Category: Liberty

Democracy? Shrug

I’m a Penn State alum (Chemical Engineering, 07) and long time Joe Paterno admirer.  I own a football that bears his autograph.  I have a framed picture of him leading the 2005 team onto the field against Ohio State.  I have a dachshund named JoePa.

I don’t, nor have I ever, thought he was perfect.  He could be mean; he could be arrogant. Coach Paterno liked his bourbon a bit much (or so I hear).  His wife was a girl he met and started dating while he was faculty and she was a student.  He was openly condescending toward the media.  He was, from time to time, insubordinate to his bosses at Penn State.   This list of flaws and/or possible flaws is by no means exhaustive.

But I’ve long admired him for the combination of the high level of ethics and high level of success with which he ran the Penn State football team.  I still do, and still do for those reasons.  With regard to recent events, the evidence is clear that Joe Paterno did exactly what he was supposed to do, both legally and ethically, in regard to the accusations made against his former assistant Jerry Sandusky.

What does this have to do with modern western society’s exultation of Democracy? This.  Most people simply don’t know the truth, and large chunks believe things very contrary to it.

The whys and hows of the beliefs of people in this regard are subject to debate and a number of different factors.  Confirmation bias.  Jealousy.  Lousy media coverage.

What makes this example particularly stark is the abundance of media coverage over relatively lengthy time and how not-complicated the facts are.  We’re not talking about something so nuanced as the ethics of public education, the long term effects of poverty subsidies, or whether a public option currency will /should lead to greater fiscal growth.  Those things are complicated.  The data are easily muddied.  The logic of a debate on any of them would be nuanced.   Such is not the case with Paterno in regards to his actions with respect to the accusations of molestation made against Jerry Sandusky, and yet people get them wrong anyway.

Democracy, left unchecked, will naturally become a kleptocracy.  Individuals will caucus to vote themselves the fruits of others’ labors.  Other individuals will caucus to stop them.  The power of these individuals will consolidate.  What will eventually come about are factions competing and compromising for a treasury filled with the fruits of the labors of the disenfranchised.

What checks a democracy can be a number of things.  A general moral culture.  A king or queen.  A written constitution.

There are problems easily seen with all of these.  A general moral culture, even if 100% of the culture had it, would depend on not just the moral fortitude, but the intellectual fortitude of the people as well.  As is easily seen, most people are blissfully unaware of the facts, even when the facts are quite clear.

A king or queen is still just a man or woman.  Wise and noble as any given one may be, he or she is still mortal and able to be tempted.

The problems with depending on a written constitution to defend against such ills are easily seen by the American experience.  The 9th and 10th Amendments couldn’t be more clear; and the powers of the government are extremely limited.  Yet even with clear language and educated interpretation, Social Security, ObamaCare, wars on abstract nouns, and a fiat currency still exist.  Some parts get ignored; others get warped.

This is why I say I believe in liberty and don’t give one hoot whether it comes by Democracy or dictatorship.  At best, Democracy is the least terrible of a bunch of terrible options for an earthly government run by men and women.


An Unconstitutional Tax if it Is a Tax: My Opinion of the Supreme Court’s ObamaCare Decision

My opinion on the ObamaCare ruling? If I were on the Supreme Court, I would have filed a separate dissenting opinion.

Actually, I’m not sure about that. I have not read any dissenting opinions from the Court. I wanted to judge whatever the majority opinion was on its own merits, not clouded by whatever merits exist in any existing dissenting opinions, and write my own. Any similarity this bears to the opinion(s) of Justices Kennedy, Alito, Thomas, and Scalia is purely coincidental. I’ll read their opinions immediately after posting this.

Dissent aside, I mostly agree with Justice Roberts’ majority opinion, including his thinly veiled shot at the law:

“Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.”

He might as well have said, “This law stinks on ice. Even though it’s really stupid, the authority is not given to the Supreme Court to protect citizens from really stupid laws, just unconstitutional ones.” In fact, I really only have two problems with the opinion itself, one of which is of no consequence to the result.

We disagree about the extent of the Commerce Clause. He seems to be of the opinion that it gives Congress the authority to tinker with any and all existing commerce; I think it gives Congress and Congress alone the power to erect tariffs, subsidies, and standards and practices in commerce between states, foreign countries, and Indian tribes. I have absolutely no doubt that his thinking is more in line with the post-1937 Court; I have absolutely no doubt that my thinking is more in line with the Framers and the pre-1937 Court. However, we agree that neither the Commerce Clause nor anything besides Congress’ taxing power justifies the law.

Since I’ve already noted that my opinion would be dissenting, you’ve probably already guessed that Justice Roberts’ opinion and I disagree that Congress’ power to tax justifies the law. It should be noted: I don’t necessarily disagree that the Individual Mandate is a tax; I do disagree that if it is a tax, it’s a Constitutional one for the following reasons:

1. The Constitution makes clear that all federal laws that either raise existing taxes or impose new taxes, as Justice Roberts’ majority opinion said the Individual Mandate does, must originate in the House of Representatives. Even though the reason for this was made archaic by the 17th Amendment, it’s still very much a part of the Constitution. The Senate can no more originate bills for raising revenue than the House can ratify treaties or confirm Cabinet members or federal judges. The Patient Protection and Affordable Care Act originated in the Senate. Therefore, if it’s a new tax, it’s unconstitutional.

2. The power of Congress to tax is limited by Article 1, Section 2, Clause 3. All federal taxes fall into one of two categories: taxes that need to be apportioned (direct taxes), and taxes that do not need to be apportioned (indirect taxes).

What’s the difference? Direct taxes are taxes you cannot avoid. Merely by existing, you must pay them. Indirect taxes can be avoided: like federal taxes on tobacco, alcohol, or gasoline purchases. You pay them only if you choose to purchase those things, and you are free to not purchase those things. Direct taxes must be apportioned among the states according to their latest enumeration, indirect taxes may be, but need not be.

Here’s the question: if we accept that ObamaCare’s “penalty” is a tax, is it a tax that needs to be apportioned or not? Here’s the answer: it’s impossible to tell, because it’s unconstitutional either way.

If it is a tax that needs to be apportioned, then logically, in order to be Constitutional, it must be both a direct tax and actually be apportioned. If the Individual Mandate needs to be apportioned and meets the apportionment mandate of of A1S2C3, then medical insurance itself must be considered a tax.

Why is that? Because otherwise the possibility exists that the tax would have no respect for enumeration. If, say, 50% of New Hampshire chose to pay the “penalty” instead of buying medical insurance and only 5% of Mississippi did the same, the tax would not be apportioned. The only way the tax remains apportioned is if paying the penalty for not buying medical insurance is considered equivalent to buying medical insurance.

However, Congress alone has the power to lay and collect taxes (A1S8C1). Since the payment of medical insurance is collected by a private company not designated by Congress and does not directly raise revenue, medical insurance itself cannot be considered a portion of a direct tax. Since medical insurance itself cannot be considered a direct tax, the Individual Mandate does not meet the apportionment mandate of A1S2C3, and is therefore unconstitutional if it needs to be apportioned.

A counter to this argument is that Congress doesn’t collect taxes, the Treasury Department (a part of the Executive branch) does. Therefore, to say that taxes need be collected by Congress in order for the payment to be a tax is wrong, and it is possible that the purchase of medical insurance can be considered a tax.

While I would grant such an argument in and of itself, such reasoning defies the Court’s justification for the Individual Mandate being a tax at all. We must remember that the Patient Protection and Affordable Care Act does not refer to either the purchase of insurance or the penalty for not purchasing insurance as a tax. If it is a tax, it is because its conditions necessarily imply that it is a tax. In other words, you can call it “piano,” but if if it looks like a duck, walks like a duck, sounds like a duck, and both its parents were ducks, it’s a duck no matter what you call it.

Simply put, the purchase of medical insurance isn’t called a tax, and doesn’t look, walk, or sound like a tax. It didn’t originate as a tax, either. The Treasury Department has the authority to collect taxes on behalf of Congress because Congress explicitly delegated such authority to it; such is not the case with the purchase of medical insurance under ObamaCare. Taxes directly raise revenue for the government, the purchase of medical insurance does not. The purchase of medical insurance is a part of a voluntary, mutual agreement between two parties, taxes need not be voluntary or mutually agreed upon. Medical insurance existed before ObamaCare’s Individual Mandate, and wasn’t considered a tax beforehand. Simply put: the purchase of medical insurance cannot be considered a tax.

Since the purchase of medical insurance cannot be considered a tax, the Individual Mandate fails to meet the apportionment requirement of A1S2C3, and is therefore unconstitutional if it is a tax that needs to be apportioned.

If it is a tax that does not need to be apportioned, it must be an indirect tax. Therefore, it must be a tax on some type of activity. Since not buying medical insurance is inactivity, not activity (as the Court’s denial of the Commerce Clause justification confirmed), it is a direct tax and therefore must be apportioned. Since this contradicts the very premise of it being a tax that does not need to be apportioned, it is therefore unconstitutional if it is a tax that does not need to be apportioned.

3. As I’ve noted previously, the majority opinion in Roe v. Wade states that the word “liberty” in the 14th Amendment prohibits state laws from interfering with the doctor-patient relationship. The identical language in the 5th Amendment would prohibit the federal government from the same. The notion that Congress is allowed to pass such a law, even if it’s a tax, without a Constitutional Amendment or the Court overturning Roe v. Wade is inconsistent with that ruling.

Any of the above is sufficient for eliminating Congress’ taxing power as justification for the Individual Mandate in ObamaCare. All of the above just shows how lousy of a decision it was.

Fantasy, Reality, Legislation, and the Drug War

This article by’s Mike Riggs was recently posted about drug war.  Several characters within the Obama White House have been parroting the typical half-and-less-than-half truths.  Hope and change indeed.

I don’t advocate drug use.  In fact, I advocate the exact opposite: not drug use. Let me make something clear: unless you have a legitimate medical reason to use certain chemicals, you shouldn’t hurt your body with those chemicals.  It’s immoral, sinful, counterproductive, and will get expensive.  I’m not out to make your choices for you, but if you want my advice, there it is.

Some people imagine that the opposite is anti-drug legislation.  They are wrong.

In fantasy land, legislation fixes problems.  “Make it a law” that everyone buys health insurance, earns a certain minimum hourly rate of pay, and doesn’t use or sell certain intoxicating chemicals, then magically everyone has health insurance, is both productive on a certain level and compensated for it, and doesn’t use drugs! Done!

In reality, legislation that does anything other than directly protect people and their property from violence distorts free markets.  “Make it a law” that everyone buys health insurance, and health insurance prices skyrocket.  Minimum wage legislation makes everyone unwilling or unable to find a job that pays a certain hourly rate unemployable.  The drug war merely drives the drug trade into the black market.

What does that do?  It makes drugs artificially scarce, driving up prices and driving down the safety and quality.  It makes the profit margins massive and the industry criminal, drawing the most ruthless criminals into the trade.  It also makes the government unable to place a reasonable consumption tax on such an item.

It fills prisons.  The United States has the most restrictive drug laws in the world, and also has the most drug related crime and highest prison population by percentage.  Prisoners cost money.  The government must take this money from somewhere else.

Prisoners tend to remain in prison.  The single greatest indicator of whether or not an individual will go to prison in the future is whether or not he has been to prison in the past.  It’s a big resume stain and time wasted not gaining valuable skills.  Double whammy; huge comparative disadvantage.  So what do they turn to? Crime.  Costs money to enforce those crimes and put the ex-cons through trials and back into prison.

So the drug war:

–Might keep some people from using drugs
–Fills prisons, which is expensive
–Drives down government revenue by keeping otherwise productive people in prison
–Drives down government revenue by keeping a taxable item off the market
–Raises crime, which is dangerous and expensive
–Creates a market in which violence thrives
–Creates a market in which the product is more unsafe

And that list is far from exhaustive.

All to keep some people who want to use drugs from using drugs.  Which, by the way, how’s that going?

End the War on Drugs.  End all wars on ill-defined, abstract nouns.

The Problem of Consequentialist Public Policy

It’s been a few days since I’ve posted.  I’ve been busy.

In that time, I posted the following on facebook:

Requesting that members of an organization ethically opposed to contraception, or anyone else, not be forced (yes, with very real threats of lethal force) to give up their property to pay for other people’s contraception is not the same thing as denying access to contraception. Denial is an action. Therefore, inaction is not denial (modus tollens). Not paying for other people’s stuff is inaction, not action.

It’s no “War on Women.” It’s stopping the war on property

Which drew a response from my long time friend, the always thoughtful Sean Sheehan.    The rest of the exchange was as follows (click the picture to enlarge):

My main issue with Sean’s line of thought is the consequentialism of it: if X benefits from some action, then X should pay for it.

If X benefits from it

This makes an implicit assumption: we know X will have a net benefit from something.  It makes the assumption that you can predict the future.

Not that such an assumption is always bad.  People speculate all the time.  It keeps prices more stable.  It keeps money more sound.  The assumption that there will be greater benefit in the future from some foregone benefit now is the nature of investment, and investment makes us more prosperous.

If you have a half of tank of gas now, but you think the price will be higher in a few days, you’re more likely to fill up now.  This increases demand now, raising the current price.  If you think the price will be lower in a few days, you’re less likely to fill up now.  This decreases demand now, lowering the current price.   This being done on a massive scale “smooths” the transition of prices from one state to the next, making current prices reflect future prices, making them more stable. Decisions based on expectations about the future are not inherently bad things.

Making them for other people, on the other hand, is.

I think this is particularly relevant to the case of subsidized contraception in an effort to drive down unwanted pregnancies.  While admittedly a very simplified equation, it is fairly representative of the truth:

Unwanted pregnancies = amount of unprotected sex * natural conception rate + amount of sex with contraception * rate of conception while using contraception

Subsidizing contraception makes the market price cheaper.  You’ll get no argument from me.  This decreases the opportunity cost for persons to use contraception.  Likely then, many more persons will use contraception.

But does that decrease the number of unwanted pregnancies?  Maybe, but suffice it to say I know we don’t know that for sure.  Being on contraception decreases the perceived risk associated with having sex.  This greatly increases the amount of sex with contraception.

That increase makes sex in general more widespread, and therefore more acceptable in society.  There is increased societal pressure for girls to engage in sexual intercourse.  If girl A and girl B are both after guy C, girl B, even if she’s not on contraception, feels more pressure to have sex with guy C if she thinks girl A will do so because girl A is more likely to be on contraception.  This increases the perceived opportunity cost of not having unprotected sex with guy C, raising the amount of unprotected sex as well.

So even if contraception subsidies do make the market price of contraception cheaper, I see no reason to believe they actually, necessarily reduce the number of unwanted pregnancies.  The exact opposite may be the effect.

Even if contraception subsidies do lead to fewer unwanted pregnancies, is that necessarily a good thing?  Sure, more women would be less educated; that’s not good.  But there would be greater population: greater population leads to greater division of labor, leading to greater specialization, leading to greater comparative advantage, leading to greater prosperity.  There would likely be more marriages in the absence of contraception subsidies, and married couples tend to be more productive, and make more money, than two single people.

That’s the danger of making public policy based on consequentialist ethics: we don’t know the future.  We don’t know the full impact of every little decision, and sometimes, the actual consequences of a policy can be the exact opposite of what was intended.  Government intrusion into medical care has made it more expensive.  Welfare has led to more people unable to provide for themselves.  Housing subsidies led to a massive housing bubble and financial collapse, leading to mass numbers of people getting kicked out of homes.  Greater restrictions on the availability of firearms tend to lead to more firearm-related crimes.

Speculation is fine.  Forcing everybody to speculate simultaneously, and speculate the same way, is dangerous.  Just because I may think you’d benefit from filling your tank now doesn’t mean that you should, and by no means gives me the right to force you to do so.  Even if I’m right about the price of gasoline, and we can’t be certain that I am, how do I know that you weren’t going to use that money for something even better, something that would have made you more money than the money you would have lost by waiting to fill up your tank?

Then X should pay for it

I tried to demonstrate by an industrial analogy that such is a complicated matter.  If Company A invests in a technology that drives down their production costs of product B, it will likely drive down the free market price of whatever good or service they are producing.  This will drive down the free market price of competing goods, such as product C from Company D.  If I purchase product C, I am benefiting from that initial company’s investment: I am able to save money on my purchase.  Do I have a moral responsibility to pay for the initial company’s investment?

A legitimate question is, “Do I pay, in some way, for Company A’s initial investment?”  The answer is sort of.  I’m not completely isolated from the risk associated with the investment.  If Company A’s investment is a failure, company A is less wealthy.  They may have to downsize, making some people poorer, making their ability to make direct or indirect mutually beneficial exchanges with me less likely.  They may exit the particular product market, driving up demand for competing product C, making product C more expensive.  To be sure, I am not isolated from the results of Company A’s investment.

And that’s just it: completely “free riders” are somewhat of a myth in the free market.  We are not completely isolated from the decisions of others.  I bear a burden if Company A’s investment is a failure, and I get a benefit if it is successful.  Even if I have nothing whatsoever do to with Company A; even if I don’t realize it.

But what we do have in a free market are incentives.  Incentives for risk taking.  Incentives for prudence.  Incentives that keep the brunt of the benefits and failures on the one who controls the resources.  Deviation from the market distorts those natural incentives.

The Excluded Middle: Why Either ObamaCare or Roe v. Wade Must Go

There is a rule in logic called the law of the excluded middle: in reality, something either is or is not.

The ruling on Roe v. Wade was a ruling of the 9th Amendment (at the District level, and a very poor one: the Supreme Court, although it upheld the ruling, discarded, mocked, and borderline shamed the District Court’s rationale) and 14th Amendment (at the Supreme Court level).

The relevant Constitutional text comes from Section 1 of the 14th Amendment:

nor shall any State deprive any person of life, liberty, or property, without due process of law

This merely extended the protection of life, liberty, and property citizens have under the 5th Amendment to state laws:

nor be deprived of life, liberty, or property, without due process of law;

The 5th Amendment was irrelevant to Roe v. Wade, because the law challenged was a state law, not a federal one, but it does demonstrate that because of the identical text, if the principle applies at the state level, it also applies at the federal level.  This is not a power granted to the federal government that is prohibited to the states.

The end result of Roe and subsequent decisions was that “privacy” was a liberty in a doctor-patient relationship, especially in matters related to procreation (largely due to Skinner v. Oklahoma, which prohibited states from forced sterilization of “habitual criminals”), if and only if those interests outweigh the interests of the States‘ interests: “safeguarding health, maintaining medical standards, and in protecting potential life.”  Regardless of the merits of such an argument, and even such pro-choice liberals as Alan Dershowitz and Cass Sunstein, as well as Blackmun’s own clerk, Edward Lazarus, admit it stinks on ice, that’s the result.

Which begs the question: if the federal government is not allowed to impose mandates on a doctor-patient relationship (and method of payment is an aspect of such a relationship), and states are only allowed to do so if they can demonstrate that they doing so in “safeguarding health, maintaining medical standards, and in protecting potential life” efforts, how is ObamaCare Constitutional when it does exactly that?

Either the text “liberty” in the 14th and 5th Amendments prohibits such interference or it doesn’t.  It’s the law of the excluded middle.

Why I’m Such a Big Fan of the Constitution

I’m a libertarian.  Very much so.  I border on minarchist.  Yet I’m a very big fan of the U.S. Constitution, which isn’t all that libertarian.  So what gives?

Sure there are some very libertarian elements to the Constitution.  The Bill of Rights, for example.  But there are some parts of it that aren’t so libertarian: the power of Congress to socialize the currency,  the power given to the government to establish Post Offices and postal roads, etc.  These things are not libertarian.  Libertarians prefer free market money, roads, and shipping, and know that any effort of the government to engage in such things almost certainly distorts the market and makes people less free and prosperous.  I would be the first to support amendments to such things.

Yet I’m still overall a big fan.  Why? Because it protects my tastes from yours and vice versa.  I’ll explain with an anecdote.

So I’m taking a bath last evening after hitting the gym.  I put on some Chopin on the iPad to play while I soaked, a change from my favorite, Beethoven. I thought to myself, “Some people couldn’t tell the difference between the two.  Many of those people could tell the difference between Katy Perry and Lady Gaga.  Those people are what’s wrong with music.”

But the more I thought about it, the more I realized that just isn’t true.  The existence of Katy Perry and Lady Gaga don’t alter my enjoyment of Chopin or Beethoven one bit.  They don’t limit the availability of Chopin.  I can think such people’s knowledge of music and beauty is shallow and/or limited, and I do, but those people aren’t what’s wrong with music, and neither is the fact that their tastes create a market for such music.  There’s not much wrong with music at all.

Where that notion could come into play, however, is at the ballot box.  People who couldn’t tell the difference between Hobbes and Locke, Marx and Von Mises, or Keynes and Hayek vote.  I would wager such people are the vast majority of voters.  Among those who actually can tell the difference, I get no assurance that they agree with my views on them or their ideas.

What’s more, even if I can convince those in my locale to adopt my thoughts on those thinkers, that doesn’t mean that voters hundreds of miles away won’t have a different opinion and try to force it on me.  California could try to govern Ohio; Mississippi could try to govern Massachusetts.

And even if I could convince every single person of the intellectual and moral superiority of my thoughts on the ideas of those people, that still doesn’t mean they’d vote the same way, and even if they did, that those elected wouldn’t change their minds.  People aren’t perfect; people have different tastes and interests.

So why am I such a big fan of the Constitution? Because it protects that very thing from mattering too much.  If California or Vermont wants socialized medicine, fine.  If Maryland or Illinois wants take money from its people and use it to subsidize abortions, fine.  If Indiana or Kansas wants to take money from its people to pay farmers to do nothing, fine.  If Michigan or New York wants to take money from its people to save rich, irresponsible automakers or bankers from their bad decisions, fine.

Of course it’s not really fine. All of those are very stupid things to do and will, in the long run, make them poorer.  As an Ohioan, they are all trading partners, and their being less wealthy decreases my opportunities to engage in mutually beneficial exchanges with them, potentially making me poorer.  It is fine by the U.S. Constitution, however.

The U.S. Constitution does prevent those things, short of an amendment, from happening on a national level.  None of those things are expressly granted powers of the federal government, and the 9th and 10th amendments make it clear that unless something is an expressly granted power of the federal government, or both necessary and proper for the maintenance of the Constitution, the federal government does not have those powers.  Alabama would be poorer due to a poorer New Hampshire, but Alabama isn’t forced to adopt a bad policy just because New Hampshire does.

Even better than that, it’s easy to see how the prevention of those things on a national level aids in the prevention of them on a state level.  It certainly, at a minimum, hinders them.  Maine may want each of its lobster exports to be subsidized by $2, but Mainers would be far less friendly to the subsidy if it cost every Mainer $1000 per year than if it cost every Mainer, Ohioan, Minnesotan, and Californian $1 per year.  It is in this indirect fashion that the Constitution, while in no way prohibiting Maine from enacting such a policy on its own, discourages such fiscal and property rights imprudence from happening on a state level as well.

Is it any wonder that in spite of the fact the states are completely free to institute completely socialized medicine, and some are in favor of it, that very few have socialized medicine at all, and those that have done so have only done so in a very limited capacity?  It shouldn’t be.

Also, the Constitution is clear, written, available, and able to be changed.  We can plainly see what it says and what it does not say.  Don’t like something?  There’s a few processes for that.  This keeps the law clear, making it easy for markets to adjust to even those provisions that aren’t purely libertarian.

The Constitution protects my tastes from yours; Oregon’s from West Virginia’s, and vice versa.  Or at least it would if we obeyed it.  That’s why I’m such a big fan.

Mitt Romney is a Fraud

In a speech in Chicago, Mitt Romney said the following:

For three years, President Obama has expanded government instead of empowering the American people.  He’s put us deeper in debt. He’s slowed the recovery and harmed our economy. And he has attacked the cornerstone of American prosperity, our economic freedom.

Mr. Romney is absolutely right on all fronts.  Barack Obama is guilty of all of the above.

What I fail to understand, Mr. Romney, is how the man who (1) signed RomneyCare, (2) forced Massachusetts citizens to pay for other people’s abortions and contraception, (3) endorsed an absurd, arbitrary energy tax to curb a fake problem, and (4) tried to raise Massachusetts’ corporate taxes by so much that the heavily Democratic legislature cut the tax cut in half can be expected to be an alternative to that.  You drove Massachusetts into debt, slowed its recovery, and harmed its economy.  You crushed economic freedom.

You’re a fraud, Mitt Romney.  If you truly believed economic freedom was the cornerstone of American prosperity, you would advocate ending the Federal Reserve, ceasing unconstitutional overseas spending, and ending the income and corporate taxes.  In other words, you would drop out and endorse Ron Paul.

The Laffer Curve and Military Spending

The Laffer Curve is a concept in economics and public policy in which common sense is applied to taxes with surprising (and real, as the Clinton and Bush capital gains tax cuts revealed) results.  It is the brainchild of Art Laffer, economic adviser to Presidents Ronald Reagan (officially) and Bill Clinton (unofficially).  They experienced great economic prosperity.  Art Laffer is smart.

The concept begins with a question: what if the marginal tax rate of something (be it an income tax, corporate tax, capital gains tax, etc.) was 0%?  How much revenue could a government reasonably expect from such a tax?

The answer is obvious: nothing.

But there’s another question: what if the marginal tax rate of that same thing were 100%?  How much revenue could a government reasonably expect?

The answer might be slightly less obvious, but still true: nothing.  If something is going to be taxed to the absolute maximum, nobody is going to do it.  At least not legally.  There’s no benefit to doing it legally.

Yet the government does get some revenue from these things.  So clearly, there must be some peak (or, theoretically, peaks) at which the tax rate provides a maximum amount of revenue.  It is very possible, as the capital gains tax cuts under Clinton and Bush revealed, that a lower tax rate will result in greater government revenue from such things.  Even if a higher tax rate does result in greater revenue, that doesn’t make it optimal national policy.  The government shouldn’t be trying to squeeze every last penny they can get out of the American people.

It’s not a difficult concept. Most on the right and middle of American politics, as well as some on the left, acknowledge such a thing.  What so many of those same people on the right fail to realize is that the same concept applies to military spending and America’s overseas military footprint.

Replace government revenue with national security and marginal tax rate with military spending.  If America spent nothing on the military, America could expect no security outside of disorganized mobs.  National security would be almost nothing.  If America spent all of its money on the military, national security would also be minimal.  There would be nothing to defend.  There would be nothing of real, productive value to get such money to the military.  National security would be virtually nothing.  The same concept is easily applied to the overseas footprint of the U.S. military.

So clearly then, it is possible to cut back military spending or overseas footprint and actually provide greater national security.  This is not rocket science.

Since 2001, America’s inflation adjusted, per capita Defense Department spending has gone up by approximately 50%.   Since 2001, America has engaged in long, arduous conflicts in the Middle East and Northern Africa.  Since 2001, America has been subject to more terrorist attacks (unsuccessful though they were, but only due to explosive malfunctions, not security measures) than in the 50 years prior.  Anti-American, Islamic Fundamentalist Nationalism has been on the rise throughout the Middle East and parts of Europe.

Which has to make you wonder: are we already operating to the right of the peak?  Even if we’re not, is the national security policy of the United States really optimal?

Reform Occupy Whatever

I’m not some yuppie Republican out to tell the Occupy protesters to take a bath, stop smoking pot, and go get a job.

I’m not a Republican. I suspect Occupy protesters bathe as much as anyone else .  I may think smoking pot is bad for the  health of (most) folks, and I don’t do it or recommend it, but I’m against the War on Drugs and don’t particularly care if peaceful people engage in moderate, responsible marijuana consumption.  Either way, I see no reason to believe marijuana use is any more rampant at the Occupy protests than it is in the rest of society.

The jobs thing is dumb.  Many of the protesters are protesting because they can’t find one, and they blame systemic problems.  I largely concur.

I am with you when you say you want monetary reform, and especially when you hint at free market money.  I am with you when you complain about bailouts, which are really just welfare for rich people.  I am with you when you say that the current wealth distribution is likely very unnatural and harmful to the economy.

So please believe me, Occupants, when I say I am not one of those people.  I am, however, someone who says you are misguided in your goals and need to refocus your energy.  Why do I say that?  Because things like this are real

That’s right.  “1%ers” find what you do quaint.  Adorable.  Not a threat.  They’ll even buy your signs for fun little lawn chairs and posters.

There’s a reason why.  You’re not a threat.  The problems you notice are either very real or probably real.  The solutions you propose stink.  More government regulation of financial markets, more power granted to unions, and higher income taxes on those making large salaries are not threats.  Those things protect the “1%” from the “99%”

More government regulation of financial markets makes it more difficult for people outside the 1% to get wealthy in a variety of ways, but mainly by limiting potential returns and making laws more confusing.  Large, established financial firms have the capital and people to search through new regulations and find ways to comply with them.  Small, upstart competitors do not.  This keeps markets more unstable than they would otherwise be.  This massive unknown in return on investment, due to more unstable markets, due to less quality speculation, due to diminished returns and a large number of laws and regulations keeps interest rates that banks pay to small time investors and account holders artificially low. That hurts the 99%.

More power granted to unions is a problem for large corporations, but much, much more of a problem for their upstart competitors.  It squashes competition, and drives up prices for consumers by both limiting the supply of goods and raising the cost of production.  That hurts the 99%.

Higher income tax rates keep the 1% as the 1%.  1%ers already have wealth.  They aren’t “earning” anything more than they have to, that all gets automatically reinvested.  It’s people on the cusp of becoming 1% or 2% or 3% that a “progressive” income tax hurts.  It hurts the ability of the 99% to become 1%.  It also decreases the incentive of the most productive people to be as productive as possible.  That hurts the supply and quality of goods, which makes things more expensive.  That hurts the 99%.

In the end, I don’t dislike you.  I’m with you on many things.  I love the energy.  You need to refocus and think about the impact of your goals.  Right now, the 1% isn’t scared, as well they shouldn’t be.

Reason #(insert large number) why I’m not a Republican

As if there was any doubt, the Republican Party is, in fact, made up of at least 31% (+/- 3.6%) stupid people.  According to today’s Rasmussen polls, 88% of Republicans view Rick Santorum as a conservative, while only 57% view Ron Paul as conservative. 

That’s right, 31% of Republicans view a man who voted for No Child Left Behind, more expensive drugs for senior citizens not on medicare, has never once voted against a foreign aid package, teamed with Hillary Clinton to “get violence out of video games”,  endorsed Arlen Specter, and supported quanitative easing as being more conservative than a man who has voted against all of those things and against every unbalanced budget.

Apparently being “conservative” in the Republican context is supporting unconstitutional wars, forcing otherwise non-violent people to live their lives according to your values, and spending other people’s money almost as much as Democrats.  If that’s “conservative” or “conserving” Republican values, count me out.