Browsed by
Category: Politics

Oklahoma: The Economic Storm – Article by David J. Hebert

Oklahoma: The Economic Storm – Article by David J. Hebert

Comments 0 Comment
The New Renaissance Hat
David J. Hebert
May 25, 2013
******************************

A tornado ravaged Oklahoma last week, destroying hundreds of homes, killing dozens, and injuring hundreds more. Unfortunately, it looks like the citizens of Oklahoma are about to be ravaged by another storm brought on by the Oklahoma Attorney General, Scott Pruitt.

According to ABC News, Mr. Pruitt and his staff began “aggressively combing the region for fraud just hours after the tornado … and immediately [found] businesses violating the law. ”

What laws were the businesses accused of violating?  Anti-price-gouging laws. Using powers granted by the Emergency Price Stabilization Act, Mr. Pruitt is hoping to help the people of Oklahoma by preventing businesses from profiting off of the suffering of the townspeople, many of whom just lost their homes. He goes so far as to say, “[the townspeople] never anticipate or expect that someone would take advantage of them right now, but this situation is what criminals prey upon. ”

While Mr. Pruitt no doubt intends to help the local citizens, his misunderstanding of the workings of the price mechanism will lead only to folly and the prolonged suffering of the very people that he is trying to help. What he is effectively arguing for is a price ceiling on basic commodities, such as water (which is reportedly being sold for $40 per case today as opposed to only $3-$4 just a few weeks ago).

This has very predictable results: a shortage.

When prices are held below their market value, the effect is that there will be a large number of people who are willing to purchase water at that price but very few sellers willing to sell the water at that price. This means that people will compete on non-price margins to acquire water, that is, they will queue, sometimes for hours on end. The time that they spend waiting in line, however, is a deadweight cost as it is value that is forgone but is not captured by anyone. So now, instead of contributing towards the reconstruction of the town, the people are stuck waiting in line for water.

The beauty of the price mechanism is what it accomplishes in situations like this, assuming, of course, officials allow it to function properly. In this situation, demand in Oklahoma rises and producers, seeing an opportunity to profit, reroute trucks/planes to Oklahoma, thus increasing the quantity of water supplied in the area that needs it most.

Absent the rise in price, we would have to rely on the benevolence of these companies to help the people in need (and assume that they knew what the people of Oklahoma wanted to begin with).

This isn’t in and of itself terrible. Obviously companies DO send extra water to places that experience disasters, and the Red Cross DOES send volunteers and such. But notice that nothing in the preceding analysis precludes this benevolence. Why rely merely on benevolence when we can also rely on self-interest? If the goal is to help people get clean drinking water, it stands to reason that we ought to incentivize producers as many ways as possible, be they other-regarding, self-regarding or both.

David Hebert is a Ph.D. Fellow at the Mercatus Center at George Mason University.

This article was originally published by The Foundation for Economic Education.

The IRS’s Job Is To Violate Our Liberties – Article by Ron Paul

The IRS’s Job Is To Violate Our Liberties – Article by Ron Paul

Comments 0 Comment
The New Renaissance Hat
Ron Paul
May 21, 2013
******************************

“What do you expect when you target the President?” This is what an Internal Revenue Service (IRS) agent allegedly said to the head of a conservative organization that was being audited after calling for the impeachment of then-President Clinton. Recent revelations that IRS agents gave “special scrutiny” to organizations opposed to the current administration’s policies suggest that many in the IRS still believe harassing the President’s opponents is part of their job.

As troubling as these recent reports are, it would be a grave mistake to think that IRS harassment of opponents of the incumbent President is a modern, or a partisan, phenomenon. As scholar Burton Folsom pointed out in his book New Deal or Raw Deal, IRS agents in the 1930s where essentially “hit squads” against opponents of the New Deal. It is well-known that the administrations of John F. Kennedy and Lyndon Johnson used the IRS to silence their critics. One of the articles of impeachment drawn up against Richard Nixon dealt with his use of the IRS to harass his political enemies. Allegations of IRS abuses were common during the Clinton administration, and just this week some of the current administration’s defenders recalled that antiwar and progressive groups alleged harassment by the IRS during the Bush presidency.

The bipartisan tradition of using the IRS as a tool to harass political opponents suggests that the problem is deeper than just a few “rogue” IRS agents—or even corruption within one, two, three, or many administrations. Instead, the problem lies in the extraordinary power the tax system grants the IRS.

The IRS routinely obtains information about how we earn a living, what investments we make, what we spend on ourselves and our families, and even what charitable and religious organizations we support. Starting next year, the IRS will be collecting personally identifiable health insurance information in order to ensure we are complying with Obamacare’s mandates.

The current tax laws even give the IRS power to marginalize any educational, political, or even religious organizations whose goals, beliefs, and values are not favored by the current regime by denying those organizations “tax-free” status. This is the root of the latest scandal involving the IRS.

Considering the type of power the IRS excises over the American people, and the propensity of those who hold power to violate liberty, it is surprising we do not hear about more cases of politically motivated IRS harassment. As the third US Supreme Court Chief Justice John Marshall said, “The power to tax is the power to destroy” — and whom better to destroy than one’s political enemies?

The US flourished for over 120 years without an income tax, and our liberty and prosperity will only benefit from getting rid of the current tax system. The federal government will get along just fine without its immoral claim on the fruits of our labor, particularly if the elimination of federal income taxes is accompanied by serious reduction in all areas of spending, starting with the military spending beloved by so many who claim to be opponents of high taxes and big government.

While it is important for Congress to investigate the most recent scandal and ensure all involved are held accountable, we cannot pretend that the problem is a few bad actors. The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process. Thus, the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission.

What No One Wants to Hear About Benghazi – Article by Ron Paul

What No One Wants to Hear About Benghazi – Article by Ron Paul

Comments 1 comment
The New Renaissance Hat
Ron Paul
May 18, 2013
******************************

Congressional hearings, White House damage control, endless op-eds, accusations, and defensive denials. Controversy over the events in Benghazi last September took center stage in Washington and elsewhere last week. However, the whole discussion is again more of a sideshow. Each side seeks to score political points instead of asking the real questions about the attack on the US facility, which resulted in the death of US Ambassador Chris Stevens and three other Americans.

Republicans smell a political opportunity over evidence that the Administration heavily edited initial intelligence community talking points about the attack to remove or soften anything that might reflect badly on the president or the State Department.

Are we are supposed to be shocked by such behavior? Are we supposed to forget that this kind of whitewashing of facts is standard operating procedure when it comes to the US government?

Democrats in Congress have offered the even less convincing explanation for Benghazi, that somehow the attack occurred due to Republican-sponsored cuts in the security budget at facilities overseas. With a one- trillion-dollar military budget, it is hard to take this seriously.

It appears that the Administration scrubbed initial intelligence reports of references to extremist Islamist involvement in the attacks, preferring to craft a lie that the demonstrations were a spontaneous response to an anti-Islamic video that developed into a full-out attack on the US outpost.

Who can blame the administration for wanting to shift the focus? The Islamic radicals who attacked Benghazi were the same people let loose by the US-led attack on Libya. They were the rebels on whose behalf the US overthrew the Libyan government. Ambassador Stevens was slain by the same Islamic radicals he personally assisted just over one year earlier.

But the Republicans in Congress also want to shift the blame. They supported the Obama Administration’s policy of bombing Libya and overthrowing its government. They also repeated the same manufactured claims that Gaddafi was “killing his own people” and was about to commit mass genocide if he were not stopped. Republicans want to draw attention to the President’s editing of talking points in hopes no one will notice that if the attack on Libya they supported had not taken place, Ambassador Stevens would be alive today.

Neither side wants to talk about the real lesson of Benghazi: interventionism always carries with it unintended consequences. The US attack on Libya led to the unleashing of Islamist radicals in Libya. These radicals have destroyed the country, murdered thousands, and killed the US ambassador. Some of these then turned their attention to Mali, which required another intervention by the US and France.

Previously secure weapons in Libya flooded the region after the US attack, with many of them going to Islamist radicals who make up the majority of those fighting to overthrow the government in Syria. The US government has intervened in the Syrian conflict on behalf of the same rebels it assisted in the Libya conflict, likely helping with the weapons transfers. With word out that these rebels are mostly affiliated with al Qaeda, the US is now intervening to persuade some factions of the Syrian rebels to kill other factions before completing the task of ousting the Syrian government. It is the dizzying cycle of interventionism.

The real lesson of Benghazi will not be learned because neither Republicans nor Democrats want to hear it. But it is our interventionist foreign policy and its unintended consequences that have created these problems, including the attack and murder of Ambassador Stevens. The disputed talking points and White House whitewashing are just a sideshow.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission.

Futile Temporary Totalitarianism in Boston – Video by G. Stolyarov II

Futile Temporary Totalitarianism in Boston – Video by G. Stolyarov II

Comments 0 Comment

The aftermath of the Boston Marathon bombings of April 15, 2013, showed all too clearly that totalitarianism does not need decades of incremental legislation and regimentation to come to this country. All it needs is the now-pervasive fear of “terrorism” – a fear which can give one man the power to shut down the economic life of an entire city for a day.

This video is based on Mr. Stolyarov’s recent essay, “Futile Temporary Totalitarianism in Boston“.

References

-“U.S. Cities With Bigger Economies Than Entire Countries” – Wall Street Journal – July 20, 2012
– “Adding up the financial costs of the Boston bombings” – Bill Dedman and John Schoen, NBC News – April 30, 2013
– “United Airlines Flight 93” – Wikipedia
– “Richard Reid” – Wikipedia
– “Umar Farouk Abdulmutallab” – Wikipedia
– “Homicides decrease in Boston for third straight year” – Matt Carroll, The Boston Globe – January 1, 2013
– “List of motor vehicle deaths in U.S. by year” – Wikipedia
– “How Scared of Terrorism Should You Be?” – Ronald Bailey, Reason Magazine – September 6, 2011
– “Terrorism Risk Insurance Act” – Wikipedia
– “Business Frets at Terrorism Tag of Marathon Attack” – Associated Press – May 13, 2013
– “TIME/CNN Poll Shows Increasing Number Of Americans Won’t Give Up Civil Liberties To Fight Terrorism” – Tim Cushing, TechDirt – May 6, 2013

Illiberal Belief #17: Democracy is a Cure-All – Article by Bradley Doucet

Illiberal Belief #17: Democracy is a Cure-All – Article by Bradley Doucet

Comments 0 Comment
The New Renaissance Hat
Bradley Doucet
May 14, 2013
******************************
I know it is sacrilege, but that is all the more reason to say it, and say it loud: Democracy is not the be-all, end-all, Holy Grail of politics that many imagine it to be. It is one, but only one, of the ingredients that make for good societies, and it is far from the most important one. Why point this out? If democracy is a good thing, why stir controversy by questioning just how good? Because the widespread, quasi-religious devotion to democracy in evidence today has some very nasty consequences. Democracy means “rule by the people.” The people usually rule by electing representatives, a process which is called, simply enough, representative democracy. Sometimes, as in the case of a referendum on a specific question, the people rule more directly, and this is known as direct democracy. Actually, though, “rule by the people” is a bit misleading, since “the people” are never unanimous on any given question, and neither are their chosen representatives. In practice, democracy is rule by majority (i.e., 50% + 1), or even mere plurality (i.e., more than any one other candidate but less than half) when three or more candidates compete.
***

Long before any nation had experienced anything even approaching universal suffrage, people concerned with human liberty—thinkers like Alexis de Tocqueville and John Stuart Mill—expressed concerns that the fading tyranny of kings might merely be replaced by a “tyranny of the majority.” They worried that majorities might vote away minorities’ hard-won rights to property, freedom of religion, freedom of expression, and freedom of movement. Majorities with a hate on for certain minorities might even vote away their very right to life.

History has given these worries ample justification. Democracy by itself is no guarantee of peace and freedom. Adolf Hitler’s victory in democratic 1930s Germany is only the most glaring example of popular support for an illiberal, anti-human regime. The people of Latin America have a long and hallowed tradition of rallying behind populist strongmen who repay their fealty by grinding them (or sometimes their neighbours) beneath their boot heels, all the while running their economies into the ground. Their counterparts in post-colonial Africa and certain parts of Asia have shown similarly stellar political acumen.

As writers like Fareed Zakaria (The Future of Freedom: Illiberal Democracy at Home and Abroad) point out, in those parts of the world that have successfully achieved a respectable degree of freedom and prosperity (basically Europe, the Anglosphere, and Japan and the Asian Tigers), sheer democracy has been supplemented—and preceded—by institutions like the rule of law, including an independent judiciary; secure property rights; the separation of church and state; freedom of the press; and an educated middle class. Indeed, instead of supplementing democracy, it is more accurate to say that these institutions limit the things over which the people can rule. It is enshrined in law and tradition that neither the people nor their representatives shall be above the law, violate the lives or property of others, impose their religious beliefs on others, or censor the freedom of the press. These checks on the power of the people have created, in the most successful parts of the world, not just democracies but liberal democracies.

According to Zakaria, societies that democratize before having built up these liberal institutions and the prosperity they engender are practically doomed to see their situations deteriorate instead of improve, often to the detriment of neighbouring countries, too. Liberty is simply more important than democracy, and must come first. We who are fortunate enough to live in liberal democracies would do well to remember this when judging other nations, like China, and urging them to democratize faster.

We would do well to remember it when thinking about our own societies, too. Thinkers like economist Bryan Caplan, author of The Myth of the Rational Voter: Why Democracies Choose Bad Policies, argue that even in the most liberal countries, democracy often works against liberty. Economists have been saying for a few decades now that political ignorance is an intractable problem that undermines the beneficial effects of democracy. The argument is that since a single vote has practically no chance of affecting the outcome of an election (or a referendum), the average voter has no incentive to become informed. Defenders of democracy have replied that ignorance doesn’t matter, since the ignorant essentially vote randomly, and random ignorant votes in one direction will be cancelled out by random ignorant votes in the opposite direction, leaving the well-informed in the driver’s seat.

Caplan agrees that if average voters were merely ignorant, their votes would cancel each other out, and the well-informed would be in charge and make good decisions. His central insight, though, is that voters are not merely ignorant, but irrational to boot. Voters have systematically biased beliefs, to which they are deeply attached, and those biases do not cancel each other out. Specifically, the average voter underestimates how well markets work; underestimates the benefits of dealing with foreigners; focuses on the short-term pain of job losses instead of the long-term gain of productivity increases; and tends at any given time to be overly pessimistic about the economy. These biases lead voters to support candidates and policies that undermine their own best interests.

The alternative to democracy, Caplan emphasizes, is not dictatorship, but markets. The market is not perfect, but it works a lot better than politics, because in my daily life as a producer and a consumer, I have an obvious incentive to be rational: my pocketbook. This incentive is lacking when it comes time to go to the polls, because of the aforementioned near-impossibility that my vote will determine the outcome. Given this asymmetry, we should favour markets over politics whenever possible. For those things that must be decided collectively, democracy may be the best we can do, but we should strive to decide as many things as possible privately, resorting to politics only when no other option is feasible. In other words, we should recapture the wisdom of the American Founding Fathers, rediscover the genius of constitutionally limited democracy, and reclaim some of the liberty previous generations fought so valiantly to secure. If we don’t, it might not be too much longer, in the grand scheme of things, before the Western world ceases to be a model worth emulating.

Bradley Doucet is Le Quebecois Libré‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.
Futile Temporary Totalitarianism in Boston – Article by G. Stolyarov II

Futile Temporary Totalitarianism in Boston – Article by G. Stolyarov II

Comments 4 comments
The New Renaissance Hat
G. Stolyarov II
May 13, 2013
******************************

Everyday life in the United States is still semi-free most of the time, if one goes about one’s own business and avoids flying or crossing the border. Yet, the aftermath of the Boston Marathon bombings of April 15, 2013, showed all too clearly that totalitarianism does not need decades of incremental legislation and regimentation to come to this country. All it needs is the now-pervasive fear of “terrorism” – a fear which can give one man the power to shut down the economic life of an entire city for a day.

The annual Gross Domestic Product of Boston is approximately $326 billion (based on 2011 figures from the Wall Street Journal). For one day, Boston’s GDP can be roughly estimated as ($326 billion)/365 = $893.15 million. Making the rather conservative assumption that only about half of a city’s economic activity would require people to leave their homes in any way, one can estimate the economic losses due to the Boston lockdown to be around $447 million. By contrast, how much damaged property and medical costs resulted directly from the criminal act committed by the Chechen nationalist and Islamic fundamentalist brothers Tamerlan and Dzokhar Tsarnaev? An NBC News article detailing the economic damages from the bombing estimates total medical costs to be in excess of $9 million, while total losses within the “impact zone” designated by the Boston Police Department are about $10 million. To give us a wide margin of error again, let us double these estimates and assume that the bombers inflicted total economic damage of $38 million. The economic damage done by the lockdown would still exceed this total by a factor of about 11.76 – more than an order of magnitude!

It is true, of course, that the cost in terms of the length and quality of life for the three people killed and the 264 people injured by the bombings cannot be accounted for in monetary terms. But I wonder: how many years of life will $447 million in lost economic gains deprive from the population of Boston put together – especially when one considers that these economic losses affect life-sustaining sectors such as medical care and pharmaceuticals? Furthermore, to what extent would this lost productivity forestall the advent of future advances that could have lengthened people’s lives one day sooner? One will most likely never know, but the reality of opportunity cost is nonetheless always with us, and surely, some massive opportunity costs were incurred during the Boston lockdown.  Moreover, one type of damage does not justify or excuse another. However horrific the Boston bombings were, they were not a reason to further hinder innocent people.

Bad policy is the surest and most powerful ally of malicious, hate-driven miscreants like the Tsarnaev brothers. On April 19, the day of the lockdown, Dzokhar Tsarnaev, the sole surviving Boston Marathon bomber, hid inside a boat in a private backyard, incapacitated and nearly dead from a botched suicide attempt. Dzokhar wanted only to end his own life, and yet he could never have caused more trouble than he did during those hours, because, while the lockdown was in place, bad policy was inflicting more economic damage than the Tsarnaev brothers’ crude and clumsy attack could ever have unleashed on its own.

Only after the lockdown was lifted could a private citizen, David Henneberry, leave his house and notice that his boat had a loose cover. As Thomas Jefferson would have told the Bostonians, the price of liberty is eternal vigilance. Virtually every time malicious plots against innocent civilians are actually foiled – be it the takedown of United Airlines Flight 93 or the arrests of attempted “shoe bomber” Richard Reid and “underwear bomber” Umar Farouk Abdulmutallab – it is the vigilance of ordinary but courageous individuals that truly enhances the safety of us all.  Policies that create martial law, prevent people from leading their lives, and result in SWAT-style “sweeps” of people’s homes in search of a single individual not only do nothing to actually help capture the violent wrongdoer, but also subvert the liberty, prosperity, and quality of life for many orders of magnitude more people than any criminal cell could ever hope to undermine on its own.

Would any other dangerous condition, one not thought to be “terrorism,” ever provoke such a wildly disproportionate and oppressive reaction? Consider that Boston had 58 homicides in the year 2012. Many cities’ murder rates are much higher, sometimes reaching an average of one murder per day. Was a lockdown initiated for every third homicide in any American city? Traffic fatalities claim over 30,000 lives in the United States every year – or 10,000 times the death toll of the Boston Marathon bombing, and ten times the death toll of even the terrorist attacks of September 11, 2001. Are entire neighborhoods shut down every time there is a deadly car crash? If this were the accepted practice, all economic life – indeed most life in general – in the United States would grind to a halt.  Yet, while the most likely and widespread threats to our lives come from very mundane sources, bad policies and distorted public perceptions of risk are motivated by fear of the unusual, the grotesque, the sensational and sensationalized kinds of death. And yet, in spite of fear-mongering by politicians, the media, special interests, and those who rely exclusively on sound bites, the threat to one’s personal safety from a terrorist act is so minuscule as to safely be ignored. In fact, as Ronald Bailey of Reason Magazine discusses, the odds of being killed by a lightning bolt are about four times greater!

 Ironically enough, the very act that precipitated the Boston lockdown might not even officially be designated a terrorist act after all. If you thought that this was because politicians are suddenly coming to their senses, think again. The real reason is somewhat less intuitive and relates to insurance coverage for the businesses damaged by the attacks. Most commercial property and business-interruption insurance policies will cover losses from criminal acts, but explicitly exclude coverage for acts of terrorism, unless the business purchases special terrorism coverage reinsured by the federal Terrorism Risk Insurance Program. However, for the terrorism exclusions in many ordinary commercial insurance policies to apply, an act of terrorism has to be formally certified as such by the Secretary of the Treasury (and sometimes other officials, such as the Attorney General and the Secretary of Homeland Security). (For more details on this turn of events, read “Business Frets at Terrorism Tag of Marathon Attack” by the Associated Press.) The affected businesses really do not want the bombings to be formally classified as terrorism, as this will impede the businesses’ ability to obtain the insurance proceeds which would be integral to their recovery.

 I have no objection to the federal government refraining from certifying the bombings as a terrorist act in an effort to avoid needless bureaucratic complications that would impede recovery. However, I also detest Orwellian doublethink. If the bombings are not terrorism for one purpose, then they cannot be terrorism in any other sense. If they will not be used to justify depriving businesses of insurance proceeds, then surely they must not be used to deprive the rest of us of our freedom to move about as we wish, to pursue our economic aspirations, to retain the privacy of our homes, and to otherwise lead our lives in peace. If the bombings are not certified as terrorism, then all fear-mongering rhetoric by federal politicians about the need to heighten “security” in response to this “terrorist” act should cease as well. The law of non-contradiction is one type of law that our politicians – and the people of the United States more generally – urgently need to recognize.

I certainly hope that no future bombings of public events occur in the United States, not only out of a desire to preserve the lives of my fellow human beings, but also out of grave concern for the possibly totalitarian reaction that would follow any such heinous act. I enjoy living in peace and relative freedom day to day, but I know that it is only by the grace and perhaps the laziness of America’s political masters that I am able to do so. I continue to hope for an amazing run of good luck with regard to the non-occurrence of any particularly visible instances of mass crime, so that the people of the United States can find the time to gradually become enlightened about the real risks in their lives and the genuinely effective strategies for reducing those risks. There is hope that the American people are gradually regaining their common sense; perhaps they will drag the politicians toward reason with them – however reluctant the politicians might be to pursue sensible policies for a change.

Federal Reserve Blows More Bubbles – Article by Ron Paul

Federal Reserve Blows More Bubbles – Article by Ron Paul

Comments 1 comment
The New Renaissance Hat
Ron Paul
May 5, 2013
******************************

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.

With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal.

In the meantime, real families are suffering. While Wall Street and the federal government take advantage of access to the Fed’s new “free” money, the Fed claims there is no inflation. But who hasn’t paid higher prices at the grocery store, the gas pump, for tuition, for insurance? It’s bad enough that household incomes have stagnated, but real purchasing power has declined so much that one in seven Americans, 47.3 million people, are on food stamps. Five million are collecting unemployment insurance with 21.5 million afflicted by unemployment according to the federal government’s own figures. That’s 13.9 percent — close to double the 7.5 percent unemployment number reported last week.

We are certainly not in a recovery. We don’t see the long unemployment and soup-kitchen lines like in the Great Depression, but that’s just because the lines are electronic now.

It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations. Allow interest rates to rise to equal the risks in the economy. Allow bad debts to be liquidated so we can build on a firm foundation. Stop printing money to benefit the government and big banks. Restore sound money to the economy and the American people. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission.

Your Student Loan Shall Not Be Forgiven – Article by Andrew Heaton

Your Student Loan Shall Not Be Forgiven – Article by Andrew Heaton

Comments 0 Comment
The New Renaissance Hat
Andrew Heaton
May 4, 2013
******************************

There’s a decent chance you know a recent graduate with a student loan balance that makes Greece look tight-fisted. That graduate might occasionally jabber on about “student loan forgiveness,” which is a popular notion among people with large student loans.

The concept behind forgiveness is that college graduates are sweating debt through their pores like vodka, so the government ought to swoop in and write them a check. This plan sounds pretty swell if you’re a recent graduate, but if you’re some kind of weirdo who pays income tax it means you get to foot that bill. So watch out.

One such proposal presently in embryonic form is H.R. 1330, The Student Loan Fairness Act. This particular scheme would create a new “10-10” standard for student loan repayment, in which individuals would repay one-tenth of their disposable income for 10 years, after which their debt would be forgiven.

You’ll notice that representatives usually come up with similar token gestures in order to make graduates appear to be seriously contributing to their loans. For instance, a congressman might suggest that an alumnus periodically toss fistfuls of loose change at their bursar, or set up a “repayment fund” by hoarding pennies in the ashtray of their car. Then at some point, as in H.R. 1330, Uncle Sam steps in and waives their debt away. Their onerous student loan is “forgiven.”

In the world of finance, “debt forgiveness” is not the same thing as regular forgiveness, wherein the aggrieved party absolves you of guilt but secretly nurses a grudge. “Debt forgiveness” simply means someone else pays your debt instead of you. Your tuition bill does not magically disappear, but is rather transferred via legal mechanisms to another shmuck. The federal government steps in to magnanimously fork over the remainder of your tab to a university, loan shark, etc. But “the government,” which sounds distant and vaguely sterile, is funded by you.

And by me, for that matter. Which is irritating, because I strenuously avoided going into debt during college. I attended a state school despite acceptance to a pretentious “boat shoes” school. I obtained my masters degree through a scholarship. I intentionally zigzagged around accruing debt because I had the foresight to realize that both of my majors were utterly useless and would never earn the money back.

Thus, I do not carry a significant debt burden. However, I am still poor, underemployed, and probably eligible for food stamps. Assuming I make enough money this year to even pay taxes, should the government confiscate my income and give it to people who opted for expensive private colleges or who chose even more frivolous majors than I did?

Ultimately someone has to repay all these student loans, be they alumni or taxpayers. I nominate Warren Buffett. He’s always whining about not paying enough taxes anyway. If you’re unfamiliar with the man, Warren Buffett is a wealthy investor from Omaha who apparently was the inspiration for the lead character in the Pixar film Up.

Between his net worth of $53.5 billion and his endearing toothbrush-bristle eyebrows, I would like him to adopt my entire generation as his surrogate grandchildren. Then we can ask Mr. Buffett to use his vast, undertaxed fortune to pay off our student loans.

Better yet, what if we treated student loans like the sorts of investments Mr. Buffett needed to calculate himself in order to become a finance mogul? What if we treated student loans more like private enterprise? For instance, if you approached me for a $40,000 loan to obtain a degree in engineering, I might regard that as a savvy venture, whereas I might deny a $400,000 request to study Jurassic art. In a few years, you would see a dramatic reduction in redundant arts and sciences majors like myself, and no one would ever speak of nurse or technician shortages again.

Student loans, unlike all other species of finance, are ineligible for discharge in bankruptcy. Why not remove this legal impediment, allowing graduates to decide for themselves the pros and cons of filing for Chapter 7, which results in a personal balance sheet purged of debt, but a horrendously blemished credit rating? This option is better than the current option for students, which consists of faking their own deaths. Couple that with student loan speculation, and you could potentially push students toward degrees they might actually benefit from. Allowing them the option of bankruptcy would create an opportunity for true “forgiveness” of debt.

The combined student debt of our nation’s college graduates is massive, sad, and oppressive. We need to come up with solutions to deal with it. But remember: forgiveness of debt punishes someone else. The spiritual world may run on confession and absolution, but the financial realm is still firmly ruled by Mammon and Karma.

Guest blogger Andrew Heaton is a former congressional staffer, now working as a writer and standup comedian in New York City. More of his wit and insight can be found at his website, MightyHeaton.com.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

The Unplanned Order of Houston, TX – Article by Bradley Doucet

The Unplanned Order of Houston, TX – Article by Bradley Doucet

Comments 0 Comment
The New Renaissance Hat
Bradley Doucet
May 1, 2013
******************************
“Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”
 – Jane Jacobs, The Death and Life of Great American Cities
***

I recently had the pleasure of visiting the great American city of Houston, Texas. I was only there for two days, and so only saw a tiny fraction of what there was to see. But I was able to spot some evidence and hear some firsthand accounts of one of the city’s important peculiarities: its lack of zoning laws. With a population of 2.1 million (6 million in the metro area), Houston is the largest city in America without zoning laws—and it gets along just fine without them, thank you very much.

In the Zone

If there’s one thing that seems certain in this world besides death and taxes, it’s that cities have zoning laws. These laws determine what kinds and sizes of homes and commercial buildings can be built where, the densities of neighbourhoods, the outward appearances of structures, and so on. But as much as we have come to take these minute regulations of city life for granted, it wasn’t always so. According to Samuel R. Staley, who teaches graduate and undergraduate courses in urban planning, regulation, and urban economics at Florida State University in Tallahassee, “Before the twentieth century land-use and housing disputes were largely dealt with through courts using the common-law principle of nuisance.” If a smelly pig farm set up shop in a residential area, for instance, residents could go to court and either be compensated for the harm caused by the noxious fumes or get the pig farmer to cease operations or move elsewhere.

As Staley explains, that all changed with the ascendancy of the Progressive movement in the early years of the last century. Progressives argued that the common-law approach to nuisance was too expensive, time-consuming, and complicated, making it a difficult avenue for the less fortunate members of society to use. Zoning would be more efficient and fair, they claimed. Yet whatever the good intentions behind it, its effect, writes Staley, “was to fully politicize land-use decisions,” often in favour of the politically powerful.

Houstonians, unique among the residents of large American cities, rejected zoning in popular referendums on three separate occasions: in 1948, in 1962, and again in 1993. Despite pleas before the 1993 vote from the Houston Homeowner’s Association about the need “to stop the cancerous erosion of the quality of life in many of our neighborhoods,” the city’s registered voters did not seem overly concerned about their quality of life, as few of them even bothered to come out for the vote.

How Can People Live This Way?

So, does chaos reign in The Big Heart (a nickname earned when Houstonians pitched in to help many tens of thousands of refugees from New Orleans in the aftermath of Hurricane Katrina)? Hardly. There were no slaughterhouses or pulp and paper mills in the residential neighbourhood I was staying in. There was a charming Mexican restaurant, though, with parking for maybe twenty vehicles, a small bridge crossing a little creek, and an expansive patio bordered by tall shade trees.

CB Richard Ellis, a big property company, explains how the city manages to avoid “a disjointed landscape where oil derricks sit next to mansions and auto salvage yards abut churches” without recourse to zoning laws: “What is unique about Houston is that the separation of land uses is impelled by economic forces rather than mandatory zoning. While it is theoretically possible for a petrochemical refinery to locate next to a housing development, it is unlikely that profit-maximizing real-estate developers will allow this to happen.” The spontaneous order of the market encourages charming restaurants in among private homes, but discourages incompatible uses. As author James D. Saltzman has written, “heavy industry voluntarily locates on large tracts near rail lines or highways; apartments and stores seek thoroughfares; gas stations vie for busy intersections.”

It is not the case, however, that Houston is completely bereft of regulation. Developers commonly employ private covenants and deed restrictions to limit the uses of land in a given development. These can keep businesses or apartments out of the neighborhood, or even stipulate lawn care and acceptable house paint colours. But importantly, as Saltzman points out, “However detailed, deed restrictions contain rules voluntarily accepted by home buyers, unlike the edicts issued to property owners by a zoning commission.”

In addition to these voluntary restrictions, though, there are also some land-use ordinances regulating things like trailer parks, rendering plants, and commercial landscaping. And in fact, these city regulations have not all had positive effects, either. Michael Lewyn, associate professor at the Touro Law Center, points out that rules regarding minimum lot sizes for single-family homes, minimum street widths, and mandatory parking space requirements for both residential and commercial buildings have made Houston less dense than it would have been if its development had been left entirely to market forces. This means the sprawling city is more dependent on cars and less pedestrian friendly than it could be.

Reaping the Benefits

Despite such laws, however, Houston still regulates land use to a significantly lesser degree than other cities. The payoff, in addition to a welcome, convenient, eclectic mix of uses, is more affordable housing. As prices were soaring across the country in the inflation-fueled housing bubble a few years back, they remained relatively stable in Houston. And not having soared, they did not plummet when that bubble inevitably burst. According to Federal Reserve Bank of Dallas senior economist Bill Gilmer, lack of zoning deserves a lot of the credit.

As Jane Jacobs wrote about in her classic 1961 work, The Death and Life of Great American Cities, city planners often behave as if the rest of us who live in a city had no plans of our own. In Houston, more than in most cities, people can pursue their own plans. Rather than leading to chaos, this leads to a more spontaneous, more organic kind of order. If residents of other cities could move away from imposed, top-down order, we too could be freer to pursue more of our own plans without the hassle and added cost of zoning laws.

Bradley Doucet is Le Quebecois Libré‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.
Liberty Was Also Attacked in Boston – Article by Ron Paul

Liberty Was Also Attacked in Boston – Article by Ron Paul

Comments 0 Comment
The New Renaissance Hat
Ron Paul
April 28, 2013
******************************

Forced lockdown of a city. Militarized police riding tanks in the streets. Door-to-door armed searches without warrant. Families thrown out of their homes at gunpoint to be searched without probable cause. Businesses forced to close. Transport shut down.

These were not the scenes from a military coup in a far off banana republic, but rather the scenes just over a week ago in Boston as the United States got a taste of martial law. The ostensible reason for the military-style takeover of parts of Boston was that the accused perpetrator of a horrific crime was on the loose. The Boston bombing provided the opportunity for the government to turn what should have been a police investigation into a military-style occupation of an American city. This unprecedented move should frighten us as much or more than the attack itself.

What has been sadly forgotten in all the celebration of the capture of one suspect and the killing of his older brother is that the police state tactics in Boston did absolutely nothing to catch them. While the media crowed that the apprehension of the suspects was a triumph of the new surveillance state – and, predictably, many talking heads and Members of Congress called for even more government cameras pointed at the rest of us – the fact is none of this caught the suspect. Actually, it very nearly gave the suspect a chance to make a getaway.

The “shelter in place” command imposed by the governor of Massachusetts was lifted before the suspect was caught. Only after this police state move was ended did the owner of the boat go outside to check on his property, and in so doing discover the suspect.

No, the suspect was not discovered by the paramilitary troops terrorizing the public. He was discovered by a private citizen, who then placed a call to the police. And he was identified not by government surveillance cameras, but by private citizens who willingly shared their photographs with the police.

As journalist Tim Carney wrote last week:

“Law enforcement in Boston used cameras to ID the bombing suspects, but not police cameras. Instead, authorities asked the public to submit all photos and videos of the finish-line area to the FBI, just in case any of them had relevant images. The surveillance videos the FBI posted online of the suspects came from private businesses that use surveillance to punish and deter crime on their property.”

Sadly, we have been conditioned to believe that the job of the government is to keep us safe, but in reality the job of the government is to protect our liberties. Once the government decides that its role is to keep us safe, whether economically or physically, they can only do so by taking away our liberties. That is what happened in Boston.

Three people were killed in Boston and that is tragic. But what of the fact that over 40 persons are killed in the United States each day, and sometimes ten persons can be killed in one city on any given weekend? These cities are not locked-down by paramilitary police riding in tanks and pointing automatic weapons at innocent citizens.

This is unprecedented and is very dangerous. We must educate ourselves and others about our precious civil liberties to ensure that we never accept demands that we give up our Constitution so that the government can pretend to protect us.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission.