The United States Is a Nuclear Dictatorship

The United States Is a Nuclear Dictatorship

11/15/2017Ryan McMaken

Thanks in part to Trump's bombastic and unpredictable style — but more likely due to his lack of friends in Washington — members of Congress have suddenly realized that maybe, just maybe, it's a bad thing that the President of the United States can unilaterally blow up the world. 

And when I say "President of the United States" I don't mean that as a metonym for the US government as in the phrase "Washington today is considering a pact with Mexico." 

No, a single specific individual really does have the ability to make that decision and give that order — unimpeded in any way. 

This fact — which should daily be regarded by all Americans as an excellent illustration of what a farce "constitutional government" is — is now a topic of debate in Washington. It is now being suggested that some of those alleged "checks and balances" we're always being told about might be applied to the most destructive and apocalyptic power enjoyed by a US government agent. 

CNN reports

Congressional lawmakers raised concerns about President Donald Trump's ability to use nuclear weapons during a hearing Capitol Hill Tuesday amid bipartisan anxiety over launch process procedures and indications that the administration has considered the option of a first strike on North Korea.

Members of the Senate foreign affairs committee called into question a decades-old presidential authority to deploy nuclear weapons in what was the first congressional hearing on nuclear authorization in decades.

You read that right. This is the first time Congress has considered the question of a president's nuclear-warmaking prerogatives in decades. Congress, on the other hand, has been quite busy during that time holding hearings about steroid use in sports, and violence on television.

As it stands right now, the president can start a nuclear war all by himself. We're talking about first strike capability here, and not about merely a response to military action by another state.

The LATimes tells us how easy it is: 

All he has to do is call in the military officer who carries the “football,” the bulky briefcase containing the nuclear codes, and work through a brief procedure to transmit launch orders to U.S. Strategic Command...There are really no checks and balances,” said Bruce G. Blair, a former nuclear launch control officer who is now a researcher at Princeton University. “The presidency has become a nuclear monarchy.”

"Nuclear dictatorship" probably better captures the reality of the situation.

Thus, all the president has to do is decide — perhaps based on whatever unreliable information the CIA is feeding him — that now is the time to unleash a nuclear holocaust on, say, North Korea. Once the bombers are flying, or once the missiles are launched, of course, we'll then have to hope that none of them are interpreted as threats to major nuclear powers like China and Russia, both of which are right next door. 

Indeed, it's this unpredictability of how a nuclear strike might get out of hand has long been a limiting factor on the use of the weapons. During the Vietnam War, for example, using nuclear weapons were discussed as a possible alternative to the failed bombing strategy at the time. The problem strategists encountered was the sheer volume of unpredictable consequences that could result from usage. 

The downsides of starting a nuclear conflict are immense, both in terms of global diplomacy, and in terms of actual risk to the American population. 

But even with this reality staring us in the face, Washington is so obsessed with maintaining an aggressive military stance, that it's unwilling to seriously consider any limitation on the President. 

This why we should expect no real changes out of these Congressional hearings. Not surprisingly, Congress has already taken any meaningful change off the table: 

Ultimately, the panel warned against legislative changes to rein in the President's authority to exercise nuclear authority.

"I think hard cases make bad law, and I think if we were to change the decision-making process in some way because of a distrust of this President, I think that would be an unfortunate precedent," said Brian Mckeon, who previously served as Principal Deputy Under Secretary of Defense for Policy during the Obama administration.
This pretty much sums up how Washington's foreign policy works. Limiting the power of the President in any way, we're told "would be an unfortunate precedent." After all, this Trump guy may be a jerk, but all the other Presidents are totally wonderful human beings. We wouldn't want to limit their power to blow up the planet.
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The State and Local Tax Deduction Is Not a Subsidy

11/30/2017Ryan McMaken

Roy Cordato recently wrote a very good article for the Carolina Journal on the deduction of state and local taxes:

Should you ever be taxed on “income” that is not, in any meaningful sense, yours?

This is the fundamental question facing Congress in deciding whether to eliminate the deductibility of state income and local property taxes from federal taxable income, a policy change proposed by President Trump. Unfortunately, this question is unlikely to become part of the debate over tax reform. Instead, those who support the president focus on issues that are completely beside the point.

Some are arguing people living in higher tax states “benefit more” from the current system of state and local tax deductibility than people in low tax states. Those who point out this discrepancy often go on to claim this justifies the elimination of the deduction because these differentials between states actually constitute an “unfair subsidy” to those living in high tax states — New York, Connecticut, and California, for example — by those living in lower tax states like North Carolina, Texas, and New Hampshire.

But to call this deduction a subsidy of one set of taxpayers by another is putting the cart before the horse. The first question that needs to be answered is, is it appropriate, from either an ethical or economic efficiency perspective, to tax the revenue used to pay state and local taxes in the first place? If it is not, then any talk of subsidization of one group by another as a result of not taxing these revenues is irrelevant. Plus, in a tax setting, to subsidize means either to directly take income from some and transfer it to others or to benefit some categories of taxpayers by allowing them to operate under a different set of rules than all other taxpayers. The deductibility of property and sales taxes does not fit either of these categories.

Supporters of this change also argue the current system encourages higher taxes at the state and local levels. First of all, it’s not clear why this would justify taxing revenue that, from an ethical or economic perspective, shouldn’t be taxed in the first place. Once again, the cart is going before the horse. But what makes this a rather bizarre argument, particularly for conservatives, is that their remedy is to expose more of a person’s income to taxation at the federal level. They are, in fact, arguing for a transfer of taxing power from state and local governments to the federal government. So much for federalism.

So again, the question that goes begging is, should you be taxed on income that you are not allowed to take ownership of? As a question of morality or tax fairness, it is difficult to see how the answer could be yes. I don’t think anyone would claim that it is morally justified for an individual to be taxed on someone else’s income. But this is exactly the case with income that goes to paying state income taxes and property taxes. It is income we are forced to give up all rights to, with no enforceable promise of anything in return. Morally, as opposed to legally, this money is not our own, i.e., we have no choice about how it is allocated. Therefore, to not allow state income taxes to be deductible from federal taxes is the moral equivalent of taxing people on income that is someone else’s. In this case, it belongs to the state or local government.

[Read the rest of the article.]

One of Cordato's best observations here is that — even if one is okay with the idea of taxation in general —  it is totally inappropriate to tax income that the taxpayer is being forced pay as taxes. Income that is taxed is never really income at all. It's just money the taxpayer must hand over involuntarily without being able to save it, spend it, or do anything other than watch it go straight out the door to the government. To call this money "income" is thus absurd. But this doesn't stop that advocates for the elimination of the deduction on those taxes. A good sampling of their demands for more taxes can be found in their response to my article on the topic. They're so fired up about the imaginary "subsidy" that the deduction creates, they want to tax "income" that isn't income at all. 

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Marvin Goodfriend Nominated for Fed Board of Governors

11/30/2017Ryan McMaken

President Donald Trump has nominated Carnegie Mellon University professor Marvin Goodfriend to be a member of the Federal Reserve Board of Governors.

We reported back in June that Goodfriend was likely to be nominated. As a governor, Goodfriend leaves much to desired.

He has criticized the use of QE, but, as Bloomberg notes,

Goodfriend thought the impact of QE was questionable, at best. Instead he made a case for an even more unorthodox idea: negative interest rates. He conceded, however, that a sustained policy of negative rates might require abolishing paper currency, a step that would likely prove unpopular.

In other words, Goodfriend has problems with the radical policy of QE. The solution? The ultra-radical policy of negative interest rates.

As Tho Bishop has pointed out, multiple vacancies on the Fed board gives Donald Tump the opportunity to drastically move the Fed in a new direction. So far, though, we're just looking at more of the same.

Here's Bob Murphy on "The Nuttiness of Negative Interest Rates." 

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Decentralize New York City

11/30/2017Ryan McMaken

The writer known as Bionic Mosquito has helpfully brought to our attention some of the good stuff offered by Murray Rothbard in his articles for Libertarian Forum. Specifically, Mosquito points to Rothbard's 1969 article promoting the mayoral candidacy of Norman Mailer. Rothbard writes: 

The Mailer platform stems from one brilliantly penetrating overriding plank: the absolute decentralization of the swollen New York City bureaucracy into dozens of constituent neighborhood villages.

Mosquito notes that Rothbard would be unloved among some modern libertarians who strongly oppose secession by bits and pieces — especially by individual secession. You see, these libertarians claim that secession is illegitimate if a group of people decide to do it by referendum. Presumably, if a single person opposes the proposed secession by referendum, then it becomes a crime against humanity. Oh sure, these libertarians claim they like secession in the form of "individual secession." This option, of course, exists totally outside reality, as Mosquito notes: 

So…since libertarians cannot support secession by referendum, we are left with convincing seven billion people of the value of political, individual anarchy. They will all just opt out at the same moment – no pushback from the state or even their neighbors. All of them, simultaneously, having this “aha” moment.

Sounds like a great strategy. 

This, of course, is why Rothbard supported all sorts of localized secession movements. Mosquito continues with his look at Rothbard's article on Mailer: 

Rothbard is not waiting for the big bang – seven billion people simultaneously seeing the light:

Each neighborhood will then be running its own affairs, on all matters, taxation, education, police, welfare, etc.

As opposed to the idea that there is something un-libertarian about people living next to each other and sharing some desires in common for the neighborhood. In any case, the smaller and more local the political unit, the more control each constituent has and the more that those in government will be known individually – in person, face-to-face.

Rothbard recognizes that neighborhoods will separate into common groupings; he is not shy about discussing black and white. He recognizes that the idea of “diversity” is an idea formed to bring conflict; instead, he offers:

…in the Mailer plan, black and white could at long last live peacefully side-by-side, with each group and each self-constituted neighborhood running its own affairs.

Whites and blacks would be independent equals “rather than as rulers of one over the other….”

One of Mailer’s key proposals is that New York City secede from New York State and form a separate 51st State….

That the seceding New York City would likely be far more socialist than the rest of the state didn’t bother Rothbard one bit, it seems – decentralization was the key, the non-aggression principle put into practice. Also, keep in mind: Mailer ran as a democrat. Imagine that: a democrat for secession and political segregation. 

Rothbard goes on to support his effort at New York secession by noting that the city has more then enough wealth to support itself as an independent entity. In the past I've claimed that large cities ought to become their own states, and noted the states have more than enough population and wealth to do so. 

Moreover, Rothbard in the article makes the excellent point that if the federal government weren't siphoning off so much of New York City's wealth, the taxpayers there would have immense resources to address all the city's needs: 

Another superb part of Mailer's libertarian vision is his reply about where the New York City government would raise funds; he points out that citizens of New York City pay approximately $22 billion in income taxes to the federal government, and that New Yorkers only receive back about $6 billion from federal coffers. Hence, if New Yorkers kept that $22 billion in their own hands . . . That way lies secession indeed!' 

Those are 1969 numbers, but as I've noted in a similar context — in my "Decentralize the Welfare State" article — states like New York ought to be allowed to decentralize tax collections. That is, if we can't eliminate taxation, at least the wealth produced by New Yorkers — or whatever state you like — ought to at least stay in New York where the people who paid the tax bills actually live. 

All of these changes are baby steps toward real decentralization that provides small amounts of greater choice to taxpayers, and more control over their lives by localizing political power. 

As always, we're hear about how we should really be supporting secession for "7 billion people." That's fine. But as Mosquito notes: 

My responses to a couple of the anti-secessionist libertarians can be found here and here.  The very short version: we will never get from something like 200 political jurisdictions to 2,000 or 2 billion or 7 billion until we get to 201 first.  Support secession, then the next one and then the next one.  Do this a few dozen times and we might be getting somewhere.

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Congress and the Fed Take Aim at Bitcoin

11/29/2017Tho Bishop

As Bitcoin continues to soar to new heights, Washington seems to be preparing to follow countries like Russia and China in preparing to increase their influence on cryptocurrency. 

Today outgoing New York Federal Reserve head William Dudley revealed that the Federal Reserve is investigating its own "digital currency", though it would be "premature" to suggest that we will see a "crypto-dollar" anytime in the near future. 

Far more important is Congress looking into updating its Anti-Money Laundering laws to include crypto-currencies. The Senate Judiciary committee held a hearing yesterday on the topic, as it continues to consider S.1241, a bill that would explicitly apply "digital currency" to Federal scrutiny. It also requires Federal law enforcement to create a " strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States."

While the very nature of cryptocurrency may shield savvy users from enforcement, it would be interesting to see how such legislation would impact such laws would have on crypto-exchanges, as well as public demand for Bitcoin and other cryptocurrencies.

As I noted a few months ago, the more governments and central banks view cryptocurrency as a threat, the more likely we are to see them try to tighten their control of exchanges as part of a large goal of replacing private cryptocurrency with their own state-controlled tokens. 

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Austrian Student Scholars Conference, Feb. 16-17, 2018

Grove City College will host the fourteenth annual Austrian Student Scholars Conference, February 16-17, 2018. Open to undergraduates and graduate students in any academic discipline, the ASSC will bring together students from colleges and universities across the country and around the world to present their own research papers written in the tradition of the great Austrian School intellectuals such as Ludwig von Mises, F.A. Hayek, Murray Rothbard, and Hans Sennholz. Accepted papers will be presented in a regular conference format to an audience of students and faculty.

Keynote lectures will be delivered by Drs. Guido Hülsmann and G.P. Manish.

Cash prizes of $1,500, $1,000, and $500 will be awarded for the top three papers, respectively, as judged by a select panel of Grove City College faculty. Hotel accommodation will be provided to students who travel to the conference and limited stipends are available to cover travel expenses. Students should submit their proposals to present a paper to the director of the conference (jmherbener@gcc.edu) by January 15. To be eligible for the cash prizes, finished papers should be submitted to the director by February 1.

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The November-December issue of The Austrian is now online!

11/28/2017Ryan McMaken

The November-December issue of The Austrian, now in mailboxes, is now also available online [PDF]. In this issue, we take a look at whether central bankers can really be trusted to centrally plan the global economy. Also included is the latest book review from David Gordon, and numerous photos from our 35th Anniversary Gala and from our Fellows program.

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The Austrian is published six times per year.

All past issues are available online:

 

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Political "Tribalism" is the Consequence of Centralized Power

11/21/2017Tho Bishop

This clip from MSNBC's Morning Joe went through my Facebook feed earlier, with the show's panel pointing to the willingness of Alabama Republicans to vote for Roy Moore as an example of "extreme" tribalism that has taken over American politics. As Willie Geist put it:

If you're willing to protect the tribe at the cost of a 14-year old girl, you need to re-evaluate yourself.

Now, living in Alabama, I know many Moore defenders will dismiss the legitimacy of the original claims made against him. Putting aside the specific details of the case, it's hard to argue with Mr. Geist's point - if you are truly willing to sacrifice a 14-year old girl simply for the sake of your "tribe", then it may be worth evaluating your actions.Of course, the case of Roy Moore isn't a particularly unique one. Whenever allegations of inappropriate behavior are made against an individual that wields political power, the natural reaction to defend or attack an individual often coincides with how close their political views are to yours. 

In fact, one of my favorite articles that has emerged in light of recent allegations came out last week in the Washington Post after allegations emerged about Senator Al Franken. Written by a "feminist" who "studies rape culture", she is refreshingly honest by admitting that she would never want Democrats to take action against Franken simply because he's better than any Republican.

If I believed for one second that Franken is the only Democrat in the Senate who has done something like this, with or without photographic evidence, I would see that as the best and most appropriate option. But in the world we actually live in, I’m betting that there will be more. And more after that. And they won’t all come from states with Democratic governors and a deep bench of progressive replacements. Some will, if ousted, have their successors chosen by Republicans.

In other words, if we set this precedent in the interest of demonstrating our party’s solidarity with harassed and abused women, we’re only going to drain the swamp of people who, however flawed, still regularly vote to protect women’s rights and freedoms. 

While it may be fair to argue that this reaction is "tribalistic", it's also quite rational. 

After all, politics is simply war by other means - and you tend to prefer an SOB on your side over an enemy choir boy.

The solution, of course, is to change the battlefield. If we take away the power Washington has, and allow politics to be played out at the State and Local level, then America will no longer be a country in which we are required to force our political beliefs on everyone else. Instead, we would all have genuine options about the style of government we live under. 

As the scope of government America continues to grow, we will see political tribalism only grow.

Until that trend reverses itself, a politician's political affiliation will always matter more than his morals. 

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Herbener Contributes to New Book on the Theory of Costs

11/21/2017Shawn Ritenour
My friend and department Chairman Jeff Herbener has a chapter included in the new book The Economic Theory of Costs: Foundations and New Directions edited by Matt McCaffrey and published by Routledge. Herbener's chapter is entitled "Time and the Theory of Cost" The abstract reads as follows:
Production costs in Neoclassical models account for the physical conditions of production (MPP) and consumer demands (MR) but fail to incorporate time across the structure of production. Incorporation of real time in production necessitates the recognition that capitalist-entrepreneurs make production decisions. They discount the MRPs of factors when buying them in advance of selling their output and they must speculate about the DMRPs of factors in the face of uncertainty of the future when deciding what they will pay for them. This chapter develops a theory of cost in light of capitalist-entrepreneurs acting in real time.

It is a joy to work with colleagues who continue to add to our understanding of the laws of economics.

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Trophy Hunting Saves Endangered Species

11/20/2017Ryan McMaken

Legal trophy hunting creates an incentive for entrepreneurs to preserve endangered species since the trophy hunting industry makes these species valuable as  investments. The logic here is so apparent that even TruTV's show "Adam Ruins Everything" — which is hardly a right-wing propaganda rag — has figured it out: 

Adam Ruins Everything - Why Trophy Hunting Can Be Good for Animals

Two years after the killing of the cutely-named Cecil the Lion sparked outrage over trophy killing, the topic has once again been stoked by the Trump administration said it planned to end the ban on the importation into the US of some trophies from hunting. A backlash followed, and now Trump says he's not so sure

This is a topic we've already covered more than once here at mises.org. The fact remains that when animals have no economic value, there is no incentive to preserve them from total destruction:

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Yellen Announces She Will Leave Fed Next Year

11/20/2017Tho Bishop

Today Janet Yellen announced that she will be leave the Fed entirely when Jay Powell is confirmed as the next Federal Reserve Chairman, she had the option of staying on as a governor. It was widely expected that Yellen would stay on, though there was some thought that her ideological similarity with Powell made it possible she could have stayed on the Federal Reserve Board.

This move gives Trump yet another spot to fill at the Fed, which will make five total during his presidency. He filled one of those spots earlier this year when Randal Quarles, a former Bush Treasury official, was confirmed by the Senate. 

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