Does ‘coming out of the closet’ if you’re gay show courage? Probably not; as many, many have over the past few decades preceded you and it has become politically popular to support that ‘right’. In the same vein it is hardly courageous or ‘hero status’ to profess your religious preferences particularly if they’ve been predominant in your culture for centuries.

However, to stand up for Liberty and individual freedoms even when they rub up against your personal preferences and to believe in a society that is determined from the ground up and not the top down through government managing of those forfeited freedoms is not only unpopular but deserves to be called ‘courageous’.

As I heard a Pastor explain recently that, “Most things worth acquiring like ‘Rest’ or a ‘Quality Relationship’ are achieved indirectly through other investments”, most time into others which many times includes individual tolerance (the good kind) and the ‘inconvenience of Liberty’ as Jefferson put it.

While there’s fortunes and power to be gained in ‘Special Interest’ there’s hardly any in standing up for Liberty as Ron Paul and others could attest to (but wouldn’t). But the irony is that it is the agency of Liberty that produces social cooperation and true equality. Let’s be honest, we will never solve the inequalities in men by creating empirical homogeneity in the science labs of Universities and think tanks in Washington, that shape the blunt force of government policy; rather a limited government structure that is purposefully divided in its function to protect Liberty would be grand to have once again.

Stand up for the US Constitution and demonstrate Liberty in your personal lives. That my friends is courageous.

“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Rahm Emanuel

If you look around your kitchen and garage you’ll find chemicals and appliances that are used every day that can be ‘weaponized’ into a smoke bomb, flame thrower or even worse. Obviously that wasn’t the original intent of the product, but under the right circumstances and wrong intentions bad results occur. Even something as innocuous as a suitcase can be turned into a ‘dirty suitcase bomb’. Remember after the fall of the Russian Empire we were afraid some of their suitcase bombs made it onto the streets?

A similar comparison can be made regarding social values, competing interests and how they are maintained and managed. James Madison called these special interests ‘Factions’ and warned about how divisive they could be in pitting one group against another, but also how healthy, as they provided the right friction in a Republic for order in the marketplace and a stable society. Madison and the other founding era fathers warned against the abuse and instability of democracy.

This week the Supreme Court has taken up two cases that will greatly impact our society, Liz Goodwin, Yahoo! writes regarding the Supreme Court’s decision to take up two gay rights cases, “Supreme Court gay marriage cases could set stage for dramatic societal changes”. On Tuesday the Court will decide whether California’s Proposition 8 ban on gay marriage denies rights and discriminates unfairly against gays. On Wednesday the Court will take up a case that will look at whether the 1996 Defense of Marriage Act which bars the Federal Government from recognizing gay marriage is constitutional.

Out of the two cases the CA Prop 8, Perry v. Hollingsworth is considered by both Pro and Anti-gay rights groups as having the most far reaching effect. “In Perry, there’s a possibility that the court could declare that gays and lesbians have a fundamental right to marriage just as heterosexual couples do. Such a decision would send a message from the court that both same sex and heterosexual relationships must be treated equally in the eyes of the law.”

The trickledown effect could result in restrictions on religious freedoms, adoption and contract law, personal property rights, health care and every other nook and cranny of society. What the Perry case does it reaffirms the Supreme Court and the Federal Government as ‘the law of the land’ and final arbiter. The irony here is that ‘The Majority’ for years has suppressed the rights of a minority (less than 10% of population) to protect societal norms where today the tables might be turned.

Madison in Federalist Papers #10 defines Factions or Special Interest, “By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.” Madison goes on to write, “The latent causes of faction are thus sown in the nature of man; and we see them everywhere brought into different degrees of activity, according to the different circumstances of civil society. A zeal for different opinions concerning religion, concerning government, and many other points, as well of speculation as of practice; an attachment to different leaders ambitiously contending for pre-eminence and power; or to persons of other descriptions whose fortunes have been interesting to the human passions, have, in turn, divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex and oppress each other than to co-operate for their common good.”

Madison as well as the other framers understood the potential for abuse in a democracy as individuals through special interest will line up behind leaders to promote and protect their interests over the interests of others.

Special Interest groups play into the political dynamics as Madison had suggested, ‘an attachment to different leaders ambitiously contending for pre-eminence and power’ which divides men into parties. The Democrats pocket the Unions, Teachers and African Americans, while the Republicans herd family values, business and the defense industry.

“The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.” Madison #10

Democracy if it works at all works best at lower rungs of government as there tends to be more homogeneity and common interests. The Constitution was constructed to restrain democratic rule, as Madison suggested “Factions tend to nullify each other.” This applies to other ‘Weaponized Causes’ like Gun Ownership, Security, Commerce, Education, Abortion, and Welfare as well. Today however, slimmer majorities rule over larger minorities and remove individual liberties for a ‘common good’. Early nationalists like Alexander Hamilton who were leery of individuals to behave correctly, were more in favor of an aristocratic rule but were in the minority,  as the US Constitution protected  state sovereignty and limited delegated power restrained the federal government and the instability of democracy. Factions (Special Interest) fought their battles at the state level and in the marketplace. Today however, at the whim of the next social or economic crisis Washington removes the rights and freedoms of one group in order to provide for another.

In a recent interview, Sandra Day O’Connor recalled fond memories of her colleague Chief Justice William Rehnquist with whom she graduated with from Stanford University and served with on the Stanford Law Review. In the interview she alluded to the progress the Chief Justice had made in ‘ruling for the majority’ when it came to landmark issues, inferring a greater importance of majority rule rather than constitutional rule of law. While the cautions of democracy have gone unheeded over the past century, with power concentrated in Washington, it now has been left in the hands of the democracy of nine to rule over the 315 million.

Recently, Mark Victor a Defense Attorney and Radio Host in Phoenix AZ speaking before a Republican group for Liberty asked, “With a show of hands how many are for Freedom!” Hands went up all around the room with many shouts. Next he started to ask, “How many believe in the freedom to practice your faith!” Again, hands up and screams around the room. After Mark was through the list of freedoms that appeal to Conservative Republicans, he asked, “How many are for the freedom to use drugs?” All of a sudden it fell quiet. Again, “How many are for the freedom to be gay or choose a nontraditional lifestyle?” No one raised their hands. Mark says he does that in Progressive Democrat meetings as well, and no one applauded or raised their hands in support of freedom of individuals to keep their paychecks, choose their schools, choose their health care or the rights of the unborn. Do you see the problem?

Thomas Jefferson put it this way, “I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it”.

Madison’s remedy was the Constitution which created bicameral powers and dual sovereignty of state and federal governments that avoided systemic failure that was a characteristic of democracies in the past. Through decentralized state powers it allowed for government closer to the people and experimentation in solving social and economic maladies that allowed for failure and success. “The influence of factious leaders may kindle a flame within their particular States, but will be unable to spread a general conflagration through the other States. A religious sect may degenerate into a political faction in a part of the Confederacy; but the variety of sects dispersed over the entire face of it must secure the national councils against any danger from that source. A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State.”

At the end of the Constitutional Convention in 1787, a lady (Mrs. Powell) asked Benjamin Franklin, “Well Doctor what have we got a republic or a monarchy? To which he replied, “A republic if you can keep it.”

While the rights of each individual and the natural law freedoms that supersede government are in play through these rulings, an important issue lost in the fray is the federalist system that our nation was created from and maintains those freedoms. Jonathan Alder writing in Reason Magazine in defense of state constitutional power that keeps in check federal power, “The system of federalism is an essential guarantor of individual liberty and constraint on governmental power. As the Supreme Court noted in a unanimous 2011 decision, “federalism secures the freedom of the individual.” It does this by, among other things, forcing states to compete with one another for citizens by providing different mixes of policies (taxes, services, and legal guarantees) in an effort to discover the best mix. Where states get it wrong, such as by imposing excessive taxes or unjust laws, people remain free to “vote with their feet”  and move to a jurisdiction with laws more in line with their beliefs.”

The question to ask ourselves today is ‘Can we restore the integrity of the Republic?’, where most decisions that are made today in Washington would be made in private transactions, through local communities and State Houses. Or should nine jurors in Washington supersede individual liberty and rule for Special Interests?

Christopher Mahon, Editor

editor@ambidextrouscivicdiscourse.com

 

Federal Reserve announces Consent Order against Citigroup, addressing their deficiencies and corrective measures.

 

NOW, THEREFORE, it is hereby ordered that, before the filing of any notices, or taking
of any testimony or adjudication of or finding on any issues of fact or law herein, and without
this Order constituting an admission or denial by Citigroup of any allegation made or implied by
the Board of Governors in connection with this matter, and solely for the purpose of settling this 4
matter without a formal proceeding being filed and without the necessity for protracted or
extended hearings or testimony, pursuant to sections 8(b)(1) and (3) of the FDI Act (12 U.S.C.
§§1818(b)(1) and 1818(b)(3)), Citigroup and its institution-affiliated parties shall cease and
desist and take affirmative action as follows:
Source of Strength
1. The board of directors of Citigroup shall take appropriate steps to fully utilize
Citigroup’s financial and managerial resources, pursuant to section 38A of the FDI Act
(12 U.S.C. § 1831o-1) and section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R.
§ 225.4(a)), to serve as a source of strength to each of the Banks, including, but not limited to,
taking stepsto ensure that each of the Banks complies with the Consent Orders issued by their
respective banking agency supervisors and any other supervisory actions taken by their respective
banking agency supervisors.
Board Oversight
2. Within 60 days of this Order, Citigroup’s board of directors shall submit to the
Reserve Bank an acceptable written plan to continue ongoing enhancements to the board’s
oversight of Citigroup’s firmwide compliance risk management program with regard to
compliance with BSA/AML Requirements. The plan shall describe the actions that the board of
directors has taken since the Consent Orders became effective and will take to improve
Citigroup’s firmwide compliance risk management with regard to BSA/AML Requirements,
including, but not limited to, ensuring that such compliance risk is effectively managed across
Citigroup, including within and across business lines, support units, legal entities, and
jurisdictions in which Citigroup and its subsidiaries operate. The plan shall, at a minimum,
address, consider, and include: 5
(a) Funding for personnel, systems, and other resources as are needed to
operate a BSA/AML compliance risk management program that is commensurate with the
compliance risk profile of the organization and that fully addresses the organization’s
compliance risks on a timely and effective basis;
(b) policies to instill a proactive approach throughout the organization in
identifying, communicating, and managing BSA/AML compliance risks;
(c) measures to ensure adherence to approved BSA/AML compliance
policies, procedures, and standards, and ensure the timely completion of related projects and
initiatives; and
(d) measures to ensure the resolution of BSA/AML-related audit, compliance
reviews, and examination findings.
Compliance Risk Management Program
3. Within 60 days of this Order, Citigroup shall submit an acceptable written plan to
the Reserve Bank to continue to improve the governance, structure, and operations of the
compliance risk management program with regard to BSA/AML Requirements and the
regulations issued by the Office of Foreign Assets Control of the United States Department of
the Treasury (“OFAC”) (31 C.F.R. Chapter V). The plan shall, at a minimum, address, consider,
and include:
(a) The structure and composition of Citigroup’s compliance committees and
a determination of the optimum structure and composition needed to provide adequate oversight
of Citigroup’s firmwide compliance risk management;
(b) enhanced written policies, procedures, and compliance risk management
standards; 6
(c) the independence and authority of the compliance functions and related
compliance committees;
(d) the duties and responsibilities of the heads of compliance for global
business lines, the BSA/AML global program, and legal entities, as applicable, including the
reporting lines within Citigroup, and between Citigroup and its business lines and legal entities;
(e) a process for periodically reevaluating staffing needs in relation to the
organization’s compliance risk profile, and management succession planning for key compliance
positions;
(f) the scope and frequency of compliance risk assessments;
(g) measures to ensure compliance and improve accountability within
business lines and legal entities and their respective compliance functions;
(h) procedures for the periodic testing of the effectiveness of the compliance
risk management program;
(i) consistency with the Board of Governors’ guidance regarding Compliance
Risk Management Programs and Oversight at Large Banking Organizations with Complex
Compliance Profiles, dated October 16, 2008 (SR 08-8); and
(j) the findings and recommendations of the consultant engaged by Citibank
pursuant to Article V of Citibank’s Consent Order with the OCC.
BSA/AML Compliance Program
4. Within 90 days of this Order, Citigroup shall complete a review of the
effectiveness of Citigroup’s firmwide BSA/AML compliance program (the “BSA/AML Review”)
and prepare a written report of findings and recommendations (the “BSA/AML Report”). The
BSA/AML Review shall, at a minimum, address, consider, and include: 7
(a) The structure of Citigroup’s firmwide BSA/AML compliance program,
including reporting lines and taking into account the functions that Citigroup performs for the
Banks and Citigroup’s other subsidiaries;
(b) standards for BSA/AML compliance that apply on a firmwide basis,
including business lines and legal entities;
(c) the duties, responsibilities, and authority of Citigroup’s chief BSA/AML
compliance official, including reporting lines within Citigroup and from Citigroup’s business lines
and legal entities to the chief BSA/AML compliance official;
(d) communication of BSA/AML-related roles and responsibilities across the
organization;
(e) coordination among corporate BSA/AML compliance and the BSA/AML
compliance functions of the Banks, Citigroup’s other subsidiaries, and business lines;
(f) processes for monitoring business line and legal entity compliance with
Citigroup’s BSA/AML policies and procedures and BSA/AML requirements;
(g) policies, procedures, and processes, including, but not limited to, those for
identifying and investigating suspicious activity, and for filing suspicious activity reports;
(h) the scope and frequency of reporting with respect to BSA/AML compliance
within Citigroup, at a minimum, to senior management and board committees, as well as between
Citigroup and its business lines and legal entities;
(i) BSA/AML-related risk assessments;
(j) measures to ensure that any BSA/AML compliance functions, including,
but not limited to, transaction monitoring and suspicious activity reporting, that are performed by 8
Citigroup’s nonbank subsidiaries for the Banks or the Edge Act corporation are performed to meet
regulatory requirements;
(k) independent testing within Citigroup entities subject to BSA/AML
Requirements;
(l) training; and
(m) the findings and recommendations of the consultant engaged by Citibank
pursuant to Article V of Citibank’s Consent Order with the OCC.
5. Within 120 days of this Order, the board of directors of Citigroup shall review the
BSA/AML Report and shall submit an acceptable written plan to the Reserve Bank that includes a
description of the specific actions that Citigroup will take to continue to strengthen the
management and oversight of Citigroup’s firmwide BSA/AML compliance program, taking into
account the requirements of the appropriate federal or state supervisor of Citigroup’s functionally
regulated subsidiaries.
Progress Reports
6. Within 30 days after the end of each calendar quarter following the date of this
Order, the board of directors of Citigroup or an authorized committee thereof shall submit to the
Reserve Bank written progress reports detailing the form and manner of all actions taken to secure
compliance with this Order, a timetable and schedule to implement specific remedial actions to be
taken to address the recommendation in the Report, and the results thereof.
Approval and Implementation of Plans
7. (a) Citigroup shall submit written plans that are acceptable to the Reserve
Bank within the applicable time periods set forth in paragraphs 2, 3, and 5 of this Order. 9
(b) Within 10 days of approval by the Reserve Bank, Citigroup shall adopt the
approved plans. Upon adoption, Citigroup shall promptly implement the approved plans and
thereafter fully comply with them.
(c) During the term of this Order, the approved plans shall not be amended or
rescinded without the prior written approval of the Reserve Bank.
Communications
8. All communications regarding this Order shall be sent to:
(a) Jonathan Polk
Senior Vice President
Federal Reserve Bank of New York
33 Liberty Street
New York, New York 10045
(b) Kevin L. Thurm
Chief Compliance Officer
Citigroup, Inc.
399 Park Avenue
New York, New York 10022
Miscellaneous
9. Notwithstanding any provision of this Order to the contrary, the Reserve Bank
may, in its sole discretion, grant written extensions of time to Citigroup to comply with any
provision of this Order.
10. The provisions of this Order shall be binding upon Citigroup and its institutionaffiliated parties, in their capacities as such, and their successors and assigns.
11. Each provision of this Order shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Reserve Bank. 10
12. The provisions of this Order shall not bar, estop, or otherwise prevent the Board
of Governors, the Reserve Bank, or any other federal or state agency from taking any other
action affecting Citigroup, the Banks, any nonbank subsidiary of Citigroup, or any of their
current or former institution-affiliated parties and their successors and assigns.
By Order of the Board of Governors effective this 21st day of March, 2013.
CITIGROUP INC. BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM

Full Text

Federal Reserve releases information highlighting their January FOMC meeting. They see moderate growth with the goal of ‘maximum employment with price stability’. Fed will maintain fed funds rate 0-.25% as long as unemployment remains over 6.5% and report projects inflation stable over next couple years in a 2% range. The committee also has decided to,

“continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”

Full Article

Release Date: March 20, 2013

For immediate release
Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year. Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

FOMC Report

“Do you want a government run by majority rule or a government restrained by its own documents?” Senator Rand Paul

The President last week was challenged by Congress to be specific in its ‘Drone Policy’ and other military permissible actions on US soil. Through Attorney General Eric Holder, he admitted it was ‘inappropriate’ and after Senator Rand Paul’s 13 hour filibuster of CIA Director nominee John Brennan, admitted in a letter the next day, “It has come to my attention that you have now asked an additional question: ‘Does the President have the authority to use a weaponized drone to kill an American not engaged in combat on American soil?’ The answer to that question is no.”

Was the President’s answer adequate enough and by what authority is that ‘NO’ tied to?

Senator Paul framed the issue in the first hour of the filibuster, “If there’s a gentleman or a woman with a grenade launcher attacking our buildings or our Capitol, we use lethal force. You don’t get due process if you’re involved with actively attacking us, our soldiers or our government. You don’t get due process if you’re overseas in a battle shooting at our soldiers. But that’s not what we’re talking about. The Wall Street Journal reported and said that the bulk of the drone attacks are signature attacks. They don’t even know the name of the person. A line or a caravan is going from a place where we think there are bad people to a place where we think they might commit harm and we kill the caravan, not the person. Is that the standard that we will now use in America?”

“I will speak today until the President responds and says no, we won’t kill Americans in cafes; no, we won’t kill you at home in your bed at night; no, we won’t drop bombs on restaurants. Is that so hard?”

Senator Paul’s response to AG Holder’s letter the day after the filibuster was ‘Hooray!’ as he felt that those who staged the filibuster received the answer they were looking for and the American people are better off in hearing it. But while the Administration was dragged from ‘inappropriate’ to ‘No’, and there may even be an implied constitutional principle rather than arbitrary power that makes that decision, it is vague at best.

A definition of ‘Arbitrary Power’:

“Having unlimited power; uncontrolled or unrestricted by law; despotic; tyrannical: an arbitrary government.”

John Locke, a seventeenth century philosopher that some refer to as the ‘Father of Classical Liberalism’ who’s ideas the founding era fathers called upon in creating the US Constitution said, “This freedom from absolute, arbitrary power, is so necessary to, and closely joined with a man’s preservation, that he cannot part with it”. The mortal sin of government is arbitrary power, while a government restrained by law (constitution) will survive.

This has been the history of the United States, even while constitutional boundaries have been slowly broken down and powers arbitrarily assumed by Washington have become more prevalent, the ‘SS America’ though her belly full with assumed authority in Washington still navigates and protects its precious cargo and passengers to some degree. But what transpired last week is very important in understanding the condition and restoration needed to right this Republic.

While the week started out very interesting as Washington rarely does, ‘aired its dirty laundry’ it became even more so as Senators John McCain and Lindsay Graham criticized Senator Paul and his colleagues that staged the filibuster the next morning. Senator McCain called some of Paul’s comments ‘Ridiculous’ and said,  “So we’ve done a, I think, a disservice to a lot Americans by making them believe that somehow they’re in danger from their government They’re not. But we are in danger. We are in danger from a dedicated, longstanding, easily replaceable leadership enemy that is hellbent on our destruction. And this leads us to having to do things that perhaps we haven’t had to do in other more conventional wars.”

Senator Graham added a rebuke and challenge to why now, “We should be talking about it. I welcome a reasoned discussion. But to my Republican colleagues, I don’t remember any of you coming down here suggesting that President Bush was going to kill anybody with a drone.”

To help Senator Graham’s memory, there were those in Congress (not many GOP) that criticized the Patriot Act and violations of FISA (Foreign Intelligence Surveillance Act) in unwarranted monitoring of emails and cell phone calls as there was a great public shift in tolerance at the time to give up personal freedoms for security. Many of the legislative and executive actions back then have paved the way for more aggressive legislation that could possibly violate state non delegated power and personal liberties like due process today. NDAA 2012 is a good example of that as around 20 states are in the process of creating resolutions and laws to ‘nullify’ it.

Senator Rand’s response to McCain and Graham was, “They are on the wrong side of history on this one. They believe that war is everywhere and there kind of with the President who believes there’s no geographic limitations. They also say that the laws of war apply, what the laws of war apply means is that you don’t get Due Process and I can understand that in a battlefield, you don’t read Miranda Rights, if you are shooting at me, we kill you. But they say America’s a battlefield and that’s a huge mistake. If we bring what is in effect Marshall Law to America, Americans will be really upset. These are the same people (McCain and Graham) that want to detain American citizens indefinitely without a trial.”

While to the ‘untrained eye’ these last few days may seem like a lot to do about nothing and they may automatically tune out politics or just can’t see drone strikes or other military actions on American soil. But consider, in ‘broad daylight’ we have an administration that can only muster up ‘inappropriate’ to describe the act of the federal government killing Americans without due process and many in Congress berating the questioners. If this is the response in public, what could happen in the ‘Fog of War’? Isn’t it important to tie these arbitrary powers to law and a system of authorization?

While filibusters are unique in that they happen infrequently, the filibuster by Senator Rand Paul and others was unique in that it called for less federal military intervention which we haven’t heard from in more than six decades. Interesting, a filibuster in 1917 by Republicans to kill pro-intervention into World War 1 was defeated by senate Democrats through cloture at the urging of President Woodrow Wilson.

Up until the early 1950s, many conservatives were non-interventionists and the ‘Old Right’ was committed to restraining executive powers until the late 1960s when neoconservatives began to endorse interventionism in opposition to the USSR.

The Right were generally dragged kicking and screaming into both world wars and as McCain et al demonstrated this past week, neoconservatives are having a very difficult time justifying the precious lives of our children, the destruction of important military assets and the sacrifice of individual liberty in a futile effort to buy off world support through aid and occupation and the pretense of security at home through paternalism.

As Ecclesiastes 1.9 says, “There’s nothing new under the sun.” What has been done is being done and whether it’s Conservative or Progressive ideology that you think is ‘new’, you are mistaken my friend.

But there is a ‘Plumbline’, a measuring stick that allows these old ideas to be rehashed and it protects liberty in the process. It’s the US Constitution, which says ‘No’ to federal power except for which has been specifically delegated and ‘Yes’ to the states for all other non delegated power.

James Madison writing in Federalist Papers 10 warned against the loss of personal freedoms in a ‘centralized government’, “A pure democracy can admit no cure for the mischiefs of faction(s) (special interests).. Hence it is, that democracies have ever been found incompatible with personal security or the rights of property; and have, in general, been as short in their lives as they have been violent in their deaths”.

Missing from the President’s and AG Holder’s response, as well as the media coverage and the critics of the filibuster is the US Constitution and a discussion of the limits of government power under it. Washington as we know it HAS TO live under arbitrary power to consolidate more power and the money that goes with it. For Individual Liberty to prevail and a healthy society as a result, constitutional authority must be reestablished.

To be blunt, it is the ‘Rand Pauls’ and Ron Wydens (sole Democratic Senator to speak at filibuster) whose job it is to dismantle (not change) Washington and it is the state legislatures around the nation whose job it is to resurrect State Authority in order to bring back Constitutional alignment.

Christopher M. Mahon, Editor

 

Christopher Mahon is the Editor of Ambidextrous Civic Discourse, ‘Where the Right and Left meet’; a place where you can find information about economics, philosophical and political issues that challenge those on the ‘right’ or the ‘left’ on what works best in society. At ACD you can find articles, essays and book classics on the subjects mentioned above that contrast differences like Keynesian vs. Classical Economics or the function of government – Negative vs. Positive Liberty. Please peruse our Library and videos. Chris has a Masters in Accounting and Financial Management. Learn more at –  www.ambidextrouscivicdiscourse.com

 

As the President and Congress face Sequestration, an imposed cut on spending increases of roughly 2% which would amount to $42 billion in FY 2013 according to the CBO (Congressional Budget Office). Most would agree that cutting 2% out of their home budget is no fun, as evenings out and other discretionary spending would suffer but it wouldn’t warrant the reactions coming from the Media, the President and other politicians in Washington.

Some  have argued against federal spending cuts and would say the more important issue is a ‘balanced budget’ and that raising taxes would be the better way to accomplish this, as you can pinpoint those taxes toward the wealthier class of citizens. Economists like Paul Krugman of the NYTimes go even further by inferring that private and government spending in the economy make no difference and that he could argue that money in government hands can be ‘invested’ more fairly. Free market believers on the other hand would make the point that Laissez-faire “an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression,” is more efficient, less fragile and as a result of competitive markets allows for success, failure and the reallocation of resources to their most productive positions.

Today, if you are in the ‘Middle Class’ you might be expecting something from Washington as both parties in the 2012 election out did themselves in making promises to this class of people.

In two recent studies by Harvard Professors, they show that levels of public spending affects private markets and the economy in a negative way, (maybe Harvard Economic chairman Greg Mankiw is making some influence in the pro-Keynesian college curriculum). In the studies  ”Large changes in fiscal policy: taxes versus spending“, Alberto Alesina and Silvia Ardagna and “Do Powerful Politicians Cause Corporate Downsizing?” Lauren Cohen, Joshua Coval, and Christopher Malloy (all of  Harvard Business School), the ‘public versus private economy’ is taken into consideration on how they perform and interact. In the ‘Large Changes’ study, they look at OECD countries (Organisation for Economic Co-operation and Development) from 1970-2007 and identified periods of austerity where government was slashed and periods when government grew in proportion to the private market. While there has been criticism of the study, the study supports the Classical Market (Laissez-faire) concept that less government intrusion leaves the private market to ‘self regulate’, while isolating failures (which become systemic in centralized/government dominated markets) and through competition, creative models result that are more efficient and tailored to consumers’ wants and needs. In the second study, they track politicians in the US Congress that become Chairpersons or influential leaders of their party and whether or not that affects the amount of federal spending that flows to their home state and the effects of that spending. The study finds that there’s an almost 50% increase in federal spending that flows to the home state of the Congressman and that the change in public:private ratio (increase in public) has a dramatic negative influence on the state’s private industries with layoffs and economic slow downs resulting many times. In the first study, when public spending has been cut, and there were some isolated incidences of initial slowdowns, vibrant growth has followed. The argument being made by the White House and some in Congress is that if you cut federal spending the ‘fragile US recovery’ will stall. Many believe this has already happened and that the opposite should prove true that if you cut federal spending, putting more money in the hands of the individual and the private market, and if Washington gives clear signals to the credit markets and private capital sitting on the sidelines that Washington will ‘stand down’, that sustainable recovery is more probable.

Over the last Eighty years, Washington has built an intricate ‘Welfare and Warfare’ system that provides regulation and subsidizes to almost every area of society through business, individual and foreign aid. “Government spending at the start of the 20th century was less than 7 percent of GDP. It vaulted to almost 30 percent of GDP by the end of World War I, and then settled down to 10 percent of GDP in the 1920s. In the 1930s spending doubled to 20 percent of GDP. Defense spending in World War II drove overall government spending over 50 percent of GDP before declining to 22 percent of GDP in the late 1940s. The 1950s began a steady spending increase to about 36 percent of GDP by 1982. In the 1990s and 2000s government spending stayed about constant at 33-35 percent of GDP, but in the aftermath of the Crash of 2008 spending has jogged up to 40 percent of GDP.” USGovernmentSpending.com

While many Conservatives have warned of a growing ‘Socialization’ of  US society through federal domestic intervention into commerce, education, family and other areas of civilian life that in their view ‘robs personal freedoms’, Progressives have warned about a growing military complex as a result of protecting the US against terrorism abroad and more recently even domestically as we ‘hunt down’ homegrown terrorists. The US has been transformed from a predominantly ‘private society’ where most transactions happen without government intervention to a ‘mixed society’ where a considerable amount of daily transactions (direct and indirect) include government influence.

Washington has proved what the founding era fathers feared, that the nature of federal power and spending  is to grow and that they can’t police themselves. There are only two likely outcomes:

One is given in this illustration by Stan Druckenmiller a former ‘well heeled’ Hedge Fund Manager, ”The bond market is the banker for the federal government. Imagine if you will, your banker comes to you and you’re making $40,000/yr and lends you money at zero interest – no cost. Later, after you’re in debt $5 million, they realize, ‘He’s making $40,000 and has $5 million in debt!’ Suddenly your interest rate goes to 16% and carrying cost goes through the roof. That’s what will happen to the US government over the next 10 years, and it will happen suddenly like Greece. Greece was in good shape in 2010.” The market eventually gets it’s revenge.

The second, is happening but slowly as several states for various reasons (anti-NDAA and Gun Control legislation for example) are standing up to federal power that the states believe violate constitutional authority and are reclaiming those powers to protect their citizens. As Lincoln era legislation was passed in the 1860s: National Banking Acts, Legal Tender, Morrill Grants (education) and railway acts (early corporate cronyism) intended to nationalize power for a greater purpose of the ‘American Experience’ which was followed years later by FDR New Deal federal expansion of power as mentioned earlier in the article, popular sentiment has started to change as Americans are looking for relief and protection from a capricious federal government that it is out of control.

After World War 1, Presidents Warren Harding and Calvin Coolidge were met in 1920 with one of the worst Depressions in history as prices fell almost 20% (Wholesale by more than 36%). Some blamed it on returning troops from the war, others on monetary policy as interest rates were almost doubled and even some blamed gold and the anticipation of inflation (Federal Reserve policies). Harding and Coolidge cut  federal spending by more than 20%, considering government spending a burden on the private market, and the devastating depression of 1920 lasted approximately 18 months. Economists will point to the austerity cuts of the 1920s and Laissez-faire policies of Coolidge as the path to follow, while some instead will point to the aggressive spending of the New Deal era as the better solution for today. Keep in mind that the 1929 depression didn’t show ‘green shoots’ until 1937 and the stock market took 25 years to recover to its pre-crash levels.

The real question is more philosophical and goes to the core of Platonic and Hobbesian differences. Plato illustrated three classes of citizens in his Republic: A ‘Ruler’ class, ‘Warrior’ class and ‘Worker’ class. Washington today has become that Ruler class, while the courts and law enforcement could be the Warrior class and all others fall into the Worker class. Hobbes believed that ‘all men were created equal’ in the sense of potential and ability of each man to find life, liberty and to pursue happiness. In that philosophy our Declaration of Independence was forged and won, the US Constitution was built upon this principle that ‘men’ can find their way and through the voluntary and free association and exchange in the marketplace society is regulated and healthy, while government can play a small part in a negative position (stands down) to defend man’s property and individual liberties. These rights remain with man until man forfeits those rights when taking them from another. Which will we choose going forward?

Even if we took the advice of Coolidge and the studies mentioned above seriously and were able to make substantial cuts in federal spending and a robust recovery resulted; wouldn’t we find ourselves in jeopardy again as soon as the next crisis appears and the federal government steps in? In order to solve our spending problems we need to be fiscally responsible and we need to mend our Constitutional Fence.

Tell us what you think.

Christopher M. Mahon, Editor

editor@ambidextrouscivicdiscourse.com

 

 

 

Jerome Powell, board member of the Federal Reserve teed up his speech on ‘too big to fail’ At the Institute of International Bankers 2013 Washington Conference, Washington, D.C. on March 4, 2013 by saying, “In broad terms, these reforms (Dodd-Frank) seek to eliminate the expectation of bailouts in two ways–by significantly reducing the likelihood of systemic firm failures, and by greatly limiting the costs to society of such failures. When failures are unusual and the costs of such a failure are modest, the expectation at the heart of too big to fail will be substantially eliminated. My focus today is principally on the second of these two aspects of reform–containing the costs and systemic risks from failures, a goal being advanced by work to create a credible resolution authority.”

Powell who was appointed to the position May of 2012 and served as an Assistant Secretary and as Undersecretary of the Treasury under President George H.W. Bush and had worked for the Carlyle Group 1997-2005 graduated from Princeton and received his law degree from Georgetown went on to say,

“It is worth noting that too big to fail is not simply about size. A big institution is “too big” when there is an expectation that government will do whatever it takes to rescue that institution from failure, thus bestowing an effective risk premium subsidy. Reforms to end too big to fail must address the causes of this expectation.”

Powell remembering back to the Savings and Loan debacle, goes on to justify Fed intervention, “It happened in January 1991, at a time of great stress in the financial system and the broader economy, and only days after 45 depository institutions in the region had been closed and 300,000 deposit accounts frozen. My Treasury colleagues and I joined representatives of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board in a conference room on a Sunday morning. We came to understand that either the FDIC would protect all of the bank’s depositors, without regard to deposit insurance limits, or there would likely be a run on all the money center banks the next morning–the first such run since 1933. We chose the first option, without dissent.”

Powell believes that between the capitalization requirements in Basel III and the new oversights produced through Dodd-Frank of creating a ‘Single Port of Entry’ and a ‘Living Will’ type liquidation through Orderly Liquidation Authority (OLA) which he describes as similar to the bankruptcy process, that a banking systemic failure is less likely and that generally the financial markets are healthier today as a result.

“Under single point of entry, the FDIC will be appointed receiver of only the top-tier parent holding company of the failed financial group. Promptly after the parent holding company is placed into receivership, the FDIC will transfer the assets of the parent company (primarily its investments in subsidiaries) to a bridge holding company. Equity claims of the failed parent company’s shareholders will be wiped out, and claims of its unsecured debt holders will be written down as necessary to reflect any losses in the receivership that the shareholders cannot cover. To capitalize the bridge holding company and the operating subsidiaries, and to permit transfer of ownership and control of the bridge company back to private hands, the FDIC will exchange the remaining claims of unsecured creditors of the parent for equity and/or debt claims of the bridge company. If necessary, the FDIC would provide temporary liquidity to the bridge company until the “bail-in” of the failed parent company’s creditors can be accomplished.”

Critics of the OLA and other Dodd-Frank legislation say that basically the legislation promotes further Moral Hazard and ‘enshrines the taxpayer’ in the bailout process. In addition, it firmly places the federal government in the position of ‘choosing winners and losses’ as JP Morgan did himself during the Bank Panic of 1907, settling grudges and eliminating competition.

The ‘Living Will’ legislation requires ‘too big to fail’ entities to create a financial/legal document that outlines how the entity should be liquidated in case of ‘death’. Kind of like today’s Medical Proxies where care and decisions are given to someone else (receivership). It’s ironic that ‘end of life’ decisions, medical (Affordable Care Act) and financial (Dodd-Frank) all are ending up in the control of the federal government.

It was noted above that Mr Powell worked for the US Treasury prior to the Fed Reserve position which is fairly common and some view as producing a myopic view of financial problems and solutions. In addition, his work at Carlyle in Global investments reinforces the potential to maintain the status quo of a centralized financial system rather than alternatives that would diversify and minimize ‘long tail’ risks and systemic failure. As with many of our problems today, more government stands in the way of market solutions that allow failure that is not systemic, that is productive and the process reallocates resources to their more efficient uses rather than sophisticated ‘Crony Capitalism’.

To read the speech by Jerome Powell in its entirety.

Please share your thoughts with us and comment below. Thanks.
Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

In the 1939 Frank Capra fictional movie classic, ‘Mr Smith Goes To Washington’, we find after the death of a US Senator named Samuel Foley of a western state, the Governor of that state Governor Hubert “Happy” Hopper through pressure from his children appoints their Boys Club leader Jefferson Smith played by Jimmy Stewart to ‘go to Washington’ and take on the corruption and to build a boy’s park in his home state. Unfortunately for Mr Smith, being wet behind the ears and not knowing the harsh realities of the Belt Way and how favors and projects are bought and paid for, his efforts are challenged; as his colleague, also of the same state, senior Senator Joseph Pain played by Claude Rains and a powerful media magnate Jim Taylor who ‘runs the state’ plot Mr Smith’s demise through accusations of fraud and self aggrandizement in stealing the Boy’s Club money.

While Mr Smith is vindicated to some extent at the end of the film as the political graft of his state’s senior Senator Paine and media magnate Taylor is exposed, still you turn the movie off thinking that nothing really changes in Washington, DC.

I highly recommend the movie to our younger generation, and while it is in Black & White (for some reason that’s a ‘deal breaker’), you’ll enjoy it very much. But let’s modernize this story for today and address what most think – that ‘nothing really changes’ in Washington. Whether it’s a new President every four or eight years or even a grassroots movement like in 2010 when the GOP picked up many Congressional House and Senate seats, the frustration of most is the same as they see continued: budget deficits, US debt, and monetary policy that Washington uses to unconstitutionally over promise on yet more social, economic and foreign policy intervention at the expense of the Individual.

Enter Ron Paul stage left, arguably a ‘modern day Jefferson Smith’. While Paul raises the volume of conversation on both sides of the aisle and can even dominate a family dinner conversation; love, hate or ambivalence toward him, most would agree he has been consistently promoting the dynamics of applying the original meaning of constitutional limited powers, that there are specific delegated powers that belong to the federal (General) government and the non delegated powers belong to the states, municipalities and the Individual.

Representative Paul, retired last month and while we could discuss his failure/success in passing ‘constitutional’ federal legislation, he was known as ‘Dr NO’ where Washington tried to pass overreaching legislation that tread on state non delegated powers and he brought a voice to the forefront of the need to get back to limited government. Like Smith in the movie, Paul was marginalized by government collusion, insider deals and ‘Greater Good’ promises of national security, healthcare for all, and equality for the good of the ‘General Welfare’.

While it is important to send Congressmen to our US Capitol that understand and will vote pro-Constitution in an effort to protect Individual Liberties, it is even more important to send them to the state houses to resist federal overreach into non delegated powers.
Federal policies like the National Defense Authorization Act, Affordable Care Act and new federal Gun Control legislation are generally written in Washington and while they include invitations to special interest groups that can have influence in ‘authoring’, getting behind and supporting the legislation, the bill drafting rarely include the states or citizen groups of which they will have the greatest impact. The good news is that many states are standing up to these bills that while well intended, take away the non delegated powers of the states and create unintended results as have been seen through education, retirement, healthcare and employment.

The founding generation understood that limited enumerated federal power and all other power left to the states protected against a fragile and monolithic government structure that would be impervious to change and market dynamics. To paraphrase David Brooks, his recent comments on Meet The Press regarding the Newtown, CT shooting and federal gun control bills, “‘in New York City there’s literally a police station around the corner, a few minutes away, while in a small town in Wyoming, it could take 45 minutes to an hour if you are lucky..’” Brooks was emphasizing the differing needs and wants throughout the country and that to create ‘one size fits all’ policies are not practical and can be counterproductive.

Robert Natelson of the Goldwater Institute writing in The Original Constitution (2010), “One of the great achievements of the federal convention (1787) was the idea of dual sovereignty. Previously, people had conceived as sovereignty as an attribute always located in some one place. The Framers, however, drafted a document that divided sovereignty between states and federal government—or more precisely between the American people as a whole and subsets of the American people operating through their state governments.” Natelson goes on to use the Ratifiers’ understanding of what they were signing as delegates of the Colonies (States) at the time. He digs into rare documents of the colonial conventions that expose their fear of a runaway federal government that would eventually create one sovereign government and the rights of the people would be lost. While the states and local governments had the power to create or support churches, currency and covenants on how to live, they did not want that falling into the hands of a ‘General Government’.

Unfortunately for the signers it wouldn’t be long before those constitutional lines would be challenged as both Virginia and Kentucky in 1799 created resolutions written by Madison and Jefferson in opposition to the Alien and Sedition Act in part but also as the seeds of a monolithic process were already at work as the Federal Government proposed that they could regulate their own power through their three branches of Government. These resolutions were a wakeup call that the states had sovereign powers and that it was within their constitutional rights to defend them.

Madison warned, “Though clothed with the pretext of necessity, or disguised by arguments of expediency, may yet establish precedents which may ultimately devote a generous and unsuspicious people to all the consequences of usurped power.” Big Government if sold properly galvanizes a constituency of a majority over a minority only when the states shirk their responsibilities.

At the website Tenth Amendment Center, you can see which states have started to resist federal overreach into the non delegated powers of the states. Between ‘Health Freedom Acts’, Nullification, No Medicare Expansion and outright Rejection there are more than 40 states involved in resisting federal power in the Affordable Care Act. There are 17 states currently in different stages of nullifying the National Defense Authorization Act (NDAA 2012) legislation that allows the federal government to violate Due Process rights and potentially to commandeer state resources without state authorization.

Unfortunately, these success stories of the States standing up for their rightful powers and responsibilities are not covered on national news outlets and there is an obvious need for more resources and involvement in each state to resist a growing federal government and its overreach into state non delegated powers.

If, like after watching the 1939 classic ‘Mr Smith Goes To Washington’ you find yourself saying, “What can I do? Can there really be change?” The answer is yes but it’s not in Washington politics but at your State House or in your local legislative District. The powers of Nullification, Interposition and other Article V tools have lain dormant for years, but today is the day for states to take action. Get involved by getting local in your politics. You can find out what’s going on in your state by visiting the Tenth Amendment Center.

For years Wall Street and Washington has siphoned off our ‘best and brightest’ to concentrate power, isn’t it time through the sovereign powers of the states to diffuse Washington’s unconstitutional stranglehold on society?

Christopher M. Mahon, Editor

A very interesting exchange on Foxnews Sunday with Chris Wallace as Karl Rove, one of the panelists is asked about recent comments from Talk Radio host Mark Levin who said, “He’s also up there with that stupid little third grade white board of his, with his fourth-grade writing style, talking about how they committed $30 million to Tea Party candidates. Bring on your little white board. We’re ready!”

Levin, like many other media critics, grassroots Republican Party groups like the Tea Party are still hurting from the devastating loss the party suffered in 2012 and who blame Rove in part with supporting nominees and a ‘runaway platform’ after the convention last August that many states, local districts and the grassroots like the Tea Party didn’t support.

Karl Rove, a ‘Republican Strategist’ has been involved with the political process since 1968 and has worked with mostly ‘modern traditional’ Republican candidates whose policies generally support a large military footprint and supply side business incentives. Rove has played a part in both George H and George W Bush campaigns and other campaigns like Ronald Reagan’s.

Rove has been in the news lately when it was announced earlier this year that he was starting up the Conservative Victory Project, which is described on Wikipedia as, “the prominent Republican political activist, and the super-PAC American Crossroads. Its purpose was to support “electable” conservative political candidates for political office in the United States. The effort was prompted by embarrassing failures of several Tea Party and independent conservative candidates in the elections of 2012. The project has been strongly criticized by some other conservative activists.”

Rove goes on to make the point later in the Foxnews show, “Right. And our (Conservative Victory Project) object is, to avoid having stupid candidates who can’t win general elections, who are undisciplined, can’t raise money, aren’t putting together the support necessary to win a general election campaign, because this money is too difficult to raise to be spending it on behalf of candidates who have little chance of winning in a general election.” Wallace then goes on to ask this question to Bob Woodward, “Bob, what does it say about the Republican Party when you have Karl Rove stepping in there to say we have got to try to police those Republican primary voters — I mean, it’s part of the process, I’m not saying there is anything wrong with that, but they are trying to police who Republican primary voters are going to pick to go up against Democrats (interrupted).. and let me just finish the question. And, when you have Marco Rubio, who is pretty conservative and a Tea Party favorite giving the Republican response and the Tea Party thinks they have to have somebody else to give a response to the response?” Woodward then responds, “My last book is going to be called “Some People Never Go Away,” and Karl is going to get his own chapter (LAUGHTER) because he never goes away.”

Woodward goes on to point out, “I think the problem in the Republican Party is really not money. I think they’ve got lots of it. I think it is – theory of the case, why are we here, what is our message, how to connect to the real world and this idea about 30 million here, we’re going to do that, I think is the wrong track…you’re going to set yourself up as a kind of politburo, vetting these candidates …I mean the whole theory of Republicanism is to let the local state or a district decide.”

Is Karl Rove or other party advocates needed to sift out ‘unelectable’ candidates or can that be done through the ‘primary marketplace’ (as Rand Paul suggested) or from the ground up through local and district support for candidates and issues? If Rove is a problem is he merely a symptom of a greater problem that lies at the feet of the Republican National Committee (RNC)?

Many have tried to pin down a reason for the GOP’s victory in the 2010 election results: An economy in crisis, a rejection of Obama and the Tea Party and other grassroots movements that were calling for ‘limited government’ and ‘fiscal responsibility’. While incumbents were fair game, it was generally a big year for Republicans. Among record turnout, the GOP saw increased numbers in most categories and young people in particular.

The college students that were turning out for Tea Party and other grassroots movements that centered on ‘Liberty’, ‘Limited Government’ and the Constitution seemed to strike a chord with the message. But then they saw their candidate Ron Paul vilified and marginalized in both the news media and the debates. The issues that were important to them – limiting federal power, free markets, keeping federal government out of social issues and a ‘constitutional compass’ weren’t taken seriously. But they were told, even though their candidate was battered and bruised all was not for nothing as the Convention in August (2012) would show that they were heard loud and clear and that some of those issues would make it onto the RNC platform.

In ‘RNC Rule 12: The Death of The GOP?’ during the RNC Convention last year I wrote about the latest RNC rule change to control the national platform. “The RNC Rule 12 that was enacted yesterday gives the ability of the GOP establishment in Washington the power to change rules and regulations quickly to destabilize grassroots movements that have less funds and influence in order to centralize power and the platform. Tea Party-type fires will be extinguished way earlier and if you happen to be in a majority interest today, good luck when the majority changes tomorrow due to special interest winds – platform will follow favor and money. Any creative grassroots movement going forward unfortunately will occur outside the GOP brand.”

The history of the Republican Party starts in 1854. The history of the RNC starts in 1856, launched with the goal of equal representation throughout the states through one representative from each state. The idea was that through local and diverse representation the people would be heard and constitutional liberty would be protected and ideas and solutions would germinate locally and arrive in Washington to create a national platform. As years have passed that representation has changed and power has moved from the rural and urban locales to Washington, DC. Ironically, Woodward unlike some of the GOP panelists picked up on that.

If the Republican Party can solve their problem of representation and the irresistible urge to centralize power in Washington, maybe that can be reflected in their national platform that puts the authority of the Constitution first in governing under the delegated powers and protecting the non delegated powers that were to remain in the states. Is the fate of the ‘Grand Ole Party’ the fate of a Nation?

Christopher Mahon, editor

 

Remember Bowles-Simpson? They are back with a new plan and are the GOP getting ready to announce a ‘Flat Tax’?

Erskine Bowles and Alan Simpson of  the President’s  National Commission on Fiscal Responsibility and Reform which released a budget proposal on December 1, 2010, proposed $4 billion in deficit cuts and to a balance budget by 2035, Congressman Paul Ryan(R) was also on that committee and came out with his own plan that proposed to eliminate the US deficit in 30 years and to reduce the US debt, the 2012 version passed the House along party lines in 2011. Unfortunately nothing passed the Senate and nothing made it to the President’s desk to sign.

The new Bowles-Simpson plan is a little lighter as it would cut $2.4 billion over 10 years, cutting $600 billion from Medicare and Medicaid, $600 billion from new tax deductions and tax revenues, while $1.2 Billion in discretionary spending would be cut. It would also consider changes to slow increases in Social Security and other federal retirement payouts.

Last night at an Arizona Maricopa County Legislative District meeting, US Congressman David Schweikert(R), former Committee Member on Financial Services, shared his frustration in solving the budget and deficit problem and spoke of the urgency of a budget and how four years without one has meant no formal financial decisions made and that borrowed money goes to post budget commitments or status quo which compounds many financial problems within government.

Schweikert also hinted at a ‘news making’ tax policy announcement to be released by the GOP later this month, that would be ‘Flat tax’ in nature and could be a game changer in the Sequestration drama. Could mortgage interest, 179 deductions (accelerated depreciation) for business be on the table? Would GE (years ago paid no taxes on profit) or Face Book this year have to ante up? Schweikert believes this will force the Democrats to have to use logic and numbers in approaching spending and not emotional appeal to the public that he says quite frankly has been working.

The skeptic in me thinks this may be more of another stall to kick the can down the road a few more months for another ‘financial cliff’ or sequestration crisis. We’ll see.

Christopher M. Mahon, Editor

 

 

We live in a time of furious federal legislation that assaults constitutional integrity that limits government power through the specific delegated (enumerated) powers that the states have granted to the Federal Government. Unfortunately like in the late 18^th century and as we are finding out today, pragmatic attempts at solving socio-economic ills lead to attempts to violate these protections. If the lofty competitive universities of today and yesteryear teach anything, it’s that the ‘ends justify the means’ and as Plato mapped out in his Republic, there is an elite group that has been bred, taught and primed to lead and govern all men. They reside in Washington but power share through government-business relationships on Wall Street and other places that reinforce that power arrangement.

In the Virginia Legislature, January 23rd, 1799 addressing their concerns over the federal Alien and Sedition Acts of 1798 and its ambitious attempt to solve what the ‘Nationalists’ of their time perceived as an immigration problem, they passed law that violated state sovereignty for a ‘Greater Good’; and in Thomas Wood’s book, Nullification: How To Resist Federal Tyranny in the 21^st Century’, and his quote below, tell me if this doesn’t sound like the recent battle that Arizona had through SB 1070 and where the Constitution speaks regarding state and federal powers or some of the federal legislation coming from Washington regarding NDAA, Gun and most recent Immigration legislation that contains ‘unpacked’ language that potentially violate ‘Due Process’ and other rights for expediency:

“If a suspicion that aliens are dangerous, constitutes the justification of that power exercised over them by Congress then a similar suspicion will justify the exercise of a similar power over natives (citizens); because there is nothing in the Constitution distinguishing between the power of a state to permit the residence of natives and aliens. It is, therefore, a right originally possessed, and never surrendered, by the respective states, and which is rendered dear and valuable to Virginia, because it is assailed through the bosom of the Constitution, and because her peculiar situation renders the easy admission of artisans and laborers an interest of vast importance. But this bill contains other features, still more alarming and dangerous. It dispenses with the trial by jury; it violates the judicial system; it confounds legislative, executive, and judicial powers; it punishes without trial; and it bestows upon the President despotic power over a numerous class of men. Are such measures consistent with our constitutional principles? And will an accumulation of power so extensive in the hands of the executive, over aliens, secure to natives (citizens) the blessings of republican liberty?”

This is a time that Edmund Burke would point to in his often quoted, “All it takes for evil to prevail is for good men to do nothing.” If you want to get involved, going to Washington is not necessary and in most cases nonproductive. Rather, find your local political party affiliation meeting or look for a social connection on FaceBook, Meetup, etc where you can join forces on issues that should concern you. The ‘Tenth Amendment Center’ has an excellent tracking page for different issues and great articles, please visit it and get informed on how you can help in your state. Many states are in different phases of drafting legislation to thwart federal overreach, so get up off the couch or from your well warmed chair at Starbucks and get involved. It’s time to stand up for your family, your community and your state to keep government powers diffused, competitive and effective in protecting (not granting) the rights of each individual.

The market itself, unencumbered by federal intervention and minimally by state and local government, in its free and voluntary social and economic associations and transactions that marginalizes the ‘bad actors’, is the best system we have to safeguard the liberty of each and every one of us, and is at the heart of what the founding era Patriots believed and created.

Christopher M. Mahon, Editor

editor@ambidextrouscivicdiscourse.com

 

On the heels of the Sandy Hook shooting, New York State becomes the first to issue new gun legislation. “The Secure Ammunition and Firearms Enforcement Act, or SAFE Act, gives New York the toughest gun laws in the nation and touches on the mental health issues that both pro-gun and anti-gun activists say should be part of any new legislation.“

Many pro and anti-gun control advocates saw New York’s decision as a model for the President and Federal legislation, which he just signed moments ago as Executive Orders, which include: Mental Health requirements, Universal Background Checks, restore ban on military style (restrict manufacturing) and 10 round limit on magazines, tougher laws on sale of guns (possibly enforced by BATF) and federal funding to ‘put more cops back on streets’. But here’s where it gets both historically interesting and potentially dangerous for individual liberties and the unintended consequences that always follow in the wake of federal intervention into markets.

The Second Amendment that has been quoted by both sides of the gun control issue is unfortunately sorely misunderstood. Part of the Bill of Rights, the second amendment like the other amendments address specific rights based on natural (Divine) law that restricts federal power and emphasizes the delegated and non-delegated powers between the federal government and the states. The Bill was in part due to Virginia and other states that needed better clarification that protected state sovereignty and also two colonies that hadn’t ratified the Constitution yet, North Carolina and Rhode Island weren’t convinced that state sovereignty was protected by the document well enough. The Bill was proposed in Congress September 25, 1789 and North Carolina later that year ratified the Constitution and Rhode Island (the last to ratify) in June 1790. Regarding the Bill of Rights, most ratified the Bill through 1791 with, Massachusetts, Georgia and Connecticut ratifying in 1939 as part of the Bill of Rights sesquicentennial celebrations.

Does the 2nd Amendment (Bill of Rights) have power over all government or specifically written to restrict federal power?

The founding era framers and ratifiers feared that what they were creating in a document to protect individual liberty and to limit the power of the state would later be destroyed through ‘unpacking’ its language and interpretation. Words like ‘Welfare’ which defined the proportionality of the ‘Benefit Principle’ and restricted federal power and not the egalitarian intentions to ‘create equality’; or ‘Commerce’ which had a narrow intent in refereeing state interrelationships and not the broad interventionist meaning of today, which would undermine a federative republic and dissolve into a centralized system of Monarchy/Democracy, from which they fled from earlier.

In creating the Bill of Rights, left on the writers’ floor was proposed language from James Madison, “No state shall violate the equal rights of conscience, or the freedom of the press, or the trial by jury in criminal cases.” In some ways this language (while not all encompassing) was uncharacteristic of Madison who in Federalist Papers #39, very adeptly laid out the balance of power (sovereignty) between federal and national governments inferred in the Constitution. The avoidance in the final Bill drafted of the language was purposeful as they understood both the importance of a federal government that oversaw conflicts between the states and the involvement of the states in foreign relations, but they also saw the value of a decentralized system (federation) of government in the states and municipalities that had their own charters/constitutions, closer to the people in handling social and economic issues that go hand in hand. David Brooks of the NYTimes recently on a Sunday talk show commenting on gun control said that the needs of a small rural town in Wyoming are different than the needs in New York City. In NYC a police station is literally around the corner, while in rural Wyoming they may arrive in an hour.

It was understood early on that the Bill of Rights, like the Constitution, specifically addressed federal power and not the States. Even up until 1833 in Barron v. Baltimore, the Supreme Court specifically ruled that the Bill of Rights provided “security against the apprehended encroachments of the general government—not against those of local governments.” But unfortunately that all changed with a Civil War, an Amendment and new courts. In 1925 in Gitlow v. New York, the Supreme Court ruled that the 14th Amendment allowed that the Bill of Rights applied to the states as well. What the founding era generation feared was starting to unfold, as America headed toward a centralized Democracy, monolithic, fragile and impervious to competition or change.

A Constitutional Republic that was created to protect the liberties of the individual and the market for free and voluntary association and exchange which leads to social cooperation is being replaced by a Platonic society of visionaries and experts in a centralized government that plans for social cooperation through limiting the freedoms of the individual and focusing on ‘collectives’ and managing markets toward outcomes instead. That’s why an issue like gun control makes sense to the latter: ‘limit the freedom of the individual in order to create a better outcome of ‘less gun violence’ and a ‘better society’. What they don’t account for is the unintended consequences that result instead. Rather, the founding era if they could speak to us from their graves would say, ‘Government closer to the people works better’ and that gun control legislation at lower levels of government (in a decentralized system) even when they fail can be profitable as failure is cast aside while success can be adopted by others. Also, there’s different needs and wants in Texas versus New York.

Finally, there is good news. As with other federal infringements like the Affordable Care Act and the changes in the National Defense Authorization Act (2012) many states are taking positions of resisting the effects on state sovereignty. Through pragmatic state actions that can be interpreted as ‘Nullification’, ‘Interposition’ or there’s even been discussion of ‘Article V’ Convention of the States as in the Founding Era period as states rushed back then to protect the Constitution and it’s integrity that they created. If gun rights are to be infringed upon, the states (their constitutions permitting) can experiment with that and we’ll all benefit indirectly, but a federal government which uses the ‘if we can save one life’ straw dog argument to promote a collective equality or freedom is way, way, way out of bounds and should be challenged by the states.

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

While I’m not a professional fly fisherman, I have slept at a Holiday Inn Express. I’m obviously joking and appreciate Holiday Inn’s commercials. But I was on a trip last year with a couple of fly fishermen and I’ve been in a social gathering where the sport has been discussed.

What has stood out to me is the hypnotic stare and elevated excitement as the stories unfold of catching fish and the different techniques. The interesting thing is to hear about the fly lures they put at the end of their fishing rods depending upon the type of fish they are after. Some look like literal flies, while others like worms or mimic the environment where they hang out. You almost can’t see the hook hiding behind the design. Also they’ll tell you where to wade – ‘over by that rock’ or in ‘deeper current’ in determining ‘best location’ for different fish.

Politics is very much similar to this. The hypnotic stare and elevated conversations that can happen around a holiday table, bar or even a senior citizen centers as you and I give our opinions and expertise on what Washington needs to do and what the important issues are; which of course generally run along side our particular proclivities: Pro Life/Pro Choice, Education, Social Security, Entitlements, Social Issues, Defense, etc.

Both the national Republican and Democrat parties like professional fly fishermen also choose specific fly lures (issues) and look to wade in specific areas of our nation in order to find you and I and ‘hook’ us, drag us into their boat or box to be filet, gutted and cooked later on. OK enough word pictures, I’m hoping you’re following this.

Except for Defense and squabbles that arise between the states and the states and foreign entities in which the Federal Government takes on the role of agent, all the issues above were intended to be functions of the states/colonies and even more importantly the function of a free market. A central system becomes monolithic, fragile and resistant to ideas and change; and when (not if) failure results it is catastrophic. Decentralized systems (the states retaining most powers) on the other hand, allows for competitive models to social and economic problems, failure is actually beneficial as unproductive resources are reallocated and success is imitated. Also, democracy can exist in the lower levels of government as the potential for homogeneity and similar interests are more likely ‘closer to the ground’ than at ’40,000 ft in Washington’.

When you and I drool like a fish and leap for nationalizing social issues of banning drugs, homosexuality or economic issues of ‘tax the rich’, wealth redistribution, universal healthcare or promises of better government Social Security and Medicare we really are leaping for a disguised hook of central government control of our lives that will limit individual freedom and just like the mirage of the hook will never deliver the promises made. It’s the free market of voluntary association and exchange that best accomplishes the goals (proclivities) you seek. Even in the controversial areas of Drugs, Marriage and even Abortion (which I believe is murder at some point) should be decided at the state, local and personal levels as was the intent of the Constitution. The Constitution delegated very few powers to the federal government but the feds have usurped more power through our weakness in seeing our beliefs ‘nationalized’.

In the movie ‘Finding Nemo’ the warning was to watch out for the nets that the commercial fishermen lowered from their boats. But for some it was irresistible as they swam into captivity. You and I MUST resist the ‘captivity’ of more central power even if the mirage seems so real.

I think my new slogan for 2013 is, ‘Don’t Get Hooked!’, and if you are currently dangling from a GOP or Democrat party promise of Equality, Justice, World Peace or whatever your proclivity, I hope that you can set yourself free. This starts by understanding the ratifiers intent in the US Constitution and why a ‘runaway’ federal government is dangerous to Liberty.

Christopher M. Mahon
editor@ambidextrouscivicdiscourse.com

As America returns to work today, nursing hangovers, fatigue and wincing at FaceBook pictures, so Washington and the media return to figure out what exactly happened in the wee hours of the night of the ‘Fiscal Cliff’.

If the Chinese Zodiac proclaimed 2012 the ‘Year of the Dragon’, politically it was the ‘Year of the Donkey’ as Progressives and the Democrat Party celebrates a pretty good year: Affordable Care Act upheld by SCOTUS, a vanquished GOP Presidential candidate, winning most national congressional challenges and a potential budget deal (sequestration aside) that raises taxes on 77% of Americans and virtually no spending cuts.

As we entered into 2012 and considered the consumer confidence level, unemployment, debt and a sluggish economy it seemed more likely the ‘Year of the Elephant’ but, that was a year that wasn’t. Just as Tony Romo or a Mark Sanchez were able to clutch defeat from the hands of victory, so at the beginning of 2013 after approving what one analyst called a ‘Hobson’s Choice’ in the budget bill in the midnight hours closing out the year, GOP politicians run for cover, and the Republican Party ponders not only it’s future but also it’s purpose.

Contrary to Jay Leno’s skit ‘Jaywalking’ where Leno asks people questions about current news and other topics in public areas around Los Angeles and get answers like: ‘Abraham Lincoln was the first President’ or are stumped when asked, ‘What color is the White House?’; the ‘Man on the Street’ is a lot smarter and intuitive regarding what’s pertinent to his/her world and what is on their life’s ‘windshield. While they find most of Washington irrelevant, they will make the necessary adjustments to react to a ‘Gamed system’. Welfare recipients will stay on Welfare regardless of any public condemnation because the math tells them that the effort expended through employment has no net benefit than receiving cash and benefits through government subsidies. But it is not only the individual who is intuitively smarter than Washington, it is the small employer groups too. As they watch big business, industry groups and unions cut deals in Washington through their invitations to K Street, the smaller business owner/investor seeks out shelter and creative accounting to avoid paying growing levels of tax and regulations. Just today I witnessed a conversation on a social network of avoiding the Affordable Care Requirements and increases in payroll taxes by creating ‘Independent Contractor’ (1099) relationships with their current employees. Even under reporting revenues is becoming increasingly morally acceptable.

In an article in the NYTimes by columnist Maureen Dowd, The Man Who Said ‘Nay’ that references Senator Michael Bennet’s (D-CO) tough decision to part with his party’s support of the last minute budget deal in the Senate. Bennet says, “The burden of proof has to shift from the people who want to change the system to the people who want to keep it the same,” he said. “I think if we can get people focused to do what we need to do to keep our kids from being stuck with this debt that they didn’t accrue, you might be surprised at how far we can move this conversation.

“Washington politics no longer follows the example of our parents and our grandparents who saw as their first job creating more opportunity, not less, for the people who came after. My mother’s parents were refugees from Warsaw who came here after World War II because they could rebuild their shattered lives. But the political debate now is a zero-sum game that creates more problems than solutions.”

While we can understand Senator Bennet’s frustration in Washington as power and the game goes back and forth from one side of the table to the other with little accomplished, as the GOP wins in certain years (1968, 1980, 2000) while the Democrats win in other years (1992, 2008, 2012). The frustration of the ‘Jaywalker’, small business owner, ‘Man on the Street’ is that power and choice remains in Washington and that ever increasing Federal power and potential to intervene into his/her life further is readily apparent with no evidence of abatement.

Washington power elites scoff at individuals and small businesses as they tin foil and duct tape their lives around the latest Federal Laws that threaten to encroach their personal liberties, threatening fines and incarceration; meanwhile there’s a growing resentment around the country as more and more are figuring out that the ‘Utopian Promises’ of both parties aren’t being delivered, only excuses and demands for more money and more control. The Right’s promise of a ‘Moral America’ and a better ‘World Order’ through laws like Defense of Marriage Act, stronger Drug enforcement and foreign Military intervention has wrung at best hollow while the unintendeds are readily apparent. The same is true on the Left as Progressivism of the late nineteenth century through private initiatives like: the Settlement Houses, Mutual Aid and other private charities went a long way to solving social problems as workable solutions were funded and others either adapted or failed. However, this drastically changed as Progressivism became entrenched and made it’s home in the political process; the idea was, what works on a local level in Chicago, should work on an even grander scale through Washington. Of course the disappointment and failure of this theory continues to come home to roost as Progressive goals of Education, Poverty and Equality continue to be missed with the excuse: ‘More money and control needed’.

The good news going into 2013 is that just as people outside of Washington go about their business and figure ways to ‘creatively’ cope and adjust to overreaching policies in Washington, so the States are becoming more proactive in the process. Controversial concepts like: Nullification, Interposition and Article V Conventions are being bantered about more and more. While even more encouraging is that many states are actually exercising those powers, as Michigan’s state house approved 151-0 to not comply with NDAA 2012 that allows for the Federal government to commandeer state resources and many states refuse to create an Insurance Exchange as required by the Affordable Care Act and draw up language in their state’s charter/constitution to prevent further federal intervention.

A year from now how will we close out 2013? Will it be the ‘Year of the Elephant (GOP) or the Donkey (Democrats)? Or could this be the ‘Year of the Eagle (Individual Liberty) through state initiatives and individual’s who refuse to comply with federal mandates, taxes and regulations?

Wishing you a great year!

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

As we finish out 2012 we can reflect on ‘the year that was’ like a Time Magazine expose or as the media outlets are doing even as I write this. But as we look back and take an account, shouldn’t we look forward and apply what we’ve learned?

To be sure it was an interesting year as the President won reelection fairly handily and the GOP was hit hard with a loss that the political consultants are having a hard time reconciling, let alone explaining.

We had a devastating hurricane on the east coast where too many lost their lives and many more their homes, cars and even today remain homeless. On the positive side of Sandy, which unfortunately is less reported, we saw so many step up and volunteer their time, finances and expertise in helping their neighbors. Even fire fighters from Louisiana who were at the receiving end of a fire truck and volunteers when they went through Katrina in 2005, returned the favor and flew into NYC to help with the disaster. Also unreported is the under performance of Federal aid and programs like FEMA which dropped the ball during Katrina and by all accounts today have dropped the ball in Sandy as well.

There was the Sandy Hook Elementary School shooting that tragically left 27 dead, including 20 children, 7 adults, including the shooter himself (suicide).

While we point out these tragic events, there were obviously many more we haven’t mentioned but there were also exponentially even more positive events and ‘average day’ occurrences that are left out by the media and quite frankly taken for granted by you and I. Contrary to what the media reports: food, clothing, work and play is for the most part readily available and that even with market distorting intervention from government that has lead to higher unemployment, prices and an unacceptable quality of education and level of poverty, the reality is for most of us the markets adjust and allow for volunteer (free market) exchange and association that allows for a ‘robust’ society and continued higher quality of life. Is political change needed? Absolutely. Has government failed us and morphed into a centralized system that is resistant to change and more prone to monolithic ideology? Again – absolutely.

The funny thing about human nature is that most of us are inherently critical and like to voice our ’2 cents’ worth of criticism. Whether it’s ‘giving advice’ to our spouse or children from our lounge chairs about how to perform housework, yard work or even just to scream at Tony Romo and the Dallas Cowboys with beer in hand, we all subscribe to being ‘Amateur Critics’ to some degree. Even regarding how society works or doesn’t and the role of government and what we think about the political system, most of us are more than willing to voice our opinion about political parties, personalities and Washington in general.

We’ve often heard that, ‘if you are not part of the solution, you are part of the problem’ or that ‘you can’t complain unless you’ve participated in the process’ with the idea that you and I should be engaged in creating a better society rather than only complaining about what we have.

Here’s a suggestion for the New Year that will cost you time and resources – Volunteer.

First, find out what you find yourself complaining (criticizing) about most. If it’s ‘those blood sucking welfare recipients’ then volunteer your time at a food bank or charity like Salvation Army where they give out clothing, economic and housekeeping advice. If education (or lack there of), offer to volunteer at your local schools: tutoring, mentoring or even as a crossing guard – get involved. If you are ‘rupturing blood vessels’ over politics and the inefficiencies (in your mind) of government then volunteer your time to go to local district meetings like precinct committees where you’ll find out that most there would welcome you as there hasn’t been a continuous flow of ‘new blood’ and unfortunately many of these groups are bogged down in myopic self examination and could benefit from greater diversity and fresh ideas.

There’s a Bible verse, Luke 6.68 “give, and it will be given to you. Good measure, pressed down, shaken together, running over, will be put into your lap.” While our motivation shouldn’t be self aggrandizement and Ayn Rand if she were alive might criticize you for being ‘altruistic’, the reality is that as you invest your time and resources, like any investment there will be a return; and part of that return comes back to us in the experiential knowledge we gain, the character changes that happen and the valuable process of becoming ‘other person centered’ and as the Bible suggests – ‘a servant to all’.

We at Ambidextrous Civic Discourse wish you a Happy New Year and an enriched 2013, full of life, love and contentment which I have personally found through Jesus Christ.

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

The recent shootings in CT this past week has brought to the forefront the call for new Federal Gun Control legislation to ‘Criminalize’ certain types of gun ownership. Will the cost of removing further personal liberties of the Individual and the rise of centralized federal power be effective in diminishing firearm deaths? Has it been effective in the ‘Drug War’ or Alcohol Prohibition of the Past? As I write this article this morning, 10 were shot in Chicago, a city with some of the toughest anti-gun laws, but a city that remains one of the most violent in gun injuries and deaths.

In a Cato Institute Study, Alcohol Prohibition was a Failure, of 1920s Prohibition, they found the federal law besides being an infringement on Individual liberty was quite ineffective in what it set out to do: Reduce Alcohol related deaths and the social ills that are associated with the freedom to imbibe alcohol and that the unintended consequences were horrifically worse. Organized crime, prostitution and other social maladies prospered under the well meaning legislation. The Temperance Movement supported by churches, mutual aid societies and government proved to be a disaster and was later rescinded in 1933.

Arguably the Drug War a much larger war than Alcohol Prohibition is at least if not more unsuccessful as Billions of dollars and half the prison population full of ‘drug offenders’ lay society’s resources wasted and the ‘unintendeds’ of a border war, hybrid drugs that kill and the increase in ancillary social maladies are the byproduct. This begs the question, “What would society look like with harsh Federal Gun legislation that ‘Criminalizes’ gun ownership?”

There are two assumptions that many people make about government and social problems in arriving at a ‘Remedy’. The first is that in taking a position against using Federal power (either through a strict Constitutional interpretation or pragmatic position that lower levels of government like the States can do it more effective) means that you are sympathetic to what is perceived to be a social ill or cause like in the case of marriage, drugs and lifestyle choices. The other assumption is that laws and public policies are built around that the individual will obey the laws and there won’t be unintended consequences that result from government intervention.

Both of these assumptions are wrong and history has shown the unintended consequences are terrible. When the ‘Free Market’ is violated by government intervention, the values in that marketplace will be distorted as in the case of Alcohol Prohibition which due to lack of supply (the demand while reduced somewhat due to legislation was still high enough to create a market) sent prices soaring and both an underground and ‘illegal’ supply resulted and a para-industry was born – Bootlegging. The same is true today for drugs, again the assumption is law will eliminate demand and solve the social problems but the unintended is that behavior adapts to circumvent the law as happens with federal regulations over business or even tax legislation and the cost to comply or not.

Unfortunately, if harsh federal gun criminalization is the answer to this past week’s horror, the result will not only be the steady stream of Drugs and Prostitution over our borders but firearms as well, and just as we’ve seen the awful hybrids of alcohol (moonshine) and today’s dangerous drugs (Meth, Ecstasy) that result from prohibition as users want the ‘biggest bang for the buck’, can you imagine the potency of firearms that will be available in your neighborhoods and schools in the near future?

The Second Amendment was part of the Bill of Rights, 12 (10 ratified) Amendments over federal powers to protect the natural rights of individual liberty and property and to answer the concerns of the holdout colonies/states yet to ratify the Constitution. It is very important to understand that the Second Amendment didn’t apply to state powers, those powers are delegated through the states’ Constitutions. So each state or municipality if their constitution permits can pass legislation whether it will help or not.

While there will always will be social maladies among us, the best way to handle them are through the ‘friction’ of the marketplace and when deemed necessary by local government where there is the potential for greater homogeneity, cooperation and the potential to maintain greater individual liberty.

Let’s be ready for what Rahm Emmanuel says, “Don’t let a good crisis go to waste” and for federal government to infringe on personal freedoms (for a greater good), instead let clearer heads and rational thinking rule the day.

Christopher M. Mahon, Editor

Yet another unfortunate and terrible shooting incident that brings to the heart the fears of so many parents – the loss of a child.

The shooting in Newtown, CA December 14th 2012 was heart breaking as families and a nation have been grieving.

Unfortunately, while many focus on the incident in consoling those who’ve lost so much and examining the security and whether procedures were followed correctly, others are using the ‘crisis’ as opportunity to push a polemic agenda of more (or less) government involvement.

As our country’s founders understood that the ‘natural process of Government was to grow’, this is particularly cogent when a ‘crisis’ occurs. But how do we as Individuals and citizens of municipalities, states and a Federal Government sleep at night knowing that we could be at the mercy of the next crisis which through well meaning public policies could further limit our freedoms for a ‘Common Good’?

While many understand that the Constitution was designed with two systems of government in mind, Federal and State powers, there is disagreement on what powers each possess. Does Federal trump State and if there is belief that the Federal or a State has ‘overstepped’ and abused it’s power as in the recent conflicts with ‘Obamacare’ or in Arizona’s battle with SB1070 on immigration, who or where is the governing body to make an impartial decision on which party is correct?

Thomas Woods writes in his book ‘Nullification: How To Resist Federal Tyranny in The 21st Century’, “When the Constitution was ratified, the people were assured that it established a government of limited powers (primarily related to foreign policy and the regulation of interstate commerce), that the states retained all powers not delegated to the new government, and that the federal government could exercise no additional powers without their consent, given in the form of constitutional amendments. This is not a peculiarly conservative or libertarian reading of the historical record. This is the historical record.”

Today, we see many States resisting what they perceive as Federal overreach in prescribing policies for social and economic ills through Washington. Almost thirty states have either said no to creating Insurance Exchanges or have taken a wait and see approach regarding ‘Patient Protection and Affordable Care Act (2010)’ (Obamacare) and just this week Michigan’s House voted unanimously to defend itself against NDAA 2012 which it deems unconstitutional regarding the commandeering of State assets. Add to that the Sheriff Initiative Act and other individual States acting through ‘assumed’ Nullification powers have decided on their own not to enforce certain Federal laws.

Washington and many in the media challenge the constitutional legitimacy of Nullification and it’s even more evil sister ‘Secession’. For the last eighty years the universities have taught that these issues were decided through Civil War and subsequent court precedent. However, Robert Natelson in his 2010 book, ‘The Original Constitution’ approaches the split powers of the Federal and State governments slightly different as he draws upon what the ‘Founders-era’ intents were and their understanding of law, reason and the dialogue of the state conventions that the ‘Ratifiers’ understood when signing the Constitution.

Natelson, brings out an important question that would help to define better the relationship of the States and Federal governments and the proper recourse when Federal power abuses the States as many have come to believe is happening today. While ‘Nullification’ is the buzz on twitter and other social networks, Natelson takes us through the Founders-era understanding of the Constitution and how the states defended their sovereign powers through ‘Article V Conventions’ which were different than a ‘Constitution Convention’; Article V allows for specific issues and text to be addressed while not jeopardizing the whole document. He points out, “To be sure, the question of whether there was an “American people as a whole”—or only the peoples of separate states—has been the subject of much debate. Some contend that the Constitution created merely a compact (contract) among the thirteen states—or, more precisely, a compact among thirteen separate political societies. According to this “compact theory,” each of those societies gave up certain aspects of sovereignty to the federal government, retaining the rest. Advocates of this theory point out that the states ratified through individual conventions. Some have employed the compact theory to argue that if the federal government breaks the terms of the contract by exceeding its powers, the states have the right to void (“nullify”) the offending federal actions or even secede from the union. Others argue that the Constitution was less an interstate compact than a popular grant—that is, a grant from the American people of certain powers to the new central government. Powers not given to the central government and already lodged in the respective state governments remained there. What was left was retained by the people. Advocates of this theory contend that ratification by state conventions was merely a concession to practicality, not to imply that states were the parties (or at least not the only parties) to the Constitution.”

As dark clouds of economic and social crisis’ gather, the threat of the abuse of Federal power looms but the silver lining in those clouds is that many States are becoming proactive in blocking what they perceive as harmful and unconstitutional Federal legislation through Nullification and Interposition which has historical precedent, but will the real war engage when we define the relationships of the States and Federal government as Mr. Natelson has suggested, through ‘Compact Theory or Direct Grant’?

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

For those of us old enough to remember ‘Supply-side’ Economics during the Reagan years can appreciate the nostalgia as it is being bandied about in the media as either an economic pariah or last hope in solving the ‘Fiscal Cliff’. In some ways as most other public policies for either party, this is the other side of the tennis match for Republicans.

The two economic philosophies at play in the budget/tax/spending negotiations is ‘Demand-Side’ economics or Keynesianism (John Maynard Keynes) that the Democrats believe if you stimulate demand by putting money in the consumers’ hands you can spend your way out of a recession. The other philosophy as mentioned earlier is ‘Supply-Side’ economics that believes if you instead put money through tax breaks, credits, subsidies in the producers hands that they will produce more product and presumably less expensive which will in turn cause the consumer to show up in the marketplace.

Both of these philosophies and economic principles are flawed and here are some reasons why:

First, the presumption that belies these beliefs is that government can manage the complexities of the market and has the knowledge of both how much and what the market needs and what the demands and wants are from the consumer.

Second, neither system accounts for malinvestment and human behavior responses, that results from market intervention and neither allows for the correction that the market provides which leads to a healthier economy.

Third, both systems and beliefs are latched onto by the parties precisely because they support the need for larger government that oversees all market activity, rather than the federal government playing a more passive and negative position that ‘stands down’ until the freedoms of the individual and the markets are violated. The private sector through competition, success and yes – failure, does a much better job in regulating economic activities and where necessary states and local government could get involved with the Fed as a far away ‘watch dog’ mostly interceding where there’s disputes between the states. The recessions and depressions of the past where there were no centralized banking or financial systems saw failure but they were decentralized, diffused for the most part and allowed for the market to clear resources more efficiently.

Finally, the `Fiscal Cliff’ and the choice in solutions offer an interesting dialogue regarding ‘Tax Cuts, Credits and Deductions’. As was mentioned earlier, Supply-Side uses incentives through tax cuts but also credits and deductions to pass money through to Producers and Higher Income Earners with the philosophy that they would do better with it than the consumer. So a $2,000 car purchase credit would make consumers show up at the local dealerships or a mortgage deduction on Schedule A would make consumers purchase homes. This month around the nation, clients are showing up in Accountants’ offices seeing what new equipment needs to be purchased in order to take advantage of ‘Section 179’ deduction, which allows for certain asset purchases to accelerate depreciation as a ‘onetime expense’ instead of over the life of the asset.

The problem with Section 179 and other deductions is that it creates malinvestments, as market dynamics are temporarily thwarted through government planning and intervention. Just like you and I show up at Costco and buy tins of stuff we don’t need or over purchase, when this is done collectively it leads to malinvestments. Businesses misread the market and see demand rise so they build bigger facilities (tying into long term debt) and start to hire. This can be seen through the housing market crisis as consumers and investors purchased homes, builders built, lender lent, as prices skyrocketed and lost their fortunes as the market (which it always does) brought correction. Both the builders and purchasers suffered greatly as they signed onto long term debt agreements while both prices and demand were artificially inflated. Unfortunately the government which created the mess rather than allowing for the market to clear, thinks it has another solution.

Of course we haven’t touched on spending which is a function of the size of government and should be constitutionally aligned and restrained but that’s for another article. Tax Policy in general should be based on a low (flat) rate, with no deductions or incentives which distorts the markets as we’ve seen. If the GOP could understand this and present lower marginal rates for individuals and corporations but the elimination or phase out of deductions this would go a long way to signaling to the marketplace that a capricious runaway government has been at least for now restrained. This would free up capital on the sidelines (which there’s a lot of) to consider risk and long term investments once again.

Tell us what you think.

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

In Obama’s Soak-the-’Rich’ article in Cato Institute, the writer Daniel J. Mitchell says,

“Tax Hikes are Worse than the Fiscal Cliff

America actually will fall off two fiscal cliffs in January, but only one of them is bad. The good fiscal cliff is the so-called sequester, which is the inside-the-beltway term for automatic spending cuts. These aren’t really spending cuts, just reductions in the growth of spending. If the sequester takes place, total federal spending will climb by $2 trillion over the next 10 years instead of $2.1 trillion. But anything that restrains the growing burden of government spending is a good idea, so a small step is better than nothing.

The bad fiscal cliff is the automatic tax hike, which exists because the 2001 and 2003 tax cuts are scheduled to expire at the end of the year. This means higher tax rates for all taxpayers, as well as increased double taxation of dividends and capital gains.”

What many economists and politicians don’t recognize is that there is a difference between money saved or spent in the private sector versus the public sector and the ‘unintended consequences’ of behavioral changes by the individual and the marketplace as a result of public policies that increase taxes, create more regulations and which usually means tax avoidance and spending decisions that are short term and counterproductive.

Unfortunately, as government does with most ‘hard political decisions’, politicians in Washington after much saber rattling will compromise on the important decisions of redefining the role of the Federal government and making some significant spending cuts and policy changes in Defense, Social Security, Medicare and other entitlement programs that for the most part should be remanded back to the states. Instead there will be a mirage of spending decreases from the baseline budget as mentioned earlier and there will be a phase out of tax deductions at an income level of $250,000 or so, which like the AMT was never bracketed or indexed and eventually inflated its way into the ‘Middle Class’ where most of the money is. As a result the market response will be to hide more income and investment strategies that moves more capital into the ‘shadow economy’ and overseas.

This past week in a ‘Farewell to Congress’ retiring Rep. Ron Paul took some time to reflect on his 40 year contribution to raising a warning of abusive federal power, “Dependence on our government is the worst it has been in US history..Why does the changing of parties and politicians not change policies, could it be that both parties are essentially the same?..Real Patriotism is challenging the government (and your party) when it’s wrong.”

While we appreciate past generations like those who grew up during the Great Depression and fought in WW2 and Tom Brokaw nicknamed the ‘Greatest Generation’. With deference to that generation, I believe the Greatest Generation is ahead of us, growing up before our eyes, rejecting today’s Historicism being taught of our past and embracing instead the original underpinnings of Individual Liberty that were forged in the US Constitution and which sailed a great Republic.

Hip Hip Hurrah for Elections and Representation! The Status quo won again and as Rep. Ron Paul slips out of public office, will there be a GOP or Democrat party that realigns itself to the Constitution and will there be new voices crying in the wilderness, “This is the way to Liberty, Walk Ye in it!” or are we inevitably headed down the slippery slope of more centralized government?

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

While the GOP licks it wounds and some flee what they perceive as a ‘sinking ship’, the son of the ‘Father of NeoConservatism’ (Irving Kristol), Bill Kristol says on FoxNews Sunday November 11, 2012:

“The leadership in the Republican Party and the leadership in the conservative movement has to pull back, let people float new ideas…Let’s have a serious debate. Don’t scream and yell when one person says, ‘You know what? It won’t kill the country if we raise taxes a little bit on millionaires.’ It really won’t, I don’t think…I don’t really understand why Republicans don’t take Obama’s offer to freeze taxes for everyone below $250,000 — make it $500,000, make it a million…Really? The Republican Party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of them live in Hollywood?”

While holding the line on taxes by the GOP might be a Pyrrhic victory at best, Kristol’s and other Conservative’s budging on tax policy (increasing) but giving no leeway on social and foreign policy issues belies a much larger problem. Punting on tax policy keeps the ball on the field of big government (federal), while giving up social policies to the states and shrinking US foreign policy engagements and footprint loses the ball from Washington and federal central planning as the canvass.

The history of the GOP is that of having it’s origins in the Progressive movement and it’s nature is to believe in ‘big government’. So while they Mea culpa on increasing taxes which is big government, it still keeps the federal government ball in play; while the GOP leadership resist inevitable changes in social and foreign policies, as states ratify marijuana and marriage laws and the public and US monetary conditions scream for changes in foreign policy. More taxes stays within the auspices of federal power, while decreases in military engagements and on social issues decrease federal power.

The Conservative and Progressive movements today are twin sons of different mothers. Birthed in the late nineteenth century postbellum and with different ‘step dads’ of both parties (in and out of office) siring along the way. The real question and the true sign of GOP capitulation is whether RNC Washington leadership is willing to discuss the purpose and limits of federal power going forward and welcoming Constitutionalists, Libertarians and Classical Conservatives in the vein of Edmund Burke to the table, who believe strongly in the individual and the free market to regulate not only economic values but social values as well.

In Federalist Papers, 10, 39 and 51 Madison eloquently expressed the limited powers of the federal government and the sovereignty of the states. Madison also gave instruction that while factions (special interests) could be dangerous to Individual Liberties, that in a competitive market both private and public (between the states) it allowed for the best ideas and solutions to step forward, failures to be isolated with it’s resources best reallocated and for ‘bad actors’ to be marginalized.

The question today might be asked by John Kennedy’s favorite poet Robert Frost in the 1920 classic ‘The Road Not Taken’,

“Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.”

The road of ‘Limited, decentralized and constitutional government’ which protected Liberty rather than creating Utopian outcomes was more traveled earlier in US history but the path is today overgrown and distrusted by most in power and in the Universities; can party leadership turn with courage and determination down this path once again? Is there a post-Tea Party Movement waiting in the wings instead?

Please, tell us what you think.

Christopher M. Mahon, Editor

The GOP didn’t just lose the 2012 election. The Democrats ate their lunch, danced with their wives and slept in their beds.

Even in ‘red states’ like Arizona and Florida, results of Democrat wins are still trickling in. As of this writing it looks like Alan West has lost his reelection bid.

The knee jerk reaction of Hamiltonian Conservatives who bring in federal power for their own proclivities and ‘Damn the Constitution’, has to change.

No one likes a bully, whether it’s a Liberal or Conservative.

US Neoconservatism as a world dominant solution (proselytizing of American Excellence) tried over and over again (50+ yrs) is like the NY Yankees thinking they’re going to win the series with ARod, it’s a failed policy and the unintended consequences continue to mount; and Conservatism’s brand of morality has just as much unintended consequences as Progressive values when ‘Weaponized’ by federal power.

The genius of the Constitution was (and should be again) the limited role of the federal government to Article 1 Section 8 (20 planks) with limited interpretations of the ‘Supremacy and Commerce Clauses’, and most importantly leaving all other power to the states to fail or succeed, but not ‘fatally’ as would happen at the federal level. The great social issues of our day Abortion (murder), marriage (lifestyles), drugs, etc should be decided at the state and local levels which follows the wisdom of the Constitution that decentralization protects liberties better and you find greater chance of representative government closer to ground. Our financial systems should be deregulated and decentralized (as before) to protect against moral hazard, cronyism and centralized system failure. The USD should compete in a freer market that would determine true value and protect us against inflation and remove the printing press from Washington.

We are finding that women, Latinos, Independents, Libertarians and even ‘white’ men are walking away from the GOP in greater numbers, the answer is not what Karl Rove and Washington pundits are calling for, “reach out (cater) to these groups for greater constituencies” like the Democrats, because we can’t compete at that level and freedom and big government solutions are mutually exclusive.

The Tea Party and Liberty movements that started after the banking bailout of 2008 point us in the best direction, these were groups of volunteers (thousands), organically organized for the greatest good – Individual Liberty. The Democrats ‘ground game’ is what beat the GOP: there are more registered Democrats than Republicans and through union organizers, special interest that pounded the pavement, they got the vote out, because the workers had a stake in the election. Literally thousand upon thousands who perceived (and were told) their very livelihood and dependence was the State took to the streets and the polling booths. It was as Jefferson and Hamilton (who agreed on very little) would say (paraphrased), “When the voters recognize that the public treasury has become a public trough, they will send to Washington not persons who will promote self-reliance and foster an atmosphere of prosperity, but rather those who will give away the most cash and thereby create dependency.” You can’t compete with that by promising an end to Terrorism and a quasi-Just society through lifestyle prohibitions and abortion regulated at federal levels – butter beats guns, hands down.

We are at 1854 all over again, and as splinter groups like the ‘Free Soilers’ and most of the Whigs walked away from their party due to a prevailing issue of it’s time the Kansas Nebraska Act (Slavery/State Sovereignty), so the prevailing issue of our day which limits all citizens, ‘Individual Liberty’ (self determination and to be left alone) that an unyielding government wishes to suppress; will the outcome be a ‘revamped’ GOP party or will the party like the Whigs be remembered by school children in history books?

Tell us what you think?

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

As the dust settles this morning from election 2012, the Democratic Party celebrates a decisive victory, the Republican Party licks it’s wounds, and Independents and Libertarians still sleep in cots outside the political process.

While Prognosticators who got it wrong come up with the ‘Whys’, here’s some thoughts going forward for the GOP and more importantly the grassroots movements that started with a cry out for Liberty and back to the Constitution.

What Americans basically decided last night was that sending our young men and women onto foreign soil to die and government as a moral agent in our personal lives was worse than taking our hard earned wages and redistributing them to someone else in benefits and entitlements.

The irony was that the same reason the GOP told you to support the ‘lesser of two evils’ the nation decided right or wrong that the President was just that: kinder, gentler and surprisingly, more able to handle the financial crisis which when you dig down, includes factoring in military expenditures that the GOP refuses to recognize.

When you consider the win by the President and the DNC it is pretty impressive:

Barack Obama: 50% 303 (most likely FL too: 332)
Mitt Romney: 48% 206
House: Dems most likely +8
Senate: Dems most likely +2

At the risk of saying ‘I told you so’, I personally foresaw this coming over the past two years and have written about it but knew it was fait accompli after the RNC August convention of this year when ‘Rule 12′ was enacted and the two years of grassroots work at the state and local levels by party line GOP, libertarian and even independent voters who aligned with the Tea Party movement were cast to the side for a Washington-style backroom deal that was carved out on K Street with special interest groups.

When reading the Tea Leaves however, one needs to be careful to not fall into the same Neoconservative/Religious Right dogma, “The country is heading to hell in a handbag and Islam will take over America”. When you consider the historic ballot initiatives in several states that approved marijuana and gay marriages, one might become very discouraged and interpret these results as a hedonistic society headed to the brink, rather than a response to government intrusion into the personal lives of Americans. The Federal ‘Defense of Marriage Act’ is unconstitutional and an awful law that allows a national government to reach into the most intimate part of each of our lives and further divides us as a nation. Social mores are much more effectively defined in the private marketplace between individuals and by state and local governments closer to the ground, where necessary. The same is true of Marijuana laws, that it is at the state level where authorized powers set by the Constitution reside to regulate drugs as was true of alcohol. If the GOP or a third party gets behind the rational process of decriminalization (not condoning) at the federal level it would be a courageous feat of ending the savage border brutality and the unintended consequences of more than half our prison population locked up for drugs. See Cato Institute’s article, ‘Alcohol Prohibition Was A Failure’ for further insight.

So where do we go from here? I personally would like to ‘throat punch’ the ‘GOP face painters’ who teased Ron Paul supporters with juvenile retorts like, “Paulbots”, but that’s for another day, maybe a few beers and a dark alley.

Just as in 1854 when the nation was settling into a two party system of the Whigs and Democrats with a few splinter groups residing in different states like the ‘Free Soilers’ of New York that splintered off of the Whigs because of slavery, there arose a large enough issue in the Kansas Nebraska Act, which extended slavery into more territories, that there was a birth of a new political party. The question today is can the Grand Old Party find her roots in freedom as it did back then? Then it was to free a race of people unjustly treated, even stripped of the most basic personal liberties to not only own property but being treated as property themselves. Today, unfortunately ‘we’ve come a long way baby’ and through government mischief the Constitution has been turned on its head from an important document of ‘Original Intent’ that limits government, ‘Thus far and no further!’ to a ‘living document’ that regulates man and his freedoms.

Like Jefferson who understood the annoyances and inconveniences that comes with Liberty as people make poor choices in life, those choices are ably offset in the private social and economic marketplace through the friction of voluntary association and exchange rather than a government ‘managed society’ that we find ourselves in today.

Do you really believe that less government in regulating drugs or lifestyle choices will result in more drug use or an increase in alternative lifestyle choices? If that reasoning were true, then with ever increasing government intervention, wouldn’t we see less of it today? If Homosexuality is practiced by less than 10% of our population then why is it a bellwether issue come election time? Because fair minded individuals will come to the support of those being suppressed by government. So if you want more of something then go right ahead and subsidize it or let government regulate it.

Will a new message and direction rise from the embers of the GOP’s defeat in 2012? Today, pundits are rehashing a bad night and like the Democrats after their trouncing in 2010, convincing themselves it wasn’t their message of ‘big government that regulates morals at home and spreads American Democracy abroad’, but the consumer of the message and maybe their strategy in explaining it.

Partly as a result of the banking bailouts of 2008 which most Americans realized was flat wrong and unjust and the ever growing entitlements and unfunded liabilities, there was a spontaneous uprising for less government and re-examining the role of federal power within the restraints of the Constitution that lead to victories in 2010. There were threatening propositions like: ‘Audit The Fed’, sending education and other federal programs back to the states, redefining our military role in the world that threatened both party’s positions and constituents. This movement was eventually hijacked by the GOP and discarded in August at the convention like a prom date. Who will it be that takes up the mantle of Individual Liberty and limited government going forward? While it took a Civil War and Postbellum legislation that redefined the Federal role as more central and powerful and has lead us to where we are today, let’s hope it doesn’t take another war to remove those powers.

Christopher M. Mahon, Editor
editor@ambidextrouscivicdiscourse.com

While most would agree that Governor Romney did a ‘smack down’ to President Obama and Jim Lehrer, did the design of constitutional restraint of government and Individual Liberty suffer a ‘smack down’ as well? While both candidates agreed on more than they disagreed, were the disagreements more on the application of federal power rather than if it has a legitimate (constitutional) function at all (education, healthcare, retirement, etc)?

Both candidates would maintain universal healthcare (Romney would replace Obamacare), federal powers over education and retirement, and strong military footprint overseas. Regarding balancing the budget: both would work off baseline budgeting that calls ‘cuts’, slow down in future growth, which never leads to debt elimination. In Reason Magazine Nick Gillespie’s article, ‘Romney Won the Debate, But Will the Country Lose?’ Gillespie notes where we lose freedom and choices as Americans:

“Last night’s presidential debate between Democratic incumbent Barack Obama and Republican challenger Mitt Romney was far more substantive and wonky than most watchers would have ever predicted. More important, given Romney’s strong showing and nearly complete domination of Obama,…At the same time, and despite multiple attempts by the moderator of the debate and the participants themselves to stake out radically different visions of the role of government, Obama and Romney were far more similar than different when they talked policy. That’s bad news for the country.”

While the President was caught on a tape several years ago saying he favored ‘Redistribution’ it shouldn’t come as a shock; Progressives in the Democrat party for years have favored social engineering policies and tax policies to accomplish a ‘fairer’ society as an outcome. If there is a shock at all it is that the GOP has favored ‘Redistribution’ policies of their own.

Ironically, President Obama is a byproduct of the Progressive journey from post-Civil War Settlement Houses and Community Organizing centered in the largest cities (particularly Chicago) that advocated for inner city immigrant groups to feed them and teach them to read, write and basic economics. The process started out localized through philanthropic means by the children of the industrialists of the day like the Du Ponts, Carnegies and Vanderbilts; even Jane Addams the co-founder of the Hull House came from a wealthy family. Her father John Huey Addams was an Agricultural businessman with large land holdings. He was a founding member of the Republican Party and a friend of Abraham Lincoln’s.

One can argue that Obama has ‘GOP’ in his bloodline; and that’s the bigger point, the past 150 years has been a progression in not only ‘big government’ but ‘big business’ and ‘welfare’ (the evolution of the settlement house movements) interests that are protected by both parties through government policies that no longer protect access or individual freedom but provide outcomes through government intervention.

While Democratic style takes from the high income earners and redistributes in the form of welfare, education, healthcare and other benefits to the ‘lower rung’ of society and manages business through regulations, GOP style rewards behavior through tax credits and deductions (Filing status, Exemptions, EIC, Mortgage Deductions etc) that is to influence moral decisions, to ‘create a better outcome’ for society. Either way both are outcome based and interventionist in their application and of course as we’re finding out today that whether military, agricultural, economic, monetary or tax policy intervention, it leads to distorted outcomes and unintended consequences as individuals and business entities with their private capital will respond to those policies by protecting themselves.

Policies that come out of Washington are more and more being drawn up on K Street through lobbyists of the largest corporations who contrary to public opinion favor federal regulations, taxes and fees as it protects their market share, and costs are passed along to the consumer who has less choice in the matter due to government intervention that limits competition. Both parties just like US foreign policy of ‘favored nation’ status have their own ‘favored Corporations or Industry’ status and promote those interests and demand support from those receiving the benefits.

In our current 2012 Elections environment the GOP and the Dems in their campaign rhetoric throw off ‘talking points’ and hyperbole to draw the differences but it seems more and more like two identical sock puppets who’s only distinction is one is on the ‘Right’ hand while the other is on the ‘Left’.

The flames of ‘Individual Liberty’ and ‘limited government’ that has been expressed through grassroots movements over the past few years and the protests of the abuse of ‘big government’ and ‘big business’ that cohort together may have been marginalized and silenced for now, but eventually will like water find it’s way through what seems like a nonporous political system.

The reason I’m sure of that is the response of both parties this summer as the roughly 30 state GOP parties in particular expressed those ‘grassroots’ preferences and wanted them represented in the national platform, but were eventually nullified at the national level in Washington through Rule 21 and other party manuevers for the GOP and the same is being considered in the Dem party as well. What will become more and more apparent is that ‘great ideas’ and grassroots movements just as in other less competitive markets will go elsewhere to plant their seeds and eventually we’ll see an erosion of the two party system which will diffuse factions while giving individual liberty a greater chance.

Christopher M. Mahon, Editor

Recently over a discussion of the function of government with a good friend of many years we came to a crossroad as he expressed how he didn’t understand my ‘faith’ in Laissez-faire, a marketplace with little to no government regulation. While I think it is a legitimate concern as there are potential abuses in all relationships and transactions including the marketplace, my response back should have been, “While I understand your concerns with individuals taking advantage of one another, I don’t understand your ‘faith’ in government to ‘make it right’ and not to be exponentially more abusive as power is concentrated in the hands of a few and they have the force, law and money to do as they will.”

Whom should we fear more, the millionaire across town who can use his money and influence to deny me and a limited number of other people access or the government with unchecked power that can confiscate our wealth, send our children to war and deplete our livelihoods for a Utopian vision? Even the billionaires we read about have limited powers until they hook that power to government influence and coercion.

There are two assumptions made by both the ‘Left’ and the ‘Right’. The Left believes it has a natural ‘Altruistic’ compass while the Right believes it has a ‘Moral’ compass built in. So that both believe if they as a collective are heading the ship of ‘big government’ that even if for a greater good they need to steer into the cliffs of suppressing Individual Liberties they have the internal fortitude to not destroy the ‘Ship America’. Unfortunately this is either a lie or extremely arrogant and naive.

While my friend’s question ‘how do you have faith in Laissez-faire?’ is difficult to answer because historically societies have had government structure to varying degrees; the settling of the ‘Wild, Wild West’ and the ‘Free Banking Era’ are two good examples to consider in US history. We’ve been lied to by Hollywood and Historians  regarding western expansion and the violence it entailed, a study ‘The Not So Wild, Wild West’ by Montana State University Economics Department shows the opposite to be true; the settlements of the western states were a safer place than almost all our major cities today as well as many suburbs. What was unique is that it mostly was settled through private contract law rather than government systems.

Even law enforcement was through private means as they hired Sheriffs and Deputies directly or through contracts like the Pinkerton Services who pursued many ‘outlaws’ like Jesse James. Cattlemen and Frontier Associations and Fraternities were formed out of common interests (voluntarily) to negotiate property rights and easement agreements.

Laissez-faire “is an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression.”

Private banking with less government regulation and less centralization of power historically has also worked better. While there were banking crisis’ prior to today’s US centralized banking system, they were generally smaller and the market was quicker to dissolve failures, realign malinvestment and reallocate assets and labor more efficiently. The ‘Panic of 1819′ which was in part due to monetary expansion and debt from the War of 1812 and all other Panics that followed were due to violations of market principles and where economic conditions were less regulated by government the time period for adjustment and recovery was shorter as the market cleared bad investment while determining value. The ‘Free Banking Era’ of 1836-1864 is a bit of a misnomer as there was state regulations at the time but there was competition in the currency market and between banks regulated by the states. During economic growth some banks took greater risks going off species (gold, silver, etc) and offering more competitive portfolio returns and investors bought those risks. When the economy slowed and the market corrected many of the banks who took risk went under and the investors holding those risks took the losses as well. But with less government intervention, the losses, valuations and reallocation of assets was orderly and recovery was quicker. When you consider more recently the history of US banking and Currency laws and the degree of federal intervention since the Bank Panic of 1907 which led up to the Federal Reserve Act of 1913, the last century of centralized banking reveals economic and monetary crises of a monolithic system that lacks competition and is supported by ‘too big to fail’ versus a decentralized system of competitive banks and currencies that allowed for market failure and correction with the latter evidencing more stability. Even as recently as last week Federal Reserve Governor Jerome Powell described the new ‘Single Port of Entry’ provision and ‘Living Will’ that charter banks determine ahead of time to go through a bankruptcy-like procedure that basically enshrines the taxpayer as on the hook for the cost.

Here’s a ‘Jenga’ exercise we should play from time to time. If our Jenga pieces are government structure to maintain a society to protect freedom, how many pieces of today’s government can we dismantle without it falling apart? How many pieces of federal government have centralized power in Washington and created a monolithic system that is impervious to change and fragile to systemic failure? It’s amazing in the game how many pieces we can remove but I think most would be surprised how much of government we can remove that has only gotten in the way, distorted values and restrained the liberties of the Individual. The US Constitution is a good plumb line and starting point.

Christopher M. Mahon, Editor

 

 

 

The NYTimes Editorial today criticized the ‘lack of honesty’ in Paul Ryan’s RNC convention speech last night. “Mr. Ryan, who rose to prominence on the Republican barricades with a plan to turn Medicare into a voucher system, never uttered the word “voucher” to the convention. He said Medicare was there for his grandmother and mother, but neglected to say that he considers it too generous to be there in the same form for future grandmothers (while firmly opposing the higher taxes on the rich that could keep it strong). He never mentioned his plan to abandon Medicaid on the doorstep of the states, or that his budget wouldn’t come close to a balance for 28 years.”

The editorial goes on to say, “The reasons for that are clear: Details are a turn-off, at a boisterous convention or apparently in a full campaign. A New York Times poll last week showed that the Medicare plan advocated by Mr. Ryan and Mitt Romney was highly unpopular in the swing states of Florida, Ohio and Wisconsin. As soon as voters find out that the Republicans plan to offer retirees a fixed amount, they disapprove, clearly preferring the existing system.”

The NYTimes should remember the old adage, “for every finger you point there are 4 pointing back”. While it is true that Ryan didn’t mention ‘vouchers’ and specifics on how a transition to a better system would work (assuming that it is best for the federal government to manage Medicare, which is debatable and probably unconstitutional aligned to ‘original intent’), the article doesn’t point out the Ryan plan either, only to distort and hype what it perceives as ‘negatives’ in the eyes of the elderly.

The Ryan plan would like other plans being offered by GOP members create an ‘age line’ of 55, which would give seniors the choice to continue on their current plan or to go to a voucher type system to choose a plan and to participate in choosing their health care options. Below age 55 would go on the new plan, a similar plan that corporate America offers as well as Congress and the President participate in.

The rhetoric on both sides of the isle and both sides of the political ideology of Government vs Private solutions can’t avoid the economic realities of not only ‘Government Healthcare’, but ‘Government Retirement’ programs through public employee union pensions and Social Security’s as well who’s day of reckoning has arrived too.

Outcome based benefit programs create liabilities for employers (government) today for a future promised benefit tomorrow. The plan, whether pension or health care is actuarially ‘made whole’ each year and as the internal calculations in the plan change (mortality, morbidity, interest rate) the plan requires more or less contribution each year. Unfortunately, the discipline for the plan administrator (employer) to segregate and maintain the reserves to fund the promises has always been a problem and the long term costs of the plan make them prohibitive.

In the late 1980s corporate America started to address the funding and cost problems of their pension plans by moving to ‘Defined Contribution’ plans which work almost the reverse of ‘Defined Benefit’ (outcome based) plans. Instead of defining a benefit in an ‘unknown’ future and creating ‘unfunded liabilities’ they define a contribution based on current factors like a percentage of salary, and make the contribution today removing the potential for unfunded liabilities in a commitment to pay out benefits tomorrow and instead bring the employee into the decision making and risk bearing on his/her future.

At some level this will need to happen because ‘business as usual’ or even worse a burdensome redistribution through taxes on the productive members of society will produce a much worse outcome. The framers had it correct and as Madison described the US in Federalist Papers #39 as a ‘mix’ of a Federal and National system, the intent was to leave to the states the great social experiments like how we treat our elderly and sick and to very much limit federal powers (National) to the well defined enumerated powers of Article 1.8. The tearing down of federalist boundaries within the Constitution over the past 150 years has led to the most profound loss of Individual Liberty and government mischief, a price we can longer afford.

Christopher M Mahon, Editor

In ‘Money, Method, and the Market Process’ Ludwig Von Mises wrote, “The socialists of Eastern Germany, the self-styled German Democratic Republic, spectacularly admitted the bankruptcy of the Marxian dreams when they built a wall to prevent their comrades from fleeing into the non-socialist part of Germany.” If the East German wall stood as a testament to the failure of German Socialism, then maybe Obamacare and the strict participation into other government managed services like Public Education, Social Security and Medicare stand as a testament to US Socialism failure of the FDR administration and subsequent policymakers who built upon it.

Of course today’s US Socialism is more subtle and genteel as it uses the weapons of regulation, fees and taxes instead of direct public ownership to coerce participation and to make alternative choices punitive.

To be fair, both parties do it. There are GOP socialists as well as Democratic ones, who believe in government support (subsidies) of particular industries (companies) and managing behavior that their policymakers and intelligentsia believe are appropriate for the Utopian common good.

The headline going into the fall election isn’t ‘Romney vs Obama’, that was the safe bet; the headline is the ‘Big Win’ by the national GOP, which marshaled corporate and social activist contributions to defeat those looking for change in party positions. DC GOP policies of a ‘Managed business environment’, ‘Federal power to manage social value goals’ and the continued ‘War on Terrorism’ was on the ‘primary voting block’ over the past year. Some wanting to realign the GOP party to Constitutional principles and others, Libertarian or even more to the Right than the current party positions, but going into the fall it looks like the national party has survived.

Unfortunately for Mises, he did not see the day when the German wall would be torn down, hopefully for us and our children we’ll see the day when the social experiments of a government managed society in education, health care, retirement and even as it dangerously careens into more intimate areas like what we eat and lifestyle choices, we’ll see inroads in the 21th Century that allow Individual Liberty and markets to choose.

Government as Washington warned was a `fearful master’and as Jefferson also suggested, that it’s `nature was to grow’; the US Constitution was designed to limit federal powers and restrain it’s natural encroachment into state sovereignty. Those voices have been silenced for now in the 2012 election, the question going forward is where and when will they surface again in the form of party representation. The Whigs died in the mid-nineteenth century giving rise to the Republican party, will another party rise to replace a current one or will as Nick Gillespie suggests in a coauthored book, ‘Declaration of Independents’ see the death of a `duopolistic’ party system.

Christopher M. Mahon, Editor

The original ‘Pledge of Allegiance’ was written in 1892 by Francis Bellamy (1855–1931), who was a Baptist minister, a Christian socialist, and the cousin of socialist utopian novelist Edward Bellamy (1850–1898). Part of his intent was to bring the progressive movement to recognize a ‘new’ Americanism that could be unified behind a symbol and choose the Flag. He wanted to include the ideas of social equality and a common fraternity as goals of this new progressive nation in the pledge but felt that his associates wouldn’t allow it as they didn’t believe in equality for women and African-Americans. The ‘under God’ was added years later in 1954 by President Eisenhower.

The original salute, which was called the Bellamy Salute was done with an outstretched hand with palms down and finished with palms up; this was done in schools and for patriotic public events from 1892-1942 until there was a growing sentiment that it resembled the Nazi Salute too closely. The word ‘Allegiance’ has a Middle English origin (14th Century), meaning: a) the obligation of a feudal vassal to his liege lord, b: the fidelity owed by a subject or citizen to a sovereign or government.

The pledge forgets the importance of Individual Liberty and how the US Constitution is dedicated to protect it, in some ways it diminishes the power of federalism with the term ‘One Nation’ and ‘Indivisible’ and subscribes to the pursuit of the utopian goal of a ‘greater common good’ and an equality that fits all.

Here’s an amended version for today:

I pledge allegiance to Individual Liberty and recognize the flag (voluntarily) of the United States of America, and to the republic for which it stands, one nation (a nation in limited powers and a federal system of state power in all else) under God (if you so choose), indivisible (except for where federal government treads into state sovereignty), with liberty and justice for all (not measured as a collective outcome but through the protection of each individual to live his/her life, liberty and pursuit of happiness as they so choose.

In Sunday’s NY Times column, Modesty and Audacity, David Brooks writes, “Washington is full of arrogant people who grab power whenever they get the chance. But there is at least one modest minimalist in town, and that’s John Roberts Jr.” Brooks of course is referring to the 5-4 (or 4-1-4) ruling of SCOTUS last week that produced a surprise ruling in some respects and some interesting tea leaf reading days later.

Brooks goes on further to frame what he and most in Washington believes is the game, “And here’s the biggest gift that Roberts gave to the nation: By restraining the power of the court to shape health care policy, he opened up space for the rest of us to shape that policy through the political process. By modestly refraining from rewriting health care laws himself, he has given voters and politicians more room to be audacious.” Does that sound dangerous to you? How much of your life do you wish to depend upon politicians to ‘manage’ and activities to exclude?

While it could be argued on both sides of the Health Care debate that they won a victory in the Roberts decision, on the one hand health care goes through but on the other there’s been a potential boundary drawn around the Commerce Clause which has taken on a power of it’s own since the Hughes court of the 1930s (Charles Hughes, Chief Justice, like Roberts nominated by a Republican, Hoover). But ‘at the end of the day’ (hate that saying) it still leans toward a pro-government interventionist game that doesn’t open the gate as much to non-politicians and lawyers and leaves the individual at the mercy of all branches of the federal government.

In Brooks’ summary he says, “Personally, I think the Republicans’ defined-contribution approach is compelling. It’s a potentially effective way to expand coverage while aligning incentives so that people make cost-conscious, responsible decisions. But the truth is neither I nor anybody else really knows what works. We’re going to have to go through a process of discovery. We’re going to have to ride the period of rapid innovation that is now under way.” While admitting the efficiency of aligning cost to benefits, in the article he doesn’t recognize the most efficient way that can be done and is done through competitive markets, without having to compromise the greatest attribute and foundation of this ‘Nation/Federalist’ system and that is the Freedom of the Individual and the Market to arrive at what Man cannot ‘Manage’ his/her way to.

Brooks even admits at the end of this statement “But the truth is neither I nor anybody else really knows what works.” So with that statement being true, then why would we take the further irrational steps of limiting personal choice, taking non-homogeneous data (individuals are so different), and from 40,000 feet in the air (DC) make decisions by an elite-ignorant (admitted by Brooks) group in Washington to create policy and manage costs, benefits and features?

If Presidential nominee Mitt Romney and his camp could step away from the ‘GOP handlers’ they would realize that as the smoke clears there’s ground to be staked out or it will be staked out for him. You see he was right in his Federalism but possibly wrong in his policy choice for Massachusetts. He is right in that the US Constitution and Madison specifically emphasizes the importance of leaving Positive Liberty (Government managed outcomes) and powers not enumerated in the Constitution to the states – it can’t be emphasized enough how important that is. He might be wrong as time will show in who stays, flees or goes to MA in part due to their health care system and whether it will crumble under the weight of its debt or survive.

Of course that is the power of the Market, that while as Brooks says ‘Nobody really knows what works’, with a federal government that protects open access into the market and quells disputes between states (not intrastate) it allows for the ‘friction’ of voluntary exchange and association which will in the long run provide access to better health care choices and lead to the ‘Greater Good’ of Liberty which is defined ‘on the ground’ and can be arguably protected in Washington if as Franklin said, “..a Republic, if you can keep it!”

“Can you even dye my eyes to match my gown?”

A line by Dorothy Gale from Wizard of Oz played by Judy Garland, an allegory written by Frank Baum in the late 19th century that parodies the eastern banks’ desire for a gold system vs the mid-west farmers’ desire to keep silver open as that was what they predominantly owned and traded with.

In the story Dorothy makes her way through following gold (follow the yellow brick road) into the government of OZ where they make all kinds of promises not realizing until later that she had the power to get back to Kansas all along because she was wearing silver (changed to red in 1939 movie) shoes which would get her there. The cowardly lion was William Jennings Bryan who made the case for silver but was no match to the eastern banking interests. The banks not only won on the gold issue as they consolidated their power but they would go on to win even bigger as the 1907 bank panic followed which lead to centralizing the bank system under the Federal Reserve in 1913 legislation.

This morning, the Wizard (Bernanke) once again told congress with a wink, wink, nudge, nudge that the banks could get another ‘helicopter drop’ of cash. Yes, you and I are today’s Dorothy, but instead of following the ‘Yellow Brick Road’ we’re following a different ‘Road to Serfdom’ (Hayek).

The question that we can ask ourselves allegorically is what do we like Dorothy already have that we’ve forgotten about, that will get us back to what had been working for us? The answer has been there all the time: Understanding the power that each state has to defend itself and its people against federal encroachment and the importance of decentralized government and currency. Tools like nullification and state’s party insistence that their candidates be held to the responsibility of saying to the federal government, “Thus far and no further” while at the same time resisting the temptation of federal aid that comes with strings attached. It will take readers of this article, getting involved in state and municipal politics to make the difference and educating themselves on the reason why the Constitution separates the powers of government between limited federal and greater state power. Please help yourself to the articles on this website and the Library tab at top that includes many free books, essays and articles regarding why Liberty should be the goal of government based on a  ’Negative’ (nonintervention) posture rather than ‘Positive’ and why free and unmanaged markets do much better in determining value than managed markets.

As the powers in Washington scatter about to preserve their corrupt and crony power that dates back to the Lincoln administration, shouldn’t we start clicking our heels together that a rebalance of constitutional alignment would take place. Find your silver slippers and get going.

Christopher M. Mahon, Editor

 

The Washington Times on Monday May 7th in its article `Romney rejects Ron Paul-style Austerity‘ reported,

“Speaking Monday at a town hall style-meeting event in Cleveland, presumptive GOP presidential Mitt Romney plunged a fork into the idea that he could come around to embracing (Congressman Ron) Paul’s call for deep cuts in federal spending.

“My job is to get America back on track to have a balanced budget. Now I’m not going to cut $1 trillion in the first year,” he said, distancing himself from Mr. Paul’s plan to slice more than a quarter of the estimated $3.8 trillion being spent by the the federal government.”

Later when pushed further regarding Paul’s budget proposal and the spending cut measures, Romney went on to say, “The reason, is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work.”   

Here’s why Romney is wrong in his suggestion that this could harm the US economy, wrong in his historical perspective and most importantly wrong on his understanding of the `American Spirit’.

FactCheck, which generally leans progressive, correctly points out that “The biggest (budget) cut, on a percentage basis, occurred in fiscal year 1920 after two years of steep budget increases to finance World War I. That year, spending dropped from $18.5 billion to $6.4 billion, which is $12.1 billion decline or about 65 percent. The $12.1 billion in today’s dollars would be worth $134.3 billion, according to the Bureau of Labor Statistics’ .

Likewise, there was a sharp decline in spending after World War II. Beginning in 1946, Congress cut spending for three straight fiscal years. The biggest drop occurred in 1946, when spending dropped by $37.5 billion or about 40 percent (from $92.7 billion to $55.2 billion). That $37.5 billion would be worth $425.4 billion in today’s dollars — making it the largest cut in adjusted dollars.”

To further the comparison to the error of Romney’s remarks that to `take $1 trillion Federal spending out $15 trillion US economy’ would cause job loss versus what happened in 1920 and 1946, is that in 1920 and 1946 they removed roughly 17% and 16% of federal spending (respectively) while  Ron Paul’s proposal would shift federal spending by less than 7%. But here’s where Romney, policy makers and most economists get it wrong, it’s the `Unseen’. While Federal spending through intervention in military, education, health care and many other areas of the economy create malinvestment and shift purchasing power from the individual to the state, the reverse allows markets to correct and that money doesn’t disappear as Romney suggests but moves through the economy in a more efficient way. Both 1920 and 1946 illustrate that as you had millions of men and women coming home from wars, you had manufacturing shifting from making weapons and bombs to meet domestic and international demands for other products and services.

Finally, where Romney really gets it wrong is calculating the heart of the American worker-entrepreneur on the same plane as in Greece or France. The US small business owners and those who’d like to be are like race horses restrained and thrown off at the starting gate by a capricious federal government that if instead was restrained would allow like in 1920 and in 1946 for the ingenuity of the `American Spirit’ to soar. The greatness of the United States isn’t inherent in her citizens rather as it has been in her law, protection of individual liberty and the access to succeed and fail through the discipline of the US Constitution.

While Federal power has encroached greatly and has been redefined in a positive matter through intervention and defining social and financial outcomes over the past 150 years, there is still a remnant of Liberty, Self Determination and the desire to not only lift one’s self but to help others.

In 1866 Lord Acton of British Parliament viewed the remains of the Civil War aftermath and in a lecture series he exalted the unique qualities of the US prior to the war, a Democratic Republic restrained by state sovereignty, where the lowest man counted but warned of a new federalism to come that would go the way of Rome and France.

The Federal Government has an important but limited role as a referee between the states, the states and foreign entities and to vigilantly protect our sovereignty as a nation. The question for today framed in the backdrop of the 2012 election, “Are there state and national politicians (like Presidents Harding and Coolidge of the 1920s* and the Congress of 1946, 47) who will aid in the process of restraining Federal power and loosening the Individual and the states to experiment as Madison, Jefferson and many of the framers suggested?

This is why it is crucial that the GOP platform adopts Congressman Paul’s classical economic and constitutional principles of limited federal power, social and financial values determined by the market (free and voluntary exchange and association) and sound money.

While President Obama wishes to impose more centralized federal government power in taking over more sectors of the economy and redistribute wealth, if Mr. Romney wins in November, don’t we still lose? Our financial, social and infrastructure problems will not go away. Just as aerodynamics defies gravity briefly through a 3 point landing or crash, so do markets eventually adjust either voluntarily like in 1920, 1946 or involuntarily like in 1929 and 2008. The global systems of the world are decentralizing one way or the other; the Middle East, Greece, Ireland and potentially France are showing how `not to do it’, Paul’s classical economic principles through constitutionally aligned government as we’ve seen voluntarily applied in our past shows how ‘to do it’. Who’s steps should we follow?

Christopher M Mahon, Editor

 

*Unfortunately, the recovery of 1920-21 was followed by Federal Reserve excess in part by the 1st Fed Chairman Benjamin Strong’s friendship to Montagu Norman, Governor of Bank of England to help in Britain’s parliamentary requirement to go back to Gold in 1925 at a fixed price (which is a lesson for today). Modern day Keynesians point to greed and excess of unrestrained markets  to the Great Depression but the reality is that the monetary policies of the Federal Reserve distorted markets and brought about malinvestment. The 1929 Depression that took 25 years should have been a 1929-30(31) Depression if Hoover and/or Roosevelt had taken the same steps as Harding, Coolidge in early 1920s and the 1946 Congress. Hopefully today classical economics (Austrian) will win out.

In a March 9th article in Reason Magazine, `Ron Paul Revolution: What Now? Brian Doherty sums up the frustration of Ron Paul supporters as their candidate hasn’t won a single primary or caucus state, and media channels like Politico have written him off. The math of Super Tuesday last week also shows that Congressman Paul has no chance of winning the nomination. So what is left of his candidacy? Who or how can the Constitution and Individual Liberty be brought to the forefront as Washington Insider interests jockey for power with large funding resources and powerful media connections?

Doherty mulls over a brokered convention in Tampa, “Given the general attitudes of the average GOP stalwart, though, it’s hard to imagine Ron Paul coming out of one a winner. Ronald Reagan in 1976 made quite the push to deny leader Gerald Ford the nomination when Ford lacked a clear majority going into the convention, and even Reagan, god-saint of modern Republicanism, failed. Former GOP super-strategist Roger Stone, who lived through those days, reminded me that Reagan actually represented the views and enthusiasms of the mass of GOP activists in his day in a way Ron Paul does not now. This makes it even less likely Paul will succeed with any last-minute Tampa coup.”

But all is not lost. Ron Paul and his campaign support bring a couple of surprises to a brokered convention. First, the media has discounted loyal delegate support for Ron Paul in states where delegates are not bound and can move their support, and in the training and volunteer effort that the Paul camp has made since 2008 in getting their people into key precinct positions in each state will help. While it may be a long, long shot when considering Reagan failed, still Paul’s influence will be felt at the convention.

Finally, when you again run through the numbers and where Ron Paul runs strong: Independents, Reagan Democrats and the Youth (twenty somethings); even without the holdout for a brokered convention, just as the King of Israel contended with Elijah so will the eventual GOP nominee need Paul support going into November. Unlike deals made with past failed candidacies, to get Ron Paul support and a successful national campaign there will need to be tangible evidence of foreign and domestic policy revisions that align with constitutional principles.

If Mitt Romney runs against President Obama with $1billion cut in spending in the first year, a new military footprint and a Defense rather than Military Intervention policy that respects national sovereignty around the globe – until they violate ours;  and an audit of the Federal Reserve with a change in objective from Employment/Inflation to inflation only and creates a committee in his first year to look at role of Federal Reserve going forward, then we can consider the Paul campaign of 2012 very successful.

My friends, don’t give up the good fight! Evangelize those around you to the Constitution and Individual Liberty as vital to a healthy society and the well being of a nation. As Madison suggested in Federalist Papers #39, our success hinges on `Self-Government’.

NOTE: If you wish to be more involved, contact your county party office that you are registered with and find out how you can be involved. You could become a committee member and precinct representative. Each state is vital in the fight against federal power encroachment, the best weapon the states have against that encroachment sits rusty and unused – Nullification. Finally, many are standing up to Universal Health Care. Get involved.

Christopher M. Mahon, Editor

The Iowa Caucus is less than a week away and political rhetoric by all candidates is at a high level, a good part of that is directed at Ron Paul who currently is the leader as indicated from most polls. He not only pulls from Independent and Libertarian voters but also Conservatives who have become disenfranchised with almost 10 years of military conflict at the expense of a balanced budget and debt. The latest accusations portray Congressman Paul as not only out of the `mainstream’ in his ideas on federal powers (even though by all accounts they are constitutional) but also that a Ron Paul presidency would be dangerous for the US as Iran could go nuclear and Paul is an `Isolationist’.

In a November 2011 Cato Institute article Ted Galen Carpenter makes the opposite claim that Military Interventionists and NeoCons like Gingrich, Santorum and Bachmann do us much more harm than good. For interventionists to not realize the beneficiary of a war with Iraq was Iran was a failure….“For neoconservatves to argue that the withdrawal of the few thousand remaining U.S. troops from Iraq significantly worsens that aspect is either obtuse or disingenuous. If they didn’t want Iran t…o gain significant influence in the region, they should have thought of that danger in 2002 and early 2003, instead of lobbying feverishly for U.S. military intervention against Iraq. The United States has paid a terrible cost — some $850 billion and more than 4,400 dead American soldiers — to make Iran the most influential power in Iraq.”

In another article by Per Bylund, Bylund  makes the case how the `Endowment Effect’ theory, (people place more value on things they own versus things they do not) illustrates the shortcomings of economic and military intervention in not understanding human action (Praxeology) and the unintended consequences. Or why Ron Paul’s theories on domestic and foreign policies while more aligned to constitutional principles are also more sound than policies of the other candidates.

Does US military policy of Intervention into the affairs of other nations (occupation, embargo, etc), prop up the dictators of the world like Hugo Chavez or Mahmoud Ahmadinejad who rally their people and crusade against US military might and US monetary policy? What part did Federal Reserve Quantitative Easing (1 and 2) play in the Middle East uprisings and other struggling nation’s financial affairs?  What part did troops in Iraq, Afghanistan and Pakistan play? Tell us what you think?

Christopher M. Mahon, Editor

“The law of unintended consequences pushes us ceaselessly through the years, permitting no pause for perspective.” Richard Schickel

2011 saw a word or phrase that leaped into the media’s lexicon in coverage of politics and economics as governments, institutions and financial systems that have worked for the most part over the past several decades, now appear to be crumbling or at least listing. The `Unintendeds’ of decision making in centralized systems like Social Security, Medicare and Wall Street here in the US and the European financial system, Middle East governance and general global central planning has resulted in scenarios that most have not anticipated.

Unintended (Consequences) is a term that has been around at least since the writings of economist, Adam Smith (Wealth of Nations) and mentioned by economists and authors like: Jean-Baptiste Say, Frederic Bastiat, Ludwig Von Mises and Frederic Hayek who have all either used the term or the meaning of it while describing the potential disastrous outcome of using government central planning power in solving society’s maladies such as poverty, unemployment and immorality rather than allowing `Free Markets’ to determine price, value and allocations. The market itself is a `regulator’ and better one at that than governments or monopolistic markets that distort value and price and produce the unintended consequences like shortages (under price) and bubbles (overprice).

Rudolph (RJ) Rummel, University of Hawaii estimates in his 1994 controversial study `Death By Government‘  that 168 million people were killed as a result of Communist and Socialist governments since 1900 and giving the phenomena a name – Democide. Most due to outright violence inherent in the system but estimates are that a considerable amount suffered  indirectly due to the unintended consequences of political justice and equality, poverty and neglect that is the outcome when government’s through central planning control economic and social functions.

Here in the US more government intervention in both choosing military options in the Middle East and in solving the US economic recession has been met by public resistance. The Tea Party and Occupy Wall Street movements have been a manifest outcome in some way to the resistance.  In the EU as there has been planning and negotiating for more government intervention into their banking crisis and conflicts between state sovereignty and EU interests there has been growing resistance by the UK, Germany and other states/nations not to comply.

So while considering the battle that will rage going into next year between the Individual and a free society vs government intervention, what will be the Word (Phrase) for 2012? Totalitarianism or Laissez-faire? Tell us what you think?

 

Christopher M. Mahon, Editor

 

 

 

CONSIDERING RON PAUL AND THE RISKS-REWARDS OF US MILITARY INTERVENTION

“The armies separated; and, it is said, Pyrrhus replied to one that gave him joy of his victory that one more such victory would utterly undo him. For he had lost a great part of the forces he brought with him, and almost all his particular friends and principal commanders; there were no others there to make recruits, and he found the confederates in Italy backward. On the other hand, as from a fountain continually flowing out of the city, the Roman camp was quickly and plentifully filled up with fresh men, not at all abating in courage for the loss they sustained, but even from their very anger gaining new force and resolution to go on with the war.” Plutarch

 

Plutarch’s observation, which is where the phrase a `Pyrrhic Victory’ comes from suggests that while a win (War Victory) is good, if not managed properly could be the undoing or collapse of a nation. Even in the best (for lack of better word) or most moralistic war, while the citizenry keeps its freedom it’s the State, the pilot fish (Corporations through huge government contracts) and the financiers of their excursions that make substantial gains. This group is ready to wage war again: gain territory and advantages, build weapons at a premium and of course finance it, but the citizenry is exhausted, depleted and emotionally, spiritually and physically bankrupt from the last victory (or defeat).

Ron Paul has been dismissed as naive and with outcries of `Appeaser’ or `Coward’ when he suggests the dangers of another war (Iran) and to verify (Reagan) intelligence carefully and to consider the risks before moving ahead. Critics who favor military intervention will highlight the `dangers’ of a nuclear Iran meanwhile not consider the full scope of risk to Individual Liberty (from bills like NDAA 2012) or the financial impact to an already dire US and global economic condition. Interventionists also don’t consider the motives and reward of the State, their corporate relationships and the banks who survive from one stimulus bill or appropriations bill to the next and look forward to the next big government excursion. In Reason Magazine, ‘Ron Paul Challenges Mindless Militarism’, Jacob Sullum writes, “This week the U.S. officially ended its war in Iraq, nearly nine years after launching it based on the false claim that Saddam Hussein posed a threat to us because he had weapons of mass destruction. The war, which replaced a brutal dictator with a corrupt, wobbly elected government that may not be able to defend Iraq’s borders or maintain peace in a country driven by sectarian violence, cost the U.S. $800 billion and nearly 4,500 American lives. More than 100,000 civilians were killed during the invasion and its aftermath.

The regime installed by the U.S. in Afghanistan to replace Al Qaeda’s Taliban allies is even weaker and more corrupt than the one in Iraq. Ten years after the invasion, we still have 100,000 troops in Afghanistan, and so far the war has cost about $500 billion, 1,800 American lives, and thousands of civilian casualties.”

The irony in Plutarch’s statement and warning was that they were conquered by a conqueror that later would make the same mistake. Are we too myopic and blind to the dangers of `Empire Building’? Has war like the automobile industry or `Green Technology’ become a `preferred’ industry that the government funnels money into? Washington, Jefferson, Eisenhower, Kennedy and Reagan warned of the proliferation of militaristic power rather than defense; a strong constitutionally based Defense is right they would have argued, but today if you utter a word questioning the wisdom of an aggressive military footprint and preemptive attacks you are drown out by rhetoric and name calling.

While the zeal of the Neo-Conservative GOP base is to be the `leader’ in managing world affairs and using military intervention as a tool for peace while contemplating a war with Iran and putting aside the blaring consequences of these policies the other obvious reality is that with over $15.13 Trillion in debt (more than our GDP), the USD is leveraged more than 40:1 and we can’t afford the current military footprint let alone expanding it further. Isn’t it time to talk sensibly about a well balanced strategy of Defense that is constitutionally based and fits within our budget? Can we learn lessons from Rome and Great Britain that while they achieved Empires for a time, they expanded beyond their ability to manage their affairs effectively and Individual Liberties were sacrificed in the process?

Woodrow Wilson wasn’t wrong because he was an `Appeaser’, he was wrong because he was an early `Empire Builder’ and a globalist which oversteps constitutional authority of Federal power. There was no sovereign threat to the US at the time of WW1 except possibly to the banks as they were financing the war, and that’s a harbinger on `Too big to fail’ and Moral Hazard.

Sullum concludes, “For 35 years Ron Paul has been speaking truths that the foreign policy mavens of both parties prefer to ignore: that the Constitution gives Congress alone the power to declare war, that unjustified interventions breed resentment that undermines our security, that there is a difference between military spending and defense spending, that foreign aid rewards autocrats and their cronies, and that economic sanctions  are an “an act of war” that hurts people in the name of punishing  the governments that oppress them. If there really is no room for these arguments in the Republican Party, that is the party’s fault, not Paul’s.”

Today, as we take a `full assessment’ of external and internal threats to our sovereignty we need to weigh the real threats to State sovereignty from terrorism and invasion from abroad, against fragilities of our financial house and the cost to Individual Liberty while tipping our hats to individuals like Ron Paul who are courageous in that they don’t back down but speak out against tyranny and the political marginalization of alternative views.

The real terror today is that the US Constitution with its separation of powers between the states and federal government and protection against the concentration of power into the hands of a few has become unfamiliar and even peculiar to most of our population who perceive it as `dangerous’ and a threat to their way of life. When you consider Pyrrhus’ warning, the irony is thick.

Christopher M. Mahon, Editor

editor@ambidextrouscivicdiscourse.com

“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating,” A statement by IMF head Christine Lagarde. She later went on to warn of “economic retraction, rising protectionism, isolation and…what happened in the 1930s (depression).”

The speech by LaGarde at the US State Department in Washington was partly in response to the infighting and bickering between the Euro nations and the UK regarding who needs to make sacrifices and who’s more solvent and should be downgraded first. Bank of France’s Christian Noyer addressing rumors of a possible French downgrade said that there wasn’t economic data that warranted that move and if there was a downgrade that the UK should be downgraded first.

François Fillon, Prime Minister of France said that Britain’s debt and deficit position has not been fairly evaluated in it’s triple A rating. Britain has become the whipping boy of the EU nations since it vetoed the European Union Treaty last week and Prime Minister Cameron said there was no chance of the UK participating in any newly negotiated European government or financial system. Many inside Britain fear economic and political reprisals as a result of veto and comments made by Cameron.

Conflicting financial positions in France and Germany have made it difficult as well to negotiate in good faith for long term solutions, LaGarde warned against `quick fixes’ and stated that all countries need to work together, “It is really that Gordian Knot that needs to be cracked, that needs to be addressed as collectively as possible, starting with those at the center but with the support of the international community probably channeled through the IMF,” she said.

In other financial news this morning the Credit Agency Fitch has downgraded several banks, which included Bank of America,  Morgan Stanley  and Goldman Sachs, as well as Europe’s Barclays, Societe Generale and BNP Paribas. Germany’s Deutsche Bank and Switzerland’s Credit Suisse were also downgraded. Fitch was the third credit rating agency to downgrade global financial institutions since September.

Meanwhile the Financial Times on some positive notes has come out this morning in a series, Is America Working, an assessment of the US Labor market and it’s technical skills and how `Creative Destruction’  (Capitalism) has turned US financial markets around in the past.

 

Additional reading:

IMF Chief Warns of 1930s Style Threat

No Country Immune From Rising Risks: IMF’s LaGarde

Why Is There A Euro Crisis? 

 

5,4,3,2,1 BLAST OFF! I remember as a young boy in the heyday of the NASA Space Program the thrill of watching on TV the Apollo missions blasting into space. What pageantry, what courage and what technology! The intellectual capital and cooperative effort that it must have taken. The other day while golfing on one of my local courses, I noticed an elderly couple behind me that was enjoying the afternoon. As we moved from hole to hole I was somewhat surprised at how adept the wife was at maneuvering the golf cart. Though somewhat limited in her physical ability she was able to operate the vehicle quite well.

I contrast those two scenes to highlight the degree of difficulty and the prospects of participation in both of those vehicles. Obviously it takes a high skill set to build and or operate a Rocket Ship, while a golf cart was purposefully built so that the broadest amount of people could participate. The question then is, `Did the framers of the Constitution (our government) construct it so that only very few and those highly skilled could represent it or was it built for the greatest amount of participation?

Today in the GOP race to become the Presidential Candidate the news highlights almost each day the gaffs, stammers and lack of knowledge of the candidates. Even Herman Cain’s question `How to say hot dog in Cuban’? As if assuming he didn’t know it was Spanish while he could have easily meant the different dialect and as in UK or US English there are different words to describe a bathroom, apartment and elevator. Even in the United States, Soda and Sandwiches (Grinder, Hero, wedge) have different expressions in different parts of the country. It seems the election process is more of a weeding out of those who don’t know the intricacies of the `Washington System’  and the very specific international information that one would only pickup if a world traveler or through growing up in certain social settings. Is that what we want in a candidate?

What are the dangers of letting anyone into Office vs narrowing the selection?

Of course the dangers would be scaled to the amount of power available and the potential for critical or even fatal failure. In the UK, the powers of the Monarchy are virtually nonexistent as the Throne is a figurehead position today, so the Brits don’t lose sleep over who’s next in line. The framers discussed this at length as they considered many resources at the time like: Baron Montesquieu’s theory on `Separation of Powers’ which stated that centralized power was more likely to lead to tyranny and cataclysmic failure while decentralized power diffused the impact. They also observed the mistakes made by Europe’s Monarchal and primitive central bank systems. In the Federalist Papers Hamilton and Madison disagreed on the function of government, while Hamilton admired a European Monarchal and Parliamentary system, particularly in banking, Madison preferred the protections of a decentralized Republic.

In a highly `specialized’ system of government that is centralized into a federal system that is far reaching into the intimate lives of each individual and as a result has developed intricate systems of welfare, taxation, regulation and the necessary University structures to support it would have to by nature be very selective and restrictive in candidate selection. On the other hand, in a decentralized system, that has specific and limited powers (enumerated) for the federal system and much broader powers to the states, local and community systems, the selection process can be much broader based, particularly as you get closer to the community levels.

So these two views (Rocket Ship vs Golf Cart) really can change your selection process. If `Rocket Ship’ then as the media suggests, a well educated (in governmental systems), world traveled and leadership-oriented candidate ONLY will do. But if like the founders who understood the potential for the `downside risk’  built instead a `Golf Cart’, isn’t it more of an examination to who can protect that constitutional design and ultimately put the protection of Individual Liberty first?

While the pageantry and beauty of a rocket ship is awesome to behold, unfortunately even in the hands of the greatest minds there’s system errors and they do fall from the sky at a great cost. The framer’s didn’t want to put the fate of a Great Nation in the hands of a few but designed through decentralize powers (in bits) to be put in the hands of many. Think about it, a little grey haired woman (golf cart)  in a small town in Florida as a town alderman could overrule Washington because of constitutional design. Which of today’s candidates and current officeholders are best capable to maintain and restore that design?

 

Christopher M. Mahon

 

 

When discussing `Negative’ vs. `Positive’ government I like to use the illustration of two types of basketball games, in one game the referee theoretically runs up and down the sideline and only enters the game when a predetermined infraction occurs by one player fouling another. While one team might have net advantages on paper, the game played better by either team determines the outcome. In the other game rather than the ref `standing down’ and restricted to only engage when an infraction occurs, the ref is allowed to manage the game to determine the outcome. So if team A on paper is more skilled than team B, the ref can call the game to the advantage of team B to create a more `Just’ outcome. In 2007 shock waves were sent through the sport of basketball when Tim Donaghy a professional referee for the NBA was accused of gambling and `fixing’ games. Serious allegations in the state of Arizona contend that Donaghy had miscalled two road games against the Phoenix Suns when they played the LA Lakers and the San Antonio Spurs. The league itself was called on the carpet as an FBI investigation was under way. Sportscasters and fans alike were bewildered and never could imagine that NBA games could be fixed or players and refs becoming actors playing a part like in professional wrestling. There has been disinterest and disenchantment as ticket sales have plummeted and the league has attempted to repair its reputation over the last few years. While sports lovers understand the differences in talent and teams that are favored or lacking, they like the spontaneity of the game and root for the underdog and bristle at league or game favoritism.

In a `Negative’’ government system, government is limited in its powers to `protect’ or `promote’ individuals or groups based partially on JS Mill’s `Harm’ Principle from his essay `On Liberty’, “That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” Another rather macabre illustration of Positive government is from Kurt Vonnegut’s short story Harrison Bergeron, Vonnegut foresees a dystopian world of government equality, “The plot is set in the year 2081. Due to the 211th, 212th and 213th Amendments to the Constitution of America, all Americans are mandated equal. “They were not only equal before God and the law. They were equal every which way.” In America no one is more intelligent than anyone else; no one is better looking or more athletic than anyone else. In order to stop any sort of competition in society these measures are enforced by the United States Handicapper General”. The very strong were burdened with weights and objects to severely limit their strength, the intellectuals were encumbered with drugs to distort their minds and understanding, and the beautiful wore masks or the appearance of their beauty was marred.

The `US Handicapper General’ today is Cass Sunstein, Office of Information and Regulatory Affairs, who through his legal and behavioral science background determines the best `Positive’ laws to meet the outcome goals of Social Justice and Equality.

While those in favor of a government that manages the game toward a certain outcome and manipulates behavior towards that end, there are others who believe that the outcome and unintended consequences of a Positive government are tragic and result in less liberties and freedom for each individual. Ludwig Von Mises, the author of Human Action proffers that it is because of the inequalities of men that voluntary association, exchange and cooperation can occur. That when we attempt, even if for altruistic intentions (if possible) to rebalance mankind based on skill sets, intellect, physical prowess, etc that it distorts the abilities of free and voluntary exchange and association to bring peace and harmony to society. Class system strife is the result of Positive government interventions and not the socio-economic differences that will always exist in society. A strong man and an intelligent man can pool their resources and work together. A poor man and a rich man can agree upon employment conditions and work together. While this may sound simplistic and I’m sure you can think of examples of exploitation, in a freer market with more choices, bad actors (employers, business owners) are held in check by the decisions of the consumers and workers.  

The budget and debt battle of 2011 has taken on many themes, pitting the rich against the poor, the elderly against young workers, but isn’t it really about the size and function of government? As we’ve discussed, today’s government is Positive in nature, as it looks to manage the behavior of individuals in order to produce societal outcomes – which never happens. Federal US Education budget has grown at more than 2 times the rate of inflation and the US is at the bottom compared to other nations. Poverty is still unacceptably high (as measured by Fed) even after decades of the `War on Poverty’. The question being asked today by many is not only what are the legitimate functions of the federal government but also couldn’t private resources take care of the social ills of society much better than government?

As many in the media and governments around the world smell blood in the water, is there a not so hidden strategy being prepared? The recent revelations on Rupert Murdoch’s News of the World paying off government officials and hacking into voice mail accounts of tragedy victims (possibly even 9/11) has closed the newspaper down which was founded in 1843, stopped a lucrative Murdoch deal and has exposed the Murdoch media empire to other potential government and market reactions.

One of the prized possessions of that empire is the Fox syndication, which like other Murdoch properties (NY Post, Wall Street Journal) promotes a Conservative view on social and economic issues. When the scandal initially broke, media on the left like MSNBC, NY Times and others seemed to walk a pretty good `tight rope’ of reporting the facts while holding back judgment or opinion. FoxNews, WSJ and the NYPost,  has also walked that tight rope as well, disclosing the Murdoch relationship, reporting the facts and holding it’s punches regarding the `soft’ attacks of the left at that time.

More recently, the tight rope has been abandoned on the left and the gloves have come off. Politicians in England like David Cameron are running for cover and politicians in the US like Jay Rockefeller (D-WV), Barbara Boxer (D-CA) and Harry Reid (D-NV) have called for Congressional investigations (some GOP like Peter King (R-NY) have asked for a review regarding 9/11 hacking). MSNBC, has put out a poll that asks if `Rupert Murdoch has done `something’ regarding the scandal’ and the NYTimes over the weekend included an Op-Ed by Joe Nocera, `The Journal Becomes Foxified’ where he says, “As a business story, the News of the World scandal isn’t just about phone hacking and police bribery. It is about Murdoch’s media empire, the News Corporation, being at risk — along with his family’s once unshakable hold on it. The old Wall Street Journal would have been leading the pack in pursuit of that story.” Nocera, goes on to suggest as does Ed Miliband a UK Labor leader that Murdoch’s empire should come under further scrutiny and as Miliband forcefully says, `broken up’.

For those who can add, it’s become apparent that some government officials, like those mentioned above and competing media with different ideologies might be looking for competitive advantages or even payback through attaching the notoriety of News of the World events to the other Murdoch properties or even government regulations that could censor Free Speech through a `Fairness’ policy. FoxNews has always been a target of left media and even White House and Congressional operatives; to add fuel to the fire, recently the White House released emails that confirmed what many on the Right had already suspected, that the President really didn’t like to have to deal with FoxNews as a legitimate News Organization and had been trying to marginalize it.  

Today, the Wall Street Journal has commented directly on the scandal and the attacks on the left to associate the paper with it. In the Opinion section, `News and Critics’ it says, “We also trust that readers can see through the commercial and ideological motives of our competitor-critics. The Schadenfreude is so thick you can’t cut it with a chainsaw. Especially redolent are lectures about journalistic standards from publications that give Julian Assange and WikiLeaks their moral imprimatur. They want their readers to believe, based on no evidence, that the tabloid excesses of one publication somehow tarnish thousands of other News Corp. journalists across the world.”  The article goes on to say, “In braying for politicians to take down Mr. Murdoch and News Corp., our media colleagues might also stop to ask about possible precedents. The political mob has been quick to call for a criminal probe into whether News Corp. executives violated the U.S. Foreign Corrupt Practices Act with payments to British security or government officials in return for information used in news stories. Attorney General Eric Holder quickly obliged last week, without so much as a fare-thee-well to the First Amendment.”

Unfortunately the Left (Progressives and Modern Liberals) have been ahead of the curve in precedences – bad legislation that produces unintended consequences (New Deal, War on Poverty, Affirmative Action). The `Zeal of the Public Weal’ that at times has blinded both the Left and the Right in pursuits of their causes has produced significant blow back in both social and economic results. All parties (media and government) should consider this when the itch to push their causes and agendas  start to increase and the results are less liberty.

The Left also should consider the adage, “Be careful what you ask for because you might get it”. As MSNBC, NYTimes and other media could envision a party at the demise of FoxNews and other conservative brands, they have no idea what could be lurking behind to replace them. TeapartyNews anyone? PaulNews?

Christopher M. Mahon

In an article on CNBC’s website, the IMF is quoted as seeing the need for the US to continue on the path of quantitative easing. This is an interesting departure from the global financial community’s (including IMF) criticism of the Federal Reserve’s policy of printing money to save the US economy at the expense of world economic conditions. Some have blamed global rising food, energy prices and unemployment on US monetary policy.

In an article last month, Raghuram Rajan, IMF economist told a forum held by the Council of Foreign Affairs, “The function of the Fed monetary policy adopted in November 2010 to boost the U.S. economy is relatively limited, the biggest problem in some sense is that the Fed’s monetary policy actions are essentially transmitted to the rest of the world, when the rest of the world doesn’t allow their exchange rates to move and protect their own monetary policy and keep that as a separate policy as its own.”

The mixed message being sent by the IMF is at best simply monetary policy conflicts between economic academics or maybe more sinister,  the world’s next `central bank’ trying to move along the process of transferring the world’s currency reserve responsibilities from the Federal Reserve to the IMF.

To add to the intrgue, George Soros was quoted this weekend as saying, “The US could still absorb taking on more debt” and that a rush to pay down the debt could hinder its slow economic recovery.

These comments coming from the Paul Krugman’s of the world, who follow to the letter Keynesian government stimulus and monetary easing policies wouldn’t be surprising but the suggestions come from those most likely to benefit from the greased slide.

US Growth Requires Easy Money: IMF
George Soros From Bretton Woods 2 Conference: US Can Absorb More Debt

While new home sales took an ‘unexpected’ drop of 12.6% in January, the jobs report showed promise as new jobless claims dipped below the 400,000 level. But does the jobless number really reflect what is happening in the jobs market? We know that individuals who can’t find employment after a ‘reasonable’ amount of time give up looking and might rotate in and out of jobless numbers, but is there an unregulated, unstructured ‘jobs market’ that is unaccounted for?

In a December 2009 article by Cato Institute’s Richard Rahn,’New Underground Economy’ lays out the characteristics of how underground economies ebb and flow. He starts out, “Here is the evidence. The Federal Deposit Insurance Corp. (FDIC) released a report last week concluding that 7.7 percent of U.S. households, containing at least 17 million adults, are unbanked (i.e. those who do not have bank accounts), and an “estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked” (i.e., those who rely heavily on nonbank institutions, such as check cashing and money transmitting services). As an economy becomes richer and incomes rise, the normal expectation is that the proportion of the unbanked population falls and does not rise as is now happening in the United States.”

Rahn, in his article goes on to say that the underground economy is affected by federal and state tax, regulatory policies and inflation. When Sarbanes-Oxley was implemented in 2003 as a reaction to companies like Enron who didn’t account for off balance sheet liabilities in their reporting, it had the unintended consequences of building huge costs for large and mid-size companies to come into compliance. Most complied but some started to move headquarters out of US. Even today, while new start ups have slowed due to economic environment, there’s an increasing ratio of new companies starting up in Europe or Asia.

The smaller US businessowner has different alternatives than mid-size and large companies that are more public, they can simply take their business offline or underground.The trades and some services are more likely to go ‘offline’ to avoid heavy local, state and federal taxes which can eat up substantial profits and add time consuming additional recordkeeping and compliance. Carpenters, painters, lawn maintenance, home cleaning and many other small businesses who reported income for years are taking risks by pulling if not all their business, a good part out of the above ground economy.  This is reflected in January 2011 federal tax revenues which are up from the previous year. “Total government revenues rose by $21.4 billion for the month (Jan 2011) from a year ago to $226.6 billion, a 10.4% increase. Year to date, revenues are up by $65.4 billion to $758.4 billion or by 9.4%. Total outlays for the month though increased by $28.4 billion or by 11.5%.  Fiscal year to date, spending is up by $53.4 billion, or by 4.8%” Dirk Van Dijk, CFA ‘Federal Red Ink Less Than Expected.

When you look closer at federal revenue for January however, you see that payroll revenue is down even when factoring in the lowered employee tax rate by 2% (6.4 to 4.4), which only took affect in January and that the increase had more to do with liquidation of qualified money out of IRAs and 401(k)s, profit taking and asset repositioning as the estate tax issue wasn’t settled until year end.

In the trades like Carpentry, an owner might take his full business underground and work for cash without reporting or he may take his labor offline by hiring help that they pay in cash. The worker takes the risk of not entering social security and of possibly not building his credit profile and the employer takes the risk on an unlikely audit or insurance claim if payroll not accounted for. These are risks that are considered either consciously or unconsciously everyday as the cost of business continues to rise.

The budget battles happening in Washington and in the states like Wisconsin and now breaking out in other states like IL, OH and NJ is of particular interest to businessowners who hope for spending cuts but weigh the advantages and disadvantages of moving out of states or the country for larger companies and for small business owners, cutting another employee or taking their business underground.

New Underground Economy

Federal Red Ink Less Than Expected

At its core principles, Collective Bargaining is very reasonable and is a part of individual liberty: freedom to voluntary association and voluntary exchange which are also free market principles. A group of employees who work for a company in which some decide after meeting and exchanging ideas can go to management and negotiate their wants based upon their hard work and talents.

Unfortunately that is far from what exists today as worker interests and freedom to choose representation has taken a back seat to large powerful organizations that not only move masses of workers but also move massive legislation and influence elections through worker contributions and turnout. What was born in the 19th century Progressive and Social Reform movements that brought bargaining power to individual workers through numerous union options has been consolidated today through federal legislation into basically two organizations: AFL-CIO and Change To Win Federation.

Beatrice Webb, Socialist, Reformer, Economist and Co-Founder of the London School of Economics, is credited with first coining the phrase ‘Collective Bargaining’ in 1891.

Early US unionization and worker representation existed at local levels and organized more along craft or trade skills. Unions took on the characteristics of the European Guilds which while negotiating worker wages and hours also provided workers with education and training. While some employers fought union efforts many saw the benefits to the quality of their shops and in the products they were able to produce. While friction existed between worker and company ownership at times, companies had the choice to negotiate and workers had choices in who to associate and unite with. The late 19th century, particularly after the War and the depression of 1873 saw organizations like the American Federation of Labor and Knights of Labor open up to workers unprecedented bargaining power and a new focus for national unionism through political organization. Late 19th century and early 20th century social reform through progressive wage, immigration, African American and child labor reform saw the passage of local, state and federal laws that governed business and labor relationships and supported union centralization.

The Railway Act of 1926 and the court case Texas & N.O.R. Co. v. Brotherhood of Railway Clerks in 1930, strengthened union power to negotiate on behalf of workers. But it wasn’t until New Deal ground breaking legislation of the 1930s that put union at the forefront of the blue collar worker’s destiny.

In some ways The National Labor Relations Act of 1935 changed everything. It put regulatory powers in the hands of the federal government over labor and private industry. Ironically, the Act went much further than it’s inclusion in earlier legislation of FDR’s administration, the National Industrial Recovery Act (NIRA) of 1933 that was overturned as unconstitutional by the Supreme Court also in 1935. The result of the NLRA was the formation of the National Labor Relations Board which oversaw union and private industry’s labor contract negotiations. But it didn’t stop there, it also influenced union activities, worker voting and representation and the consolidation of power as unions merged into much larger organizations. The NLRB codified labor law, which would influence some of the largest US industries for the next 70 years.

The AFL-CIO has over 56 key Unions that represent several hundreds and over 11 million workers according to a 2008 survey. The Change To Win Federation is a collection of 4 major unions: The International Brotherhood of Teamsters (IBT); Service Employees International Union (SEIU); United Farm Workers (UFW); and United Food and Commercial Workers (UFCW), as of 2008 they had 4.8 million members. These organizations have the financial resources and votes to affect elections and legislation passed through Congress. Unfortunately, just like federally protected industries and companies like auto and banking, they result in monolithic centralized entities that lack competition and lose sight of their goals: individual workers.

The current Labor environment has become interesting due to the ‘uprising in Wisconsin’ where Governor Scott Walker and the legislature of Wisconsin, in addition to looking for wage and benefit concessions has also included in SB 11 changes in collective bargaining in the state for municipal and state workers; which at first blush might seem ominous for Wisconsin union workers and other state and federal workers. The legislation limits collective bargaining to wages with a CPI cap and in addition it reduces contracts from 2 years to 1 year. Also, and most importantly for union workers it includes a clause that would open up worker choices of union representation and the ability to ‘fire’ unions or replace management every year. The state would also require certification and re-certification of union entities:

Under SELRA and MERA, a collective bargaining unit elects a labor organization as its representative once a majority of the employees in that collective bargaining unit who are actually voting votes for that labor organization; that labor organization remains the representative unless a percentage of members of the collective bargaining unit supports a petition for a new election and subsequently votes to decertify the representative. This bill requires an annual certification election of the labor organization that represents each collective bargaining unit containing general employees. If, at the election, less than 51 percent of the actual employees in the collective bargaining unit vote for a representative, then, at the expiration of the current collective bargaining agreement, the current representative is decertified and the members of the collective bargaining unit are nonrepresented and may not be represented for one year. This bill requires an initial certification election for all represented state and municipal general employees in April 2011.

In some ways the condition of the union system and the individual worker placed into that system is similar to the US government system which has become too centralized, powerful and sacrifices the interests of the individual for the collective. The US Constitution stands as a plumb line to correct government, which hopefully is what some of today’s state conflicts reflect - change (even when it is good) is seldom without pain. . Unfortunately for union workers there is no ‘constitution’ to look back to specifically, but understanding that representation is more effective when it operates at local levels. Also, decentralized systems through state and local organizations allow for the recognition of unique differences and through experimentation, expose ideology and operations to success and failure. As there’s a call around the country for ‘Workers Unite!’ mostly by union operatives, workers should really study history and then ask themselves, ‘am I getting a fair shake from my union and, is what my employer asking of me fair’?

The Walker Bill – SB 11  To read Full Bill

In an article last year we warned of a possible Muni default crisis, this is an update to that article which you can find at ‘The Coming Municipal Bond Collapse’.

The recent Wisconsin stand off between the GOP Governor Scott Walker, his legislature and the teacher’s union has now started to break out in other states like Ohio who are battling budget deficits. Yield spreads are starting to reflect growing possibilities of defaults. Meredith Whitney of Whitney Group, bank and Muni analyst had came out early and suggests short positions, but even PIMCO says, “Now, however, with many states and local governments struggling to close large deficits, it’s time to acknowledge that defaults could happen, even in large and systemically important municipal issuers.”

In a CNBC article by John Carney, ‘The Bulls and Bears Agree’, ”The debate underway now is about the likely severity and scale of Muni defaults. Or, more precisely, we have a debate about how to fairly price the default risks inherent in Muni credits. On the one hand, there are analysts like Meredith Whitney and hedge fund managers like Jim Chanos who warn that investors are taking on too much risk for too little yield. Whitney has predicted a “wave of defaults” that could be in the hundreds of billions of dollars. On the other hand, there are the bond fund managers and economists like CNBC reporter Steve Liesman, most of who are more bullish on Muni credits.” As a footnote, Whitney has been fairly accurate in forecasting banking and real estate crisis, while Liesman has not.

John Carney in a second part of the Muni Series explains why he doesn’t trust muni managers. He reflects back on the 2008 financial crisis and points to overconfidence in models and risk assessment which were exposed to be flawed as the dust clears from the subsequent collapse. Carney says, “The reason I find this so striking is that this is the same sort of thing we’re now hearing about muni-bonds. The “muni people” are pretty much united in the view that munis are safe, that talk of large losses is irresponsible and the product of novice minds looking at a market they don’t understand. After all, investment grade munis never default.I’m worried that the same kind of tunnel vision that blinded so many of the smartest minds on Wall Street to the fragility of the mortgage market may be operating in munis.

Of course, as Nassim Taleb, Peter Schiff and Nouriel Roubini have pointed, modern portfolio management theory is vulnerable to fragility due to models that underestimate risk. Taleb goes even further in his NYTimes Best Seller, ‘The Black Swan’ saying that our current financial system is designed to ‘blow up’ every 25 years or so. With growing unrest around the world and in US States, the shift in currency and credit markets, it’s a good idea to reassess risks in our portfolios.

For more info:

Why I Don’t Trust The Muni Bond Experts, John Carney

The Two Faces Of Ben Bernanke, Peter Schiff”

‘Replacing the government of persons by the administration of things.’ Saint-Simon

To paraphrase Isaiah Berlin from his essay, ‘Two Concepts of Liberty’, When men lose interest in their ends, they lose control of their means. When we hand over the education of our children, or our healthcare to experts we also lose control over it as well, keeping our fingers crossed that men and women of excellent education and pedigree themselves can figure it out. But like Saint-Simon understood, caregiving except by the closets of relationships or through an individual’s compassion with their own resources, warps into duty and the object into a byproduct of the means.  

Wisconsin, arguably the birthplace of Progressivism, is ground zero of the upcoming budget battles between the states and unions; contracts negotiated during better times, that are benefit-rich, stand in contrast to plummeting state revenues and many private workers who are unemployed or underemployed.

There is a strange irony, as this plays out in Wisconsin, where Robert La Follette, the former Senator and Governor of the state, championed the early Progressive movement. Like a thread that enters into the first stitch of a garment, could the same thread becomes it’s unwind?

The early Progressive movements started as modest private initiatives in the cities such as Chicago, Boston and NY in the late 19th Century to address wages, poverty, illiteracy and shelter in the growing immigrant population and later in the post war African American population through settlement house, labor, education and other social movements that made their way from Europe.

Women such as Jane Addams and Ellen Gates Starr, founders of the Hull House in Chicago, came from well to do families (Duponts, Carnegie) that benefited from the industrial age and believed that they had a `personal responsibility to clean up their cities’ and give back to society. Addams’ father like many of that generation were ‘Lincoln Republicans’ who saw the charitable needs of their day. By the turn of the century there were thousands of settlement houses throughout the major cities in the US with facilities to feed, shelter and educate the masses. Successful ventures like Hull House in Chicago and Henry Street Settlement in NYC were the beneficiary of discriminating donors who inspected their facilities and results. Because these were private initiatives at the outset they were free to raise funds, experiment with methodology and be exposed to competition. Competition at the time was mostly from national organizations like the Salvation Army. What was unique about the settlement house movement and made it effective was that it was local, flexible and responsive to the needs of their neighborhood clients. What worked in one neighborhood might not work in another.

There also was labor and education movements that were growing as well. Initially the labor movements were setup as European Guilds which focused on training and skill development, later the movement turned more toward collective bargaining for higher wages. The labor movement gained traction in the early 20th century, which was aided by the derogatory termed ‘Muckrakers’ of the time like Upton Sinclair and his book, ‘The Jungle’ which described the working conditions in the slaughter houses of the Midwest.

While public education has always been a part of American history on some level; until Horace Mann, Secretary of Education in MA in the early 19th century introduced the ‘Prussian Model’ of professional teaching, most education if not home schooled were a loose collection of neighborhood schools with parents volunteering to teach the children. During the progressive era John Dewey, who taught at University of Chicago and Columbia, where he experimented with radical changes in education theory, purported that in order for society to change it must first be introduced into the classrooms. He was the first to suggest that curriculum, teacher certification and methodology should be centralized and more directly managed through the federal government. While public education existed before as a function of state and local administration with little federal guidance, Dewey radically changed it so that the states were mere agents of federal management and planning.

Robert La Follette and Wisconsin’s Progressive legacy is similar to the early beginnings of the movement. While La Follette championed a number of progressive reforms, including the first worker’s comp system, railroad rate reform, the minimum wage, the open primary system, women’s suffrage, and progressive taxation. He created an atmosphere of close cooperation between government and the citizens. Unfortunately, La Follette like the early progressives of the 19th century never imagined what the mixture of admirable causes (poverty, education, wages), unions and politics would turnout. The unintended consequences come from the insulation of bad theory, protocol and application that no longer has to compete for dollars or victims.

Social reform that is fueled by private initiative has proven to bring about wanted change, however once it has been ‘weaponized’ through union and political power it becomes something else. That ‘something else’ is protesting on the streets of Madison this week.

 

 One summer my brother and I stayed with relatives in a tony area of Connecticut; our family was middle class from a suburb of NYC and not schooled in the finer things, we were however, very good in sports. We’d show up at the tennis courts in mismatched shorts and tees, torn sneakers (high-tops not Tennis) but we’d kill anybody we’d play. The elites at the club tolerated us for a time, but refused to recognize our skills and couldn’t wait for us to leave.

In a recent interview with Bill O’Reilly, Charles Krauthammer commenting on CPAC (Conservative Political Action Committee), and their year after year top vote for Ron Paul in their straw Poll, belittled Paul’s support for ending the Federal Reserve, calls for substantial cuts in the defense budget and his constitutional discipline of separating federal and state power that would extremely realign not only government but also political fortunes.

While Krauthammer is my favorite elitist and intellectual he does unfortunately suffer from a condition, ‘Elitist Intellectual Ailment’ (EIA), which is characterized by ideas and policies that emanate from a small group of schools and think tanks that has a love for information and the need to connect causality. I call it the ‘Joe Frazier’ Socio-political style of `leading with your head’. This group believes that there isn’t a problem that can’t be intellectually worked out in a lab on an Ivy League campus through the hands of elitists (sons and daughters of the same) who then can through government management of society process their answers. To elitists, Government has never been the problem, the problem has been either differing elitist theories on the use of government or the improper use of government by the rare occasions that Commoners (non-elitists) have been in power. While Progressives favor the government as a re-distributor of wealth and income and Conservatives favor government as a protector of traditional values, they both favor government. They reject the ideas of Ron Paul and true free market believers who suggest that in an open society, through voluntary exchange and association, societies don’t necessarily collapse but ‘self-correct’.  

Krauthammer who honored in political and economic studies, has a degree from Harvard Medical School in Psychiatry and practiced until 1978 when he went to work for the Carter Administration is like many Conservative and Progressive elitists, they at times can move back and forth between political philosophies and political parties. While they may hang out in different areas of the ‘Country Club’, at the end of the day they still sit down at the same table and enjoy hot toddies in front of the same fire. Both believe that society is better managed by experts (another name for elites) who can steer resources, labor and values for the greater good.

To Krauthammer and other elitists, Ron Paul is the most peculiar of anomalies; he is bright, well educated, understands Washington like elitists, but yet he doesn’t see government as the overriding solution to society.

In a NYTimes best seller, ‘The Black Swan’, Nassim Taleb (University of Paris, Wharton School) wrote about the fragility that was inherent in financial, economic and public policy models coming out of the best schools and think tanks, that didn’t account for unknown variables. He says unlike nature which protects against exponential growth and centralization, the hybrid derivatives built in the financial markets and the government built banking behemoths would lead to a financial crisis. “If I shot an elephant, the biggest animal on earth you’d be unhappy. I will probably get some bad press as well. Will it impact the ecology of the planet though? No. If, before the financial crisis 2 years ago, I shot a company called Lehman Brothers, would it have had an impact on the world economy? Yes. The lesson learned here from the elephant is that it is not too big. Companies get too big” Taleb.

The reason that companies get too big, is the same reason that values like home prices, USD and drugs are distorted because of public policies built upon flawed interpretation of data and not properly accounting for risk. You could never have monopolies or the size companies we have today without government regulations that protect industries and corporations from competition and provide subsidized capital. But monolithic structures become prone to stress and create system failures when they fall. Nature allows for the largest tree in the forest to fall with little impact, while if the largest entity in almost any industry failed it could cause substantial impact to a community, state or a nation’s economy.

In another book, ‘Open Society’, Karl Popper traces the elitism of Conservative and Progressive theories back to Plato. Plato saw societies as machinery that would decay and become obsolete over time if not managed and planned for, he felt decay could be forestalled by ‘managing’ society to an ideal that would need to be reinterpreted over time. This would be done by a special class of individuals called ‘Philosopher-Kings’ who would set the vision. They would need to go to special schools for training and most likely come from a select (elite) group of people. He envisioned a second class of people, ‘The Warriors’ who would enforce the vision of the ‘Philosopher-Kings’, these would be police, politicians and judges; and then there would be a third class, ‘The Workers’ who followed the rules and allowed themselves to be managed and receive the benefits of a better society. As today, it would be unconscionable to move from class to class for the most part, and there would always be a need for the philosopher (political) class to manage society.

To quote Popper, “Our knowledge can only be finite, while our ignorance must necessarily be infinite.” In Popper’s theory of Falsification, he says every theory and policy is prone to failure and must be assumed so until proven so. Theories ‘cooked’ in the lab, proven on a very small data sample, could have tremendous unintended downside consequences or at a minimum – distort values.

Elitists don’t like ‘old fashion’ ideas of limited government and constitutional principles that separate government powers between the individual, states, and the federal government. Which allows for currency, food and values to self-regulate through voluntary exchange and association. To them it is too much power in too many hands. The idea of everyone doing whatever they wanted, would destroy a society, the very thing that Plato, Hegel and Marx warned against.

A truly free society, where government merely intervenes to protect individual liberties and men and women are free to succeed or fail? No, no, society must be managed and even though we have times of crisis, the boys and the girls in the labs of Princeton and Harvard will have the next great public policy solution and with a little more government control in their hands (and less in yours), elitists will enable Plato’s vision to continue.

“France will help the transition to a global financial system based on ‘several international currencies”, Christine LaGarde, the French Economy Minister said today.

France has joined a growing chorus of G20 countries who have starting to go public with plans to transition off dollar denominated global reserves to Special Drawing Rights, which are several currencies that would be held in place of USD to stabilize the currency markets. “At the same time, international capital flows should be better regulated and the role of the Special Drawing Rights issued by the International Monetary Fund should be reinforced by the inclusion of China’s yuan in the system.” Says the French economics minister.

China currently the 2nd largest economy in the world to the US, is holding $2.5 trillion in mostly USD as a hedge under the current monetary structure, the real question is what will happen to China’s and other monetary reserve portfolio balances and the USD’s value as they move to the new system.

In domestic news, housing prices plunged over 5% in 2010 and some traditionally insulated markets like Seattle and Atlanta are showing erosion as many prepare for the next level of price decreases. “Seattle is down about 31 percent from its mid-2007 peak and, according to Zillow’s calculations, still has as much as 10 percent to fall. Stan Humphries, economist for website Zillow, estimates the rest of the country will drop a further 5 and 7 percent as last year’s tax credits for home buyers continue to wear off.

See more below

Housing Crash Hit Cities Traditionally Not Considered Vulnerable

France Wants New Global Financial System

In a NYTimes article last month, David Brooks makes the case for why it is difficult for totalitarian regimes to make the transition toward democracies. Brooks points out, “But in 2002, Thomas Carothers gathered the evidence and wrote a seminal essay called “The End of the Transition Paradigm,” pointing out that moving away from dictatorship does not mean moving toward democracy. Many countries end up in a “gray zone,” with semi-functioning governments and powerful oligarchies.” Is the US currently in that ‘gray zone’? In another NYTimes article a few days ago Bob Herbert boasts that Democracy is breaking out around the world.

The assumption that Brooks, Herbert and many in the political class and media make is that the opposite of a totalitarian regime is democracy or to put it  in contrast: totalitarianism is to bondage as democracy is to liberty. The founders of the United States and history has shown that Democracy without restraint, leads to tyranny. A Democracy impregnated by special interest, elitism and powers gives birth to a ‘Rosemarie’s baby’. “Democracy… while it lasts is more bloody than either [aristocracy or monarchy]. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide” John Adams

Lord Acton (John Dalberg-Acton) a Member of British Parliament in the mid 19th Century also saw the danger of Democracy. In a lecture given after visiting the US at the end of the Civil War in 1866, Acton extolled the beginnings of the ‘Great Republic’ of America but warned of democracy. He defined the US’ early strengths in couching democracy within the restraints of law through a republican design of electoral college, state legislatures and separation of powers between State and Federal governance  inherent in her Constitution. He warned that as a result of the necessities of the recent war that Lincoln and the winning north had endured, the stage might be set for an erosion of a Republic and the unhindered growth of federal powers in the name of Democracy.

Acton applauded the founders and Constitution, “In practical politics they had solved with astonishing and unexampled success two problems which had hitherto baffled the capacity of the most enlightened nations: they had contrived a system of federal government which prodigiously increased the national power and yet respected local liberties and authorities; and they had founded it on the principle of equality, without surrendering the securities for property and freedom.” But warned about centralized powers and democratic abuses, “Above all, a democracy has never even attempted to adopt the system of representative government which is the supreme and characteristic invention of the British monarchy. Therefore it had become almost an axiom in political science that that which ancient Rome and modern France attempted and failed to accomplish is really impossible; that democracy, to be consistent with liberty, must subsist in solution and combination with other qualifying principles, and that complete equality is the ruin of liberty, and very prejudicial to the most valued interests of society, civilization, and religion.”

Acton pointed out that it was America’s founders themselves like Washington, Adams and Hamilton,  that feared Democracy itself was the potential uprooting of individual freedom. “It has been observed that a pure democracy, if it were practicable, would be the most perfect government. Experience has proved that no position in politics is more false than this. The ancient democracies, in which the people themselves deliberated, never possessed one feature of good government. Their very character was tyranny, their figure deformity” Alexander Hamilton. Acton concluded that the early `American Experience’ was successful because individual freedoms were protected through natural law and limited government powers that were less on the federal level and increased along the way down (not decreased) to the States until most powers resided in the individual. Decentralized power provided for checks and balances as successful efforts were reinforced and replicated while unsuccessful ones died quickly.

Lord Acton, goes on to cast a prescient insight, “All governments in which one principle dominates degenerate by its exaggeration. The unity of monarchy gravitates towards the despotism of a single will. Aristocracy which is governed by a minority inclines to restrict that minority into an oligarchy. In pure democracies the same course is followed, and the dominion of majority asserts itself more and more extensively and irresistibly. We understand liberty to consist in exemption from control. In America it has come to mean the right to exercise control.”

In Brooks’ NYTimes article he says regarding Democracies, “Since then, a mountain of research has established that countries with strong underlying institutions have better odds of making it to democracy. Some scholars argue that political institutions matter most — having independent political parties. Others say social institutions matter most — having a cross-cutting web of citizen, neighborhood and religious groups.” Hence the growth of NGOs(Non-governmental Organizations), Think Tanks and University Projects that operate out of public view with financial support from the likes of George Soros or the Koch brothers who influence economic and social policy decisions of both parties. Progressives in the US believe more government power can bring about social justice and equality, the beneficiary - society and the individual. Conservatives believe the use of government power is just to `conserve’ and manage the values of society - traditional marriage and family values . But popular opinion and choices are fickled and can change with the wind, and the will of the majority can be manipulated and can abuse the liberties of the individual.

Many around the world today fear religious extremists like the zealots of Islam who have declared a Jihad upon most of the world. But if a group was really interested in controlling the world wouldn’t the sublimity of Democracy be more effective? Democracy could meld different cultures, social and economic classes and interest groups around the world into a homogeneous group that can be centralized, controlled and ruled, for the greater good of a global society. Acton and unfortunately only a few in 1866, saw as the smoke of war cleared that while wars were to be fought at times, so was a democratic peace that robbed those left of the liberties that the fallen had fought for.

 Today as the cry for Democracy beckons around the world and the IMF, BIS, UN and other international groups decide upon better global financial, currency and regulatory governance, be prepared to defend national, city and local sovereignty, and in turn individual  liberties that our founders and subsequent statesmen and soldiers fought hard for. Join the effort to re-stake constitutional principles back firmly into the ground of US governance and resist the `zeal of the weal’ which myopically places social causes and interests ahead of individual freedoms.

While unrestrained Democracy truly is a mirage, Negative Liberties protected by a Republic are not.

American Federalism And The Civil War, Acton

The 40 Percent Nation, David Brooks

When Democracy Weakens, Bob Herbert

Arizona counter sues Feds over SB 1070 Immigration bill, adding to its already aggressive posture in joining almost 30 other states in suing over Obamacare. Arizona with its fiscal problems is turning out to be a state that is part of the solution rather than the problem in being a ‘check’ to encroaching federal powers to constitutional restraints.

While many states remain subservient to the Federal Government, beholding to federal grants and aid, many are rising up in defense of constitutional state and individual liberties. Battle lines are being drawn around issues such as immigration, health care and education as many states are challenging federal regulations and mandates in the courts. State electorates are holding the feet of state legislatures to the fire in not rolling over on federal legislation that encroaches upon state sovereignty.

Many from the Tea Party movment and other groups who feel that the federal government has become too large and overreaching in its authority, and has violated the limited powers as proscribed by the US Constitution, have found national elections only produced small incremental changes. Instead many are turning their focus to local and state elections and saying to their state governments and politicians, “You have a sworn duty to defend the US Constitution and our State Constitution against federal tyranny!”

Where does your state stand? According to a recent George Mason survey here is their ranking:

New Hampshire ranked as the freest state overall.  The top 10 freest states were:

1. New Hampshire 
2. Colorado
3. South Dakota
4. Idaho
5. Texas
6. Missouri
7. Tennessee
8. Arizona
9. Virginia
10.  North Dakota

George Mason’s Hall of Shame, 10 least free states started with the Big Apple:

50.  New York
49.  New Jersey
48.  Rhode Island
47.  California
46.  Maryland
45.  Hawaii
44.  Washington
43.  Massachusetts
42.  Illinois
41.  Connecticut
40.  Vermont

George Mason University: Freedom In 50 States
Arizona Countersues Federal Government – MyWay News
States Have A Duty To Defend The Constitution

As Egyptian banks reopened on Sunday the conditions have been relatively stable all things considered, as the US dollar has made a 2.3% gain on the Egyptian pound (EP) according to the BBC, since the crisis started. Rumors are that while the Egyptian government hasn’t intervened directly that state-owned banks have been selling USD to support the EP. The Egyptian stock market will remain closed until next Sunday.

When bank doors initially opened there were a significant amount of customers waiting. But withdrawals have been limited to 50,000 EP ($8,400) and $10,000 in foreign currencies.

The Egyptian government had to pull back on a treasury auction, looking for 15bn (Euro), they had to settle for 1bn as foreign investors are reluctant to buy and borrowing costs have risen for the government around 1.5% from the last auction.

The domino effect to Tunisia’s and Egypt’s political unrest that has been taking place in some respect to other neighboring countries like Jordan and Yemen, is now feared to also destabilize currencies and financial markets as well.

While the Middle East tries to rebound from unrest, Europe is still cautiously waiting for a turnaround in some of their country-states like Greece and Ireland who have undergone renovations and Portugal, Spain and Italy who are on watch lists for now. China has made overtures to purchase European bonds and help in reworking debt.

Meanwhile, the US struggles with mounting national debt, stalled talks on budget policy and cutting spending, and unemployment which remains stubbornly high at 9.0%.  

For more information

In January, a Tunisian uprising over unemployment, food inflation and government corruption caused the overthrow of the government and for President Ben Ali to flee the country allegedly with 1.5 tons of gold in his possession. The end of last month Egyptians have taken to the street in protest of the Mubarak government. The protesters include the upper middle class to the lower class, decrying the high rate of unemployment and inflation; as of this writing, Mubarak has offered to step down in September after his current term ends. With growing unrest in his own country, Jordanian King Abdullah has sacked his own government as protests against high unemployment and rising prices are growing in the streets.

Other Arab states are concerned about a Domino Effect from the uprisings spreading to their nations and the possibility of the Muslim Brotherhood and other fundamentalist groups of gaining more traction by taking advantage of the social unrest.

While fundamentalists are driving some of the uprisings, the majority of the uprisings have a common thread: Unemployment, rising food and energy prices. Does US monetary policies play a role in the process?  

The current world economies run off the US Dollar as a reserve currency. The Arab states trade in US Dollars for the most part through oil revenues, IMF funds and direct aid from the US. When the US decides to use quantitative easing measures to print its way out of economic malaise or to monetize its own debt, it not only destroys the buying power of its citizens but foreign governments and their citizens as well. Unemployment and rising prices are the result of currency and interest rate distortions, as governments, corporations and individuals react to changes in the supply, cost or perceived value of money in the marketplace. The poorest of nations and individuals in those nations seem to suffer the most as they live on the margins of society, meeting their food and shelter needs day by day. They lack the reserves and robustness to endure long periods of economic disruption. Meanwhile, China has been the whipping boy because of its perceived loose monetary policy as well, but from China’s point of view, the US leaves it no choice but to take a defensive posture, by print more Yuan/RMB in response to devaluation of the USD.

Many around the world are reacting to US foreign policies of intervention and involvement in other nation’s governments and of the proliferation of US military presence around the globe but there is a growing resentment to US monetary policy as well. The recent Basel Accord meetings late last year and the meetings most recently with the Chinese were about moving away from the USD as the sole reserve currency and a move toward a commodity structure (unlikely) or a basket of currencies – SDR (Special Drawing Rights). Since the Bretton Woods conference in 1944, the US has enjoyed a monopoly as the worlds reserve currency, which gave it the perception as a safe haven to hold currency and as the best means of exchange. The US has been able to take advantage of that position by making risky monetary and fiscal decisions to run up deficits in domestic and foreign policies and experiment in Keynesian monetary policy of stimulus injections when the economy slows down.  This has been done for years through Congressional Budget busting programs and zealous monetary policy, all the while knowing that the world had little recourse as they needed the USD. The US has been making the bed of its own demise for years and yet there’s very little evidence that the political or monetary class is willing to change directions.

Ben Bernanke of the Federal Reserve, Tim Geithner of the US Treasury, the current President and most of Congress are not only not friends of the American people, they are also not friends of most people around the globe as their policy decisions are threats to government stability and individual freedoms and standards of living. If the US wants to have the greatest positive impact around the globe, she would do well to get her own house in order by using the Constitution as a plumb line to determine legitimate federal power by which to cut programs and departments and decentralize public policy decision making, in order to bring about Montesquieu’s Balance of Power (fed/states) as her nation’s founders had intended. They can start by rescinding the Federal Reserve Act of 1913.

A strong, stable US government built upon individual liberty and constitutional restraint would make for a better export to the world instead of the foreign policy bullying and economic policy time bombs we currently export. As the recent US elections show and the unfortunate unrest around the globe backup: both the American people and the world community as a whole is frustrated. The question is: Will the US find it’s historical moorings and once again step up to a leadership position among nations, or will the US continue down the road of self-inflicted destruction, as the world community looks for leadership elsewhere?

As the world observes the unrest in Egypt and the uncertain future of its citizens as political, military and religious forces jockey for power and its neighbors prepare for similar unrest;  it brings to the forefront a growing global phenomena, that of the failure of US Neoconservative foreign policy.

Conservatives (Constitutional), Libertarians and some Democrats have warned of meddling US foreign policy for years and the unintended consequences of US style democratization. Egypt serves as an example of how US foreign policy of trying to choose a horse in the race to deliver US interests eventually backfire and has resulted in more times than not putting in power with US monies and military backing, a dictator who is as bad or worse than the previous regime. The seduction of aid packages like that of US aid to Egypt as part of the Egyptian-Israeli Peace Treaty of 1979 that has averaged close to $2 billion annually, subsidizes economic and political instability just as welfare aid subsidizes poverty. The lingering hangover that has been growing as a result of these ill gotten policies is growing world resentment and suspicion of the US government.

“The true theory of our Constitution is surely the wisest and best, that the States are independent as to everything within themselves, and united as to everything respecting foreign affairs. Let the General Government be reduced to foreign concerns only, and let our affairs be disentangled from those of all other nations, except as to commerce, which the merchants will manage the better, the more they are left free to manage for themselves, and our General Government may be reduced to a very simple organization, and a very inexpensive one; a few plain duties to be performed by a few servants.” Thomas Jefferson

Jefferson understood the limiting power of the Constitution over the federal government, even regarding foreign policy. Aid, military support and most of what is done in the name of Foreign Affairs today is unconstitutional. Just like the cracks that are appearing more regularly in US economic and monetary planning around the globe and the resentment that comes with it, so are the fault lines appearing in US foreign policy that uses aid and coercion to assure favorable markets and `good neighbor’ partnering in global political design. But just like the bully in the school yard or even worse the weak kid who pays for friendships, eventually those relationships (if they ever really existed) dissolve and the resentment and marginalization that results afterwards takes a long time to heal.

The US which is becoming more and more exposed to growing financial disruptions and potential unrest within her own shores, risks a global push back and unanticipated consequences of new alliances, some of which could be ones that ironically we are currently paying big money in the form of aid and trade pacts not to happen.

Our best diplomats are not university policy wonks or think group protégés who bear little downside risk in venturing their newest coercive policy but rather those active in `free market’ commerce who while proffering their own interests sow seeds of free market economic, political and social principles.

As the ship called, `Modern American Capitalism’ lists off shore with engine failure, it still could teach the world a thing or two about the finessed use of government powers. With many centralized and totalitarian governments making the shift to forms of market driven economies, they are still left with pesky ownership issues of property and incentives. State Capitalism around the globe has become the modern rage in order to spur growth, employment and to drive individual incentives within centralized governments, however, most property ownership is maintained by the State. Cost of ownership, asset depletion and deterioration has always been an expensive venture for government or collective ownership. In the theory Tragedy of The Commons, where there is no clear ownship, property tends to be abused and misallocated.

Where Socialism and other centralized managed economies have failed through common ownership of production and resources, Modern American Capitalism has taken a different approach through regulations and taxes while leaving intact private ownership – or at least the appearance. Through regulations and taxes of industry, the government can be the `invisible hand’  rather than the outdated `invisible hand’ of the free market that Adam Smith alluded to, that steers resources and labor into `state favored endeavors’ for the greater good, and not have to worry about ownership issues for the most part. Modern American Capitalism could be nicknamed `Socialism on the Cheap’.

In a January 24th, 2011 column of Kaiser News `Just Call Me Liar Of The Year’, Michael Cannon, Director of Health Policy Studies at the Cato Institute, touches on the issue of regulation rather than `state run’ in regards to the Obama health care legislation. Cannon reveals the subtle nuances of using private health care carriers and facilities (in the short term) in the plan with the heavy hand (invisible?) of government behind the scenes steering the process through regulations, taxes and fines as salable and palatable to the American people versus a full frontal government takeover. Cannon says, “ObamaCare is not a government takeover, I learned from PolitiFact, because it “uses the private health insurance system to expand health care coverage.” But wait. In my research, I found that distinction between public and private to be illusory: what difference is there between a public system where the government taxes and spends your money, and a “private” system where the government forces you to spend your money in the same way? “It is irrelevant,” I wrote, “whether we describe medical resources (e.g., hospitals, employees) as ‘public’ or ‘private.’ What matters – what determines real as opposed to nominal ownership – is who controls the resources.” I detailedhow making private health insurance compulsory – as ObamaCare does – “would give government as much control over the nation’s health care sector as a compulsory government program.”

Columnist Michael Kingsley wrote, “”If the government requires insurers to accept all customers and charge all the same price, regulates all aspects of their marketing to make sure they aren’t discriminating, and then redistributes the profits to make sure that no company gets penalized unfairly, in what sense is the industry still ‘private’?”

The same has be applied to other industries in the US like, banking, housing, agriculture and the auto industry. Industries that were once decentralized and robust to failure/success and characteristically saw creativity, innovation, risk and deployment of capital to its greatest efficiencies as the pillars of market dynamics, now suffer `Jenga’  like connectivities and look to government to offload fragilities that are inherent in the system.

While laws and some regulation can be productive, those that are open-ended and arbitrary leave the door open for government control and abuse. Through understanding the proper roles of federal and state powers (Constitution), most regulation and positive laws are exposed to competitive models and experimentation through state and local governments where government is the most effective and responsive.

Just Call Me Liar Of The Year, Michael Cannon

A year ago January 12th, 2010, a 7.0 magnitude earth quake hit Haiti at 4:53pm, the death toll according to the Haitian government today is at 316,000 and counting as bodies are still being pulled from the rubble. The death toll published by the Haitian government is being disputed as they give no accounting for their numbers, many believe it is much higher. In fact, much the Haitian Government has been doing for the past year is being brought into question as the global community has responded with money and resources but very little has found its way into bellies and infrastructure. Is there a teachable moment here?

“We wake up every morning in the dust … We need people who can understand the country, who can change the country,”Carla Fleuriven, a 19-year-old mother of three dressed in a white skirt and blouse, told Reuters outside the Cathedral.

“God made the earthquake, but it’s our leaders who are selling our misery,”said Sephonese Louis, 58, one of the protesters in the Champs de Mars, Port-au-Prince’s central plaza on the day of the 1 year anniversay.

“The Interim Haiti Recovery Commission — a Haitian and international partnership including Canada — is headed by former U.S. president Bill Clinton and Haitian Prime Minister Jean-Max Bellerive. It has provided food, water and basic accommodations to millions of survivors. But it has been criticized by Haitians and international organizations for lagging on restoring normality to hungry, jobless and deeply traumatized people”Olivia Ward writes in an article, `Haitian Support Stumbles’. Ward also sites that only 20%-30% of world aid has made it into the country. Later in her article Ward quotes an international Charity Oxfam Executive ”The international charity Oxfam says impressive efforts were nevertheless made in providing emergency relief that saved “countless lives.” But its recent report on reconstruction progress one year after the earthquake says there are vital elements missing from rebuilding plans, including strong leadership, co-ordination and an employment program to put Haitians to work in their own country. “We see projects approved that fit into the broad national framework,”says Robert Fox, executive director of Oxfam Canada. “But it’s at the level of detailed thinking about sequencing, and the relationship between (projects) that is needed. It’s not just a case of what can be done, but who can do it. That means, for instance, a job creation strategy. Reconstruction needs carpenters, plumbers and masons. It’s not rocket science that you can train those people in about six months.”

Is the teachable moment  that Haiti needs a change in leadership and for government to be more responsive to the needs of their people? Possibly, and unfortunately with the return of ‘Baby Doc’  Duvalier, who knows if Haiti’s in for yet another round of political turmoil. But could the other teachable moment be that governments in general are not the best vehicle to deliver aid? Whether it’s rice rotting on the docks of Port-au-Prince or mobile homes decaying on the outskirts of New Orleans during Katrina: isn’t it time to assess the way we approach disasters? Even observing the recent oil spill on our east coast, it wasn’t until leadership became more localized and to a certain extend privatized, even with BP involvement (love them or hate them) that meaningful progress was made.

Government works best when it protects `Negative Liberties’, like life and property, but far worse when delivering services and making moral judgments. NGOs (Non-governmental Organizations) fare no better, as they link through government monies and political interests in determining policies and outcomes. Currently there are over 40,000 NGOs worldwide and in a 2008 report by Esra Guler voices frustration as lofty goals to eliminate poverty have fallen short. Guler says in her report `How  To Improve NGO Effectiveness In Development? 

“The lack of coherence between what an NGO envisions and what it does bring ineffectiveness since it creates confusion in the minds of the NGO staff, its supporters, and the outside world and weakens focus and energies.”Later in the article Guler highlights the NGOs that have focused on Poverty and criticizes the poor performance in relationship to huge amounts of funds and resources that have passed through their hands.

 On the other hand private initiatives have been much more successful than government or NGO endeavors in part because they tend to be smaller in scope and the individuals, corporations or charitable organizations tend to attach more accountability to the donations.

The argument that some disasters are so big that they can only be covered by public funds is nonsense, in an article in the NY Times in July 2010 they projected that the final cost of the Haitian earthquake to be between $7-13 billion, while private donations at that point were estimated to be close to $4 billion. The estimates were based on projected government and NGO costs which are two to three times higher than private operations. The overcharges to the federal government from Katrina and mismanagement by FEMA has reached into the tens of trillion dollars to date.

Many actors and musicians like Bono and George Clooney have done a good job of putting the spotlight on special causes, but most of those money are funded through quasi-public endeavors and arguably resources are squandered. How much better for celebrities, government officials to use their high profile positions to continue to point to needs in our society but allow for private initiative to meet those needs. Not only could the monies and resources be used more effectively but society is enriched more when need and giver make a more direct encounter.  

Haitians Recall 2010 Quake

How To Improve NGO Effectiveness In Development? Esra Guler

“YOU NEED ME!” Says a devoted spouse to their successful other half. Now as the GOP emerges back onto center stage, the Conservative Majority seems to be putting a little distance from its `better half’. Conservatism and Libertarianism run like two tributaries that run parallel at times but other times appear juxtaposed as they spill into the GOP.

Where Conservatism and Libertarianism clash most is regarding social issues. We’ve heard the term ‘Fiscal Conservative’ used to describe a candidate who while meeting the economic criteria for Conservatism, fails the litmus test on social values by not taking positions of government intervention to preserve ‘marriage’, ‘family’, `drug prevention’ or a host of other social issues. Mixed into that labelled group of ‘Fiscal Conservatives’ are candidates who have mixed the two party’s (Dems/GOP) ideologies, favoring freer markets in economic policy, while favoring government redistributive social policy. Libertarians lumped into that group however, are different in that their ideology favors less intervention of government into both economic and social issues and support laws that are `negative’ in nature. It is very important, if not crucial for Conservatives to understand and embrace their `other half’ in the fight for freedom in our country and if the GOP is to survive as an alternative to the `Government as the Solution’ party which `manages’ behavior and freedoms for the greater good.

In order to do this Conservatives would do well to understand the dynamics of Libertarianism, and some of the differences between Classical Conservatism and Modern Conservatism and how they look at the function of Government.

Most Libertarians and Conservatives have similar `ends’ in sight for what society should look like: traditional marriage, sobriety, industry, moral, spiritual and overall belief that the stronger and more self sufficient the individual is the better society will become. Where they differ is in the `means’ for that to occur. Libertarian and Classical Conservative ideology were analogous in their understanding of the proper role of Government and their confidence in the individual and `self correcting’ free markets for many years; but as streams separate, so have the two movements. While most Conservatives today believe in a laissez-fare approach to economic markets (unfortunately not all do – as witnessed by 2008 bank bailout), most don’t believe in the same laissez-fare (free market) approach when it comes to social issues. But for years they did, changing significantly after the FDR New Deal era and the Civil Rights movement of the 1950s-60s. This could be due to the `Overton Window’ phenomena or my personal theory is that while Conservatives of those eras fought the Progressive march on the Left, they either consciously or subconsciously took notice to how affective government could be at getting stuff done now. Giving up the sometimes long and arduous process of laissez-fare, and losing confidence in the Individual to make the right choices, they opted for Government as the Final Solution. In a book I hope to have finished by the end of the 1st quarter 2011, I use the term `Zeal for the Weal’, in describing myopic social movements of both the Right and the Left and the unintended damages that has been done through abuse of power and removing individual liberties for the greater good when the movements gain traction through government legislation and regulations. The old adage is true, `Beware of those bearing good intentions’.

The key to the success of laissez-fare (free market)  is that markets self correct for the most part and superior ideas, products, systems and lifestyles survive, while inferior ones either fail completely, adapt or are marginalized. Both economic and social values need the same free market dynamics with a government that protects negative liberties, because both values work congruently in society, this is key to understanding Classical Conservatism. This allows for society to run at its best and allows for minority opinions, lifestyles, systems, etc to coexist with much less influence; and most importantly it protects individual liberties. In a Classical Conservative or Libertarian model, Governments only intervene when negative laws are broken - ex:  individuals or institutions tread on the rights of another to exist, prosper or suffer loss of property. Social ills like poverty, drug abuse or hunger are allowed to improve by individual and private institutional initiatives where in the free market money and resources follows success.

Conservatism has had a long history of failed policies: trade, foreign affairs, drug, immigration, etc; all `bearing good intentions’ but have produced unintended results. Just as Cuba sits as a `pimple’ for over 50 years on the arse of US foreign policy, so does the failed war on drugs that’s also linked to the immigration problem. The unintended consequences of our drug policy has been violence, prison overcrowding with wasting human life and death in its wake. Our borders are war zones, distorted pricing, supply and demand are results of shortsighted policies that have perpetuated our problems. Government that brings positive laws as a solution is packed with unintended consequences that are unpacked for years afterward.

As the US sits on the precipice of great social and financial perils, Conservatism needs to turn back to its classical roots in allowing  for individuals through free exchange and association to make the right (and wrong decisions), admit its policy failures and embrace the limited but important part Government can play today which is outlined in the Constitution.

“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Rahm Emanuel, Former White House Chief of Staff

On most news channels you’ll find a ‘tag team’ with a supporting cast who function as commentary of the Tucson shooting. Representatives Debi Wasserman (D-FL) and Kristen Hildebrand(D-NY) have been on a speaking junket, not only as friends of Rep Giffords but also as advocates for the Democratic agenda. Initially it was focused on resurrecting gun restriction laws and addressing mental health issues, but now it has encompassed the full Democratic message that was rejected in the November 2010 elections. Ironically, Giffords was a ‘blue Dog’ Democrat and many on the left fought with her over key platform issues while she found friends and associates across the aisle in the GOP.

While both parties and ideologies on the Left and Right are engaged on the field of battle (whoops, can’t use gun or military analogies) of ideas for the hearts and minds of the populace and the implications of the Tucson shooting, the left delivered the first volley of accusations through political infantry soldiers (whoops there I go again) like Paul Krugman, columnist for NY Times. As the rhetoric ebbs and flows, what are the potential consequences to individual liberties and effective governance? Do politicians ever speak about government actions while weighing constitutionally protected liberties?

As we enjoy the NFL playoffs this season, watching the better teams move the ball quickly down field and score; we are also witnessing a form of `Political Football’ except the referees and umpires are relegated to the sidelines and individual liberties are sacrificed for political and philosophical ideologies.

As we continue to pray for Gabrielle Giffords and those who are struggling in their injuries and the families of those who have suffered loss, let’s be vigilant as Americans to not allow the ‘Tyranny of the Urgent’ to become an excuse to take away individual liberties.

In Paul Krugman’s NY Times column this morning (Climate of Hate) he opens by asking this question, “When you heard the terrible news from Arizona, were you completely surprised? Or were you, at some level, expecting something like this atrocity to happen?” Mr. Krugman then continues throughout the article to vilify the ‘Right’ for everything that this crazed young man did, pulling all stops as he named TV and Radio Conservative pundits and of course Fox News as culpable. The question I had on my mind yesterday was how soon would political operatives and media rush to point fingers and take advantage of an unfortunate incident.

Meantime, as more and more evidence is revealed there is nothing that shows a patern of political philosophy let alone even a remote connection to any national Conservative media personalities, the Tea Party or Sarah Palin. Rather, we’re finding out that Mr. Loughner has had a history of run-ins with authorities in school, failed a drug test while applying for military service and has spent a lot of time alone.

On the Chris Jensen show on MSNBC this morning, a guest suggested that it is more important to ’focus on the perception of political speech rather than on the intent’. Regarding the shooter, this would have been irrelevant advice, as the mind of someone who is delusional and effected by drugs and paranoia tends to pick a disarray of information out of the air and create nonsensical ideas. From interviews with classmates and friends we find that to be true.

Regarding, free speech and gun laws. There is a call over the news services and talk shows to moderate our political hyperbole and even the suggestion of laws to more directly tie speech to outcomes. There is also a call for more restrictive gun laws in AZ and around the country. In times of national crisis there tends to be an irresistible urge to use the power of government to solve problems without weighing the long term and unintended consequences that we might not even see at the time. Because life and even human behavior is ‘self correcting’ when allowed to be, a positive outcome of this horrible tragedy might be a toning down of political speech, if that happens voluntarily it is a good thing. Also, regarding gun laws in AZ and around the country; if we allow the US Constitution to lead the way, then AZ and each state rather than the federal government can make those decisions. But the professional and media voices on both sides of the political spectrum should be taken with a grain of salt, for their livelihood depends upon tragedy and salacious stories; `fair weathered’ news doesn’t sell much. Be sober, be vigilant, political agendas are dispatched and on the march in times of crisis and individual liberties weigh in the balance.

May God bless and heal all those involved in this tragedy and may He heal our nation as well.

Those on the Right point out the flaws and inconsistencies of those on the Left, while those on the Left point out the same on the Right. But what is ‘Left’ and ‘Right’ politics? Are those the issues we should be concerned with, or is there something more sinister going on that ails our nation and its governance?

The terms for Right and Left politics actually is traced back to the French Revolution, those who were loyal to the King and the State religion sat to the right while those who weren’t sat to the left. Later, it changed slightly; those to the right were ultra loyalists of the crown, while those to the center were constitutionalists and those to the left were considered independents.

In his 1935 book, “Our Enemy, The State” Jay Nock breaks down politics, economics and all social interaction into two powers: Social vs. State Power. Social Power Nock explains is all human activities outside the control of the State. Nock warns to be careful of growing State Power, “Collective choice is never independent of what significant numbers of people want it to be.” The State not only crowds out ‘minority’ voices at the hands of the Tyranny of the Majority but eventually the State crowds out all voices except for its own. “Therefore ,every assumption of State power, whether by gift or seizure, leaves society with so much less power; there is never, nor can be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power.”

So while you and I on the Right, wage debate and small arms fire with our neighbors on the Left, there is a much greater foe that sits above the fray and who is seldom seriously engaged or moved except occasional rhetoric and empty threats – The STATE. But why is that? Why did the Congress of 1994 go to Washington and accomplish so little? Why will the Congress of 2010 most likely do the same?

In a book I hope to have finished this 1st quarter of the year, ‘Zeal For The Public Weal’, I look at historic Social Reform movements like the Settlement Houses movement of the late 19th Century brought about by Jane Addams and her followers and the Moral Majority movement of the 1980s led by Jerry Falwell and others. A common characteristic of most Social Reform movements is that while they start out as private grassroots movements with individuals and businesses donating time and resources, eventually the movements tap into the public domain, redistributing wealth and determining outcomes for the greater good of society. Just like with some harmless household items which can be ‘weaponized’, social causes become weaponized when they are aligned to Government Powers; social causes like unwed pregnancy, poverty or drug abuse when addressed privately or at most through state and local government tend to be more effective, responsive and not ‘liberty robbing’. Even advocacies for reducing Cancer and Drunk Driving hold potential harm in their zeal, when they tap into the power of the State.

The word ‘Liberal’ has at its root liberty and the term Classical Liberal use to mean someone who believed in both free social and economic markets which has produced the greatest wealth and freedoms for a society. I’m still a subscriber to that. The word ‘Conservative’ use to mean a Conservativism that allowed for both economics and traditions to be tested in free and open markets; unlike today’s conservativism that at times not only protects big business interests through regulations and subsidies but also protects social behavior in the name of ‘greater good’. Just as we’ve witnessed the unintended consequences of economic distortions at the hands of the State, so we also have witnessed the unintended social ills at the hands of the State through Conservative style intervention.

As the Conservative ‘Right’ goes to Washington once again already loaded down with the burden of our own (Special Interests) Christmas Lists for 2011, I’d say let’s reconsider and rather charge them with peeling away unconstitutional federal powers, even those that support our own pet causes. Let’s not only emphasize Conservativism, but Constitutional Conservativism.

What those of us on the Right have to learn is that the same laissez faire, free market dynamics that allows for success and failure and brings true value to the economic marketplace also works with social values as well. State intervention always distorts value and diminishes individual freedom.

 

In 1866 after the American Civil War, in a lecture given by Lord Acton, (shortly after stepping down as a member of Parliament in the UK and on a tour of the US); he admires the beginnings of the American experience that were built upon liberty as she grew as a nation in her federal powers through the early 19th century, while at the same time maintaining individual liberties through the constitutional constraints of those federal powers by the states. He also in the same lecture mourned the loss he foresaw that America would suffer at the hands of an imperialistic President who saved the union through the war but lost a Republic.

Acton quotes Hamilton and Adams, in their doubts at the early outset of America and whether a Republic could survive the onslaught of populist pressures. He quotes Adams, “John Adams, said “he saw no possibility of continuing the Union of the states; that their dissolution must necessarily take place.” Acton applauds the states and federal representatives who early on were able to respect the line of demarcation between limited constitutional federal powers and much broader state and local powers. But as the smoke of the Civil War cleared and he assessed the damage of throwing ‘constitutional restraint’ to the wind, his lecture turned from accolades to a sober warning of the loss of individual liberties at the hands of democracy and centralized federal powers. When addressing financial and social issues today, Conservatives and Progressives alike would do well to heed Lord Acton’s advice. 

Lord Acton’s lecture is timely and prophetic for today. Here are some excerpts below and the full article at the end.

“In practical politics they had solved with astonishing and unexampled success two problems which had hitherto baffled the capacity of the most enlightened nations: they had contrived a system of federal government which prodigiously increased the national power and yet respected local liberties and authorities; and they had founded it on the principle of equality, without surrendering the securities for property and freedom. I call their success unexampled, not because it is a forcible term, but because it exactly indicates the peculiar character of the history of the American Constitution, and its special significance for ourselves.”

As Time Magazine is rumored to be considering WikiLeaks founder Julian Assange for its ‘Person of the Year’, others like Newt Gingrich who suggested the US should classify Assange as an ‘Enemy Combatant’ and Hillary Clinton, Secretary of State, who in a November 29th, 2010 press conference used the term ‘illegal disclosures’ to describe the role Assange and WikiLeaks played in publishing the 250,000+ documents on its website.

In some ways, Assange is a man without a home. The Right tends to dislike him because of his associations with radical left causes; while the Left, particularly Progressives who believe in the need for big government solutions have a disdain for him because he appears ‘anti-government’ in his mission statement and attacks.

Assange might have some support from libertarians and those who realize the potential for government misdeeds, as Rep. Ron Paul, (R-TX) on Andrew Napolitano’s FreedomWatch on Fox Business Network, commented that it is better to have the information in the public domain and that governments that behave in secret tend to behave badly. On the show Napolitano and Rep. Paul discussed the similar aspects of WikiLeaks to the disclosure of classified documents by Daniel Ellsberg (Military Analyst, reviewing Vietnam War effectiveness) in what became known as ‘The Pentagon Papers’ which in 1971 through the NY Times, exposed the failures and misinformation by the Federal Government during the Vietnam War. Ellsberg’s trial was later dismissed after it became public that he had been illegally wiretapped and there were communications from G. Gordon Liddy (Nixon White House Operative) to E. Howard Hunt (CIA, President’s Investigative Unit) to ‘totally incapacitate’ Ellsberg (while debate remains over the meaning of incapacitate, some say drug others assassinate).

Many credit the disclosure of the Pentagon Reports for the exposure of the lies and failures in the war with Vietnam that lead to a change in public opinion and the eventual withdrawal of troops.

As we wade through the WikiLeaks disclosures and find evidence that the US Government has put special interests ahead of its own citizens will there be a popular movement toward more government transparency and will the disclosures fuel more ‘Tea Party’ type movements who’s goal is individual liberty? If this is the result, wouldn’t Assange turn out to be the classic Antihero after all?

“Network neutrality (also net neutrality, Internet neutrality) is a principle proposed for user access networks participating in the Internet that advocates no restrictions by Internet service providers and governments on content, sites, platforms, the kinds of equipment that may be attached, and the modes of communication. The principle states that if a given user pays for a certain level of Internet access, and another user pays for the same level of access, then the two users should be able to connect to each other at the subscribed level of access. (Wikipedia)

Ah, the old equal access argument. Where have I heard that before (only all outcome based programs managed by government to produce equality). The threat to access is not from the private sector but the public and the allowance of the collection of power in the hands of FCC Chairman Julius Genachowski. Recently Mr. Genachowski has changed his rhetoric from harsher control of the airwaves to setting moderate goals (for now) as listed in an article by Erik Sherman called, ‘Net Neutrality Faces a Political Gauntlet, and the Fall-Out Will Hit Tech Firms’ in the article he gives this list of Genachowski’s ‘wish list’:

“Broadband providers would have to tell consumers and businesses how they manage their networks. Consumers and businesses have a right to send and receive lawful traffic, so broadband providers could not block content, apps, services, or the connection of devices. No public or private entity could unreasonably discriminate in transmitting traffic so as not to effectively decide which businesses would win or lose. Broadband providers would have flexibility to manage their networks and to implement usage-based pricing, something that they’ve wanted for years. For now, it would be hands off wireless broadband other than requirements for transparency and a no-traffic-blocking rule.”

In an article/video from Reason Magazine, “Net Neutrality For Dummies’ raises some suspicion regarding the pro-NN people and put up the ‘caution lights’ when finding out that Al Gore is a major supporter. Peter Suderman, Associate Editor, Reason, also points out from data, that there is no current suppression of content and that this is more about potentiality rather than current reality:

“Al Gore says that legislation ensuring “net neutrality” is “needed for the revitalization of American democracy.” Techno-vegan Moby says without it, the “egalitarian” Internet would disappear. Even Mallory from Family Ties, Justine Bateman, thinks “the freedom to access the site of any organization from Planned Parenthood to the Christian Coalition is going to end.”

“But just what the hell is net neutrality—and is all that is good and holy about the Internet really imperiled if legislation guaranteeing it isn’t passed? Network neutrality is necessary, say its supporters, to make certain that all data on the Internet is treated equally and to protect users from information discrimination on the part of Internet service providers who will slow down or even block access to certain sites.”

The flag being waved in the Net Neutrality debate is the same one that has been waved around all social issues: Equality, Justice, Opportunity and Fairness. Progressives and those who favor government solutions believe that the government through regulation and arbitrary laws can manage toward equality, justice, etc; while those who oppose big government solutions believe that freer markets with less government regulation provide a vibrant market for both consumers and businesses.

What progressives and those who look for government solutions don’t like is that resources (private capital) moves toward successful ventures, and through market dynamics it picks true ‘winners and losers’. They would rather do it themselves.

Net Neutrality For Dummies

Sometimes in our ‘zeal’ for ‘righteousness’ we lose sight of the ‘individual’. I have a term for it and it’s described in a book I’m writing called ‘Zeal For The Weal’ to be finished first quarter next year – sorry for the shameless plug.

When we observe some of the historic reform movements of the past, like the Settlement House movement in the late 19th century which confronted ills of society like child labor, slavery and the plight of immigrants and names like Jane Addams, founder of the Hull House in Chicago which was part of the movement that came from England (Toynbee House) and spread throughout cities in the US – Henry House in NYC, Andover House in Boston for examples. There also was the Moral Majority movement of the 1970s and 1980s that took on the decline of moral values of American Society, getting the word out and gathering together to support marriage, teen pregnancy and to spread the good news of the gospel. Promise Keepers (anyone remember?) was a call to men that they could be ‘real men’ even if they loved God.

While the Moral Majority movement was more of a ‘Christian’ movement – inside the progressive movements, like the Settlement Houses of the 19th-20th century were Christians and churches who played a large part. But where these movements like most reform movements are similar is what they evolve into and the unintended byproduct of its growth.

The Settlement House movement of the late 19th century reform movement started locally and later went nationally. So programs like the Salvation Army and Hull House would compete for private donors in Chicago and would have to prove the effectiveness of their programs. Because of competition, charitable organizations just like private industry would lose funding and go out of business unless they provided value to their clients. In the early 20th century the Settlement House movement started to make inroads into government power and funding, first through municipal and state laws and later through acquiring state financing. Eventually the movement moved nationally and state chapters were formed and then decisions were made to petition for federal regulation and federal financing. Eventually the movement entwined with union and political power became entrenched in Federal Policies and developed a profession out of it called Social Workers, who in large part are funded by federal tax dollars.

The Moral Majority movement (mid 1970s- late 1980s) started in part with rally’s by Jerry Falwell and building state chapters. The message was that sociey had become anemic as a result of the lack of the message and commitment to Christ: showing up in divorce, crime, teen pregnancy and an immoral government. With the election of Ronald Reagan the movement started to nationalize around these values and looking to the federal government to enact laws that support moral issues.

In the late 1980s the movement then centralized with a legislative agenda for choosing candidates and enacting federal and state laws, was being scrutinized by the media and general public. The movement was ‘officially’ disbanded in 1989 although its platform and beliefs have existed in some form or another since and even in the Tea Party movement today. Federal programs that allow for churches and Christian nonprofit businesses to receive tax payer funds for services they provide to their communities have in part come out of the movement.

A common thread that runs through these types of reform movements is, early zeal and cooperation, success and failure that developed tangible results, a focus on taking the movement to a larger scale (national) to enact federal legilation to support the cause and lastly infighting, control and policy issues.

Two things we can learn from these movements: Local (private) solutions work better, while centralized systems (particularly public) are fragile, ineffective and sacrifice individual liberty for a greater social cause. There is an irresistible zeal when you are driven by a ’cause’ that you become myopic and sacrifice the freedoms of the individual.

When the Moral Majority movement looked to infringe upon individual freedoms by restricting behavior for the greater good and the progressive movement (Settlement Houses) looked to infringe upon individual freedoms by redistributing wealth for the greater good, they were met by resistance and eventually the movements died off or absorbed by another movement with early zeal.

The greatest book on the Individual and Liberty is the Bible. By one man’s act all suffered loss, while by another man’s act all gained and by a singular individual act, you or I can receive eternal life. You and I as individuals and by voluntary exchange and association can make a difference, but we lose sight that individuals are unique and unequal in so many ways and that ‘collective’ solutions do far greater harm than good.

If individuals in the Tea Party movement would offer up ideas and solutions on how to reduce the size and power of the federal government constitutionally, sending those powers back to the states, and allow for states and municipalities through individual representation to decide what they want their local government to do, the Tea Party will not suffer the way of past movements but grow in numbers and zeal as long as it has the Individual in mind.

In a time where ‘big’ has always seemed better, particularly regarding power and economies of scale, we see the results today in fewer but larger banks, giant retail stores like Wal-Mart and manufacturers like in the automobile industry which are ‘too big to fail’. We have also seen the progressive consolidation of ‘big government’ power as the States incrementally over the years have forfeited their rights to encroaching federal power. Since the founding of our nation, we’ve grappled with the ‘separation of powers’ between and among States and the newly empowered Federal Government. In the Federalist Papers and letters among the framers, you’ll find discussions back and forth regarding their experiences and observations on totalitarian states and the opposite – anarchism, and the kind of republic they should form. After the war of 1812 there was a growing interest in a central banking system (partly to pay war debts) similar to Europe and by the 1850s under the influence of European Socialism (particularly Jeremy Bentham, Hegel and those of the Enlightenment) there was interest in centralizing government into the hands of those who were better able to rule and administrate over the citizenry. These ideas were and are today embodied in Platonic Philosophy and the concept of ‘classes’. Plato divided society into three classes: The Ruler-Philosophers, who envisioned and managed the ‘ideal’ state, The Warrior, who implemented the vision and enforced its law and the Workers, who were the ‘managed’ and who’s efforts and production was for the greater good of the State and society.

The mid nineteenth century in the US saw an even greater interest by industrialists, bankers and the social reform movement, for a powerful centralized federal government to regulate industry, to take care of the needs of its people and to rid the government of corruption. The 1850s saw the decline of the Whig party and the rise of the Republican Party as a challenge to the Democratic Party particularly on the key issues of the day, slavery and the conflicting interests of the Northern and Southern States. At the close of the nineteenth century there was a growing social movement through the University Settlements in major cities like Chicago, New York and Boston, to care for the growing immigration population in the inner city and the recently liberated slavery population that came to work in the mills and industrial base of the major cities. While initially this was done locally and mostly with private money, ironically donated through the financial resources and volunteerism of the children of the industrialists – like the DuPont’s and Carnegies (Jane Addams, co-founder of Hull House in Chicago, father was President of a large bank and co-founder of the Republican Party); after the turn of the century, the movement and momentum was toward federal solutions through legislation and financial intervention. This was in part due to union interests who saw the benefits of preventing child labor which competed against the labor movement’s goal of higher wages and recruiting the black population as dues paying members. In addition, the Progressive Movement had tied its interests to the Federal Government looking for a larger audience to make their case and to take their local solutions from the cities and state, and scale them to what they perceived as national problems that commanded more money and federal power.

After the 1907 bank panic, banking interests saw the benefit of a centralized banking system similar to what Europe enjoyed, where instead of states regulating banks and currency, through legislation (Federal Reserve Act of 1913) this power would be entrusted to the federal government through a quasi private/public institution whose interests were controlled by shareholders who were the largest banks. So most bank risk would be divested to the federal government and the banks could enjoy returns without risk. Before 1913, banks and the banking system survived based on prudent financial management of risk, like during the crisis of 1819, where banks were allowed to fail, as they voluntarily took on risk in moving away from currency which had ‘intrinsic value’ in the form of gold or other assets and leveraged their portfolios. Because the financial system was decentralized and regulated at the state level (particularly prior to 1860s and Lincoln’s National Banking Acts), bank losses and failures though occurring, were much less devastating to the overall economy and the financial system was much less fragile and more robust than it is today. As Nassim Taleb, author of ‘The Black Swan’ says, “Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse we have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur I shiver at the thought.” Prior to 1913 and the consolidation of the banking industry under regulation by the Federal Reserve, banks and businesses failed, but the failures were easily absorbed and reallocated to productive means because the system was ‘Self Correcting’ instead of ‘Managed’. Because States regulated banking at the local level, they were more able to be successful and even when their policies failed, they could look to other States for redundancy, examples and guidance. (See Murray Rothbard’s book: Panic of 1819, for the dynamics of the States’ regulatory policies and effects)

This brings me to the 17th Amendment. As more and more political, banking and business interests were looking for a more powerful Federal Government to manage the States’ interests by provide ‘uniformity’ in regulations, more control of markets and competition, there were proposals in Washington to allow a popular vote for Senators instead of Senators being elected by each State’s elected representatives. The proposal was unsuccessful in being passed by Congress, but was eventually passed by State legislatures and adopted in 1913 instead. The reason given at the time, was because of long periods of a few unseated Senators, particularly during the Civil War period and leading up to it, the argument was made that the popular vote would result in less fractions. Unfortunately, it has resulted in an ‘unconstitutional’ amendment that appears to give democratic representation to citizens, but instead has consolidated power into the hands of a few through Marginalizations of majorities and catering to interest groups that the founders warned would happen. Money, lobbyists and political interests converge on Washington to petition for votes in exchange for money and power. The period around 1913, just before the outbreak of the World’s first ‘Great War’ was a time of adopting legislation that had bad unintended consequences and opened the floodgate for profound changes in the way America thinks and wants from its government.
See Below for the new language and the original language in the Constitution and a short video by Judge Anthony Napolitano, on some of the reasons why the 17th Amendment is unconstitutional and needs to be repealed. In addition, I’ve referenced some great articles and books regarding concepts like: Fragility, Liberty (Two Concepts), Monetary Policy

17th Amendment amended language: “The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.
When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.
This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.” (Text of 17th Amendment)

Original Text: “The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof for six Years; and each Senator shall have one Vote.”

Judge Anthony Napolitano Video on Freedom Watch

In a recent interview, Thomas Sowell, an American economist and author and Senior Fellow at Hoover Institute, who turned 80 this year discussed his new book and ideas in an interview. In his new book, Dismantling America: and other controversial essays. and in the interview he lays out his philosophy of government, which is the Conservative position of laissez-faire (much less regulation) of economic activity and of government intervention of social values.

I’ve always admired Professor Sowell and have enjoyed several of his books, particularly in the area of economics and his understanding of free trade which is based on free association and exchange. But as a ‘former’ Conservative for over 30 yrs I’ve come to the realization that the big difference between Progressives and Conservatives is what they want the federal government to regulate. Pros want to regulate economic activity to produce social outcomes of collective equality, justice and peace, while Cons prefer to leave economic activity to a freer and less regulated model but on the other hand prefer to intervene into societal values with federal powers. My assertion is that social values and economic values work in tandem and respond to open markets in similar ways, and that to have a healthy economy and ‘values’ rich society is to have much less regulations and more freedom of association and transaction.

The framers of our constitution in fact grappled with this and in their brilliance came up with a divided government that enumerate specific powers of the federal government which were ‘negative’ regarding liberty and left all else to the States which could be either ‘negative’ or ‘positive’ liberty, but warned against the latter. Negative Liberty is like Adam’s relationship with God in the garden, “All else you are free to do, but stay away from this tree” vs God’s relationship with the Israelites through Mosaic Law, “these 613 laws you Must perform to qualify”. JS Mill put Negative Liberty this way in his Harm Principle, “That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. ” As Jefferson said, “The best government is the one that governs least.” Doesn’t it make sense that if you or I can barely (a least we think) regulate our own homes, then why would we think more power in Washington, DC would allow for better regulatory outcomes. Also, with the unique personalities, talents and physical demands from house to house, wouldn’t it make sense that how you govern effectively might be different than how I would in my house? Managing from 30,000 feet is much less effective and could be harmful and counter productive versus managing close and on the ground. The framers understood this, and looked to many sources and historical events to conclude that ‘macro government’ should be negative in its application of law (like the garden) but that States and their local precincts could experiment in positive liberty. So issues like marriage, drugs, land rights, banking, etc, they left to the States to decide. The essence of the Constitution was to limit power and maximize liberty, but to allow the Federal Government to step in when those liberties were violated, the powers left to the States depending upon each State’s Charter or Constitution allowed for them to ‘dabble’ in positive liberty to regulate certain values – but forewarned them to proceed at their own peril.

Thomas Sewell interview with Right Wing News blog

So where is the Christian Moral Majority movement today?

What started out thirty years ago as a crusade to drive Christian morality into politics and thus into the laws of our nation and statehood, has ended not with a bang but in a puff of vapor. Its leadership is gone or faded into the social background and where as political parties desperately courted the movement, today there’s a definite disassociation. So what happened and what has it left behind in its wake? I would suggest that the antithesis of the Moral Majority is the Progressive Movement that now shepherds universal health care, environmental legislation and re-distributive policies designed (in their minds) to bring about social justice and equality. Being a part of the Moral Majority Movement in the 1980s and 1990s, and reflecting on what the movement was trying to accomplish, I unfortunately today realize it was misdirected. Some of it might even seem obvious now: ‘The majority forcing its will on a minority’ (like censorship) or ‘limit personal freedoms for the greater good’ (homosexuality). The gospel message starts small like a seed and grows; it changes the life of an individual who then can effect change in his family and community. Christianity to be effective changes mankind one individual at a time, and individuals change society. With a wind at its back and a great candidate in Ronald Reagan, the Moral Majority tried to use its political capital to enforce its moral will on American Society through the use of State powers and it was ugly and shameful. Through the gospel we preached and tried to demonstrate love in our personal relationships, but in our political affiliations and support of heavy handed ‘Pro-Christian’ legislation we demonstrated intolerance for personal freedoms under the law. Our motives might have been for the well being of the ‘sinner’ but in our disregard for the US Constitution and personal freedoms we hardened more hearts than we helped and in my opinion helped to mobilize the progressive movement in opposition.

While the progressive movement dates as far back as Plato and Aristotle and the modern movement from Hegel, Marx and Stuart in response to the Industrial Revolution which embodied itself in US politics with Theodore Roosevelt, Woodrow Wilson and FDR’s ‘New Deal’; it had become dormant in the 1970s, but revived partly in opposition to the Moral Majority Movement in the 1980s, you can read the history of the progressive movement that I wrote on my blog at (The Progressive Movement: Individual Regressivism) for some additional insight. While the philosophies of the Progressive and Moral Majority movements may be different, their delivery system is very similar. The Moral Majority starts out from the perspective, ‘God is not fairly represented in society’, while the Progressive Movement says, ‘There are inequities and abuses in society’. The Moral Majority and Progressive movements are Collectivists in their approach to ideas and in using government, by identifying groups or classes in society. Collectivism is grounded in Holism which believes that the individual is part of a system and inseparable, so in Collectivism the state is emphasized over the individual – ‘the greater good’. Both the Moral Majority and Progressive movements believe that the government was to be used to carry out their policy agendas. The government would use its power to force the will of the many onto the will of the few. Neither one of the movements has shown success at accomplishing their goals; the prohibition movement of the 1920s was a disaster (Alcohol Prohibition Was a Failure) as are drug laws today at promoting morality, and many of the wealth redistribution and government social programs from FDR’s New Deal have produced unintended consequences and huge deficits.

So, the Progressive Movement which unlike the Moral Majority movement has some political capital left in its arsenal. The question is, will it go the way of the Moral Majority and other socio-political movements of the past, which gain power and try to force its will on its subjects only to be eventually rebuffed? Or will it (where I believe the Moral Majority failed) try to protect all freedoms (left and right) and encourage social change (as Moral Majority should have) through society privately with government as a ‘defender’ of freedoms instead of playing an `offensive’ role as a provider. There’s an old idiom, “You can lead a horse to water but you can’t make it drink”, that could be upgraded to “You can lead a horse to water but not only can you not make it drink but you can make it hate water and you as well.” Social movements that use state control and force, even those well intended and containing admirable goals will create more unintended consequences, raise suspicions of the state with possible overreactions and eventually will be turned away by the people in the end.

Christopher M. Mahon, Editor 2009