Damien Manier

Defining Power: Coercion vs Voluntary Cooperation

2011-03-15T02:49:00Z

Originally posted on damienmanier.com

Recent Essay for political sociology class defining power:

Power may be better understood as coercion, to differentiate from natural, electrical, or even Bertrand Russel's definition (as cited in Janoski, 2005) as “simply the capicity to realize ends” by the individual. To treat power as a synonym for coercion would fit the definitions provided by Max Weber (as cited in Janoski,2005) as “the chance of a man or a number of men to realize their own will in a social action even against the resistance of others who are participating in the action.” The other similar definitions cited in the text (Janoski, 2005) correctly state this kind of power leads to “zero-sum” contests and is “thus inextricably linked with conflict in social life”; however, the application of the definition seems overly broad to include any type of influence, dependence, or interaction between individuals. This view presents a very cynical take on human nature that casts every relationship and every type of coordination or interaction between individuals with the roles of exploiter and exploited. Not only is this overly broad application cynical but it also diffuses any analysis and makes extracting any concrete principles regarding the concept of power nearly impossible since this application makes power “sociologically amorphous” since “all conceivable qualities of a person and all conceivable combinations of circumstances may put him in a position to impose his will in a given situation.” (Max Weber as cited in Janoski, 2005)

Coercion, the use of force explicitly or implicitly, is only one way individuals and groups interact with each other and will inevitably lead to “zero-sum” contests but individuals and groups can also interact through voluntary cooperation, in which case they will be mutual beneficiaries and cast off the doomed outlook that every relationship is that of “exploiter” and “exploited.” Even if a disinterested third party finds the interdependence of various relationships to be unbalanced, so long as it is voluntary each party involved in the interaction will be exchanging some good, service, etc that they value less for one that they value or more or else they would withdrawal their participation, absent coercion.

With this definition of power, it is clear that power is the very essence of politics. “The modern state is a compulsory association which organizes domination.” (Weber as cited in Janoski, 2005) The state is power, or coercion, incarnate. The difference between state power and individuals exercising power, though, is that state power has been legitimized by appealing to divine sovereignty, historically, or popular sovereignty, by wrapping itself in the enigmatic “general will.” In all the examples of exploiter/exploited relationships provided in the text one can easily find evidence of explicit coercion of one individual or group over another, which would be condemned by most any observer, or with a little more effort be traced to the implicit coercion of the laws, regulations, influence, and support of the state lingering in the shadows of the interaction, choosing the winners and losers in relationships that are no longer free.

Janoski, Thomas. (2005). Handbook of Political Sociology: States, Civil Societies, and Globalization. Cambridge University Press.

Monopoly and Competition: Government Intervention and its Effects on the Free Market

2010-03-30T16:01:00Z

(Originally posted at damienmanier.com)

One of the roles of government, debated even among those of a libertarian or small government perspective, is that of regulating monopolies and ensuring competition. On a larger political scale, the debate may focus on how free or how socialized should a market be, but among those that believe the markets should be as free as possible there is still concern over monopoly practices and how the government could be used as a tool to respond to them. The first step in understanding and forming conclusions in this debate is to determine a definition of monopoly. The three offered here are: One seller or producer of a good or service; the establishment of a monopoly price; and a firm or corporation that has been granted market power and special status by the government, either directly or indirectly. Also, the requirements for competition must be established, which economic textbooks may point to as: many small buyers and sellers; standardized product; and no barriers to entry or exit.¹ After close inspection of the definitions of monopoly and the textbook requirements for competition, I hope to demonstrate that “barriers to entry or exit” are the only true requirement to competition and that all barriers are due to coercion, either from government or criminal activity among businesses and individuals.

The first definition of monopoly is that of one seller or producer of a good or service. This is the most literal definition (“monos” means “only and “polein” means “to sell”) and the most common understanding of the word monopoly. While this is a very clear cut and precise definition of monopoly its application is much less so and its use to justify government intervention is even more hazy. The application of this definition becomes difficult when one has to determine what constitutes a single product or service. Since there will be some sort of differentiation between every product offered by different people one could rationally claim that everyone is a monopolist. For example, while Hershey's Chocolate company may not be a monopolist of chocolate they are monopolists of “Hershey's Kisses” and John's doctor is a monopolist of medical services to John. This is further complicated if we accept that fact that the point that the differentiation is substantial to lead to a product being categorized by a different product is solely in the mind of the consumer and can not be defined by any specific attributes or by committee. The second flaw with the use of this definition is when it is used to justify government intervention in the markets based on misconceptions of individual rights and freedom. While individuals do have the freedom to act on available choices they are not entitled to any certain number of choices. If there truly was only the choice of purchasing a product or service from one producer or not purchasing it at all then the individual is free to act on that choice, not require more choices be made available to him. Murray Rothbard uses the example of “Crusoe and Friday bargaining on a desert island” where they “have very little range or power of choice; their power of substitution is limited. Yet if neither man interferes with the other's person or property, each one is absolutely free. To argue otherwise is to adopt the fallacy of confusing freedom with abundance or range of choice. No individual producer is or can be responsible for other people's power to substitute.”²

The second definition, achieving monopoly price is explained best by Ludwig von Mises: “If conditions are such that the monopolist can secure higher net proceeds by selling a smaller quantity of his product at a higher price than by selling a greater quantity of his supply at a lower price, there emerges a monopoly price higher than the potential market price would have been in the absence of monopoly.”³ The concerns raised by the proponents of this defintion are that a single producer or a cartel made up of a few producers will restrict supply in order to gain increased profit margins at a higher price point on the supply-demand curve. However, this will only be profitable for products or services whose prices are inelastic above the “theoretical” competitive price. The flaw in this defintion is determining “competitive price” versus “monopoly price.” Since in the free, or unhampered, market every seller will “absolute control...over the price he will attempt to charge for any particular good...the question is whether he can find any buyer at that price. Similarly,...any buyer can set any price at which he will purchase a certain good; the question is whther he can find a seller at that price.”⁴ Naturally, sellers will seek the highest price and consumers will seek the lowest price and whatever price they agree on, absent coercion, is the competitive price. Along the same line, how would one determine if the producer was moving from a “sub competitive price” to the competitive price for their goods as opposed to moving from the competitive price to a monopoly price. The “demand curve is not simply 'given' to a producer, but must be estimated and discovered” and any restriction may simply be a correction of past supply to demand errors by the producer.⁵ These flaws lead to the conclusion that there can be no definable monopoly price on the free market since all prices are based on free-exchange between buyer and seller and whatever terms they come to are by definition the competitive price.

The third definition of monopoly is the original definition of government granted, direct or indirect, market power or protected status. Lord Coke, a definitive source of Common Law in 17^th Century England, defined monopoly as “an institution or allowance by the king, by his grant, commission, or otherwise . . . to any person or persons, bodies politic or corporate, for the sole buying, selling, making, working, or using of anything, whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before, or hindered in their lawful trade.”⁶ The formation of monopolies and the negative consequences of monopoly power is made possible only due to government intervention and it is therefore ironic that one of the few areas where limited government advocates tolerate government intervention is in the regulation of monopolies. Monopolies are created through barriers to entry into their market and government is the creator of these barriers, which include explicit grants of monopoly status, in industries deemed “public utilities” or “natural monopolies”, patents, license requirements, and economies of scale.⁷ Another barrier is the entire system of corporatism, the alliance between big business and government to create regulations and other burdens on new entrants into the market in order to hamper competition.

The most obvious, and accepted as necessary by some, way the government creates monopolies is by granting exclusive franchises to industries deemed “public utilities.” Some common examples have been energy providers (gas and electric), telephone service providers, and cable tv. The rationalization used is that certain industries, due to high fixed costs, economies of scale, and land usage limitations, are better served by having a single provider. The conclusion is that government should choose a single provider and protect them from competition while at the same time heavily regulating the selected monopoly to prevent monopoly pricing and pass the savings of the increased efficiency on to the customer. However, history does not seem to support this theory. Many industries that claim they are “public utilities” were competitive in the past or became competitive after time spent with protected monopoly status and the customer did not see great advantage in the monopoly years, especially when taxes used to subsidize the utilities are taken into account and other government intervention is not present in the competitive years. “In one of the first statistical studies of the effects of rate regulation in the electric utilities industry, published in 1962, George Stigler and Claire Friedland found no significant differences in prices and profits of utilities with and without regulatory commissions from 1917 to 1932.”⁸ Also, substitutes or alternative technology prevents the formation of “natural monopolies” on the free market. For example, when three competing gas companies tried to merge in 1888, an inventor named Thomas Edison “introduced the electric light which threatened the existence of all gas companies” and while all had “heavy fixed costs which led to economies of scale...no free-market or 'natural' monopoly ever materialized.”⁹ In 1940, economist Horace M. Gray noted that “public utility status was to be the haven of refuge for all aspiring monopolists,” to include, “radio, real estate, milk, air transport, coal, oil, and agricultural industries...who found it too difficult, too costly, or too precarious” otherwise. The label of “public utility” is arbitrary and history has shown that government designated monopolies to do serve the public well and stifle innovation and technological progress as well as violate the rights of entrepreneurs who wish to enter protected industries.

One of the first industries to be deemed a “natural monopoly” or “public utility” was the telecommunications industry, led by AT&T. Initially the monopoly was due to patents that Alexander Graham Bell held from 1876 to 1894. During this time period AT&T held between 85-100 percent of the market power for telephone systems and adoption was slow with average daily calls per 1,000 people increasing from 4.8 in 1880 to only 37 in 1895; the number of telephones per 1,000 people also increased slowly from 1.1 in 1880 to 4.8 in 1895. However, after the patents expired and competition was able to set in daily calls per 1,000 jumped from 37 in 1895 to 391.4 in 1910 and telephones per 1,000 people also increased much more rapidly, going from 4.8 in 1895 to 82 in 1910.¹⁰ The government, however, did not see this competition and rapid expansion of services and options as a good thing, instead they saw it as “duplicative,” “destructive,” and “wasteful” and during a Senate Commerce Committee hearing in 1921 it was stated that “telephoning is a natural monopoly.”¹¹ This was in spite of the apparent boom in competitors and service. AT&T lobbied for this “natural” monopolization and put itself “squarely behind government regulation, as the quid pro quo for avoiding competition.”¹²

From the AT&T case we can see that it was able to form its original monopoly, before the government explicitly granted it monopoly status, through another government barrier to competition, patents. Patents are probably the most common and most accepted, among capitalists, form of government barriers to competition since they supposedly protect the innovations of individuals and allow them to reap the benefits of research, investment and ingenuity without someone else profiting from an idea they did not share the costs in discovering. However, there is strong evidence that patents are unnecessary and in fact stifle innovation instead of promoting it as intended. The telephone industry demonstrated this earlier but another example would be in the field of steam engines and steam power. In 1768, James Watts patented the steam engine and used his political clout to extend the patents until 1800. He aggressively pursued his competitors with patent violations and prevented many innovations from taking place in the area of steam power or improvements in the steam engine. As a result, “during the period of Watt's patents, the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt's patent; however between 1810 and 1835 it is estimated to have increased by a factor of five.”¹³ The book, Against Intellectual Monopoly, documents many examples like this in almost all fields. Without patents, the original innovators will still find advantage since people are only likely to imitate successful innovations that would mean the original innovators would have time to establish themselves and gain market power and brand name recognition before competitors really started entering the market.

The requirement of Licenses to conduct a particular type of business or to work in a particular field are another widely accepted form of government intervention that creates a barrier to entry for potential competition. One of the reasons for this is that licenses are not sold to the public as protection for existing businesses from potential competitors or as a restriction on the supply of labor to artificially raise wages above market level for favored professions, but instead is billed as a means to protect the consumer by ensuring quality service. However, just like the other barriers to competition, licenses, when required by law, do more harm to the consumer by reducing available options when there is a strict quota on the number of licenses available or when smaller competitors can not afford licensing fees; monopoly pricing due to cartelization since “the governmental administration of licensing is almost invariably in the hands of members of the trade”¹⁴ who have an obvious interest in limiting entry into their field to individuals who are of similar mind to keep prices higher.

All of the barriers mentioned so far and others have become part of the system of corporatism that is actually the dominant force in US and western markets, not capitalism. The high fixed price that leads to economies of scale and prevents smaller businesses from competing is government. “It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus--including those regulations widely misperceived as restraints on corporate power--were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.”¹⁵ In this essay we have mostly focused on the direct barriers to competition placed by the government but there are also many less obvious ways that government intervention helps favored corporations such as inflationary credit expansion, where the first to receive the new dollars will get to use them before the inflationary effects kick in and corporate law itself that allows the individuals who act, or make decisions, in a business to separate themselves from the liabilities involved with those decisions causing a serious accountability issue in our markets today. A “corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law.”¹⁶ This arbitrary grant of artificial personhood status to businesses is yet another barrier to free competition and a fraud is committed when corporate law is presented as part of capitalism and the free market or as advantageous to consumers.

In conclusion, monopolies, oligopolies, unnaturally high market concentrations all stem from government intervention into the free market placing various barriers to the entry and exit of competing businesses. This is done in the guise of regulating or promoting capitalism but is actually within a system of corporatism, the alliance of big business and big government. Big business works with big government to “socialize costs in exchange for a share of profits.”¹⁷ Big business also likes big government because “it has a competitive advantage over small business in doing business with it and negotiating favors. Big government, in turn, likes big business because it is manageable; it does what it is told.”¹⁸ This alliance has distorted our markets and increased the power of both partners at the expense of competition, consumers, and citizens.

1Jacqueline Brux, Economics Issues and Policy Fourth Edition, (Ohio: Cengage Learning, 2008), 246.

2Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 653.

3Ludwig von Mises, Human Action: A Treatise on Economics (Alabama: Ludwig von Mises Institute, 2008), 278

4Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 662.

5Ibid., 690

6 Quoted in Richard T. Ely and others, Outlines of Economics (3rd ed.; New York: Macmillan & Co., 1917), pp. 190–91.

7Jacqueline Brux, Economics Issues and Policy Fourth Edition, (Ohio: Cengage Learning, 2008), 251-253.

8Thomas DiLorenzo, "The Myth of Natural Monopoly", The Review of Austrian Economics Vol.9, No.2 (1996), 49-50.

9Ibid., 48

10Adam Thierer, “Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly”, The Cato Journal Vol. 14 No. 2 (Fall, 1994)

11Ibid.

12Ibid.

13Michele Boldrin, David Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 1.

14Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 1095.

15Roderick Long, “Corporations Versus the Market; Or, Whip Conflation Now”, Cato Unbound, 10 November 2008.

16Frank van Dun, “Is the Corporation a Free-Market Institution?,” Ideas on Liberty, March 2003.

17Robert Locke, “What is American Corporatism?,”, Front Page Magazine, 13 September 2002.

18Ibid.

Flaws of Equal Employment Opportunity

2010-03-24T22:11:00Z

(Originally posted at damienmanier.com)

The Civil Rights Act of 1964 and the many following bills that modified and added to it has been a great affront to property rights and by extension individual sovereignty. Whether we examine the impacts of “equality of outcome” the Civil Rights Act strives to implement or we examine how the act contradicts core principles, such as an individual's right to their own person and the fruits of their labor, we will find that the government intervention required by the Civil Rights Act faces serious challenges on both sides of the equation, principles and practical effects.

The Civil Rights Act of 1964, specifically Title VII, prohibited discrimination by employers, with over 15 employees, on the basis of race, color, religion, sex, national origin, or by association with an individual of those factors. In 1967, persons over the age became a protected group; in 1990, persons with disabilities gained protected status; the Genetic Information Nondiscrimination Act of 2008 prohibited discrimination based on genetic information; and all of these bills protect individuals from retaliatory discrimination. (1)

If one accepts that an individual has the right to his own person and the fruits of his labor then one can not be in agreement with this legislation and remain consistent in their principles. The concept of this right is a “negative” one or a right to be free from coercion in regards to your person and the fruits of your labor which creates a situation where no one has the “right” to “compel someone to do a positive act, for in that case the compulsion violates the right of person or property of the individual being coerced.” (2) Many recognize the impracticality of violating this principle when it is not applied to employers. For example, while many find racism to be abhorrent they would not necessarily advocate that individuals be forced to patronize minority owned businesses equally and an ardent feminist would find it difficult that men looking for jobs should be forced by threat of law to submit their resumes to equally qualified female employers. In the first case, many recognize that the consumer has the right to spend his money where he pleases regardless of motivations or character flaws and in the second instance most would see the flaw in coercing a person to apply or accept a job against their will. However, segments of our population choose to ignore these principles when it comes to employers. Is an employer's person any less their own or is their money, representative of their property and the fruits of their labor, different than the property of the individuals seeking employment. I do not see how one can claim one and not the other without being disingenuous.

Milton Friedman argues that anti-discrimination laws are not necessary to achieve the goal. He states that, “a businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not. Such an individual is an effect imposing higher costs on himself than are other individuals who do not have such preferences. Hence, in a free market they will tend to drive him out.”(3) Another practical issue with this legislation is that it uses often arbitrary standards in order to designate certain groups “oppressed” or of “minority” status. Our text points out that numbers are of little significance when designating a group a minority but instead their level of “access to positions of power, prestige, and status in society” should be the deciding factor. (4) What this will lead to is endless lobbying from all groups in an attempt to shred the label of “oppressor” in exchange for the benefits of being labeled “oppressed.” Rothbard points out that the different ways to categorize or class people is infinite and research can be done to demonstrate how they all face various barriers to the “access” mentioned above. He also note the impossible task of parodying this movement as a friend of his tried to do by arguing that short people, suffering from “heightism”, should be designated a minority or “oppressed class.” Unfortunately, he was beat by a serious undertaking to do just that by “a sociologist at Case-Western Reserve,” Professor Saul D. Feldman, who provided plenty of convincing research and evidence to back up his case. (5)

The principles of Title VII of the Civil Rights Act are perfectly acceptable from a moral standpoint. Employers are unwise to discriminate based on race, color, sex, religion, or national origin, but that does not give anyone the right to coerce them to act against their will or to release their property to individual's not of their choosing. Consumers, employees, peers, etc. are free to boycott, ostracize, or shame employers who act reprehensibly but not coerce with threat of law/violence to act morally.

Equal Employment Opportunity Commission,"Equal Employment Opportunity is The Law"; available from http://www.eeoc.gov/employers/upload/eeoc_self_print_poster.pdf; Internet; accessed 23 March 2010.
Murray Rothbard, The Ethics of Liberty (New Jersey: New York University Press, 1998), 100.
Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 2002), 109-110.
Jacqueline M. Brux, Economic Issues & Policy (Ohio: Thomson Higher Education, 2008), 114
Murray Rothbard, “Freedom, Inequality, primitivism and the Division of Labor”, available from http://mises.org/fipandol.asp; Internet; accessed 23 March 2010.

Proportional Justice: Retribution and Restitution

2010-03-15T03:33:00Z

(Originally posted at damienmanier.com)

The way we punish criminals and restore justice is very important to our overall crime prevention strategy. It is important to establish a punitive system that will exact the right amount of punishment while also bringing about justice and restitution to the victim of the crime. A retributive punishment system, where the maximum punishment is proportional to the crime and the victim decides the final sentence for the aggressor would bring the goal of criminal punishment back to its rightful focus… justice for the victims of crime.

The “primacy of restitution to the victim” is an “ancient principle of law”, but “as the State monopolized the institution of punishment, so the rights of the injured were slowly separated from penal law.” (1)(2) This has led to the focus of “punishment” shifting from justice for the victims to the utilitarian purpose of deterrence or the “humanitarian” goal of “rehabilitation.” Both of these alternatives to justice are philosophically flawed if carried to their logical conclusions. The utilitarian goal of deterrence would justify “cruel and unusual” punishments, since it would be the most effective at deterring future criminals, as well as severely harsh punishments for minor crimes since justice or proportionality is not the goal. The humanitarian goal of rehabilitation, on the other hand, condemns the criminal to an “indeterminate” sentence– “to be determined at the Psychologist’s pleasure”– regardless of the crime and all at the expense of the victim, who pays taxes to support these rehabilitation efforts, with no restitution repaid to the victim or justice achieved on their behalf. Also, if rehabilitation is the sole goal of criminal punishment than a petty thief could theoretically be held much longer than a murderer if the thief is less willing to reform or not as capable of feigning rehabilitation compared to the murderer.

The way to truly pursue justice against the aggressor and on behalf of the victim would be to allow the victim to sentence the aggressor, up to a maximum punishment, once they have been found guilty. The punishment should be both proportionally retributive towards the criminal as well as include restitution for the victim, “two teeth for a tooth” concept of punishment. This is demonstrated most easily in the example of theft used by Murray Rothbard in his essay Punishment and Proportionality. Suppose a thief is found guilty of stealing $15,000 from Bob. We would hold that he must pay back the $15,000 he stole (restitution), but that is not punishment but simply restitution for the thief is no worse off than he was prior to the theft, so he should be forced to pay an additional $15,000 (plus police and court costs) to Bob so that he is deprived of the same liberty that he deprived Bob of (retribution). This is the concept that sets the proportional maximum that a victim may sentence a guilty criminal. However, the victim, since justice is theirs, should also be able to forgive the criminal in entirety or exercise partial forgiveness for whatever reason, philosophy, sympathy, monetary compensation, etc.

This legitimate sense of justice and retributive system of punishment will distribute punishment appropriately according to the level of harm done to the victims of the crime and the “two teeth for a tooth” concept upheld up to the desire of the victim should also act as a deterrent to criminals, even though that is not the primary goal.

(1) Rothbard, Murray. The Ethics of Liberty. New Jersy: New York University, 1998. (“Punishment and Proportionality“)

(2) William, Tallack. Reparation to the Injured and the Rights of the Victims of Crime to Compensation. London, 1900.

Flaws in Social Security

2010-03-15T03:29:00Z

(Originally posted at damienmanier.com)

Here is an essay I recently wrote for one of my classes regarding Social Security. The majority of my research and sources was through the book “The Roots of the Social Security Myth” which can be found here .

Social Security will likely be insolvent in the next couple of decades if it remains as is and some have suggested allowing individuals to invest some or all of their payroll taxes into private investment accounts or put another way, to stop coercing individuals to pay into a government run programs that uses the revenues collected from “new investors” to pay the benefits of “old investors”, a ponzi scheme of sorts. Social Security is an example of one of the many ways the government expanded its powers and intrusive nature after the great depression. It is also an example of government “double-speak” as it was sold to the public as one thing and actually legislated as another. The two contradicting narratives still continue today as most of the public tend to view social security the way its proponents want them to, as an inherent right earned through investment of their money that individuals can lay claim to in their retirement years. The reality of social security is starkly different and as long as we are operating under that fallacy no reform will be effective. The real answer is to give responsibility and their own money back to the individual and let them do as they wish.

The common view of social security is that is a type of insurance, where people pay in a certain amount and then receive their investment returned with interest when they retire. This is how it was sold to the public and we bought it. However, Roosevelt himself said the following about the payroll taxes and the motivations behind this public marketing scheme:

…those taxes were never a problem of economics.
They were politics all the way through.
We put those payroll contributions there so
as to give the contributors a legal, moral, and
political right to collect their pensions and
their unemployment benefits. With those taxes
in there, no damn politician can ever scrap my
Social Security program. (1)

However, the “legal, moral, and political right” were only marketing and not fact. This was made clear by Assistant Attorney General Robert Jackson arguing before the court in 1937:

…these benefits are in the nature of pensions or
gratuities. There is no contract created by
which any person becomes entitled as a matter
of right to sue the United States or to maintain
a claim for any particular sum of money. Not
only is there no contract implied but it is
expressly negated, because it is provided in
the Act, Section 1104, that it may be repealed,
altered, or amended in any of its provisions at
any time. This Court has held that a pension
granted by the Government is a matter of
bounty, that the pensioner has no legal right to
his pension, and that they may be given, withheld,
distributed, or recalled at the discretion
of Congress. (2)

The practical implications were also expressed in this letter from an individual who lost his social security when Congress changed the law to deny benefits to those who were self-employed making over a certain amoung:

My position is that Congress has violated the
sanctity of a contract, to which I am a party, . .
. and it is a well-established principle of law
that no valid contract can be altered or
amended without the consent of both contracting
parties. . . .
Since the inception of the plan I have paid
my premiums by payroll deductions until
April 1947, when it became necessary for me
to retire . . . from that time until January 1951 I
received the benefits to which I was entitled. I
engaged in business promptly thereafter as a
self-employed person . . . as self-employed
persons were not covered by the then existing
statute. I continued to receive my social-security
benefits until the new act.
The people who get social security paid for
it. It is their money, they invested it during all
the years to the social-security fund. The social
security is not a charity. It is a form of insurance.
How has the Government the right to
take the money away or to say how much
these people can or cannot earn? (3)

Social Security is a welfare program paid for in current taxes and a redistribution of wealth. The idea that it is a retirement insurance or account in any way owned or controlled or inherently due to the financiers, taxpayers, is a facade that makes it politically untouchable. This lie is compounded by the claim that payroll taxes are kept in a trust fund earning interest to pay beneficiaries. The books are cooked. The funds are used as general funds and replaced with government bonds. In other words, the government borrows money from itself promising to pay itself back with interest. How does the government pay interest…well since all of its money comes from taxpayers, the taxpayers pay the interest and pay back the government bonds or IOUs. All smoke and mirrors in order to protect this coercive and government expanding program.

The answer is not reform but to scrap Social Security altogether. It is not the federal governments place to ensure retirement for all. The private accounts would give the government a huge stake in the markets, where there political capital as well as individuals payroll taxes will be at risk. This will encourage further regulation and manipulation of industry to produce positive results for government retirement accounts. Also, the government will have $1 trillion plus dollars to influence the markets and the people involved in the markets. People should be responsible for themselves or suffer the consequences. Charities, friends and families can help pick up the slack.

1. Arthur M. Schlesinger, Jr., The Age of Roosevelt, vol. 2,
The Coming of the New Deal (Boston: Houghton Mifflin,
1958), p. 308.

2. 73U.S., Congress, Senate, Oral Arguments in Helvering et
al. v. Davis involving the Old-Age Benefit Provisions of the Social
Security Act Before the Supreme Court of the United States, May
5, 1937, S. Doc. 71, 75th Cong., 1st sess., 1937 qtd in “The Roots of the Social Security Myth” by John Attarian

3. Analysis of the Social Security System: Hearings
before a Subcommittee of the House Committee on Ways and
Means, 83rd Cong., 1st sess., 1953 qtd in “The Roots of the Social Security Myth.”

Conservative problems with "Big Government" exclude Security and Defense

2009-12-10T00:35:00Z

This afternoon while driving home I was listening to talk radio, some of you may already be judging but hear me out, and I heard the conservative them for bashing government run health care, "If the government can run the DMV, screws up this simple program, makes this stupid mistake, etc...then why would we entrust it with 1/6th of economy and let it run health care." This is a very valid point. The question I have is why this isn't consistently applied to defense and security. If we can not trust government run health care or hand out drivers licenses, then how can we trust government to a true monopoly on protecting our individual rights, defending our property and lives, and running an industry that directly cost nearly 10 percent of US GDP in 2009. The defense industry is riddled with just as much corruption, inefficiency, bureaucracy, and all other issues that are symptomatic of a government run program that lacks internalized costs for those making the decisions.

NLRB v. Jones and Laughlin Steel Corporation (1937)

2009-11-29T23:45:00Z

After the break is a short essay I wrote on the Supreme Court case, National Labor Relations Board (NLRB) v. Jones and Laughlin Steel Corporation (1937). The essay briefly addresses some of the case history regarding the Commerce Clause of the US Constitution as well as the impact that NLRB had on the expansion of the federal government and the destruction of federalism, States' rights, and individual rights.

(originally posted at damienmanier.com)

The Supreme Court case, National Labor Relations Board (NLRB) v. Jones and Laughlin Steel Corporation, a new precedent was established through which what remained of state power and sovereignty and individual rights would be trampled by the ever growing federal government. In this case, the NLRB charged Jones and Laughlin Steel Corporation (Defendants) with "unfair labor practices affecting interstate commerce" because they allegedly fired workers who chose to organize into a union.(1) The Circuit Court of Appeals found for the defendant and ruled that the order to cease "unfair labor practices" by the NLRB was unconstitutional. The Supreme Court heard the case and reversed the decision, marking a "dramatic departure...from a century and a half of precedent"(2) and putting another nail in the coffin of federalism.

In 1824, not long after the Constitution was written and adopted, the Court granted the federal government powers beyond the "narrowest definition" of the commerce clause, "to make regular" or "facilitate the free flow of goods, but not, except in cases of danger, to prohibit the flow of any good"(3); and instead adopted the position that the power granted by the commerce clause allowed congress to regulate interstate commerce in any manner it deems fit, limited only by "the political check of the voters."(3) However, Chief Justice Marshall also made clear that since the framers of the Constitution felt the need to enumerate this specific power than there must be unenumerated power that was not granted and that "something, if we regard the language or the subject of the sentence, must be the exclusively internal commerce of the state."(3) Following this decision, "Congress was relatively careful to limit its use of the commerce clause" to justify legislation. Until Franklin Roosevelt decided, in the midst of the Great Depression, to greatly expand federal government and its powers. This led to the Supreme Court striking down many of the laws he advocated as unconstitutional [Railroad Retirement Board v. Alton Railroad Co. (1935),A.L.A. Schechter Poultry Corp v. United States (1935), Carter v. Carter Coal Co. (1936)] All of these cases maintained most of the precedent set in the 1824 case. However, after Roosevelt politicized the Supreme Court's decisions, comparing them to the very racist Dredd Scott decision, and threatening to pack the court with sympathetic judges the Court appears to have given in to the pressure in NLRB v. Jones and Laughlin Steel Corporation. In this decision, the Supreme Court held that Congress could now regulate intrastate activities that have a "close substantial relation to interstate commerce" making regulation "essential or appropriate to protect that commerce from burdens and obstructions."(4) This ruling has led to almost limitless expansion of the federal government as almost any activity can be shewn to be related or connected to interstate commerce, as demonstrated in Wickard v. Filburn, where the federal government was able to regulate even home-grown wheat used by the grower themselves to feed themselves and their horses since they had they purchased the wheat it would be reflected in the national market and could therefore be regulated.

Congress's power under the commerce clause has continue to expand ever since and has almost been upheld every time, with a couple of exceptions [United States v. Lopez (1995)]. This has destroyed the system of federalism that founding fathers intended.

1. http://www.lawnix.com/cases/nlrb-jones.html

2. United States v. Lopez (1995)

3. The Heritage Guide to the Constitution. Edited by Edwin Meese III. 2005.

4. Men in Black. Mark R. Levin. 2005.

Corporate Welfare and Corporatism

2009-11-22T18:06:00Z

Here is a short essay I wrote for my American Government Class on Corporate Welfare. I hope to further explore and expand on the ideas presented in the future. I always appreciate suggested sources and helpful comments. Enjoy!

Corporations are firms or companies (private, publicly traded, for profit, and/or non-profit) that agree to be regulated by certain rules, corporate law, that regulates the relationships and interactions of corporate management, shareholders/owners, employees, creditors and the government. Companies agree to these rules because they provided limited liabilities to all actual persons who are a part of the corporation by creating an artificial “person hood” status for the corporation and limiting the liabilities to that entity. The government also uses its state power to protect, from competition through tariffs and regulation, and subsidize these entities. In return, the government is able to manipulate the economy through few points, they can regulate the significantly fewer large corporations easier than they could coordinate and regulate different stores on every corner, and they will be working with voluntary and cooperative participants who want the continued benefits of state power. Understanding “corporate welfare” is a bit more complex since no one wants to claim to support such measures but nearly all political parties and platforms do in some form or another. In fact, the entire concept of the “corporation” is a form of corporate welfare, or redistributing wealth or interfering in the market on behalf of companies or firms. Support for corporate welfare is never described as such but almost the entire political class does support it in its more overt forms or it's more subtle indirect forms. Libertarians, on the other hand, oppose all forms of corporate welfare when they are not being negligent or inconsistent with their principles.

The left supports several types of corporate welfare. The recent “Kelo” case involving eminent domain gave private lands to corporate interests and was decided by liberal judges. Also, many of the regulations that are supposedly done to restrict corporate actions are supported by the corporations themselves because it makes it more difficult for new competitors to enter the market. Roderick T. Long in an essay written for the Cato Institute, “Corporations versus the Market” wrote that , “the ability of colossal firms to exploit economies of scale is also limited in a free market...unless the state enables them to socialize these costs by immunizing them from competition- e.g., by imposing fees, licensure requirements, capitalisation requirements, and other regulatory burdens that disproportionately impact newer, poorer entrants as opposed to richer, more established firms.” (1)

The right also supports several types of corporate welfare, but they may be more dangerous since they shroud their policies in the cloak of the free market. For example, they advocate tax breaks for certain businesses or industries but “when a firm is exempted from taxes to which its competitors are subject, it becomes the beneficiary of state coercion directed against others, and to that extent owes its success to government intervention rather than market forces.” (1) The right's use of privatization is often of a similar nature. In free market terminology privatization would be the removal of government and its influence from an industry but the right often uses it to mean a transfer of monopoly status over an industry to some contracted firm or corporation. Thus the monopoly status is maintained and the governments involvement and influence is still present.

The right and left both justify the more overt types of corporate welfare that they end up supporting, such as TARP and the bailouts of the auto and financial industry, as necessary evils. However, necessary evil is a contradiction as if something is necessary than it must be good and not evil. Here we can apply one of Ayn Rand's famous quotes “Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.” In this case, either the bailouts were necessary and good, having a positive effect, while the principle that labeled them evil must be ill founded or the principle that makes such bailouts evil is correct and they were not in fact necessary. The contradiction should force us to check the two premises “necessary” and “evil” and see which one is wrong.

Libertarians, and the position I support, holds that all corporate welfare is wrong. The current “conflation” of corporatism and capitalism is especially dangerous since it rallies and multiplies the opponents of free markets who somehow see them tied to pro-corporate policies and also allows statist policies to be sold under the mantle of the free market. The current failures of “capitalism” and the “free market” are really only failures of the current system which is often labeled capitalism but is only one step away from socialism. In socialism, the state owns industry but in our current system, often labeled capitalism, the states of privatized profits and socialized costs in exchange for regulation and influencing willing participants and created corporatism which should not be confused with real capitalism or free markets.

1. http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/

Another good article I read while doing my research, but did not have room to include in my post was:
http://97.74.65.51/readArticle.aspx?ARTID=22594/ An article in FrontPageMag.com

Originally posted on DamienManier.com