When the history
of the United States is written the date Monday, October 26, 2009
will be one which those seeking to trace the growth and intrusiveness
of the Federal government will note for marking the start of the
nationalization of the American health care system. The date is
important because on that day Senate Majority Leader Harry Reid
announced that he was introducing the so-called “public option”
into the Senate's version of President Obama's horribly mis-named
“health care reform” bill. According to Senator Reid his version
of the public option will allow individual states to “opt-out” of
participation in the plan. Details of the opt-out provision have not
been finalized but, given the Federal government's propensity to
withhold funds from states which fail to act in the manner that our
Grand Masters desire, it is likely that funds for some other portion
of the reform plan will be withheld so as to encourage states to do
the right thing. In the long term it likely won't matter as private
health insurers will succumb to the competition from the
government-subsidized health insurance plan.
We are told that
the “public option” will act to increase competition between
private insurance providers. This assumes that competition in
providing private health insurance is somehow lacking. Those who
maintain that this is so often point to the similarity in prices
offered for similar insurance coverage. This is a fundamental error
in defining competition and, like so many other fundamental errors
that the parasitic class makes, this one is going to end up costing a
lot of money. The error which is being made is the confusion of
similarity of the prices quoted for the same sort of coverage from
different companies with a lack of competition. It is the same thing
as asserting that there is no competition between WalMart and Target
based on the fact that the prices of the vacuum cleaners they sell
are close to each other. For example, I checked the insurance quotes
for health coverage for two adults, both non-smokers, with no
resident children. The policies I looked at had $5000 deductibles,
20% coinsurance rates, and $30 office visits, along with allowing me
to keep my current doctor. The prices I got back ranged from a low
of $280.55 to $303 per month – not a significant differential in
price, but there were ten companies included in that spread, plenty
of competition from where I sit. And there shouldn't be much of a
difference in price for the simple reason that health insurance
pricing is based on statistical expectations of health outcomes
across a broad spectrum of the insured. A large disparity in price
would be indicative of either substantially different internal costs
or important divergences of coverage – the “fine print.” The
fact that I was able to obtain quotes on roughly one hundred
disparate policies, issued by more than ten companies, tells me that
competition for my health care dollar is alive and well. The lack of
a wide price spread for similar coverage is also an indication that
the companies involved have roughly the same costs of doing business
– costs undoubtedly increased by governmental interference in what
is left of what was once a free market.
Unfortunately,
the level of economic education in this country is such that most
people are not capable of seeing through the fog of the statist
propaganda that is being disseminated about the “public option.”
This makes them susceptible to the argument that introducing a
government run (and subsidized) health care insurer will increase
competition and result in lower insurance prices. The sad fact is
that a government-subsidized health plan will be less expensive, for
the insured person, than will similar coverage from a private company
– the politicians will see to that. The Federal government will
simply subsidize the public option to whatever extent is necessary –
raising taxes and hiding the costs as needed – because to do
otherwise would be to expose the lies about how the public option
will actually work.
As time goes on
the subsidized nature of the public option insurance will ensure that
it will gradually drive private insurers out of the market. Besides
the subsidies offered the purchasers of public option insurance, the
Federal government is sure to impose further regulatory burdens upon
private companies – regulations that the government itself will be
exempted from. The added costs of the regulations will act to force
private companies to raise their prices in order to remain
profitable. The Federal government is also sure to impose new
minimum requirements for health insurance policies regarding the type
of coverage they must meet – minimums the public option insurance
will either be exempted from or which taxpayers will find themselves
footing the bill for. This sort of action on the part of the
Federal government will act to drive non-state actors from the health
insurance stage.
Even if some
states do opt-out of the public option there will come a time at
which it will no longer matter. Sooner or later the market for
private health insurance will shrink to the point at which it will
not be sustainable. For private insurance to be viable the market
for the product needs to be large enough that affordable policies can
cover the cost of the occasional catastrophic illness on the part of
some of the insured. I don't pretend to know how large that market
need be but it is likely to be bigger than the populations of states
that might choose to opt-out; states such as Wyoming, Montana, and
Arizona – to name some of the states that sometimes show signs of
resisting Leviathan's continued growth. In any case, at some point
in the future there will no longer be private health insurers and the
nationalization of yet another piece of the United States' economy
will be complete. And it will all have started on October 26, 2009.
We all know that
anger is a powerful emotion. Politicians know this well and often
work to deliberately fan the flames of anger in order to attain their
own goals. Some, such as Adolf Hitler, Hideki Tojo, Mao Tse Tung,
and Franklin Delano Roosevelt, attain mastery of the art of
manipulating emotions to lead their countries into war, or campaign
against supposed internal enemies to increase their personal power.
There is another political figure who is showing that he is a master
of this art and is working to not only increase the power of the
State but, also, his own influence, prestige, and power. This man
has changed the aim of his country's internal politics and has
radically altered the economic and legal foundations of that nation
in less than a year in office. That man is none other than American
President Barak Obama.
Mr. Obama, for
all his veneer of impassiveness and his soothing speeches in which he
proclaims his desire for everyone to live in peace and harmony,
fails to match his actions to his words. He is accomplishing this by
fanning the flames of class hatred and resentment with his constant
repetition of what has quickly become the official myth of the
current economic crisis with which all of us are living. In almost
every speech, interview, and press conference which he gives the
President is at pains to repeat the same distortions, omissions, and
outright lies about the causes and course of our economic problems.
That in itself would be bad enough, but President Obama, as part of
his propaganda offensive, is urging banks and other financial
institutions to continue with many of the same policies that have
caused all this trouble in the first place. He is putting banks in a
damned of they do and damned if they don't position – for they will
be the first ones blamed, again, when the next round of economic
trouble comes our way, as it must when all of the hundreds of
billions of dollars that the Federal Reserve has created out of thin
air begin coursing they way through the economy. Chances are good
that all of that new fiat money will trigger a round of inflation
that will make that of the the late 1970s and early 1980s look like
small potatoes. But I digress.
The President
has launched what amounts to a class war by repeating that the cause
of our current mess is attributable, in large part, to the actions of
grossly overpaid, greedy bankers, hedge fund managers, and other
banking and investment professionals. He goes on to compound the
deceit by asserting that those same greedy people are refusing to
loan money to supposedly deserving businesses and individuals in
spite of having received hundreds of billions of dollars in TARP
funds in order to avoid bankruptcies. According to what has become
the gospel according to Saint Obama, misguided Federal policies such
as the Community Reinvestment Act, the demand for more and more
mortgage backed securities on the part of Fannie Mae and Freddie Mac,
combined with market distorting, artificially low interest rates set
by the Federal Reserve have nothing to do with our problems. Indeed,
the Federal government is cast as the hero of the drama because of
its selflessness in acting to provide untold billions of dollars in
taxpayer-backed funds to bail out the short-sighted greedy bankers
and financiers, takeover AIG, GM, and Chrysler and prevent what is
portrayed as an economic cataclysm. By acting as it did the Federal
government has supposedly protected us all from that dread phenomenon
– market instability, whatever that is – and enabled most
Americans to continue life as usual.
By making use of
a willing left-leaning mass media propaganda machine the American
people have been subjected to a nearly continuous barrage of
misinformation. This has resulted in many Americans becoming ever
more angry with the “greedy bankers” who are supposed to be at
the heart of the mess which has cost millions of ordinary citizens
their jobs. And President Obama has not been slow to take advantage
of the emotional storm which he has had a large part in creating. He
is proposing to slap a bunch of new regulations on banks and
financial markets. This is to be expected from a Democratic
President elected on a platform promising some sort of undefined
“change.” The new part of the proposed policy changes involves
using the power of a now nearly-unrestrained Federal government to
set limits on the pay of executives in the banking and financial
sectors whose companies partook of TARP funds. Little did these
people realize what a poison pill they were being handed when then
Treasury Secretary Henry “Chicken Little” Paulson brought them
the bailout money that he had frightened our spineless
Congresscritters into giving him. The President's new proposals are
certainly not part of any deal they thought they were signing up for.
This is not the
first time that a misguided economically-illiterate president has
imposed wage controls. It is the first time that wage controls have
been targeted at a single group of employees and certainly the first
time they have been introduced without even the poor excuse of
fighting inflation (which was used during WII and later by Richard
Nixon in the early 1970s). This move represents the opening shot in
a class war: carefully aimed at a group which has been painted black
by the State's propaganda machine for more than a year. Those cheers
you hear in the background are coming from the throats of American
citizens who have not only been unable to see through the State's
propaganda smokescreen, but are also unable to see that this
assertion of Federal power marks a precedent which will some day be
applied to them. President Obama is openly proclaiming that this
wage cap is being adopted only to punish an unpopular class. What
will happen to the next class that displeases him – say small
business owners who fail to provide whatever the Federal government
should decide is needed as part of the president's health care reform
effort? How about the doctors and other health care professionals
who “make too much?” After all, we've already been told many
times that those who make more than $250,000 a year are wealthy and,
by socialist definition, have too much money.
The Federal
government under President Obama has already shown that it does not
care about enforcing contract law – as is evident from the many
demands from both the White House and Capital Hill that bonuses,
contractually owed to former Merrill Lynch employees, not be paid by
Bank of America – which didn't want ML in the first place. (See:
http://www.ncbusinesslitigationreport.com/articles/fiduciary-duty/
partway down the page with the title “Threats and Secret Promises:
Bank of America's Merger with Merrill Lych”). This government has
no concern about passing what amount to ex post facto laws (forbidden
explicitly by the constitution) when it comes to dealing with the
economic crisis we find ourselves in, particularly when those laws
apply to those greedy bankers. President Obama and his team of merry
men, ably assisted by Congresscritter Barney Frank and his fellow
clowns on the House Financial Services Committee, have no problem
with unilaterally changing the rules of the game, after the other
side has already started playing by the rules as originally written
down. (See:
http://joemygod.blogspot.com/2009/10/barney-frank-on-wall-street-pay-limits.html,
and
http://www.huffingtonpost.com/2009/01/12/frank-willing-to-take-oba_n_157172.html)
Not content with limiting the pay of executives whose companies took
advantage of TARP funds the president and his allies are seeking to
extend these limits across the spectrum of financial service
companies.
Now, I'm not
defending the actions of the Wall Street bankers who helped bring
about the current mess, they do have a fair share of the blame for
not having had the sense to see that Federal government-induced
market distortions were bound to come back and bite them in the ass.
Nor am I defending the incredible salaries some of them have gotten
over the years, although there is at least some economic
justification for disbursing billions of dollars in bonuses for good
performance. The truth of the matter is that the bankers and
financiers are not blameless and, if they had any sense of honor, at
least some of them should be seeking to give back some of the money
they received for making decision which, in the long run, have turned
out to be horrible mistakes. If they can live with their consciences
I, as a good libertarian, am not going to try to coerce them into
doing anything they don't want to do as regards their levels of
compensation.
But I am
concerned with where Mr. Obama is taking this nation. In less than a
year in office he has made changes in this nation's economic
structure which would bring smiles to the faces of Karl Marx, V.I.
Lenin, and Mao Tse Tung – taking over large parts of the economy
directly with the takeovers of GM and Chrysler and making other
sectors dance to his tune, as with Wall Street and, soon enough,
health care. The changes that FDR wrought upon this nation's
economic structure are but pimples compared to those of a man who has
never run a business, has never had to adhere to a budget, managed to
vote “present” more than anyone else in Illinois history when he
held office in that unfortunate state, and now is in charge on what
was once a vibrant national economy. His continued calls for more
regulations to be placed on America's financial sector are meeting
with wide acclamation and, most likely, will be put in place –
complete with salary caps for executives in that arena. Little does
he realize that in doing so he will be adding costs to financial
transactions performed in this country – costs which are not found
in many other places which would love to have the business we will be
losing. Barak Obama has shown that he is a master at crowd
manipulation – especially when that crowd consists of people
convinced that life “owes” them everything from a place to live,
to food, to health care simply because they exist. Class warfare is
alive and well in the United States. We can only hope that it will
not become physical in nature.
The many recent
calls for further regulation of financial markets and institutions in
the United States are but one manifestation of the left's infatuation
with the idea that humans and their society are perfectible if only
enough rules and regulations are put in place to control their
actions. They also mark one more step on the road to totalitarianism
in the U.S. We have been told many times in recent months that it is
necessary to place further restrictions, on what is already a market
over-burdened with Federal regulations, in order to “ensure that
this [the current financial crisis] never happens again.”
President Obama has not only called for more regulation of the U.S.
financial markets, but, also, seems to agree that some sort of
international oversight of those markets is necessary. Given that
the Federal government has apparently won the propaganda war over who
is responsible for the recent “meltdown” of financial structures
around the world –- it was unregulated bankers and financiers who
brought the calamity upon us – it is virtually a certainty that
more onerous restrictions will be placed upon the evildoers in order
to prevent them from causing such damage again: all to the cheers of
a poorly educated and informed populace.
The apparent
success of the Obama regime's drive to further control the nation's
banking and financial infrastructure is another step on the road to
making the United States a police state. As the Federal government
moves to place caps on the remuneration of those who work in the
banking and finance fields all Americans lose yet more of their
freedom – the majority simply haven't yet recognized that fact.
Given President Obama's recent speeches in which he declares that the
banks which were bailed out by the Federal government are not loaning
enough money to businesses and consumers it will probably not be long
before policies will be put in place which will define how much money
banks and other financial institutions must loan to various classes
of customers; likely, whether or not they would ordinarily qualify
for those loans. Despite the President's many disclaimers that he
doesn't want the Federal government involved in the day-to-day
management of such areas of the economy as the auto industry and Wall
Street his actions say otherwise. Given his recent calls for banks
to return to the good old days of loaning money willy-nilly it is
obvious that he has not learned anything from the lessons of the
current economic troubles – indeed, he wants to force banks back
into the very practices which helped get us into this fix in the
first place. Each time the Federal government puts in place more
regulations, every time a Federal or state prosecutor decides to
bring criminal charges against bankers and financiers for actions
that were not crimes when they were made, every time Federal and
state prosecutors are allowed to conflate civil law infractions with
criminal actions (as is often the case with so-called “conspiracies”
whose members are brought to trial) the United States takes another
step on the road to becoming a police state.
One of the signs
that one is living in a police state is an increased unwillingness on
the part of most citizens to say or do anything which might be
construed as opposing the State. The State seeks to attain this goal
in several ways. It starts by introducing young people to the vision
of the State as a benevolent entity –- one which is concerned only
with providing citizens with the best possible life; at the low, low
cost of sacrificing a few civil liberties which don't matter all that
much anyway. For those who have already passed through the State's
education system the mass media (which are always required to obtain
licenses from the State in order to operate) are enlisted in the
propaganda effort. This is particularly true when socialist programs
and policies are being discussed There is an increase in the number
of puff pieces published or aired which seek to portray the
leadership of the State as wise, enlightened individuals who desire
nothing more than to make the citizenry happy, well-fed, and willing
to join the leadership in bettering the nation internally and
strengthening it against all external and internal enemies. During
the period of Nazi rule in Germany this mode of operation was known
as “working toward the Fuhrer.” Citizens are encouraged to
inform the State's police agencies of any “unusual” activities on
the part of their neighbors. Everyone, young and old, is encouraged
to be alert for anything which might threaten “national security.”
The police are increasingly used to monitor the political actions
and speech of the citizens: various types of “thought crime” are
defined and viewed as, in many cases, more serious than plain,
old-fashioned crimes such as assault and larceny. In an effort to
make certain that everyone is made aware of the many threats facing
the State and thus the Nation, and the people arrests are made and
trials held. Many times the information that leads to the arrests is
provided by informants –- often in the pay of the State –- to the
State's increasingly politicized and militarized police agencies.
This serves to reassure the mass of citizens that the State is ever
on guard to keep them safe, while also introducing an element of
doubt about what constitutes a crime, as many of the alleged plots
never get any further than discussing or “planning” some alleged
outrage against the State. (Check out the books The Tyranny of
Good Intentions and Go Directly to Jail: The Criminalization
of Almost Everything , both available through Amazon for more
details than I can go into here). The fact that, in many cases, no
overt actions need to be taken in order to commit a crime causes many
citizens to cease even talking about perceived shortcomings of the
government and its leadership. This results in the State being able
to declare that the vast majority of its citizens are happy and
content with the policies of the government –- which is very
convenient whenever someone does actually complain.
The United
States is rapidly approaching this state of affairs. Much of the
mass media is dedicated to feeding the populace intellectual pablum.
Look around at the magazines and newspapers which line the check-out
lanes at supermarkets. It is unusual for any of these publications
to print anything of a political nature and when they do the articles
are almost invariably rehashed “talking points” in favor of
whatever new program the current regime is touting as a way to cure
some perceived societal ill. The airwaves, with the exception of
so-called “conservative talk radio”, are likewise almost devoid
of serious discussions of political issues – the shouting matches
of such programs as the “O'Reilly Factor” cannot be considered to
be reasoned discourse. In most cases even those media outlets which
purport to oppose the proposed action by the State are themselves
pushing for some increase in the power of the Federal government:
it's only that the power will be exercised in a different manner or
in an alternative area of life.
The current
debate over health care “reform” is but one example of this
phenomenon. The Democratic proposal is to place some Federal
bureaucracy in control of all aspects of health care. They would
mandate that everyone purchase health insurance –- whether it makes
sense in the individual case or not. The insurance policies will
have to meet certain government-defined criteria in order to be
considered legal. The current Federally-controlled health care
system –- Medicare -– will be required to scale back the services
it will pay for (to the detriment of those participating in the plan)
in order to partially pay for the new program. What is left of the
free market in medical services will be killed and buried beneath
tons of new Federal regulations and guidelines.
The Republicans,
rather than pushing for reducing the role of the Federal government
in health care, also want to increase its power in this area. Rather
than the Democrats' “public option” (State-subsidized health
insurance) the Republicans wish to put in place something called
“co-ops”. Though no one really knows how they would operate the
safe bet is that they will be another way of increasing the Federal
government's involvement in health care. One can work one's way down
the list of Republicans' objections to the Democrats' proposal and
find similar things. All the Republicans' substitutions still result
in the growth of the power, size, and intrusiveness of the Federal
behemoth: they do not act to reduce the influence of the Federal
government in this field.
In like manner,
one can go through the list of issues confronting this country and
see much the same thing. Democrats want to use the power of the
Federal government to legalize “gay marriage”, while Republicans
seek to use the same power to forbid them. Democrats want to use
Federal power to not only allow women the right to an abortion -–
they wish to force medical service providers to perform the
procedures no matter the feelings and beliefs of the workers.
Republicans want to use the power of the central government to ban
abortions altogether. The list goes on and one is hard-pressed to
find an issue on which one side or the other wants to reduce Federal
power in the area under discussion, let alone act to eliminate that
power entirely. Through all of this the Constitution is more and
more viewed as an antiquated obstacle to enabling the growth of
Federal power. No longer do the vast majority of our U.S.
Representatives, Senators, and members of the Executive branch take
their oaths to “preserve, protect, and defend the Constitution”
seriously.
As time goes on
the power of Leviathan waxes and fewer citizens move to oppose the
growth. Even now there are few areas in life that are not subject to
some form of Federal regulation. As the State's intrusiveness has
grown so has its police powers: necessary in order to ensure
compliance with its wishes. The United States is effectively a
police state; it's just that in most cases we call our police
“bureaucrats” or administrative law judges in order to disguise
their true function and make their intrusions more palatable to the
masses. Until now they have remained largely non-violent in the
exercise of their vast powers. We cannot count on that to continue
and only the foolish wish to see that power increased. What is left
of free political discourse in this nation is rapidly disappearing.
If the Democrats get their way and the FCC once again imposes the
so-called “Fairness Doctrine” the presence of voices opposing the
growth of totalitarianism on the airwaves in this country will be
mostly silenced. In the meantime those who dispute the need for, or
the legality of, the continued growth of the monstrosity that our
Federal government has become are labeled as miscreants who represent
a small minority of the populace and who are motivated by racist
hatred of the new President's policy initiatives. It is anyone's
guess how much longer these voices of dissent will be tolerated by
the Obama administration or, for that matter, any administration
which replaces it. The State's power continues to grow and most
Americans ignore the threat it poses so long as they can keep up with
who gets kicked off the island next.
The
Michigan state legislature has avoided another shutdown of the state
government by passing a budget resolution that gives them another
month to craft a budget that meets the needs of the state. The
Republicans are holding firm on not raising taxes while cutting a lot
of the social programs that have grown like mushrooms over the last
thirty years or so. Meanwhile, Governor Jennifer Granholm and the
Democrats are casting about for more ways to lay hands on the money
that the few remaining employed workers in Michigan manage to bring
home. Governor Granholm is campaigning hard to not cut any of the
funds allocated to K-12 education and college scholarship programs.
Her reasoning on this is that Michigan needs to “create a favorable
business environment” and that the way to do that is to have a
well-educated population ready for high-tech manufacturing jobs, such
as putting together wind turbines, one of her favorite hobby-horses.
And, we all know that the government run education system is a model
of efficiency and has no place to save money.
Granholm
and the state's Democratic leaders are attempting to portray
themselves as being concerned about the decline in Michigan's
unemployment numbers and overall economic situation and, by their
lights, I suppose they are. However, as with the crowd in
Washington, the folks in Lansing have little concept of what it takes
to make a state attractive to new businesses. Rather than looking
for ways to cut taxes and lower the numerous barriers to entry for
businesses in Michigan, the state's Democrats are taking the opposite
tack. Governor Granholm proposal:
•
Raises the tax on a pack of cigarettes from $2 to $2.25 and taxes
other tobacco products at that new effective rate to raise a
combined $135 million.
• Applies the state's sales tax to professional and college
sports tickets, and concerts, generating $87 million.
• Places a penny tax on each bottle of water sold in Michigan
to raise about $18 million.
• Generates $8 million by reducing the value of state credits
for film production.
• Gathers $83 million by limiting next year's proposed increase
in state earned income tax credits for low-wage workers.
(see:
http://www.mlive.com/politics/index.ssf/2009/09/governor_jennifer_granholm_rel.html)
.
Along with the increased taxes the Democrats are also pushing for a
variety of new regulations and interventions in the marketplace for
energy. For instance, on a trip to Japan in September of 2008, in an
attempt to get Japanese wind turbine manufacturers to open new
factories in Michigan she said
“a legislative agreement will require
DTE and Consumers Energy to shift at least 10% of their power from
renewable sources such as wind power. She said Michigan stands to
create as many as 60,000 jobs in renewable energy industries, but
that the state needs a mandate for renewable energy.” (from
“Granholm pushes for energy mandate to interest Japanese firms”
(see:
http://www.wind-watch.org/news/2008/09/11/granholm-pushes-for-energy-mandate-to-interest-japanese-firms/)
The governor is also pushing to tighten
state regulations on coal-fired power plants, in spite of the lack of
enough “environmentally friendly” renewable energy sources to
meet the state's increasing energy demands.
“In Michigan, for instance, Democratic
Gov. Jennifer Granholm is talking about tightening environmental
regulation when it comes to coal-fired power plants. Republicans
don't have the votes to impose less regulation. “ (see:
http://www.mlive.com/environment/index.ssf/2009/03/some_states_picking_economy_ov.html)
And it's not only the energy generation
sector of the economy which is attracting the governor's attention.
She is also seeking to impose further regulation on auto insurance
companies doing business in the state.
“Gov. Jennifer Granholm has threatened
penalties for any insurance carriers that do not go along with a
freeze on rates for a year.
The insurance consumer advocate, Melvin
Butch Hollowell, in a 335 page report, claims auto insurance has
become unaffordable for too many. He is calling for lawmakers to
change state law to require that insurers obtain the insurance
commissioner's approval before raising rates and they they consider
allowing a low cost auto policy with reduced benefits. Those are
among the 10 changes he is recommending.” ( see:
http://www.insurancejournal.com/news/midwest/2009/02/05/97633.htm
)
In making these charges the governor conveniently overlooks the
fact that it is state government requirements that are acting to
drive up the cost of auto insurance for Michigan's drivers. For
starters, the state requires that all auto owners must purchase a
no-fault insurance policy in order to be able to own a vehicle. The
state also does not allow the insurance companies to vary the cost of
their product based on where a driver lives. This has amounted to
requiring out-state drivers to subsidize the insurance of those who
live in the Detroit area – raising their rates, but keeping them
“fair” for the Detroit area, which, surprise, surprise, votes
heavily Democratic. Talking about the increase in insurance rates
gives the governor an opportunity to castigate businesses for
responding to a situation caused by the intervention of the
government into the marketplace.
So, on the one hand the governor talks
a good story about how to improve Michigan's sagging economy, but
with the other she erects barriers to entry of new firms, or
expansion of existing ones. This is typical of those who believe
that only the government is capable of making the “correct”
decisions regarding what needs to be done to improve the prospects of
Michigan's economy. Is it any wonder that new businesses are not
exactly lining up to open or expand in this benighted state? Given
the governor's approach to solving Michigan's economic problems I can
only hope that the Republicans stick to their guns and force the
Democrats to make serious cuts in social programs that, in many
cases, have not been in existence many years, and which we used to
get along fine without. Failure to make real cuts to Michigan's
budget and take steps to keep it from growing like Topsy once the
economy does manage to turn around will only delay that rejuvenation
of the economy of a state which has been suffering from the effects
of recession for most of the last decade. Unless businesses are
convinced that Michigan will become, and remain, a good state in
which to operate we will not see the type of growth that is necessary
to put Michigan back near the top of the economic heap, as it was
when I was growing up.
One
of the things which has gotten less attention than it needs in all
the noise that has been generated by the debate over health care
reform is one that is fundamental to not only health care, but the
very manner in which our country is governed. Simply stated it is
this: can the Congress legally mandate changes to our health care
system and then turn the operation over to bureaucrats? According to
our Constitution the answer is also very simple: No. The reason lies
in the very first line of the Constitution proper where, in Article
I, Section 1 it says: “All legislative Powers herein
granted shall be vested in a Congress of the United States, which
shall consist of a Senate and House of Representatives. “
And yet, turning legislation, that is the making of the laws under
which we all live, over to an ever growing Federal bureaucracy is
exactly what the proponents of “change” wish to do. You see,
once the Congress passes the law enabling changes to how the nation's
health care is provided, the details of its implementation – the
actual writing of the rules, that is the laws, defining how things
will work – is turned over to some Federal agency.
I
realize that I'm out of step with the times on this issue, but this
is certainly not what the Founding Fathers intended for our
government to be. You see, not only do bureaucrats make the rules
but they also, via the mechanism of so-called “administrative
courts” decide how those rules are to be enforced. In effect they
get to act as law makers, law enforcers, and judges. Combining these
three functions under one roof is certainly not what those who spent
considerable time and effort figuring out how to separate them
intended for our nation. Our Founding Fathers set forth the
principles of separation of powers not because they wanted to make
our government complex but because they recognized that doing so
would help to prevent the rise of tyranny. They counted on the greed
for power that is present in the heart of every politician to
maintain that separation: they believed that the Congress would act
as a check on the President and the Courts would act to check the
power of both. They did not dream of the possibility that the three
branches would collude to increase the power of all of them so as to
be able to kill the liberty and freedom that they had struggled so
hard to obtain and pass on to future generations. But that is
precisely what has happened.
For
many years our Constitution worked pretty much as intended. While it
did so Americans not only saw their country grow in size, but also in
economic power, so that by the time of WWI our nation was the largest
economic power in the world, having overtaken Great Britain in the
1880s. In a space of less than 150 years our country went from being
so feeble that its very continuation in existence was in doubt for
many years, to a position of world leadership – all under the basic
structure that had been laid down in the summer of 1787. There had
been a few deviations from the intent of the Founding Fathers, but
they were few and far between and, as yet, the power of the Federal
bureaucracy was still very limited. All this happened during a
period of change in technology, science, and the arts such as the
world had never seen before – a period which saw the average
American's yearly income rise considerably even though there were
millions of people immigrating to this country. Not everything was
perfect, understandable as we are dealing with humans here. But, in
any case life got better for the vast majority of people over a
considerable period of time under a Federal government that remained
small and which by-and-large lived according to the rules set up in
the Constitution.
Things
began to change some in the early years of the 20th
century with the growth of the so-called “Progressive” movement –
a movement which held that people would be better off under a
government which was run by an expert bureaucracy: a system which
allowed outside third parties to make the decisions about how others
should act, because they supposedly knew what was best for them. The
movement made some progress and managed to establish such now
monumental bureaucracies as the FDA and the U.S. Department of
Agriculture. On the whole, though our system of government still
worked as the Founding Fathers intended it should. The executive,
legislative, and judicial functions of government were kept separate
and people were still largely able to live their lives free from the
interference of the government.
All
that changed with the coming of the Great Depression and Franklin
Delano Roosevelt. He was elected in 1933 on promises to bring a “New
Deal” to Americans; a government which cared about them as
individuals, one which would bring order and stability back into
their lives, one which would provide them jobs, certainly not one
they should fear. And Americans bought it as they valued economic
security above freedom and liberty. FDR, for his part, kept his
promises, pushing a veritable deluge of legislation through the
Congress in his fabled first 100 days in office. He created a forest
of Federal bureaucracies with a plethora of initials to go with them:
the NLRB, NIRA, CCC, WPA, and a host of other agencies and programs
came into being.
The
Supreme Court held back the tide of socialist legislation finding
that many of Roosevelt's new agencies and laws were unconstitutional
– mainly on the grounds that the Congress was delegating its
legislative powers. At that time the Court recognized what most
Americans seemingly did not – that allowing the consolidation of
legislative, enforcement, and interpretive powers to reside in one
agency was a sure path to the destruction of the liberty and freedom
which made the United States unique among the nations of the world.
The Court realized the truth of Benjamin Franklin's old adage about
giving up a little liberty for a little safety and losing both in the
long run.
FDR
was furious that the Supreme Court would dare to stand in the way of
his schemes to vastly expand the power and reach of the Federal
government and launched his infamous attempt to pack the Supreme
Court with justices who would rule in his favor. It was at this
point that a couple of the judges on the Court, fearing more for
their future job security than they did for the Constitution, had a
change of heart and began to rule in favor of the Administration on
many of the contentious issue of the day. The lack of the courage of
their convictions on the part of two or three men in 1937 has doomed
Americans to lives in which the wishes of unelected Federal
bureaucrats count more than our own in many areas of life.
And
it's all built on a legal fiction. The fiction is that the Congress
hasn't really delegated its legal authority to make the laws because
it continues to exercise some type of “oversight” of the powerful
bureaucracies it has created. The fact that Congressional oversight,
certainly in its ability to control the day to day operations of our
multitude of Federal agencies, is a farce, doesn't keep the courts
from insisting that it exists. A few Congresscritters holding
hearings into some matter whenever the public outcry becomes such
that they fear for their own re-election, particularly when no
individual is held accountable for his or her actions, is not
oversight: it is political theater designed to keep the masses happy.
This is another insistence in which clever politicians and lawyers
have subverted the clear meaning of the Constitution to the detriment
of the American people. Yet most people don't even stop to think
about it so ingrained has the apparatus of oppression become in our
lives.
Now,
the President and his supporters wish to expand the reach of the
government into the one area in which its control has been, to this
point, relatively controlled. The supporters of the President's
scheme to “reform” health care are at pains to point out that
there really in no difference between having health care decisions
made by lackeys of the State or employees of health insurance
companies. They fail to realize that there is a critical difference
– if a health insurance company too often abuses its customers it
finds that those customers begin taking their business elsewhere –
an option that will not be available once Federal bureaucracies are
set up to make health care decisions for us. The private insurers
are not perfect. It is important to realize that some of their
policies are brought about by Federal government regulations that are
already in place concerning rates of reimbursement for procedures and
limits on lifetime expenditures for things such as durable medical
equipment. It is doubtful that putting more power into the hands of
unaccountable minions of the State will improve the overall quality
of health care in this nation.
The
American public needs to wake up and realize that it is the results
of policies, not the intentions behind them that are important in the
final analysis. I may want to set up a government-mandated wage
structure that insures everyone who works a decent wage. But if the
result of the policies that I put in place to achieve that goal is
that many marginally employable persons lose their jobs because
businesses can no longer afford them at my new higher wage rates I
have actually achieved the result of consigning more people to the
welfare rolls or life on the street. Certainly I would not expect to
be rewarded for having brought about such a debacle, but that is
exactly what happens when Americans continue to return the same old
faces to Congress election after election. Given the lengthy track
record of policy failure that the Federal bureaucracies have it is
doubtful that they will do any better if they are given the power to
directly govern the course of health care in this nation. And that's
what will happen if Congress passes such a law because the Congress
will give up its legislative power as part of the deal, even though
out Constitution says that it cannot do that. Federal employees will
have the power to make the laws, enforce them, and interpret what
they mean (becoming judge, jury, and, in some instances literally,
executioner). If you think our current health care system is a mess
give it a few years under the gentle ministrations of an all-powerful
bureaucracy – it will get worse.
I've been listening to NPR's coverage of the national
debate over the supposed health care crisis in the United States.
This evening's report mentioned hearings that were held today by a
Senate committee that is trying to come up with a bill that will
garner enough votes to avoid a filibuster by opponents of the
measure. One of the items that was being discussed, and which seems
to be locked in to all versions of the reform bills under
consideration, is a mandate that all Americans purchase health
insurance or face fines and/or other punitive measures designed to
ensure compliance with the wishes of the State.
And it seems as though no one dares to point out what
an incredibly stupid thing such a mandate would be. Let's leave
aside for now the libertarian objections to such a provision and look
at this on its own merits for the time being. Bear in mind that one
of the goals the reformers are aiming for is to achieve a reduction
in the cost of health care. And one of the first things these
altruistic power-brokers want to do is put the coercive power of the
State to work ensuring that every person in the United States is
covered by health insurance; for their own good, of course.
Though arguing from analogy is, necessarily, a
difficult thing to do as no two situations are identical, there is
one area from which we may get a good idea of what lies ahead on the
path of mandating the purchase of health insurance. Auto insurance
is a field from which we can certainly get some idea of what will
happen when the State requires everyone to be covered by some form of
health insurance. If what has happened here in Michigan with
mandatory auto insurance coverage is any indication the results of a Federal health insurance mandate are
going to be anything but pretty. Michigan is one of several states
that bought into the argument that our court systems were being
overwhelmed by the numbers of auto accident suits being filed and that auto insurance was getting too expensive. So the state's legislators
enacted something known as “no fault” automobile accident
insurance. The idea is that a person's own auto insurance provider will
cover the costs of damages, health care, and so on. Whenever a policy
holder is involved in an accident the insurance provider simply pays
the bills and life goes on. Not only was this scheme supposed to
lessen the load of civil lawsuits working their way through the court
system, but auto insurance costs were supposed to go down because
insurance companies would no longer need to pay for expensive
lawyer's fees associated with all of those court cases: at least that
was the theory. To ensure that everyone benefited from this wonderful new idea the Michigan legislature mandated that everyone purchase auto insurance, at certain specified minimum levels.
The reality has, surprise, surprise, been considerably
different from the roseate picture that was painted by the proponents of the original measure. For one thing mandating the purchase of auto insurance
handed the insurance companies a captive group of customers;
customers who had to buy their product regardless of the cost.
Unsurprisingly, the cost of auto insurance in Michigan has done
nothing but increase since the “no fault” law was put in place
back in the 1970s. Among the conclusions reached in a 2005 study by
The Foundation for Taxpayer and Consumer Rights are these:
Premiums
are 19% higher in no-fault states than in personal responsibility states.
States
with some form of no-fault insurance are consistently the highest priced in the nation.
Auto
insurance premiums rose 92% faster in no-fault states than in personal responsibility states between 1998 and 2002.
(see:
http://www.consumerwatchdog.org/documents/1812.pdf
for more details)
According
to an item from the Mackinaw Center for Public Policy: “Even
when one disregards the high level of taxation to which the insurance
industry is subjected, the additional cost built into an auto
insurance policy in Michigan as a result of government's many other
intrusions in the market is staggering. For instance, laws force
insurance companies to sell drivers more insurance than even the
companies believe they need. Companies are prohibited by other laws
from assigning risk based entirely on where losses occur, forcing
those who live in low-risk areas to subsidize those who live in
high-risk areas. These edicts accomplish political goals that could
have been paid for out of general revenues, but the Legislature has
found it easier to hide them in the cost of insurance. “ (See:
https://www.educationreport.org/article.aspx?ID=94)
Other
studies of the field indicate that Michigan is not alone in
experiencing increases in the cost of auto insurance following the
passage of laws that mandate the purchase of it. The cost increases
come as no surprise and were predicted by opponents of the Michigan
law prior to its passage. After all, it's only natural for
businesses to raise the prices of their goods and services when they are
guaranteed sales by virtue of the police power of the State. There
is some limit to the cost of auto insurance as competition does still
exist within the insurance marketplace, but those limits are higher than would be the case in a marketplace in which
the customer is free to walk away from the market entirely if she
finds nothing that meets her needs or budgetary requirements.
Unless
the Federal government is going to place arbitrary limits on the
prices that may be charged for differing health insurance policies
there is no reason to believe that what has happened in Michigan and
other states which mandate the purchase of auto insurance will not
happen on a national scale with health insurance. Along with higher
insurance costs will come the need for higher levels of subsidy
payments to those whom the all-knowing State decides are too poor to
pay for the insurance themselves. That's one of the reasons that
President Obama and his close allies are pushing so hard for the
so-called “public option” for the purchase of health insurance.
They see such a provision as a means of ensuring that health
insurance companies do not take undue advantage of the consumers who
will be forced to purchase some product they may not want or need.
The public option is also a means of dressing up the wolf of a
single-payer insurance scheme in the guise of the sheep of consumer
protectionism. Of course, whether or not the “public option” is
included in the final law the costs of health insurance will continue
to rise. The proponents of the public option won't admit that, but
it is inevitable. The actual cost increase may be hidden within the
general tax increase which will be necessary to pay for the
President's brainchild but be there they certainly will be.
There
is much to dislike about any of the proposed “reforms” of the
health care system as all of those put forth by the politicians in
Washington result in an increase in the power of the State. However,
the idea of mandating the purchase of health insurance goes beyond
simply putting in place new regulations for doctors and other health
care providers to keep track of and hope not to transgress.
Mandating the purchase of health insurance not only increases the
intrusions the Federal government will make into all of our lives, it
will also directly add to the already high cost of health insurance.
This cost increase will “require” the State to further subsidize
the cost for low income households (which means raising taxes on
those in the middle class and above to pay for that “benefit”).
The result will be increased costs, heightened Federal government
intrusiveness into all of our lives, increased levels of taxation,
and most likely of all – no improvement in the overall health of
the American people; which is supposedly the object of this whole
exercise in futility. So long as the Federal government is not
forced to give up its role as regulator of the nation's health care
the situation will not improve – we'll simply end up back here
again in a few years listening to the familiar complaints of the
regulators (who will have failed in meeting any of their supposed
objectives) that they need ever more money and power to achieve their
goals.
The debate over health care reform is ongoing and no
one is sure what type of changes will be forced upon the people by
our guardians in Washington. With all of the smoke and noise that
has been generated around this issue there is still nothing which one
can point at and say, “This is what the Congress will be voting
on”. In a quick scan of the field of likely contenders one sees
the so-called “compromise” bill that has been put together by
Senator Max Baucas (D-MT), who spent many hours with Republican
Senators Olympia Snowe (R-ME), Chuck Grassley (R-IA), and Mike Enzi
(R-WY), in an attempt to craft a "bipartisan" bill, and HR 3200 – sponsored by Representatives John Dingell
(D-MI), Charlie Rangel (D-NY), and Harry Waxman (D-CA) among others (which gives the Statists everything they want, such as mandating the purchase of health insurance) –
together with any number of proposed amendments, and other possible
bills. Conspicuous by its absence in the debate is anything
resembling a libertarian alternative to the extension of Federal
power envisioned by all of the bills that are currently being
discussed. And that is a real shame because this type of legislation
is one in which a libertarian plan could be put forward.
A libertarian bill could use reducing the cost of
health care as its point of departure. The sponsors of the other
bills that are being considered all claim to reduce costs, but the
reality is that what they really control, if anything, is the
rate of increase in cost. For instance, President Obama's plan doesn't
actually lower the amount of money that will be spent by the Medicare
system, it merely slows the rate of growth of this voracious monster
of a Federal boondoggle. Yet, to hear the President and his
supporters tell the tale, one could be forgiven for thinking that the
amount of Federal money spent on Medicare will decline if the
President's plan is adopted.
A truly libertarian bill would lower the amount of
money the Federal government must allocate to Medicare by removing
the question from the Federal realm entirely. Now is the time when
we should be truly thinking “outside the box” as everyone seems
to be ready to discuss the supposed health care emergency (as some
Democrats are portraying it) and actually do something about it. So
here is my proposal for a libertarian alternative to the proposals
being put forth by the proponents of Big Government:
-
-
allow individuals to opt out of the Medicare
system entirely,
-
do not collect Medicare taxes from those who opt
out and reduce their Federal income taxes by the proportion that
Medicare represents of the entire Federal budget,
-
allow those who opt out to do whatever they wish
with their money; buy health insurance, go on a vacation, save it,
it doesn't matter as it's their money to start with,
-
eliminate the Federal government's power to
determine what equipment your local hospital can purchase, what
services it may provide, and how much it may charge for the service
thus interjecting an element of competition into the medical
marketplace,
-
remove the cap on the number of doctors which may
be graduated each year from the nation's medical schools. Making
more doctors available will also add to the marketplace competition
that serves to drive costs down in every other area of life in
which it is allowed to operate,
-
require doctors, hospitals, labs, etc. to post
their charges for common procedures. This could be done on-line, by mail, or via local newspapers, preferably all three.
If people can see how much it will cost them to have their MRI down
at Hospital “X” as opposed to Hospital “Y” they'll probably
choose whichever one is less,
-
jettison the idea that in order to be “adequate”
health insurance must cover every service, office visit, and lab
test that a person gets. When I was a young adult (more years ago
than I like to think about) the health policy I had covered major
surgery, truly unusual and expensive tests, and other
“catastrophic” costs. Other than that I had to pay for routine
office visits, lab tests, and so forth. This would have the effect
of lowering the costs of health insurance as companies would no
longer have to offer only policies that offer “soup to nuts”
coverage with the only difference in cost being the amount of the
yearly deductible.
Now, I'm not going to claim that this will save “X”
number of dollars from the Federal budget or that it will solve every
aspect of the supposed health care crisis. But guess what, neither
will any of the plans being put forth by the advocates of ever-larger
government. What it would do is set a precedent for reducing the
power of the Federal government, increasing the liberty of individual
citizens, and giving those citizens some of their own money back.
The idea here is to take a bite out of the power of the Federal
government and help reduce the cost of health care, while
demonstrating that people are capable of managing their own lives.
Taking steps to reintroduce competition into the
medical marketplace is long overdue. For too long the AMA and the
Federal government have had a cozy relationship which allows American
doctors to avoid having to really compete for patients while also
allowing the Federal government far too much regulatory power. It's
been convenient for the medical professionals to maintain that they
like the idea of competition, while regretting that they can't openly
compete because the nasty Federal government won't allow them to do
that. The above scheme would greatly reduce the Federal government's
involvement in the medical marketplace without reducing the safety of
the drugs, etc. that people rely on.
Would my plan be perfect? No, nothing involving people
is ever going to be. However, my scheme gets us moving back in the
direction of increasing the freedom of action of citizens, rather
than further circumscribing it as the plans but forth by the
politicians in Washington and the professional lobbyists hired by the
health care providers would do. In the long run that's more
important than coming up with a “perfect” plan which satisfies
no one except those with a vested interest in increasing their power
over others.
The Federal government has now grown so powerful that
some in this nation are taking its slightest wish to be a command.
The announcement on Monday by a group of major American corporation,
including Hewlett-Packard, AT&T, Tyco and others, that they will
be adopting new executive compensation guidelines is a sign of this.
The corporations have said that they will develop new rules regarding
the compensation of top executives based on a report from the
Conference Board that was also announced on Monday. Some will
maintain that this is nothing new, that businesses have many times
tried to get out in front of possible new regulations by adopting
some sort of voluntary self-regulatory scheme on their own. While
that is true, it's never been a good sign, but this move is much more
significant. To my knowledge American corporations have never
subscribed to the idea that the State has any power in the area of
setting the compensation that corporate employees, particularly those
at the upper end of management, may receive. To my way of thinking
this is yet another example of the expansion of the powers of the
Federal government far beyond anything allowed by the Constitution or
envisioned by the nation's Founding Fathers.
The companies are making this move in an obvious
attempt to head off yet more regulation by the anti-business Obama
regime. President Obama has repeatedly stated that he believes that
corporate executives' pay is too high and is not properly linked to
the actual performance of the executives or the companies. According
to the new guidelines executive pay is to be more transparently
linked to performance and the compensation packages are to be “more
affordable”, eliminate “golden parachutes”, and be subject to
more oversight by company boards of directors. None of these things
can be measured objectively: one man's excessive pay is another's
reasonable reward for effort made and results obtained. Likewise,
the amount of gold in one's parachute is a matter of interpretation,
not solid fact. That means that any regulations based on these ideas
will be open to interpretation and companies will be left to wonder
if they've overstepped the limits until they're reprimanded by some
Washington-based bureaucrat. About the only thing missing is a
requirement that the executives bow daily in the direction of
Washington and give thanks to President Obama that they have a job.
Given this administration's propensity for exacting arbitrary ex post
facto punishments for corporations and executives which it thinks
have crossed the boundary of what is “reasonable” (just look at
the recently announced prosecution of Bank of America for fulfilling
the contractual requirements that it inherited when it took over
Merrill Lynch – at the State's insistence it should be noted see:
http://www.ncbusinesslitigationreport.com/2009/04/articles/fiduciary-duty/threats-and-secret-promises-bank-of-americas-merger-with-merrill-lynch/).
How long will it be before executive pay is held in escrow until
the State determines whether or not it is “excessive”?
This is the sort of corporate kowtowing that
demonstrates how tight the link is between regulation by the State
and corporate well-being. Left unsaid in this announcement is the
realization that the socialists in Washington have it within their
power to simply regulate executive pay in any manner they may wish.
The fact that such regulations would be unconstitutional no longer
even comes up for discussion. It's as though American businesses
have lost their backbone. A generation ago the very idea that the
Federal government has the power to place limits on how much money
the top employees in a business may make would have been considered
laughable. Furthermore, businesses of yesteryear, faced with such an
extension of the power of the State would have stood up for their
rights and filed suit in court to prevent any such regulations from
being put into effect. How the mighty have fallen.
Some will argue that the new rules (a version of which
are already in effect for any financial institution that submitted to
the State's blackmail and accepted TARP money) aren't any different
than other Federal rules that corporations already abide by. What
they overlook is that the State has never before (except during WWII
and a short time during the Nixon years) set limits on how much money
a person is able to earn in the course of legal employment. What is
more troubling in some ways, than the restrictions themselves, is the
general reaction by the public that “those scoundrels had it coming
to them”. The Obama regime is deliberately making this change as a
populist act of class warfare. And Americans are falling for it
because they fail to realize two things: there is considerable
mobility between classes in the U.S. and those who are in the lower
ranks of earners today generally move up the ladder to higher paying
jobs in the future; and once the State is allowed to regulate
compensation in one area or for one class the precedent will be used
to gradually lower the limit at which such regulation kicks in.
President Obama has already defined $250 thousand dollars as the
amount of income which delimits the “wealthy” from everyone else.
By using class envy to drive his new regulations President Obama is
deliberately pandering to one of the worst emotions of man: envy.
This emotion has been considered to be a sin by many as it makes it
all too easy to justify shackling those of whom one is envious.
President Obama has been at pains to point out that racism has no
place in American society and he is to be applauded for that.
However, he is deliberately acting to substitute class-envy for
racism so as to set the stage for ever more onerous burdens to be
placed on the supposed “wealthy” of this nation. Not only is the
President introducing a darker, more vindictive tone into the debate
over compensation, but he is also greatly extending the
extra-constitutional reach of the Federal government. This is yet
another example of how little constitutional limitations on Federal
power matter to this man whom we are told is a “constitutional law
expert”. Once again the powers that be are able to act as they
please because they know that the vast majority of the American
populace has no idea what is actually written in the Constitution.
Because of this ignorance the Obama regime is able to more-or-less
make up the rules as it goes along and change the interpretation of
existing rules to fit its conception of how things should work.
There are many Americans who think that strict limits
should be placed on executive pay. They cite supposed gaps between
performance and compensation, a lack of oversight of pay packages by
corporate boards of directors, and how “unfair” it is that some
executives make millions of dollars a year while other employees work
for far less. According to the thinking of such people all of these
“problems” are best addressed by extending the power of the State
over business activities. What they overlook is that the
corporations themselves do not seem to view the situation with alarm
– something which would be happening if any of these businesses
felt endangered by the levels of executive compensation they are
dispensing.
It is entirely possible for boards of directors to
discuss in great detail the amount of money to be paid to a member of
upper management and reduce the amount if they feel that it is out of
line with the benefits that they anticipate the new employee will
bring to the company. The pay scales of upper management in American
businesses are high because the amounts of money which these people
can make for their employers is also high. It is not unreasonable to
pay a manager who brings in $700 million dollars of new business or
introduces similar operational savings to the bottom line of a
company $300 million. From the standpoint of the company they've
gotten a bargain and it should not be anyone else's view which
prevails in the setting of the wage – outsiders are not privy to
all of the information available to a corporate board, nor are they
affected by the amount of compensation given out. Once again
Americans are falling victim to the liberal credo that outside third
parties know what is the best course of action for other to take.
Once again the State is usurping power which rightfully belongs to
others. And once again Americans are being suckered into giving up
yet more liberty – this time by the promise that they'll get to
watch as greedy corporate executives “get theirs”. In the end
the only certainty is that the Federal government will have further
expanded its powers at the expense of the American public.
“We can mandate whatever we want to in America. We
can mandate that Coca-Cola®
come out of the cold water tap.” So said Senator Ron Wyden (D-OR)
in an interview on NPR's Weekend Edition on Sunday morning, September
20, 2009. This is but one example of the sort of hubris which has
seized the Democratic lawmakers in Washington, D.C. It is also
indicative of a dangerous trend in American politics; one which has
been going on for some time, unfortunately. If Senator Wyden's
comment is to be taken at face value, and I know of no reason why it
shouldn't be, he seems to feel that the Constitution and the rule of
law no longer to him and his fellow legislators. This applies to legislators of both parties, though with the Democrats in control of both the legislative and the executive branches of the government they seem to have a particularly virulent case of the condition right now.
This is a natural result of the rigging of American
national politics so that legislators are practically guaranteed a
seat for life unless they caught with their hand too deeply into the
cookie jar. The turnover in seats in both the House and Senate is
pathetically small in any given election cycle. Given the precision
with which Congressional districts can be drawn legislators know
that, except in roughly 10% of the districts across the nation, they
will hold their seat for as long as they want it. Even those which
are so-called “swing” districts tend to stay with one party or
the other for several years between swings. This is certainly not
the outcome that our Founding Fathers were expecting when they put
together the Constitution over two hundred years ago. It is one of
the results of the various election “reform” laws passed in the
last twenty years or so; rather than opening up the field to
newcomers the effect has been to rig elections so that incumbents
have nearly insurmountable advantages in an election. The tendency
has become more noticeable since the passage of the McCain/Feingold
election reforms that limited the speech of outside organizations by
denying them the ability to make direct reference to any candidate in
an election. This has effectively acted to muzzle opposition that is
not directly a part of either major party.
The Democratic wing of the “Big Government” party
which rules this country feels that it can ignore the growing Tea
Party movement simply because that movement is almost entirely
outside of the areas from which the they draw their support. The Tea
Party movement is strongest in the West and Midwest, areas dominated,
except around big cities like Chicago, by the Republicans. Unless
the dissatisfaction with the way things are currently done in
Washington grows to encompass areas that the Democratic party
controls nothing will change. The Democrats will continue to
belittle the Tea Party movement as the squawkings of a few
disaffected, and probably racist, middle-class white men: hardly a
group to which they feel the need to pay attention. The result will
be that our arguments will not be heard above the rantings of those
who dismiss us as members of a radical fringe movement that will go
away if simply ignored.
And that is one of the problems with the current Tea
Party movement, though I agree with their goal of rolling back
Federal power and forcing our elected officials to abide by the
Constitution as it is written, there is nothing in it to attract
those who get everything they want from the State. Unless the
recipients of Federal largess come to understand that they are simply
being used by the rich and powerful men in Washington this nation
will continue down the path to socialism and, eventually,
totalitarianism. To that end those of us who want to return this
nation to one which is ruled by law rather than executive fiat must
find some message which appeals to those who are the beneficiaries of
the Federal government's wealth redistribution schemes. Judging by
the response thus far, simply pointing out the evils of the current
system will not be enough. We must develop some sort of blueprint
for getting us from where we are – trodden under the heel of an
increasingly arrogant government – to where we want to be –
living in a land in which each individual is truly free to seek his
or her own destiny without the interference of government
bureaucrats.
What that blueprint looks like exactly, I don't know.
However, coming up with a way of getting this nation back on the
right track, without causing damaging upheavals in the economy or
simply tossing those who currently receive welfare and other types of
support from the State on the garbage heap – which will only lead
to damaging social disorder – is not going to be easy. Yet, I
think that the time has come for those of us who want to live the
life of freedom which the Founding Fathers bequeathed to us to
develop such a plan. As a friend of mine said, “We've got to come
up with a Giant Fricking Reset Button”, and convince people that we
need to collectively push that button and get rid of those in
Washington who think that they “can mandate whatever [they]
want...”. This will not be an easy task, yet we must undertake it
if we want to be taken seriously and force real change on our
government.
It has become common for supporters of President
Obama's plan to socialize medical care in this country to maintain
that those of us who oppose such a measure are motivated, partly or
wholly, by racism. Former President Jimmy Carter has signed onto
this school of thought, as have the usual suspects such as the
Reverends Al Sharpton and Jesse Jackson. Also climbing on board the
“Let's Smear the Opposition” bus have been any number of Senators
and Representatives, including Senate majority Leader Harry Reid and
Speaker of the House Nancy Pelosi. This is playing the “race card”
on a grand scale and for those who believe that the Federal
government should no longer be bound by the Constitution it is a
convenient charge to make.
Making the charge that one's opponents are motivated by
racial hatred is particularly easy to make in America right now, in
spite of considerable evidence, such as the man who currently
occupies the Oval Office, that racism is a shadow of what it used to
be. Is it all gone, no, and more's the pity as the fact that it
still exists gives the Democratic charges just that tinge of
legitimacy that makes people think there might be something to it.
What it also does is act to absolve the advocates of socialism of
having to make real arguments in favor of their position that health
care is a right and that those who support that school of thought
have the right to use the coercive power of the State to enforce
their desires. You see, making the charge of racism in America today
has the effect of immediately changing the focus of the debate from
the merits of each sides' arguments to one in which the opponents are
forced to spend the majority of their time defending themselves from
the despicable charge.
This is one of the results of the growth of the cult of
political correctness in this country. Even though they may not
agree with the philosophy that one must never say anything which
might be offensive to someone else, most Americans have
subconsciously adopted that mode of speech and argument. It is
interesting to note that in this particular instance the first
principle of politically correct speech - “Thou shalt not speak any
offensive epithet lest thou should injure thine opponent's
self-esteem” - does not apply when making the charge of racism.
Yes, it's permissible for the left to level such a charge at those
whom they have discovered are not willing to simply allow the
juggernaut of an ever-larger Federal government to roll over them
unchecked. It is not, however, permissible to point out that in
making such a charge, one which I and I dare say most Americans feel
is outrageous, the backers of the Obama regime are themselves acting
in racist manner. But, that's rather beside the point – it merely
illustrates how, by making this unfounded indictment, the supporters
of President Obama are able to deflect the debate from the true point
at issue – that the President's plan to “reform” health care is
nothing less than a plan to socialize the health care system by
slowly driving out any remnants of the free market in this sector of
the economy.
Making the charge of racism simply demonstrates the
emptiness of the case for supporting the President's proposals. As
time goes on more details of the President's proposals have emerged
and it becomes obvious why President Obama tried to keep them murky
early on. The simple fact is that the proposed changes cannot be
paid for without both drastically curtailing the services provided by
Medicare, particularly those for the elderly, and increasing the
taxes that most Americans will pay. Unless the Obama regime is
willing to curtail spending on other social programs and so-called
“entitlements” the money is not there. This nation faces
deficits from now until forever because none of our so-called
“leaders” in Washington has had the political will to call a halt
to the continual expansion of spending on social programs –
programs which, by and large, lack any constitutional support. Our
nation is bankrupt, or would be if anyone dared to actually face the
facts of the matter. Yet the President insists that we stick our
heads further into the sand and allow him and his cronies to saddle
the populace with still more taxes. The sad thing is that, if the
level of Federal taxes were reduced, as they could be if Americans
insisted the government live within the law, the vast majority of
people could pay for their own health insurance. Bat that's another
admission that those in power dare not make because they realize that
to do so would be to call into doubt most of their actions over the
last half century.
So we're stuck with the absurd situation in which the
President and his supporters cannot make a reasonable case for the
proposed changes, but they dare not admit that. So they lower
themselves to the level of making ad hominem attacks on those who are
pointing out the many fallacies of their position. By doing so they
not only continue to add to the level of rancor, discord, and
distrust that pervades American political discourse but they lessen
the chances that anything good can come out of this discussion of the
problems of our health care system; and a serious discussion badly
needs to take place. However, calling their opponents names will not
move the debate forward and it threatens to destroy what little
decorum and rationality exists in what passes for political debate in
America. Shame on them, and shame on those of us who oppose the
President's plan for allowing ourselves to be distracted from the
real matter at hand – will the United States make an irrevocable
move into outright socialism or will we move the other way – back
towards the freedoms that this country was founded upon?
The Federal Reserve has
announced a policy that, not too many years ago, would have been
widely denounced as a tyrannical usurpation of power. The Fed is in
the process of drawing up “guidelines” to set limits on the
amount of compensation that can be paid to the upper management of
the nation's banks. This is in keeping with a White House policy of
setting limits on the pay for executives of banks which have taken
advantage of the TARP funds made available under what amounts to an
emergency decree by former Treasury Secretary Hank Paulsen last
September. Yet, somehow, this direct interference with the workings
of the free market has not drawn the fire from so-called
conservatives that one would have expected. This strikes me as yet
another sign of just how little attention is paid to the Constitution
and the limits that it sets on the power of the Federal government
these days. Instead of vilifying this new assertion of unlawful
power on the part of the State the reaction seems to be, “Oh well,
this is merely a logical extension of the programs that have saved
our financial system from collapse”. There is also more than a
hint of class warfare in this move as the President seeks to further
establish himself as the savior of the poor and downtrodden.
This change in the Fed's regulatory scheme is a
continuation of the Obama regime's policy of punishing the wealthy by
capping the amount of money they may earn in the future. After all,
this is the same outfit that has placed caps on the amount of money
that may be earned by top management in the nationalized parts of the
U.S. auto industry known as General Motors and Chrysler. One of the
things that concerns me, besides the obvious unconstitutionality of
the moves to regulate the recompense of employees in the putatively
private sector of the economy, is the level of, there is no other
word for it, glee, which has met the Fed's announcement. This is but
one sign that the majority of the American people have bought into
the State's version of the causes of the events leading up to the
current economic crisis: the fault lies entirely with those greedy
bankers who were let loose to run amok by a Bush administration that
cared only for allowing its friends and supporters to make obscene
amounts of money. There seems to be little awareness that our
current financial problems were caused by a series of ill-considered
policies adopted by various agencies of the Federal government –
the same government which is now being trusted with
extra-constitutional powers to put things right.
What many Americans fail to realize is that, by
acquiescing in the imposition of wage caps for some they accept that
all may have their remuneration set by the State. Many will not
accept the truth of the last statement, preferring to believe in the
myth of a benevolent Federal government, a government which would
never act in such a way as to harm the people. However, history, if
it teaches us anything at all, teaches us that government power, once
established in an area of economic or social activity, continues to
expand. To take but one example, the Interstate Commerce Commission
was originally empowered only to regulate railroad freight rates.
Its powers eventually grew to encompass the trucking industry as well
as railroads and its field of activity grew to include such details
as what routes trucks could drive and what they were allowed to carry
on those routes. The railroads saw an even more drastic expansion of
the ICC's powers as it came to control the smallest details of the
freight rates the railroad could charge, how the roads were required
to do their accounting – though those methods failed to reflect the
actual costs incurred by the companies – and other details of
operations. The ICC grew so cumbersome and destructive of economic
activity that even the Congresscritters in Washington finally
realized that it was killing the freight industry, both trucks and
railroads, and its power were drastically cut in the early 1980s and
the commission itself eventually phased out, to be replaced by the
Surface Transportation Board. In a repeat of history Congress is now
considering expanding the powers of the STB to set railroad freight
rates. Representative James Oberstar (D-MN), chairman of the
Committee on
Transportation and Infrastructure has opened hearings about what he
calls the problem of freight railroads overcharging their customers.
Wherever one looks at government programs, particularly
those which regulate some sort of activity one sees the expansion of
those powers into areas that were not imagined in the original
legislation. Yet, the State's “education system” does a good job
of indoctrinating students with the idea that the Federal government
is the source of all goodness and wisdom. Thus, many people do not
acknowledge that the government is the source of a lot of their
problems, even in the face of considerable evidence that it is.
It doesn't take a genius to see the path that the
State will follow now that it has been allowed to establish wage caps
in a small section of the economy. At some time in the future the
Federal government will extend its new found powers and establish
wage limits for management in other sections of the economy, and the
workers will cheer because the “rich, fat cats” of management
will be seen as getting what is coming to them. Little will they
realize that they will be the next in line for having their incomes
limited. Anyone who has read Frederick Hayek's book The Road to
Serfdom will understand how this process is inevitable, unless
the people realize what is going on and act decisively to change the
course of their government. Forcing the Federal government back into
the constraints imposed on it by the Constitution will allow
Americans to recover their lost freedoms, including the freedom to
work for wages set by the free market, not by some bureaucrat in
Washington, D.C.
The President
of the United States fired the President of General Motors
Corporation over the weekend. This would have been unthinkable even
a decade ago. But, things have changed and, apparently, this doesn't
bother most of the American people or the great majority of the mass
media's talking heads. However, it is troublesome for several reasons.
Where is the Constitutional power granted to the President of the
U.S. to make such decisions? There's nowhere that I can see that
there's a clause which, even given the twisted reasoning lawyers are
so proud of, gives the Executive the power to reach into the board
rooms of private corporations and pick and choose who will be allowed
to head up those organizations. Surely no one can argue with a
straight face that the Commerce Clause grants the President this sort
of power. If it does then there is no limit on the powers of the
Federal government and no one is safe from the exercise of arbitrary
government power. For if the President can fire the head of General
Motors, then there is nothing to prevent him from firing the head,
or, indeed, any employee, of any business in America. An extremely
dangerous precedent has been set over the weekend and a large number
of the American people, if not an outright majority, are applauding the
move; indifferent to the potential harm that such power can do to
everyone in the country. Instead, the State's propaganda machine
continues to spout the party line: the move was “necessary” in
order to give President Obama's plan to save the domestic auto
industry a chance to succeed politically; Rick Wagoner was too “old
school” General Motors to be able to make the changes to the
company that the President has deemed necessary for the corporation
to be considered for nationalization, er, excuse me, more "bridge loans"; the firing “sends a message”
to the automakers that it is “no longer business as usual” to
quote one commentator on NPR yesterday.
The only
person who seems upset by President Obama's firing of Mr. Wagoner is
Michigan Governor Jennifer Granholm, who seems almost offended by the
move. This is ironic in that Governor Granholm was one of the prime
cheerleaders for a Federal bailout of the Detroit automakers.
Apparently, the good governor of my state overlooked the fact that
granting the Federal government unconstitutional powers by way of
allowing it to “lend” money to individual companies, would lead
to further abuses of power. Was she really so naive as to think that
the Federal government would not impose all sorts of new rules and
regulations upon the companies that it was moving to “save”? Did
she really imagine that the Federal government would not seek to
exercise that power in such a way as to strike fear into the hearts
of any in the business community who might oppose it? If that's the
case it's no wonder that the State of Michigan is in the severe
economic trouble that it finds itself. Of course, even the good
governor's objections to the President's action is not based on
Constitutional or other legal grounds, but on the fact that Rick
Wagoner is a “good man” who was, according to the governor,
leading GM out of its troubles.
There is an
extremely dangerous mindset growing in this country – that only the
Federal government can solve the nation's economic ills and that it
must be granted virtually unlimited powers in order to be able to
accomplish this goal. Almost no one is heard objecting to the vast
expansion of power over the nation's economy that has occurred over
the last few months. There is no longer any debate as to whether or
not the Federal government has the Constitutional authority to
undertake any particular action. No, the debate is now only over how
much money a certain program is going to cost and what group it will
favor when put in place. We are seeing the culmination of the many
precedents that we've allowed our presidents, ever since at least the
days of Franklin D. Roosevelt's tenure, if not earlier, to set in the
direction of increasing the amount of power wielded by the occupant
of the house at 1600 Pennsylvania Ave. The President is now looked
upon as the one person upon whom all of the nation's hopes, fears,
and troubles lie. To paraphrase (and greatly condense) an article
from Reason Magazine
sometime last year, Americans are so used to placing all blame or,
conversely, all accolades upon the President for whatever is
happening that the Presidents over the years have found it more and
more easy to argue that they “need” all the power in order to
match the supposed responsibility they have for everything that is
going on. The cultural trend away from persons accepting
responsibility for their own actions and, instead, placing that
responsibility on some third party is finding its logical conclusion
here. If individual Americans are not accountable for their own
actions then they do not need power to decide how to live their
lives: that power should, by rights, be given to the person who is
primarily accountable for everything that goes on – the President
of the United States. It is not right, constitutionally, morally, or
ethically, but it is now a fact of life. The government of the
United States, in the person of the President, has asserted that it
has the right to dictate the smallest details of the operations of
businesses and the manner in which individual citizens may live.
Many
people will say that I'm being overly-pessimistic, that the Federal
government will not make it a habit to fire corporate executives, or
set business policy, or interfere in matters of citizen's private
affairs. Those who maintain that idea are sorely lacking in
historical perspective and understanding of the nature of the State.
A few examples of how Federal power has expanded over the decades
should be sufficient to show the trend. When the income tax was
first put in place, in 1913, it was limited to 1% on income above
$3,000 (a large income for the period) rising to 7% at $500,000 and
the people were assured that there was no reason to think the rates
would ever increase. As of 2008 the lowest tax rate is 10% for those
making less than $8,025 per year to 35% for those making over
$357,701 per year and those rates will have to increase in order to
pay for the Obama regime's “economic stimulus” packages. Indeed,
we've already been told that $250,000 per year is to be considered as
making too much money. (Figures from:
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States)
The New Deal brought with it the minimum wage, first set at $.25/hr.
it covered only workers directly engaged in interstate commerce or
those producing goods sold in interstate commerce, the minimum wage
has grown to $7.25/hr. and covers virtually every worker in America.
(figures from: http://www.dol.gov/ESA/minwage/chart.htm)
The Federal Occupational Safety and Health Administration is another
example of the growth of Federal power and interference in the lives
of citizens and ways in which businesses may operate; with precise
standards set for such things as the height above the floor for fire
extinguishers, the construction of ladders, and the placement and
types of myriads of safety equipment – even though there is no
constitutional justification for the agency. The ubiquity and power
of the Federal government is such that most people don't even stop to
think whether or not that government has any right to operate as it
does – they simply acquiesce and attempt to carry on as best they
can. To believe that the Federal government, especially in light of
the furor over the retention bonuses paid to AIG employees, will not
continue to expand its power in what was once called “the private
sector” is the equivalent of believing that the local McDonald's
will suddenly appear with three stars in the Michelin guide.
Now
that President Obama has established that he has the authority to
fire the heads of corporations we can expect to see yet more
interference in the operations of private enterprises, in particular
those which have accepted the poison pill of Federal bailout funds.
Furthermore, I will not be surprised to see the definition of
“Federal aid” expanded to include taking advantage of so-called
“tax loopholes”. The reasoning will be relatively
straightforward for Washington. We have already been told,
repeatedly, that paying Federal taxes is patriotic. It follows,
therefore, that failure to pay the maximum Federal tax one may be
eligible for is unpatriotic. Taking advantage of “tax loopholes”
is to avoid paying the maximum tax to the Federal government.
Therefore, taking advantage of “tax loopholes” is unpatriotic in
that it amounts to taking money from the American taxpayer. As we
know from the actions of the Federal government up to this time,
taking money from the American taxpayer gives the Federal government
the right to determine how a business may operate. Thus, the power
of the Federal government, which will become ever more hungry for tax
revenue, will be extended. And, again as the recent AIG case
attests, one cannot rely on Congress not to at least attempt to
change the rules retroactively; so that what is permissible today
will be illegal tomorrow, in spite of the Constitutional ban on bills
of attainer and ex post facto laws.
President
Obama has nearly completed the job of destroying the U.S.
Constitution in the arena of what was formerly considered “private
activity”. He is doing for Federal regulatory agencies what the
G.W. Bush regime did for Federal law enforcement and espionage
agencies with the PATRIOT ACT – extending the power of the State
and destroying the foundation of civil liberties that this nation was
founded upon. The truly sad part is that the American people are
largely applauding him as he does so.
It's the day
before we are supposed to be told whether or not the Federal
government will continue to shovel money into the hands of the
moribund American automakers, GM and Chrysler. In spite of
protestations from the White House that “bankruptcy is an option”
there is, and I don't think I'm going out on much of a limb here, no
chance that the companies will be allowed to enter Chapter 11
proceedings. This situation can no longer be viewed as strictly an
economic question: what's best for the economy overall?, but from a
political viewpoint: what's best for the Obama regime? Looked at
from that standpoint the answer is obvious as to the course the
Federal government will take – more money will be wasted in an
attempt to keep ineffective corporations afloat, the only question
will be – how much more of the taxpayers' money will be wasted to
gain political favor for the new President?
The Obama
regime (yes, I'm aware of the connotations of the word, but “group
of sycophantic toadies” is too long for general use), and its allies,
will mount a large propaganda campaign in order to justify the waste
of still more money that the country doesn't have, in order to prop up
corporations that have shown themselves incapable of making good use
of their resources. Nothing has really changed since the last time
the Federal government made “bridge loans” to the automakers.
The unemployment situation is worse than it was in late November, so
we'll be told that the country can't take the chance of losing the
supposed three million jobs that directly or indirectly depend on the
U.S. automakers continuing in business. On top of that, since the
State now has a financial interest in the companies, we'll be told
that further “investment” is needed in order to “protect the
investment taxpayers have already made” - the State's excuse for
throwing good money after all. And, I suspect, we'll hear about how
our “national security” depends on the continued existence of a
“viable” American automotive industry.
This last is
totally specious as automotive factories are not suitable for
manufacturing tanks, APCs, or most of the rest of the panoply of
modern war. The only vehicles the auto companies produce, on a
routine basis, for the armed forces are Hummers and trucks – which
could be purchased elsewhere if needed. The idea that automobile
plants could be converted to the production of heavy equipment, as
was done during WWII, is no longer viable. Given the pace of any
large conventional war the conflict would be over long before the
needed conversion could take place. Even in WWII it took the better
part of eighteen months before significant military production was
rolling off Detroit's assembly lines and the process was sped up to
some degree because large amounts of manufacturing capacity was still
idle from the effects of the Great Depression and didn't need to be
shut down prior to being converted to military use. In the long run
our nation's security interests would be far better served by
strengthening the economy over the long run by ending State
interference in the marketplace – the very sort of interference
that is being pushed as the solution to our economic ills.
We will be
told that the recent report of General Motors' auditors, which
expressed grave doubt as to the company's ability to continue as a
“going concern”, is overly pessimistic. The State's propaganda
mill will push the idea that all that is needed is to make sure that
GM continues to operate during the current economic crisis. The
company will announce that its coming products, such as the Chevy
“Volt”, a high-priced (recent estimates put the price at
~$35,000) “green” vehicle, will allow the organization to regain
profitability as soon as the economy recovers from the current
downturn. We will be asked to suspend disbelief, in much the same
manner as when we go see a science fiction movie, and accept the idea
that the automakers will be competitive when things improve, in spite
of all the historic evidence to the contrary. All that will need to
be done is to shovel more billions of dollars of “loans” to GM,
loans which are supposed to be repaid, in order to assure that this
rosy view of the future comes true. No mention will be made of the
fact that GM's indebtedness to the Federal government will approach
the amount it owes its UAW-approved healthcare trust fund. It is
costs associated with on-going healthcare expenses (an estimated $47
billion) that are a large part of GM's financial problems; yet,
somehow repaying government loans will not have the same effect on
the corporation's balance sheet. This type of thinking can only come
from government employees who have access to unlimited funds thanks
to their ability to reach directly into the pockets of every
American.
Finally, the
Obama regime cannot afford to alienate the country's labor union
movement, which would surely happen if the UAW was not to be given a
huge chunk of the public's money. The simple fact is that the UAW,
in spite of all the damage it has done to the automakers over the
last fifty years, is to be rewarded by being granted the opportunity
to feed at the public trough. Ordinary Americans, most of whom make
considerably less than the average UAW worker, will be required to
subsidize the lifestyles of those workers. Labor inefficiency will
be rewarded at the expense of the overall economy. The majority of
Americans will be required to accept a lower standard of living so
that a few politically connected workers may be spared the “economic
turmoil” that the rest of us will be subjected to.
So, come
midweek, don't be surprised to hear that the Federal government, after
having carefully examined “all options”, will “invest” more
money in the dying American automotive industry. It will make no
sense economically. Indeed, it will be counterproductive in the long
term. However, politics is more important, in Washington, D.C., than
anything else, including the long term health of the overall American
economy.
It is a
well-known Wall Street expression that “the market dislikes
uncertainty.” Yet, this has seemingly been forgotten, if it was
ever known, by Senator Chris Dodd (D-Conn) when he said “I'm
concerned that we may end up having to do that [nationalization], at
least for a short time,”
in order to bring stability to the nation's financial markets. Wall
Street reacted violently to this hint that the State may continue its
destruction of private enterprise in the United States and bank
stocks led the downward trend. The market recovered slightly by the
end of the day when a White House spokesman denied that the Obama
regime has any intention of taking over the country's banks. One of
NPR's “Marketplace” commentators reminded the show's audience of
the old Wall Street adage, but seemed unaware that it is largely the
acts of the Federal government that has made the nation's
stockholders so jittery.
And that,
indeed, is what is behind most of the recent volatility in the stock
market: uncertainty about what actions the Federal government may
take to try to correct the current economic crisis. And why
shouldn't the markets be unsure of what lies ahead? In the last year
we've seen the State intervene to force the sale of Bear Stearns to
JPMorgan Chase at fire sale prices. This was done, “to avoid
economic turmoil”, instead of allowing the company to go bankrupt
so that the market could efficiently reallocate the mismanaged
assets. Yet, only a few months later, the same wise men who had
declared Bear Stearns to be “too large to be allowed to fail”
decided that Lehman Brothers did not meet that standard and that
company was allowed to go under. The Lehman Brothers bankruptcy had
been preceded by the Federal takeover of Fannie Mae and Freddie Mac
only a few days earlier. These actions took place after several
months during which former Treasury Secretary Henry Paulson had
repeatedly said that there would be no more Federal bailouts of
financial firms. Of course, there's no reason to think that this say
one thing, do another, policy of the Federal government might have
led to a few Wall Streeters wondering what was going to come next: no
reason to think that the State's arbitrary actions might introduce
some uncertainty into the calculations of the nation's financial
managers.
Then came the
infamous Paulson Wall Street bailout bill, since renamed TARP, which
was originally to use government funds to purchase so-called “toxic
assets” from banks and other financial institutions that had gotten
overly involved in the sub-prime mortgage market and were now losing
money in the wreckage left by the implosion of the housing bubble;
itself a result of Federal government mismanagement of the economy.
However, only a few weeks after the Congress was stampeded (through
the use of a never-ending stream of doom and gloom statements coming
from Treasury Secretary Paulson, Federal Reserve Bank Chairman Ben
Bernanke and large numbers of media commentators) into agreeing to
spend some $700 billion, to rid the system of toxic assets, Mr.
Paulson decided that the money would best be used to purchase equity
stakes in various large financial institutions. The Secretary
justified this move by saying that it was the best way to get the
credit markets moving again. Certainly, Wall Street has no reason to
be concerned about the policy flip-flops of a man who, at that time,
had virtually unlimited power over the financial markets of the
United States: no reason to be worried about arbitrary actions by the
Secretary of the Treasury, no matter which party is in power in
Washington.
Then came the
debate over whether or not to bailout the Detroit automakers by
providing them so-called “bridge loans” which supposedly would
allow them to restructure themselves and become “financially
viable” once again. We were told that the Detroit companies could
not be allowed to go bankrupt, which would have been the best and
quickest method of reallocating mismanaged assets, and that the
Federal government would have to provide them the loans. At first
the lame-duck Bush regime opposed this course of action, but
eventually, it caved-in to mounting political pressure from various
Midwest state governors, the UAW, and the auto company executives
themselves. This backing and filling and posturing by all involved
is no reason to think that yet more uncertainty was introduced into
the minds of those who hold and manage stocks. After all, simply
because it is no longer possible to tell what the State is going to
do in regard to the economy is no reason to be concerned. There's no
reason to think that the many changes in policies and methods of
dealing with the economic crisis was the result of State
functionaries throwing things at the wall in hopes that something
would stick. No reason to believe that the Washington wise men had
no idea how to manage the use of the State's power to intervene in
the supposedly free American financial marketplace. No reason to get
a little jittery if one had significant amounts of money tied up in
the financial markets.
The
recently-passed economic stimulus bill is another example of
irresponsible Federal meddling in the marketplace and is the economic
equivalent of pouring gasoline on a fire to put it out. By now, the
combination of the Federal Reserve's acquisition of approximately
$1.5 trillion of bad assets, the $700 billion TARP program, the
nearly $800 billion Obama stimulus package, the potential $5 trillion
liability that came with the nationalization of Freddie Mac and
Fannie Mae, and the as yet untold billions to be poured down the
drain of the Detroit automaker “bridge loans” add up to a
significant fraction of the nation's GDP of $14.3 trillion. However,
to listen to the Statists there's no reason to be concerned about the
size of these liabilities, no reason to wonder whether or not the
U.S. can pay the bills that our all-wise leaders in Washington are
running up. There's certainly no reason for the folks on Wall Street
to be concerned about further arbitrary actions by the State: no
reason to think that President Obama may not find it politically
convenient to extend his unilaterally imposed pay cap for Wall Street
bankers to other classes of employment or otherwise exercise the
State's nearly unlimited economic powers. No, the State never
mis-uses its power.
And yet,
seemingly none of the highly educated fools who are running the show
in Washington seem capable of putting two and two together and
realizing that it is the State's actions which are largely
responsible for the current economic downturn. However, they can be
forgiven for being so blind publicly, as they know that admitting
their responsibility would lead to public demands that they stop what
they are doing. Instead of admitting responsibility, the powers that
be have embarked on the largest disinformation campaign seen in
recent years. We are told on a daily basis that the crisis is a
result of the failure of the free market, that the only solution is
to give more power to the State, that consumers must resume their
profligate spending and continue running up those credit card bills,
that we must continue to loan money to Detroit, and that the State
must be allowed to place caps on the amount of money a person may
earn should he or she decide to become a banker. The truth is buried
in an unceasing torrent of lies and distortions, about both current
events and history, particularly the history of the Great Depression.
The State is held up as the source of all wisdom and goodness. We
are told that Federal budget deficits no longer matter, that we must
“get the credit markets working again” by spending enormous
amounts of money that we do not have and will not be able to repay.
No, there's absolutely no reason that the stock markets should be
concerned about the State's continued exercise of its ever-growing
power to arbitrarily intervene in the workings of the market.
President
Obama, after spending the better part of the last month insisting
that his so-called economic stimulus package be passed immediately
(maintaining that failure to do so would spell utter ruin for the
country), is going to wait until tomorrow to sign the bill, which was
passed last Friday. The fact that the President has delayed signing
the bill puts the lie to the supposed emergency conditions that
required the immediate passage of the bill. Remember, this is a bill
that the Statists consider to be so important that time could not be
spent debating any of its multitude of provisions or even whether or
not it was necessary. The President repeatedly went on radio and
television and spoke before live audiences berating Republicans, and
others, for daring to ask what is in it, who is going to reap the
benefits of the hundreds of billions of dollars that are being spent,
and trying to make modifications that might actually help the
economy, such as including more tax cuts in it and cutting back on
the actual spending that the President proposed. We were told many
times during the last three weeks or so that passage of this bill was
imperative; that every minute that was taken before passage meant that more American
jobs were lost, more homes were foreclosed, and more damage was being
done to the very fabric of the American economy itself. Now that the
bill has been passed and the spending of the hundreds of billions of
dollars is assured, the sense of urgency has, apparently, vanished.
One must ask,
why is this? Why is delay acceptable now, but not during the time
leading up to the passage of this incredibly wasteful, and damaging,
piece of legislation? Why are not the President's supporters camped
outside the Oval Office chanting, “Sign that bill, save our jobs,
spend that money” at the top of their voices? The simple fact is
that, as with the TARP bailout bill that was rushed through under
similar conditions of feigned urgency last October, those who backed
the bill understand full well that a delay of even several months
would not make a significant difference to the overall effect on the
American economy in the long run. The American economy is too large
to quickly change direction, either up or down. It has taken months,
if not years, for the effects of the collapse of the housing bubble,
which actually began in late 2006/early 2007 to reach the point they
have. It will take equally as long, if not longer, for the many
malinvestments that were made, in large part because of mis-guided
policies of the Federal government, to be corrected so that the
assets involved can be put to good use and the economy can resume
growing. The only reason that the Keynesian economists and statist
politicians painted such a dire picture was to panic the American
people, many of whom are woefully ignorant regarding economics, into
demanding that “something be done” to forestall the looming
disaster which supposedly threatened to engulf mom, apple pie, and
all that is good. Politicians know from long practice that the best
way to get what they want, in this case more power over the economy
for the Federal government, is to evoke a sense of urgency around
whatever their current issue is. The result is that, between the
actions made possible by the TARP bill, loans of billions of dollars
to the Detroit automakers, and, now, the economic stimulus package,
the power of the State to intervene in the United States economy has
grown tremendously. Large parts of the financial and manufacturing
segments of the economy are now effectively nationalized, though most
Americans don't realize it because that term is never used.
Instead,
we are told that “bridge loans” have been made to the automakers
so that they can go on to “financial viability”. "Equity stakes"
are taken in large and important financial institutions. New
regulations are called for so that “this will never happen again.”
Trillions of dollars are pumped into the banking system by the
Federal Reserve in an attempt to “get the credit markets moving
again.” Executives of businesses which have taken Federal money
are now told how much they may be paid instead of having their wages set
by voluntary negotiations and market forces. The strings that are
attached to the billions of dollars about to be spent as part of the
economic stimulus package are presented as the means of “making
sure the taxpayers' money is well spent.” In other countries these
actions are called “forced nationalization” (as was the case when
Venezuela took over oil fields and other assets owned by foreign oil
companies). In other countries the proliferation of new regulations
is called authoritarianism. In other countries if the government
sets maximum wages it is seen as socialism or communism. In other
countries when the central government decides how money must be spent
and who the winners and losers are in the marketplace it is called
“central planning.” Something must be different about the United
States when the same actions are called by other names and the
motives of those who back the new powers of the State are
automatically assumed to be pure and benign. It's probably something
in the air that ensures that the United States' government would
never, ever, do anything but good.
As
always when dealing with politicians it is more important to pay
attention to what they do, than to what they say. Actions do,
indeed, speak louder than words and President Obama's delay in
signing his much ballyhooed and supposedly vital “economic
stimulus” bill reveals that he knew all along that his story was a
tissue of lies and distortions. The American people have, again,
allowed themselves to be duped into giving up more of their freedom
in the mistaken belief that the State will keep them “safe”; this
time from “economic turmoil.” There is precious little real
freedom left in this nation, as most citizens will discover when they
wake up one day to find that the State has decided how much they are
allowed to earn, how much of some good they may purchase at the local
market, how limited their choices of domestically manufactured motor
vehicles (and the options on those which are available) are, and what
doctors they may see and what treatments they may be offered, among
other things. Americans have forgotten, if indeed most of them ever
stopped to realize, that a State which can “give” them everything
also has the power to take those things away. Liberty may not
guarantee that everyone can have everything they might desire, but it
does guarantee that what they do get they will be allowed to keep.
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