescription drugs affordable for all Brazilians. He highlighted a recent law passed as part of their universal healthcare mandate that fixed a maximum price of $10 USD for any standard size prescription of any medicine. He remarked that none of the international pharma companies raised objections because "they are not in it for profits, but truly care about patient health". While the second half of this statement may or may not be true, I was smart enough to recognize that no company operates at a loss out of a sense of moral duty. They had to be making their profit somewhere. I raised my hand and asked how it is that big pharma can afford to stay in business when the sales price of their product is below their overhead. He vacillated a bit making reference to international adjustments, so I called him out and asked, "Isn't it true that by accepting so easily the imposition of price controls, Eli Lilly already has a plan for offsetting any opportunity cost of continuing to operate in Brazil? In other words, haven't you just shifted the costs to countries with free markets for healthcare, such as the United States?" He bluntly answered, "Yes, in fact, that's exactly what we've done." No one in the group I was with even seemed to care, so I followed up with a more revealing question: "Are you saying the United States is subsidizing the cost of prescription drugs for Brazil and other countries that have adopted socialist models for healthcare delivery?" Again he gave no argument, "That's correct." He then moved on to other unrelated questions without delay.

I was pretty shocked, at the time, by the casual acceptance of such a paradigm. Now...not so much. I understand now how international companies play the shell game to maximize profits, ironically at the expense of countries with free markets. Big banks do it through international currency swaps and derivatives, linking the fates of multiple countries and their populations' livelihoods to the strength of the last free market - America; then, holding America morally responsible to "do the right thing" for everybody and bailout companies and countries that become "too big to fail". They know that our commitment here to the free market is their golden goose and that it doesn't matter how many other markets adopt socialism, so long as the goose keeps laying her eggs. In doing so, these foreign sovereigns have put their sovereignty and any semblance of freedom on the altar of the almighty dollar.

However, there is a largely unrealized event on the horizon. Whether it is coordinated, or even intentional, is irrelevant; the entropic nature of achievement is taking hold and we're witnessing the devolution of higher economic orders to the lowest common denominators of unified force and selfishness. This is the path to victory for socialism. It is by this process that collective and personal desires are satisfied at the expense of other individuals or groups, with the sanction and enforcement of institutional power. Though many, myself included, long for a libertarian dynamic, it is one that is easily exploited when adopted piecemeal, along with socialist reforms. In other words if the United States is only the least socialist, centralized power, then we are the most vulnerable to plunder by economies which have adopted a fuller socialist vision because they can take advantage of our general attitudes towards defending free enterprise in dealing with international actors.

Here's an example in more general terms:

Company A is an international company which sells widgets. These widgets are inelastic, so they retain a fairly constant demand regardless of economic conditions. Access to widgets has been deemed by many leaders/activists as "a right" which should be enforced/protected. Company A sees this as a positive step. Any regulation that enshrines their product as a necessity of life essentially guarantees the company's survival if they can protect their patents and intellectual property. In order to continue selling widgets at a steady clip Company A simply decides to reallocate product, costs, and profits to maximize margins. In this way international business functions much like a hydraulic tube, where prices act as pressure on the tube, moving money from one chamber to another. The amount of fluid in the tube is constant but it is moved around in different proportions. Those countries with price controls get their widgets discounted while those with free markets pay more. In a healthy market, price controls would drive out products as the company is seeking a predetermined profit. However, if the company can simply get their profit elsewhere, then it pays to continue selling in spite of price controls. It is important that Company A's lobbyists are active protecting the uniqueness of their widgets while at the same time fighting to cast them as indispensable. They run the risk of having the recipe for their widgets simply co-opted or confiscated if they don't have government to protect it, so they enlist the strongest country in the world to do it for them under the guise of property rights.

These widgets could represent cars, education, cell phones, healthcare, foods, or any number of consumer goods & services. Are you starting to see the great irony here? Essentially our commitment in the United States to being "mostly free" increases our susceptability to economic exploitation by countries which have chosen the path of plunder. Taken to its logical end, this can only end badly; as the free market, producer nations discover that it's easier to plunder others than to expend energy supporting others. Eventually, there are no producers to carry the load and worldwide consolidation and coercion begins.

The only way to fend off this attack is to treat companies and countries the same. This begins with a proper understanding of property rights and their role in preserving liberty. This is not as simple as one might think; just google Hohfeldian Analysis. Nevertheless, a property right, by the classical definition, is laying claim to previously untitled land or materials; thus "homesteading". Right can also be established through exchange, purchase, or conveyance of titled property, as in an inheritance/bequest. Patents do not fit this definition, partly because they deny others the right to use their mind and body to produce similar goods independently utilizing natural scientific laws. This is nothing short of government granted monopoly privilege. There is no way to establish homesteaded property rights to ideas and products as history is replete with examples of independent invention. Regardless, even if prior art can be proven, there can be no tort where there is no physical invasion. Simply saying someone used their brain the wrong way does not constitute a harm to someone else. Two people on opposite sides of the globe can arrive at the same conclusions about how to mix their labor with materials to arrive at some optimal outcome. Just like Isaac Newton and Gottfried Leibniz discovering calculus in isolation, there should be no restriction on thought, it is an inherent aspect of all natural rights. If then we strip companies of monopoly privilege in the form of patents, we remove their ability to redistribute their profits independent of consequential new competition for higher market prices in the free market economies. They would have to compete toe-to-toe with other similarly formulated or constructed products no longer locked out of the market by the patent office. This would lead to a more market driven price sheet globally and force socialist countries to choose between pushing innovative products away from their market or removing price controls. This would rebalance the global market, create disincentives for central economic planning, and put innovation back at the forefront of the global market. At that point which ever country can do it better, faster, cheaper (in any combination) will win the day and the consumer is the greatest beneficiary.

For those who fall back on the tired argument of research being stifled by a lack of patent protection, couldn't you reverse the argument and say that research by other companies or individuals to improve upon products which never move past concept into development is equally stifled? Is it fair that someone could be granted a 12 year patent for a life-saving drug that never moves past concept and into product development or introduction to the market? What about a new technology that eliminates greenhouse gasses but is squatted on by an oil company because it would put them out of business? How much better would the world be today if everyone (individual or company) were allowed to pursue marginal profits through the introduction to the market of new technologies. More entrepreneurs means lower prices, quicker technological turnover, better quality, and optimally functioning markets. It very well may be that the elimination of patents could revolutionize the world, and prove, once and for all, the superiority of the capitalist system to socialist experiments. As it stands, socialism's path to victory is clear.

Friday, April 20, 2012

Thursday, April 19, 2012

My Comment Board Exchange With A Devoted Keynesian

A letter to the editor recently appeared in the Deseret News (Utah Newspaper) proposing an alternative to the presumptive Republican candidate, Romney. The comment board lit up and I engaged a well-known liberal in a back and forth that I thought was pretty representative of the Keynes vs. Hayek debate that has been going on the last few years.

Interesting contrast between Ron Paul and Mitt Romney--Paul has the courage to say exactly what he really believes, while Romney--well, etch-a-sketch says it all. I admire Paul tremendously. The problem is that Paul's dead wrong on economics. Mr. King points out that Paul's views are shaped by those of von Mises and Hayek and Bastiat--true enough. But they're essentially wrong about everything. At the heart of libertarianism is the notion that the invisible hand of free markets will, if left alone, find a perfect equilibrium, with full employment and no inflation, all needs met and all citizens free and happy. It's as unrealistic as the Marxist notion that impersonal historical forces will, through a process of dialectical materialism, result in a dictatorship of the proleteriat, all needs met, all goods held in common. I think history shows how wrong both arguments are. People in power will, almost always, become corrupted by it, and money is power. There's little difference between Soviet style autocracy and corporate rapacity. Both institutionalize the abuse of power. That's why I prefer a government with built-in checks and balances.

Another Commenter:
I don't think you can say the Austrian economists (people like Mises, Hayek) have been wrong about everything. Read what the Austrians were saying before the collapse of housing prices. They were telling everyone of the coming collapse and recession several years before the fact. I (and I think many Americans) agree with them for their criticisms of deficit financing and subsidies to corporations, whether they be oil or ethanol or solar or whatever. The dollar of today has lost about 95% of its value against the dollar of 1913, when the Federal Reserve was created. How can you say they have been wrong about the dangers of the central bank, and the devaluation of the currency? Austrians claim that when a currency is destroyed, wealth is transferred from the poor and middle class to the upper class. Can't we see this happening today?

Keynesian sure knows how to stuff a straw man.

"At the heart of libertarianism is the notion that the invisible hand of free markets will, if left alone, find a perfect equilibrium, with full employment and no inflation, all needs met and all citizens free and happy." -Actually the heart of libertarianism is the non-agression principle. Libertarianism is much more focused on this point because all else flows from this. The notion of the "invisible hand of free markets" is not a libertarian construct, never has been; in fact, a functioning market is very visible, even transparent, because it's not obfuscated by malinvestments, coercion, and, insitutionalized corruption. Furthermore, there is no Austrian economist that believes we can't have ups and downs in the business cycle, but inflation, by definition, only exists in fiat money systems, so yeah...they're spot on there. Lastly, happiness is never guaranteed, but all citizens can be free, and that condition alone gives the greatest number the best chance to pursue happiness.

Also, you were asking someone to name Austrian economists who accurately forecasted the economic collapse. Fortunately, Walter Block has already documented a list of 29 economists with citations.

Potayto potahto. To deny the utopianist underpinnings of libertarianism is to deny the essential appeal of the philosophy. Yes, libertarians believe in business cycles, but the libertarian notion of a 'business cycle' includes downturns that look an awful lot like The Great Depression. The libertarian solution is to do nothing, because markets will self-correct, providing, given enough time, all sorts of pretty rainbows and frolicking bunnies. And while inflation is theoretically impossible, well, that's the beauty of libertarianism. Since it has never, by definition, been tried anywhere, you can theorize all sorts of wonderful outcomes.
As for the Walter Block article, I'm familiar with it, and it's really not impressive. A bunch of economists predicted that a housing bubble would burst. They also predicted, with impressive accuracy, an unbroken string of sunsets occurring in the west. The biggest laugh-line in the article, however, is Block's 'if only we had listened!' lament. What would it have mattered? The Austrian school solution, basically to any economic catastrophe, is inaction.

Inflation is not only "theoretically impossible" under a gold standard (or any other specie standard) it is just impossible...it's not a theory, it's logic; so there is no need to have a "utopian" libertarian experiment to arrive at that conclusion, just think it through.

The downturn of the The Great Depression had absolutely nothing to do with libertarianism; the vast majority of that period was overseen by Roosevelt and his Keynesian "solutions". It was a period mired in confiscatory economic policy, introduction of fiat money, expansion of government, and international conflict. If you look at the period prior to the G.D. there were plenty of shocks in the economy, but none as severe because government didn't attempt to interject itself at every step as the solution.

The Austrian solution is not inaction, unless you characterize market growth at the expense of government growth as such. Nevertheless, the typical Keynesian response to criticism when their central planning fails (as it has repeatedly) is "it would have been a lot worse".

"I guess we'll never know", right?

Wednesday, April 18, 2012

Government Explained to an Alien

This great video highlights how acclimated we've become to the idea of rulers over us.  Here's a thought...what if no one ruled over us and we had to be responsible for ourselves?

Tuesday, March 20, 2012

How To Get Elected As A Delegate

This is a general article aimed at helping aspiring delegates get elected. Having been a state delegate multiple times, including this year, I know what it takes. I live in Utah which is totally in the can for Romney, yet I and several of my friends have been able to get elected as delegates despite our support of Ron Paul.

Here's how you do it.

Step 1: Call neighbors and friends in your precinct and ask them to attend their neighborhood caucus meetings and support you as a candidate for state delegate. If you are not willing to do this, then you will more than likely lose and the movement cannot afford to waste its precious, dedicated supporters on failed bids, so take some time to lay a little groundwork and make some calls. It's not difficult and it pays huge dividends.

Step 2: Craft a message. It's up to you whether you will be open in your support for Ron Paul or more principles-based, but make sure your message is tailored to your audience without sacrificing your integrity. Speak from the heart with passion. My speech focused on out of control spending creating a real problem for my children's generation. I also appealed to the very low approval rating of congress in saying I wanted to wipe the slate clean on incumbents. That was a very popular message.

Remember, state delegates don't vote for Presidential candidates, so if someone asks whom you support, you can answer confidently that the office of state delegate is concerned with electing state level officers such as governor, senator, attorney general, etc. and that you would prefer to focus on those races. However, state delegates do elect national delegates and that is important as it is the national delegates that will attend the party's national convention and choose a Republican candidate.

Step 3: Coordinate with other known liberty candidates in your precinct to make sure you have a strategy. You do not want to have too many liberty candidates running if the race will be tight against an establishment candidate. Think Aaron Burr/John Adams or Bob Dole/Ross Perot...you don't want to split the vote. If your elections require a majority and you don't get one on the first ballot, you should try to cooordinate with the other candidates nominated to see if the ones with the lower vote totals want to drop out and support your candidacy instead. This is politics at the grassroots level. Make some deals, play the game. The goal is not necessarily to get elected yourself, but to make sure liberty delegates dominate the caucuses, so be willing to throw your support behind a stronger candidate if you're lacking the votes.

Step 4: Get someone to nominate you that is a trusted member of the community. Even if you're allowed to nominate yourself, it is more effective to have someone get behind you and it looks less self-serving.
Step 5: If you're interested in voting in the national election for the party you need to be elected as a national delegate. Usually you don't need to be a state delegate to run for national delegate. However, the race for national delegate is usually a state-wide popularity contest so unless you have a lot of name recognition you might consider seeking out more well-known figures of the liberty movement in your state. You can connect with these people through your state's Campaign for Liberty office, Facebook groups relating to Ron Paul, Meetup groups, etc. Whatever it takes to find these people, coordination is the key to getting delegates.
I hope this information helps. Bear in mind that I've outlined here the process for Utah, but every state is a little bit different so check with your state's C4L coordinator or the state party offices to get your specific guidelines. Feel free to PM me if you have further questions.

For Liberty!

Friday, February 10, 2012

Actor Bill Murray to CNBC: 'I think we ought to be personally responsible' - The Hill's Floor Action

Actor Bill Murray to CNBC: 'I think we ought to be personally responsible' - The Hill's Floor Action

Finally, someone from Hollywood talking some sense. He actually makes passing reference to pioneer women who pushed broken down handcarts up hills as the paragon of personal responsibility...a perfect LDSECON metaphor. Thanks Bill!

Tuesday, January 31, 2012

My Litmus Test

I've decided that a person is unfit for the office of the presidency if they cannot demonstrate a basic understanding of austrian economics. For the last century only this branch of social science has an explanation for the cycle of booms and busts experienced as a result of monetary manipulation. Conservatives are unanimous in their public pronouncements against Keynesianism but there are few if any that are willing to throw off the shackles of controlled economies and unleash the free market. This is either a function of economic inertia, wherein, the difficulty of returning to a free market becomes more difficult and exponentially more painful with each passing year; or, these people don't really believe in free markets in the first place and are simply pandering.

Having said that, I think all of the remaining candidates have the capacity to understand the basics of human action or praxeology (as the larger discipline of Austrian Economics is more properly referred to by its founding fathers) if not the will. I remember during one of the early debates, Michele Bachmann talking about taking some von Mises to the beach for reading material and Gingrich hinting at a gold commission to study the return to sound currency. This is a testament to not only how much Ron Paul has accomplished, but how much we've fallen. He has been the lone voice crying in the wilderness for the better part of three decades and certainly the only one espousing the forgotten geniuses of market dynamics. Fortunately, the principles are not difficult to understand, because they are rooted in basic logic. If a=b and b=c. Then a=c. That's as difficult as the math in economics should ever be. Superimposing random variables on aggregate measurements of individual action, then presuming to divine the future from empirical evidence supposes that men are a collective mind, conditioned to operate in concert according to the past, and devoid of free will to change their actions according as their desire for different outcomes determines them.

Stated otherwise, it is impossible to predict, in an interdependent system, the impact of decisions made by a single actor within the system. The Butterfly Effect or Domino Effect can project the effects of small initial decisions far into the future, perhaps even exponentially so.

That computer you decide not to buy, might be the difference between profitability and loss for a shopkeeper, which may hasten his decision to close the business, which would cause employees to lose jobs, which may cause them to lose their homes, which may cause the price of homes locally to fall, which could slow down housing starts, putting even more laborers out of work, increasing the demand on charities to provide basic services, ad infinitum. However, the decision to save the $1000 might buy an unemployed researcher another month of rent and ramen in his studio apartment, where he's been carefully developing a cure for the common cold. We literally have no idea and it is impossible to know just how consequential and far reaching our seemingly inconsequential decisions are.

For this reason it is imperative that we learn to respect natural systems, in all their complex efficiency, and resolve to avoid meddling. It's time we recognized that the powerful forces of the free market cannot be controlled but by theft and plunder; that the damages of malinvestment lead to social unrest and discontent. It's time we make logic our litmus test for office.

Thursday, January 12, 2012

Ron Paul & Mormonism

I am writing this post to give you some tools to advocate for liberty when you come in contact with members of the Church of Jesus Christ of Latter Day Saints (Mormons).

Quick background. I joined said church in 1997 after deep study, reflection, and prayer. I consider myself extremely devout. About that same time another church member turned me on to a book called The Law, which I'm sure many of you have read. This became part of a more comprehensive path to enlightenment and awakening. My religious conversion was coupled with a philosophical conversion to libertarianism which made my transformation more complete. I have spent the last 14 years reconciling the two belief systems which I describe as really one in the same, as all truth is part of the gospel in my mind. I believe the primal longing for liberty is inherent in many faiths, so hopefully non LDS readers will relate to the principle contained herein.

I want to highlight a couple points about my religion and political stances that may help some of you as you come in contact with Mormons who are unfamiliar with or have a negative opinion of Dr. Ron Paul. In the primaries this year there are two Mormons running, which in my view is historic that our country has begun to move past many of the shallow mischaracterizations of and prejudices against this religion. With these two candidates comes a lot of support from affinity-based voters. These are Mormons who will simply vote for Huntsman or Romney (most likely the latter) based on nothing more than a common faith, regardless of whether the candidates political viewpoints square with basic tenets of their faith. This is an attempt to enlist you in using gentle persuasion to convince Mormons that Ron Paul is the best candidate.

Here are a couple examples:

1) Mormons believe that a pre-mortal battle was waged in heaven. This pre-mortal battle, referenced by Isaiah and Jeremiah in the Old Testament, was an intellectual battle of ideologies. The two opposing forces lined up on the side of liberty or coercion. This conflict is described in several places within LDS scripture: Moses 4:1-4, Abraham 3, 2Nephi2:27, and elsewhere. Furthermore general authorities of the church, such as Ezra Taft Benson, have warned about the disastrous outcomes of infringing on God-given natural rights. If you are confronted by Mormons trying to justify somehow the use of government force to compel obedience to such things as The Patriot Act, Conscripted Military Service, Public Welfare, The War on Drugs, etc. gently remind them of this basic belief and ask them to study further and reconsider their stance.

2) Related to the first issue but for some reason separated from it by neo-cons is the issue of force employed in pre-emptive war. Besides the numerous admonitions by Christ to "turn the other cheek", or "love your enemies; The Book of Mormon and Doctrine & Covenants have something to say on this point as well. Unfortunately, the finer details of the doctrine taught require readers to actually think about the implications of the scriptures, so they get glossed over many times by casual readers. One could engage a Mormon on this issue by pointing out that D&C 98:16 admonishes the saints to "renounce war and proclaim peace", which is something the leadership of the church, if not the laity, does constantly despite the seeming deafness of many listeners. Moses 6:15 portrays Satan as the author of warfare and bloodshed. Alma chapters 43 and 46 acknowledge the justification of war IN DEFENSE only of family, religion, and freedom. The Book of Mormon prophet, Mormon, lamented the savagery of his people who had become bloodthirsty and desirous of pre-emptive slaughter and other heinous war crimes and cries out "They are without order and without mercy" (Moroni 9:18). Instead he "utterly refused to go up (meaning to their enemies' lands) against [his] enemies" (Mormon 3:16). The best example is the Book of Mormon prophet, Gidgiddoni, who in expressing the will of God in counseling his people against pre-emptive war said "The Lord forbid; for if we should go up (again, to their enemies' land) against them the Lord would deliver us into their hands; therefore we will prepare ourselves in the center of our lands, and we will gather all our armies together, and we will not go against them, but we will wait till they shall come against us; therefore as the Lord liveth, if we do this he will deliver them into our hands." (3Nephi3:20-21) There are many more examples than this, but sufficeth to say the scriptures clearly speak out against pre-emptive warmongering.

I want to reiterate that I am not trying to convert anyone to "Mormonism" on this site. I simply want to give you tools to find common ground and advocate for Dr. Paul when you come in contact with Mormons willing to listen to the message and consider it. If you are faced with any doctrinal rejoinders, feel free to hit me up. God bless you in your efforts!

Friday, January 6, 2012

8.5% Unemployment Rate Is A Bald Faced Lie

Here is a great link to a some charts that show that the government is cooking the books on unemployment reporting. Since the government compares workforce participation against employment levels, it stands to reason that the more people the government can take out of the workforce through manipulation of data, the better the unemployment figures are going to look. It just so happens that as we're approaching an election that unemployment figures are magically improving. Well not really...

Check it out.


Friday, November 4, 2011

Of Greeks, Banks, and Economic Imperialism

The Euro was a bad idea from the get go. I know that's no revelation for most people who follow this. You can't take the tool of currency manipulation away from sovereign nations and expect them all to hold hands and play nice. One is always going to try to benefit at the expense of another. A unified Europe was an ambitious plan, one that if successful would have equalized the international trade markets and given Europe the purchasing power of the US, but carried such inherent risk that the only predictable beneficiaries would be the banks, who set themselves up to win regardless of the score at the end of the game.

Since the economic torture room called the great recession has prodded the truth out of its Greek prisoners - that the party is over - there is a choice to be made and it's really the same choice that just about every struggling middle class family facing foreclosure needs to make. Do we continue burning through our productive capacity to support a mountain of debt or do we hit the reset button? The average person faces the specter of poor credit for a period of time where they will be forced to rent their home and live below their means in order to scratch and claw their way back to fiscal responsibility. Greece faces the same decision, on a much larger scale of course, but essentially comparable. What Iceland proved is that you can say "Yes!" to all the offers of credit coming in the mail, then flip your creditors the bird when it comes time to pay. A couple banks will bear the brunt of the blame/pain - in this case MF Global, while others will exercise credit default swaps and move on to the next sucker. Furthermore, creditors will not stay away nearly as long as they threatened. Once a country is no longer burdened by a crippling debt service, they are actually more likely to pay a small debt, so the first creditor in the door would be fairly secure and can earn a healthy return by lending to a formerly irresponsible borrower at high rates.

While I do think Papandreiu's referendum move was political, it was also smart to, like Pontius Pilate, give his people a say in their future so he could wash his hands of whichever decision is made. I don't think anyone wants to be the guy in charge when faced with two bad alternatives. If I was a Greek citizen I'd vote to go back to the Drachma and reinstate the Greek central bank, break from the Euro, default on the debt, and start from scratch. Creditors would come back eventually and the Greeks could pat themselves on the back for pulling one over on the economic imperialists running the show in Brussels.

Of course, I don't believe this will happen as I think the relentless pressure of the EuroZone partners will scare Greeks enough to make them adopt wicked austerity, in which case, they're just delaying the inevitable collapse long enough to pay back some well-connected bankers and give the Germans more economic and political power than they already have, which is considerable. In other words a more orderly, long-term default is still a default but at least it doesn't trigger dominoes and allows the Euros to build their "firewall".

Regardless of the decision made, the Dollar is only going to get stronger because it is the least bad alternative, not because of any fundamental strength in the US economy. This bodes well for precious metals and commodities in general in the long run, but I think it will be a wild ride in the short term, with several dives to come and plenty of opportunities to beef up the portfolio with real strength.

It's also a good time to reconsider what prophets and apostles have told us for years about being prepared personally for the inevitable collapse of Babylon. Get your house in order. Beef up your personal security portfolio with food, fuel, medical supplies, tools, and guns. With these five categories covered you'll survive any Mad Max scenario and give yourself and your family a feeling of comfort and peace.

Friday, September 9, 2011

My Take on President Obama's "Job Speech" - 09/08/2011

In the president's speech last night, he conceded the following:

1) America was founded on rugged individualism.
2) We need to tax cuts to stimulate spending and hiring.
3) We need to shrink the size of government.
4) We need to do away with onerous and redundant regulations to free up businesses and give the market more certainty.
5) We need to close loopholes, which implies simplifying the tax code and moving away from the lobbyist-controlled corporatocracy that exists now, where his own buddies, Warren Buffett and Jeff Immelt (GE), pay almost no taxes as a pro rata share of income.

I, and every other, conservative/libertarian American should be encouraged that the President has become aware of the above truths. It is a testament to just how far we've fallen as a result of the failed policies of both parties.

However, not to be overly conciliatory, President Obama was quick to qualify all of his concessions with a "double down" on big-government, Keynesian, labor theory of value fiscal policy, which almost immediately negated any respect he seemed to have for the idea of limited, constitutional government:

1) We have a shared fiduciary responsibility for the financial well-being of all Americans.
2) We need to spend more money at the federal level on infrastructure. (additional stimulus)
3) By ignoring the Constitution we now have Social Security, Medicare, Interstate Roads, Railroads, National Parks, etc. Therefore, we can't be so stingy about our adherence to the Constitution.
4) Government is better at creating jobs than the private sector and needs to do more of it.
5) Collective bargaining is a right that needs to be protected.

The assumptions that must be granted for the above proposals to be effective/true are many and varied, but can basically be reduced to the following statist maxims:

Those in government are smarter than you. Government is the source of your rights and has the authority to define them, so there is no need for a code of law to enumerate those rights. Profit belongs to labor, not entrepreneurs. Government is better at educating children, creating jobs, organizing large scale projects, judging the worthiness of charitable pursuits and administering charitable funds.

President Obama demonstrated last night that he is an exceptional speaker who wields considerable power over an audience and has mastered the debate tactic of softly conceding small points to win larger arguments and delivering rhetorical darts with precision. He will be very formidable in a general election, not because he is a capable executive, but because he knows how to speak what the people want to hear... I'll feed you. I'll clothe you. I'll keep you safe.

Bread and Circuses...

Wednesday, September 7, 2011

A government created job is like...

...hitting into a double play.

...choosing a cup of pee over a cup of tea.

...killing a single dandelion in a pristine yard with Roundup.

...putting a Picaso in a single-wide trailer.

...cutting down a tree to make a pencil.

...filling a hot air balloon with a Bic.

...brushing your teeth with pumice.

Tuesday, August 2, 2011

Notice To My Creditors

To Whom It May Concern:

I hereby demand that you increase my line of credit. The reason for this is that I want to be able to make the existing minimum, interest-only payments on all my other debts from the increased line amount you give me.


Brock O'Bombya

Dear Mr. O'Bombya,

We received your letter from last week regarding your credit limit. This is an unreasonable request to give someone with your spending history more money to blow through. For this reason we are denying your request.


FRB Card Services

Dear FRB Card Services,

This is not an unreasonable request. You see, my credit report shows I have an 800 score, so there's no way I can default. I know what you're thinking; I don't make enough money to pay all my debts. Again, I don't see this as a problem. As long as I can keep that great credit score and other companies keep giving me larger lines, all is well. You'll get your payments and so will my other creditors. I've never missed a single payment to you or anyone else, and have been a good borrower ever since joining the Federal Reserve Bank. I ask you to reconsider before my next payment deadline.

Best Regards,

Brock O'Bombya

Mr. O'Bombya,

We realize you've been a long-time customer but what you've described above is called a Ponzi scheme. Now if it was up to the FRB you'd have the line extension already. In fact, they'd probably pay you for some of your debt as well. However, our department is an independent arm of the company and must make decisions based upon your ability to pay the PRINCIPAL, not just the interest. We're sure you understand. Perhaps you'd do better just to cut back your personal spending a little. Whatever you decide, we wish you only prosperity.

A. Paulista
Customer Service Representative
FRB Card Services

Dear Mr. Paulista,

Thank you for your kind response, but since you have been intractible and are threatening my life by putting a gun to my head like a terrorist, I can't help but go over your head. Therefore, I am contacting your supervisor, Mitch Peloski, an old comrade of mine that I've always been able to count on for a reasonable compromise. I'll be speaking with them privately this afternoon to solve this crisis before my payment due date. I'm sure he'll understand that interest payments are better than a total default. I do ask, however, that you not share this conversation with the credit bureaus or my other creditors. Remember, we all sink or swim together!


Brock O'Bombya

Dear FRB Card Services,

I can no longer stand to be a part of the sort of gamesmanship I detailed above. I will not seek to extend my current contract in the service department. I've been blowing the whistle into your deaf ears for too many years and will be moving on. I'm taking my case directly to the shareholders of this company and will be attempting an un-hostile takeover.


A. Paulista