Ron Morley's Freedom Blog : Federal government

Constitution? What Constitution?

Ronald D. Morley — Tue, 31 Mar 2009 19:33:00 GMT

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.

Why the State Loves Keynseian Economics

Ronald D. Morley — Sun, 30 Nov 2008 15:27:00 GMT

In this time of economic turmoil it seems as though the majority of economists have become disciples of John Maynard Keynes. Turn on virtually any news broadcast covering the financial crisis which the State's economic mismanagement has thrust upon us and, most of the time, the “economic experts” the media turns to for explanations of what is going on, and for suggestions of what needs to be done to turn things around, turn out to do little but spout the same mistaken Keynesian economic ideas that Franklin Delano Roosevelt relied upon to justify his “New Deal.” According to most of the economists that the general public will have opportunity to listen too, men such as Robert Reich, Robert Rubin, Lawrence Summers, Henry Paulson, Chris Farrell, and others, there are two things which will pull America out of the financial disaster that we are supposedly heading for: an increase in consumer spending, and a large Federal government financial stimulus package. The fact that both history and economics tells us these steps are counter-productive, indeed will act to extend the length and depth of the economic troubles, does not appear to matter to these people.

In spite of the evidence, compiled by Murray Rothbard and others, that Keynes' preferred policy, called “pump priming” acts to prolong economic downturns and make them worse than they need to be, these policies continue to be number one on the State's list of tools to be used when faced with an economic downturn. There are a several reasons for this state of affairs. Passing so-called “economic stimulus” packages appeals to short-sighted legislators because they are seen to be “doing something” about the worsening economy. This action also allows the power-hungry Congresscritters, and members of the executive branch of the government, to extend the power of the State by attaching various rules and regulations to the money they thus make available: rules that must be obeyed by anyone wishing to avail themselves of this Federal largess.

However, the truth of the matter is that State intervention in the economy is always counter-productive, and rarely moreso than during an economic downturn. The reasons are fairly simple, though many people fail to understand them. The effects of the Federal government's interventions begin with one simple thing: any money spent by the Federal government, which adds to the government's deficit, is money that is no longer available to the private sector. The Federal government must cover its deficits by borrowing money from some source and, of necessity, the loans to the State compete against demand for the same funds from the private sector. However, most people do not recognize the truth of this situation, and its affect on their lives, and so they simply accept the loudly and oft-repeated claims that only the Federal government is capable of “making a large enough impact on the economy” to be useful. It's as if the economy is some large machine that will automatically respond positively to the government's attempts at percussive maintainence.

It is amazing that otherwise intelligent people do not seem to understand why the government's “economic stimulus” packages do not work as advertised. They seem to think that, because it is the Federal government which is borrowing money so as to be able to increase its deficit spending, the law of supply and demand is somehow bypassed. They do not, or choose not, to understand that every dollar borrowed by the State is a dollar that is no longer available to entrepreneurs in the private sector. Also not comprehended is that the increased demand for dollars in the loan market drives up the price of those dollars, I.e., interest rates increase, which increases the economic burden that must be borne by private sector borrowers. The higher interest rates also ensure that some potential borrowers, business people who might have created private sector jobs, are unable to afford to take out loans, reducing the amount of economic growth.

Some people will say that when the Federal Reserve acts to increase the money supply, as it has done recently to the tune of several trillions of dollars, that it offsets the increased demand for dollars by the Federal government and the overall effect on the private sector is neutral. This is simply not the case as the Federal Reserve's actions simply increase the rate of inflation within the economy. By flooding the economy with dollars the Fed simply makes each of those dollars is worth less than its predecessor. The increased inflation offsets any possible affect the increased supply of dollars may have had on overall demand. There is also the increased danger of the government's artificial expansion of the money supply triggering a hyper-inflationary spiral such as is now occurring in Zimbabwe. The simply truth is that government action cannot repeal the basic laws of economics.

The Federal government, of course, is all in favor of government-based economic stimulation. After all, from its point of view, it's all good. It is able to expand and extend the reach of its power. It lessens the economic power of the private sector, further enhancing the State's power. And, perhaps most important, the majority of the jobs which are created by the economic stimulus are directly connected to State spending and, therefore, the citizens holding those jobs are made yet more dependent on the State for their livelihoods. From the State's point of view this is all good and, if the economic crisis is lengthened, its power is only increased. In short, no matter how it is sugar-coated, the policies of John Maynard Keynes are essentially ways of increasing the power of the central government at the expense of individual freedom.