Category: national politics & policies

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Accountability general freedom national politics & policies

Against Regimentation

On Monday, Senator Rand Paul got caught in a contretemps with the TSA. He was not in transit to or from his work in Congress, so he couldn’t enlist constitutional protection from being detained.

And detained he was.

Well, the TSA insists that he was not “at any point detained,” but what he says is this:

I was detained by the Transportation Security Administration . . . for not agreeing to a patdown after an irregularity was found in my full body scan. Despite removing my belt, glasses, wallet and shoes, the scanner and TSA also wanted my dignity. I refused.

I showed them the potentially offending part of my body, my leg. They were not interested. They wanted to touch me and to pat me down. I requested to be rescanned. They refused and detained me in a 10-foot-by-10-foot area reserved for potential terrorists.

Both Senator Paul and his father, Congressman Ron Paul, have criticized the TSA. They echo those 19th century classical liberals who had a word for the kind of treatment that modern security-obsessed Rand Paul makes a statementgovernments inflict upon a (too willing) populace: “regimentation.” What’s more regimenting than being forced to wait in lines, holding shoes in hand, emptying the contents of pockets into institutional-gray trays, submitting to a variety of scans and gropes?

There have got to be better ways of securing big ol’ jet airliners. Why not apply greater legal liability to airlines for safety, and let them figure out more customer-friendly methods of keeping terrorists out of cockpits?

Any government security effort ought to focus on spotting and stopping terrorists . . . without sacrificing everyone’s freedom and dignity.

It’s Common Sense. I’m Paul Jacob.

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Accountability folly national politics & policies

Getting It Wrong at the Fed

The Federal Reserve is America’s central bank, and its managers are political appointees. But transparency — an essential feature of the republican form of government — is something that doesn’t quite describe the information we (and our representatives) get about that institution.

“Opacity” is probably the best word to describe former Fed Chair Alan Greenspan’s speeches to Congress — deciphering his testimony was often more difficult than a line-by-line interpretation of a Sorbonne phenomenologist.

And full transcripts of the Open Market Committee reports go public only after a long lag. Only last week did 2006’s Federal Reserve insider badinage escape the confines of secrecy, and boy, what a pathetic situation was revealed.

Remember, in 2006 the mortgage boom was reaching its peak, and its excesses were obvious. Federal Reserve insiders made jokes about it, yet “gave little credence to the possibility that the faltering housing market would weigh on the broader economy,” as Binyamin Appelbaum noted in the Wall Street Journal. Geithner went so far as to say that the market’s “fundamentals” looked good, and that outgoing chairman Greenspan’s “greatness . . . was not fully appreciated,” which Appelbaum cautions is “an opinion now held by a much smaller number of people.”

This weekend at Townhall.com, I wrote that Rep. Ron Paul was surely right to focus on the Federal Reserve all these years. He bucked the tide and proved himself prescient, just as the folks within the Fed, engaging in groupthink and chummy insider-to-insider praise, proved themselves quite clueless.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture national politics & policies

Firing People for Fun & Profit

After winning the New Hampshire primary last night, Mitt Romney charged that “some desperate Republicans” have joined forces with President Obama “to put free enterprise on trial.”

Newt Gingrich calls Romney a “vulture capitalist” and blasted his work as CEO of Bain Capital as “bankrupting companies and laying off employees.” Rick Perry snidely attacked Mitt for “all the jobs that he killed,” adding “I’m sure he was worried he would run out of pink slips.”
Presidential Candidate Mitt Romney
A Wall Street Journal report quoted Jon Huntsman: “What is clear is [Mr. Romney] likes firing people.”

So, did Romney say “I like being able to fire people”? What he said was, “I want individuals to have their own insurance. That means the insurance company will have an incentive to keep you healthy. It also means if you don’t like what they do, you can fire them. I like being able to fire people who provide services to me.”

I, too, like being able to fire companies who don’t adequately supply the services I demand.

Yet, what about Romney’s work at Bain Capital?

Bain Capital took firms having trouble making a profit and attempted to make them more profitable. Sometimes that meant cutting back the work force to avoid bankruptcy, where everyone would lose their jobs. Sometimes it meant cutting up a company and its assets and selling them to entrepreneurs who could do better.

Not all businesses succeed. No surprise, then, that politicians used to spending a seemingly unlimited supply of other people’s money regardless of performance fail to understand this simple reality.

To his credit, Ron Paul defended Romney, saying of Gingrich, Huntsman and Perry, “I think they’re wrong. They are either just demagoguing or they don’t have the vaguest idea how the market works.”

Or both.

This is Common Sense. I’m Paul Jacob.

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

Ups and Downs

Inflationism is the ideology of increasing the money supply to spur economic activity and “growth.” In the 19th century, economists were generally against it, though certain “innovators” (cranks) thought that increasing the supply of money would “increase aggregate demand” with no bad repercussions. “Cross of gold” kind of nonsense; “free silver” idiocy.

In the 20th century, alas, inflationism went mainstream.

Today, a few respectable economists — high-profilers like the New York Times’s Paul Krugman and U.C. Berkeley’s Brad DeLong, for example — embrace inflationism. Occasionally their arguments sound sophisticated, but all are just warmed-over rehashes of very old errors.

It’s the economic equivalent of the “perpetual motion machine”: the eternal quest to get something for nothing, progress on the cheap. It inevitably fails — but only after fooling people by “working” for a while.

Reason’s Tim Cavanaugh, discussing declining housing prices, notes that “it’s becoming harder for the Fed, HUD, the Treasury Department and the National Association of Realtors to pretend the 25-year real estate inflation was anything but a $15 trillion rip-off.” He welcomes the deflation of housing prices. The idea that one’s house should increase in value by always increasing in price — that’s really just a recipe for social disaster. It endured as long as it did only “through government subsidized debt.”

Thank Congress; thank their Fannie and their Freddie; thank the inflationist Fed.

“Creating” money and loosening credit tends to nudge up prices . . . but not all prices equally. It signals people to over-invest in certain sectors, often real estate. This creates a sector boom . . . that then must “bust.”

The alternative? The honesty of sound money.

This is Common Sense. I’m Paul Jacob.

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

Water’s Value — in a Desert

It’s a dam shame.

There are plenty of private sector dams in the U.S., but the biggest are federal government projects, like those on the Columbia and Colorado rivers. These government-run outfits aren’t “free,” though. Indeed, they often prove to be good examples of typical government operations, providing special favors to some people at the expense of others.

Take the Hoover Dam, cherished as the nation’s highest symbol by MSNBC’s Rachel Maddow. The dam supplies water and electricity to Las Vegas, Nevada — at cut rate prices. A typical family in Las Vegas pays half for water what the same family would pay in Atlanta, Georgia, despite the fact that Atlanta gets 13 times more precipitation. These cheap rates have predictable consequences — overuse, for one. Which then leads local water authorities to foist on consumers some heavily intrusive conservation rules.

Andrew Wilson, in a report for the Property & Environment Research Center, writes that “A market-ready solution for Las Vegas water,” though not often talked about, would have far fewer negative consequences. And it’s not a difficult idea as such: “discard the historic cost-based pricing model and move instead to a pricing system that recognizes the scarcity value of water.”

Raising the prices for water and electricity to Las Vegas (and, for that matter, electricity to favored Bonneville Power Administration customers in the Pacific Northwest — along with many other federal government “business” products) would not only help forestall shortages and draconian lawmaking, it would be equitable. There’s no reason for the rest of the country to be, in effect, subsidizing Sin City.

Or any other city.

This is Common Sense. I’m Paul Jacob.

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insider corruption national politics & policies

A Newt Public-Private Partnership

For nine years, from 1999 until 2008, Newt Gingrich worked helping Freddie Mac, the government–created, bubble-creating housing corporation. Newt’s outfit, The Gingrich Group, knocked down more than $1.6 million dollars in consulting fees during that time.

Newt says he warned the government-sponsored giant that the bubble it was busy blowing up would burst badly.

For all those years? He was either mind-numbingly repetitive or must have really drawn out his words. He is from Georgia, but still.

Folks at Freddie tell a different story. They say former Speaker Gingrich helped “build bridges” to Republicans on Capitol Hill, hoping to prevent congressional efforts to rein in the mortgage giant. Those efforts proved successful — there was no powering down of the Frankenstein mortgage monster. The Gingrich Group’s contract wasn’t canceled until the 2008 crash, when the U.S. Treasury took control of Freddie Mac and his sister housing financier, Fannie Mae.

In last weekend’s GOP presidential debate, Congressman Ron Paul argued that Newt Gingrich’s position with Freddie Mac is “something people ought to know about.”

“While he was earning a lot of money from Freddie Mac,” explained Rep. Paul, “I was fighting, over a decade, to try to explain to people where the housing bubble was coming from.”

Newt responded that, like Dr. Paul, he wanted to audit the Fed. As for his Freddie role, “I offered strategic advice,” claimed Newt, adding, “I was in the private sector.”

Laughter erupted throughout the hall. Even Mr. Gingrich couldn’t keep a straight face.

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets insider corruption national politics & policies

A $13 Billion Reward

The Federal Reserve, our central bank, hit the news big last week.

Beginning in August 2007 and continuing for the next two and a half years, the Fed lent the world’s biggest banks something like $7.77 trillion dollars at the barely perceptible interest rate of 0.01 percent. With that money, the banks bought Treasury bonds (federal debt) and made $13 billion in profit.

I reported on this multi-trillion-dollar loan figure in December 2008, a few weeks after the biggest day ever of Fed bailout fever. For some reason this information didn’t become widespread or understood until this December, when Judge Andrew Napolitano and Jon Stewart made a big deal of it on their respective TV shows, after Bloomberg reported the profits banks made off all that bailout money.

What does this figure represent? To me, it represents the outrageous amount of magic money a sick and corrupt fiat-dollar/bailout-based system of moral hazard requires when it implodes.

I think we can all justifiably roll our eyes, now, when some rah-rah boy for big government tells us how absolutely necessary it is to have a central bank. The old gold standard never fell apart this badly. The gold requirement itself placed a huge check on out-of-control banking.

But a $13 billion reward for the biggest financial mess in world history? That’s the very opposite of a check or balance on risk-taking, greed, or downright stupidity.

This is Common Sense. I’m Paul Jacob.

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general freedom national politics & policies U.S. Constitution

Video: Civil Liberties During a Never-Ending War

What do you call a defense bill that allows indefinite detention at Guantanamo Bay of American citizens accused but not convicted of assisting terrorists without due process? Tyranny. Unconstitutional. Rand Paul compares the now-pending legislation to the hated Egyptian Emergency Law enforced against dissidents for 30 years, which ended with the overthrow of the Mubarak regime:

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free trade & free markets general freedom national politics & policies too much government video

Video: Milton Friedman on Drug Legalization

Nobel Laureate economist explaining why drug prohibition makes no sense:

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free trade & free markets national politics & policies too much government U.S. Constitution

The Post Office’s Future?

At some point approaching catastrophe, one has to stop offering googly sounds of uplift and hope, and just speak the truth.

Postmaster General Patrick Donahoe may understand that. The U.S. Post Office, he recently told the National Press Club, is “in a deep financial crisis because we have a business model that is tied to the past.” Deep ties to the past, indeed. Setting up a postal system was written into the Constitution.

Early in the system’s history, postal positions served as rewards to friends of successful politicians. This put a lot of bad apples into the cider; the business soured. Postage skyrocketed.

This sorry situation brought entrepreneurs into the market, delivering letters at a fraction of the government system’s prices. The politicians fought back, took the competitors to court, and won — on dubious Constitutional grounds.

But they did overhaul the system, reducing prices.

That was a long time ago. Today’s situation may be worse. As Donahoe put it, “We are expected to operate like a business but we do not have the flexibility to do so. Our business model is fundamentally inflexible.”

No surprise, Congress is inflexible. But there are competing bills rumbling around to allegedly fix the financial woes of the institution Donahoe calls “a national treasure.”

Well, if it’s a treasure, sell it off: The federal government could use the money. (Though likely not well.)

And the people could use a good privatized mail service. Or two. Or more.

This is Common Sense. I’m Paul Jacob.