Author: Redactor

Categories
too much government

The Moral of the Madoff Story

Detecting fraud is one of the most important roles for government. But our friends in power tend to be incompetent at it.

This becomes clear in light of that most costly Ponzi scheme, Bernie Madoff’s.

Before he was caught, Madoff — who now paints signs in prison — perpetrated one of the longest-​running scams in investment history. It wasn’t an investment scheme that lost its way. No, it was a fraud through and through. It cost his marks billions.

Joseph Cotchett, a lawyer for some of Madoff’s victims, interviewed the fraudster at length. Cotchett calls Madoff “charming” and “no dummy.” But he noted that his fraud was not a great work of sophistication: “It is amazing how simple it was.” 

Still, the regulators responsible for finding this kind of fraud didn’t see it. Early in the millennium, Madoff thought he might get caught. In 2005, the SEC sat down with him, and he thought the gig was up. Regulators, insists Cotchett, did not dig “to the next level, and the next level was not deep by his own admission.” 

Lots of folks clamor, these days, for more regulation. Here’s my advice: Improve the most basic form of regulation — protection against fraud — and build on success. Leave complicated micromanagement stuff alone until governments get competent at the very basics.

If you cannot detect an unsophisticated fraud, how can you run a very sophisticated economy?

This is Common Sense. I’m Paul Jacob.

Categories
Tenth Amendment federalism

The Tenth Amendment Movement

When Sarah Palin announced her resignation as governor of Alaska, she caused quite a stir. Both Palin haters and Palin lovers united in their inability to talk about much of anything else. 

Then, a week later, she had an op-​ed on environmental policy published in the Washington Post.

And then, not long after that, she signed a resolution declaring the state of Alaska sovereign under the Tenth Amendment, and telling the federal government to back off from engaging in activities not delegated to it in the United States Constitution.

This sounds weird to lovers of big government, to Palin haters in general. But even some Palin lovers misconstrued the event.

It was not about Sarah Palin. She was not the only governor to sign such a resolution. Tennessee’s Democratic governor, Phil Bredesen, had done the same thing, earlier.

In fact, it’s not about governors at all. Other states, like Oklahoma and New Hampshire, have passed similar resolutions. As I wrote recently at Townhall​.com, “[a]ll these resolutions have passed state legislatures. It’s not just lone ‘whacko’ governors doing the deed. Deliberative bodies have decided these measures.”

What’s happening is the re-​emergence of the original idea of our federation: A central power limited in scope, and states with different sets of powers and responsibilities. 

And people’s rights and powers limiting both. 

Yes, folks, there are signs of hope.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall tax policy

Pity the Politicians?

In tough times, who get hit hardest? According to the Center on Budget and Policy Priorities, “[a]t least 39 states have imposed cuts that hurt vulnerable residents.”

Why? Well, states have been spending at increasing rates for years now. And then came the slump, with less income — and fewer sales — to tax. So of course state revenues plummet.

And politicians must force themselves to do the thing they hate most: Cut.

But, as Steve Chapman argues in his column, “A Hole They Dug for Themselves,” simply by increasing spending no more than the rate of inflation, they would have avoided this. Chapman insists, “governors and legislators might have prepared for drought.”

One thing Chapman doesn’t say is that this spending limit idea has been on many states’ tables for some time. It’s often called TABOR, or the Taxpayer Bill of Rights. Such measures constitutionally limit spending to the rate of inflation plus the rate of population increase. Only voters can break this spending cap.

But politicians hate such measures, oppose them for all they are worth.

So, we may pity the poor, but let’s not shed one drop of sorrow for the politicians.

And, if you live in Maine or Washington state, vote for the TABOR-​like initiatives that will be on the ballot this November. Help yourself, help the poor — by forcing politicians to spend as if things could change and tomorrow matters.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Medical Insurance to the Max

Get everybody into a medical insurance plan, fast! But how?

Lots of “universal coverage” talk assumes that most uninsured folks are “too poor.” But look, most young people don’t buy insurance because they are healthy. And I know oldsters who have gone through life without medical insurance. When they’ve needed a shot, or a few stitches, they’ve visited the doctor and paid the bill.

Becky Akers, writing in The Christian Science Monitor, wants to know why everyone wants to force her to buy something she thinks makes no financial sense.

Ms. Akers admits that, though she is healthy and without insurance, she could get run over by a bus. But she bets she can cover most medical needs out of her savings and income. 

Supporters of government managed medicine judge this irresponsible. 

And yet, many of these critics are the same folks who insist that catastrophic medical insurance — the kind that is inexpensive because of huge deductibles — cover everybody, regardless of pre-​existing conditions. But this turns insurance into a transfer program, workable only with high prices. Add full coverage rather than catastrophic, and medical insurance skyrockets beyond most people’s pay grade.

Yet if politicians would just stop tinkering with insurance, medical prices would come down for everyone, as Akers suggests … including, even the uninsurable, who would still require aid other than insurance.

If you are already sick, it’s too late to insure against sickness.

This is Common Sense. I’m Paul Jacob.

Categories
insider corruption

Arresting New Jersey

For the millions of people living in New Jersey, who’ve never been arrested on corruption charges, this one’s for you.

Recently, the FBI arrested 44 folks there, including two state legislators and three mayors. Big news, I guess, but hardly unusual by Jersey standards. The U.S. Attorney says the state’s politicians work in an “ethics-​free zone.”

Chris Christie, now the Republican candidate for governor in 2009, used to be the U.S. Attorney. In seven years, he prosecuted 130 state and local politicians and convicted every single one of them.

Unfortunately, reducing corruption will take more than building additional prisons to hold politicians. The trick is empowering voters to hold government accountable — thereby putting less unchecked power in any individual’s hands.

Christie believes voters need the power of ballot initiatives. But earlier this year he said, “I hesitated about proposing initiative and referendum because my party had been such a failure on initiative and referendum ten years ago …”

Republicans gained a majority in both legislative chambers in part on a promise to enact a statewide initiative. Once in power, Republicans took a dive.

Christie pledges to be different, and to campaign with shoe leather: “I will travel around the state to publicly campaign for [initiative and referendum] and try to get the citizens to put pressure on their legislators to vote for this.”

In a usually safe state for Democrats, the latest polls show Christie with a sizable lead over Democrat Governor Jon Corzine.

This is Common Sense. I’m Paul Jacob.

Categories
term limits

Security Deposit for Term Limits?

Politicians do pay a price when they break a term limits pledge: No pledge breaker has ever been elected to higher office.

In 1992, Marty Meehan ran for Congress promising to serve four terms at most. In 1995, he rebuked congressmen for violating similar pledges, saying, “The best test of any politicians’ credibility on term limits, is whether they are willing to … limit their own service.” Meehan even filed a letter of resignation with the House clerk that supposedly would go into effect should he break his own word. But he did break it, finally leaving Congress only in 2007.

Meehan had always wanted to be governor. That was not to be.

Term limits have always been popular, and it’s embarrassing to be known for breaking a term limits pledge.

A new outfit called Alliance for Bonded Term Limits believes more than reputation should take a hit when politicians violate a term limits pledge. They think candidates should legally contract to pay up if they wimp out.

The plan, according to their website, is to “provide a vehicle for sincere candidates to demonstrate their commitment to limited tenure in office by voluntarily bonding their term limit promise with personal assets in advance of the election. These bonded assets of substantial worth will be forfeited to charity only if their promise is broken.”

Will it work? So far, the organization just has an idea. It’s a gleam in someone’s eye. But let’s keep our fingers crossed.

This is Common Sense. I’m Paul Jacob.