It should come as no surprise to anyone who has read this blog before that I am endorsing Ron Paul for President in 2012. In a political climate in which buzz words like "hope," and "change" are so casually tossed around as to be meaningless, Congressman Paul offers our nation the only hope for real change. Our nation is mired in three foreign wars that Dr. Paul warned against, remains in the midst of an economic collapse that Dr. Paul predicted, and our liberties are continuously being eroded by an enlarging security apparatus that Dr. Paul opposed. The ever expanding welfare/warfare state that Dr. Paul has consistently opposed and that mainstream politicians in both major political parties have enlarged now faces a debt crisis that can only be corrected by returning federal government to its constitutionally defined roles. These are the key issues of the 2012 campaign and no candidate in either party offers credible (or even fantastical) solutions to address them other than Ron Paul. While Rome burns, the Neros in both political parties are fiddling away with their tired and empty rhetoric about what tax rates should be and who should pay them and completely ignore the root causes of our current predicament. If the United States is to emerge from our current woes as a stronger and more prosperous nation, the status quo must be rejected and the only candidate challenging the status quo is Congressman Ron Paul.
THE ECONOMIC CASE FOR RON PAUL
In the fall of 2008, the 2008 election suddenly became a referendum on the economy when the housing bubble collapsed and banks with bad debt started to fail. The Republican candidate, Senator John McCain, enjoyed a slight lead in the polls, even after Sarah Palin's gaffes, until the stock market crashed less than a week after Senator McCain proclaimed, "the fundamentals of the economy are strong." McCain followed this with the second gaffe of suspending his campaign to rush to Washington to, "do something," about a financial crisis he didn't even see on the horizon a week earlier. Saddled with these gaffes and being the candidate of the party presiding over the collapse, McCain's lead vanished and Barack Obama became the 44th President of the United States.
Ron Paul had been warning about a collapse in the housing bubble since 2002. Easy credit, fueled by the Federal Reserve maintaining artificially low interest rates and risky lending encouraged by the Community Reinvestment Act, greed and subprime lending, and securitization of bad debt by quasi-government lenders, such as Fannie Mae and Freddie Mac, led to the creation of a lot of bad debt and skyrocketing real estate prices from increasing demand. None of this was sustainable and when the U.S. dollar began to weaken from the Fed's expansion of the money supply, the bubble burst. What has been the response of politicians on both sides of the aisle? They have tried to re-inflate the bubble with bail outs, TARP and continued low interest rates. Candidate Bill Clinton once reminded us that one definition of insanity is doing the same thing over and over and expecting a different result. Yet politicians on both sides of the aisle have responded to our current recession with the same policies that got us in to it. The other candidates for President, on both sides of the aisle, propose only additional Keynesianism to get us out: either tax cuts or stimulus spending. Congressman Paul also recognizes the moral hazard of government securitizing bad loans. When investors reap all the profits, but taxpayers will take all the losses, risky lending is encouraged.
Establishment politicians and mainstream media paint Ron Paul's economic ideas as extreme by focusing on his desire to return to the gold standard and his call to end the Federal Reserve. Clearly neither is likely to happen in a Ron Paul administration as both would require acts of Congress to achieve. But, the salient economic point here is that Dr. Paul recognizes that one source of our economic woes is the weakening of our dollar. This is caused by printing and borrowing to cover excessive government spending and lowering interest rates which sends signals that there is a surplus of capital available for borrowing, when in reality there is not (which fuels borrowing against artificial wealth instead of true accumulated capital). The surplus of printed dollars devalues the savings of every American and particularly reduces the buying power of those at the lower end of the socioeconomic scale. A commodity backed currency (i.e. the gold standard) is not readily inflatable and it is the Federal Reserve that carries out this policy of printing dollars and lowering interest rates. While a return to a commodity currency and abolishing the Federal Reserve may not be practical, clearly our current monetary policy which creates economic bubbles and robs us all of wealth needs to change. In the Republican presidential debate in New Hampshire last week, Congressman Paul was the only candidate who discussed the importance of a change in monetary policy to address the structural problems in our economy. Canada, despite also having a fiat currency, has developed the strongest currency in the western hemisphere, if not the world, through sounder monetary policy. Ron Paul's proposals to allow commodity currency to compete openly with Federal Reserve notes and to give Congress greater autonomy to audit the Federal Reserve may go a long way toward achieving a sounder U.S. dollar, even if his ideals of a gold standard and abolishing the Federal Reserve are neither achievable nor desirable.
THE FISCAL CASE FOR RON PAUL
Our federal debt has reached over $14 trillion USD. This is about 90% of GDP and the federal debt is projected to exceed 100% of GDP by the end of this fiscal year (Greek debt was about 125% of GDP when their fiscal crisis came to a head). An ever growing percentage of the federal budget is devoted to paying interest on this debt to our creditors (including China), which diverts resources away from other functions of government. Added to the burden of accumulated federal debt is the underfunded liability of entitlement programs. Both Medicare and Social Security are funded by taxing current workers to pay the benefits of current retirees, and not out of some sort of trust fund that allowed your contributions to grow into your benefits. They are Ponzi schemes that become unsustainable as the ratio of workers to retirees dwindles. That day of reckoning is soon as retirees are living longer and the baby boomer generation (the largest generation in U.S. history) is leaving the work force and joining the ranks of retirees. Escalation of health care costs (which, contrary to rhetoric, the "Obama-care," health insurance reform did nothing to address) make the solvency of Medicare particularly precarious and the both the Bush and Obama administrations saw fit to burden the taxpayer with additional health care entitlements.
Dealing with the debt crisis is the most important issue that the next President will face and of the field, it is Ron Paul who offers long term solutions. President Obama has demonstrated that nothing will curtail his penchant for spending and offers only tax increases. Other Republican candidates offer some modest spending cuts, pay lip service to modest entitlement reform (raising retirement ages, means testing benefits...), and insist that lower taxes will generate economic growth and greater revenue. The only other Republican (who is not running) who offers a credible plan to deal with entitlement programs is Congressman Paul Ryan (WI). However the Ryan plan ignores defense spending, which amounts to substituting a warfare state for a welfare state. Ron Paul understands that it is inflatable currency that allows government to pay (at least temporarily) for expanding social programs and perpetual war. Step one in slowing growth of our debt is sounder monetary policy. Step two is realizing that the Constitution sets limits on federal government and only reducing its scope to those levels is going to bring our debt under control. Step three involves cutting military spending by ending unnecessary and immoral wars overseas and using those savings to sure up federal programs for the transition to a more constitutionally limited government while not abandoning current beneficiaries who rely on those programs. President Obama is not talking about any significant cuts in federal spending and no Republican seems willing to entertain cuts in military spending. Congressman Paul supports both as the only path out of the budgetary abyss. Only after structural spending liability is addressed and after the role of government is adjusted can a meaningful conversation about taxes (what kind of tax should we have?, who should be taxed and at what rate, etc.) occur.
THE CIVIL LIBERTIES CASE FOR RON PAUL
Excessive military spending is not only a drain on our economy, but it is also a threat to our liberty at home. Governments always assume more power and curtail liberty in time of war, but the war on terror is perpetual. In the name of security, we have accepted ever expanding encroachments on our liberty. The PATRIOT Act allows the federal government to review your library records. After illegally eavesdropping on mobile phone calls placed overseas, President Bush signed (and Barack Obama voted for) an expansion of federal wiretapping authority that makes a mockery of the FISA courts. Terror suspects are held indefinitely in offshore prisons outside the rule of law. Federal investigations use, "enhanced interrogation techniques." Airport screenings have become increasingly invasive. Of the GOP candidates for President, only Ron Paul and Gary Johnson have called for rolling back these measures. President Obama has embraced this new federal power. Gitmo remains open and indefinite detentions continue. Routine use of water boarding may have stopped, but President Obama retains his prerogative to authorize it in select cases. Iraq and Afghanistan remain occupied and the U.S. is now involved militarily in Libya without any authorization from Congress whatsoever. Not only did Senator Obama vote to expand federal wiretapping authority, but President Obama has maintained a federal program of targeted assassination of terror suspects, even if those suspects are U.S. citizens. Ron Paul has opposed all of these measures in specific and interventionist foreign policy in general. For anyone concerned about the erosion of civil liberties since 9/11, Ron Paul is the clear candidate.
THE ELECTABILITY CASE FOR RON PAUL
Why Ron Paul and not Gary Johnson? What Gary Johnson brings to the table is his experience. He was a successful two-term governor who actually did a lot of the things other Republicans only talk about in terms of shrinking government. I favour Ron Paul over Gary Johnson for two reasons, one ideological and the other practical. The ideological is that Ron Paul is a better defender of the Constitution. While Johnson is good at pointing out how and why government schemes don't or won't work, he is a self-described empiricist and if presented with data that a certain program is accomplishing a desired goal (without other unintended detrimental consequences) he could be persuaded to support it, even if it is not a proper role for federal government. I, on the other hand, believe the Constitution forbids the federal government from being involved in certain things, even if such intervention might be advantageous. The practical is, I actually do think Ron Paul is more electable. He has national organization, better name recognition, and solid fund raising. Furthermore, Paul and Johnson illustrate the libertarian divide on abortion. Unlike Gary Johnson, Ron Paul is firmly anti-abortion, which makes him more electable in a GOP primary and might go a long way to helping more socially conservative voters over look his position on drug legalization.
Because of some of his libertarian positions that are not accepted by social conservatives, establishment politicians and mainstream media (as well as many of my friends) have labeled him unelectable. In truth he is only unelectable if we continue to believe it so. With the addition of Bachmann, Gingrich, and Romney to the field; Ron Paul is no longer polling second in the GOP race. However he, Cain, Gingrich and Bachmann are polling within the margin of error of one another and Ron Paul still polls better in a head-to-head match up with Barack Obama than any GOP contender other than Mitt Romney. While Romney may seem electable, he probably is not. Not only is "Romney-care," an albatross around his neck in the GOP primary, but the truth is nothing Mitt Romney says can be believed. He has changed his positions so many times to suit the prevailing breeze, n0 one can comfortably vote for him and predict how he might govern. After two successive Presidents who said one thing and did another, it is time to elect someone with a voting record that matches his rhetoric, like Ron Paul. Only Ron Paul can credibly challenge Barack Obama on issues of civil liberties. The New Hampshire electorate is rather libertarian and increasing numbers of libertarians have moved there as part of the Free-State movement. Although Romney, who governed a neighbouring state and has a residence in New Hampshire, will almost certainly win the nation's first primary (of course we thought that in 2008 too, didn't we?); the libertarian electorate and New Hampshire's open primary, which will allow Democrats and Independents who support Ron Paul's civil liberties agenda and have no Democrat race to vote in to crossover and vote for Ron Paul, gives Ron Paul a good chance to emerge from the New Hampshire primary in the top three. Ron Paul is electable if more of us choose to believe he is and rather than holding our noses and voting for the lesser of evils instead of, "throwing away our vote," vote our conscience.
Congressman Ron Paul is the only electable candidate whose actions match his rhetoric, who is committed to ending the status quo and putting America on a different path, who will make government live within its means, address our weak economy and devalued dollar, and protect our civil liberties. For these reasons, I wholeheartedly endorse Ron Paul for President of the United States in 2012.
Friday, June 17, 2011
Sunday, April 17, 2011
Crapitalism
Crapitalism is a contraction for crony capitalism. It is a system of economics and governance that is antithetical to true capitalism and threatening to a free society. Crapitalists seek profits not by producing quality products at reasonable prices and out-competing other producers of similar products, but rather by getting special tax-breaks and subsidies from government or special rules and regulations that regulate their competitors out of business. Examples include protective tariffs; subsidies for oil, ethanol, sugar, and wool; tax breaks for a specific company to come to a specific state and out compete other businesses in that state that have to pay the taxes (usually done in the name of job creation); publicly funded sports stadia; and other regulations that favour one company over its competitors. In other words, all the shenanigans that Michael Moore complains about and inappropriately labels as capitalism. Unlike the true capitalist, the crapitalist makes his profits at taxpayer expense. Crony capitalists, rather than seeking ways to produce more efficiently than their competition, hire lobbyists to go to Washington (or state capitals) and lobby for tax breaks, subsidies, and regulations that hurt their competitors. What follows is a particularly disgusting example.
In 1989 the United States signed the Montreal Protocol, an agreement to phase out the use of chlorofluorocarbons (CFCs) that have been implicated in the depletion of the ozone layer. The 1990 Clean Air Act empowered to EPA to ban the use of CFCs and begin the elimination of aerosols and refrigerants that contain CFCs. Inhalers for asthma attacks contained CFCs, but the law allows exemptions for essential uses of CFCs and the FDA had labeled such inhalers as medically necessary to allow their continued use.
The most commonly prescribed inhaler for acute asthma attacks is albuterol. In 1995, the patent for albuterol expired and generic albuterol inhalers became available at lower cost than brand name. In 1996, Schering-Plough introduced an albuterol inhaler (brand name Proventil) that uses hydrofluoroalkane (HFA) as a propellant, instead of CFCs (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). HFA does not deplete ozone. Currently, there are only four available HFA-inhalers (http://www.fda.gov/downloads/ForConsumers/ConsumerUpdates/ucm048245.pdf). In addition to Proventil, there is Ventolin (manufactured by Glaxo-Smith-Kline), ProAir (manufactured by Teva), and Xopenex (manufactured by Sepracor). There are no generic HFA albuterol inhalers (http://asthma.emedtv.com/albuterol-inhaler/generic-albuterol-inhaler.html) and the brand name HFA inhalers cost about three times as much as generic, CFC-containing, inhalers. Acute asthma attacks can also be treated with epinephrine inhalers. Epinephrine is available generically and over-the-counter (Primatene Mist). Initially there were concerns that the epinephrine inhaler might not be as effective, nor as safe, as an albuterol inhaler, but a small study in 2005 suggested that there may be similar safety and efficacy with epinephrine compared to albuterol (http://www.ncbi.nlm.nih.gov/pubmed/16400891). In 2003, the FDA removed the essential use exemption from CFC containing albuterol inhalers because a non-ozone depleting alternative was available and all CFC containing albuterol inhalers (i.e. all generic inhalers) were removed from the market by December 31, 2008 (http://www.fda.gov/downloads/ForConsumers/ConsumerUpdates/ucm048245.pdf). In 2007, the FDA followed suit with epinephrine inhalers that contain CFCs, removing the essential use exemption. Epinephrine inhalers will become unavailable as of December 31, 2011 (http://www.fda.gov/OHRMS/DOCKETS/98fr/cd0813.pdf).
Ostensibly, this has been done to protect the environment. However, CFCs from asthma inhalers were a very small component of total CFC emissions (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm and http://blogs.webmd.com/allergies-and-asthma/2006/03/primatene-mist-or-albuterol.html). Certainly this move is of no benefit to patients with asthma as it takes cheaper and equally effective medications off the market. It is easy to see, however, who benefits from these regulations. Schering-Plough, Glaxo-Smith-Kline, Teva, and Sepracor have had their less expensive competitors regulated out of existence and people suffering from asthma are now forced to purchase their more expensive alternatives. Indeed, in a statement to USA Today, the FDA nearly admitted as much stating that it took action because sales of the environmentally friendly inhalers were lagging behind the less expensive generic inhalers containing CFCs, "This regulation is necessary because private markets are very unlikely to preserve levels of stratospheric ozone sufficient to protect the public health." (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). One could argue that the FDA's hands were tied with regard to albuterol because once there was a non-ozone depleting alternative they could no longer grant an essential use exemption to albuterol inhalers. But if so, why didn't the FDA take action as soon as an HFA-albuterol inhaler was available rather than wait years and only take action after it was apparent that expensive HFA inhalers couldn't compete against cheaper generic inhalers that contained CFCs? And what about epinephrine? There is no HFA-inhaler version of epinephrine. Therefore, despite demonstrated efficacy, the FDA is essentially saying you can't use a medication that we know works as an alternative to albuterol. It seems clear that the FDA has taken these actions purely for the benefit of powerful pharmaceutical interests.
Using the Woodward and Bernstein principle of identifying who benefits and following the money, it seems almost certain that big Pharma lobbied for these rule changes to eliminate their competition form the market place. In fact, two patient advocacy groups petitioned the FDA in 2003 to remove the the essential use exemption from CFC containing albuterol inhalers. The Allergy and Asthma Network Mothers of Asthmatics launched a campaign to lift the exemption sponsored by Sepracor (and the President and Founder of this group has owned Sepracor stock) and the American Lung Association took $1 million from Teva to promote the CFC withdrawal (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). It stretch credulity to suggest that big Pharma money isn't behind the regulatory change for epinephrine inhalers as well. Under the guise of protecting the environment and with the lobbying of big pharmaceutical companies, the federal government has regulated competitors of the big pharmaceutical companies out of the market and caused millions of Americans to pay more to treat their asthma. Teva, Glaxo-Smith-Kline, Sepracor, Schering-Plough, all get to increase their profits at taxpayer expense, not by producing a better or more affordable product in a competitive market, but by having their competition eliminated by regulatory fiat.
This type of crony capitalism, or crapitalism, has no connection to true capitalism. In true capitalism the consumer is king because the only way competitors are eliminated from the market is when they cannot produce a product as well or as efficiently and cheaply as their competitors. In a truly capitalist society a company can only corner a market by producing the best product at the best price and in an openly competitive economy if anyone else develops a way to produce that product better or cheaper then that company will no longer corner the market. Either way, the consumer benefits. In crapitalism business interests lobby government to regulate their competitors out of existence and the consumer is then stuck with either and inferior product, or a more expensive one, or both. These anti-competitive regulations, subsidies, tariff protections, and tax breaks need to be abolished. Profits should be earned, not transferred from average Americans to influential interests by legislative or regulatory fiat.
In 1989 the United States signed the Montreal Protocol, an agreement to phase out the use of chlorofluorocarbons (CFCs) that have been implicated in the depletion of the ozone layer. The 1990 Clean Air Act empowered to EPA to ban the use of CFCs and begin the elimination of aerosols and refrigerants that contain CFCs. Inhalers for asthma attacks contained CFCs, but the law allows exemptions for essential uses of CFCs and the FDA had labeled such inhalers as medically necessary to allow their continued use.
The most commonly prescribed inhaler for acute asthma attacks is albuterol. In 1995, the patent for albuterol expired and generic albuterol inhalers became available at lower cost than brand name. In 1996, Schering-Plough introduced an albuterol inhaler (brand name Proventil) that uses hydrofluoroalkane (HFA) as a propellant, instead of CFCs (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). HFA does not deplete ozone. Currently, there are only four available HFA-inhalers (http://www.fda.gov/downloads/ForConsumers/ConsumerUpdates/ucm048245.pdf). In addition to Proventil, there is Ventolin (manufactured by Glaxo-Smith-Kline), ProAir (manufactured by Teva), and Xopenex (manufactured by Sepracor). There are no generic HFA albuterol inhalers (http://asthma.emedtv.com/albuterol-inhaler/generic-albuterol-inhaler.html) and the brand name HFA inhalers cost about three times as much as generic, CFC-containing, inhalers. Acute asthma attacks can also be treated with epinephrine inhalers. Epinephrine is available generically and over-the-counter (Primatene Mist). Initially there were concerns that the epinephrine inhaler might not be as effective, nor as safe, as an albuterol inhaler, but a small study in 2005 suggested that there may be similar safety and efficacy with epinephrine compared to albuterol (http://www.ncbi.nlm.nih.gov/pubmed/16400891). In 2003, the FDA removed the essential use exemption from CFC containing albuterol inhalers because a non-ozone depleting alternative was available and all CFC containing albuterol inhalers (i.e. all generic inhalers) were removed from the market by December 31, 2008 (http://www.fda.gov/downloads/ForConsumers/ConsumerUpdates/ucm048245.pdf). In 2007, the FDA followed suit with epinephrine inhalers that contain CFCs, removing the essential use exemption. Epinephrine inhalers will become unavailable as of December 31, 2011 (http://www.fda.gov/OHRMS/DOCKETS/98fr/cd0813.pdf).
Ostensibly, this has been done to protect the environment. However, CFCs from asthma inhalers were a very small component of total CFC emissions (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm and http://blogs.webmd.com/allergies-and-asthma/2006/03/primatene-mist-or-albuterol.html). Certainly this move is of no benefit to patients with asthma as it takes cheaper and equally effective medications off the market. It is easy to see, however, who benefits from these regulations. Schering-Plough, Glaxo-Smith-Kline, Teva, and Sepracor have had their less expensive competitors regulated out of existence and people suffering from asthma are now forced to purchase their more expensive alternatives. Indeed, in a statement to USA Today, the FDA nearly admitted as much stating that it took action because sales of the environmentally friendly inhalers were lagging behind the less expensive generic inhalers containing CFCs, "This regulation is necessary because private markets are very unlikely to preserve levels of stratospheric ozone sufficient to protect the public health." (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). One could argue that the FDA's hands were tied with regard to albuterol because once there was a non-ozone depleting alternative they could no longer grant an essential use exemption to albuterol inhalers. But if so, why didn't the FDA take action as soon as an HFA-albuterol inhaler was available rather than wait years and only take action after it was apparent that expensive HFA inhalers couldn't compete against cheaper generic inhalers that contained CFCs? And what about epinephrine? There is no HFA-inhaler version of epinephrine. Therefore, despite demonstrated efficacy, the FDA is essentially saying you can't use a medication that we know works as an alternative to albuterol. It seems clear that the FDA has taken these actions purely for the benefit of powerful pharmaceutical interests.
Using the Woodward and Bernstein principle of identifying who benefits and following the money, it seems almost certain that big Pharma lobbied for these rule changes to eliminate their competition form the market place. In fact, two patient advocacy groups petitioned the FDA in 2003 to remove the the essential use exemption from CFC containing albuterol inhalers. The Allergy and Asthma Network Mothers of Asthmatics launched a campaign to lift the exemption sponsored by Sepracor (and the President and Founder of this group has owned Sepracor stock) and the American Lung Association took $1 million from Teva to promote the CFC withdrawal (http://health.usnews.com/usnews/health/articles/070819/27asthma_2.htm). It stretch credulity to suggest that big Pharma money isn't behind the regulatory change for epinephrine inhalers as well. Under the guise of protecting the environment and with the lobbying of big pharmaceutical companies, the federal government has regulated competitors of the big pharmaceutical companies out of the market and caused millions of Americans to pay more to treat their asthma. Teva, Glaxo-Smith-Kline, Sepracor, Schering-Plough, all get to increase their profits at taxpayer expense, not by producing a better or more affordable product in a competitive market, but by having their competition eliminated by regulatory fiat.
This type of crony capitalism, or crapitalism, has no connection to true capitalism. In true capitalism the consumer is king because the only way competitors are eliminated from the market is when they cannot produce a product as well or as efficiently and cheaply as their competitors. In a truly capitalist society a company can only corner a market by producing the best product at the best price and in an openly competitive economy if anyone else develops a way to produce that product better or cheaper then that company will no longer corner the market. Either way, the consumer benefits. In crapitalism business interests lobby government to regulate their competitors out of existence and the consumer is then stuck with either and inferior product, or a more expensive one, or both. These anti-competitive regulations, subsidies, tariff protections, and tax breaks need to be abolished. Profits should be earned, not transferred from average Americans to influential interests by legislative or regulatory fiat.
Sunday, March 13, 2011
You Say You Want a Revolution
On December 17, 2010, Mohamed Bouazizi, a 26-year-old Tunisian, doused himself with gasoline and set himself on fire to protest policies of the Tunisian government. That desperate act of defiance has been the spark that ignited a powder keg of revolutions in the Middle East. From Tunisia, protest spread to Egypt where the 3o-year dictatorship of Hosni Mubarek was peacefully toppled. From Egypt, protests have spread to Bahrain and Lebanon. Iran's Green Revolution has been rekindled. Now, as civil war rages in Libya and the Arab League has called for Colonel Qadhafi to step down, the United States is left to wonder what to make of this and what role should it play.
The first question is what is the ultimate goal of these revolutionaries? Are they interested in individual liberty and economic freedom? Or, are these revolutions fueled by reactionary Islamist or jihadist elements bent on establishing theocracies in place of the secular autocracies? In short, are these revolutions more similar to the one in Tehran in 1979 or to the revolutions in Eastern Europe in 1989? Several features suggest the latter. First the protests, particularly in Egypt, have not been coupled with overt anti-American or anti-Western rhetoric (the burning of American flags, etc.). In fact, many on the street interviewed by western journalists have talked about how they would like to have the type of democracy enjoyed in the U.S. Secondly, the root causes of these protests have been economic. Third, in the case of Iran, it hardly seems likely that protest against an Islamic theocracy is aimed at establishing an Islamic theocracy. Although some have worried about the influence of the Muslim Brotherhood in Egypt, it should be recognized that Egypt is not a resource rich nation (i.e. not an oil producing nation) that can economically afford difficult political relations with the West. On the contrary, Egypt's largest industry is tourism and one would hope that the economic interest of Egyptians would favour stability and continued cordial relations with the West. In Libya, Colonel Qadhafi has tried to persuade his people that Al Qaeda is behind the insurgency in an effort to discredit the insurgency and dissuade Libyans from joining it. If Qadhafi thinks that associating the insurgency with Al Qaeda discredits it in the eyes of the Libyan people, then it is unlikely the Libyan people are interested in jihad.
However, the good intentions of the protesters is no guarantee of a positive outcome. History is full of examples of failed democratic revolutions in which the best of intentions produce horrendous results or the ensuing chaos and power vacuum degenerates into tyranny. The French First Republic and the Wiemar Republic provide European examples. Hugo Chavez became an autocrat by democratic means, as did Vladmir Putin. There is no guarantee that democratic revolutions will remain democratic. Many factors, discussed in two previous posts (http://freemarkets-freeminds-freesociety.blogspot.com/2008/04/orange-revolution.html and http://freemarkets-freeminds-freesociety.blogspot.com/2009/06/iran.html) are important for successful liberal democracy, including limits on government power; a concept of rule of law; private property rights; dispersal of power amongst national and local governments, public and private institutions, and between different branches of government; and independent civil and governing institutions. Simply voting and having majority rule guarantees none of these things and can be a recipe for mob rule. Capital and private property rights are important in the development of liberty. The production of wealth (and therefore a tax base for government) requires private ownership, which requires personal property rights, which then requires codification of the protection of those rights. Commerce requires freedom to travel, free speech to advertise, and therefore the codification of these freedoms. Based on this relationship between capitalism and freedom, Fareed Zakaria has observed in his wonderful book, The Future of Freedom, that successful liberal democracies tend to take hold in countries with a per capita GDP of $6,000 USD. Based on this analysis, Egypt, Libya, and Iran would not seem like fertile ground for successful democracies (in fact, Zakaria points out that resource-rich states like Iran have greater impediment because no government in Iran would be beholden to free and productive citizenry to create wealth). In the midst of all this uncertainty, surely a militant jihadist group could play on the fears of the people and their desire for stability and hijack a revolution that may have started as a democratic one.
This uncertainty is a quandary for the United States. There is great fear that these revolutions may lead to instability and the rise of more terrorist states in an already volatile region (and a region that the world depends on for oil). Furthermore, with Libya and Iran as exceptions, often the protesters are revolting against governments allied with the U.S. (such as Mubarek in Egypt and the monarchy in Bahrain). Should the United States be supporting its allies even if they do not have the support of their own people. Should we intervene to help topple dictators like Qadhafi and Ahmadinejad? Would U.S. support for insurgents undermine their legitimacy? Would U.S. involvement allow jihadists to paint these movements as American backed frauds and ride anti-western sentiment into power? Would our involvement, militarily, foment the very radicalization of these movements that we hope to avoid?
If we truly believe that it is a self-evident truth that governments derive their just powers from the consent of the governed, then we must not continue to prop up dictators in a region where our history of doing so in the past in the name of, "stability," has damaged our reputation and created the type of anger that contributes to the recruitment of terrorists. We may fear possible outcomes of these revolutions, but we have no choice but to let them play out and let the brave people of these nations chart their own destinies. They may not choose the same style of governance as ours, but we must acknowledge that the choice is theirs and not ours.
Whether or not to intervene in Libya is a more difficult question. Rebel forces seem locked in a stalemate with Colonel Qadhafi's forces and many Libyans will die before this is over. It is tempting to consider establishing a no-fly zone and perhaps even sending in ground troops to help the Libyan people get rid of an evil dictator. After all, where would the U.S. be today without the intervention of France in our revolution? However, U.S. troops in Libya, or U.S. planes over Libya would involve the U.S. in yet another middle eastern quagmire and serve as yet another example of foreign conquest to our detractors in the region. The key difference between the American Revolution and the Libyan one is the Continental Congress sent Benjamin Franklin to Paris to ask the King of France for help. While we should stand ready to provide any assistance the Libyan people ask us for (preferably in the context of a multinational effort), we must continue to understand that the fate of Libya is for Libyans to decide.
Ultimately these movements are not about the United States or our interests. We should stop talking about these revolutions as if it is up to the U.S. to decide how to manage their outcomes. It was the Athenian penchant for toppling tyrants in favour of democracies that stirred the ire of Sparta. Democratic movements and regime change have legitimacy when the arise from within, not when they are imposed from without.
The first question is what is the ultimate goal of these revolutionaries? Are they interested in individual liberty and economic freedom? Or, are these revolutions fueled by reactionary Islamist or jihadist elements bent on establishing theocracies in place of the secular autocracies? In short, are these revolutions more similar to the one in Tehran in 1979 or to the revolutions in Eastern Europe in 1989? Several features suggest the latter. First the protests, particularly in Egypt, have not been coupled with overt anti-American or anti-Western rhetoric (the burning of American flags, etc.). In fact, many on the street interviewed by western journalists have talked about how they would like to have the type of democracy enjoyed in the U.S. Secondly, the root causes of these protests have been economic. Third, in the case of Iran, it hardly seems likely that protest against an Islamic theocracy is aimed at establishing an Islamic theocracy. Although some have worried about the influence of the Muslim Brotherhood in Egypt, it should be recognized that Egypt is not a resource rich nation (i.e. not an oil producing nation) that can economically afford difficult political relations with the West. On the contrary, Egypt's largest industry is tourism and one would hope that the economic interest of Egyptians would favour stability and continued cordial relations with the West. In Libya, Colonel Qadhafi has tried to persuade his people that Al Qaeda is behind the insurgency in an effort to discredit the insurgency and dissuade Libyans from joining it. If Qadhafi thinks that associating the insurgency with Al Qaeda discredits it in the eyes of the Libyan people, then it is unlikely the Libyan people are interested in jihad.
However, the good intentions of the protesters is no guarantee of a positive outcome. History is full of examples of failed democratic revolutions in which the best of intentions produce horrendous results or the ensuing chaos and power vacuum degenerates into tyranny. The French First Republic and the Wiemar Republic provide European examples. Hugo Chavez became an autocrat by democratic means, as did Vladmir Putin. There is no guarantee that democratic revolutions will remain democratic. Many factors, discussed in two previous posts (http://freemarkets-freeminds-freesociety.blogspot.com/2008/04/orange-revolution.html and http://freemarkets-freeminds-freesociety.blogspot.com/2009/06/iran.html) are important for successful liberal democracy, including limits on government power; a concept of rule of law; private property rights; dispersal of power amongst national and local governments, public and private institutions, and between different branches of government; and independent civil and governing institutions. Simply voting and having majority rule guarantees none of these things and can be a recipe for mob rule. Capital and private property rights are important in the development of liberty. The production of wealth (and therefore a tax base for government) requires private ownership, which requires personal property rights, which then requires codification of the protection of those rights. Commerce requires freedom to travel, free speech to advertise, and therefore the codification of these freedoms. Based on this relationship between capitalism and freedom, Fareed Zakaria has observed in his wonderful book, The Future of Freedom, that successful liberal democracies tend to take hold in countries with a per capita GDP of $6,000 USD. Based on this analysis, Egypt, Libya, and Iran would not seem like fertile ground for successful democracies (in fact, Zakaria points out that resource-rich states like Iran have greater impediment because no government in Iran would be beholden to free and productive citizenry to create wealth). In the midst of all this uncertainty, surely a militant jihadist group could play on the fears of the people and their desire for stability and hijack a revolution that may have started as a democratic one.
This uncertainty is a quandary for the United States. There is great fear that these revolutions may lead to instability and the rise of more terrorist states in an already volatile region (and a region that the world depends on for oil). Furthermore, with Libya and Iran as exceptions, often the protesters are revolting against governments allied with the U.S. (such as Mubarek in Egypt and the monarchy in Bahrain). Should the United States be supporting its allies even if they do not have the support of their own people. Should we intervene to help topple dictators like Qadhafi and Ahmadinejad? Would U.S. support for insurgents undermine their legitimacy? Would U.S. involvement allow jihadists to paint these movements as American backed frauds and ride anti-western sentiment into power? Would our involvement, militarily, foment the very radicalization of these movements that we hope to avoid?
If we truly believe that it is a self-evident truth that governments derive their just powers from the consent of the governed, then we must not continue to prop up dictators in a region where our history of doing so in the past in the name of, "stability," has damaged our reputation and created the type of anger that contributes to the recruitment of terrorists. We may fear possible outcomes of these revolutions, but we have no choice but to let them play out and let the brave people of these nations chart their own destinies. They may not choose the same style of governance as ours, but we must acknowledge that the choice is theirs and not ours.
Whether or not to intervene in Libya is a more difficult question. Rebel forces seem locked in a stalemate with Colonel Qadhafi's forces and many Libyans will die before this is over. It is tempting to consider establishing a no-fly zone and perhaps even sending in ground troops to help the Libyan people get rid of an evil dictator. After all, where would the U.S. be today without the intervention of France in our revolution? However, U.S. troops in Libya, or U.S. planes over Libya would involve the U.S. in yet another middle eastern quagmire and serve as yet another example of foreign conquest to our detractors in the region. The key difference between the American Revolution and the Libyan one is the Continental Congress sent Benjamin Franklin to Paris to ask the King of France for help. While we should stand ready to provide any assistance the Libyan people ask us for (preferably in the context of a multinational effort), we must continue to understand that the fate of Libya is for Libyans to decide.
Ultimately these movements are not about the United States or our interests. We should stop talking about these revolutions as if it is up to the U.S. to decide how to manage their outcomes. It was the Athenian penchant for toppling tyrants in favour of democracies that stirred the ire of Sparta. Democratic movements and regime change have legitimacy when the arise from within, not when they are imposed from without.
Friday, December 24, 2010
Ask and Tell
Kudos to Congress and President Obama for repealing the military's policy of, "Don't Ask, Don't Tell," opening the way for gays and lesbians to serve openly in the armed forces.
As a Roman Catholic, my church teaches that homosexual behaviour is sinful, but having a gay or lesbian sexual orientation is not (so yes, the Catholic Church would ask gays to remain celibate if they are to practice the faith). The distinction is that one chooses one's behaviour, but one does not choose one's innate orientation. However, such a discussion of the private morality of homosexual behaviour is irrelevant to a discussion of federal public policy in a nation with a constitutional guarantee not to respect the establishment of a particular religion. After all, who is to say that the Roman Catholic view or fundamentalist Protestant view of homosexuality should prevail over the Episcopalian view (our country's state church before the Revolution) that does not deem homosexual behaviour sinful? One (or multiple) church's view should not be the basis for public policy. For the devoutly faithful who view homosexual behaviour as sinful, the answer is quite simple: don't engage in it and leave everyone else alone.
Perhaps the intent of "Don't Ask, Don't Tell," was an effort to separate behaviour from orientation. Being gay didn't disqualify you from service, simply being openly gay. Independent of whether or not the military, as a federal institution, should regulate personal and private morality (and conceding that the military has an interest in enforcing a code of conduct that would not otherwise apply in civilian life), this policy isn't simply about behaviour because simply stating one's sexual orientation is grounds for discharge under this policy. What we have asked gay men and women to do in order to serve their country is to lie, or at least be less than honest, about who they are. How is that compatible with a professional military that would other wise promote values of personal honour and integrity? It's not. The truth is, "Don't Ask, Don't Tell," was never good policy. It was simply the best achievable result, politically, 17 years ago but in the end doesn't really satisfy gay patriots who wish to serve or those who wish to exclude them. Times have changed and this policy has outlived its limited usefulness.
The arguments for continuing, "Don't Ask, Don't Tell," are mind-boggling in their naked bigotry. Senator McCain, the marine commandant, and apparently marine units have argued that including people who are openly gay will damage unit cohesion and diminish combat readiness. So the argument is that a gay patriot who is willing to fight and die for his country has to deny who he is to do so because his comrades in arms may be too bigoted or too unprofessional to handle to him being, "out of the closet?" Not only does this suggest that American service men and women are bigoted, but is also suggests that they are less professional than their British, Canadian, or Israeli counterparts who seem to have been able to accept openly gay comrades in arms. There will still be a military code of conduct that will apply to gay service men and women as well, including rules for fraternization. The integration of gay men and women into a service of trained and competent professionals should no more disrupt combat readiness than the introduction of women to an all male service did.
Rush Limbaugh is fond of saying that the only purpose of the military is to, "kill people and break their stuff." Ironically he uses this as an argument against allowing gays to serve openly because he maintains that the military should, therefore, not be a vehicle for experiments in social justice. But, on the contrary, it is an argument for greater inclusion. The military should not exclude competent, capable people who can help achieve its mission on the basis of arbitrary characteristics. As Milton Friedman teaches us in Capitalism and Freedom (pp.109-110), "...an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a competitive disadvantage to other individuals who do not. Such an individual is in effect imposing higher costs on himself than are other individuals who do not have such preferences." Granted, the military is not a business. However excluding competent capable people for reasons unrelated to their effectiveness will still have have the effect of making the military less efficient. Furthermore, since the military does not have economic competitors its short-sightedness will not drive it out of business, but rather will perpetuate its inefficiencies. Therefore, the President and Congress needed to act.
Last March, a former Air Force chief of staff, Merrill McPeak, wrote an op-ed in the New York Times in favour of, "Don't Ask, Don't Tell," (http://www.nytimes.com/2010/03/05/opinion/05mcpeak.html?th=&emc=th&pagewanted=all). In addition to denigrating the professionalism of men and women in uniform by making the, "unit cohesion," argument, General McPeak points out that there are many reasons for the military to exclude people from service that would be unacceptable in the civilian sector:
As a Roman Catholic, my church teaches that homosexual behaviour is sinful, but having a gay or lesbian sexual orientation is not (so yes, the Catholic Church would ask gays to remain celibate if they are to practice the faith). The distinction is that one chooses one's behaviour, but one does not choose one's innate orientation. However, such a discussion of the private morality of homosexual behaviour is irrelevant to a discussion of federal public policy in a nation with a constitutional guarantee not to respect the establishment of a particular religion. After all, who is to say that the Roman Catholic view or fundamentalist Protestant view of homosexuality should prevail over the Episcopalian view (our country's state church before the Revolution) that does not deem homosexual behaviour sinful? One (or multiple) church's view should not be the basis for public policy. For the devoutly faithful who view homosexual behaviour as sinful, the answer is quite simple: don't engage in it and leave everyone else alone.
Perhaps the intent of "Don't Ask, Don't Tell," was an effort to separate behaviour from orientation. Being gay didn't disqualify you from service, simply being openly gay. Independent of whether or not the military, as a federal institution, should regulate personal and private morality (and conceding that the military has an interest in enforcing a code of conduct that would not otherwise apply in civilian life), this policy isn't simply about behaviour because simply stating one's sexual orientation is grounds for discharge under this policy. What we have asked gay men and women to do in order to serve their country is to lie, or at least be less than honest, about who they are. How is that compatible with a professional military that would other wise promote values of personal honour and integrity? It's not. The truth is, "Don't Ask, Don't Tell," was never good policy. It was simply the best achievable result, politically, 17 years ago but in the end doesn't really satisfy gay patriots who wish to serve or those who wish to exclude them. Times have changed and this policy has outlived its limited usefulness.
The arguments for continuing, "Don't Ask, Don't Tell," are mind-boggling in their naked bigotry. Senator McCain, the marine commandant, and apparently marine units have argued that including people who are openly gay will damage unit cohesion and diminish combat readiness. So the argument is that a gay patriot who is willing to fight and die for his country has to deny who he is to do so because his comrades in arms may be too bigoted or too unprofessional to handle to him being, "out of the closet?" Not only does this suggest that American service men and women are bigoted, but is also suggests that they are less professional than their British, Canadian, or Israeli counterparts who seem to have been able to accept openly gay comrades in arms. There will still be a military code of conduct that will apply to gay service men and women as well, including rules for fraternization. The integration of gay men and women into a service of trained and competent professionals should no more disrupt combat readiness than the introduction of women to an all male service did.
Rush Limbaugh is fond of saying that the only purpose of the military is to, "kill people and break their stuff." Ironically he uses this as an argument against allowing gays to serve openly because he maintains that the military should, therefore, not be a vehicle for experiments in social justice. But, on the contrary, it is an argument for greater inclusion. The military should not exclude competent, capable people who can help achieve its mission on the basis of arbitrary characteristics. As Milton Friedman teaches us in Capitalism and Freedom (pp.109-110), "...an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a competitive disadvantage to other individuals who do not. Such an individual is in effect imposing higher costs on himself than are other individuals who do not have such preferences." Granted, the military is not a business. However excluding competent capable people for reasons unrelated to their effectiveness will still have have the effect of making the military less efficient. Furthermore, since the military does not have economic competitors its short-sightedness will not drive it out of business, but rather will perpetuate its inefficiencies. Therefore, the President and Congress needed to act.
Last March, a former Air Force chief of staff, Merrill McPeak, wrote an op-ed in the New York Times in favour of, "Don't Ask, Don't Tell," (http://www.nytimes.com/2010/03/05/opinion/05mcpeak.html?th=&emc=th&pagewanted=all). In addition to denigrating the professionalism of men and women in uniform by making the, "unit cohesion," argument, General McPeak points out that there are many reasons for the military to exclude people from service that would be unacceptable in the civilian sector:
The services exclude, without challenge, many categories of prospective entrants. People cannot serve in uniform if they are too old or too young, too fat or too thin, too tall or too short, disabled, not sufficiently educated and so on. This, too, might be illegal in the civil sector. So why should exclusion of gay people rise to the status of a civil-rights issue, when denying entry to, say, unmarried individuals with sole custody of dependents under 18, does not?
The issue of an unmarried individual with sole custody of dependents under the age of 18 putting him or herself in harms way is a special case. However, the rest of General McPeak's other examples all pertain to issues of fitness for duty. Exclusion of gay people represents the exclusion of people independent of their capability or competence. The argument is particularly absurd when the same individual would be allowed to serve so long as no one knows that he or she is gay. Sixty or seventy years ago that last sentence could have read, "blacks," instead of, "gay people." I am sure "unit cohesion" arguments were made then too. The arguments were just as wrong then as they are now. One has as much ability to choose one's sexual orientation as one has the ability to choose one's skin colour.
Perhaps Barry Goldwater summed it up the best in a Larry King Live interview fifteen or more years ago when he argued that you didn't have be straight to serve in the military, you just needed to be able to shoot straight.
The issue of an unmarried individual with sole custody of dependents under the age of 18 putting him or herself in harms way is a special case. However, the rest of General McPeak's other examples all pertain to issues of fitness for duty. Exclusion of gay people represents the exclusion of people independent of their capability or competence. The argument is particularly absurd when the same individual would be allowed to serve so long as no one knows that he or she is gay. Sixty or seventy years ago that last sentence could have read, "blacks," instead of, "gay people." I am sure "unit cohesion" arguments were made then too. The arguments were just as wrong then as they are now. One has as much ability to choose one's sexual orientation as one has the ability to choose one's skin colour.
Perhaps Barry Goldwater summed it up the best in a Larry King Live interview fifteen or more years ago when he argued that you didn't have be straight to serve in the military, you just needed to be able to shoot straight.
Sunday, October 24, 2010
Is Social Security Reform Too Much to Hope For?
Most mature observers of American government know that the United States is facing a looming entitlement crisis. Social Security and Medicare account for nearly 60% of the federal budget and the cost of each is spiraling out of control. The cost of Medicare escalates with the rising cost of health care in general and the recently passed health insurance reform, while expanding coverage, does not address health care costs in any meaningful way. Both programs face a demographic crisis. Baby boomers are retiring and there is a dwindling number of workers paying in to the system to cover the new retirees. The dirty little secret in Washington is that the current system is unsustainable.
In a previous post (http://freemarkets-freeminds-freesociety.blogspot.com/2010/04/end-it-dont-mend-it.html), I outlined a case for eliminating Social Security, on both moral and economic grounds. Although no plan for the elimination of the program should affect current retirees or those nearing retirement who have planned on Social Security, I understand that the argument I presented is not politically practical. Current retirees will always fear that the changes will affect them; demagoguery about individuals losing their retirement nest egg in private, stock-based, accounts is too easy; and a straight retirement welfare program for the working poor, which is what I think should replace Social Security, is unpopular because people who have been paying in to the program want their money back. For these reasons, Social Security has long been known as the "third rail," of American politics. Touch it, and you die. Barry Goldwater campaigned on Social Security reform in 1964 and lost. Paul Tsongas suffered a similar fate in the 1992 Democratic Presidential primary, losing to Bill Clinton when he raised issues of Social Security solvency and declared, "there is no Santa Claus." President Reagan had to appoint a commission to give elected officials political coverage to make some necessary changes in the 1980's that bought the last couple of decades of solvency.
However, an increasing number of Americans, having watched the Greek welfare state collapse, seem to have noticed the writing on the wall and there are signs that maybe the old political rules about Social Security are changing. Although President Bush did not accomplish Social Security reform and faced bitter opposition and demagoguery, he did win two elections (2000 and 2004) despite campaigning on the issue. Congressman Paul Ryan (R-WI), the ranking member on the House Budget committee, has been at the forefront of discussing the looming entitlement crisis and has proposed a road map for reform (http://www.roadmap.republicans.budget.house.gov/). Despite the predictable demagogic attacks on this plan, Congressman Ryan's reelection in 2010 is considered safe. More interestingly, at least three candidates for Senate - Marco Rubio (R-FL), Rand Paul (R-KY), and Pat Toomey (R-PA) - have endorsed specific reforms to Social Security on the campaign trail. All have addressed the question on Fox News Sunday. On March 28, 2010, Speaker Rubio endorsed Congressman Ryan's road map, including the possibility that retirement ages may need to be raised or cost-of-living adjustments decreased to keep the program solvent. On October 3, 2010, Dr. Paul similarly endorsed the notion that retirement ages may need to be raised. Earlier today (October 24, 2010), Mr. Toomey discussed the demographic challenges to Social Security and allowing younger workers to opt out and in to private or partially private retirement accounts, with regulations about the amount of risk (ratio of stocks to less volatile investments) the portfolio can have based on the proximity of the account holder to retirement. All three of these candidates are currently leading in their races. In the latest polls, Mr. Toomey leads Democrat Congressman Joe Sestak 46% to 43%. Dr. Paul leads over Kentucky Attorney General Jack Conway (D) 48% to 43%. Stunningly, in Florida (a state full of retirees), Speaker Rubio has opened up a commanding lead in the three way race with former Governor Charlie Crist (I) and Congressman Kendrick Meek (D): Rubio 41%, Crist 26%, and Meek 20%! (see Real Clear Politics for the latest polls: http://www.realclearpolitics.com/epolls/latest_polls/senate/)
The election of Congressmen and Senators who are unafraid to at least discuss Social Security reform and willing to go on record advocating specific changes in the midst of an election campaign (and in the case of Dr. Paul and Mr. Toomey, in tight races) would represent a huge step forward for the possibility of desperately needed entitlement reform. The only questions that remain are: 1) can these brave souls stand up to the demagoguery and the organized special-interest attacks to bring the rest of their party (and the President) along? and 2) can Republicans, who created new entitlements and doubled the national debt under George W. Bush really be trusted to do this?
In a previous post (http://freemarkets-freeminds-freesociety.blogspot.com/2010/04/end-it-dont-mend-it.html), I outlined a case for eliminating Social Security, on both moral and economic grounds. Although no plan for the elimination of the program should affect current retirees or those nearing retirement who have planned on Social Security, I understand that the argument I presented is not politically practical. Current retirees will always fear that the changes will affect them; demagoguery about individuals losing their retirement nest egg in private, stock-based, accounts is too easy; and a straight retirement welfare program for the working poor, which is what I think should replace Social Security, is unpopular because people who have been paying in to the program want their money back. For these reasons, Social Security has long been known as the "third rail," of American politics. Touch it, and you die. Barry Goldwater campaigned on Social Security reform in 1964 and lost. Paul Tsongas suffered a similar fate in the 1992 Democratic Presidential primary, losing to Bill Clinton when he raised issues of Social Security solvency and declared, "there is no Santa Claus." President Reagan had to appoint a commission to give elected officials political coverage to make some necessary changes in the 1980's that bought the last couple of decades of solvency.
However, an increasing number of Americans, having watched the Greek welfare state collapse, seem to have noticed the writing on the wall and there are signs that maybe the old political rules about Social Security are changing. Although President Bush did not accomplish Social Security reform and faced bitter opposition and demagoguery, he did win two elections (2000 and 2004) despite campaigning on the issue. Congressman Paul Ryan (R-WI), the ranking member on the House Budget committee, has been at the forefront of discussing the looming entitlement crisis and has proposed a road map for reform (http://www.roadmap.republicans.budget.house.gov/). Despite the predictable demagogic attacks on this plan, Congressman Ryan's reelection in 2010 is considered safe. More interestingly, at least three candidates for Senate - Marco Rubio (R-FL), Rand Paul (R-KY), and Pat Toomey (R-PA) - have endorsed specific reforms to Social Security on the campaign trail. All have addressed the question on Fox News Sunday. On March 28, 2010, Speaker Rubio endorsed Congressman Ryan's road map, including the possibility that retirement ages may need to be raised or cost-of-living adjustments decreased to keep the program solvent. On October 3, 2010, Dr. Paul similarly endorsed the notion that retirement ages may need to be raised. Earlier today (October 24, 2010), Mr. Toomey discussed the demographic challenges to Social Security and allowing younger workers to opt out and in to private or partially private retirement accounts, with regulations about the amount of risk (ratio of stocks to less volatile investments) the portfolio can have based on the proximity of the account holder to retirement. All three of these candidates are currently leading in their races. In the latest polls, Mr. Toomey leads Democrat Congressman Joe Sestak 46% to 43%. Dr. Paul leads over Kentucky Attorney General Jack Conway (D) 48% to 43%. Stunningly, in Florida (a state full of retirees), Speaker Rubio has opened up a commanding lead in the three way race with former Governor Charlie Crist (I) and Congressman Kendrick Meek (D): Rubio 41%, Crist 26%, and Meek 20%! (see Real Clear Politics for the latest polls: http://www.realclearpolitics.com/epolls/latest_polls/senate/)
The election of Congressmen and Senators who are unafraid to at least discuss Social Security reform and willing to go on record advocating specific changes in the midst of an election campaign (and in the case of Dr. Paul and Mr. Toomey, in tight races) would represent a huge step forward for the possibility of desperately needed entitlement reform. The only questions that remain are: 1) can these brave souls stand up to the demagoguery and the organized special-interest attacks to bring the rest of their party (and the President) along? and 2) can Republicans, who created new entitlements and doubled the national debt under George W. Bush really be trusted to do this?
Sunday, October 17, 2010
Personal Reflections on the 2010 Maryland Gubernatorial Campaign
My apologies to out of state readers, but as this is a mid-term election, all races are local. I hope the following has enough connection to national issues and national trends to be of interest to the general reader - Publius
My church participates in an organization called P.A.T.H., which stands for People Acting Together in Howard County. It is an interdenominational, faith-based, community advocacy organization that seeks to provide a voice for the needy in Howard County (Maryland). My impression is that it is fairly non-partisan and certainly its recently accomplished policy goals have been, in my view, fairly non-controversial. The first is the establishment of the Healthy Howard program (http://www.healthyhowardplan.org), a privately run county government initiative to provide health care to the uninsured in Howard County and the second is legislation to help mobile home owners if the land they are renting is sold (http://www.path-iaf.org/media/20100617.pdf). So, when they announced at my church that P.A.T.H. was looking for people to attend a candidates forum last Thursday (October 14, 2010), which the current Maryland Governor, Martin O'Malley (D) had already agreed to attend and which his challenger, former Maryland Governor Bob Ehrlich (R) had been invited to attend (but had not yet confirmed) and that was billed as a non-partisan event and a chance to see the candidates unscripted, I jumped at the chance, even though I had not previously been active in P.A.T.H.
In reality the event was not unscripted (candidates were given the issues to be discussed and the questions to be asked ahead of time) and hardly non-partisan. Although technically not a partisan event, it turns out that P.A.T.H. is part of the Maryland I.A.F. (Industrial Areas Foundation), which also includes A.I.M. (Action In Montgomery County) and B.U.I.L.D. (Baltimoreans United In Leadership Development). The MD-I.A.F. is a chapter of the national I.A.F., a Chicago based entity for community organizing with a very leftist agenda (their website has a link to an article in The Nation about how the Democrats are not far enough to the left: http://www.industrialareasfoundation.org/). Far from being an open forum for voters to hear from the candidates, the event was a politically charged gathering at which Gov. O'Malley was welcomed as a hero and which Gov. Ehrlich, wisely, chose not to attend, opting instead to meet with MD-I.A.F. leadership privately the next day. The purpose of the meeting was to advance the following agenda, crafted by MD-I.A.F.:
1) Jobs: The Maryland I.A.F. stated that putting Maryland back to work was its number 1 priority and it's solution was to ask the next Maryland Governor to organize the National Governor's Association to call on President Obama to create a New Deal style public works program.
2) Move our Money to Create Jobs and Stop Usury: MD-I.A.F. called on the next Governor to move state assets from, "usurious large banks," to community banks that, "do not charge [interest rates] above Maryland's state usury laws." They also called for the creation of a Maryland state bank.
3) Fully Fund Education: In 2002, the Maryland General Assembly passed what is known as the Thornton legislation, which mandates increases in state spending on education, but does not provide a funding source for these increases. The MD-I.A.F. called on the next Governor to keep these commitments and invest a minimum of $250 million each year for school construction.
4) In-state tuition rates for all Maryland high-school graduates: regardless of immigration status
5) Affordable Health-Care: MD-I.A.F. called on the next Governor to work under the auspices of the federal Affordable Care Act to create a non-profit health insurance co-op in Maryland to provide affordable health insurance who currently do not have insurance, cannot afford insurance, and will be forced to buy insurance under the new federal law. It turns out that those covered under the Healthy Howard program in my county do not count under the new federal law because they still haven't bought health insurance, even though they have access the health care...
Governor O'Malley, of course, agreed to this agenda almost without reservation: although he did prudently stop short of promising something he couldn't deliver (a federal public works program or being able to move the National Association of Governors on an issue) and said he needed to study how the federal health care legislation affects Maryland and Marylanders before figuring out how to proceed on that issue. I do not know how Governor Ehrlich responded to these issues in his private meeting the following day. I do know that both candidates are committed to fully funding the Thornton education legislation and merely differ on how they would pay for it.
Both of Maryland's gubernatorial candidates for 2010 agree on the education position, and I will concede that it is the job of the next Governor to figure out how to implement the federal health care legislation in the state, assuming it survives court challenges and attempts at repeal (although it is ironic that the upshot of the Affordable Care Act is to mandate that impoverished Marylanders purchase health insurance that they cannot afford...). The rest of the agenda, however, is quite leftist and much of it is divorced from economic reality.
The in-state tuition proposal is a difficult issue. It ignores the salient fact that tuition is cheaper for state residents because they, or their families, subsidize the state colleges and universities by paying taxes. It's a break on tuition for those that pay taxes in the state, not for those who don't. On the other hand, it is hard to oppose creating opportunity for those who have risked a lot to come to this country to work hard and build a better life for themselves. Former Arkansas Governor Mike Huckabee (R) made a compelling case in 2008 Presidential debate defending his signing of similar legislation in Arkansas, when he said he was not about to hold children (the students) responsible for the sins of their parents (that came to the U.S. illegally) because, "we're a better country than that."
However, it is clear that the Maryland-I.A.F. doesn't understand interest rates. As a Maryland tax payer, I certainly want the state to keep its money wherever it can get the highest rate of return, regardless of whether that bank charges high interest rates for loans or credit cards. The Maryland-I.A.F. is particularly incensed by credit cards that charge more than 10% interest (which, I think, is pretty much ALL of them), but this ignores the fact that one pays no interest at all if you don't keep a balance. The purpose of the high interest rate is twofold: first to make a profit for the bank or credit card company and secondly to be high enough to encourage you to actually, eventually, pay the bill. A rate that is set artificially low may not allow banks to profitably provide this service or may encourage reckless spending by providing too easy credit. Didn't we learn this lesson when artificially low interest rates fueled a housing bubble? Interest rates are better set by market forces than by fiat. An interest rate is nothing more than the price of borrowing money and it should be based on the length of the loan, the risk of the borrower, and the availability of capital. Interest rates should rise when savings rates are low to encourage saving and send a signal that there is little capital available for lending (thereby making loans riskier) and fall when the banks are flush with cash, signaling that there is plenty of capital available to borrow. An artificially low interest rate sends signals that there is capital available to borrow, when there isn't. Credit card interest rates are much higher than other loans because they are short term borrowing at higher risk. To set such rates artificially low by fiat would introduce entirely too much risk that would ultimately prove detrimental to the bank and to the credit card holder. And create a state bank? I suppose we should do that because the Federal Reserve has worked out so well...
Maryland I.A.F.'s jobs agenda is laughable. Ignoring the fact that the New Deal was an abysmal failure at putting Americans back to work (unemployment never fell below 13% before World War II and there was a double-dip in 1937 despite the WPA), Maryland-I.A.F.'s answer to joblessness in Maryland is to ask the federal government for money that it doesn't have. This position blissfully ignores the implications of increasing federal spending. If such spending isn't funded by a higher tax burden, then the federal government will have to either print the money or borrow it. Printing, of course, would devalue the dollar further and robs all of us of wealth as each dollar in our savings account suddenly becomes worth less. Borrowing increases the federal debt. Each year, a percentage of the federal budget is money to pay interest on the national debts (to the holders of that debt). In 2009, that amounted to 5% of the federal budget, but as the debt rises, so too will that number to the point were it becomes large enough that money isn't available to spend on other things, such as defense or social security, or education. If we continue on the current spending course, we can either collapse, like Greece, as investors start viewing holding U.S. debt as a bad risk, or reach a point at which it becomes impossible for the government to fund its most basic services. Either way, we pass a huge economic burden to future generations. The proposal also ignores the real issues with regard to job creation in Maryland. Governor O'Malley has worked to create a vibrant biotechnology community in Maryland, offering incentives for biotech companies to complement the academic resources at University of Maryland, Johns Hopkins University, and the National Institutes of Health in Bethesda; for which he was named, "BIO Governor of the Year," in 2010 (http://www.governor.maryland.gov/pressreleases/100503.asp). However, other than biotechnology, Maryland has not been a business friendly state. Many potential jobs were denied from Maryland's Eastern Shore when Walmart decided to cancel it's plans to build a big facility there after the Maryland legislature, controlled by Gov. O'Malley's party, passed a bill that essentially targeted only Walmart with fines for not providing enough health benefits for employees. Gov. O'Malley increased the Maryland state sales tax by 20% (from 5% to 6%). Not only does this create an unfriendly retail environment in Maryland, but it is a regressive tax that is hardest on middle class and lower income Marylanders (although at least state sales tax in Maryland exempts groceries). The business climate in Maryland is so unfriendly that when Tim Kaine (D) was Governor in Virginia, he ran commercials encouraging businesses to come there (http://www.youtube.com/user/VirginiaEconomicDev), and he's in the same party as Governor O'Malley! Repealing the sales tax increase, easing regulations, offering tax incentives for businesses other than biotech could all help ease the pain of recession for Marylanders and create private sector job growth in Maryland, and all make more sense than federal make-work projects that the federal government can ill afford.
Maryland-I.A.F. is, of course, entitled to have and promote its agenda. I just wish I had understood that this was to be an agenda driven event, rather than an open forum for voters to assess the candidates, before I ended up at what was essentially an O'Malley pep rally to promote an agenda that I, for the most part, disagree with.
My church participates in an organization called P.A.T.H., which stands for People Acting Together in Howard County. It is an interdenominational, faith-based, community advocacy organization that seeks to provide a voice for the needy in Howard County (Maryland). My impression is that it is fairly non-partisan and certainly its recently accomplished policy goals have been, in my view, fairly non-controversial. The first is the establishment of the Healthy Howard program (http://www.healthyhowardplan.org), a privately run county government initiative to provide health care to the uninsured in Howard County and the second is legislation to help mobile home owners if the land they are renting is sold (http://www.path-iaf.org/media/20100617.pdf). So, when they announced at my church that P.A.T.H. was looking for people to attend a candidates forum last Thursday (October 14, 2010), which the current Maryland Governor, Martin O'Malley (D) had already agreed to attend and which his challenger, former Maryland Governor Bob Ehrlich (R) had been invited to attend (but had not yet confirmed) and that was billed as a non-partisan event and a chance to see the candidates unscripted, I jumped at the chance, even though I had not previously been active in P.A.T.H.
In reality the event was not unscripted (candidates were given the issues to be discussed and the questions to be asked ahead of time) and hardly non-partisan. Although technically not a partisan event, it turns out that P.A.T.H. is part of the Maryland I.A.F. (Industrial Areas Foundation), which also includes A.I.M. (Action In Montgomery County) and B.U.I.L.D. (Baltimoreans United In Leadership Development). The MD-I.A.F. is a chapter of the national I.A.F., a Chicago based entity for community organizing with a very leftist agenda (their website has a link to an article in The Nation about how the Democrats are not far enough to the left: http://www.industrialareasfoundation.org/). Far from being an open forum for voters to hear from the candidates, the event was a politically charged gathering at which Gov. O'Malley was welcomed as a hero and which Gov. Ehrlich, wisely, chose not to attend, opting instead to meet with MD-I.A.F. leadership privately the next day. The purpose of the meeting was to advance the following agenda, crafted by MD-I.A.F.:
1) Jobs: The Maryland I.A.F. stated that putting Maryland back to work was its number 1 priority and it's solution was to ask the next Maryland Governor to organize the National Governor's Association to call on President Obama to create a New Deal style public works program.
2) Move our Money to Create Jobs and Stop Usury: MD-I.A.F. called on the next Governor to move state assets from, "usurious large banks," to community banks that, "do not charge [interest rates] above Maryland's state usury laws." They also called for the creation of a Maryland state bank.
3) Fully Fund Education: In 2002, the Maryland General Assembly passed what is known as the Thornton legislation, which mandates increases in state spending on education, but does not provide a funding source for these increases. The MD-I.A.F. called on the next Governor to keep these commitments and invest a minimum of $250 million each year for school construction.
4) In-state tuition rates for all Maryland high-school graduates: regardless of immigration status
5) Affordable Health-Care: MD-I.A.F. called on the next Governor to work under the auspices of the federal Affordable Care Act to create a non-profit health insurance co-op in Maryland to provide affordable health insurance who currently do not have insurance, cannot afford insurance, and will be forced to buy insurance under the new federal law. It turns out that those covered under the Healthy Howard program in my county do not count under the new federal law because they still haven't bought health insurance, even though they have access the health care...
Governor O'Malley, of course, agreed to this agenda almost without reservation: although he did prudently stop short of promising something he couldn't deliver (a federal public works program or being able to move the National Association of Governors on an issue) and said he needed to study how the federal health care legislation affects Maryland and Marylanders before figuring out how to proceed on that issue. I do not know how Governor Ehrlich responded to these issues in his private meeting the following day. I do know that both candidates are committed to fully funding the Thornton education legislation and merely differ on how they would pay for it.
Both of Maryland's gubernatorial candidates for 2010 agree on the education position, and I will concede that it is the job of the next Governor to figure out how to implement the federal health care legislation in the state, assuming it survives court challenges and attempts at repeal (although it is ironic that the upshot of the Affordable Care Act is to mandate that impoverished Marylanders purchase health insurance that they cannot afford...). The rest of the agenda, however, is quite leftist and much of it is divorced from economic reality.
The in-state tuition proposal is a difficult issue. It ignores the salient fact that tuition is cheaper for state residents because they, or their families, subsidize the state colleges and universities by paying taxes. It's a break on tuition for those that pay taxes in the state, not for those who don't. On the other hand, it is hard to oppose creating opportunity for those who have risked a lot to come to this country to work hard and build a better life for themselves. Former Arkansas Governor Mike Huckabee (R) made a compelling case in 2008 Presidential debate defending his signing of similar legislation in Arkansas, when he said he was not about to hold children (the students) responsible for the sins of their parents (that came to the U.S. illegally) because, "we're a better country than that."
However, it is clear that the Maryland-I.A.F. doesn't understand interest rates. As a Maryland tax payer, I certainly want the state to keep its money wherever it can get the highest rate of return, regardless of whether that bank charges high interest rates for loans or credit cards. The Maryland-I.A.F. is particularly incensed by credit cards that charge more than 10% interest (which, I think, is pretty much ALL of them), but this ignores the fact that one pays no interest at all if you don't keep a balance. The purpose of the high interest rate is twofold: first to make a profit for the bank or credit card company and secondly to be high enough to encourage you to actually, eventually, pay the bill. A rate that is set artificially low may not allow banks to profitably provide this service or may encourage reckless spending by providing too easy credit. Didn't we learn this lesson when artificially low interest rates fueled a housing bubble? Interest rates are better set by market forces than by fiat. An interest rate is nothing more than the price of borrowing money and it should be based on the length of the loan, the risk of the borrower, and the availability of capital. Interest rates should rise when savings rates are low to encourage saving and send a signal that there is little capital available for lending (thereby making loans riskier) and fall when the banks are flush with cash, signaling that there is plenty of capital available to borrow. An artificially low interest rate sends signals that there is capital available to borrow, when there isn't. Credit card interest rates are much higher than other loans because they are short term borrowing at higher risk. To set such rates artificially low by fiat would introduce entirely too much risk that would ultimately prove detrimental to the bank and to the credit card holder. And create a state bank? I suppose we should do that because the Federal Reserve has worked out so well...
Maryland I.A.F.'s jobs agenda is laughable. Ignoring the fact that the New Deal was an abysmal failure at putting Americans back to work (unemployment never fell below 13% before World War II and there was a double-dip in 1937 despite the WPA), Maryland-I.A.F.'s answer to joblessness in Maryland is to ask the federal government for money that it doesn't have. This position blissfully ignores the implications of increasing federal spending. If such spending isn't funded by a higher tax burden, then the federal government will have to either print the money or borrow it. Printing, of course, would devalue the dollar further and robs all of us of wealth as each dollar in our savings account suddenly becomes worth less. Borrowing increases the federal debt. Each year, a percentage of the federal budget is money to pay interest on the national debts (to the holders of that debt). In 2009, that amounted to 5% of the federal budget, but as the debt rises, so too will that number to the point were it becomes large enough that money isn't available to spend on other things, such as defense or social security, or education. If we continue on the current spending course, we can either collapse, like Greece, as investors start viewing holding U.S. debt as a bad risk, or reach a point at which it becomes impossible for the government to fund its most basic services. Either way, we pass a huge economic burden to future generations. The proposal also ignores the real issues with regard to job creation in Maryland. Governor O'Malley has worked to create a vibrant biotechnology community in Maryland, offering incentives for biotech companies to complement the academic resources at University of Maryland, Johns Hopkins University, and the National Institutes of Health in Bethesda; for which he was named, "BIO Governor of the Year," in 2010 (http://www.governor.maryland.gov/pressreleases/100503.asp). However, other than biotechnology, Maryland has not been a business friendly state. Many potential jobs were denied from Maryland's Eastern Shore when Walmart decided to cancel it's plans to build a big facility there after the Maryland legislature, controlled by Gov. O'Malley's party, passed a bill that essentially targeted only Walmart with fines for not providing enough health benefits for employees. Gov. O'Malley increased the Maryland state sales tax by 20% (from 5% to 6%). Not only does this create an unfriendly retail environment in Maryland, but it is a regressive tax that is hardest on middle class and lower income Marylanders (although at least state sales tax in Maryland exempts groceries). The business climate in Maryland is so unfriendly that when Tim Kaine (D) was Governor in Virginia, he ran commercials encouraging businesses to come there (http://www.youtube.com/user/VirginiaEconomicDev), and he's in the same party as Governor O'Malley! Repealing the sales tax increase, easing regulations, offering tax incentives for businesses other than biotech could all help ease the pain of recession for Marylanders and create private sector job growth in Maryland, and all make more sense than federal make-work projects that the federal government can ill afford.
Maryland-I.A.F. is, of course, entitled to have and promote its agenda. I just wish I had understood that this was to be an agenda driven event, rather than an open forum for voters to assess the candidates, before I ended up at what was essentially an O'Malley pep rally to promote an agenda that I, for the most part, disagree with.
Sunday, September 26, 2010
The Needle in the Haystack
In a follow-up to a previous post on airport security measures (http://freemarkets-freeminds-freesociety.blogspot.com/2010/01/find-terrorist.html), I'd like to share another anecdote:
Three weeks ago, my wife and I met a friend and his nine year-old son in St. Louis to go to a Cardinals game. My friend has taken his son to several different major league baseball parks and buys him one of those small souvenir bats at every ball park. Our flights home left at about the same time, so we all went to the airport together. Because it was only a weekend trip, none of us had checked bags. As our carry-on bags are being x-rayed, the TSA agent decides that the long cylindrical object in my friend's bag (the souvenir bat) could be a weapon and can't go on the plane. My friend is told he must go check that bag before coming through security. His son passed through and waited for him with my wife and I.
After several minutes, he returned with the bag. They did an open bag search just before checking it (a different TSA agent) and found nothing suspicious. They found nothing, because the bat was in his son's bag and after x-raying the bags, the TSA agent picked up the wrong one for him to check and handed the bag with the "suspicious object" back to his son and let him through the security checkpoint!
The story is absurd on two levels. First, the notion that a nine year-old boy can't take a small souvenir bat in a carry on bag is absurd (and would be eliminated by screening for terrorists instead of for weapons). Secondly, even if the object in question had been a weapon, the TSA agent subsequently handed the bag with the "weapon" back to be carried through security and pulled the wrong bag to be checked. If you thought the TSA was making you safer, think again.
Three weeks ago, my wife and I met a friend and his nine year-old son in St. Louis to go to a Cardinals game. My friend has taken his son to several different major league baseball parks and buys him one of those small souvenir bats at every ball park. Our flights home left at about the same time, so we all went to the airport together. Because it was only a weekend trip, none of us had checked bags. As our carry-on bags are being x-rayed, the TSA agent decides that the long cylindrical object in my friend's bag (the souvenir bat) could be a weapon and can't go on the plane. My friend is told he must go check that bag before coming through security. His son passed through and waited for him with my wife and I.
After several minutes, he returned with the bag. They did an open bag search just before checking it (a different TSA agent) and found nothing suspicious. They found nothing, because the bat was in his son's bag and after x-raying the bags, the TSA agent picked up the wrong one for him to check and handed the bag with the "suspicious object" back to his son and let him through the security checkpoint!
The story is absurd on two levels. First, the notion that a nine year-old boy can't take a small souvenir bat in a carry on bag is absurd (and would be eliminated by screening for terrorists instead of for weapons). Secondly, even if the object in question had been a weapon, the TSA agent subsequently handed the bag with the "weapon" back to be carried through security and pulled the wrong bag to be checked. If you thought the TSA was making you safer, think again.
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